1933 Act File No. 33-51247
1940 Act File No. 811-7129
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
-----
Pre-Effective Amendment No. ..............................
Post-Effective Amendment No. 12 ............................ X
------ -----
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
-----
Amendment No. 13 ............................................. X
------ -----
FEDERATED MANAGED ALLOCATION PORTFOLIOS
(formerly, Managed Series Trust)
(Exact Name of Registrant as Specified in Charter)
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, Pennsylvania 15237-7000
(Address of Principal Executive Offices)
(412) 288-1900
(Registrant's Telephone Number)
John W. McGonigle, Esquire,
Federated Investors Tower,
1001 Liberty Avenue
Pittsburgh, Pennsylvania 15222-3779
(Name and Address of Agent for Service)
(Notices should be sent to the Agent for Service)
It is proposed that this filing will become effective:
immediately upon filing pursuant to paragraph (b)
X on January 31, 2000 pursuant to paragraph (b)
60 days after filing pursuant to paragraph (a) (i) on _________________
pursuant to paragraph (a) (i) 75 days after filing pursuant to paragraph
(a)(ii) on _______________ pursuant to paragraph (a)(ii) of Rule 485
If appropriate, check the following box:
This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Copies to:
Matthew G. Maloney, Esquire
Dickstein Shapiro Morin & Oshinsky, LLP
2101 L. Street, N.W.
Washington, DC 20037
PROSPECTUS
Federated Managed Allocation Portfolios
(formerly, Managed Series Trust)
Federated Managed Income Portfolio (formerly, Federated Managed Income Fund)
Federated Managed Conservative Growth Portfolio (formerly, Federated Managed
Growth and Income Fund)
Federated Managed Moderate Growth Portfolio (formerly, Federated Managed Growth
Fund)
Federated Managed Growth Portfolio (formerly, Federated Managed Aggressive
Growth Fund)
INSTITUTIONAL SHARES
As with all mutual funds, the Securities and Exchange Commission (SEC) has not
approved or disapproved these securities or passed upon the adequacy of this
prospectus. Any representation to the contrary is a criminal offense.
<TABLE>
<CAPTION>
CONTENTS
<S> <C>
Risk/Return Summary 1
What are the Funds' Fees and Expenses? 7
What are the Funds' Investment Strategies 11
What are the Principal Securities in Which the Funds Invest? 14
What are the Specific Risks of Investing in the Funds? 18
What do Shares Cost? 21
How are the Funds Sold? 21
How to Purchase Shares 22
How to Redeem Shares 23
Account and Share Information 24
Who Manages the Funds? 26
Financial Information 29
</TABLE>
- ----------------------
| |
| NOT FDIC INSURED |
| |
| MAY LOSE VALUE |
| |
| NO BANK GUARANTEE |
|--------------------|
JANUARY 31, 2000
Risk/Return Summary
WHAT IS EACH FUND'S INVESTMENT OBJECTIVE?
<TABLE>
<CAPTION>
Fund Objective
<S> <C>
Federated Managed To seek total return with an
Income Portfolio emphasis on income and potential for
("FMIP") capital appreciation
Federated Managed To seek total return with an
Conservative Growth emphasis on income and
Portfolio ("FMCGP") capital appreciation
Federated Managed To seek capital appreciation with
Moderate Growth income as a secondary objective
Portfolio ("FMMGP")
Federated Managed To seek capital appreciation
Growth Portfolio
("FMGP")
</TABLE>
While there is no assurance that a Fund will achieve its investment objective,
it endeavors to do so by following the investment strategies and policies
described in this prospectus.
WHAT ARE THE FUNDS' MAIN INVESTMENT STRATEGIES?
The Funds invest in diversified portfolios which are allocated among several
categories of equity and fixed income securities. The Adviser manages the Funds
based on the view that the investment performance of each Fund's portfolio over
the long term depends primarily on the fact that the portfolio consists of
securities from multiple categories. Of secondary importance to each Fund's
performance is allocation of the portfolio among asset categories in response to
market conditions and the selection of securities within asset categories.
Therefore, each Fund pursues its investment objective in the following manner:
. by setting ranges regarding the percentage of a Fund's portfolio assets which
will be invested in each asset category;
. by allocating each Fund's portfolio among asset categories within those
defined ranges; and
. by actively selecting securities within each of the asset categories.
The Funds will each allocate their portfolios within the following ranges
of equity and fixed income securities:
<TABLE>
<CAPTION>
Asset Category FMIP Range FMCGP Range FMMGP Range FMGP Range
<S> <C> <C> <C> <C>
Equity 5%-25% 30%-50% 50%-70% 70%-90%
Securities
Fixed Income 75%-95% 50%-70% 30%-50% 10%-30%
Securities
</TABLE>
The Funds will further allocate portfolios among the following asset categories,
in such proportions as the Adviser from time-to-time determines, consistent with
the long-term ranges set by it: a Fund's equity portfolio will be allocated
among large company stocks, small company stocks and foreign stocks; and a
Fund's fixed income portfolio will be allocated among U.S. government
securities, mortgage-backed securities, investment grade corporate debt,
non-investment grade corporate debt ("junk bonds") and foreign fixed income
securities. A Fund may lengthen or shorten the duration of its fixed income
portfolio from time to time based on its interest rate outlook, but the Funds
have no set duration parameters. Duration measures the price sensitivity of a
fixed income security to changes in interest rates.
WHAT ARE THE MAIN RISKS OF INVESTING IN THE FUNDS?
All mutual funds take investment risks. Therefore, it is possible to lose money
by investing in the Funds. The primary factors that may reduce the Funds'
returns include:
. Stock Market Risks. The value of equity securities in a Fund's portfolio will
fluctuate and, as a result, a Fund's share price may decline suddenly or over
a sustained period of time.
. Interest Rate Risks. Prices of fixed income securities generally fall when
interest rates rise. Interest rate changes have a greater effect on the price
of fixed income securities with longer durations.
. Credit Risks. There is a possibility that issuers of securities in which a
Fund may invest may default in the payment of interest or principal on the
securities when due, which could cause a Fund to lose money.
. Currency Risks. Because the exchange rates for currencies fluctuate daily,
prices of the foreign securities in which a Fund invests are more volatile
than prices of securities traded exclusively in the U.S.
. Prepayment Risks. When homeowners prepay their mortgages in response to lower
interest rates, the Funds will be required to reinvest the proceeds at the
lower interest rates available. Also, when interest rates fall, the price of
mortgage backed securities may not rise to as great an extent as that of
other fixed income securities.
. Call Risks. A Fund's performance may be adversely affected by the possibility
that an issuer of a security held by a Fund may redeem the security prior to
maturity at a price below its current market value.
. Sector Risks. Because the Funds may allocate relatively more assets to
certain industry sectors than to others, the Funds' performance may be more
susceptible to any developments which affect those sectors emphasized by the
Funds.
. Liquidity Risks. The non-investment grade securities and complex CMOs in
which the Funds invest may be less readily marketable and may be subject to
greater fluctuation in price than other securities.
. Risks Related to Company Size. Because the smaller companies in which the
Funds may invest may have unproven track records, a limited product or
service base and limited access to capital, they may be more likely to fail
than larger companies.
. Risks Associated with Noninvestment Grade Securities. A Fund may invest a
portion of its assets in securities rated below investment grade which may be
subject to greater interest rate, credit and liquidity risks than investment
grade securities.
. Risks of Foreign Investing. Because the Funds invest in securities issued by
foreign companies, a Fund's share price may be more affected by foreign
economic and political conditions, taxation policies and accounting and
auditing standards than would otherwise be the case.
Shares offered by this prospectus are not deposits or obligations of any bank,
are not endorsed or guaranteed by any bank and are not insured or guaranteed by
the U.S. government, the Federal Deposit Insurance Corporation, the Federal
Reserve Board or any other government agency.
Risk/Return Bar Chart and Table
Federated Managed Income Portfolio
The graphic presentation displayed here consists of a bar chart representing the
annual total returns of Institutional Shares as of the calendar year-end for
each of five years.
The `y' axis
reflects the
"% Total
Return"
beginning
with "0%" and
increasing in
increments of
4% up to 16%.
The `x' axis
represents
calculation
periods from the earliest first full calendar year-end of the Institutional
Shares start of business through the calendar year ended December 31, 1999. The
light gray shaded chart features five distinct vertical bars, each shaded in
charcoal, and each visually representing by height the total return percentages
for the calendar year stated directly at its base. The calculated total return
percentage for the Institutional Shares for each calendar year is stated
directly at the top of each respective bar, for the calendar years 1995
through1999. The percentages noted are: 15.69%, 5.56%, 10.49%, 9.95% and 0.32%.
The bar chart shows the variability of the Fund's Institutional Shares total
returns on a calendar year-end basis.
The Fund's Institutional Shares are sold without a sales charge (load). The
total returns displayed above are based upon net asset value.
Within the period shown in the Chart, the Fund's Institutional Shares highest
quarterly return was 5.24% (quarter ended March 31, 1998). Its lowest quarterly
return was (0.81%) (quarter ended September 30, 1999).
Average Annual Total Return Table
The following table represents the Fund's Institutional Shares Average Annual
Total Returns for the calendar periods ended December 31, 1999. The table shows
the Fund's Institutional Shares total returns averaged over a period of years
relative to the Standard & Poor's 500 Index (S&P 500), the Lehman Brothers
Government/Corporate Bond Index (LBGCBI), broad-based market indexes, and the
Lipper Balanced Funds Average (LBFA), an average of funds with similar
investment objectives. Total returns for the indexes and average shown do not
reflect sales charges, expenses or other fees that the SEC requires to be
reflected in the Fund's performance. Indexes are unmanaged, and it is not
possible to invest directly in an index.
<TABLE>
<CAPTION>
Calendar Institutional S&P 500 LBGCBI LBFA
Period Shares
<S> <C> <C> <C> <C>
1 Year 0.32% 21.05% 0.39% 8.73%
5 Years 8.28% 28.56% 7.10% 16.24%
Start of 7.53% 25.72% 6.46% 14.54%
Performance/1/
</TABLE>
1 The Fund's Institutional Shares start of performance date was May 25, 1994.
Past performance is no guarantee of future results. This information provides
you with historical performance information so that you can analyze whether the
Fund's investment risks are balanced by its potential returns.
Risk/Return Bar Chart and Table
Federated Managed Conservative Growth Portfolio
The graphic
presentation
displayed here
consists of a bar chart representing the annual total returns of Institutional
Shares as of the calendar year-end for each of five years.
The `y' axis reflects the "% Total Return" beginning with "0%" and increasing in
increments of 4% up to 20%.
The `x' axis
represents
calculation
periods from the earliest first full calendar year-end of the Institutional
Shares start of business through the calendar year ended December 31, 1999. The
light gray shaded chart features five distinct vertical bars, each shaded in
charcoal, and each visually representing by height the total return percentages
for the calendar year stated directly at its base. The calculated total return
percentage for the Institutional Shares for each calendar year is stated
directly at the top of each respective bar, for the calendar years 1995
through1999. The percentages noted are: 19.79%, 6.34%, 12.99%, 12.43% and 5.16%.
The bar chart shows the variability of the Fund's Institutional Shares total
returns on a calendar year-end basis.
The Fund's Institutional Shares are sold without a sales charge (load). The
total returns displayed above are based upon net asset value.
Within the period shown in the Chart, the Fund's Institutional shares highest
quarterly return was 7.16% (quarter ended December 31, 1998). Its lowest
quarterly return was (2.50%) (quarter ended September 30, 1999).
Average Annual Total Return Table
The following table represents the Fund's Institutional Shares Average Annual
Total Returns for the calendar periods ended December 31, 1999. The table shows
the Fund's Institutional Shares total returns averaged over a period of years
relative to the Standard & Poor's 500 Index (S&P 500), the Lehman Brothers
Government/Corporate Bond Index (LBGCBI), broad-based market indexes, and the
Lipper Balanced Funds Average (LBFA), an average of funds with similar
investment objectives. Total returns for the indexes and average shown do not
reflect sales charges, expenses or other fees that the SEC requires to be
reflected in the Fund's performance. Indexes are unmanaged, and it is not
possible to invest directly in an index.
<TABLE>
<CAPTION>
Calendar Institutional S&P 500 LBGCBI LBFA
Period Shares
<S> <C> <C> <C> <C>
1 Year 5.16% 21.05% 0.39% 8.73%
5 Years 11.22% 28.56% 7.10% 16.24%
Start of 10.07% 25.72% 6.46% 14.54%
Performance/1/
</TABLE>
1 The Fund's Institutional Shares start of performance date was May 25, 1994.
Past performance is no guarantee of future results. This information provides
you with historical performance information so that you can analyze whether the
Fund's investment risks are balanced by its potential returns.
Risk/Return Bar Chart and Table
Federated Managed Moderate Growth Portfolio
The graphic
presentation
displayed here
consists of a bar chart representing the annual total returns of Institutional
Shares as of the calendar year-end for each of five years.
The `y' axis reflects the "% Total Return" beginning with "0%" and increasing in
increments of 5% up to 25%.
The `x' axis
represents
calculation
periods from the earliest first full calendar year-end of the Institutional
Shares start of business through the calendar year ended December 31, 1999. The
light gray shaded chart features five distinct vertical bars, each shaded in
charcoal, and each visually representing by height the total return percentages
for the calendar year stated directly at its base. The calculated total return
percentage for the Institutional Shares for each calendar year is stated
directly at the top of each respective bar, for the calendar years 1995
through1999. The percentages noted are: 22.26%, 10.50%, 14.29%, 13.75% and
12.83%.
The bar chart shows the variability of the Fund's Institutional Shares total
returns on a calendar year-end basis.
The Fund's Institutional Shares are sold without a sales charge (load). The
total returns displayed above are based upon net asset value.
Within the period shown in the Chart, the Fund's Institutional Shares highest
quarterly return was 12.01% (quarter ended December 31, 1998). Its lowest
quarterly return was (7.13%) (quarter ended September 30, 1998).
Average Annual Total Return Table
The following table represents the Fund's Institutional Shares Average Annual
Total Returns for the calendar periods ended December 31, 1999. The table shows
the Fund's Institutional Shares total returns averaged over a period of years
relative to the Standard & Poor's 500 Index (S&P 500), the Lehman Brothers
Government/Corporate Bond Index (LBGCBI), broad-based market indexes, and the
Lipper Balanced Funds Average (LBFA), an average of funds with similar
investment objectives. Total returns for the indexes and average shown do not
reflect sales charges, expenses or other fees that the SEC requires to be
reflected in the Fund's performance. Indexes are unmanaged, and it is not
possible to invest directly in an index.
<TABLE>
<CAPTION>
Calendar Period Institutional S&P 500 LBGCBI LBFA
Shares
<S> <C> <C> <C> <C>
1 Year 12.83% 21.05% 0.39% 8.73%
5 Years 14.66% 28.56% 7.10% 16.24%
Start of 13.09% 25.72% 6.46% 14.54%
Performance/1/
</TABLE>
1 The Fund's Institutional Shares start of performance date was May 25, 1994.
Past performance is no guarantee of future results. This information provides
you with historical performance information so that you can analyze whether the
Fund's investment risks are balanced by its potential returns.
Risk/Return Bar Chart and Table
Federated Managed Growth Portfolio
The graphic
presentation
displayed here
consists of a bar chart representing the annual total returns of Institutional
Shares as of the calendar year-end for each of five years.
The `y' axis reflects the "% Total Return" beginning with "0%" and increasing in
increments of 5% up to 25%.
The `x' axis
represents
calculation
periods from the earliest first full calendar year-end of the Institutional
Shares start of business through the calendar year ended December 31, 1999. The
light gray shaded chart features five distinct vertical bars, each shaded in
charcoal, and each visually representing by height the total return percentages
for the calendar year stated directly at its base. The calculated total return
percentage for the Institutional Shares for each calendar year is stated
directly at the top of each respective bar, for the calendar years 1995
through1999. The percentages noted are: 22.25%, 12.35%, 14.90%, 15.77% and
17.32%.
The bar chart shows the variability of the Fund's Institutional Shares total
returns on a calendar year-end basis.
The Fund's Institutional Shares are sold without a sales charge (load). The
total returns displayed above are based upon net asset value.
Within the period shown in the Chart, the Fund's Institutional Shares highest
quarterly return was 15.71% (quarter ended December 31, 1998). Its lowest
quarterly return was (10.37%) (quarter ended September 30, 1998).
Average Annual Total Return Table
The following table represents the Fund's Institutional Shares Average Annual
Total Returns for the calendar periods ended December 31, 1999. The table shows
the Fund's Institutional Shares total returns averaged over a period of years
relative to the Standard & Poor's 500 Index (S&P 500), the Lehman Brothers
Government/Corporate Bond Index (LBGCBI), broad-based market indexes, and the
Lipper Balanced Funds Average (LBFA), an average of funds with similar
investment objectives. Total returns for the indexes and average shown do not
reflect sales charges, expenses or other fees that the SEC requires to be
reflected in the Fund's performance. Indexes are unmanaged, and it is not
possible to invest directly in an index.
<TABLE>
<CAPTION>
Calendar Institutional S&P 500 LBGCBI LBFA
Period Shares
<S> <C> <C> <C> <C>
1 Year 17.32% 21.05% 0.39% 8.73%
5 Years 16.47% 28.56% 7.10% 16.24%
Start of 14.67% 25.72% 6.46% 14.54%
Performance/1/
</TABLE>
1 The Fund's Institutional Shares start of performance date was May 25, 1994.
Past performance is no guarantee of future results This information provides you
with historical performance information so that you can analyze whether the
Fund's investment risks are balanced by its potential returns.
What are the Fund's Fees and Expenses?
FEDERATED MANAGED INCOME PORTFOLIO
FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
Institutional Shares of the Fund.
<TABLE>
<S>
<C>
Shareholder Fees
Fees Paid Directly From Your Investment
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering
price) None
Maximum Deferred Sales Charge (Load) (as a percentage of original purchase price or redemption proceeds, as
applicable) None
Maximum Sales Charge (Load) Imposed on Reinvested Dividends (and other Distributions) (as a percentage of
offering price). None
Redemption Fee (as a percentage of amount redeemed, if
applicable) None
Exchange
Fee
None
Annual Fund Operating Expenses (Before Waivers)/1/
Expenses That are Deducted From Fund Assets (as a percentage of average net assets)
Management
Fee/2/
0.75%
Distribution (12b-1)
Fee None
Shareholder Services
Fee/3/ 0.25%
Other
Expenses
0.34%
Total Annual Fund Operating
Expenses 1.34%
</TABLE>
1 Although not contractually obligated to do so, the adviser and shareholder
services provider waived certain amounts. These are shown below along with
the net expenses the Fund actually paid for the fiscal year ended November
30, 1999.
<TABLE>
<S>
<C>
Total Waiver of Fund
Expenses 0.54%
Total Annual Operating Expenses (after
waivers) 0.80%
</TABLE>
2 The adviser voluntarily waived a portion of the management fee. The adviser
can terminate this voluntary waiver at any time. The management fee paid by
the Fund's Institutional Shares (after the voluntary waiver) was 0.41% for
the fiscal year ended November 30, 1999.
3 The shareholder services provider voluntarily waived a portion of the
shareholder services fee. The shareholder services provider can terminate
this voluntary waiver at any time. The shareholder services fee paid by the
Fund's Institutional Shares (after the voluntary waiver) was 0.05% for the
fiscal year ended November 30, 1999.
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund's
Institutional Shares with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in the Fund's Institutional Shares
for the time periods indicated and then redeem all of your Institutional Shares
at the end of those periods. The Example also assumes that your investment has a
5% return each year and that the Fund's Institutional Shares operating expenses
are before waivers as shown in the table and remain the same. Although your
actual costs may be higher or lower, based on these assumptions your costs would
be:
<TABLE>
<S> <C>
1 Year $ 136
3 Years $ 425
5 Years $ 734
10 Years $ 1,613
</TABLE>
What are the Fund's Fees and Expenses?
FEDERATED MANAGED CONSERVATIVE GROWTH PORTFOLIO
FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
Institutional Shares of the Fund.
<TABLE>
<S> <C>
Shareholder Fees
Fees Paid Directly From Your Investment
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering
price) None Maximum Deferred Sales Charge (Load) (as a percentage of original
purchase price or redemption None
proceeds, as applicable)
Maximum Sales Charge (Load) Imposed on Reinvested Dividends (and other
Distributions) (as a None percentage of offering price).
Redemption Fee (as a percentage of amount redeemed, if applicable) None
Exchange Fee None
Annual Fund Operating Expenses (Before Waivers)/1/
Expenses That are Deducted From Fund Assets (as a percentage of average net assets)
Management Fee
0.75%
Distribution (12b-1) Fee None
Shareholder Services Fee/2/
0.25%
Other Expenses
0.24%
Total Annual Fund Operating Expenses
1.24%
</TABLE>
1 Although not contractually obligated to do so, the shareholder services
provider waived certain amounts. These are shown below along with the net
expenses the Fund actually paid for the fiscal year ended November 30, 1999.
<TABLE>
<S> <C>
Total Waiver of Fund Expenses
0.20%
Total Annual Operating Expenses (after waivers)
1.04%
</TABLE>
2 The shareholder services provider voluntarily waived a portion of the
shareholder services fee. The shareholder services provider can terminate
this voluntary waiver at any time. The shareholder services fee paid by the
Fund's Institutional Shares (after the voluntary waiver) was 0.05% for the
fiscal year ended November 30, 1999.
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund's
Institutional Shares with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in the Fund's Institutional Shares
for the time periods indicated and then redeem all of your Institutional Shares
at the end of those periods. The Example also assumes that your investment has a
5% return each year and that the Fund's Institutional Shares operating expenses
are before waivers as shown in the table and remain the same. Although your
actual costs may be higher or lower, based on these assumptions your costs would
be:
<TABLE>
<S> <C>
1 Year $ 126
3 Years $ 393
5 Years $ 681
10 Years $ 1,500
</TABLE>
What are the Fund's Fees and Expenses?
FEDERATED MANAGED MODERATE GROWTH PORTFOLIO
FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
Institutional Shares of the Fund.
<TABLE>
<S> <C>
Shareholder Fees
Fees Paid Directly From Your Investment
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price)
None
Maximum Deferred Sales Charge (Load) (as a percentage of original purchase price or redemption
None
proceeds, as applicable)
Maximum Sales Charge (Load) Imposed on Reinvested Dividends (and other Distributions) (as a percentage
None
of offering price)
Redemption Fee (as a percentage of amount redeemed, if applicable)
None
Exchange Fee
None
Annual Fund Operating Expenses (Before Waivers)/1/
Expenses That are Deducted From Fund Assets (as a percentage of average net assets)
Management Fee
0.75%
Distribution (12b-1) Fee
None
Shareholder Services Fee/2/
0.25%
Other Expenses
0.26%
Total Annual Fund Operating Expenses
1.26%
</TABLE>
1 Although not contractually obligated to do so, the shareholder services
provider waived certain amounts. These are shown below along with the net
expenses the Fund actually paid for the fiscal year ended November 30, 1999.
<TABLE>
<S> <C>
Total Waiver of Fund Expenses
0.20%
Total Annual Operating Expenses (after waivers)
1.06%
</TABLE>
2 The shareholder services provider voluntarily waived a portion of the
shareholder services fee. The shareholder services provider can terminate
this voluntary waiver at any time. The shareholder services fee paid by the
Fund's Institutional Shares (after the voluntary waiver) was 0.05% for the
fiscal year ended November 30, 1999.
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund's
Institutional Shares with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in the Fund's Institutional Shares
for the time periods indicated and then redeem all of your Institutional Shares
at the end of those periods. The Example also assumes that your investment has a
5% return each year and that the Fund's Institutional Shares operating expenses
are before waivers as shown in the table and remain the same. Although your
actual costs may be higher or lower, based on these assumptions your costs would
be:
<TABLE>
<S> <C>
1 Year $ 128
3 Years $ 400
5 Years $ 692
10 Years $ 1,523
</TABLE>
What are the Fund's Fees and Expenses?
FEDERATED MANAGED GROWTH PORTFOLIO
FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
Institutional Shares of the Fund.
<TABLE>
<S> <C>
Shareholder Fees
Fees Paid Directly From Your Investment
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price) None
Maximum Deferred Sales Charge (Load) (as a percentage of original purchase price or redemption None
proceeds, as applicable)
Maximum Sales Charge (Load) Imposed on Reinvested Dividends (and other Distributions) (as a None
percentage of offering price)
Redemption Fee (as a percentage of amount redeemed, if applicable) None
Exchange Fee None
Annual Fund Operating Expenses (Before Waivers)/1/
Expenses That are Deducted From Fund Assets (as a percentage of average net assets)
Management Fee/2/ 0.75%
Distribution (12b-1) Fee None
Shareholder Services Fee/3/ 0.25%
Other Expenses 0.37%
Total Annual Fund Operating Expenses 1.37%
</TABLE>
1 Although not contractually obligated to do so, the adviser and shareholder
services provider waived certain amounts. These are shown below along with
the net expenses the Fund actually paid for the fiscal year ended November
30, 1999.
<TABLE>
<S> <C>
Total Waiver of Fund Expenses
0.22%
Total Annual Operating Expenses (after waivers)
1.15%
</TABLE>
2 The adviser voluntarily waived a portion of the management fee. The adviser
can terminate the voluntary waiver at any time. The management fee paid by
the Fund's Institutional Shares (after the voluntary waiver) was 0.73% for
the fiscal year ended November 30, 1999.
3 The shareholder services provider voluntarily waived a portion of the
shareholder services fee. The shareholder services provider can terminate
this voluntary waiver at any time. The shareholder services fee paid by the
Fund's Institutional Shares (after the voluntary waiver) was 0.05% for the
fiscal year ended November 30, 1999.
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund's
Institutional Shares with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in the Fund's Institutional Shares
for the time periods indicated and then redeem all of your Institutional Shares
at the end of those periods. The Example also assumes that your investment has a
5% return each year and that the Fund's Institutional Shares operating expenses
are before waivers as shown in the table and remain the same. Although your
actual costs may be higher or lower, based on these assumptions your costs would
be:
<TABLE>
<S> <C>
1 Year $ 139
3 Years $ 434
5 Years $ 750
10 Years $ 1,646
</TABLE>
What are the Funds' Investment Strategies?
Each Fund will primarily invest in two types of assets: equities and fixed
income, as follows:
. FMIP will invest 5%-25% of its assets in equity securities, and 75%-95% of
its assets in fixed income securities;
. FMCGP will invest 30%-50% of its assets in equity securities, and 50%-70% of
its assets in fixed income securities;
. FMMGP will invest 50%-70% of its assets in equity securities, and 30%-50% of
its assets in fixed income securities; and
. FMGP will invest 70%-90% of its assets in equity securities, and 10%-30% of
its assets in fixed income securities.
The Adviser manages the Funds based on the view that the investment of each
Fund's portfolio over the long term depends primarily on the fact that the
portfolio consists of securities from multiple asset categories ("Asset
Categories") which include, with respect to a Fund's equity portfolio, the
following: large company stocks, small company stocks and foreign stocks; and
with respect to a Fund's fixed income portfolio, the following: U.S. government
securities, mortgage-backed securities, investment- grade corporate debt,
non-investment grade corporate debt ("junk bonds") and foreign fixed income
securities.
Of secondary importance to each Fund is the allocation of the portfolio's
assets among the Asset Categories in response to market conditions, and the
selection of securities within Asset Categories.
Therefore, each Fund pursues its investment objective in the following manner:
. by setting ranges regarding the percentage of a Fund's portfolio assets which
will be invested in each Asset Category;
. by allocating each Fund's portfolio assets among Asset Categories within
those defined ranges; and
. by actively selecting securities within each of the Asset Categories.
The Adviser will regularly review each Fund's allocation among Asset
Categories. The Adviser will attempt to exploit price inefficiencies among the
various Asset Categories. For example, the Adviser may move an Asset Category to
its upper limit if the Adviser expects that category to offer superior returns
relative to other Asset Categories. Likewise, the Adviser may move the Asset
Category to its lower limit if the Adviser believes that category is overvalued
relative to the other Asset Categories.
The selection of portfolio securities involves an approach specific to each
Asset Category. The approach for each category is summarized as follows:
LARGE COMPANY STOCKS
With regard to the portion of each Fund's portfolio allocated to large company
stocks, each Fund pursues its investment objective by investing in common stock
of companies with large market capitalizations. Large market capitalization
companies are those which are the 1,000 companies with the largest market
capitalization. Market capitalization is determined by multiplying the number of
outstanding shares by the current market price per share. The Adviser invests in
companies that offer growth prospects or in companies whose stock is
undervalued. Using its own quantitative process, the Adviser rates the future
performance potential of companies. The Adviser identifies under-valued
companies based on valuation models which identify companies trading at low
valuation relative to their history, to the market, or to their expected future
growth. The Adviser also invests in companies which may not be undervalued, but
which offer growth prospects based upon an evaluation of the sustainability of
current growth trends. In addition to these factors, the Adviser looks at recent
stock price performance and the direction of current fiscal year earnings
estimates.
SMALL COMPANY STOCKS
With regard to the portion of each Fund's portfolio allocated to small company
stocks, each Fund pursues its investment objective by investing at least 65% of
the allocation in equity securities of companies that fall within the market
capitalization range of the S&P 600 Small Cap Index (Index). Market
capitalization is determined by multiplying the number of outstanding shares by
the current market price per share. The Adviser invests in companies that offer
growth prospects or in companies whose stock is undervalued. Using its own
quantitative process, the Adviser rates the future performance potential of
companies. The Adviser evaluates each company's earnings quality in light of its
current valuation to narrow the list of attractive companies. The Adviser then
evaluates product positioning, management quality and sustainability of current
growth trends of those companies. Using this type of fundamental analysis, the
Adviser selects the most promising companies for a Fund's portfolio.
Companies with similar characteristics may be grouped together in broad
categories called sectors. In determining the amount to invest in a security,
the Adviser attempts to limit a Fund's exposure to each business sector that
comprises the Index. A Fund's allocation to a sector will not be less than 50%
or more than 200% of the Index's allocation to that sector.
The Funds may buy securities in initial public offerings. The Funds will
participate in such offerings without regard to the issuer's market
capitalization. The Adviser may select initial public offerings based on its
fundamental analysis of the issuer.
FOREIGN STOCKS
With regard to the portion of each Fund's portfolio allocated to foreign stocks,
each Fund pursues its investment objective by investing the allocation in equity
securities of companies based outside the United States. The Adviser manages the
Funds based on the view that international equity markets are inefficient at
pricing securities and that careful security selection offers the best potential
for superior long-term investment returns. Selection of industry and country are
secondary considerations.
Using its own quantitative process, the Adviser ranks the future performance
potential of companies. The Adviser evaluates each company's earnings potential
in light of its current valuation to narrow the list of attractive companies.
The Adviser then evaluates management quality and may meet with company
representatives, company suppliers, customers, or competitors. The Adviser also
reviews the company's financial statements and forecasts of earnings. Based on
this information, the Adviser evaluates the sustainability of the company's
current growth trends and potential catalysts for increased growth. Using this
type of fundamental analysis, the Adviser selects the most promising companies
for the Funds' portfolios.
U.S. GOVERNMENT SECURITIES
U.S. government securities consist of treasury securities and non-mortgage
backed agency securities. The Adviser invests the U.S. government securities
portion of the Funds' portfolios by setting an average duration target for the
fixed income portion of each Fund, based upon the Adviser's interest rate
outlook from time to time. In constructing a portfolio with a targeted average
duration, the Adviser generally uses ongoing relative value analysis to compare
current yield differences of securities to their historical and expected yield
differences. The Funds have no set duration parameters regarding the U.S.
government securities which it purchases.
MORTGAGE BACKED SECURITIES
Mortgage backed securities generally offer higher yields than comparable
non-mortgage backed government securities. The extra yield compensates for
prepayment risk. The Adviser attempts to manage prepayment risk by selecting
mortgage backed securities with characteristics that make prepayment risk less
likely. Characteristics that the Adviser may consider in selecting mortgage
backed securities include the interest rate formulas of the underlying
mortgages, the index upon which the mortgage rate is based, the length of time
the mortgages have been outstanding, and the prior prepayment history of the
mortgages.
The Funds may invest in mortgage-backed securities primarily by investing in
another mutual fund (which is not available for general investment by the
public) that owns those securities and that is advised by an affiliate of the
Adviser. This other mutual fund is managed independently of the Funds and may
incur administrative expenses. Therefore, any such investment by the Funds may
be subject to duplicate expenses. However, the Adviser believes that the
benefits and efficiencies of this approach should outweigh the potential
additional expenses. The Funds may also invest in such securities directly.
INVESTMENT GRADE CORPORATE DEBT
With regard to the allocation in domestic corporate fixed income securities, the
Adviser allocates investments among industries and adjusts the credit quality of
the portfolio by analyzing current economic and securities market conditions,
particularly changes in interest rates and expected trends in corporate
earnings. These factors also guide the selection of maturity and duration of
portfolio securities, but the Funds have no set maturity or duration parameters
regarding the securities which it purchases. Duration measures the price
sensitivity of a fixed income security to changes in interest rates. In
selecting a portfolio security, the Adviser analyzes the business, competitive
position, and financial condition of the issuer to assess whether the security's
risk is commensurate with its potential return.
NON-INVESTMENT GRADE CORPORATE DEBT
The Funds will invest in noninvestment grade securities primarily by investing
in another mutual fund (which is not available for general investment by the
public) advised by an affiliate of the Adviser. The other mutual fund is managed
independently of the Funds and may incur administrative expenses. Therefore, any
such investment by the Funds may be subject to duplicate expenses. However, the
Adviser believes that the benefits and efficiencies of this approach should
outweigh the potential additional expenses. The Funds may also invest directly
in noninvestment grade securities. Although the selection of noninvestment grade
domestic corporate securities involves the same factors as investment grade
securities, the Adviser gives greater emphasis to its analysis of the issuer.
The Funds have no set maturity or duration parameters regarding the securities
which it purchases.
FOREIGN FIXED INCOME SECURITIES
With regard to the allocation to foreign fixed income securities, each Fund
pursues its objective by investing primarily in fixed income securities of
foreign governments and their agencies which are members of the Organization for
Economic Cooperation and Development.
The Adviser manages the foreign fixed income allocation to maintain an average
AA rating of its portfolio securities. The Adviser uses the J.P. Morgan Global
Traded Index Excluding U.S. Index (Global Index) as a starting point for
selecting the foreign fixed income portfolio securities. The Adviser looks for
opportunities to enhance each Fund's performance by diverging from the Global
Index. Such opportunities may cause the Adviser to weight the portfolio
differently than the Global Index or to buy securities not represented in the
Index. Under ordinary market conditions, however, the duration of the portfolio
securities does not deviate more than 25% from the duration of the Global Index.
No more than 25% of the foreign fixed income allocation will be invested in any
one country. The Funds also intend to invest at least 50% of the foreign fixed
income allocation in securities that have received ratings in the two highest
rating categories or unrated securities that the Adviser considers of comparable
quality.
The Adviser weighs several factors in selecting investments for the foreign
fixed income portfolio. First, the Adviser analyzes a country's general economic
condition and outlook, including its interest rates, foreign exchange rates and
trade balance. The Adviser then analyzes the country's financial condition,
including its credit ratings, government budget, tax base, outstanding public
debt and the amount of public debt held outside the country. In connection with
this analysis, the Adviser also considers how developments in other countries in
the region or the world might affect these factors.
Using its analysis, the Adviser tries to identify countries with favorable
characteristics, such as a strengthening economy, favorable inflation rate,
sound budget policy or strong public commitment to repay government debt. The
Adviser then evaluates available foreign fixed income investments in these
countries based upon its outlook for interest and foreign exchange rates. The
Adviser tries to select securities that offer the best potential returns
consistent with its general portfolio strategy.
HEDGING
Hedging transactions are intended to reduce specific risks. For example, to
protect the Funds against circumstances that would normally cause the Funds'
portfolio securities to decline in value, the Funds may buy or sell a derivative
contract that would normally increase in value under the same circumstances. The
Funds may also attempt to hedge by using combinations of different derivatives
contracts, or derivatives contracts and securities. The Funds' ability to hedge
may be limited by the costs of the derivatives contracts. The Funds may attempt
to lower the cost of hedging by entering into transactions that provide only
limited protection, including transactions that (1) hedge only a portion of its
portfolio, (2) use derivatives contracts that cover a narrow range of
circumstances or (3) involve the sale of derivatives contracts with different
terms. Consequently, hedging transactions will not eliminate risk even if they
work as intended. In addition, hedging strategies are not always successful, and
could result in increased expenses and losses to the Funds.
PORTFOLIO TURNOVER
Each Fund actively trades its portfolio securities in an attempt to achieve its
investment objective. Active trading will cause a Fund to have an increased
portfolio turnover rate, which is likely to generate shorter-term gains (losses)
for its shareholders, which are taxed at a higher rate than longer-term gains
(losses). Actively trading portfolio securities increases a Fund's trading costs
and may have an adverse impact on a Fund's performance.
What are the Principal Securities in Which the Funds Invest?
EQUITY SECURITIES
Equity securities represent a share of an issuer's earnings and assets, after
the issuer pays its liabilities. The Funds cannot predict the income they will
receive from equity securities because issuers generally have discretion as to
the payment of any dividends or distributions. However, equity securities offer
greater potential for appreciation than many other types of securities, because
their value increases directly with the value of the issuer's business. The
following describes the type of equity security in which the Funds principally
invest.
Common Stocks
Common stocks are the most prevalent type of equity security. Common stocks
receive the issuer's earnings after the issuer pays its creditors and any
preferred stockholders. As a result, changes in an issuer's earnings directly
influence the value of its common stock.
FIXED INCOME SECURITIES
Fixed income securities pay interest, dividends or distributions at a specified
rate. The rate may be a fixed percentage of the principal or adjusted
periodically. In addition, the issuer of a fixed income security must repay the
principal amount of the security, normally within a specified time.
The following describes the types of fixed income securities in which the
Funds principally invest.
Treasury Securities
Treasury securities are direct obligations of the federal government of the
United States. Treasury securities are generally regarded as having the lowest
credit risks.
Agency Securities
Agency securities are issued or guaranteed by a federal agency or other
government sponsored entity acting under federal authority (a GSE). The United
States supports some GSEs with its full faith and credit. Other GSEs receive
support through federal subsidies, loans or other benefits. A few GSEs have no
explicit financial support, but are regarded as having implied support because
the federal government sponsors their activities. Agency securities are
generally regarded as having low credit risks, but not as low as treasury
securities.
The Funds treat mortgage backed securities guaranteed by GSEs as agency
securities. Although a GSE guarantee protects against credit risks, it does not
reduce the interest rate and prepayment risks of these mortgage backed
securities.
Corporate Debt Securities
Corporate debt securities are fixed income securities issued by businesses.
Notes, bonds, debentures and commercial paper are the most prevalent types of
corporate debt securities. The Funds may also purchase interests in bank loans
to companies. The credit risks of corporate debt securities vary widely among
issuers. In addition, the credit risk of an issuer's debt security may vary
based on its priority for repayment.
MORTGAGE BACKED SECURITIES
Mortgage backed securities represent interests in pools of mortgages. The
mortgages that comprise a pool normally have similar interest rates, maturities
and other terms. Mortgages may have fixed or adjustable interest rates.
Interests in pools of adjustable rate mortgages are known as ARMs.
Mortgage backed securities come in a variety of forms. Many have extremely
complicated terms. The simplest form of mortgage backed securities are
pass-through certificates. An issuer of pass-through certificates gathers
monthly payments from an underlying pool of mortgages. Then, the issuer deducts
its fees and expenses and passes the balance of the payments onto the
certificate holders once a month. Holders of pass-through certificates receive a
pro rata share of all payments and pre-payments from the underlying mortgages.
As a result, the holders assume all the prepayment risks of the underlying
mortgages.
Collateralized Mortgage Obligations (CMOs)
CMOs, including interests in real estate mortgage investment conduits (REMICs),
allocate payments and prepayments from an underlying pass-through certificate
among holders of different classes of mortgage backed securities. This creates
different prepayment and interest rate risks for each CMO class. The degree of
increased or decreased prepayment risks depends upon the structure of the CMOs.
However, the actual returns on any type of mortgage backed security depend upon
the performance of the underlying pool of mortgages, which no one can predict
and will vary among pools.
SEQUENTIAL CMOS
In a sequential pay CMO, one class of CMOs receives all principal payments and
prepayments. The next class of CMOs receives all principal payments after the
first class is paid off. This process repeats for each sequential class of CMO.
As a result, each class of sequential pay CMOs reduces the prepayment risks of
subsequent classes.
PACS, TACS AND COMPANION CLASSES
More sophisticated CMOs include planned amortization classes (PACs) and targeted
amortization classes (TACs). PACs and TACs are issued with companion classes.
PACs and TACs receive principal payments and prepayments at a specified rate.
The companion classes receive principal payments and prepayments in excess of
the specified rate. In addition, PACs will receive the companion classes' share
of principal payments, if necessary, to cover a shortfall in the prepayment
rate. This helps PACs and TACs to control prepayment risks by increasing the
risks to their companion classes.
IOS AND POS
CMOs may allocate interest payments to one class (Interest Only or IOs) and
principal payments to another class (Principal Only or POs). POs increase in
value when prepayment rates increase. POs tend to increase in value when
interest rates decline (and prepayments increase) making POs a useful hedge
against interest rate risk. In contrast, IOs decrease in value when prepayments
increase, because the underlying mortgages generate less interest payments.
However, IOs tend to increase in value when interest rates rise (and prepayments
decrease), making IOs a useful hedge against interest rate risks.
FLOATERS AND INVERSE FLOATERS
Another variant allocates interest payments between two classes of CMOs. One
class (Floaters) receives a share of interest payments based upon a market index
such as LIBOR. The other class (Inverse Floaters) receives any remaining
interest payments from the underlying mortgages. Floater classes receive more
interest (and Inverse Floater classes receive correspondingly less interest) as
interest rates rise. This shifts prepayment and interest rate risks from the
Floater to the Inverse Floater class, reducing the price volatility of the
Floater class and increasing the price volatility of the Inverse Floater class.
Z CLASSES
CMOs must allocate all payments received from the underlying mortgages to some
class. To capture any unallocated payments, CMOs generally have an accrual (Z)
class. Z classes do not receive any payments from the underlying mortgages until
all other CMO classes have been paid off. Once this happens, holders of Z class
CMOs receive all payments and prepayments.
SPECIAL TRANSACTIONS
Delayed Delivery Transactions
Delayed delivery transactions, including when issued transactions, are
arrangements in which the Fund buys securities for a set price, with payment and
delivery of the securities scheduled for a future time. During the period
between purchase and settlement, no payment is made by the Fund to the issuer
and no interest accrues to the Fund. The Fund records the transaction when it
agrees to buy the securities and reflects their value in determining the price
of its shares. Settlement dates may be a month or more after entering into these
transactions so that the market values of the securities bought may vary from
the purchase prices. Therefore, delayed delivery transactions create interest
rate risks for the Fund. Delayed delivery transactions also involve credit risks
in the event of a counterparty default. These transactions create leverage
risks.
TO BE ANNOUNCED SECURITIES (TBAS)
As with other delayed delivery transactions, a seller agrees to issue a TBA
security at a future date. However, the seller does not specify the particular
securities to be delivered. Instead, the Fund agrees to accept any security that
meets specified terms. For example, in a TBA mortgage backed transaction, the
Fund and the seller would agree upon the issuer, interest rate and terms of the
underlying mortgages. The seller would not identify the specific underlying
mortgages until it issues the security. TBA mortgage backed securities increase
interest rate risks because the underlying mortgages may be less favorable than
anticipated by the Fund.
DOLLAR ROLLS
Dollar rolls are transactions where the Funds sell mortgage-backed securities
with a commitment to buy similar, but not identical, mortgage-backed securities
on a future date at a lower price. Normally, one or both securities involved are
TBA mortgage backed securities. Dollar rolls are subject to interest rate risks
and credit risks.
FOREIGN SECURITIES
Foreign securities are securities of issuers based outside the United States.
The Funds consider an issuer to be based outside the United States if:
. it is organized under the laws of, or has a principal office located in,
another country;
. the principal trading market for its securities is in another country; or
. it (or its subsidiaries) derived in its most current fiscal year at least 50%
of its total assets, capitalization, gross revenue or profit from goods
produced, services performed, or sales made in another country.
Foreign securities are primarily denominated in foreign currencies. Along with
the risks normally associated with domestic securities of the same type, foreign
securities are subject to currency risks and risks of foreign investing. Trading
in certain foreign markets is also subject to liquidity risks.
DERIVATIVE CONTRACTS
Derivative contracts are financial instruments that require payments based upon
changes in the values of designated (or underlying) securities, currencies,
commodities, financial indices or other assets. Some derivative contracts (such
as futures, forwards and options) require payments relating to a future trade
involving the underlying asset. Other derivative contracts (such as swaps)
require payments relating to the income or returns from the underlying asset.
The other party to a derivative contract is referred to as a counterparty.
Many derivative contracts are traded on securities or commodities exchanges.
In this case, the exchange sets all the terms of the contract except for the
price. Investors make payments due under their contracts through the exchange.
Most exchanges require investors to maintain margin accounts through their
brokers to cover their potential obligations to the exchange. Parties to the
contract make (or collect) daily payments to the margin accounts to reflect
losses (or gains) in the value of their contracts. This protects investors
against potential defaults by the counterparty. Trading contracts on an exchange
also allows investors to close out their contracts by entering into offsetting
contracts.
For example, the Funds could close out an open contract to buy an asset at a
future date by entering into an offsetting contract to sell the same asset on
the same date. If the offsetting sale price is more than the original purchase
price, the Funds realize a gain; if it is less, the Funds realize a loss.
Exchanges may limit the amount of open contracts permitted at any one time. Such
limits may prevent the Funds from closing out a position. If this happens, the
Funds will be required to keep the contract open (even if it is losing money on
the contract), and to make any payments required under the contract (even if it
has to sell portfolio securities at unfavorable prices to do so). Inability to
close out a contract could also harm the Funds by preventing it from disposing
of or trading any assets it has been using to secure its obligations under the
contract.
The Funds may also trade derivative contracts over-the-counter (OTC) in
transactions negotiated directly between the Funds and the counterparty. OTC
contracts do not necessarily have standard terms, so they cannot be directly
offset with other OTC contracts. In addition, OTC contracts with more
specialized terms may be more difficult to price than exchange traded contracts.
Depending upon how the Funds use derivative contracts and the relationships
between the market value of a derivative contract and the underlying asset,
derivative contracts may increase or decrease the Funds' exposure to interest
rate and currency risks, and may also expose the Funds to liquidity and leverage
risks. OTC contracts also expose the Funds to credit risks in the event that a
counterparty defaults on the contract.
The Funds may trade in the following types of derivative contracts.
Futures Contracts
Futures contracts provide for the future sale by one party and purchase by
another party of a specified amount of an underlying asset at a specified price,
date, and time. Entering into a contract to buy an underlying asset is commonly
referred to as buying a contract or holding a long position in the asset.
Entering into a contract to sell an underlying asset is commonly referred to as
selling a contract or holding a short position in the asset. Futures contracts
are considered to be commodity contracts. Futures contracts traded OTC are
frequently referred to as forward contracts.
The Funds may buy or sell forward foreign currency exchange contracts,
interest rate futures contracts and stock index futures to accommodate cash
flows and to hedge against the effects of changes in the value of portfolio
securities due to anticipated changes in interest rates and market conditions.
INVESTMENT RATINGS FOR INVESTMENT GRADE SECURITIES
The Adviser will determine whether a security is investment grade based upon the
credit ratings given by one or more nationally recognized rating services. For
example, Standard and Poor's, a rating service, assigns ratings to investment
grade securities (AAA, AA, A, and BBB) based on their assessment of the
likelihood of the issuer's inability to pay interest or principal (default) when
due on each security. Lower credit ratings correspond to higher credit risk. If
a security has not received a rating, the Funds must rely entirely upon the
Adviser's credit assessment that the security is comparable to investment grade.
What are the Specific Risks of Investing in the Funds?
STOCK MARKET RISKS
The value of equity securities in each Fund's portfolio will rise and fall.
These fluctuations could be a sustained trend or a drastic movement. A Fund's
portfolio will reflect changes in prices of individual portfolio stocks or
general changes in stock valuations. Consequently, a Fund's share price may
decline.
The Adviser attempts to manage market risk by limiting the amount each Fund
invests in each company's equity securities. However, diversification will not
protect a Fund against widespread or prolonged declines in the stock market.
INTEREST RATE RISKS
Prices of fixed income securities rise and fall in response to changes in the
interest rate paid by similar securities. Generally, when interest rates rise,
prices of fixed income securities fall. However, market factors, such as the
demand for particular fixed income securities, may cause the price of certain
fixed income securities to fall while the prices of other securities rise or
remain unchanged.
Interest rate changes have a greater effect on the price of fixed income
securities with longer durations. Duration measures the price sensitivity of a
fixed income security to changes in interest rates.
CREDIT RISKS
Credit risk is the possibility that an issuer will default on a security by
failing to pay interest or principal when due. If an issuer defaults, the Funds
will lose money.
Many fixed income securities receive credit ratings from services such as
Standard & Poor's and Moody's Investors Service, Inc. These services assign
ratings to securities by assessing the likelihood of issuer default. Lower
credit ratings correspond to higher credit risk. If a security has not received
a rating, the Funds must rely entirely upon the Adviser's credit assessment.
Fixed income securities generally compensate for greater credit risk by paying
interest at a higher rate. The difference between the yield of a security and
the yield of a U.S. Treasury security with a comparable maturity (the spread)
measures the additional interest paid for risk. Spreads may increase generally
in response to adverse economic or market conditions. A security's spread may
also increase if the security's rating is lowered, or the security is perceived
to have an increased credit risk. An increase in the spread will cause the price
of the security to decline.
Credit risk includes the possibility that a party to a transaction involving
the Funds will fail to meet its obligations. This could cause the Funds to lose
the benefit of the transaction or prevent the Funds from selling or buying other
securities to implement their investment strategies.
CURRENCY RISKS
Exchange rates for currencies fluctuate daily. The combination of currency risk
and market risks tends to make securities traded in foreign markets more
volatile than securities traded exclusively in the United States.
The Adviser attempts to manage currency risk by limiting the amount the Funds
invest in securities denominated in a particular currency. However,
diversification will not protect the Funds against a general increase in the
value of the U.S. dollar relative to other currencies.
CALL AND PREPAYMENT RISKS
Call risk is the possibility that an issuer may redeem a fixed income security
before maturity (a call) at a price below its current market price. An increase
in the likelihood of a call may reduce the security's price.
If a fixed income security is called, the Funds may have to reinvest the
proceeds in other fixed income securities with lower interest rates, higher
credit risks, or other less favorable characteristics.
Unlike traditional fixed income securities, which pay a fixed rate of interest
until maturity (when the entire principal amount is due) payments on mortgage
backed securities include both interest and a partial payment of principal.
Partial payment of principal may be comprised of scheduled principal payments as
well as unscheduled payments from the voluntary prepayment, refinancing, or
foreclosure of the underlying loans. These unscheduled prepayments of principal
create risks that can adversely affect a Fund holding mortgage backed
securities.
For example, when interest rates decline, the values of mortgage backed
securities generally rise. However, when interest rates decline, unscheduled
prepayments can be expected to accelerate, and the Funds would be required to
reinvest the proceeds of the prepayments at the lower interest rates then
available. Unscheduled prepayments would also limit the potential for capital
appreciation on mortgage backed securities.
Conversely, when interest rates rise, the values of mortgage backed securities
generally fall. Since rising interest rates typically result in decreased
prepayments, this could lengthen the average lives of mortgage backed
securities, and cause their value to decline more than traditional fixed income
securities.
Generally, mortgage backed securities compensate for the increased risk
associated with prepayments by paying a higher yield. The additional interest
paid for risk is measured by the difference between the yield of a mortgage
backed security and the yield of a U.S. Treasury security with a comparable
maturity (the spread). An increase in the spread will cause the price of the
mortgage backed security to decline. Spreads generally increase in response to
adverse economic or market conditions. Spreads may also increase if the security
is perceived to have an increased prepayment risk or is perceived to have less
market demand.
SECTOR RISKS
Companies with similar characteristics may be grouped together in broad
categories called sectors. Sector risk is the possibility that a certain sector
may underperform other sectors or as the market as a whole. As the Adviser
allocates more of a Fund's portfolio holdings to a particular sector, a Fund's
performance will be more susceptible to any economic, business or other
developments which generally affect that sector.
LIQUIDITY RISKS
Trading opportunities are more limited for securities that are not widely held.
This may make it more difficult to sell or buy a security at a favorable price
or time. Consequently, the Funds may have to accept a lower price to sell a
security, sell other securities to raise cash or give up an investment
opportunity, any of which could have a negative effect on the Funds'
performance. Infrequent trading of securities may also lead to an increase in
their price volatility.
Liquidity risk also refers to the possibility that a Fund may not be able to
sell a security or close out a derivative contract when it wants to. If this
happens, a Fund will be required to continue to hold the security or keep the
position open, and a Fund could incur losses.
RISKS RELATED TO COMPANY SIZE
Generally, the smaller the market capitalization of a company, the fewer the
number of shares traded daily, the less liquid its stock and the more volatile
its price. Market capitalization is determined by multiplying the number of its
outstanding shares by the current market price per share.
Companies with smaller market capitalizations also tend to have unproven track
records, a limited product or service base and limited access to capital. These
factors also increase risks and make these companies more likely to fail than
companies with larger market capitalizations.
RISKS ASSOCIATED WITH NONINVESTMENT GRADE SECURITIES
Securities rated below investment grade, also known as junk bonds, generally
entail greater market, credit and liquidity risks than investment grade
securities. For example, their prices are more volatile, economic downturns and
financial setbacks may affect their prices more negatively, and their trading
market may be more limited.
RISKS OF FOREIGN INVESTING
Foreign securities pose additional risks because foreign economic or political
conditions may be less favorable than those of the United States. Securities in
foreign markets may also be subject to taxation policies that reduce returns for
U.S. investors.
Foreign companies may not provide information (including financial statements)
as frequently or to as great an extent as companies in the United States.
Foreign companies may also receive less coverage than United States companies by
market analysts and the financial press. In addition, foreign countries may lack
uniform accounting, auditing and financial reporting standards or regulatory
requirements comparable to those applicable to U.S. companies. These factors may
prevent the Funds and their Adviser from obtaining information concerning
foreign companies that is as frequent, extensive and reliable as the information
available concerning companies in the United States.
Foreign countries may have restrictions on foreign ownership of securities or
may impose exchange controls, capital flow restrictions or repatriation
restrictions which could adversely affect the liquidity of a Fund's investments.
What do Shares Cost?
You can purchase or redeem Shares any day the New York Stock Exchange (NYSE) is
open. When a Fund receives your transaction request in proper form (as described
in the prospectus), it is processed at the next calculated net asset value
(NAV). If a Fund purchases foreign securities that trade in foreign markets on
days the NYSE is closed, the value of a Fund's assets may change on days you
cannot purchase or redeem Shares. The Funds do not charge a front-end sales
charge. NAV is determined at the end of regular trading (normally 4:00 p.m.
Eastern time) each day the NYSE is open. The Funds generally value equity
securities according to the last sale price in the market in which they are
primarily traded (either a national securities exchange or the over-the-counter
market). The Funds generally value fixed income securities at the last sale
price on a national securities exchange, if available, otherwise, as determined
by an independent pricing service.
The required minimum initial investment for each Fund is $25,000. There is no
required minimum subsequent investment amount.
An account may be opened with a smaller amount as long as the minimum is
reached within 90 days. An institutional investor's minimum investment is
calculated by combining all accounts it maintains with a Fund. Accounts
established through investment professionals may be subject to a smaller minimum
investment amount. Keep in mind that investment professionals may charge you
fees for their services in connection with your Share transactions.
How are the Funds Sold?
The Funds offer two share classes: Institutional Shares and Select Shares, each
representing interests in a single portfolio of securities. This prospectus
relates only to Institutional Shares. Each share class has different expenses
which affect their performance. Contact your investment professional or call 1-
800-341-7400 for more information concerning the other class.
The Funds' Distributor, Federated Securities Corp., markets the Shares
described in this prospectus to individuals and financial institutions.
The Distributor and its affiliates may pay out of their assets other amounts
(including items of material value) to investment professionals for marketing
and servicing Shares. The Distributor is a subsidiary of Federated Investors,
Inc. (Federated).
How to Purchase Shares
You may purchase Shares through an investment professional or directly from the
Funds. The Funds reserve the right to reject any request to purchase Shares.
THROUGH AN INVESTMENT PROFESSIONAL
. Establish an account with the investment professional; and
. Submit your purchase order to the investment professional before the end of
regular trading on the NYSE (normally 4:00 p.m. Eastern time). You will
receive the next calculated NAV if the investment professional forwards the
order to a Fund on the same day and a Fund receives payment within one
business day. You will become the owner of Shares and receive dividends when
a Fund receives your payment.
Investment professionals should send payments according to the instructions in
the sections "By Wire" or "By Check."
DIRECTLY FROM THE FUNDS
. Establish your account with a Fund by submitting a completed New Account
Form; and
. Send your payment to a Fund by Federal Reserve wire or check.
You will become the owner of Shares and your Shares will be priced at the
next calculated NAV after a Fund receives your wire or your check. If your check
does not clear, your purchase will be canceled and you could be liable for any
losses or fees incurred by a Fund or Federated Shareholder Services Company, the
Funds' transfer agent.
An institution may establish an account and place an order by calling a Fund
and the Shares will be priced at the next calculated NAV after a Fund receives
the order.
By Wire
Send your wire to:
State Street Bank and Trust Company
Boston, MA
Dollar Amount of Wire
ABA Number 011000028
Attention: EDGEWIRE
Wire Order Number, Dealer Number or Group Number
Nominee/Institution Name
Fund Name and Number and Account Number
You cannot purchase Shares by wire on holidays when wire transfers are
restricted.
By Check
Make your check payable to The Federated Funds, note your account number on the
check, and mail it to:
Federated Shareholder Services Company
P.O. Box 8600
Boston, MA 02266-8600
If you send your check by a private courier or overnight delivery service that
requires a street address, mail it to:
Federated Shareholder Services Company
1099 Hingham Street
Rockland, MA 02370-3317
Payment should be made in U.S. dollars and drawn on a U.S. bank. The Funds will
not accept third- party checks (checks originally payable to someone other than
you or The Federated Funds).
BY SYSTEMATIC INVESTMENT PROGRAM
Once you have opened an account, you may automatically purchase additional
Shares on a regular basis by completing the Systematic Investment Program (SIP)
section of the New Account Form or by contacting the Funds or your investment
professional. The minimum investment amount for SIPs is $50.
BY AUTOMATED CLEARINGHOUSE (ACH)
Once you have opened an account, you may purchase additional Shares through a
depository institution that is an ACH member. This purchase option can be
established by completing the appropriate sections of the New Account Form.
How to Redeem Shares
You should redeem Shares:
. through an investment professional if you purchased Shares through an
investment professional; or
. directly from the Funds if you purchased Shares directly from the Funds.
THROUGH AN INVESTMENT PROFESSIONAL
Submit your redemption request to your investment professional by the end of
regular trading on the NYSE (normally 4:00 p.m. Eastern time). The redemption
amount you will receive is based upon the next calculated NAV after a Fund
receives the order from your investment professional.
DIRECTLY FROM THE FUNDS
By Telephone
You may redeem Shares by calling the Funds at 1-800-341-7400 once you have
completed the appropriate authorization form for telephone transactions. If you
call before the end of regular trading on the NYSE (normally 4:00 p.m. Eastern
time) you will receive a redemption amount based on that day's NAV.
By Mail
You may redeem Shares by mailing a written request to a Fund. You will receive a
redemption amount based on the next calculated NAV after a Fund receives your
written request in proper form.
Send requests by mail to:
Federated Shareholder Services Company
P.O. Box 8600
Boston, MA 02266-8600
Send requests by private courier or overnight delivery service to:
Federated Shareholder Services Company
1099 Hingham Street
Rockland, MA 02370-3317
All requests must include:
. Fund Name and Share Class, account number and account registration;
. amount to be redeemed; and
. signatures of all shareholders exactly as registered.
Call your investment professional or the Funds if you need special
instructions.
Signature Guarantees
Signatures must be guaranteed if:
. your redemption will be sent to an address other than the address of record;
. your redemption will be sent to an address of record that was changed within
the last 30 days; or
. a redemption is payable to someone other than the shareholder(s) of record.
A signature guarantee is designed to protect your account from fraud. Obtain a
signature guarantee from a bank or trust company, savings association, credit
union or broker, dealer, or securities exchange member. A notary public cannot
provide a signature guarantee.
PAYMENT METHODS FOR REDEMPTIONS
Your redemption proceeds will be mailed by check to your address of record. The
following payment options are available if you complete the appropriate section
of the New Account Form or an Account Service Options Form. These payment
options require a signature guarantee if they were not established when the
account was opened:
. an electronic transfer to your account at a financial institution that is an
ACH member; or
. wire payment to your account at a domestic commercial bank that is a Federal
Reserve System member.
Redemption in Kind
Although each Fund intends to pay Share redemptions in cash, it reserves the
right to pay the redemption price in whole or in part by a distribution of a
Fund's portfolio securities.
LIMITATIONS ON REDEMPTION PROCEEDS
Redemption proceeds normally are wired or mailed within one business day after
receiving a request in proper form. Payment may be delayed up to seven days:
. to allow your purchase to clear;
. during periods of market volatility; or
. when a shareholder's trade activity or amount adversely impacts a Fund's
ability to manage its assets.
You will not accrue interest or dividends on uncashed checks from a Fund if
those checks are undeliverable and returned to a Fund.
SYSTEMATIC WITHDRAWAL PROGRAM
You may automatically redeem Shares in a minimum amount of $100 on a regular
basis. Complete the appropriate section of the New Account Form or an Account
Service Options Form or contact your investment professional or the Funds. Your
account value must meet the minimum initial investment amount at the time the
program is established. This program may reduce, and eventually deplete, your
account. Payments should not be considered yield or income.
ADDITIONAL CONDITIONS
Telephone Transactions
The Funds will record your telephone instructions. If the Funds do not follow
reasonable procedures, they may be liable for losses due to unauthorized or
fraudulent telephone instructions.
Share Certificates
The Funds no longer issue share certificates. If you are redeeming Shares
represented by certificates previously issued by the Funds, you must return the
certificates with your written redemption request. For your protection, send
your certificates by registered or certified mail, but do not endorse them.
Account and Share Information
CONFIRMATIONS AND ACCOUNT STATEMENTS
You will receive confirmation of purchases and redemptions (except for
systematic transactions). In addition, you will receive periodic statements
reporting all account activity, including systematic transactions, dividends and
capital gains paid.
DIVIDENDS AND CAPITAL GAINS
Each Fund (except the Income Portfolio) declares and pays any dividends
quarterly to shareholders. The Income Fund declares and pays any dividends
monthly to shareholders. Dividends are paid to all shareholders invested in a
Fund on the record date. The record date is the date on which a shareholder must
officially own Shares in order to earn a dividend.
In addition, the Funds pay any capital gains at least annually. Your dividends
and capital gains distributions will be automatically reinvested in additional
Shares unless you elect cash payments.
If you purchase Shares just before a Fund declares a dividend or capital gain
distribution, you will pay the full price for the Shares and then receive a
portion of the price back in the form of a taxable distribution, whether or not
you reinvest the distribution in Shares. Therefore, you should consider the tax
implications of purchasing Shares shortly before a Fund declares a dividend or
capital gain. Contact your investment professional or the Funds for information
concerning when dividends and capital gains will be paid.
ACCOUNTS WITH LOW BALANCES
Due to the high cost of maintaining accounts with low balances, accounts may be
closed if redemptions cause the account balance to fall below the minimum
initial investment amount. Before an account is closed, you will be notified and
allowed 30 days to purchase additional Shares to meet the minimum.
TAX INFORMATION
The Funds send an annual statement of your account activity to assist you in
completing your federal, state and local tax returns. Fund distributions of
dividends and capital gains are taxable to you whether paid in cash or
reinvested in the Funds. Dividends are taxable as ordinary income; capital gains
are taxable at different rates depending upon the length of time a Fund holds
its assets.
Fund distributions are expected to be both dividends and capital gains.
Redemptions are taxable sales. Please consult your tax adviser regarding your
federal, state, and local tax liability.
Who Manages the Funds?
The Board of Trustees governs the Funds. The Board selects and oversees the
Adviser, Federated Investment Management Company. The Adviser manages the Funds'
assets, including buying and selling portfolio securities. The Adviser's address
is Federated Investors Tower, 1001 Liberty Avenue, Pittsburgh, PA 15222-3779.
The Adviser has delegated daily management of some of a Fund's assets to the
Sub-Adviser, Federated Global Investment Management Corp., who is paid by the
Adviser and not by the Funds based on the portion of foreign securities the Sub-
Adviser manages. The Sub-Adviser's address is 175 Water Street, New York, NY
10038-4965.
PORTFOLIO MANAGERS
The portfolio managers for the Funds' individual asset categories are as
follows:
<TABLE>
<CAPTION>
Name Asset Category
(Portfolio Manager since) Managed Biography
<S> <C> <C>
John W. Harris (December Overall Allocation and Domestic John W. Harris is a Portfolio Manager
for the
1998) Large Company Stocks Funds and performs the overall asset
allocation
of the Funds' assets among the various
asset
categories. In addition, Mr. Harris is
a
manager of the U.S. large company
stocks asset
category. He has performed these
duties since
December 1998. In allocating the
Funds' assets,
Mr. Harris evaluates the market
environment and
economic outlook, utilizing the
services of the
Adviser's Investment Strategy
Committee. Mr.
Harris initially joined Federated in
1987 as an
Investment Analyst. He served as an
Investment
Analyst and an Assistant Vice
President from
1990 through 1992 and as a Senior
Investment
Analyst and Vice President through May
1993.
After leaving the money management
field to
travel extensively, he rejoined
Federated in
1997 as a Senior Investment Analyst
and became
a Portfolio Manager and Assistant Vice
President of the Funds' Adviser in
December
1998. In January 2000, Mr. Harris
became Vice
President of the Funds' Adviser. Mr.
Harris is
a Chartered Financial Analyst. He
received his
M.B.A. from the University of
Pittsburgh.
- ---------------------------------------------------------------------------------------------------------------------------
Michael P. Donnelly (June Domestic Large Company Stocks Mr. Donnelly joined Federated in 1989
as an
1997) Investment Analyst. He served as a
Portfolio
Manager from 1994 to 1998 and became a
Senior
Portfolio Manager in 1998. He was a
Vice
President of the Funds' Adviser from
1994 to
1999. In May 1999, Mr. Donnelly became
a Senior
Vice President of the Funds' Adviser.
Mr.
Donnelly is a Chartered Financial
Analyst and
received his M.B.A. from the
University of
Virginia.
- ---------------------------------------------------------------------------------------------------------------------------
James E. Grefenstette Domestic Large Company Stock Mr. Grefenstette joined Federated in
1992 and
(August 1994) has been a Portfolio Manager since
1994. Mr.
Grefenstette became a Senior Vice
President of
the Funds' Adviser in January 2000. He
served
as a Vice President of the Funds'
Adviser from
1996 through 1999 and was an Assistant
Vice
President of the Funds' Adviser from
1994 until
1996. Mr. Grefenstette is a Chartered
Financial
Analyst; he received his M.S. in
Industrial
Administration from Carnegie Mellon
University.
- ---------------------------------------------------------------------------------------------------------------------------
Susan M. Nason (Inception) U.S. Treasury Securities Ms. Nason joined Federated in 1987 and
has been
a Senior Portfolio Manager and Senior
Vice
President of the Funds' Adviser since
1997. Ms.
Nason served as a Portfolio Manager
and Vice
President of the Funds' Adviser from
1993 to
1997. Ms. Nason is a Chartered
Financial
Analyst and received herM.S.I.A.
concentrating
in Finance from Carnegie Mellon
University.
- ---------------------------------------------------------------------------------------------------------------------------
Joseph M. Balestrino (March U.S. Treasury Securities and Mr. Balestrino joined Federated in
1986 and has
1995) Investment-Grade Corporate Bonds been a Senior Portfolio Manager and
Senior Vice
President of the Funds' Adviser since
1998. He
was a Portfolio Manager and a Vice
President of
the Funds' Adviser from 1995 to 1998.
Mr.Balestrino served as a Portfolio
Manager and
an Assistant Vice President of the
Funds'
Adviser from 1993 to 1995. Mr.
Balestrino is a
Chartered Financial Analyst and
received his
Master's Degree in Urban and Regional
Planning
from the University of Pittsburgh.
- ---------------------------------------------------------------------------------------------------------------------------
Kathleen M. Foody-Malus Mortgage-Backed Securities Ms. Foody-Malus joined Federated in
1983 and
(Inception) has been a Senior Portfolio Manager
since 1996
and a Vice President of the Funds'
Adviser
since 1993. She was a Portfolio
Manager and a
Vice President of the Funds' Adviser
from 1993
to 1996. Ms. Foody-Malus received her
M.B.A. in
Accounting/Finance from the University
of
Pittsburgh.
- ---------------------------------------------------------------------------------------------------------------------------
Todd A. Abraham (January Mortgage-Backed Securities Mr. Abraham joined Federated in 1993
as an
2000) Investment Analyst and served as
Assistant Vice
President from 1995 to 1997. Mr.
Abraham has
been a Portfolio Manager since 1995
and a Vice
President of the Funds' Adviser since
1997.
Mr.Abraham served as a Portfolio
Analyst at
Ryland Mortgage Co. from 1992 to 1993.
Mr.
Abraham is a Chartered Financial
Analyst and
received his M.B.A. in Finance from
Loyola
College.
- ---------------------------------------------------------------------------------------------------------------------------
John T. Gentry (July 1997) Investment Grade Corporate Bonds Mr. Gentry joined Federated in 1995 as
an
Investment Analyst and has been a
Senior
Investment Analyst and an Assistant
Vice
President of the Funds' Adviser since
1997. Mr.
Gentry served as a Senior Treasury
Analyst at
Sun Company, Inc. from 1991 to 1995.
Mr. Gentry
is a Chartered Financial Analyst and
earned his
M.B.A., with concentrations in Finance
and
Accounting, from Cornell University.
- ---------------------------------------------------------------------------------------------------------------------------
Mark. E Durbiano (Inception) High Yield Corporate Bonds Mr. Durbiano joined Federated in 1982
and has
been a Senior Portfolio Manager and a
Senior
Vice President of the Funds' Adviser
since
1996.
From 1988 through 1995, Mr.
Durbiano was
a Portfolio Manager and a Vice
President of the
Funds' Adviser. Mr. Durbiano is a
Chartered
Financial Analyst andreceived his
M.B.A. in
Finance from the University
ofPittsburgh.
- ---------------------------------------------------------------------------------------------------------------------------
Robert M. Kowit (November Foreign Bonds Mr. Kowit joined Federated in 1995 as
a Senior
1995) Portfolio Manager and a Vice President
of the
Funds' Sub-Adviser. Mr.Kowit served as
a
Managing Partner of Copernicus Global
Asset
Management from January 1995 through
October
1995. From 1990 to 1994, he served as
Senior
Vice President/Portfolio Manager of
International Fixed Income and Foreign
Exchange
for John Hancock Advisers. Mr. Kowit
received
his M.B.A. from Iona College with a
concentration infinance.
- ---------------------------------------------------------------------------------------------------------------------------
Micheal W. Casey, Ph. D. Foreign Bonds Mr. Casey joined Federated in 1996 as
a Senior
(January 1997) Investment Analyst and an Assistant
Vice
President. Mr. Casey currently serves
as a
Senior Portfolio Manager and has been
a Vice
President of the Sub-Adviser since
1998. Mr.
Casey served as an International
Economist and
Portfolio Strategist for MariaFiorini
Ramirez
Inc. from 1990 to 1996. Mr. Casey
earned a
Ph.D. concentrating in economics from
The New
School for Social Research and a M.Sc.
from the
London School ofEconomics.
- ---------------------------------------------------------------------------------------------------------------------------
Aash M. Shah (June 1997) Domestic Small Company Stocks Mr. Shah joined Federated in 1993 and
has been
a Portfolio Manager and a Vice
President of the
Funds' Adviser since January 1997. Mr.
Shah was
a Portfolio Manager and served as an
Assistant
Vice President of the Adviser from
1995 through
1996, and as an Investment Analyst
from 1993 to
1995. Mr.Shah received his Masters in
Industrial Administration from
Carnegie Mellon
University with a concentration
infinance and
accounting. Mr. Shah is a Chartered
FinancialAnalyst.
- ---------------------------------------------------------------------------------------------------------------------------
Grant K. McKay (January 2000) Domestic Small Company Stocks Mr. McKay joined Federated in 1997 as
an
Investment Analyst. He has been an
Assistant
Vice President/Senior Investment
Analyst of the
Funds' Adviser since 1998. Mr. McKay
worked for
PRIMCO Capital Management as a Credit
Research
Analyst from 1993 to 1995 and as an
Assistant
Portfolio Manager during 1995 and
1996. Mr.
McKay is a Chartered Financial
Analyst. He
received his M.B.A. with a
concentration in
Finance from the University of Chicago.
- ---------------------------------------------------------------------------------------------------------------------------
Alexandre de Bethmann Foreign Stocks Mr. de Bethmann joined Federated in
1995 as a
(November 1995) Senior Portfolio Manager and a Vice
President
of the Funds' Sub-Adviser. Mr. de
Bethmann
served as Assistant Vice
President/Portfolio
Manager for Japanese and Korean
equities at the
College Retirement Equities Fund from
1994
to1995. Mr.deBethmann received his
M.B.A. in
Finance from Duke University.
- ---------------------------------------------------------------------------------------------------------------------------
Frank Semack (November 1995) Foreign Stocks Mr. Semack joined Federated in 1995 as
a Senior
Portfolio Manager and a Vice President
of the
Funds' Sub-Adviser. Mr.Semack served
as an
Investment Analyst at Omega Advisers,
Inc. from
1993 to 1994. Mr. Semack received his
M.Sc. in
economics from the London School of
Economics.
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
The Adviser, Sub-Adviser and other subsidiaries of Federated advise
approximately 176 mutual funds and separate accounts, which totaled
approximately $125 billion in assets as of December 31, 1999. Federated was
established in 1955 and is one of the largest mutual fund investment managers in
the United States with approximately 1,900 employees. More than 4,000 investment
professionals make Federated Funds available to their customers.
ADVISORY FEES
The Adviser receives an annual investment advisory fee of 0.75% of each Fund's
average daily net assets. The Adviser may voluntarily waive a portion of its fee
or reimburse a Fund for certain operating expenses.
Financial Information
FINANCIAL HIGHLIGHTS
The Financial Highlights will help you understand each Fund's financial
performance for its past five fiscal years, or since inception, if the life of a
Fund is shorter. Some of the information is presented on a per share basis.
Total returns represent the rate an investor would have earned (or lost) on an
investment in a Fund, assuming reinvestment of any dividends and capital gains.
This information has been audited by Deloitte & Touche LLP, whose report,
along with the Funds' audited financial statements, is included in the Annual
Reports.
Financial Highlights-Institutional Shares
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
Distributions
Net Realized
from Net
and Unrealized
Realized
Gain/(Loss) on
Gain on
Net Asset Investments, Distributions
Investments,
Value, Net Foreign Currency Total from from Net
Foreign Currency
Year Ended beginning Investment Transactions and Investment Investment
Transactions and
November 30, of period Income Futures Contracts Operations Income
Futures Contracts
<S> <C> <C> <C> <C> <C>
<C>
Federated Managed Income Portfolio
1995 $ 9.76 0.62 0.78 1.40
(0.62) --
1996 $10.54 0.59 0.12 0.71
(0.62) (0.07)
1997 $10.56 0.60 0.30 0.90
(0.62) (0.07)
1998 $10.77 0.55 0.49 1.04
(0.55) (0.13)
1999/1/ $11.13 0.55 (0.42) 0.13
(0.54) (0.31)
Federated Managed Conservative Growth Portfolio
1995 $ 9.85 0.50 1.28 1.78
(0.49) --
1996 $11.14 0.50 0.41 0.91
(0.52) (0.16)
1997 $11.37 0.49 0.74 1.23
(0.50) (0.12)
1998 $11.98 0.44 0.81 1.25
(0.46) (0.62)
1999/1/ $12.15 0.45 0.14 0.59
(0.45) (0.47)
Federated Managed Moderate Growth Portfolio
1995 $ 9.82 0.40 1.70 2.10
(0.40) --
1996 $11.52 0.41 0.97 1.38
(0.44) (0.23)
1997 $12.23 0.38 1.19 1.57
(0.40) (0.30)
1998 $13.10 0.35 0.92 1.27
(0.34) (0.88)
1999/1/ $13.15 0.35 1.00 1.35
(0.35) (0.60)
Federated Managed Growth Portfolio
1995 $ 9.82 0.35 1.77 2.12
(0.33) (0.02)
1996 $11.59 0.33 1.24 1.57
(0.38) (0.26)
1997 $12.52 0.30 1.43 1.73
(0.31) (0.36)
1998 $13.58 0.23 1.22 1.45
(0.22) (0.69)
1999/1/ $14.12 0.22 1.75 1.97
(0.20) (0.72)
</TABLE>
1 For the year ended November 30, 1999, the Funds were audited by Deloitte &
Touche LLP. Each of the previous years were audited by other auditors.
2 Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
3 This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
<TABLE>
<CAPTION>
Ratios to Average Net Assets
Net Asset -------------------------------------------------
Value, Net Net
Assets, Portfolio
Total end of Total Investment Expense Waiver/ end of
period Turnover
Distributions period Return/2/ Expenses Income Reimbursement/3/ (000
omitted) Rate
<S> <C> <C> <C> <C> <C>
<C> <C>
(0.62) $10.54 14.74% 0.75% 6.26% 1.06% $
50,852 165%
(0.69) $10.56 6.98% 0.80% 5.72% 0.80% $
67,122 164%
(0.69) $10.77 8.88% 0.80% 5.63% 0.70% $
71,058 99%
(0.68) $11.13 10.06% 0.80% 5.09% 0.62% $
81,421 122%
(0.85) $10.41 1.22% 0.80% 5.21% 0.54% $
86,919 95%
(0.49) $11.14 18.51% 1.00% 5.10% 0.55%
$103,715 157%
(0.68) $11.37 8.54% 1.05% 4.72% 0.31%
$156,635 154%
(0.62) $11.98 11.25% 1.05% 4.27% 0.25%
$164,728 130%
(1.08) $12.15 11.19% 1.08% 3.77% 0.20%
$178,521 117%
(0.92) $11.82 5.11% 1.04% 3.78% 0.20%
$151,961 94%
(0.40) $11.52 21.79% 1.00% 4.29% 0.76% $
68,313 106%
(0.67) $12.23 12.54% 1.05% 3.77% 0.40%
$136,255 95%
(0.70) $13.10 13.39% 1.05% 3.07% 0.26%
$163,519 136%
(1.22) $13.15 10.56% 1.07% 2.67% 0.20%
$173,514 111%
(0.95) $13.55 11.00% 1.06% 2.69% 0.20%
$168,702 113%
(0.35) $11.59 21.96% 1.00% 3.42% 1.71% $
25,611 139%
(0.64) $12.52 14.13% 1.05% 2.96% 0.88% $
49,715 86%
(0.67) $13.58 14.40% 1.05% 2.27% 0.52% $
76,271 115%
(0.91) $14.12 11.34% 1.12% 1.66% 0.33% $
88,113 123%
(0.92) $15.17 14.83% 1.15% 1.53% 0.22% $
93,453 113%
</TABLE>
P R O S P E C T U S
[LOGO OF FEDERATED INVESTORS]
World-Class Investment Manager(R)
Federated
Managed
Allocation
Portfolios
Federated Managed Income Portfolio
Federated Managed Conservative
Growth Portfolio
Federated Managed Moderate
Growth Portfolio
Federated Managed Growth Portfolio
INSTITUTIONAL SHARES
JANUARY 31, 2000
A Statement of Additional Information (SAI) dated January 31, 2000 is
incorporated by reference into this prospectus. Additional information about the
Funds and their investments is contained in the Funds' SAI and Annual and
SemiAnnual Reports to shareholders as they become available. The Annual Reports'
Management Discussions and Analyses discuss market conditions and investment
strategies that significantly affected each Fund's performance during its last
fiscal year. To obtain the SAI, Annual Reports, Semi-Annual Reports and other
information without charge, and make inquiries, call your investment
professional or the Funds at 1-800-341-7400. You can obtain information
about the Funds (including the SAI) by writing to or visiting the Public
Reference Room of the Securities and Exchange Commission in Washington, DC. You
may also access fund information from the EDGAR Database on the SEC's Internet
site at http://www.sec.gov. You can purchase copies of this information by
contacting the SEC by email at [email protected] or by writing to the SEC's
Public Reference Section, Washington DC 20549-0102. Call 1-202-942- 8090 for
information on the Public Reference Room's operations and copying fees.
[LOGO OF FEDERATED INVESTORS]
Federated Managed Allocation Portfolios
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
1-800-341-7400
www.federatedinvestors.com
Federated Securities Corp., Distributor
Investment Company Act File No. 811-7129
Cusip 314212804
Cusip 314212408
Cusip 314212606
Cusip 314212200
G00873-03-IS (1/00)
Federated is a registered mark
of Federated Investors, Inc.
2000 (C)Federated Investors, Inc.
PROSPECTUS
Federated Managed Allocation Portfolios
(formerly, Managed Series Trust)
Federated Managed Income Portfolio (formerly, Federated Managed Income Fund)
Federated Managed Conservative Growth Portfolio (formerly, Federated Managed
Growth and Income Fund)
Federated Managed Moderate Growth Portfolio (formerly, Federated Managed Growth
Fund)
Federated Managed Growth Portfolio (formerly, Federated Managed Aggressive
Growth Fund)
SELECT SHARES
As with all mutual funds, the Securities and Exchange Commission (SEC) has not
approved or disapproved these securities or passed upon the adequacy of this
prospectus. Any representation to the contrary is a criminal offense.
<TABLE>
<CAPTION>
CONTENTS
<S> <C>
Risk/Return Summary 1
What are the Funds' Fees and Expenses? 7
What are the Funds' Investment Strategies? 11
What are the Principal Securities In Which the Funds Invest? 15
What are the Specific Risks of Investing in the Funds? 19
What do Shares Cost? 21
How are the Funds Sold? 22
How to Purchase Shares 22
How to Redeem Shares 23
Account and Share Information 25
Who Manages the Funds? 26
Financial Information 29
</TABLE>
NOT FDIC INSURED
MAY LOSE VALUE
NO BANK GUARANTEE
JANUARY 31, 2000
Risk/Return Summary
WHAT IS EACH FUND'S INVESTMENT OBJECTIVE?
<TABLE>
<CAPTION>
Fund Objective
<S> <C>
Federated Managed To seek total return with an
Income Portfolio emphasis on income and potential
("FMIP") for capital appreciation
Federated Managed To seek total return with an
Conservative Growth emphasis on income and capital
Portfolio ("FMCGP") appreciation
Federated Managed To seek capital appreciation with
Moderate Growth income as a secondary objective
Portfolio ("FMMGP")
Federated Managed To seek capital appreciation
Growth Portfolio
("FMGP")
</TABLE>
While there is no assurance that a Fund will achieve its investment objective,
it endeavors to do so by following the investment strategies and policies
described in this prospectus.
WHAT ARE THE FUNDS' MAIN INVESTMENT STRATEGIES?
The Funds invest in diversified portfolios which are allocated among several
categories of equity and fixed income securities. The Adviser manages the Funds
based on the view that the investment performance of each Fund's portfolio over
the long term depends primarily on the fact that the portfolio consists of
securities from multiple categories. Of secondary importance to each Fund's
performance is allocation of the portfolio among asset categories in response to
market conditions and the selection of securities within asset categories.
Therefore, each Fund pursues its investment objective in the following manner:
. by setting ranges regarding the percentage of a Fund's portfolio assets which
will be invested in each asset category;
. by allocating each Fund's portfolio among asset categories within those
defined ranges; and
. by actively selecting securities within each of the asset categories.
The Funds will each allocate their portfolios within the following ranges of
equity and fixed income securities:
<TABLE>
<CAPTION>
Asset Category FMIP Range FMCGP Range FMMGP Range FMGP Range
<S> <C> <C> <C> <C>
Equity Securities 5%-25% 30%-50% 50%-70% 70%-90%
Fixed Income Securities 75%-95% 50%-70% 30%-50% 10%-30%
</TABLE>
The Funds will further allocate portfolios among the following asset categories,
in such proportions as the Adviser from time-to-time determines, consistent with
the long-term ranges set by it: a Fund's equity portfolio will be allocated
among large company stocks, small company stocks and foreign stocks; and a
Fund's fixed income portfolio will be allocated among U.S. government
securities, mortgage-backed securities, investment grade corporate debt,
non-investment grade corporate debt ("junk bonds") and foreign fixed income
securities. A Fund may lengthen or shorten the duration of its fixed income
portfolio from time to time based on its interest rate outlook, but the Funds
have no set duration parameters. Duration measures the price sensitivity of a
fixed income security to changes in interest rates.
WHAT ARE THE MAIN RISKS OF INVESTING IN THE FUNDS?
All mutual funds take investment risks. Therefore, it is possible to lose money
by investing in the Funds. The primary factors that may reduce the Funds'
returns include:
. Stock Market Risks. The value of equity securities in a Fund's portfolio
will fluctuate and, as a result, a Fund's share price may decline suddenly
or over a sustained period of time.
. Interest Rate Risks. Prices of fixed income securities generally fall when
interest rates rise. Interest rate changes have a greater effect on the
price of fixed income securities with longer durations.
. Credit Risks. There is a possibility that issuers of securities in which a
Fund may invest may default in the payment of interest or principal on the
securities when due, which could cause a Fund to lose money.
. Currency Risks. Because the exchange rates for currencies fluctuate daily,
prices of the foreign securities in which a Fund invests are more volatile
than prices of securities traded exclusively in the U.S.
. Prepayment Risks. When homeowners prepay their mortgages in response to
lower interest rates, the Funds will be required to reinvest the proceeds at
the lower interest rates available. Also, when interest rates fall, the
price of mortgage backed securities may not rise to as great an extent as
that of other fixed income securities.
. Call Risks. A Fund's performance may be adversely affected by the
possibility that an issuer of a security held by a Fund may redeem the
security prior to maturity at a price below its current market value.
. Sector Risks. Because the Funds may allocate relatively more assets to
certain industry sectors than to others, the Funds' performance may be more
susceptible to any developments which affect those sectors emphasized by the
Funds.
. Liquidity Risks. The non-investment grade securities and complex CMOs in
which the Funds invest may be less readily marketable and may be subject to
greater fluctuation in price than other securities.
. Risks Related to Company Size. Because the smaller companies in which the
Funds may invest may have unproven track records, a limited product or
service base and limited access to capital, they may be more likely to fail
than larger companies.
. Risks Associated with Noninvestment Grade Securities. A Fund may invest a
portion of its assets in securities rated below investment grade which may
be subject to greater interest rate, credit and liquidity risks than
investment grade securities.
. Risks of Foreign Investing. Because the Funds invest in securities issued by
foreign companies, a Fund's share price may be more affected by foreign
economic and political conditions, taxation policies and accounting and
auditing standards than would otherwise be the case.
Shares offered by this prospectus are not deposits or obligations of any bank,
are not endorsed or guaranteed by any bank and are not insured or guaranteed by
the U.S. government, the Federal Deposit Insurance Corporation, the Federal
Reserve Board or any other government agency.
Risk/Return Bar Chart and Table
Federated Managed Income Portfolio
The graphic presentation displayed here consists of a bar chart representing the
annual total returns of Select Shares as of the calendar year-end for each of
five years. The `y' axis reflects the "% Total Return" beginning with "-4%" and
increasing in increments of 4% up to 16%. The `x' axis represents calculation
periods from the earliest first full calendar year-end of the Select Shares
start of business through the calendar year ended December 31, 1999. The light
gray shaded chart features five distinct vertical bars, each shaded in charcoal,
and each visually representing by height the total return percentages for the
calendar year stated directly at its base. The calculated total return
percentage for the Select Shares for each calendar year is stated directly at
the top of each respective bar, for the calendar years 1995 through1999. The
percentages noted are: 14.83%, 4.72%, 9.84%, 9.27% and (0.38%).
The bar chart shows the variability of the Fund's Select Shares total returns on
a calendar year-end basis. The Fund's Select Shares are sold without a sales
charge (load). The total returns displayed above are based upon net asset value.
Within the period shown in the Chart, the Fund's Select Shares highest quarterly
return was 5.04% (quarter ended March 31, 1995). Its lowest quarterly return was
(0.99%) (quarter ended September 30, 1999).
Average Annual Total Return Table
The following table represents the Fund's Select Shares Average Annual Total
Returns for the calendar periods ended December 31, 1999. The table shows the
Fund's Select Shares total returns averaged over a period of years relative to
the Standard & Poors 500 Index (S&P 500), the Lehman Brothers
Government/Corporate Bond Index (LBGCBI), broad-based market indexes, and the
Lipper Balanced Funds Average (LBFA), an average of funds with similar
investment objectives. Total returns for the indexes and average shown do not
reflect sales charges, expenses or other fees that the SEC requires to be
reflected in the Fund's performance. Indexes are unmanaged, and it is not
possible to invest directly in an index.
<TABLE>
<CAPTION>
Select
Calendar Period Shares S&P 500 LBGCBI LBFA
<S> <C> <C> <C> <C>
1 Year (0.38%) 21.05% 0.39% 8.73%
5 Years 7.53% 28.56% 7.10% 16.24%
Start of Performance/1/ 6.79% 25.72% 6.46% 14.54%
</TABLE>
1 The Fund's Select Shares start of performance date was May 25, 1994.
Past performance is no guarantee of future results. This information provides
you with historical performance information so that you can analyze whether the
Fund's investment risks are balanced by its potential returns.
Risk/Return Bar Chart and Table
Federated Managed Conservative Growth Portfolio
The graphic presentation displayed here consists of a bar chart representing the
annual total returns Select Shares as of the calendar year-end for each of five
years. The `y' axis reflects the "% Total Return" beginning with "0%" and
increasing in increments of 4% up to 20%. The `x' axis represents calculation
periods from the earliest first full calendar year-end of the Select Shares
start of business through the calendar year ended December 31, 1999. The light
gray shaded chart features five distinct vertical bars, each shaded in charcoal,
and each visually representing by height the total return percentages for the
calendar year stated directly at its base. The calculated total return
percentage for the Select Shares for each calendar year is stated directly at
the top of each respective bar, for the calendar years 1995 through1999. The
percentages noted are: 19.05%, 5.72%, 12.21%, 11.56% and 4.42%.
The bar chart shows the variability of the Fund's Select Shares total returns on
a calendar year-end basis. The Fund's Select Shares are sold without a sales
charge (load). The total returns displayed above are based upon net asset value.
Within the period shown in the Chart, the Fund's Select Shares highest quarterly
return was 6.89% (quarter ended December 31, 1998). Its lowest quarterly return
was (2.68%) (quarter ended September 30, 1999).
Average Annual Total Return Table
The following table represents the Fund's Select Shares Average Annual Total
Returns for the calendar periods ended December 31, 1999. The table shows the
Fund's Select Shares total returns averaged over a period of years relative to
the Standard & Poors 500 Index (S&P 500), the Lehman Brothers
Government/Corporate Bond Index (LBGCBI), broad-based market indexes, and the
Lipper Balanced Funds Average (LBFA), an average of funds with similar
investment objectives. Total returns for the indexes and average shown do not
reflect sales charges, expenses or other fees that the SEC requires to be
reflected in the Fund's performance. Indexes are unmanaged, and it is not
possible to invest directly in an index.
<TABLE>
<CAPTION>
Select
Calendar Period Shares S&P 500 LBGCBI LBFA
<S> <C> <C> <C> <C>
1 Year 4.42% 21.05% 0.39% 8.73%
5 Years 10.47% 28.56% 7.10% 16.24%
Start of Performance/1/ 9.53% 25.72% 6.46% 14.54%
</TABLE>
1 The Fund's Select Shares start of performance date was May 25, 1994.
Past performance is no guarantee of future results. This information provides
you with historical performance information so that you can analyze whether the
Fund's investment risks are balanced by its potential returns.
Risk/Return Bar Chart and Table
Federated Managed Moderate Growth Portfolio
The graphic presentation displayed here consists of a bar chart representing the
annual total returns of Select Shares as of the calendar year-end for each of
five years. The `y' axis reflects the "% Total Return" beginning with "0%" and
increasing in increments of 5% up to 25%.
The `x' axis represents calculation periods from the earliest first full
calendar year-end of the Select Shares start of business through the calendar
year ended December 31, 1999. The light gray shaded chart features five distinct
vertical bars, each shaded in charcoal, and each visually representing by height
the total return percentages for the calendar year stated directly at its base.
The calculated total return percentage for the Select Shares for each calendar
year is stated directly at the top of each respective bar, for the calendar
years 1995 through1999. The percentages noted are: 21.42%, 9.78%, 13.44%, 12.99%
and 11.99%.
The bar chart shows the variability of the Fund's Select Shares total returns on
a calendar year-end basis. The Fund's Select Shares are sold without a sales
charge (load). The total returns displayed above are based upon net asset value.
Within the period shown in the Chart, the Fund's Select Shares highest quarterly
return was 11.85% (quarter ended December 31, 1998). Its lowest quarterly return
was (7.24%) (quarter ended September 30, 1998).
Average Annual Total Return Table
The following table represents the Fund's Select Shares Average Annual Total
Returns for the calendar periods ended December 31, 1999. The table shows the
Fund's Select Shares total returns averaged over a period of years relative to
the Standard & Poor's 500 Index (S&P 500), the Lehman Brothers
Government/Corporate Bond Index (LBGCBI), broad-based market indexes and the
Lipper Balanced Funds Average (LBFA), an average of funds with similar
investment objectives. Total returns for the indexes and average shown do not
reflect sales charges, expenses or other fees that the SEC requires to be
reflected in the Fund's performance. Indexes are unmanaged, and it is not
possible to invest directly in an index.
<TABLE>
<CAPTION>
Select
Calendar Period Shares S&P 500 LBGCBI LBFA
<S> <C> <C> <C> <C>
1 Year 11.99% 21.05% 0.39% 8.73%
5 Years 13.86% 28.56% 7.10% 16.24%
Start of Performance/1/ 12.31% 25.72% 6.46% 14.54%
</TABLE>
1 The Fund's Select Shares start of performance date was May 25, 1994.
Past performance is no guarantee of future results. This information provides
you with historical performance information so that you can analyze whether the
Fund's investment risks are balanced by its potential returns.
Risk/Return Bar Chart and Table
Federated Managed Growth Portfolio
The graphic presentation displayed here consists of a bar chart representing the
annual total returns of Select Shares as of the calendar year-end for each of
five years. The `y' axis reflects the "% Total Return" beginning with "0%" and
increasing in increments of 5% up to 25%.
The `x' axis represents calculation periods from the earliest first full
calendar year-end of the Select Shares start of business through the calendar
year ended December 31, 1999. The light gray shaded chart features five distinct
vertical bars, each shaded in charcoal, and each visually representing by height
the total return percentages for the calendar year stated directly at its base.
The calculated total return percentage for the Select Shares for each calendar
year is stated directly at the top of each respective bar, for the calendar
years 1995 through1999. The percentages noted are: 21.62%, 11.62%, 14.04%,
15.06% and 16.52%.
The bar chart shows the variability of the Fund's Select Shares total returns on
a calendar year-end basis. The Fund's Select Shares are sold without a sales
charge (load). The total returns displayed above are based on net asset value.
Within the period shown in the Chart, the Fund's Select Shares highest quarterly
return was 15.52% (quarter ended December 31, 1998). Its lowest quarterly return
was (10.53%) (quarter ended September 30, 1998).
Average Annual Total Return Table
The following table represents the Fund's Select Shares Average Annual Total
Returns for the calendar periods ended December 31, 1999. The table shows the
Fund's Select Shares total returns average over a period of years relative to
the Standard & Poor's 500 Index (S&P 500), the Lehman Brothers
Government/Corporate Bond Index (LBGCBI), broad- based market indexes, and the
Lipper Balanced Funds Average (LBFA) an average of funds with similar investment
objectives. Total returns for the indexes and average shown do not reflect sales
charges, expenses or other fees that the SEC requires to be reflected in the
Fund's performance. Indexes are unmanaged, and it is not possible to invest
directly in an index.
<TABLE>
<CAPTION>
Select
Calendar Period Shares S&P 500 LBGCBI LBFA
<S> <C> <C> <C> <C>
1 Year 16.52% 21.05% 0.39% 8.73%
5 Years 15.73% 28.56% 7.10% 16.24%
Start of Performance/1/ 13.92% 25.72% 6.46% 14.54%
</TABLE>
1 The Fund's Select Shares start of performance date was May 25, 1994.
Past performance is no guarantee of future results. This information provides
you with historical performance information so that you can analyze whether the
Fund's investment risks are balanced by its potential returns.
What are the Fund's Fees and Expenses?
FEDERATED MANAGED INCOME PORTFOLIO
FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
Select Shares of the Fund.
<TABLE>
<CAPTION>
Shareholder Fees
Fees Paid Directly From Your Investment
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering
price) None Maximum Deferred Sales Charge (Load) (as a percentage of original
purchase price or redemption proceeds, as applicable) None Maximum Sales Charge
(Load) Imposed on Reinvested Dividends (and other Distributions) (as a
percentage of offering price) None Redemption Fee (as a percentage of amount
redeemed, if applicable) None Exchange Fee None
<CAPTION>
Annual Fund Operating Expenses (Before Waivers)/1/
Expenses That are Deducted From Fund Assets (as a percentage of average net assets)
<S>
<C>
Management
Fee/2/
0.75%
Distribution (12b-1)
Fee/3/ 0.75%
Shareholder Services
Fee 0.25%
Other
Expenses
0.34%
Total Annual Fund Operating
Expenses 2.09%
</TABLE>
1 Although not contractually obligated to do so, the adviser and distributor
waived certain amounts. These amounts are shown below along with the net
expenses the Fund actually paid for the fiscal year ended November 30, 1999.
Total Waiver of Fund Expenses 0.59%
Total Annual Operating Expenses (after waivers) 1.50%
2 The adviser voluntarily waived a portion of the management fee. The adviser
can terminate this voluntary waiver at any time. The management fee paid by
the Fund's Select Shares (after the voluntary waiver) was 0.41% for the fiscal
year ended November 30, 1999.
3 The distributor voluntarily waived a portion of the distribution (12b-1) fee.
The distributor can terminate this voluntary waiver at any time. The
distribution (12b-1) fee paid by the Fund's Select Shares (after the voluntary
waiver) was 0.50% for the fiscal year ended November 30, 1999.
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund's
Select Shares with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in the Fund's Select Shares for
the time periods indicated and then redeem all of your Select Shares at the end
of those periods. The Example also assumes that your investment has a 5% return
each year and that the Fund's Select Shares operating expenses are before
waivers as shown in the table and remain the same. Although your actual costs
may be higher or lower, based on these assumptions your costs would be:
<TABLE>
<CAPTION>
Calendar Period Fund
<S> <C>
1 Year $ 212
3 Years $ 655
5 Years $ 1,124
10 Years $ 2,421
</TABLE>
What are the Fund's Fees and Expenses?
FEDERATED MANAGED CONSERVATIVE GROWTH PORTFOLIO
FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
Select Shares of the Fund.
<TABLE>
<CAPTION>
Shareholder Fees
Fees Paid Directly From Your Investment
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering
price) None Maximum Deferred Sales Charge (Load) (as a percentage of original
purchase price or redemption proceeds, as applicable) None Maximum Sales Charge
(Load) Imposed on Reinvested Dividends (and other Distributions) (as a
percentage of offering price) None Redemption Fee (as a percentage of amount
redeemed, if applicable) None Exchange Fee None
<CAPTION>
Annual Fund Operating Expenses (Before Waivers)/1/
Expenses That are Deducted From Fund Assets (as a percentage of average net assets)
<S>
<C>
Management
Fee
0.75%
Distribution (12b-1)
Fee/2/ 0.75%
Shareholder Services
Fee 0.25%
Other
Expenses
0.24%
Total Annual Fund Operating
Expenses 1.99%
</TABLE>
1 Although not contractually obligated to do so, the distributor waived certain
amounts. These amounts are shown below along with the net expenses the Fund
actually paid for the fiscal year ended November 30, 1999.
Total Waiver of Fund Expenses 0.25%
Total Annual Operating Expenses (after waivers) 1.74%
2 The distributor voluntarily waived a portion of the distribution (12b-1) fee.
The distributor can terminate this voluntary waiver at any time. The
distribution (12b-1) fee paid by the Fund's Select Shares (after the voluntary
waiver) was 0.50% for the fiscal year ended November 30, 1999.
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund's
Select Shares with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in the Fund's Select Shares for
the time periods indicated and then redeem all of your Select Shares at the end
of those periods. The Example also assumes that your investment has a 5% return
each year and that the Fund's Select Shares operating expenses are before
waivers as shown in the table and remain the same. Although your actual costs
may be higher or lower, based on these assumptions your costs would be:
<TABLE>
<CAPTION>
Calendar Period Fund
<S> <C>
1 Year $ 202
3 Years $ 624
5 Years $ 1,073
10 Years $ 2,317
</TABLE>
What are the Fund's Fees and Expenses?
FEDERATED MANAGED MODERATE GROWTH PORTFOLIO
FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
Select Shares of the Fund.
<TABLE>
<CAPTION>
Shareholder Fees
Fees Paid Directly From Your Investment
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering
price) None Maximum Deferred Sales Charge (Load) (as a percentage of original
purchase price or redemption proceeds, as applicable) None Maximum Sales Charge
(Load) Imposed on Reinvested Dividends (and other Distributions) (as a
percentage of offering price) None Redemption Fee (as a percentage of amount
redeemed, if applicable) None Exchange Fee None
<CAPTION>
Annual Fund Operating Expenses (Before Waivers)/1/
Expenses That are Deducted From Fund Assets (as a percentage of average net assets)
<S>
<C>
Management
Fee
0.75%
Distribution (12b-1)
Fee/2/ 0.75%
Shareholder Services
Fee 0.25%
Other
Expenses
0.26%
Total Annual Fund Operating
Expenses 2.01%
</TABLE>
1 Although not contractually obligated to do so, the distributor waived certain
amounts. These amounts are shown below along with the net expenses the Fund
actually paid for the fiscal year ended November 30, 1999.
Total Waiver of Fund Expenses 0.25%
Total Annual Operating Expenses (after waivers) 1.76%
2 The distributor voluntarily waived a portion of the distribution (12b-1) fee.
The distributor can terminate this voluntary waiver at any time. The
distribution (12b-1) fee paid by the Fund's Select Shares (after the voluntary
waiver) was 0.50% for the fiscal year ended November 30, 1999.
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund's
Select Shares with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in the Fund's Select Shares for
the time periods indicated and then redeem all of your Select Shares at the end
of those periods. The Example also assumes that your investment has a 5% return
each year and that the Fund's Select Shares operating expenses are before
waivers as shown in the table and remain the same. Although your actual costs
may be higher or lower, based on these assumptions your costs would be:
<TABLE>
<CAPTION>
Calendar Period Fund
<S> <C>
1 Year $ 204
3 Years $ 630
5 Years $ 1,083
10 Years $ 2,338
</TABLE>
What are the Fund's Fees and Expenses?
FEDERATED MANAGED GROWTH PORTFOLIO
FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
Select Shares of the Fund.
<TABLE>
<CAPTION>
Shareholder Fees
Fees Paid Directly From Your Investment
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering
price) None Maximum Deferred Sales Charge (Load) (as a percentage of original
purchase price or redemption proceeds, as applicable) None Maximum Sales Charge
(Load) Imposed on Reinvested Dividends (and other Distributions) (as a
percentage of offering price) None Redemption Fee (as a percentage of amount
redeemed, if applicable) None Exchange Fee None
<CAPTION>
Annual Fund Operating Expenses (Before Waivers)/1/
Expenses That are Deducted From Fund Assets (as a percentage of average net assets)
<S>
<C>
Management
Fee/2/
0.75%
Distribution (12b-1)
Fee/3/ 0.75%
Shareholder Services
Fee 0.25%
Other
Expenses
0.37%
Total Annual Fund Operating
Expenses 2.12%
</TABLE>
1 Although not contractually obligated to do so, the adviser and distributor
waived certain amounts. These amounts are shown below along with the net
expenses the Fund actually paid for the fiscal year ended November 30, 1999.
Total Waiver of Fund Expenses 0.27%
Total Annual Operating Expenses (after waivers) 1.85%
2 The adviser voluntarily waived a portion of the management fee. The adviser
can terminate this voluntary waiver at any time. The management fee paid by
the Fund's Select Shares (after the voluntary waiver) was 0.73% for the fiscal
year ended November 30, 1999.
3 The distributor voluntarily waived a portion of the distribution (12b-1) fee.
The distributor can terminate this voluntary waiver at any time. The
distribution (12b-1) fee paid by the Fund's Select Shares (after the voluntary
waiver) was 0.50% for the fiscal year ended November 30, 1999.
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund's
Select Shares with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in the Fund's Select Shares for
the time periods indicated and then redeem all of your Select Shares at the end
of those periods. The Example also assumes that your investment has a 5% return
each year and that the Fund's Select Shares operating expenses are before
waivers as shown in the table and remain the same. Although your actual costs
may be higher or lower, based on these assumptions your costs would be:
<TABLE>
<CAPTION>
Calendar Period Fund
<S> <C>
1 Year $ 215
3 Years $ 664
5 Years $ 1,139
10 Years $ 2,452
</TABLE>
What are the Funds' Investment Strategies?
Each Fund will primarily invest in two types of assets: equities and fixed
income, as follows:
. FMIP will invest 5%-25% of its assets in equity securities, and 75%-95% of
its assets in fixed income securities;
. FMCGP will invest 30%-50% of its assets in equity securities, and 50%-70% of
its assets in fixed income securities;
. FMMGP will invest 50%-70% of its assets in equity securities, and 30%-50% of
its assets in fixed income securities; and
. FMGP will invest 70%-90% of its assets in equity securities, and 10%-30% of
its assets in fixed income securities.
The Adviser manages the Funds based on the view that the investment of each
Fund's portfolio over the long term depends primarily on the fact that the
portfolio consists of securities from multiple asset categories ("Asset
Categories") which include, with respect to a Fund's equity portfolio, the
following: large company stocks, small company stocks and foreign stocks; and
with respect to a Fund's fixed income portfolio, the following: U.S. government
securities, mortgage-backed securities, investment-grade corporate debt,
non-investment grade corporate debt ("junk bonds") and foreign fixed income
securities.
Of secondary importance to each Fund is the allocation of the portfolio's
assets among the Asset Categories in response to market conditions, and the
selection of securities within Asset Categories.
Therefore, each Fund pursues its investment objective in the following manner:
. by setting ranges regarding the percentage of a Fund's portfolio assets
which will be invested in each Asset Category;
. by allocating each Fund's portfolio assets among Asset Categories within
those defined ranges; and
. by actively selecting securities within each of the Asset Categories.
The Adviser will regularly review each Fund's allocation among Asset Categories.
The Adviser will attempt to exploit price inefficiencies among the various Asset
Categories. For example, the Adviser may move an Asset Category to its upper
limit if the Adviser expects that category to offer superior returns relative to
other Asset Categories. Likewise, the Adviser may move the Asset Category to its
lower limit if the Adviser believes that category is overvalued relative to the
other Asset Categories.
The selection of portfolio securities involves an approach specific to each
Asset Category. The approach for each category is summarized as follows:
LARGE COMPANY STOCKS
With regard to the portion of each Fund's portfolio allocated to large company
stocks, each Fund pursues its investment objective by investing in common stock
of companies with large market capitalizations. Large market capitalization
companies are those which are the 1,000 companies with the largest market
capitalization. Market capitalization is determined by multiplying the number of
outstanding shares by the current market price per share. The Adviser invests in
companies that offer growth prospects or in companies whose stock is
undervalued. Using its own quantitative process, the Adviser rates the future
performance potential of companies. The Adviser identifies under-valued
companies based on valuation models which identify companies trading at low
valuation relative to their history, to the market, or to their expected future
growth. The Adviser also invests in companies which may not be undervalued, but
which offer growth prospects based upon an evaluation of the sustainability of
current growth trends. In addition to these factors, the Adviser looks at recent
stock price performance and the direction of current fiscal year earnings
estimates.
SMALL COMPANY STOCKS
With regard to the portion of each Fund's portfolio allocated to small company
stocks, each Fund pursues its investment objective by investing at least 65% of
the allocation in equity securities of companies that fall within the market
capitalization range of the S&P 600 Small Cap Index (Index). Market
capitalization is determined by multiplying the number of outstanding shares by
the current market price per share. The Adviser invests in companies that offer
growth prospects or in companies whose stock is undervalued. Using its own
quantitative process, the Adviser rates the future performance potential of
companies. The Adviser evaluates each company's earnings quality in light of its
current valuation to narrow the list of attractive companies. The Adviser then
evaluates product positioning, management quality and sustainability of current
growth trends of those companies. Using this type of fundamental analysis, the
Adviser selects the most promising companies for a Fund's portfolio.
Companies with similar characteristics may be grouped together in broad
categories called sectors. In determining the amount to invest in a security,
the Adviser attempts to limit a Fund's exposure to each business sector that
comprises the Index. A Fund's allocation to a sector will not be less than 50%
or more than 200% of the Index's allocation to that sector.
The Funds may buy securities in initial public offerings. The Funds will
participate in such offerings without regard to the issuer's market
capitalization. The Adviser may select initial public offerings based on its
fundamental analysis of the issuer.
FOREIGN STOCKS
With regard to the portion of each Fund's portfolio allocated to foreign stocks,
each Fund pursues its investment objective by investing the allocation in equity
securities of companies based outside the United States. The Adviser manages the
Funds based on the view that international equity markets are inefficient at
pricing securities and that careful security selection offers the best potential
for superior long-term investment returns. Selection of industry and country are
secondary considerations.
Using its own quantitative process, the Adviser ranks the future performance
potential of companies. The Adviser evaluates each company's earnings potential
in light of its current valuation to narrow the list of attractive companies.
The Adviser then evaluates management quality and may meet with company
representatives, company suppliers, customers, or competitors. The Adviser also
reviews the company's financial statements and forecasts of earnings. Based on
this information, the Adviser evaluates the sustainability of the company's
current growth trends and potential catalysts for increased growth. Using this
type of fundamental analysis, the Adviser selects the most promising companies
for the Funds' portfolios.
U.S. GOVERNMENT SECURITIES
U.S. government securities consist of treasury securities and non-mortgage
backed agency securities. The Adviser invests the U.S. government securities
portion of the Funds' portfolios by setting an average duration target for the
fixed income portion of each Fund, based upon the Adviser's interest rate
outlook from time to time. In constructing a portfolio with a targeted average
duration, the Adviser generally uses ongoing relative value analysis to compare
current yield differences of securities to their historical and expected yield
differences. The Funds have no set duration parameters regarding the U.S.
government securities which it purchases.
MORTGAGE BACKED SECURITIES
Mortgage backed securities generally offer higher yields than comparable
non-mortgage backed government securities. The extra yield compensates for
prepayment risk. The Adviser attempts to manage prepayment risk by selecting
mortgage backed securities with characteristics that make prepayment risk less
likely. Characteristics that the Adviser may consider in selecting mortgage
backed securities include the interest rate formulas of the underlying
mortgages, the index upon which the mortgage rate is based, the length of time
the mortgages have been outstanding, and the prior prepayment history of the
mortgages.
The Funds may invest in mortgage-backed securities primarily by investing in
another mutual fund (which is not available for general investment by the
public) that owns those securities and that is advised by an affiliate of the
Adviser. This other mutual fund is managed independently of the Funds and may
incur administrative expenses. Therefore, any such investment by the Funds may
be subject to duplicate expenses. However, the Adviser believes that the
benefits and efficiencies of this approach should outweigh the potential
additional expenses. The Funds may also invest in such securities directly.
INVESTMENT GRADE CORPORATE DEBT
With regard to the allocation in domestic corporate fixed income securities, the
Adviser allocates investments among industries and adjusts the credit quality of
the portfolio by analyzing current economic and securities market conditions,
particularly changes in interest rates and expected trends in corporate
earnings. These factors also guide the selection of maturity and duration of
portfolio securities, but the Funds have no set maturity or duration parameters
regarding the securities which it purchases. In selecting a portfolio security,
the Adviser analyzes the business, competitive position, and financial condition
of the issuer to assess whether the security's risk is commensurate with its
potential return.
NON-INVESTMENT GRADE CORPORATE DEBT
The Funds will invest in noninvestment grade securities primarily by investing
in another mutual fund (which is not available for general investment by the
public) advised by an affiliate of the Adviser. The other mutual fund is managed
independently of the Funds and may incur administrative expenses. Therefore, any
such investment by the Funds may be subject to duplicate expenses. However, the
Adviser believes that the benefits and efficiencies of this approach should
outweigh the potential additional expenses. The Funds may also invest directly
in noninvestment grade securities. Although the selection of noninvestment grade
domestic corporate securities involves the same factors as investment grade
securities, the Adviser gives greater emphasis to its analysis of the issuer.
The Funds have no set maturity or duration parameters regarding the securities
which it purchases.
FOREIGN FIXED INCOME SECURITIES
With regard to the allocation to foreign fixed income securities, each Fund
pursues its objective by investing primarily in fixed income securities of
foreign governments and their agencies which are members of the Organization for
Economic Cooperation and Development.
The Adviser manages the foreign fixed income allocation to maintain an average
AA rating of its portfolio securities. The Adviser uses the J.P. Morgan Global
Traded Index Excluding U.S. Index (Global Index) as a starting point for
selecting the foreign fixed income portfolio securities. The Adviser looks for
opportunities to enhance each Fund's performance by diverging from the Global
Index. Such opportunities may cause the Adviser to weight the portfolio
differently than the Global Index or to buy securities not represented in the
Index. Under ordinary market conditions, however, the duration of the portfolio
securities does not deviate more than 25% from the duration of the Global Index.
No more than 25% of the foreign fixed income allocation will be invested in any
one country. The Funds also intend to invest at least 50% of the foreign fixed
income allocation in securities that have received ratings in the two highest
rating categories or unrated securities that the Adviser considers of comparable
quality.
The Adviser weighs several factors in selecting investments for the foreign
fixed income portfolio. First, the Adviser analyzes a country's general economic
condition and outlook, including its interest rates, foreign exchange rates and
trade balance. The Adviser then analyzes the country's financial condition,
including its credit ratings, government budget, tax base, outstanding public
debt and the amount of public debt held outside the country. In connection with
this analysis, the Adviser also considers how developments in other countries in
the region or the world might affect these factors.
Using its analysis, the Adviser tries to identify countries with favorable
characteristics, such as a strengthening economy, favorable inflation rate,
sound budget policy or strong public commitment to repay government debt. The
Adviser then evaluates available foreign fixed income investments in these
countries based upon its outlook for interest and foreign exchange rates. The
Adviser tries to select securities that offer the best potential returns
consistent with its general portfolio strategy.
Hedging
Hedging transactions are intended to reduce specific risks. For example, to
protect the Funds against circumstances that would normally cause the Funds'
portfolio securities to decline in value, the Funds may buy or sell a derivative
contract that would normally increase in value under the same circumstances. The
Funds may also attempt to hedge by using combinations of different derivatives
contracts, or derivatives contracts and securities. The Funds' ability to hedge
may be limited by the costs of the derivatives contracts. The Funds may attempt
to lower the cost of hedging by entering into transactions that provide only
limited protection, including transactions that (1) hedge only a portion of its
portfolio, (2) use derivatives contracts that cover a narrow range of
circumstances or (3) involve the sale of derivatives contracts with different
terms. Consequently, hedging transactions will not eliminate risk even if they
work as intended. In addition, hedging strategies are not always successful, and
could result in increased expenses and losses to the Funds.
PORTFOLIO TURNOVER
Each Fund actively trades its portfolio securities in an attempt to achieve its
investment objective. Active trading will cause a Fund to have an increased
portfolio turnover rate, which is likely to generate shorter-term gains (losses)
for its shareholders, which are taxed at a higher rate than longer-term gains
(losses). Actively trading portfolio securities increases a Fund's trading costs
and may have an adverse impact on a Fund's performance.
What are the Principal Securities in Which the Funds Invest?
EQUITY SECURITIES
Equity securities represent a share of an issuer's earnings and assets, after
the issuer pays its liabilities. The Funds cannot predict the income they will
receive from equity securities because issuers generally have discretion as to
the payment of any dividends or distributions. However, equity securities offer
greater potential for appreciation than many other types of securities, because
their value increases directly with the value of the issuer's business. The
following describes the type of equity security in which the Funds principally
invest.
Common Stocks
Common stocks are the most prevalent type of equity security. Common stocks
receive the issuer's earnings after the issuer pays its creditors and any
preferred stockholders. As a result, changes in an issuer's earnings directly
influence the value of its common stock.
FIXED INCOME SECURITIES
Fixed income securities pay interest, dividends or distributions at a specified
rate. The rate may be a fixed percentage of the principal or adjusted
periodically. In addition, the issuer of a fixed income security must repay the
principal amount of the security, normally within a specified time.
The following describes the types of fixed income securities in which the
Funds principally invest.
Treasury Securities
Treasury securities are direct obligations of the federal government of the
United States. Treasury securities are generally regarded as having the lowest
credit risks.
Agency Securities
Agency securities are issued or guaranteed by a federal agency or other
government sponsored entity acting under federal authority (a GSE). The United
States supports some GSEs with its full faith and credit. Other GSEs receive
support through federal subsidies, loans or other benefits. A few GSEs have no
explicit financial support, but are regarded as having implied support because
the federal government sponsors their activities. Agency securities are
generally regarded as having low credit risks, but not as low as treasury
securities.
The Funds treat mortgage backed securities guaranteed by GSEs as agency
securities. Although a GSE guarantee protects against credit risks, it does not
reduce the interest rate and prepayment risks of these mortgage backed
securities.
Corporate Debt Securities
Corporate debt securities are fixed income securities issued by businesses.
Notes, bonds, debentures and commercial paper are the most prevalent types of
corporate debt securities. The Funds may also purchase interests in bank loans
to companies. The credit risks of corporate debt securities vary widely among
issuers. In addition, the credit risk of an issuer's debt security may vary
based on its priority for repayment.
Mortgage Backed Securities
Mortgage backed securities represent interests in pools of mortgages. The
mortgages that comprise a pool normally have similar interest rates, maturities
and other terms. Mortgages may have fixed or adjustable interest rates.
Interests in pools of adjustable rate mortgages are known as ARMs.
Mortgage backed securities come in a variety of forms. Many have extremely
complicated terms. The simplest form of mortgage backed securities are
pass-through certificates. An issuer of pass-through certificates gathers
monthly payments from an underlying pool of mortgages. Then, the issuer deducts
its fees and expenses and passes the balance of the payments onto the
certificate holders once a month. Holders of pass-through certificates receive a
pro rata share of all payments and pre-payments from the underlying mortgages.
As a result, the holders assume all the prepayment risks of the underlying
mortgages.
Collateralized Mortgage Obligations (CMOs)
CMOs, including interests in real estate mortgage investment conduits (REMICs),
allocate payments and prepayments from an underlying pass-through certificate
among holders of different classes of mortgage backed securities. This creates
different prepayment and interest rate risks for each CMO class. The degree of
increased or decreased prepayment risks depends upon the structure of the CMOs.
However, the actual returns on any type of mortgage backed security depend upon
the performance of the underlying pool of mortgages, which no one can predict
and will vary among pools.
SEQUENTIAL CMOS
In a sequential pay CMO, one class of CMOs receives all principal payments and
prepayments. The next class of CMOs receives all principal payments after the
first class is paid off. This process repeats for each sequential class of CMO.
As a result, each class of sequential pay CMOs reduces the prepayment risks of
subsequent classes.
PACS, TACS AND COMPANION CLASSES
More sophisticated CMOs include planned amortization classes (PACs) and targeted
amortization classes (TACs). PACs and TACs are issued with companion classes.
PACs and TACs receive principal payments and prepayments at a specified rate.
The companion classes receive principal payments and prepayments in excess of
the specified rate. In addition, PACs will receive the companion classes' share
of principal payments, if necessary, to cover a shortfall in the prepayment
rate. This helps PACs and TACs to control prepayment risks by increasing the
risks to their companion classes.
IOS AND POS
CMOs may allocate interest payments to one class (Interest Only or IOs) and
principal payments to another class (Principal Only or POs). POs increase in
value when prepayment rates increase. POs tend to increase in value when
interest rates decline (and prepayments increase) making POs a useful hedge
against interest rate risk. In contrast, IOs decrease in value when prepayments
increase, because the underlying mortgages generate less interest payments.
However, IOs tend to increase in value when interest rates rise (and prepayments
decrease), making IOs a useful hedge against interest rate risks.
FLOATERS AND INVERSE FLOATERS
Another variant allocates interest payments between two classes of CMOs. One
class (Floaters) receives a share of interest payments based upon a market index
such as LIBOR. The other class (Inverse Floaters) receives any remaining
interest payments from the underlying mortgages. Floater classes receive more
interest (and Inverse Floater classes receive correspondingly less interest) as
interest rates rise. This shifts prepayment and interest rate risks from the
Floater to the Inverse Floater class, reducing the price volatility of the
Floater class and increasing the price volatility of the Inverse Floater class.
Z CLASSES
CMOs must allocate all payments received from the underlying mortgages to some
class. To capture any unallocated payments, CMOs generally have an accrual (Z)
class. Z classes do not receive any payments from the underlying mortgages until
all other CMO classes have been paid off. Once this happens, holders of Z class
CMOs receive all payments and prepayments.
SPECIAL TRANSACTIONS
Delayed Delivery Transactions
Delayed delivery transactions, including when issued transactions, are
arrangements in which the Fund buys securities for a set price, with payment and
delivery of the securities scheduled for a future time. During the period
between purchase and settlement, no payment is made by the Fund to the issuer
and no interest accrues to the Fund. The Fund records the transaction when it
agrees to buy the securities and reflects their value in determining the price
of its shares. Settlement dates may be a month or more after entering into these
transactions so that the market values of the securities bought may vary from
the purchase prices. Therefore, delayed delivery transactions create interest
rate risks for the Fund. Delayed delivery transactions also involve credit risks
in the event of a counterparty default. These transactions create leverage
risks.
TO BE ANNOUNCED SECURITIES (TBAS)
As with other delayed delivery transactions, a seller agrees to issue a TBA
security at a future date. However, the seller does not specify the particular
securities to be delivered. Instead, the Fund agrees to accept any security that
meets specified terms. For example, in a TBA mortgage backed transaction, the
Fund and the seller would agree upon the issuer, interest rate and terms of the
underlying mortgages. The seller would not identify the specific underlying
mortgages until it issues the security. TBA mortgage backed securities increase
interest rate risks because the underlying mortgages may be less favorable than
anticipated by the Fund.
DOLLAR ROLLS
Dollar rolls are transactions where the Funds sell mortgage-backed securities
with a commitment to buy similar, but not identical, mortgage-backed securities
on a future date at a lower price. Normally, one or both securities involved are
TBA mortgage backed securities. Dollar rolls are subject to interest rate risks
and credit risks.
FOREIGN SECURITIES
Foreign securities are securities of issuers based outside the United States.
The Funds consider an issuer to be based outside the United States if:
. it is organized under the laws of, or has a principal office located in,
another country;
. the principal trading market for its securities is in another country; or
. it (or its subsidiaries) derived in its most current fiscal year at least 50%
of its total assets, capitalization, gross revenue or profit from goods
produced, services performed, or sales made in another country.
Foreign securities are primarily denominated in foreign currencies. Along with
the risks normally associated with domestic securities of the same type, foreign
securities are subject to currency risks and risks of foreign investing. Trading
in certain foreign markets is also subject to liquidity risks.
DERIVATIVE CONTRACTS
Derivative contracts are financial instruments that require payments based upon
changes in the values of designated (or underlying) securities, currencies,
commodities, financial indices or other assets. Some derivative contracts (such
as futures, forwards and options) require payments relating to a future trade
involving the underlying asset. Other derivative contracts (such as swaps)
require payments relating to the income or returns from the underlying asset.
The other party to a derivative contract is referred to as a counterparty.
Many derivative contracts are traded on securities or commodities exchanges.
In this case, the exchange sets all the terms of the contract except for the
price. Investors make payments due under their contracts through the exchange.
Most exchanges require investors to maintain margin accounts through their
brokers to cover their potential obligations to the exchange. Parties to the
contract make (or collect) daily payments to the margin accounts to reflect
losses (or gains) in the value of their contracts. This protects investors
against potential defaults by the counterparty. Trading contracts on an exchange
also allows investors to close out their contracts by entering into offsetting
contracts.
For example, the Funds could close out an open contract to buy an asset at a
future date by entering into an offsetting contract to sell the same asset on
the same date. If the offsetting sale price is more than the original purchase
price, the Funds realize a gain; if it is less, the Funds realize a loss.
Exchanges may limit the amount of open contracts permitted at any one time. Such
limits may prevent the Funds from closing out a position. If this happens, the
Funds will be required to keep the contract open (even if it is losing money on
the contract), and to make any payments required under the contract (even if it
has to sell portfolio securities at unfavorable prices to do so). Inability to
close out a contract could also harm the Funds by preventing it from disposing
of or trading any assets it has been using to secure its obligations under the
contract.
The Funds may also trade derivative contracts over-the-counter (OTC) in
transactions negotiated directly between the Funds and the counterparty. OTC
contracts do not necessarily have standard terms, so they cannot be directly
offset with other OTC contracts. In addition, OTC contracts with more
specialized terms may be more difficult to price than exchange traded contracts.
Depending upon how the Funds use derivative contracts and the relationships
between the market value of a derivative contract and the underlying asset,
derivative contracts may increase or decrease the Funds' exposure to interest
rate and currency risks, and may also expose the Funds to liquidity and leverage
risks. OTC contracts also expose the Funds to credit risks in the event that a
counterparty defaults on the contract.
The Funds may trade in the following types of derivative contracts.
Futures Contracts
Futures contracts provide for the future sale by one party and purchase by
another party of a specified amount of an underlying asset at a specified price,
date, and time. Entering into a contract to buy an underlying asset is commonly
referred to as buying a contract or holding a long position in the asset.
Entering into a contract to sell an underlying asset is commonly referred to as
selling a contract or holding a short position in the asset. Futures contracts
are considered to be commodity contracts. Futures contracts traded OTC are
frequently referred to as forward contracts.
The Funds may buy or sell forward foreign currency exchange contracts,
interest rate futures contracts and stock index futures to accommodate cash
flows and to hedge against the effects of changes in the value of portfolio
securities due to anticipated changes in interest rates and market conditions.
INVESTMENT RATINGS FOR INVESTMENT GRADE SECURITIES
The Adviser will determine whether a security is investment grade based upon the
credit ratings given by one or more nationally recognized rating services. For
example, Standard and Poor's, a rating service, assigns ratings to investment
grade securities (AAA, AA, A, and BBB) based on their assessment of the
likelihood of the issuer's inability to pay interest or principal (default) when
due on each security. Lower credit ratings correspond to higher credit risk. If
a security has not received a rating, the Funds must rely entirely upon the
Adviser's credit assessment that the security is comparable to investment grade.
What are the Specific Risks of Investing in the Funds?
STOCK MARKET RISKS
The value of equity securities in each Fund's portfolio will rise and fall.
These fluctuations could be a sustained trend or a drastic movement. A Fund's
portfolio will reflect changes in prices of individual portfolio stocks or
general changes in stock valuations. Consequently, a Fund's share price may
decline.
The Adviser attempts to manage market risk by limiting the amount each Fund
invests in each company's equity securities. However, diversification will not
protect a Fund against widespread or prolonged declines in the stock market.
INTEREST RATE RISKS
Prices of fixed income securities rise and fall in response to changes in the
interest rate paid by similar securities. Generally, when interest rates rise,
prices of fixed income securities fall. However, market factors, such as the
demand for particular fixed income securities, may cause the price of certain
fixed income securities to fall while the prices of other securities rise or
remain unchanged.
Interest rate changes have a greater effect on the price of fixed income
securities with longer durations. Duration measures the price sensitivity of a
fixed income security to changes in interest rates.
CREDIT RISKS
Credit risk is the possibility that an issuer will default on a security by
failing to pay interest or principal when due. If an issuer defaults, the Funds
will lose money.
Many fixed income securities receive credit ratings from services such as
Standard & Poor's and Moody's Investors Service, Inc. These services assign
ratings to securities by assessing the likelihood of issuer default. Lower
credit ratings correspond to higher credit risk. If a security has not received
a rating, the Funds must rely entirely upon the Adviser's credit assessment.
Fixed income securities generally compensate for greater credit risk by paying
interest at a higher rate. The difference between the yield of a security and
the yield of a U.S. Treasury security with a comparable maturity (the spread)
measures the additional interest paid for risk. Spreads may increase generally
in response to adverse economic or market conditions. A security's spread may
also increase if the security's rating is lowered, or the security is perceived
to have an increased credit risk. An increase in the spread will cause the price
of the security to decline.
Credit risk includes the possibility that a party to a transaction involving
the Funds will fail to meet its obligations. This could cause the Funds to lose
the benefit of the transaction or prevent the Funds from selling or buying other
securities to implement their investment strategies.
CURRENCY RISKS
Exchange rates for currencies fluctuate daily. The combination of currency risk
and market risks tends to make securities traded in foreign markets more
volatile than securities traded exclusively in the United States.
The Adviser attempts to manage currency risk by limiting the amount the Funds
invest in securities denominated in a particular currency. However,
diversification will not protect the Funds against a general increase in the
value of the U.S. dollar relative to other currencies.
CALL AND PREPAYMENT RISKS
Call risk is the possibility that an issuer may redeem a fixed income security
before maturity (a call) at a price below its current market price. An increase
in the likelihood of a call may reduce the security's price.
If a fixed income security is called, the Funds may have to reinvest the
proceeds in other fixed income securities with lower interest rates, higher
credit risks, or other less favorable characteristics.
Unlike traditional fixed income securities, which pay a fixed rate of interest
until maturity (when the entire principal amount is due) payments on mortgage
backed securities include both interest and a partial payment of principal.
Partial payment of principal may be comprised of scheduled principal payments as
well as unscheduled payments from the voluntary prepayment, refinancing, or
foreclosure of the underlying loans. These unscheduled prepayments of principal
create risks that can adversely affect a Fund holding mortgage backed
securities.
For example, when interest rates decline, the values of mortgage backed
securities generally rise. However, when interest rates decline, unscheduled
prepayments can be expected to accelerate, and the Funds would be required to
reinvest the proceeds of the prepayments at the lower interest rates then
available. Unscheduled prepayments would also limit the potential for capital
appreciation on mortgage backed securities.
Conversely, when interest rates rise, the values of mortgage backed securities
generally fall. Since rising interest rates typically result in decreased
prepayments, this could lengthen the average lives of mortgage backed
securities, and cause their value to decline more than traditional fixed income
securities.
Generally, mortgage backed securities compensate for the increased risk
associated with prepayments by paying a higher yield. The additional interest
paid for risk is measured by the difference between the yield of a mortgage
backed security and the yield of a U.S. Treasury security with a comparable
maturity (the spread). An increase in the spread will cause the price of the
mortgage backed security to decline. Spreads generally increase in response to
adverse economic or market conditions. Spreads may also increase if the security
is perceived to have an increased prepayment risk or is perceived to have less
market demand.
SECTOR RISKS
Companies with similar characteristics may be grouped together in broad
categories called sectors. Sector risk is the possibility that a certain sector
may underperform other sectors or as the market as a whole. As the Adviser
allocates more of a Fund's portfolio holdings to a particular sector, a Fund's
performance will be more susceptible to any economic, business or other
developments which generally affect that sector.
LIQUIDITY RISKS
Trading opportunities are more limited for securities that are not widely held.
This may make it more difficult to sell or buy a security at a favorable price
or time. Consequently, the Funds may have to accept a lower price to sell a
security, sell other securities to raise cash or give up an investment
opportunity, any of which could have a negative effect on the Funds'
performance. Infrequent trading of securities may also lead to an increase in
their price volatility.
Liquidity risk also refers to the possibility that a Fund may not be able to
sell a security or close out a derivative contract when it wants to. If this
happens, a Fund will be required to continue to hold the security or keep the
position open, and a Fund could incur losses.
RISKS RELATED TO COMPANY SIZE
Generally, the smaller the market capitalization of a company, the fewer the
number of shares traded daily, the less liquid its stock and the more volatile
its price. Market capitalization is determined by multiplying the number of its
outstanding shares by the current market price per share.
Companies with smaller market capitalizations also tend to have unproven track
records, a limited product or service base and limited access to capital. These
factors also increase risks and make these companies more likely to fail than
companies with larger market capitalizations.
RISKS ASSOCIATED WITH NONINVESTMENT GRADE SECURITIES
Securities rated below investment grade, also known as junk bonds, generally
entail greater market, credit and liquidity risks than investment grade
securities. For example, their prices are more volatile, economic downturns and
financial setbacks may affect their prices more negatively, and their trading
market may be more limited.
RISKS OF FOREIGN INVESTING
Foreign securities pose additional risks because foreign economic or political
conditions may be less favorable than those of the United States. Securities in
foreign markets may also be subject to taxation policies that reduce returns for
U.S. investors.
Foreign companies may not provide information (including financial statements)
as frequently or to as great an extent as companies in the United States.
Foreign companies may also receive less coverage than United States companies by
market analysts and the financial press. In addition, foreign countries may lack
uniform accounting, auditing and financial reporting standards or regulatory
requirements comparable to those applicable to U.S. companies. These factors may
prevent the Funds and their Adviser from obtaining information concerning
foreign companies that is as frequent, extensive and reliable as the information
available concerning companies in the United States.
Foreign countries may have restrictions on foreign ownership of securities or
may impose exchange controls, capital flow restrictions or repatriation
restrictions which could adversely affect the liquidity of a Fund's investments.
What do Shares Cost?
You can purchase or redeem Shares any day the New York Stock Exchange (NYSE) is
open. When a Fund receives your transaction request in proper form (as described
in the prospectus), it is processed at the next calculated net asset value
(NAV). If a Fund purchases foreign securities that trade in foreign markets on
days the NYSE is closed, the value of a Fund's assets may change on days you
cannot purchase or redeem Shares.The Funds do not charge a front-end sales
charge. NAV is determined at the end of regular trading (normally 4:00 p.m.
Eastern time) each day the NYSE is open. The Funds generally value equity
securities according to the last sale price in the market in which they are
primarily traded (either a national securities exchange or the over-the-counter
market). The Funds generally value fixed income securities at the last sale
price on a national securities exchange, if available, otherwise, as determined
by an independent pricing service.
The required minimum initial investment for each Fund is $1,500. There is no
required minimum subsequent investment amount. Accounts established through
investment professionals may be subject to a smaller minimum investment amount.
Keep in mind that investment professionals may charge you fees for their
services in connection with your Share transactions.
How are the Funds Sold?
The Funds offer two share classes: Select Shares and Institutional Shares, each
representing interests in a single portfolio of securities. This prospectus
relates only to Select Shares. Each share class has different expenses which
affect their performance. Contact your investment professional or call 1-800-
341-7400 for more information concerning the other class.
The Funds' Distributor, Federated Securities Corp., markets the Shares
described in this prospectus to retail and private banking customers of
financial institutions.
When the Distributor receives marketing fees, it may pay some or all of them
to investment professionals. The Distributor and its affiliates may pay out of
their assets other amounts (including items of material value) to investment
professionals for marketing and servicing Shares. The Distributor is a
subsidiary of Federated Investors, Inc. (Federated).
RULE 12B-1 PLAN
Each Fund has adopted a Rule 12b-1 Plan, which allows it to pay marketing fees
to the Distributor and investment professionals for the sale, distribution and
customer servicing of a Fund's Select Shares. Because these Shares pay marketing
fees on an ongoing basis, your investment cost may be higher over time than
other shares with different sales charges and marketing fees.
How to Purchase Shares
You may purchase Shares through an investment professional or directly from the
Funds. The Funds reserve the right to reject any request to purchase Shares.
THROUGH AN INVESTMENT PROFESSIONAL
. Establish an account with the investment professional; and
. Submit your purchase order to the investment professional before the end of
regular trading on the NYSE (normally 4:00 p.m. Eastern time). You will
receive the next calculated NAV if the investment professional forwards the
order to a Fund on the same day and a Fund receives payment within one
business day. You will become the owner of Shares and receive dividends when
a Fund receives your payment.
Investment professionals should send payments according to the instructions in
the sections "By Wire" or "By Check."
DIRECTLY FROM THE FUNDS
. Establish your account with a Fund by submitting a completed New Account
Form; and
. Send your payment to a Fund by Federal Reserve wire or check.
You will become the owner of Shares and your Shares will be priced at the next
calculated NAV after a Fund receives your wire or your check. If your check does
not clear, your purchase will be canceled and you could be liable for any losses
or fees incurred by a Fund or Federated Shareholder Services Company, the Funds'
transfer agent.
An institution may establish an account and place an order by calling a Fund
and the Shares will be priced at the next calculated NAV after a Fund receives
the order.
By Wire Send your wire to:
State Street Bank and Trust Company
Boston, MA
Dollar Amount of Wire
ABA Number 011000028
Attention: EDGEWIRE
Wire Order Number, Dealer Number or Group Number
Nominee/Institution Name
Fund Name and Number and Account Number
You cannot purchase Shares by wire on holidays when wire transfers are
restricted.
By Check
Make your check payable to The Federated Funds, note your account number on the
check, and mail it to:
Federated Shareholder Services Company
P.O. Box 8600
Boston, MA 02266-8600
If you send your check by a private courier or overnight delivery service that
requires a street address, mail it to:
Federated Shareholder Services Company
1099 Hingham Street
Rockland, MA 02370-3317
Payment should be made in U.S. dollars and drawn on a U.S. bank. The Funds will
not accept third- party checks (checks originally payable to someone other than
you or The Federated Funds).
BY SYSTEMATIC INVESTMENT PROGRAM
Once you have opened an account, you may automatically purchase additional
Shares on a regular basis by completing the Systematic Investment Program (SIP)
section of the New Account Form or by contacting the Funds or your investment
professional. The minimum investment amount for SIPs is $50.
BY AUTOMATED CLEARINGHOUSE (ACH)
Once you have opened an account, you may purchase additional Shares through a
depository institution that is an ACH member. This purchase option can be
established by completing the appropriate sections of the New Account Form.
How to Redeem Shares
You should redeem Shares:
. through an investment professional if you purchased Shares through an
investment professional; or
. directly from the Funds if you purchased Shares directly from the Funds.
THROUGH AN INVESTMENT PROFESSIONAL
Submit your redemption request to your investment professional by the end of
regular trading on the NYSE (normally 4:00 p.m. Eastern time). The redemption
amount you will receive is based upon the next calculated NAV after a Fund
receives the order from your investment professional.
DIRECTLY FROM THE FUNDs
By Telephone
You may redeem Shares by calling the Funds at 1-800-341-7400 once you have
completed the appropriate authorization form for telephone transactions. If you
call before the end of regular trading on the NYSE (normally 4:00 p.m. Eastern
time) you will receive a redemption amount based on that day's NAV.
By Mail
You may redeem Shares by mailing a written request to a Fund. You will receive a
redemption amount based on the next calculated NAV after a Fund receives your
written request in proper form.
Send requests by mail to:
Federated Shareholder Services Company
P.O. Box 8600
Boston, MA 02266-8600
Send requests by private courier or overnight delivery service to:
Federated Shareholder Services Company
1099 Hingham Street
Rockland, MA 02370-3317
All requests must include:
. Fund Name and Share Class, account number and account registration;
. amount to be redeemed; and
. signatures of all shareholders exactly as registered.
Call your investment professional or the Funds if you need special instructions.
Signature Guarantees
Signatures must be guaranteed if:
. your redemption will be sent to an address other than the address of record;
. your redemption will be sent to an address of record that was changed within
the last 30 days; or
. a redemption is payable to someone other than the shareholder(s) of record.
A signature guarantee is designed to protect your account from fraud. Obtain a
signature guarantee from a bank or trust company, savings association, credit
union or broker, dealer, or securities exchange member. A notary public cannot
provide a signature guarantee.
PAYMENT METHODS FOR REDEMPTIONS
Your redemption proceeds will be mailed by check to your address of record. The
following payment options are available if you complete the appropriate section
of the New Account Form or an Account Service Options Form. These payment
options require a signature guarantee if they were not established when the
account was opened:
. an electronic transfer to your account at a financial institution that is an
ACH member; or
. wire payment to your account at a domestic commercial bank that is a Federal
Reserve System member.
Redemption in Kind
Although each Fund intends to pay Share redemptions in cash, it reserves the
right to pay the redemption price in whole or in part by a distribution of a
Fund's portfolio securities.
LIMITATIONS ON REDEMPTION PROCEEDS
Redemption proceeds normally are wired or mailed within one business day after
receiving a request in proper form. Payment may be delayed up to seven days:
. to allow your purchase to clear;
. during periods of market volatility; or
. when a shareholder's trade activity or amount adversely impacts a Fund's
ability to manage its assets.
You will not accrue interest or dividends on uncashed checks from a Fund if
those checks are undeliverable and returned to a Fund.
SYSTEMATIC WITHDRAWAL PROGRAM
You may automatically redeem Shares in a minimum amount of $100 on a regular
basis. Complete the appropriate section of the New Account Form or an Account
Service Options Form or contact your investment professional or the Funds. Your
account value must meet the minimum initial investment amount at the time the
program is established. This program may reduce, and eventually deplete, your
account. Payments should not be considered yield or income.
ADDITIONAL CONDITIONS
Telephone Transactions
The Funds will record your telephone instructions. If the Funds do not follow
reasonable procedures, they may be liable for losses due to unauthorized or
fraudulent telephone instructions.
Share Certificates
The Funds no longer issue share certificates. If you are redeeming Shares
represented by certificates previously issued by the Funds, you must return the
certificates with your written redemption request. For your protection, send
your certificates by registered or certified mail, but do not endorse them.
Account and Share Information
CONFIRMATIONS AND ACCOUNT STATEMENTS
You will receive confirmation of purchases and redemptions (except for
systematic transactions). In addition, you will receive periodic statements
reporting all account activity, including systematic transactions, dividends and
capital gains paid.
DIVIDENDS AND CAPITAL GAINS
Each Fund (except the Income Portfolio) declares and pays any dividends
quarterly to shareholders. The Income Fund declares and pays any dividends
monthly to shareholders. Dividends are paid to all shareholders invested in a
Fund on the record date. The record date is the date on which a shareholder must
officially own Shares in order to earn a dividend.
In addition, the Funds pay any capital gains at least annually. Your dividends
and capital gains distributions will be automatically reinvested in additional
Shares unless you elect cash payments.
If you purchase Shares just before a Fund declares a dividend or capital gain
distribution, you will pay the full price for the Shares and then receive a
portion of the price back in the form of a taxable distribution, whether or not
you reinvest the distribution in Shares. Therefore, you should consider the tax
implications of purchasing Shares shortly before a Fund declares a dividend or
capital gain. Contact your investment professional or the Funds for information
concerning when dividends and capital gains will be paid.
ACCOUNTS WITH LOW BALANCES
Due to the high cost of maintaining accounts with low balances, accounts may be
closed if redemptions cause the account balance to fall below the minimum
initial investment amount. Before an account is closed, you will be notified and
allowed 30 days to purchase additional Shares to meet the minimum.
TAX INFORMATION
The Funds send an annual statement of your account activity to assist you in
completing your federal, state and local tax returns. Fund distributions of
dividends and capital gains are taxable to you whether paid in cash or
reinvested in the Funds. Dividends are taxable as ordinary income; capital gains
are taxable at different rates depending upon the length of time a Fund holds
its assets.
Fund distributions are expected to be both dividends and capital gains.
Redemptions are taxable sales. Please consult your tax Adviser regarding your
federal, state, and local tax liability.
Who Manages the Funds?
The Board of Trustees governs the Funds. The Board selects and oversees the
Adviser, Federated Investment Management Company. The Adviser manages the Funds'
assets, including buying and selling portfolio securities. The Adviser's address
is Federated Investors Tower, 1001 Liberty Avenue, Pittsburgh, PA 15222-3779.
The Adviser has delegated daily management of some of the Funds' assets to the
Sub-Adviser, Federated Global Investment Management Corp., who is paid by the
Adviser and not by the Funds based on the portion of foreign securities the Sub-
Adviser manages. The Sub-Adviser's address is 175 Water Street, New York, NY
10038-4965.
PORTFOLIO MANAGERS
The portfolio managers for the Funds' individual asset categories are as
follows:
<TABLE>
<CAPTION>
Name
(Portfolio Manager Since) Asset Category Managed Biography
<S> <C> <C>
John W. Harris Overall Allocation and John W. Harris is a Portfolio Manager for the
Funds and performs
(December 1998) Domestic Large CompanyStocks the overall asset allocation of the Funds'
assets among the
various asset categories. In addition, Mr.
Harris is a manager
of the U.S. large company stocks asset
category. He has
performed these duties since December 1998. In
allocating the
Funds' assets, Mr.Harris evaluates the market
environment and
economic outlook, utilizing the services of
the Adviser's
Investment Strategy Committee. Mr.Harris
initially joined
Federated in 1987 as an Investment Analyst. He
served as an
Investment Analyst and an Assistant Vice
President from 1990
through 1992 and as a Senior Investment
Analyst and Vice
President through May 1993. After leaving the
money management
field to travel extensively, he rejoined
Federated in 1997 as a
Senior Investment Analyst and became a
Portfolio Manager and
Assistant Vice President of the Funds' Adviser
in December 1998.
In January 2000, Mr. Harris became Vice
President of the Funds'
Adviser. Mr. Harris is a Chartered Financial
Analyst. He
received his M.B.A. from the University
ofPittsburgh.
Michael P. Donnelly Domestic Large CompanyStocks Mr. Donnelly joined Federated in 1989 as an
Investment Analyst.
(June 1997) He served as a Portfolio Manager from 1994 to
1998 and became a
Senior Portfolio Manager in 1998. He was a
Vice President of the
Funds' Adviser from 1994 to 1999. In May 1999,
Mr. Donnelly
became a Senior Vice President of the Funds'
Adviser.
Mr.Donnelly is a Chartered Financial Analyst
and received his
M.B.A. from the University of Virginia.
James E. Grefenstette (August Domestic Large CompanyStocks Mr. Grefenstette joined Federated in 1992 and
has been a
1994) Portfolio Manager since 1994. Mr. Grefenstette
became a Senior
Vice President of the Funds' Adviser in
January 2000. He served
as a Vice President of the Funds' Adviser from
1996 through 1999
and was an Assistant Vice President of the
Funds' Adviser from
1994 until 1996. Mr. Grefenstette is a
Chartered Financial
Analyst; he received his M.S. in Industrial
Administration from
Carnegie Mellon University.
Susan M. Nason U.S. Treasury Securities Ms. Nason joined Federated in 1987 and has
been a Senior
(Inception) Portfolio Manager and Senior Vice President of
the Funds'
Adviser since 1997. Ms. Nason served as a
Portfolio Manager and
Vice President of the Funds' Adviser from 1993
to 1997. Ms.Nason
is a Chartered Financial Analyst and received
her M.S.I.A.
concentrating in Finance from Carnegie Mellon
University.
Joseph M. Balestrino U.S. Treasury Securities Mr. Balestrino joined Federated in 1986 and
has been a Senior
(March 1995) and Investment-Grade Portfolio Manager and Senior Vice President of
the Funds'
Corporate Bonds Adviser since 1998. He was a Portfolio Manager
and a Vice
President of the Funds' Adviser from 1995 to
1998. Mr.
Balestrino served as a Portfolio Manager and
an Assistant Vice
President of the Funds' Adviser from 1993 to
1995. Mr.
Balestrino is a Chartered Financial Analyst
and received his
Master's Degree in Urban and Regional Planning
from the
University of Pittsburgh.
Kathleen M. Foody-Malus Mortgage-Backed Securities Ms. Foody-Malus joined Federated in 1983 and
has been a Senior
(Inception) Portfolio Manager since 1996 and a Vice
President of the Funds'
Adviser since 1993. She was a Portfolio
Manager and a Vice
President of the Funds' Adviser from 1993 to
1996. Ms.
Foody-Malus received her M.B.A. in
Accounting/Finance fromthe
University of Pittsburgh.
Todd A. Abraham Mortgage-Backed Securities Mr. Abraham joined Federated in 1993 as an
Investment Analyst
(January 2000) and served as Assistant Vice President from 1995 to 1997.
Mr.Abraham has been a Portfolio Manager since
1995 and a Vice
President of
the Funds' Adviser since 1997.
Mr.Abraham served as
a Portfolio Analyst at Ryland Mortgage Co.
from 1992 to 1993.
Mr. Abraham is a Chartered Financial Analyst
and received his
M.B.A. in Finance from Loyola College.
John T. Gentry Investment Grade Corporate Mr. Gentry joined Federated in 1995 as an
Investment Analyst and
(July 1997) Bonds has been a Senior Investment Analyst and an
Assistant Vice
President of
the Funds' Adviser since 1997.
Mr. Gentry served as
a Senior Treasury Analyst at Sun Company, Inc.
from 1991 to
1995. Mr. Gentry is a Chartered Financial
Analyst and earned his
M.B.A., with concentrations in Finance and
Accounting, from
Cornell University.
Mark E. Durbiano High Yield Corporate Bonds Mr. Durbiano joined Federated in 1982 and has
been a Senior
(Inception) Portfolio Manager and a Senior Vice President
of the Funds'
Adviser since 1996. From 1988 through 1995,
Mr. Durbiano was a
Portfolio Manager and a Vice President of the
Funds' Adviser.
Mr.Durbiano is a Chartered Financial Analyst
and received his
M.B.A. in Finance from the University of
Pittsburgh.
Robert M. Kowit Foreign Bonds Mr. Kowit joined Federated in 1995 as a
Portfolio Manager and a
(November 1995) Vice President of the Funds' Sub-Adviser. Mr.
Kowit served as a
Managing Partner of Copernicus Global Asset
Management from
January 1995 through October 1995. From 1990
to 1994, he served
as Senior Vice President/Portfolio Manager of
International
Fixed Income and Foreign Exchange for John
Hancock Advisers. Mr.
Kowit received his M.B.A. from Iona College
with a concentration
in finance.
Micheal W. Casey, Ph.D. Foreign Bonds Mr. Casey joined Federated in 1996 as a Senior
Investment
(January 1997) Analyst and an Assistant Vice President. Mr.
Casey currently
serves as a Senior Portfolio Manager and has
been a Vice
President of the Sub-Adviser since 1998. Mr.
Casey served as an
International Economist and Portfolio
Strategist for Maria
Fiorini Ramirez Inc. from 1990 to 1996. Mr.
Casey earned a Ph.D.
concentrating in economics from The New School
for Social
Research and a M.Sc. from the London School of
Economics.
Aash M. Shah Domestic Small CompanyStocks Mr. Shah joined Federated in 1993 and has been
a Portfolio
(June 1997) Manager and a Vice President of the Funds'
Adviser since January
1997. Mr. Shah was a Portfolio Manager and
served as an
Assistant Vice President of the Adviser from
1995 through 1996,
and as an Investment Analyst from 1993 to
1995. Mr. Shah
received his Masters in Industrial
Administration from Carnegie
Mellon University with a concentration in
finance and
accounting. Mr.Shah is a Chartered Financial
Analyst.
Grant K. McKay Domestic Small CompanyStocks Mr. McKay joined Federated in 1997 as an
Investment Analyst. He
(January 2000) has been an Assistant Vice President/Senior
Investment Analyst
of the Funds' Adviser since 1998. Mr. McKay
worked for
PRIMCOCapital Management as a Credit Research
Analyst from 1993
to 1995 and as an Assistant Portfolio Manager
during 1995 and
1996. Mr. McKay is a Chartered Financial
Analyst. He received
his M.B.A. with a concentration in Finance
from the University
of Chicago.
Alexandre de Bethmann Foreign Stocks Mr. de Bethmann joined Federated in 1995 as a
Senior Portfolio
(November 1995) Manager and a Vice President of the Funds'
Sub-Adviser. Mr. de
Bethmann served as Assistant Vice
President/Portfolio Manager
for Japanese and Korean equities at the
College Retirement
Equities Fund from 1994 to 1995. Mr. de
Bethmann received his
M.B.A. in Finance from Duke University.
Frank Semack Foreign Stocks Mr. Semack joined Federated in 1995 as a
Senior Portfolio
(November 1995) Manager and a Vice President of the Funds'
Sub-Adviser.
Mr.Semack served as an Investment Analyst at
Omega Advisers,
Inc. from 1993 to 1994. Mr. Semack received
his M.Sc. in
economics from the London School of Economics.
</TABLE>
The Adviser, Sub-Adviser and other subsidiaries of Federated advise
approximately 176 mutual funds and separate accounts, which totaled
approximately $125 billion in assets as of December 31, 1999. Federated was
established in 1955 and is one of the largest mutual fund investment managers in
the United States with approximately 1,900 employees. More than 4,000 investment
professionals make Federated Funds available to their customers.
ADVISORY FEES
The Adviser receives an annual investment advisory fee of 0.75% of each Fund's
average daily net assets. The Adviser may voluntarily waive a portion of its fee
or reimburse a Fund for certain operating expenses.
Financial Information
FINANCIAL HIGHLIGHTS
The Financial Highlights will help you understand each Fund's financial
performance for its past five fiscal years, or since inception, if the life of a
Fund is shorter. Some of the information is presented on a per share basis.
Total returns represent the rate an investor would have earned (or lost) on an
investment in a Fund, assuming reinvestment of any dividends and capital gains.
This information has been audited by Deloitte & Touche LLP, whose report,
along with the Funds' audited financial statements, is included in the Annual
Reports.
Financial Highlights-Select Shares
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
Distributions
Net Realized from
Net
and Unrealized
Realized
Gain/(Loss) on Gain on
Net Asset Investments, Distributions
Investments,
Value, Net Foreign Currency Total from from Net
Foreign Currency
Year Ended beginning Investment Transactions and Investment Investment
Transactions and
November 30, of period Income Futures Contracts Operations Income
Futures Contracts
<S> <C> <C> <C> <C> <C> <C>
Federated Managed Income Portfolio
1995 $ 9.77 0.48 0.83 1.31
(0.54) --
1996 $ 10.54 0.53 0.10 0.63 (0.54)
(0.07)
1997 $ 10.56 0.51 0.31 0.82 (0.54)
(0.07)
1998 $ 10.77 0.48 0.49 0.97 (0.48)
(0.13)
1999/1/ $ 11.13 0.48 (0.42) 0.06 (0.47)
(0.31)
Federated Managed Conservative Growth Portfolio
1995 $ 9.83 0.37 1.34 1.71
(0.42) --
1996 $ 11.12 0.43 0.41 0.84 (0.44)
(0.16)
1997 $ 11.36 0.40 0.74 1.14 (0.42)
(0.12)
1998 $ 11.96 0.37 0.81 1.18 (0.38)
(0.62)
1999/1/ $ 12.14 0.37 0.13 0.50 (0.37)
(0.47)
Federated Managed Moderate Growth Portfolio
1995 $ 9.81 0.23 1.79 2.02
(0.33) --
1996 $ 11.50 0.36 0.94 1.30 (0.37)
(0.23)
1997 $ 12.20 0.30 1.18 1.48 (0.32)
(0.30)
1998 $ 13.06 0.26 0.92 1.18 (0.25)
(0.88)
1999/1/ $ 13.11 0.26 1.00 1.26 (0.26)
(0.60)
Federated Managed Growth Portfolio
1995 $ 9.80 0.17 1.89 2.06 (0.25)
(0.02)
1996 $ 11.59 0.28 1.19 1.47 (0.30)
(0.26)
1997 $ 12.50 0.18 1.46 1.64 (0.22)
(0.36)
1998 $ 13.56 0.15 1.21 1.36 (0.13)
(0.69)
1999/1/ $ 14.10 0.12 1.75 1.87 (0.10)
(0.72)
</TABLE>
1 For the year ended November 30, 1999, the Funds were audited by Deloitte &
Touche LLP. Each of the previous years were audited by other auditors.
2 Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
3 This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
<TABLE>
<CAPTION>
Ratios to Average Net Assets
Net Asset Net Net
Assets, Portfolio
Total Value, end Total Investment Expense Waiver/ end of
period Turnover
Distributions of period Return/2/ Expenses Income Reimbursement/3/ (000
omitted) Rate
<S> <C> <C> <C> <C> <C>
<C> <C>
(0.54) $10.54 13.76% 1.50% 5.56% 1.06% $
13,927 165%
(0.61) $10.56 6.23% 1.50% 5.02% 0.85% $
25,459 164%
(0.61) $10.77 8.14% 1.50% 4.93% 0.75% $
36,608 99%
(0.61) $11.13 9.29% 1.50% 4.39% 0.67% $
46,193 122%
(0.78) $10.41 0.52% 1.50% 4.50% 0.59% $
43,523 95%
(0.42) $11.12 17.76% 1.75% 4.37% 0.55% $
24,787 157%
(0.60) $11.36 7.92% 1.75% 4.02% 0.36% $
44,248 154%
(0.54) $11.96 10.41% 1.75% 3.51% 0.30% $
47,499 130%
(1.00) $12.14 10.51% 1.78% 3.07% 0.25% $
62,787 117%
(0.84) $11.80 4.29% 1.74% 3.08% 0.25% $
64,972 94%
(0.33) $11.50 20.95% 1.75% 3.48% 0.76% $
27,358 106%
(0.60) $12.20 11.75% 1.75% 3.06% 0.45% $
60,208 95%
(0.62) $13.06 12.56% 1.75% 2.37% 0.31% $
72,746 136%
(1.13) $13.11 9.80% 1.77% 2.00% 0.25% $
88,588 111%
(0.86) $13.51 10.26% 1.76% 1.99% 0.25% $
95,824 113%
(0.27) $11.59 21.36% 1.75% 2.65% 1.71% $
12,342 139%
(0.56) $12.50 13.22% 1.75% 2.26% 0.93% $
31,390 86%
(0.58) $13.56 13.66% 1.75% 1.29% 0.57% $
45,514 115%
(0.82) $14.10 10.58% 1.82% 0.96% 0.38% $
66,407 123%
(0.82) $15.15 14.05% 1.85% 0.83% 0.27% $
68,512 113%
</TABLE>
[FEDERATED LOGO]
WORLD-CLASS INVESTMENT MANAGER
Federated Managed Allocation Portfolios
Federated Managed Income Portfolio
Federated Managed Conservative
Growth Portfolio
Select Shares
JANUARY 31, 2000
A Statement of Additional Information (SAI) dated January 31, 2000 is
incorporated by reference into this prospectus. Additional information about the
Funds and their investments is contained in the Funds' SAI and Annual and
SemiAnnual Reports to shareholders as they become available. The Annual Reports'
Management Discussions & Analyses discuss market conditions and investment
strategies that significantly affected each Fund's performance during its last
fiscal year. To obtain the SAI, Annual Reports, Semi-Annual Reports and other
information without charge, and make inquiries, call your investment
professional or the Funds at 1-800-341-7400.
You can obtain information about the Funds (including the SAI) by writing to or
visiting the Public Reference Room in Washington, DC. You may also access fund
information from the EDGAR Database on the SEC's Internet site at
http://www.sec.gov. You can purchase copies of this information by contacting
the SEC by email at [email protected] or by writing to the SEC's Public
Reference Section, Washington DC 20549-0102. Call 1-202-942-8090 for information
on the Public Reference Room's operations and copying fees.
[FEDERATED LOGO]
Federated Managed Allocation Portfolios
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
1-800-341-7400
www.federatedinvestors.com
Federated Securities Corp., Distributor
Investment Company Act File No. 811-7129
Cusip 314212705
Cusip 314212309
Cusip 314212507
Cusip 314212101
G00873-04-SEL (1/00)
Federated is a registered mark of Federated Investors, Inc.
2000 (C)Federated Investors, Inc. [RECYCLED LOGO]
PROSPECTUS
Statement of Additional Information
FEDERATED MANAGED ALLOCATION PORTFOLIOS
(formerly, Managed Series Trust)
Federated Managed Income portfolio(formerly, Federated Managed Income Fund)
Federated Managed Conservative Growth Portfolio(formerly, Federated Managed
Growth and Income Fund)
Federated Managed Moderate Growth Portfolio(formerly, Federated Managed Growth
Fund)
Federated Managed Growth Portfolio(formerly, Federated Managed Aggressive Growth
Fund)
INSTITUTIONAL SHARES
SELECT SHARES
This Statement of Additional Information (SAI) is not a prospectus. Read this
SAI in conjunction with the prospectuses for the Funds, dated January 31, 2000.
The SAI incorporates by reference the Funds' Annual Reports. Obtain a prospectus
or the Annual Report without charge by calling 1-800-341-7400.
JANUARY 31, 2000
CONTENTS
How are the Funds Organized? 1
Securities in Which the Funds Invest 1
What do Shares Cost? 13
How are the Funds Sold? 13
Subaccounting Services 14
Redemption in Kind 14
Massachusetts Partnership Law 14
Account and Share Information 14
Tax Information 15
Who Manages and Provides Services to the Funds? 15
How Do the Funds Measure Performance? 21
Who is Federated Investors, Inc.? 23
Financial Information 25
Investment Ratings 26
Addresses Inside Back Cover
Cusip 314212804 Cusip 314212705 Cusip 314212408 Cusip 314212309 Cusip 314212606
Cusip 314212507 Cusip 314212200 Cusip 314212101
G00873-05 (1/00)
How are the Funds Organized?
Each Fund is a diversified portfolio of Federated Managed Allocation Portfolios
(the Trust). The Trust is an open-end, management investment company that was
established under the laws of the Commonwealth of Massachusetts on November 15,
1993. The Trust may offer separate series of shares representing interests in
separate portfolios of securities. Effective January 31, 2000, the Trust changed
its name from Managed Series Trust to Federated Managed Allocation Portfolios
and Federated Managed Income Fund, Federated Managed Growth and Income Fund,
Federated Managed Growth Fund, and Federated Managed Aggressive Growth Fund
changed their names to Federated Managed Income Portfolio, Federated Managed
Conservative Growth Portfolio, Federated Managed Moderate Growth Portfolio and
Federated Managed Growth Portfolio, respectively.
The Board of Trustees (the Board) has established two classes of shares of each
Fund, known as Institutional Shares and Select Shares (Shares). This SAI relates
to both classes of Shares. The Funds' investment adviser is Federated Investment
Management Company (Adviser). Effective March 31, 1999, Federated Management,
former Adviser to the Funds, became Federated Investment Management Company
(formerly, Federated Advisers).
Securities in Which the Funds Invest
In pursuing its investment strategy, each Fund may invest in the following
securities for any purpose that is consistent with its investment objective.
Following is a table that indicates which types of securities are a:
. P = Principal investment of a Fund; (shaded in chart) . A = Acceptable (but
not principal) investment of a Fund; or . N = Not an acceptable investment of
a Fund.
<TABLE>
<CAPTION>
Securities Income Conservative Moderate Growth
Growth Portfolio
Portfolio Growth Portfolio Portfolio
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
<C>
Common Stocks A A
A A
Large Company Stocks P P
P P
Small Company Stocks N P
P P
Preferred Stocks A A
A A
Interests in Other Limited Liability Companies A A
A A
Real Estate Investment Trusts A A
A A
Warrants A A
A A
Treasury Securities P P
P P
Agency Securities P P
P P
Corporate Debt Securities P P
P P
High-Yield Corporate Debt Securities4 P P
P P
Mortgage-Backed Securities P P
P P
Asset Backed Securities A A
A A
Zero Coupon Securities A A
A A
Credit Enhancement A A
A A
Convertible Securities A A
A A
Foreign Securities A A
A A
Foreign Stocks A P
P P
Depositary Receipts A A
A A
Foreign Exchange Contracts A A
A A
Foreign Government Securities P P
P P
Derivative Contracts P P
P P
Futures Contracts P P
P P
Options A A
A A
Hybrid Instruments A A
A A
Swaps A A
A A
Repurchase Agreements A A
A A
Reverse Repurchase Agreements A A
A A
Delayed Delivery Transactions1 P P
P P
Securities Lending A A
A A
Securities of Other Investment Companies A A
A A
Asset Coverage A A
A A
</TABLE>
1. The Funds do not intend to engage in such transactions to an extent that
would cause the segregation of more than 20% of the total value of a Fund's
assets.
SECURITIES DESCRIPTIONS AND TECHNIQUES
Equity Securities
Equity securities represent a share of an issuer's earnings and assets, after
the issuer pays its liabilities. The Funds cannot predict the income they will
receive from equity securities because issuers generally have discretion as to
the payment of any dividends or distributions. However, equity securities offer
greater potential for appreciation than many other types of securities, because
their value increases directly with the value of the issuer's business. The
following describes the additional types of equity securities in which the Funds
invest.
Common Stocks
Common stocks are the most prevalent type of equity security. Common stocks
receive the issuer's earnings after the issuer pays its creditors and any
preferred stockholders. As a result, changes in an issuer's earnings directly
influence the value of its common stock.
Preferred Stocks
Preferred stocks have the right to receive specified dividends or
distributions before the issuer makes payments on its common stock. Some
preferred stocks also participate in dividends and distributions paid on
common stock. Preferred stocks may also permit the issuer to redeem the stock.
The Funds may also treat such redeemable preferred stock as a fixed income
security.
Interests in Other Limited Liability Companies
Entities such as limited partnerships, limited liability companies, business
trusts and companies organized outside the United States may issue securities
comparable to common or preferred stock.
Real Estate Investment Trusts (REITs)
REITs are real estate investment trusts that lease, operate and finance
commercial real estate. REITs are exempt from federal corporate income tax if
they limit their operations and distribute most of their income. Such tax
requirements limit a REIT's ability to respond to changes in the commercial
real estate market.
Warrants
Warrants give the Funds the option to buy the issuer's equity securities at a
specified price (the exercise price) at a specified future date (the
expiration date). The Funds may buy the designated securities by paying the
exercise price before the expiration date. Warrants may become worthless if
the price of the stock does not rise above the exercise price by the
expiration date. This increases the market risks of warrants as compared to
the underlying security. Rights are the same as warrants, except companies
typically issue rights to existing stockholders.
Fixed Income Securities
Fixed income securities pay interest, dividends or distributions at a specified
rate. The rate may be a fixed percentage of the principal or adjusted
periodically. In addition, the issuer of a fixed income security must repay the
principal amount of the security, normally within a specified time. Fixed income
securities provide more regular income than equity securities. However, the
returns on fixed income securities are limited and normally do not increase with
the issuer's earnings. This limits the potential appreciation of fixed income
securities as compared to equity securities.
A security's yield measures the annual income earned on a security as a
percentage of its price. A security's yield will increase or decrease depending
upon whether it costs less (a discount) or more (a premium) than the principal
amount. If the issuer may redeem the security before its scheduled maturity, the
price and yield on a discount or premium security may change based upon the
probability of an early redemption. Securities with higher risks generally have
higher yields.
The following describes the types of fixed income securities in which the Funds
invest.
Treasury Securities
Treasury securities are direct obligations of the federal government of the
United States. Treasury securities are generally regarded as having the lowest
credit risks.
Agency Securities
Agency securities are issued or guaranteed by a federal agency or other
government sponsored entity acting under federal authority (a GSE). The United
States supports some GSEs with its full faith and credit. Other GSEs receive
support through federal subsidies, loans or other benefits. A few GSEs have no
explicit financial support, but are regarded as having implied support because
the federal government sponsors their activities. Agency securities are
generally regarded as having low credit risks, but not as low as treasury
securities.
The Funds treat mortgage backed securities guaranteed by GSEs as agency
securities. Although a GSE guarantee protects against credit risks, it does
not reduce the market and prepayment risks of these mortgage backed
securities.
Corporate Debt Securities
Corporate debt securities are fixed income securities issued by businesses.
Notes, bonds, debentures and commercial paper are the most prevalent types of
corporate debt securities. The Funds may also purchase interests in bank loans
to companies. The credit risks of corporate debt securities vary widely amount
issuers.
In addition, the credit risk of an issuer's debt security may also vary based
on its priority for repayment. For example, higher ranking (senior) debt
securities have a higher priority than lower ranking (subordinated)
securities. This means that the issuer might not make payments on subordinated
securities while continuing to make payments on senior securities. In
addition, in the event of bankruptcy, holders of senior securities may receive
amounts otherwise payable to the holders of subordinated securities. Some
subordinated securities, such as trust preferred and capital securities notes,
also permit the issuer to defer payments under certain circumstances. For
example, insurance companies issue securities known as surplus notes that
permit the insurance company to defer any payment that would reduce its
capital below regulatory requirements.
Mortgage Backed Securities
Mortgage backed securities represent interests in pools of mortgages. The
mortgages that comprise a pool normally have similar interest rates,
maturities and other terms. Mortgages may have fixed or adjustable interest
rates. Interests in pools of adjustable rate mortgages are know as ARMs.
Mortgage backed securities come in a variety of forms. Many have extremely
complicated terms. The simplest form of mortgage backed securities are
pass-through certificates. An issuer of pass-through certificates gathers
monthly payments from an underlying pool of mortgages. Then, the issuer
deducts its fees and expenses and passes the balance of the payments onto the
certificate holders once a month. Holders of pass-through certificates receive
a pro rata share of all payments and pre-payments from the underlying
mortgages. As a result, the holders assume all the prepayment risks of the
underlying mortgages.
Collateralized Mortgage Obligations (CMOs)
CMOs, including interests in real estate mortgage investment conduits
(REMICs), allocate payments and prepayments from an underlying pass-through
certificate among holders of different classes of mortgage backed
securities. This creates different prepayment and interest rate risks for
each CMO class.
The degree of increased or decreased prepayment risks depends upon the
structure of CMOs. However, the actual returns on any type of mortgage
backed security depend upon the performance of the underlying pool of
mortgages, which no one can predict and will vary among pools.
Sequential CMOs
In a sequential pay CMO, one class of CMOs receives all principal
payments and prepayments. The next class of CMOs receives all principal
payments after the first class is paid off. This process repeats for each
sequential class of CMO. As a result, each class of sequential pay CMOs
reduces the prepayment risks of subsequent classes.
PACs, TACs and Companion Classes
More sophisticated CMOs include planned amortization classes (PACs) and
targeted amortization classes (TACs). PACs and TACs are issued with
companion classes. PACs and TACs receive principal payments and
prepayments at a specified rate. The companion classes receive principal
payments and prepayments in excess of the specified rate. In addition,
PACs will receive the companion classes' share of principal payments, if
necessary, to cover a shortfall in the prepayment rate. This helps PACs
and TACs to control prepayment risks by increasing the risks to their
companion classes.
IOs and POs
CMOs may allocate interest payments to one class (Interest Only or IOs)
and principal payments to another class (Principal Only or POs). POs
increase in value when prepayment rates increase. POs tend to increase in
value when interest rates decline (and prepayments increase) making POs a
useful hedge against interest rate risk. In contrast, IOs decrease in
value when prepayments increase, because the underlying mortgages
generate less interest payments. However, IOs tend to increase in value
when interest rates rise (and prepayments decrease), making IOs a useful
hedge against interest rate risks.
Floaters and Inverse Floaters
Another variant allocates interest payments between two classes of CMOs.
One class (Floaters) receives a share of interest payments based upon a
market index such as LIBOR. The other class (Inverse Floaters) receives
any remaining interest payments from the underlying mortgages. Floater
classes receive more interest (and Inverse Floater classes receive
correspondingly less interest) as interest rates rise. This shifts
prepayment and interest rate risks from the Floater to the Inverse
Floater class, reducing the price volatility of the Floater class and
increasing the price volatility of the Inverse Floater class.
Z Classes
CMOs must allocate all payments received from the underlying mortgages to
some class. To capture any unallocated payments, CMOs generally have an
accrual (Z) class. Z classes do not receive any payments from the
underlying mortgages until all other CMO classes have been paid off. Once
this happens, holders of Z class CMOs receive all payments and
prepayments.
Asset Backed Securities
Asset backed securities are payable from pools of obligations other than
mortgages. Most asset backed securities involve consumer or commercial debts
with maturities of less than ten years. However, almost any type of fixed
income assets (including other fixed income securities) may be used to create
an asset backed security. Asset backed securities may take the form of
commercial paper, notes, or pass through certificates. The Funds may also
purchase mortgage-related asset backed securities such as home equity loans,
second mortgages, and manufactured housing obligations. Asset backed
securities have prepayment risks.
Like mortgage-backed securities, asset backed securities may be issued by a
private entity and, although these securities must be investment grade, they
can present a credit risk.
Zero Coupon Securities
Zero coupon securities do not pay interest or principal until final maturity
unlike debt securities that provide periodic payments of interest (referred to
as a coupon payment). Investors buy zero coupon securities at a price below
the amount payable at maturity. The difference between the purchase price and
the amount paid at maturity represents interest on the zero coupon security.
Investors must wait until maturity to receive interest and principal, which
increases the interest rate and credit risks of a zero coupon security. A zero
coupon step-up security converts to a coupon security before final maturity.
There are many forms of zero coupon securities. Some are issued at a discount
and are referred to as zero coupon or capital appreciation bonds. Others are
created from interest bearing bonds by separating the right to receive the
bond's coupon payments from the right to receive the bond's principal due at
maturity, a process known as coupon stripping. Treasury STRIPs, IOs and POs
are the most common forms of stripped zero coupon securities. In addition,
some securities give the issuer the option to deliver additional securities in
place of cash interest payments, thereby increasing the amount payable at
maturity. These are referred to as pay-in-kind or PIK securities.
Credit Enhancement
Credit enhancement consists of an arrangement in which a company agrees to pay
amounts due on a fixed income security after the issuer defaults. In some
cases the company providing credit enhancement makes all payments directly to
the security holders and receives reimbursement from the issuer. Normally, the
credit enhancer has greater financial resources and liquidity than the issuer.
For this reason, the Adviser usually evaluates the credit risk of a fixed
income security based solely upon its credit enhancement.
Common types of credit enhancement include guarantees, letters of credit, bond
insurance and surety bonds. Credit enhancement also includes arrangements
where securities or other liquid assets secure payment of a fixed income
security. If a default occurs, these assets may be sold and the proceeds paid
to security's holders. Either form of credit enhancement reduces credit risks
by providing another source of payment for a fixed income security.
Convertible Securities
Convertible securities are fixed income securities that the Funds have the
option to exchange for equity securities at a specified conversion price. The
option allows the Funds to realize additional returns if the market price of the
equity securities exceeds the conversion price. For example, a Fund may hold
fixed income securities that are convertible into shares of common stock at a
conversion price of $10 per share. If the market value of the shares of common
stock reached $12, a Fund could realize an additional $2 per share by converting
its fixed income securities.
Convertible securities have lower yields than comparable fixed income
securities. In addition, at the time a convertible security is issued the
conversion price exceeds the market value of the underlying equity securities.
Thus, convertible securities may provide lower returns than non-convertible
fixed income securities or equity securities depending upon changes in the price
of the underlying equity securities. However, convertible securities permit the
Funds to realize some of the potential appreciation of the underlying equity
securities with less risk of losing its initial investment.
The Funds treat convertible securities as both fixed income and equity
securities for purposes of its investment policies and limitations, because of
their unique characteristics.
Foreign Securities
Foreign securities are securities of issuers based outside the United States.
The Funds consider an issuer to be based outside the United States if:
. it is organized under the laws of, or has a principal office located in,
another country;
. the principal trading market for its securities is in another country; or
. it (or its subsidiaries) derived in its most current fiscal year at least 50%
of its total assets, capitalization, gross revenue or profit from goods
produced, services performed, or sales made in another country.
Foreign securities are primarily denominated in foreign currencies. Along with
the risks normally associated with domestic securities of the same type, foreign
securities are subject to currency risks and risks of foreign investing. Trading
in certain foreign markets is also subject to liquidity risks.
Depositary Receipts
Depositary receipts represent interests in underlying securities issued by a
foreign company. Depositary receipts are not traded in the same market as the
underlying security. The foreign securities underlying American Depositary
Receipts (ADRs) are traded in the United States. ADRs provide a way to buy
shares of foreign-based companies in the United States rather than in overseas
markets. ADRs are also traded in U.S. dollars, eliminating the need for
foreign exchange transactions. The foreign securities underlying European
Depositary Receipts (EDRs), Global Depositary Receipts (GDRs), and
International Depositary receipts (IDRs), are traded globally or outside the
United States. Depositary Receipts involve many of the same risks of investing
directly in foreign securities, including currency risks and risks of foreign
investing.
Foreign Exchange Contracts
In order to convert U.S. dollars into the currency needed to buy a foreign
security, or to convert foreign currency received from the sale of a foreign
security into U.S. dollars, the Fund may enter into spot currency trades. In a
spot trade, a Fund agrees to exchange one currency for another at the current
exchange rate. A Fund may also enter into derivative contracts in which a
foreign currency is an underlying asset. The exchange rate for currency
derivative contracts may be higher or lower than the spot exchange rate. Use
of these derivative contracts may increase or decrease the Fund's exposure to
currency risks.
Foreign Government Securities
Foreign government securities generally consist of fixed income securities
supported by national, state or provincial governments or similar political
subdivisions. Foreign government securities also include debt obligations of
supranational entities, such as international organizations designed or
supported by governmental entities to promote economic reconstruction or
development, international banking institutions and related government
agencies. Examples of these include, but are not limited to, the International
Bank for Reconstruction and Development (the World Bank), the Asian
Development Bank, the European Investment Bank and the Inter-American
Development Bank.
Foreign government securities also include fixed income securities of
quasi-governmental agencies that are either issued by entities owned by a
national, state or equivalent government or are obligations of a political
unit that are not backed by the national government's full faith and credit.
Further, foreign government securities include mortgage-related securities
issued or guaranteed by national, state or provincial governmental
instrumentalities, including quasi-governmental agencies.
Derivative Contracts
Derivative contracts are financial instruments that require payments based upon
changes in the values of designated (or underlying) securities, currencies,
commodities, financial indices or other assets. Some derivative contracts (such
as futures, forwards and options) require payments relating to a future trade
involving the underlying asset. Other derivative contracts (such as swaps)
require payments relating to the income or returns from the underlying asset.
The other party to a derivative contract is referred to as a counterparty.
Many derivative contracts are traded on securities or commodities exchanges. In
this case, the exchange sets all the terms of the contract except for the price.
Investors make payments due under their contracts through the exchange. Most
exchanges require investors to maintain margin accounts through their brokers to
cover their potential obligations to the exchange. Parties to the contract make
(or collect) daily payments to the margin accounts to reflect losses (or gains)
in the value of their contracts. This protects investors against potential
defaults by the counterparty. Trading contracts on an exchange also allows
investors to close out their contracts by entering into offsetting contracts.
For example, a Fund could close out an open contract to buy an asset at a future
date by entering into an offsetting contract to sell the same asset on the same
date. If the offsetting sale price is more than the original purchase price, a
Fund realizes a gain; if it is less, a Fund realizes a loss. Exchanges may limit
the amount of open contracts permitted at any one time. Such limits may prevent
a Fund from closing out a position. If this happens, a Fund will be required to
keep the contract open (even if it is losing money on the contract), and to make
any payments required under the contract (even if it has to sell portfolio
securities at unfavorable prices to do so). Inability to close out a contract
could also harm a Fund by preventing it from disposing of or trading any assets
it has been using to secure its obligations under the contract.
The Funds may also trade derivative contracts over-the-counter (OTC) in
transactions negotiated directly between a Fund and the counterparty. OTC
contracts do not necessarily have standard terms, so they cannot be directly
offset with other OTC contracts. In addition, OTC contracts with more
specialized terms may be more difficult to price than exchange traded contracts.
Depending upon how the Funds use derivative contracts and the relationships
between the market value of a derivative contract and the underlying asset,
derivative contracts may increase or decrease a Fund's exposure to interest rate
and currency risks, and may also expose a Fund to liquidity and leverage risks.
OTC contracts also expose the Funds to credit risks in the event that a
counterparty defaults on the contract.
The Funds may trade in the following types of derivative contracts.
Futures Contracts
Futures contracts provide for the future sale by one party and purchase by
another party of a specified amount of an underlying asset at a specified
price, date, and time. Entering into a contract to buy an underlying asset is
commonly referred to as buying a contract or holding a long position in the
asset. Entering into a contract to sell an underlying asset is commonly
referred to as selling a contract or holding a short position in the asset.
Futures contracts are considered to be commodity contracts. Futures contracts
traded OTC are frequently referred to as forward contracts.
The Funds may buy or sell forward foreign currency exchange contracts,
interest rate futures contracts and stock index futures to accommodate cash
flows and to hedge against the effects of changes in the value of portfolio
securities due to anticipated changes in interest rates and market conditions.
Options
Options are rights to buy or sell an underlying asset for a specified price
(the exercise price) during, or at the end of, a specified period. A call
option gives the holder (buyer) the right to buy the underlying asset from the
seller (writer) of the option. A put option gives the holder the right to sell
the underlying asset to the writer of the option. The writer of the option
receives a payment, or premium, from the buyer, which the writer keeps
regardless of whether the buyer uses (or exercises) the option.
The Funds may buy and sell options on foreign currencies, foreign currency
futures, securities and securities indexes to manage interest rate and
currency risks. The Funds may write call options on securities which they own
to generate income.
Hybrid Instruments
Hybrid instruments combine elements of derivative contracts with those of
another security (typically a fixed income security). All or a portion of the
interest or principal payable on a hybrid security is determined by reference
to changes in the price of an underlying asset or by reference to another
benchmark (such as interest rates, currency exchange rates or indices). Hybrid
instruments also include convertible securities with conversion terms related
to an underlying asset or benchmark.
The risks of investing in hybrid instruments reflect a combination of the
risks of investing in securities, options, futures and currencies, and depend
upon the terms of the instrument. Thus, an investment in a hybrid instrument
may entail significant risks in addition to those associated with traditional
fixed income or convertible securities. Hybrid instruments are also
potentially more volatile and carry greater interest rate risks than
traditional instruments. Moreover, depending on the structure of the
particular hybrid, it may expose the Funds to leverage risks or carry
liquidity risks.
Swaps
Swaps are contracts in which two parties agree to pay each other (swap) the
returns derived from underlying assets with differing characteristics. Most
swaps do not involve the delivery of the underlying assets by either party,
and the parties might not own the assets underlying the swap. The payments are
usually made on a net basis so that, on any given day, a Fund would receive
(or pay) only the amount by which its payment under the contract is less than
(or exceeds) the amount of the other party's payment. Swap agreements are
sophisticated instruments that can take many different forms, and are known by
a variety of names including caps, floors, and collars. Common swap agreements
that the Funds may use include:
Interest Rate Swaps
Interest rate swaps are contracts in which one party agrees to make
regular payments equal to a fixed or floating interest rate times a
stated principal amount of fixed income securities, in return for
payments equal to a different fixed or floating rate times the same
principal amount, for a specific period. For example, a $10 million LIBOR
swap would require one party to pay the equivalent of the London
Interbank Offer Rate of interest (which fluctuates) on $10 million
principal amount in exchange for the right to receive the equivalent of a
stated fixed rate of interest on $10 million principal amount.
Caps and Floors
Caps and Floors are contracts in which one party agrees to make payments
only if an interest rate or index goes above (Cap) or below (Floor) a
certain level in return for a fee from the other party.
Total Return Swaps
Total return swaps are contracts in which one party agrees to make
payments of the total return from the underlying asset during the
specified period, in return for payments equal to a fixed or floating
rate of interest or the total return from another underlying asset.
Special Transactions
Repurchase Agreements
Repurchase agreements are transactions in which the Funds buy a security from
a dealer or bank and agrees to sell the security back at a mutually agreed
upon time and price. The repurchase price exceeds the sale price, reflecting
the Funds' return on the transaction. This return is unrelated to the interest
rate on the underlying security. The Funds will enter into repurchase
agreements only with banks and other recognized financial institutions, such
as securities dealers, deemed creditworthy by the Adviser.
The Funds' custodian or subcustodian will take possession of the securities
subject to repurchase agreements. The Adviser or subcustodian will monitor the
value of the underlying security each day to ensure that the value of the
security always equals or exceeds the repurchase price.
Repurchase agreements are subject to credit risks.
Reverse Repurchase Agreements
Reverse repurchase agreements are repurchase agreements in which the Funds are
the sellers (rather than the buyers) of the securities, and agrees to
repurchase them at an agreed upon time and price. A reverse repurchase
agreement may be viewed as a type of borrowing by the Funds. Reverse
repurchase agreements are subject to credit risks. In addition, reverse
repurchase agreements create leverage risks because the Funds must repurchase
the underlying security at a higher price, regardless of the market value of
the security at the time of repurchase.
Delayed Delivery Transactions
Delayed delivery transactions, including when issued transactions, are
arrangements in which the Funds buy securities for a set price, with payment
and delivery of the securities scheduled for a future time. During the period
between purchase and settlement, no payment is made by the Funds to the issuer
and no interest accrues to the Funds. The Funds record the transaction when
they agree to buy the securities and reflect their value in determining the
price of its shares. Settlement dates may be a month or more after entering
into these transactions so that the market values of the securities bought may
vary from the purchase prices. Therefore, when issued transactions create
interest rate risks for the Funds. Delayed delivery transactions also involve
credit risks in the event of a counterparty default. These transactions create
leverage risks.
To Be Announced Securities (TBAs)
As with other delayed delivery transactions, a seller agrees to issue a TBA
security at a future date. However, the seller does not specify the
particular securities to be delivered. Instead, the Funds agree to accept
any security that meets specified terms. For example, in a TBA mortgage
backed transaction, the Funds and the seller would agree upon the issuer,
interest rate and terms of the underlying mortgages. However, the seller
would not identify the specific underlying mortgages until it issues the
security. TBA mortgage backed securities increase interest rate risks
because the underlying mortgages may be less favorable than anticipated by
the Funds.
Dollar Rolls
Dollar rolls are transactions where the Funds sell mortgage-backed
securities with a commitment to buy similar, but not identical,
mortgage-backed securities on a future date at a lower price. Normally, one
or both securities involved are TBA mortgage backed securities. Dollar
rolls are subject to interest rate risks and credit risks.
Securities Lending
The Funds may lend portfolio securities to borrowers that the Adviser deems
creditworthy. In return, the Funds receive cash or liquid securities from the
borrower as collateral. The borrower must furnish additional collateral if the
market value of the loaned securities increases. Also, the borrower must pay
the Funds the equivalent of any dividends or interest received on the loaned
securities.
The Funds will reinvest cash collateral in securities that qualify as an
acceptable investment for the Funds. However, the Funds must pay interest to
the borrower for the use of cash collateral.
Loans are subject to termination at the option of the Funds or the borrower.
The Funds will not have the right to vote on securities while they are on
loan, but they will terminate a loan in anticipation of any important vote.
The Funds may pay administrative and custodial fees in connection with a loan
and may pay a negotiated portion of the interest earned on the cash collateral
to a securities lending agent or broker.
Securities lending activities are subject to interest rate risks and credit
risks. These transactions create leverage risks.
Inter-fund Borrowing and Lending Arrangements
The SEC has granted an exemption that permits the Funds and all other funds
advised by subsidiaries of Federated Investors, Inc. ("Federated funds") to
lend and borrow money for certain temporary purposes directly to and from
other Federated funds. Participation in this inter-fund lending program is
voluntary for both borrowing and lending funds, and an inter-fund loan is only
made if it benefits each participating fund. Federated administers the program
according to procedures approved by the Funds' Board, and the Board monitors
the operation of the program. Any inter-fund loan must comply with certain
conditions set out in the exemption, which are designed to assure fairness and
protect all participating funds.
For example, inter-fund lending is permitted only (a) to meet shareholder
redemption requests, and (b) to meet commitments arising from "failed" trades.
All inter-fund loans must be repaid in seven days or less. The Funds'
participation in this program must be consistent with their investment
policies and limitations, and must meet certain percentage tests. Inter-fund
loans may be made only when the rate of interest to be charged is more
attractive to the lending fund than market-competitive rates on overnight
repurchase agreements (the "Repo Rate") and more attractive to the borrowing
fund than the rate of interest that would be charged by an unaffiliated bank
for short-term borrowings (the "Bank Loan Rate"), as determined by the Board.
The interest rate imposed on inter-fund loans is the average of the Repo Rate
and the Bank Loan Rate.
Securities of Other Investment Companies
Each Fund may invest its assets in securities of other investment companies,
including the securities of affiliated money market funds, as an efficient means
of carrying out its investment policies and managing its univested cash. It
should be noted that investment companies incur certain expenses, such as
management fees, and, therefore, any investment by a Fund in shares of other
investment companies may be subject to such duplicate expenses.
The Funds may invest in mortgage-backed and high yield securities primarily by
investing in another investment company (which is not available for general
investment by the public) that owns those securities and that is advised by an
affiliate of the Adviser. This other investment company is managed independently
of the Funds and may incur additional administrative expenses. Therefore, any
such investment by the Funds may be subject to duplicate expenses. However, the
Adviser believes that the benefits and efficiencies of this approach should
outweigh the potential additional expenses. The Funds may also invest in such
securities directly. Asset Coverage
In order to secure its obligations in connection with derivatives contracts or
special transactions, the Funds will either own the underlying assets, enter
into an offsetting transaction or set aside readily marketable securities with a
value that equals or exceeds the Funds' obligations. Unless the Funds have other
readily marketable assets to set aside, they cannot trade assets used to secure
such obligations entering into an offsetting derivative contract or terminating
a special transaction. This may cause the Funds to miss favorable trading
opportunities or to realize losses on derivative contracts or special
transactions.
INVESTMENT RISKS
Stock Market Risks
. The value of equity securities in each Fund's portfolio will rise and fall.
These fluctuations could be a sustained trend or a drastic movement. A Fund's
portfolio will reflect changes in prices of individual portfolio stocks or
general changes in stock valuations. Consequently, a Fund's share price may
decline and you could lose money.
. The Adviser attempts to manage market risk by limiting the amount each Fund
invests in each company. However, diversification will not protect a Fund
against widespread or prolonged declines in the stock market.
Interest Rate Risks
. Prices of fixed income securities rise and fall in response to changes in the
interest rate paid by similar securities. Generally, when interest rates
rise, prices of fixed income securities fall. However, market factors, such
as the demand for particular fixed income securities, may cause the price of
certain fixed income securities to fall while the prices of other securities
rise or remain unchanged.
. Interest rate changes have a greater effect on the price of fixed income
securities with longer durations. Duration measures the price sensitivity of
a fixed income security to changes in interest rates.
Credit Risks
. Credit risk is the possibility that an issuer will default on a security by
failing to pay interest or principal when due. If an issuer defaults, the
Funds will lose money.
. Many fixed income securities receive credit ratings from services such as
Standard & Poor's and Moody's Investor Services, Inc. These services assign
ratings to securities by assessing the likelihood of issuer default. Lower
credit ratings correspond to higher credit risk. If a security has not
received a rating, the Funds must rely entirely upon the Adviser's credit
assessment.
. Fixed income securities generally compensate for greater credit risk by
paying interest at a higher rate. The difference between the yield of a
security and the yield of a U.S. Treasury security with a comparable maturity
(the spread) measures the additional interest paid for risk. Spreads may
increase generally in response to adverse economic or market conditions. A
security's spread may also increase if the security's rating is lowered, or
the security is perceived to have an increased credit risk. An increase in
the spread will cause the price of the security to decline.
. Credit risk includes the possibility that a party to a transaction involving
the Funds will fail to meet its obligations. This could cause the Funds to
lose the benefit of the transaction or prevent the Funds from selling or
buying other securities to implement their investment strategies.
Currency Risks
. Exchange rates for currencies fluctuate daily. The combination of currency
risk and market risks tends to make securities traded in foreign markets more
volatile than securities traded exclusively in the U.S.
. The Adviser attempts to manage currency risk by limiting the amount the Funds
invest in securities denominated in a particular currency. However,
diversification will not protect the Funds against a general increase in the
value of the U.S. dollar relative to other currencies.
Call and Prepayment Risks
. Call risk is the possibility that an issuer may redeem a fixed income
security before maturity (a call) at a price below its current market price.
An increase in the likelihood of a call may reduce the security's price.
. If a fixed income security is called, the Funds may have to reinvest the
proceeds in other fixed income securities with lower interest rates, higher
credit risks, or other less favorable characteristics.
. Unlike traditional fixed income securities, which pay a fixed rate of
interest until maturity (when the entire principal amount is due) payments on
mortgage backed securities include both interest and a partial payment of
principal. Partial payment of principal may be comprised of scheduled
principal payments as well as unscheduled payments from the voluntary
prepayment , refinancing, or foreclosure of the underlying loans. These
unscheduled prepayments of principal create risks that can adversely affect a
Fund holding mortgage backed securities.
. For example, when interest rates decline, the values of mortgage backed
securities generally rise. However, when interest rates decline, unscheduled
prepayments can be expected to accelerate, and the Fund would be required to
reinvest the proceeds of the prepayments at the lower interest rates then
available. Unscheduled prepayments would also limit the potential for capital
appreciation on mortgage backed securities.
. Conversely, when interest rates rise, the values of mortgage backed
securities generally fall. Since rising interest rates typically result in
decreased prepayments, this could lengthen the average lives of mortgage
backed securities, and cause their value to decline more than traditional
fixed income securities.
. Generally, mortgage backed securities compensate for the increased risk
associated with prepayments by paying a higher yield. The additional interest
paid for risk is measured by the difference between the yield of a mortgage
backed security and the yield of a U.S. Treasury security with a comparable
maturity (the spread). An increase in the spread will cause the price of the
mortgage backed security to decline. Spreads generally increase in response
to adverse economic or market conditions. Spreads may also increase if the
security is perceived to have an increased prepayment risk or is perceived to
have less market demand.
Sector Risks
. Companies with similar characteristics may be grouped together in broad
categories called sectors. Sector risk is the possibility that a certain
sector may underperform other sectors or as the market as a whole. As the
Adviser allocates more of a Fund's portfolio holdings to a particular sector,
a Fund's performance will be more susceptible to any economic, business or
other developments which generally affect that sector.
Risks Related to Company Size
. Generally, the smaller the market capitalization of a company, the fewer the
number of shares traded daily, the less liquid its stock and the more
volatile its price. Market capitalization is determined by multiplying the
number of its outstanding shares by the current market price per share.
. Companies with smaller market capitalizations also tend to have unproven
track records, a limited product or service base and limited access to
capital. These factors also increase risks and make these companies more
likely to fail than companies with larger market capitalizations.
Risks Associated with Noninvestment Grade Securities
. Securities rated below investment grade, also known as junk bonds, generally
entail greater market, credit and liquidity risks than investment grade
securities. For example, their prices are more volatile, economic downturns
and financial setbacks may affect their prices more negatively, and their
trading market may be more limited.
Risks of Foreign Investing
. Foreign securities pose additional risks because foreign economic or
political conditions may be less favorable than those of the United States.
Securities in foreign markets may also be subject to taxation policies that
reduce returns for U.S. investors.
. Foreign companies may not provide information companies in the United States.
Foreign companies (including financial statements) as frequently or may also
receive less coverage than United States to as great an extent as companies
by market analysts and the financial press. In addition, foreign countries
may lack uniform accounting, auditing and financial reporting standards or
regulatory requirements comparable to those applicable to U.S. companies.
These factors may prevent the Fund and its Adviser from obtaining information
concerning foreign companies that is as frequent, extensive and reliable as
the information available concerning companies in the United States.
. Foreign countries may have restrictions on foreign restrictions or
repatriation restrictions which ownership of securities or may impose
exchange could adversely affect the liquidity of the controls, capital flow
Fund's investments.
Leverage Risks
. Leverage risk is created when an investment exposes a Fund to a level of risk
that exceeds the amount invested. Changes in the value of such an investment
magnify a Fund's risk of loss and potential for gain.
Liquidity Risks
. Trading opportunities are more limited for equity securities that are not
widely held. This may make it more difficult to sell or buy a security at a
favorable price or time. Consequently, the Funds may have to accept a lower
price to sell a security, sell other securities to raise cash or give up an
investment opportunity, any of which could have a negative effect on the
Funds' performance. Infrequent trading of securities may also lead to an
increase in their price volatility.
. Liquidity risk also refers to the possibility that the Funds may not be able
to sell a security or close out a derivative contract when it wants to. If
this happens, the Funds will be required to continue to hold the security or
keep the position open, and the Funds could incur losses.
. OTC derivative contracts generally carry greater liquidity risk than
exchange-traded contracts.
FUNDAMENTAL INVESTMENT OBJECTIVES AND POLICIES
<TABLE>
<CAPTION>
Fund Objective
<S> <C>
Federated Managed Income Portfolio To seek total return with an emphasis on income and
potential for capital appreciation
Federated Managed Conservative Growth Portfolio To seek total return with an emphasis on income and
capital appreciation
Federated Managed Moderate Growth Portfolio To seek capital appreciation with income as a
secondary objective
Federated Managed Growth Portfolio To seek capital appreciation
</TABLE>
The investment objectives may not be changed by the Funds' Trustees without
shareholder approval.
INVESTMENT LIMITATIONS
Diversification of Investments
With respect to securities comprising 75% of the value of its total assets,
a Fund will not purchase securities of any one issuer (other than cash;
cash items; securities issued or guaranteed by the government of the United
States or its agencies or instrumentalities and repurchase agreements
collateralized by such U.S. government securities; and securities of other
investment companies) if, as a result, more than 5% of the value of its
total assets would be invested in the securities of that issuer, or if a
Fund would own more than 10% of the outstanding voting securities of that
issuer.
Borrowing Money and Issuing Senior Securities
A Fund may borrow money, directly or indirectly, and issue senior
securities to the maximum extent permitted under the 1940 Act.
Investing in Real Estate
A Fund may not purchase or sell real estate, provided that this restriction
does not prevent a Fund from investing in issuers which invest, deal, or
otherwise engage in transactions in real estate or interests therein, or
investing in securities that are secured by real estate or interests
therein. A Fund may exercise its rights under agreements relating to such
securities, including the right to enforce security interests and to hold
real estate acquired by reason of such enforcement until that real estate
can be liquidated in an orderly manner.
Investing in Commodities
The Funds may not purchase or sell physical commodities, provided that the
Funds may purchase securities of companies that deal in commodities.
Underwriting
A Fund may not underwrite the securities of other issuers, except that a
Fund may engage in transactions involving the acquisition, disposition or
resale of its portfolio securities, under circumstances where it may be
considered to be an underwriter under the Securities Act of 1933.
Lending Cash or Securities
A Fund may not make loans, provided that this restriction does not prevent
a Fund from purchasing debt obligations, entering into repurchase
agreements, lending its assets to broker/dealers or institutional investors
and investing in loans, including assignments and participation interests.
Concentration of Investments
A Fund will not make investments that will result in the concentration of
its investments in the securities of issuers primarily engaged in the same
industry. Government securities, municipal securities and bank instruments
will not be deemed to constitute an industry.
The above limitations cannot be changed by the Board of Trustees (Board) unless
authorized by the "vote of a majority of its outstanding voting securities," as
defined by the Investment Company Act. The following limitations, however, may
be changed by the Board without shareholder approval. Shareholders will be
notified before any material change in these limitations becomes effective.
Buying on Margin
A Fund will not purchase securities on margin, provided that a Fund may
obtain short-term credits necessary for the clearance of purchases and
sales of securities, and further provided that a Fund may make margin
deposits in connection with its use of financial options and futures,
forward and spot currency contracts, swap transactions and other financial
contracts or derivative instruments.
Pledging Assets
A Fund will not mortgage, pledge, or hypothecate any of its assets,
provided that this shall not apply to the transfer of securities in
connection with any permissable borrowing or to collateral arrangements in
connection with permissable activities.
Investing in Illiquid Securities
A Fund will not purchase securities for which there is no readily available
market, or enter into repurchase agreements or purchase time deposits
maturing in more than seven days, if immediately after and as a result, the
value of such securities would exceed, in the aggregate, 15% of a Fund's
net assets.
For purposes of its policies and limitations, the Funds consider certificates of
deposit and demand and time deposits issued by a U.S. branch of a domestic bank
or savings association having capital, surplus, and undivided profits in excess
of $100,000,000 at the time of investment to be "cash items." Except with
respect to borrowing money, if a percentage limitation is adhered to at the time
of investment, a later increase or decrease in percentage resulting from any
change in value or net assets will not result in a violation of such
restriction.
As a matter of non-fundamental policy, for purposes of the commodities policy,
investments in transactions involving futures contracts and options, forward
currency contracts, swap transactions and other financial contracts that settle
by payment of cash are not deemed to be investments in commodities.
In applying a Fund's concentration restriction: (a) utility companies will be
divided according to their services, for example, gas, gas transmission,
electric and telephone will each be considered a separate industry; (b)
financial service companies will be classified according to the end users of
their services, for example, automobile finance, bank finance and diversified
finance will each be considered a separate industry; and (c) asset-backed
securities will be classified according to the underlying assets securing such
securities. To conform to the current view of the SEC that only domestic bank
instruments may be excluded from industry concentration limitations, as a matter
of non-fundamental policy, a Fund will not exclude foreign bank instruments from
industry concentration limits as long as the policy of the SEC remains in
effect. In addition, investments in bank instruments, and investments in certain
industrial development bonds funded by activities in a single industry, will be
deemed to constitute investment in an industry, except when held for temporary
defensive purposes. The investment of more than 25% of the value of a Fund's
total assets in any one industry will constitute "concentration."
DETERMINING MARKET VALUE OF SECURITIES
Market values of a Fund's portfolio securities are determined as follows:
. for equity securities, according to the last sale price in the market in
which they are primarily traded (either a national securities exchange or the
over-the-counter market), if available;
. in the absence of recorded sales for equity securities, according to the mean
between the last closing bid and asked prices;
. for fixed income securities, at the last sale price on a national securities
exchange, if available, otherwise, as determined by an independent pricing
service;
. futures contracts and options are generally valued at market values
established by the exchanges on which they are traded at the close of trading
on such exchanges. Options traded in the over-the-counter market are
generally valued according to the mean between the last bid and the last
asked price for the option as provided by an investment dealer or other
financial institution that deals in the option. The Board may determine in
good faith that another method of valuing such investments is necessary to
appraise their fair market value;
. for short-term obligations, according to the mean between bid and asked
prices as furnished by an independent pricing service, except that short-term
obligations with remaining maturities of less than 60 days at the time of
purchase may be valued at amortized cost or at fair market value as
determined in good faith by the Board; and
. for all other securities at fair value as determined in good faith by the
Board.
Prices provided by independent pricing services may be determined without
relying exclusively on quoted prices and may consider institutional trading in
similar groups of securities, yield, quality, stability, risk, coupon rate,
maturity, type of issue, trading characteristics, and other market data or
factors. From time to time, when prices cannot be obtained from an independent
pricing service, securities may be valued based on quotes from broker-dealers or
other financial institutions that trade the securities.
TRADING IN FOREIGN SECURITIES
Trading in foreign securities may be completed at times which vary from the
closing of the New York Stock Exchange (NYSE). In computing its net asset value
(NAV), the Funds value foreign securities at the latest closing price on the
exchange on which they are traded immediately prior to the closing of the NYSE.
Certain foreign currency exchange rates may also be determined at the latest
rate prior to the closing of the NYSE. Foreign securities quoted in foreign
currencies are translated into U.S. dollars at current rates. Occasionally,
events that affect these values and exchange rates may occur between the times
at which they are determined and the closing of the NYSE. If such events
materially affect the value of portfolio securities, these securities may be
valued at their fair value as determined in good faith by the Funds' Board,
although the actual calculation may be done by others.
What do Shares Cost?
Each Fund's NAV per Share fluctuates and is based on the market value of all
securities and other assets of a Fund.
The NAV for each class of Shares may differ due to the variance in daily net
income realized by each class. Such variance will reflect only accrued net
income to which the shareholders of a particular class are entitled.
How Are the Funds Sold?
Under the Distributor's Contract with the Funds, the Distributor (Federated
Securities Corp.) offers Shares on a continuous, best-efforts basis.
RULE 12B-1 PLAN (SELECT SHARES)
As a compensation-type plan, the Rule 12b-1 Plan is designed to pay the
Distributor (who may then pay investment professionals such as banks,
broker/dealers, trust departments of banks, and registered investment advisers)
for marketing activities (such as advertising, printing and distributing
prospectuses, and providing incentives to investment professionals) to promote
sales of Select Shares so that overall Fund assets are maintained or increased.
This helps the Funds achieve economies of scale, reduce per share expenses, and
provide cash for orderly portfolio management and Select Share redemptions.
Also, the Funds' service providers that receive asset-based fees also benefit
from stable or increasing Fund assets.
The Funds may compensate the Distributor more or less than its actual marketing
expenses. In no event will a Fund pay for any expenses of the Distributor that
exceed the maximum Rule 12b-1 Plan fee.
For some classes of Shares, the maximum Rule 12b-1 Plan fee that can be paid in
any one year may not be sufficient to cover the marketing-related expenses the
Distributor has incurred. Therefore, it may take the Distributor a number of
years to recoup these expenses.
SHAREHOLDER SERVICES
The Funds may pay Federated Shareholder Services Company, a subsidiary of
Federated Investors, Inc. (Federated), for providing shareholder services and
maintaining shareholder accounts. Federated Shareholder Services Company may
select others to perform these services for their customers and may pay them
fees.
SUPPLEMENTAL PAYMENTS
Investment professionals may be paid fees out of the assets of the Distributor
and/or Federated Shareholder Services Company (but not out of Fund assets). The
Distributor and/or Federated Shareholder Services Company may be reimbursed by
the Adviser or its affiliates.
Investment professionals receive such fees for providing distribution-related
services or shareholder services such as sponsoring sales, providing sales
literature, conducting training seminars for employees, and engineering sales-
related computer software programs and systems. Also, investment professionals
may be paid cash or promotional incentives, such as reimbursement of certain
expenses relating to attendance at informational meetings about the Funds or
other special events at recreational-type facilities, or items of material
value. These payments will be based upon the amount of Shares the investment
professional sells or may sell and/or upon the type and nature of sales or
marketing support furnished by the investment professional.
Subaccounting Services
Certain investment professionals may wish to use the transfer agent's
subaccounting system to minimize their internal recordkeeping requirements. The
transfer agent may charge a fee based on the level of subaccounting services
rendered. Investment professionals holding Shares in a fiduciary, agency,
custodial, or similar capacity may charge or pass through subaccounting fees as
part of or in addition to normal trust or agency account fees. They may also
charge fees for other services that may be related to the ownership of Shares.
This information should, therefore, be read together with any agreement between
the customer and the investment professional about the services provided, the
fees charged for those services, and any restrictions and limitations imposed.
Redemption in Kind
Although each Fund intends to pay Share redemptions in cash, it reserves the
right, as described below, to pay the redemption price in whole or in part by a
distribution of a Fund's portfolio securities.
Because the Funds have elected to be governed by Rule 18f-1 under the Investment
Company Act of 1940, the Funds are obligated to pay Share redemptions to any one
shareholder in cash only up to the lesser of $250,000 or 1% of the net assets
represented by such Share class during any 90-day period.
Any Share redemption payment greater than this amount will also be in cash
unless the Funds' Board determines that payment should be in kind. In such a
case, the Funds will pay all or a portion of the remainder of the redemption in
portfolio securities, valued in the same way as each Fund determines its NAV.
The portfolio securities will be selected in a manner that the Funds' Board
deems fair and equitable and, to the extent available, such securities will be
readily marketable.
Redemption in kind is not as liquid as a cash redemption. If redemption is made
in kind, shareholders receiving the portfolio securities and selling them before
their maturity could receive less than the redemption value of the securities
and could incur certain transaction costs.
Massachusetts Partnership Law
Under certain circumstances, shareholders may be held personally liable as
partners under Massachusetts law for obligations of the Funds. To protect their
shareholders, the Funds have filed legal documents with Massachusetts that
expressly disclaim the liability of their shareholders for acts or obligations
of the Funds.
In the unlikely event a shareholder is held personally liable for the Funds'
obligations, the Funds are required by the Declaration of Trust to use their
property to protect or compensate the shareholder. On request, the Fundswill
defend any claim made and pay any judgment against a shareholder for any act or
obligation of the Funds. Therefore, financial loss resulting from liability as a
shareholder will occur only if a Fund itself cannot meet its obligations to
indemnify shareholders and pay judgments against them.
Account and Share Information
VOTING RIGHTS
Each share of a Fund gives the shareholder one vote in Trustee elections and
other matters submitted to shareholders for vote. All Shares of the Trust have
equal voting rights, except that in matters affecting only a particular Fund or
class, only Shares of that Fund or class are entitled to vote.
Trustees may be removed by the Board or by shareholders at a special meeting. A
special meeting of shareholders will be called by the Board upon the written
request of shareholders who own at least 10% of the Trust's outstanding shares
of all series entitled to vote. As of January 12, 2000 the following
shareholders owned of record, beneficially, or both, 5% or more of the
outstanding Shares of the Funds:
Charles Schwab & Co., Inc., San Francisco, California, owned approximately
13.65% of the Institutional Shares of the Income Portfolio. Bayban, First State
Bank of Bayport, Bayport Minnesota, owned approximately 6.71% of the
Institutional Shares of the Income Portfolio. South Valley Bank & Trust,
Medford, Oregon, owned approximately 8.05% of the Institutional Shares of the
Conservative Growth Portfolio.
Kirchbak & Co., Richfield, Minnesota, owned approximately 15.81% of the Select
Shares of the Income Portfolio. Oltrust & Co., Evansville, Indiana, owned
approximately 5.28% of the Select Shares of the Growth Portfolio.
Tax Information
FEDERAL INCOME TAX
Each Fund intends to meet requirements of Subchapter M of the Internal Revenue
Code applicable to registered investment companies. If these requirements are
not met, it will not receive special tax treatment and will pay federal income
tax.
Each Fund will be treated as a single, separate entity for federal income tax
purposes so that income earned and capital gains and losses realized by the
Trust's other portfolios will be separate from those realized by a Fund.
FOREIGN INVESTMENTS
If a Fund purchases foreign securities, their investment income may be subject
to foreign withholding or other taxes that could reduce the return on these
securities. Tax treaties between the United States and foreign countries,
however, may reduce or eliminate the amount of foreign taxes to which a Fund
would be subject. The effective rate of foreign tax cannot be predicted since
the amount of a Fund's assets to be invested within various countries is
uncertain. However, the Funds intend to operate so as to qualify for treaty-
reduced tax rates when applicable.
Distributions from a Fund may be based on estimates of book income for the year.
Book income generally consists solely of the coupon income generated by the
portfolio, whereas tax-basis income includes gains or losses attributable to
currency fluctuation. Due to differences in the book and tax treatment of
fixed-income securities denominated in foreign currencies, it is difficult to
project currency effects on an interim basis. Therefore, to the extent that
currency fluctuations cannot be anticipated, a portion of distributions to
shareholders could later be designated as a return of capital, rather than
income, for income tax purposes, which may be of particular concern to simple
trusts.
If a Fund invests in the stock of certain foreign corporations, they may
constitute Passive Foreign Investment Companies (PFIC), and the Fund may be
subject to Federal income taxes upon disposition of PFIC investments.
If more than 50% of the value of a Fund's assets at the end of the tax year is
represented by stock or securities of foreign corporations, a Fund intends to
qualify for certain Code stipulations that would allow shareholders to claim a
foreign tax credit or deduction on their U.S. income tax returns. The Code may
limit a shareholder's ability to claim a foreign tax credit. Shareholders who
elect to deduct their portion of a Fund's foreign taxes rather than take the
foreign tax credit must itemize deductions on their income tax returns.
Who Manages and Provides Services to the Funds?
BOARD OF TRUSTEES
The Board is responsible for managing the Trust's business affairs and for
exercising all the Trust's powers except those reserved for the shareholders.
Information about each Board member is provided below and includes each
person's: name, address, birth date, present position(s) held with the Trust,
principal occupations for the past five years and positions held prior to the
past five years, total compensation received as a Trustee from the Trust for its
most recent fiscal year, and the total compensation received from the Federated
Fund Complex for the most recent calendar year. The Trust is comprised of four
funds and the Federated Fund Complex is comprised of 43 investment companies,
whose investment advisers are affiliated with the Funds' Adviser.
As of January 12, 2000 the Funds' Board and Officers as a group owned less than
1% of the Funds' outstanding Shares.
<PAGE>
<TABLE>
<CAPTION>
Name
Total
Birthdate Aggregate
Compensation From
Address Principal Occupations
Compensation Trust
Position With Trust for Past 5 Years From Trust
and Fund Complex
<S> <C>
<C> <C>
John F. Donahue*#+ Chief Executive Officer and Director or $ 0
$0 for the Trust
Birth Date: July 28, 1924 Trustee of the Federated Fund
Complex, and 43 other
Federated Investors Tower Chairman and Director,
Federated investment
1001 Liberty Avenue Investors, Inc.; Chairman and Trustee,
companies in the
Pittsburgh, PA Federated Investment
Management Fund Complex
CHAIRMAN AND TRUSTEE Company; Chairman and Director,
Federated Investment Counseling and
Federated Global Investment Management
Corp..; Chairman, Passport Research,
Ltd.
Thomas G. Bigley Director or Trustee of the Federated $1,483.98
$116,760.63 for the
Birth Date: February 3, 1934 Fund Complex; Director, Member of
Trust and 43other
15 Old Timber Trail Executive Committee,
Children's investment
Pittsburgh, PA Hospital of Pittsburgh; Director,
companies in the
TRUSTEE Robroy Industries, Inc. (coated
steel Fund Complex
conduits/computer storage equipment);
formerly: Senior Partner, Ernst & Young
LLP; Director, MED 3000 Group, Inc.
(physician practice management);
Director, Member of Executive
Committee, University of Pittsburgh.
John T. Conroy, Jr. Director or Trustee of the Federated $1,632.63
$128,455.37 for the
Birth Date: June 23, 1937 Fund Complex; President, Investment
Trust and 43 other
Grubb & Ellis/Investment Properties Corporation; Senior
Vice investment
Properties Corporation President, John R. Wood and Associates,
companies in the
3201 Tamiami Trail North Naples, FL Inc., Realtors; Partner or Trustee
in Fund Complex
TRUSTEE private real estate ventures in
Southwest Florida; formerly: President,
Naples Property Management, Inc. and
Northgate Village Development
Corporation.
Nicholas P. Constantakis++ Director or Trustee of the Federated $
0 $0 for the
Birth Date: September 3, 1939 Fund Complex; Director, Michael
Baker Trust and
175 Woodshire Drive Corporation (engineering, construction,
37 other investment
Pittsburgh, PA operations and technical
services); companies
TRUSTEE formerly: Partner, Andersen Worldwide
in the Fund Complex
SC.
John F. Cunningham Director or Trustee of some of the $1,483.98
$93,190.48 for the
Birth Date: March 5, 1943 Federated Fund Complex; Chairman,
Trust and 37 other
353 El Brillo Way President and Chief Executive Officer,
investment
Palm Beach, FL Cunningham & Co., Inc. (strategic
companies in the
TRUSTEE business consulting); Trustee
Fund Complex
Associate, Boston College; Director,
Iperia Corp. (communications/software);
formerly: Director, Redgate
Communications and EMC Corporation
(computer storage systems) .
Previous Positions: Chairman of the
Board and Chief Executive Officer,
Computer Consoles, Inc., President and
Chief Operating Officer, Wang
Laboratories; Director, First National
Bank of Boston; Director, Apollo
Computer, Inc.
J. Christopher Donahue*+(++) President or Executive Vice President $ 0
$0 for the Trust
Birth Date: April 11, 1949 of the Federated Fund Complex;
Director and 30 other
Federated Investors Tower or Trustee of some of the Funds in
the investment
1001 Liberty Avenue Federated Fund Complex; President,
companies in the
Pittsburgh, PA Chief Executive Officer and
Director, Fund Complex
EXECUTIVE VICE PRESIDENT AND Federated Investors, Inc.; President
TRUSTEE and Trustee, Federated Investment
Management Company; President and
Trustee, Federated Investment
Counseling; President and Director,
Federated Global Investment Management
Corp.; President, Passport Research,
Ltd.; Trustee, Federated Shareholder
Services Company; Director, Federated
Services Company.
Lawrence D. Ellis, M.D.* Director or Trustee of the Federated $1,483.98
$116,760.63 for the
Birth Date: October 11, 1932 Fund Complex; Professor of Medicine,
Trust and 43 other
3471 Fifth Avenue University of Pittsburgh;
Medical investment
Suite 1111 Director, University of Pittsburgh
companies in the
Pittsburgh, PA Medical Center -
Downtown; Fund Complex
TRUSTEE Hematologist, Oncologist, and
Internist, University of Pittsburgh
Medical Center; Member, National Board
of Trustees, Leukemia Society of
America.
Peter E. Madden Director or Trustee of the Federated $1,392.31
$109,153.60 for the
Birth Date: March 16, 1942 Fund Complex; formerly: Representative,
Trust and 43 other
One Royal Palm Way Commonwealth of Massachusetts
General investment
100 Royal Palm Way Court; President, State Street Bank and
companies in the
Palm Beach, FL Trust Company and State
Street Fund Complex
TRUSTEE Corporation.
Previous Positions: Director, VISA USA
and VISA International; Chairman and
Director, Massachusetts Bankers
Association; Director, Depository Trust
Corporation; Director, The Boston Stock
Exchange.
Charles F. Mansfield, Jr. Director or Trustee of some of the $1,559.80
$102,573.91 for the
Birth Date: April 10, 1945 Federated Fund Complex; Executive Vice
Trust and 40 other
80 South Road President, Legal and External Affairs,
investment
Westhampton Beach, NY TRUSTEE Dugan Valva Contess, Inc. (marketing,
companies in the
communications, technology and
Fund Complex
consulting); formerly Management
Consultant.
Previous Positions: Chief Executive Officer,
PBTC International Bank; Partner, Arthur
Young & Compnay (now Ernst & Young LLP);
Chief Financial Officer of Retail Banking
Sector, Chase Manhattan Bank; Senior Vice
President, Marine Midland Bank; Vice
President, Citibank; Assistant Professor of
Banking and Finance, Frank G. Zarb School of
Business, Hofstra University.
John E. Murray, Jr., J.D., S.J.D.# Director or Trustee of the Federated $1,632.63
$128,455.37 for the
Birth Date: December 20, 1932 Fund Complex; President, Law Professor,
Trust and 43 other
President, Duquesne University Duquesne University;
Consulting investment
Pittsburgh, PA Partner, Mollica & Murray; Director,
companies in the
TRUSTEE Michael Baker Corp.
(engineering, Fund Complex
construction, operations and technical
services).
Previous Positions: Dean and Professor
of Law, University of Pittsburgh School
of Law; Dean and Professor of Law,
Villanova University School of Law.
Marjorie P. Smuts Director or Trustee of the Federated $1,483.98
$116,760.63 for the
Birth Date: June 21, 1935 Fund Complex; Public
Trust and 43 other
4905 Bayard Street Relations/Marketing/Conference
Planning. investment
Pittsburgh, PA
companies in the
TRUSTEE Previous Positions:
National Fund Complex
Spokesperson, Aluminum Company of America;
television producer; business owner.
John S. Walsh Director or Trustee of some of the $1,483.98
$94,536.85 for the
Birth Date: November 28, 1957 Federated Fund Complex; President and
Trust and 39 other
2007 Sherwood Drive Director, Heat Wagon, Inc.
investment
Valparaiso, IN (manufacturer of construction temporary
companies in the
TRUSTEE heaters); President and Director,
Fund Complex
Manufacturers Products, Inc.
(distributor of portable construction
heaters); President, Portable Heater
Parts, a division of Manufacturers
Products, Inc.; Director, Walsh &
Kelly, Inc. (heavy highway contractor);
formerly: Vice President, Walsh &
Kelly, Inc.
Glen R. Johnson Staff member, Federated Securities Corp. $ 0
$0 for the Trust
Birth Date: May 2,
1929 and 21 other
Federated Investors
Tower investment
1001 Liberty Avenue
companies in the
Pittsburgh,
PA Fund
Complex
PRESIDENT
Edward C. Gonzales President, Executive Vice President and $0
$0 for the Trust
Birth Date: October 22, 1930 Treasurer of some of the Funds in
the and 42 other
Federated Investors Tower Federated Fund Complex; Vice
Chairman, investment
1001 Liberty Avenue Federated Investors, Inc.; Trustee,
companies in the
Pittsburgh, PA Federated Administrative
Services; Fund Complex
EXECUTIVE VICE PRESIDENT formerly, Trustee or Director of some
of the Funds in the Federated Fund Complex;
Vice President, Federated Financial
Services, Inc., CEO and Chairman, Federated
Administrative Services; Director, Vice
President and Treasurer, Federated Investors
Management Company; Federated Investment
Management Company, Federated Investment
Counseling, Federated Global Investment
Management Corp. and Passport Research,
Ltd.; Director and Executive Vice President,
Federated Securities Corp.; Director,
Federated Services Company; Trustee,
Federated Shareholder Services Company.
John W. McGonigle Executive Vice President and Secretary $0
$0 for the Trust
Birth Date: October 26, 1938 of the Federated Fund
Complex; and 43 other
Federated Investors Tower Executive Vice President,
Secretary, investment
1001 Liberty Avenue and Director, Federated Investors,
companies in the
Pittsburgh, PA Inc.; Trustee, Federated
Investment Fund Complex
EXECUTIVE VICE PRESIDENT AND Management Company and Federated
SECRETARY Investment Counseling; Director,
Federated Global Investment Management
Corp., Federated Services Company and
Federated Securities Corp.
Richard J. Thomas Treasurer of the Federated Fund $0
$0 for the Trust
Birth Date: June 17, 1954 Complex; Vice President -
Funds and 43 other
Federated Investors Tower Financial Services Division,
Federated investment
1001 Liberty Avenue Investors, Inc.; formerly: various
companies in the
Pittsburgh, PA management positions within
Funds Fund Complex
TREASURER Financial Services Division of
Federated Investors, Inc.
Richard B. Fisher President or Vice President of some of $0
$0 for the Trust
Birth Date: May 17, 1923 the Funds in the Federated
Fund and 41 other
Federated Investors Tower Complex; Director or Trustee of some
of investment
1001 Liberty Avenue the Funds in the Federated Fund
companies in the
Pittsburgh, PA Complex; Executive Vice
President, Fund Complex
VICE PRESIDENT Federated Investors, Inc.; Chairman and
Director, Federated Securities Corp.
J. Thomas Madden Chief Investment Officer of these Funds $0
$0 for the Trust
Birth Date: October 22, 1945 and various other Funds in
the and 12 other
Federated Investors Tower Federated Fund Complex; Executive
Vice investment
1001 Liberty Avenue President, Federated Investment
companies in the
Pittsburgh, PA Counseling, Federated Global
Investment Fund Complex
CHIEF INVESTMENT OFFICER Management Corp., Federated Investment
Management Company and Passport Research,
Ltd.; Vice President, Federated Investors,
Inc.; formerly: Executive Vice President and
Senior Vice President, Federated Investment
Counseling Institutional Portfolio
Management Services Division; Senior Vice
President, Federated Investment Management
Company and Passport Research, Ltd.
John W. Harris John W. Harris has been the Fund's
$0 $0 for the
Birth Date: June 6, 1954 Portfolio Manager since December
1998. Trust and
Federated Investors Tower He is Vice President of the Trust. Mr.
0 other investment
1001 Liberty Avenue Harris initially joined Federated
in companies
Pittsburgh, PA 1987 as an Investment Analyst. He
in the Fund Complex
VICE PRESIDENT served as an Investment Analyst and an
Assistant Vice President from 1990
through 1992 and as a Senior Investment
Analyst and Vice President through May
1993. After leaving the money
management field to travel extensively,
he rejoined Federated in 1997 as a
Senior Investment Analyst and became a
Portfolio Manager and Assistant Vice
President of the Fund's Adviser in
December 1998. In January 2000, Mr.
Harris became Vice President of the
Funds' Adviser. Mr. Harris is a
Chartered Financial Analyst. He
received his M.B.A. from the University
of Pittsburgh.
</TABLE>
* An asterisk denotes a Trustee who is deemed to be an interested person as
defined in the Investment Company Act of 1940.
# A pound sign denotes a Member of the Board's Executive Committee, which
handles the Board's responsibilities between its meetings.
+ Mr. Donahue is the father of J. Christopher Donahue, Executive Vice President
and Trustee of the Trust.
++ Mr. Nicholas P. Constantakis and Mr. J. Christopher Donahue became members of
the Board of Trustees on January 1, 2000. Mr. Constantakis did not earn any
fees as of the fiscal year end of the Trust.
INVESTMENT ADVISER
The Adviser conducts investment research and makes investment decisions for the
Funds.
The Adviser is a wholly-owned subsidiary of Federated.
The Adviser shall not be liable to the Trust or any Fund shareholder for any
losses that may be sustained in the purchase, holding, or sale of any security
or for anything done or omitted by it, except acts or omissions involving
willful misfeasance, bad faith, gross negligence, or reckless disregard of the
duties imposed upon it by its contract with the Trust.
Other Related Services
Affiliates of the Adviser may, from time to time, provide certain electronic
equipment and software to institutional customers in order to facilitate the
purchase of Fund Shares offered by the Distributor.
BROKERAGE TRANSACTIONS
When selecting brokers and dealers to handle the purchase and sale of portfolio
instruments, the Adviser looks for prompt execution of the order at a favorable
price. The Adviser will generally use those who are recognized dealers in
specific portfolio instruments, except when a better price and execution of the
order can be obtained elsewhere. The Adviser may select brokers and dealers
based on whether they also offer research services (as described below). In
selecting among firms believed to meet these criteria, the Adviser may give
consideration to those firms which have sold or are selling Shares of the Funds
and other funds distributed by the Distributor and its affiliates. The Adviser
makes decisions on portfolio transactions and selects brokers and dealers
subject to review by the Funds' Board.
Research Services
Research services may include advice as to the advisability of investing in
securities; security analysis and reports; economic studies; industry studies;
receipt of quotations for portfolio evaluations; and similar services. Research
services may be used by the Adviser or by affiliates of Federated in advising
other accounts. To the extent that receipt of these services may replace
services for which the Adviser or its affiliates might otherwise have paid, it
would tend to reduce their expenses. The Adviser and its affiliates exercise
reasonable business judgment in selecting those brokers who offer brokerage and
research services to execute securities transactions. They determine in good
faith that commissions charged by such persons are reasonable in relationship to
the value of the brokerage and research services provided.
Investment decisions for the Funds are made independently from those of other
accounts managed by the Adviser. When the Funds and one or more of those
accounts invests in, or disposes of, the same security, available investments or
opportunities for sales will be allocated among the Funds and the account(s) in
a manner believed by the Adviser to be equitable. While the coordination and
ability to participate in volume transactions may benefit the Funds, it is
possible that this procedure could adversely impact the price paid or received
and/or the position obtained or disposed of by the Funds.
ADMINISTRATOR
Federated Services Company, a subsidiary of Federated, provides administrative
personnel and services (including certain legal and financial reporting
services) necessary to operate the Funds. Federated Services Company provides
these at the following annual rate of the average aggregate daily net assets of
all Federated Funds as specified below:
<TABLE>
<CAPTION>
Maximum Administrative Fee Average Aggregate Daily Net Assets of the Federated
Funds
<S> <C>
0.150 of 1% on the first $250 million
0.125 of 1% on the next $250 million
0.100 of 1% on the next $250 million
0.075 of 1% on assets in excess of $750 million
</TABLE>
The administrative fee received during any fiscal year shall be at least
$125,000 per portfolio and $30,000 per each additional class of Shares.
Federated Services Company may voluntarily waive a portion of its fee and may
reimburse the Funds for expenses.
Federated Services Company also provides certain accounting and recordkeeping
services with respect to the Funds' portfolio investments for a fee based on
Fund assets plus out-of-pocket expenses.
CUSTODIAN
State Street Bank and Trust Company, Boston, Massachusetts, is custodian for the
securities and cash of the Funds. Foreign instruments purchased by the Funds are
held by foreign banks participating in a network coordinated by State Street
Bank.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
Federated Services Company, through its registered transfer agent subsidiary,
Federated Shareholder Services Company, maintains all necessary shareholder
records. The Funds pay the transfer agent a fee based on the size, type, and
number of accounts and transactions made by shareholders.
INDEPENDENT AUDITORS
The independent auditor for the Funds, Deloitte & Touche LLP, plans and performs
its audit so that it may provide an opinion as to whether the Funds' financial
statements and financial highlights are free of material misstatement.
FEES PAID BY THE FUNDS FOR SERVICES
<TABLE>
<CAPTION>
Fund Advisory Fee Paid Brokerage Commissions Paid Administrative Fee Paid
Advisory Fee Waived
Sub-Advisory Fee Paid
------------------------------------------------------------
For the fiscal year ended For the fiscal year ended For the fiscal year ended
November 30, November 30, November 30,
------------------------------------------------------------------------------------------------
1999 1998 1997 1999 1998 1997 1999 1998 1997
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Income Portfolio $ 994,855 $ 880,363 $ 696,806 $ 13,258 $ 29,143 $ 18,013 $155,000 $155,001 $154,890
$ 448,968 $ 494,803 $ 461,157
$ 1,473 $ 58,453 $ 8,724
Conservative $1,767,694 $1,704,532 $1,535,953 $120,815 $154,743 $235,841 $177,712 $171,362 $155,085
Growth Portfolio $ 0 $ 0 $ 101,972
$ 4,697 $ 313,796 $ 99,378
Moderate Growth $1,994,215 $1,876,254 $1,653,493 $447,756 $461,050 $423,125 $200,485 $188,627 $166,775
Portfolio $ 0 $ 0 $ 129,366
$ 24,373 $ 340,468 $ 243,773
Growth Portfolio $1,178,534 $1,048,670 $ 762,135 $352,922 $341,583 $279,734 $155,000 $155,001 $154,893
$ 27,768 $ 176,779 $ 326,658
$ 13,271 $ 149,290 $ 87,324
</TABLE>
<TABLE>
<CAPTION>
Select Shares Institutional Shares Select
Shares
- --------------------------------------------------------------------------------------------------------
Figures for the fiscal 12b-1 Fee Paid 12b-Fee Waived Shareholder Shareholder Shareholder
Shareholder
year ended November Servicing Fee Servicing Fee Servicing Fee
Servicing Fee
30, 1999 Paid Waived
Paid Waived
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
<C>
Income Portfolio $354,680 $118,227 $212,891 $170,313
$118,227 $0
Conservative Growth $494,542 $164,848 $424,384 $339,507
$164,848 $0
Portfolio
Moderate Growth $686,157 $228,719 $436,019 $348,815
$228,719 $0
Portfolio
Growth Portfolio $501,841 $167,280 $225,564 $180,452
$167,280 $0
</TABLE>
Fees are allocated among classes based on their pro rata share of Fund assets,
except for marketing (Rule 12b-1) fees and shareholder services fees, which are
borne only by the applicable class of Shares.
How do the Funds Measure Performance?
The Funds may advertise Share performance by using the Securities and Exchange
Commission's (SEC) standard method for calculating performance applicable to all
mutual funds. The SEC also permits this standard performance information to be
accompanied by non-standard performance information.
The performance of Shares depends upon such variables as: portfolio quality;
average portfolio maturity; type and value of portfolio securities; changes in
interest rates; changes or differences in the Funds' or any class of Shares'
expenses; and various other factors.
Share performance fluctuates on a daily basis largely because net earnings
fluctuate daily. Both net earnings and offering price per Share are factors in
the computation of yield and total return.
Average Annual Total Returns and Yield
<TABLE>
<CAPTION>
Fund Average Annual Total
Returns Yields
for the periods ended November 30, 1999 for
the 30-day period
- ---------------------------------------------------------------------------------- ended
Institutional Shares Select Shares
November 30, 1999
One-Year Five-Year Start of One-Year Five-Year Start of
Institutional Select
Performance Performance
Shares Shares
(5/25/94) (5/25/94)
<S> <C> <C> <C> <C> <C> <C>
<C> <C>
Income Portfolio 1.22% 8.29% 7.59% 0.52% 7.50% 6.82%
5.44% 4.73%
Conservative Growth 5.11% 10.84% 9.77% 4.29% 10.09% 9.02%
3.83% 3.13%
Portfolio
Moderate Growth 11.00% 13.79% 12.29% 10.26% 12.99% 11.52%
2.59% 1.90%
Portfolio
Growth Portfolio 14.83% 15.28% 13.56% 14.05% 14.52% 12.82%
1.43% 0.74%
</TABLE>
TOTAL RETURN
Total return represents the change (expressed as a percentage) in the value of
Shares over a specific period of time, and includes the investment of income and
capital gains distributions.
The average annual total return for Shares is the average compounded rate of
return for a given period that would equate a $1,000 initial investment to the
ending redeemable value of that investment. The ending redeemable value is
computed by multiplying the number of Shares owned at the end of the period by
the NAV per Share at the end of the period. The number of Shares owned at the
end of the period is based on the number of Shares purchased at the beginning of
the period with $1,000, less any applicable sales charge, adjusted over the
period by any additional Shares, assuming the annual reinvestment of all
dividends and distributions.
YIELD
The yield of Shares is calculated by dividing: (i) the net investment income per
Share earned by the Shares over a 30-day period; by (ii) the maximum offering
price per Share on the last day of the period. This number is then annualized
using semi-annual compounding. This means that the amount of income generated
during the 30-day period is assumed to be generated each month over a 12-month
period and is reinvested every six months. The yield does not necessarily
reflect income actually earned by Shares because of certain adjustments required
by the SEC and, therefore, may not correlate to the dividends or other
distributions paid to shareholders.
To the extent investment professionals and broker/dealers charge fees in
connection with services provided in conjunction with an investment in Shares,
the Share performance is lower for shareholders paying those fees.
PERFORMANCE COMPARISONS
Advertising and sales literature may include:
. references to ratings, rankings, and financial publications and/or
performance comparisons of Shares to certain indices;
. charts, graphs and illustrations using a Fund's returns, or returns in
general, that demonstrate investment concepts such as tax-deferred
compounding, dollar-cost averaging and systematic investment;
. discussions of economic, financial and political developments and their
impact on the securities market, including the portfolio manager's views on
how such developments could impact the Funds; and
. information about the mutual fund industry from sources such as the
Investment Company Institute.
A Fund may compare its performance, or performance for the types of securities
in which it invests, to a variety of other investments, including federally
insured bank products such as bank savings accounts, certificates of deposit,
and Treasury bills.
The Funds may quote information from reliable sources regarding individual
countries and regions, world stock exchanges, and economic and demographic
statistics.
You may use financial publications and/or indices to obtain a more complete view
of Share performance. When comparing performance, you should consider all
relevant factors such as the composition of the index used, prevailing market
conditions, portfolio compositions of other funds, and methods used to value
portfolio securities and compute offering price. The financial publications
and/or indices which the Funds use in advertising may include:
. Lipper Analytical Services, Inc., ranks funds in various fund categories by
making competitive calculations using total return. Total return assumes the
reinvestment of all capital gains distributions and income dividends and
takes into account any change in net asset value over a specified period of
time. From time to time, a Portfolio will quote its Lipper ranking in
advertising and sales literature.
. Standard & Poor's Ratings Group Utility Index is an unmanaged index of
common stocks from forty different utilities. This index indicates daily
changes in the price of the stocks. The index also provides figures for
changes in price from the beginning of the year to date and for a
twelve-month period.
. Standard & Poor's Ratings Group Daily Stock Price Index of 500 Common
Stocks, a composite index of common stocks in industry, transportation, and
financial and public utility companies, can be used to compare to the total
returns of funds whose portfolios are invested primarily in common stocks.
In addition, the Standard & Poor's index assumes reinvestments of all
dividends paid by stocks listed on its index. Taxes due on any of these
distributions are not included, nor are brokerage or other fees calculated
in the Standard & Poor's figures.
. Standard & Poor's Ratings Group Small Stock Index, is a broadly diversified
index consisting of approximately 600 small capitalization common stocks
that can be used to compare to the total returns of funds whose portfolios
are invested primarily in small capitalization common stocks.
. Europe, Australia, and Far East (EAFE) is a market capitalization weighted
foreign securities index, which is widely used to measure the performance of
European, Australian, New Zealand and Far Eastern stock markets. The index
covers approximately 1,020 companies drawn from 18 countries in the above
regions. The index values its securities daily in both U.S. dollars and
local currency and calculates total returns monthly. EAFE U.S. dollar total
return is a net dividend figure less Luxembourg withholding tax. The EAFE is
monitored by Capital International, S.A., Geneva, Switzerland.
. Russell 1000 Index measures the performance of the 1,000 largest companies
in the Russell 3000 Index, which represents approximately 90% of the total
market capitalization of the Russell 3000 Index.
. Russell 2000 Index is a broadly diversified index consisting of
approximately 2,000 small capitalization common stocks that can be used to
compare to the total returns of funds whose portfolios are invested
primarily in small capitalization common stocks.
. Lehman Brothers Treasury Intermediate Bond Index (U.S. Dollars) is an index
composed of all bonds covered by the Lehman Brothers Treasury Bond Index
with maturities between one and 9.9 years. Total return comprises price
appreciation/depreciation and income as a percentage of the original
investment. Indexes are rebalanced monthly by market capitalization.
. Lehman Brothers Treasury Long-Term Bond Index (U.S. Dollars) is an index
composed of all bonds covered by the Lehman Brothers Treasury Bond Index
with maturities of 10 years or greater. Total return comprises price
appreciation/depreciation and income as a percentage of the original
investment. Indexes are rebalanced monthly by market capitalization.
. J.P. Morgan Global Non-U.S. Government Bond Index is a total return, market
capitalization weighted index, rebalanced monthly consisting of the
following countries: Australia, Belgium, Canada, Denmark, France, Germany,
Italy, Japan, Netherlands, Spain, Sweden and United Kingdom.
. Lehman Brothers Corporate Intermediate Bond Index (U.S. Dollars) is a subset
of the Lehman Brothers Corporate Bond Index covering all corporate, publicly
issued, fixed-rate, nonconvertible U.S. debt issues rated at least Baa with
at least $150 million principal outstanding and maturity less than 10 years.
. Lehman Brothers Corporate B Index is an index composed of all bonds covered
by Lehman Brothers High Yield Index rated "B" by Moody's Investors Service.
Bonds have a minimum amount outstanding of $100 million and at least one
year to maturity. Total return comprises price appreciation/depreciation and
income as a percentage of the original investment. Indexes are rebalanced
monthly by market capitalization.
. Lehman Brothers Mortgage-Backed Securities Index includes 15- and 30-year
fixed-rate securities backed by mortgage pools of the Government National
Mortgage Association , Federal Home Loan Mortgage Corporation , and Federal
National Mortgage Corporation . Graduated payment mortgages and balloons are
included in the index.
. Lehman Brothers Government/Corporate (Total) Index is comprised of
approximately 5,000 issues which include non-convertible bonds publicly
issued by the U.S. government or its agencies; corporate bonds guaranteed by
the U.S. government and quasi-federal corporations; and publicly issued,
fixed rate, non-convertible domestic bonds of companies in industry, public
utilities and finance. The average maturity of these bonds approximates nine
years. Tracked by Lehman Brothers, Inc., the index calculates total returns
for one month, three month, twelve month and ten year periods and year-to-
date.
. Lehman Brothers Intermediate Government/Corporate Bond Index is an unmanaged
index comprised of all the bonds issued by the Lehman Brothers
Government/Corporate Bond Index with maturities between 1 and 9.99 years.
Total return is based on price appreciation/depreciation and income as a
percentage of the original investment. Indices are rebalanced monthly by
market capitalization.
. Lehman Brothers High Yield Index covers the universe of fixed rate, publicly
issued, noninvestment grade debt registered with the SEC. All bonds included
in the High Yield Index must be dollar-denominated and nonconvertible and
have at least one year remaining to maturity and an outstanding par value of
at least $100 million. Generally securities must be rated Ba1 or lower by
Moodys Investors Service, including defaulted issues. If no Moodys rating is
available, bonds must be rated BB+ or lower by S&P; and if no S&P rating is
available, bonds must be rated below investment grade by Fitch Investor's
Service. A small number of unrated bonds is included in the index; to be
eligible they must have previously held a high yield rating or have been
associated with a high yield issuer, and must trade accordingly.
. Morningstar, Inc., an independent rating service, is the publisher of the
bi-weekly Mutual Fund Values. Mutual Fund Values rates more than 1,000
NASDAQ- listed mutual funds of all types, according to their risk-adjusted
returns. The maximum rating is five stars, and ratings are effective for two
weeks.
Who is Federated Investors, Inc.?
Federated Investors, Inc. is dedicated to meeting investor needs by making
structured, straightforward and consistent investment decisions. Federated
investment products have a history of competitive performance and have gained
the confidence of thousands of financial institutions and individual investors.
Federated's disciplined investment selection process is rooted in sound
methodologies backed by fundamental and technical research. At Federated,
success in investment management does not depend solely on the skill of a single
portfolio manager. It is a fusion of talents and state-of-the-art industry tools
and resources. Federated's investment process involves teams of portfolio
managers and analysts, and investment decisions are executed by traders
dedicated to specific market sectors and who handle trillions of dollars in
annual trading volume.
FEDERATED FUNDS OVERVIEW
Municipal Funds
In the municipal sector, as of December 31, 1999, Federated managed 12 bond
funds with approximately $2.0 billion in assets and 24 money market funds with
approximately $13.1 billion in total assets. In 1976, Federated introduced one
of the first municipal bond mutual funds in the industry and is now one of the
largest institutional buyers of municipal securities. The Funds may quote
statistics from organizations including The Tax Foundation and the National
Taxpayers Union regarding the tax obligations of Americans.
Equity Funds
In the equity sector, Federated has more than 29 years' experience. As of
December 31, 1999, Federated managed 53 equity funds totaling approximately
$18.3 billion in assets across growth, value, equity income, international,
index and sector (i.e. utility) styles. Federated's value-oriented management
style combines quantitative and qualitative analysis and features a structured,
computer-assisted composite modeling system that was developed in the 1970s.
Corporate Bond Funds
In the corporate bond sector, as of December 31, 1999, Federated managed 13
money market funds and 29 bond funds with assets approximating $35.7 billion and
$7.7 billion, respectively. Federated's corporate bond decision making--based on
intensive, diligent credit analysis--is backed by over 27 years of experience in
the corporate bond sector. In 1972, Federated introduced one of the first
high-yield bond funds in the industry. In 1983, Federated was one of the first
fund managers to participate in the asset-backed securities market, a market
totaling more than $209 billion. Government Funds In the government
sector, as of December 31, 1999, Federated managed 9 mortgage-backed, 11
government/agency and 16 government money market mutual funds, with assets
approximating $4.7 billion, $1.6 billion and $34.1 billion, respectively.
Federated trades approximately $450 million in U.S. government and
mortgage-backed securities daily and places approximately $25 billion in
repurchase agreements each day. Federated introduced the first U.S. government
fund to invest in U.S. government bond securities in 1969. Federated has been a
major force in the short- and intermediate-term government markets since 1982
and currently manages approximately $43.8 billion in government funds within
these maturity ranges. Money Market Funds In the money market sector,
Federated gained prominence in the mutual fund industry in 1974 with the
creation of the first institutional money market fund. Simultaneously, the
company pioneered the use of the amortized cost method of accounting for valuing
shares of money market funds, a principal means used by money managers today to
value money market fund shares. Other innovations include the first
institutional tax-free money market fund. As of December 31, 1999, Federated
managed more than $83.0billion in assets across 54 money market funds, including
16 government, 13 prime and 24 municipal and 1 euro-denominated with assets
approximating $34.1 billion, $35.7 billion, $13.1 billion and 115 million,
respectively. The Chief Investment Officers responsible for oversight of
the various investment sectors within Federated are: U.S. equity and high yield
- - J. Thomas Madden; U.S. fixed income -William D. Dawson, III; and global
equities and fixed income - Henry A. Frantzen. The Chief Investment Officers are
Executive Vice Presidents of the Federated advisory companies.
Mutual Fund Market
Thirty-seven percent of American households are pursuing their financial goals
through mutual funds. These investors, as well as businesses and institutions,
have entrusted over $5 trillion to the more than 7,300 funds available,
according to the Investment Company Institute.
Federated Clients Overview
Federated distributes mutual funds through its subsidiaries for a variety of
investment purposes. Specific markets include:
Institutional Clients
Federated meets the needs of approximately 1,160 institutional clients
nationwide by managing and servicing separate accounts and mutual funds for a
variety of purposes, including defined benefit and defined contribution
programs, cash management, and asset/liability management. Institutional clients
include corporations, pension funds, tax-exempt entities,
foundations/endowments, insurance companies, and investment and financial
advisers. The marketing effort to these institutional clients is headed by John
B. Fisher, President, Institutional Sales Division, Federated Securities Corp.
Bank Marketing
Other institutional clients include more than 1,600 banks and trust
organizations. Virtually all of the trust divisions of the top 100 bank holding
companies use Federated Funds in their clients' portfolios. The marketing effort
to trust clients is headed by Timothy C. Pillion, Senior Vice President, Bank
Marketing & Sales.
Broker/Dealers and Bank Broker/Dealer Subsidiaries
Federated Funds are available to consumers through major brokerage firms
nationwide--we have over 2,200 broker/dealer and bank broker/dealer
relationships across the country--supported by more wholesalers than any other
mutual fund distributor. Federated's service to financial professionals and
institutions has earned it high ratings in several surveys performed by DALBAR,
Inc. DALBAR is recognized as the industry benchmark for service quality
measurement. The marketing effort to these firms is headed by James F. Getz,
President, Broker/Dealer Sales Division, Federated Securities Corp.
Financial Information
The Financial Statements for the Funds for the fiscal year ended November 30,
1999 are incorporated herein by reference to the Annual Reports to Shareholders
of the Funds dated November 30, 1999.
Investment Ratings
Standard and Poor's Long-Term Debt Rating Definitions
AAA--Debt rated AAA has the highest rating assigned by Standard & Poor's.
Capacity to pay interest and repay principal is extremely strong.
AA--Debt rated AA has a very strong capacity to pay interest and repay principal
and differs from the higher rated issues only in small degree.
A--Debt rated A has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.
BBB--Debt rated BBB is regarded as having an adequate capacity to pay interest
and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.
BB--Debt rated BB has less near-term, vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or exposure to
adverse business, financial, or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments. The BB
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied BBB-rating.
B--Debt rated B has a greater vulnerability to default but currently has the
capacity to meet interest payments and principal repayments. Adverse business,
financial, or economic conditions will likely impair capacity or willingness to
pay interest and repay principal. The B rating category is also used for debt
subordinated to senior debt that is assigned an actual or implied BB or BB-
rating.
CCC--Debt rated CCC has a currently identifiable vulnerability to default, and
is dependent upon favorable business, financial, and economic conditions to meet
timely payment of interest and repayment of principal. In the event of adverse
business, financial, or economic conditions, it is not likely to have the
capacity to pay interest and repay principal. The CCC rating category is also
used for debt subordinated to senior debt that is assigned an actual or implied
B or B- rating.
CC--The rating CC typically is applied to debt subordinated to senior debt that
is assigned an actual or implied CCC debt rating.
C--The rating C typically is applied to debt subordinated to senior debt which
is assigned an actual or implied CCC-debt rating. The C rating may be used to
cover a situation where a bankruptcy petition has been filed, but debt service
payments are continued.
Moody's Investors Service, Inc. Long-Term Bond Rating Definitions
AAA--Bonds which are rated AAA are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as gilt
edged. Interest payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective elements are likely
to change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
AA--Bonds which are rated AA are judged to be of high quality by all standards.
Together with the AAA group, they comprise what are generally known as high
grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in AAA securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risks appear somewhat larger than in AAA securities.
A--Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment sometime in the future.
BAA--Bonds which are rated BAA are considered as medium grade obligations,
(i.e., they are neither highly protected nor poorly secured). Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
BA--Bonds which are BA are judged to have speculative elements; their future
cannot be considered as well assured. Often the protection of interest and
principal payments may be very moderate and thereby not well safeguarded during
both good and bad times over the future. Uncertainty of position characterizes
bonds in this class.
B--Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
CAA--Bonds which are rated CAA are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
CA--Bonds which are rated CA represent obligations which are speculative in a
high degree. Such issues are often in default or have other marked shortcomings.
C--Bonds which are rated C are the lowest rated class of bonds, and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
Fitch IBCA, Inc. Long-Term Debt Rating Definitions
AAA--Bonds considered to be investment grade and of the highest credit quality.
The obligor has an exceptionally strong ability to pay interest and repay
principal, which is unlikely to be affected by reasonably foreseeable events.
AA--Bonds considered to be investment grade and of very high credit quality. The
obligor's ability to pay interest and repay principal is very strong, although
not quite as strong as bonds rated AAA. Because bonds rated in the AAA and AA
categories are not significantly vulnerable to foreseeable future developments,
short-term debt of these issuers is generally rated F-1+.
A--Bonds considered to be investment grade and of high credit quality. The
obligor's ability to pay interest and repay principal is considered to be
strong, but may be more vulnerable to adverse changes in economic conditions and
circumstances than bonds with higher ratings.
BBB--Bonds considered to be investment grade and of satisfactory credit quality.
The obligor's ability to pay interest and repay principal is considered to be
adequate. Adverse changes in economic conditions and circumstances, however, are
more likely to have adverse impact on these bonds, and therefore impair timely
payment. The likelihood that the ratings of these bonds will fall below
investment grade is higher than for bonds with higher ratings.
BB--Bonds are considered speculative. The obligor's ability to pay interest and
repay principal may be affected over time by adverse economic changes. However,
business and financial alternatives can be identified which could assist the
obligor in satisfying its debt service requirements.
B--Bonds are considered highly speculative. While bonds in this class are
currently meeting debt service requirements, the probability of continued timely
payment of principal and interest reflects the obligor's limited margin of
safety and the need for reasonable business and economic activity throughout the
life of the issue.
CCC--Bonds have certain identifiable characteristics which, if not remedied, may
lead to default. The ability to meet obligations requires an advantageous
business and economic environment.
CC--Bonds are minimally protected. Default in payment of interest and/or
principal seems probable over time.
C--Bonds are imminent default in payment of interest or principal.
Moody's Investors Service, Inc. Commercial Paper Ratings
Prime-1--Issuers rated Prime-1 (or related supporting institutions) have a
superior capacity for repayment of short-term promissory obligations. Prime-1
repayment capacity will normally be evidenced by the following characteristics:
. Leading market positions in well established industries.
. High rates of return on funds employed.
. Conservative capitalization structure with moderate reliance on debt and
ample asset protection.
. Broad margins in earning coverage of fixed financial charges and high
internal cash generation.
. Well established access to a range of financial markets and assured sources
of alternate liquidity.
Prime-2--Issuers rated Prime-1 (or related supporting institutions) have a
strong capacity for repayment of short-term promissory obligations. This will
normally be evidenced by many of the characteristics cited above but to a lesser
degree. Earnings trends and coverage ratios, while sound, will be more subject
to variation. Capitalization characteristics, while still appropriate, may be
more affected by external conditions. Ample alternate liquidity is maintained.
Standard and Poor's Commercial Paper Ratings
A-1--This designation indicates that the degree of safety regarding timely
payment is strong. Those issues determined to possess extremely strong safety
characteristics are denoted with a plus sign (+) designation.
A-2--Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high as for
issues designated A-1.
Fitch IBCA, Inc. Commercial Paper Rating Definitions
FITCH-1--(Highest Grade) Commercial paper assigned this rating is regarded as
having the strongest degree of assurance for timely payment.
FITCH-2--(Very Good Grade) Issues assigned this rating reflect an assurance of
timely payment only slightly less in degree than the strongest issues.
Addresses
FEDERATED MANAGED INCOME PORTFOLIO
FEDERATED MANAGED CONSERVATIVE GROWTH PORTFOLIO
FEDERATED MANAGED MODERATE GROWTH PORTFOLIO
FEDERATED MANAGED GROWTH PORTFOLIO
Institutional Shares
Select Shares
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
Distributor
Federated Securities Corp.
Federated Investors Tower
1001 Liberty Avenue,
Pittsburgh, PA 15222-3779
Investment Adviser
Federated Investment Management Company
Federated Investors Tower
1001 Liberty Avenue,
Pittsburgh, PA 15222-3779
Custodian
State Street Bank and Trust Company
P.O. Box 8600
Boston, MA 02266-8600
Transfer Agent and Dividend Disbursing Agent
Federated Shareholder Services Company
P.O. Box 8600
Boston, MA 02266-8600
Independent Auditors
Deloitte & Touche LLP
200 Berkeley Street
Boston, MA 02116-5022
PART C. OTHER INFORMATION.
Item 23. Exhibits:
(a) (i) Conformed copy of Declaration of Trust of the Registrant (1);
(ii) Conformed copy of Amendment No. 1 to Declaration of Trust (1);
(iii) Conformed copy of Amendment No. 2 to Declaration of Trust (2);
(iv) Conformed copy of Amendment No. 4 to Declaration of Trust (5);
(b) Copy of By-Laws of the Registrant (1);
(i) Copy of Amendment No. 2 to the By-Laws; (9)
(ii) Copy of Amendment No. 3 to the By-Laws; (9)
(iii) Copy of Amendment No. 4 to the By-Laws; (9)
(c) Copy of Specimen Certificates for Shares of Beneficial Interest of the
Registrant (2);
(d) (i) Conformed copy of Investment Advisory Contract of the
Registrant (3);
(ii) Conformed copy of Sub-Advisory Contract (6);
(e) (i) Conformed copy of Distributor's Contract of the
Registrant (3);
(ii) The Registrant hereby incorporates the conformed copy of the
specimen Mutual Funds Sales and Service Agreement; Mutual Fund
Service Agreement, and Plan Trustee/Mutual Funds
Service Agreement from Item 24(b)(6) of the Cash
Trust Series II Registration Statement on Form N-1A,
filed with the Commission on July 24, 1995. (File
Numbers 33-38550 and 811-6269);
(f) Not applicable;
(g) (i) Conformed copy of Custodian Agreement of the
Registrant (4);
(ii) Conformed copy of Custodian Fee Schedule (7);
-----------------------
+ All exhibits have been filed electronically.
(1) Response is incorporated by reference to Registrant's Initial Registration
Statement on Form N-1A filed December 2, 1993 (File Nos. 33-51247 and
811-7129).
(2) Response is incorporated by reference to Registrant's Pre-Effective
Amendment No. 1 on Form N-1A filed February 11, 1994 (File Nos. 33-51247
and 811-7129).
(3) Response is incorporated by reference to Registrant's Pre-Effective
Amendment No. 2 on Form N-1A filed March 2, 1994 (File Nos. 33-51247 and
811-7129).
(4) Response is incorporated by reference to Registrant's Post Effective
Amendment No. 1 on Form N-1A filed September 30, 1994 (File Nos. 33-51247
and 811-7129).
(5) Response is incorporated by reference to Registrant's Post Effective
Amendment No. 5 on Form N-1A filed January 29, 1996 (File Nos. 33-51247 and
811-7129).
(6) Response is incorporated by reference to Registrant's Post Effective
Amendment No. 6 on Form N-1A filed January 29, 1997 (File Nos. 33-51247 and
811-7129).
(7) Response is incorporated by reference to Registrant's Post Effective
Amendment No. 7 on Form N-1A filed November 26, 1997 (File Nos. 33-51247
and 811-7129).
(9) Response is incorporated by reference to Registrant's Post Effective
Amendment No. 9 on Form N-1A filed December 2, 1998 (File Nos. 33-51247 and
811-7129).
<PAGE>
(h) (i) Conformed copy of Agreement for Fund Accounting
Services, Administrative Services, Transfer
Agency Services, and Custody Services
Procurement (6);
(ii) Conformed Copy of Amended and Restated
Shareholder Services Agreement (7);
(iii) The Registrant hereby incorporates the
conformed copy of the Shareholder Services
Sub-Contract between Fidelity and Federated
Shareholder Services from Item 24(b)(9)(iii)
of the Federated GNMA Trust Registration
Statement of Form N-1A, filed with
the Commission on March 25, 1996.
(File Nos. 2-75670 and 811-3375);
(iv) The responses described in Item 23(e) (ii) are
hereby incorporated by reference;
(i) Conformed copy of Opinion and Consent of Counsel as
to legality of shares being registered (2);
(j) Conformed copy of Consent of Independent Auditors; +
(k) Not applicable;
(l) Conformed copy of Initial Capital Understanding (2);
(m) (i) Conformed copy of Distribution Plan (4);
(ii) The responses described in Item 23(e)(ii)
are hereby incorporated by reference;
(n) The Registrant hereby incorporates the conformed copy
of the specimen Multiple Class Plan from Item
24(b)(18) of the World Investment Series, Inc.
Registration Statement on Form N-1A, filed with the
Commission on January 26, 1996 (File Nos. 33-52149
and 811-07141);
(o) (i) Conformed copy of Power of Attorney; +
(ii) Conformed copy of Power of Attorney to add new
Trustee of the Registrant; + (iii) Conformed copy of
Power of Attorney to add new Trustee of the
Registrant; + (iv) Conformed copy of Power of
Attorney to add new Trustee of the Registrant; + (v)
Conformed copy of Power of Attorney to add Chief
Investment Officer of the Registrant; + (vi)
Conformed copy of Power of Attorney to add new
Trustee of the Registrant; + (vii) Conformed copy of
Limited Power of Attorney (11).
- -----------------------
+ All exhibits have been filed electronically.
(2) Response is incorporated by reference to Registrant's Pre-Effective
Amendment No. 1 on Form N-1A filed February 11, 1994 (File Nos. 33-51247
and 811-7129).
(4) Response is incorporated by reference to Registrant's Post Effective
Amendment No. 1 on Form N-1A filed September 30, 1994 (File Nos. 33-51247
and 811-7129).
(6) Response is incorporated by reference to Registrant's Post Effective
Amendment No. 6 on Form N-1A filed January 30, 1997 (File Nos. 33-51247 and
811-7129).
(7) Response is incorporated by reference to Registrant's Post Effective
Amendment No. 7 on Form N-1A filed November 26, 1997 (File Nos. 33-51247
and 811-7129).
(10) Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 10 on Form N-1A filed January 29, 1999 (File Nos. 33-51247
and 811-7129).
(11) Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 11 on Form N-1A filed November 29, 1999 (File Nos. 33-51247
and 811-7129).
<PAGE>
Item 24. Persons Controlled by or Under Common Control with Registrant:
None.
Item 25. Indemnification: Response is incorporated by reference to Registrant's
Pre-Effective Amendment No. 1 on --------------- Form N-1A filed February
11, 1994 (File Nos. 33-51247 and 811-7129).
Item 26. Business and Other Connections of Investment Adviser:
For a description of the other business of the investment adviser,
see the section entitled "Who Manages the Funds?" in Part A. The
affiliations with the Registrant of four of the Trustees and one
of the Officers of the investment adviser are included in Part B
of this Registration Statement under "Who Manages and Provides
Services to the Funds?" The remaining Trustee of the investment
adviser, his position with the investment adviser, and, in
parentheses, his principal occupation is: Mark D. Olson (Partner,
Wilson, Halbrook & Bayard), 107 W. Market Street, Georgetown,
Delaware 19947.
The remaining Officers of the investment adviser are:
Executive Vice Presidents: William D. Dawson, III
Henry A. Frantzen
J. Thomas Madden
Senior Vice Presidents: Joseph M. Balestrino
David A. Briggs
Drew J. Collins
Jonathan C. Conley
Deborah A. Cunningham
Mark E. Durbiano
Jeffrey A. Kozemchak
Sandra L. McInerney
Susan M. Nason
Mary Jo Ochson
Robert J. Ostrowski
Vice Presidents: Todd A. Abraham
J. Scott Albrecht
Arthur J. Barry
Randall S. Bauer
G. Andrew Bonnewell
Micheal W. Casey
Robert E. Cauley
Alexandre de Bethmann
B. Anthony Delserone, Jr.
Michael P. Donnelly
Linda A. Duessel
Donald T. Ellenberger
Kathleen M. Foody-Malus
Thomas M. Franks
James E. Grefenstette
Marc Halperin
Patricia L. Heagy
Susan R. Hill
William R. Jamison
Constantine J. Kartsonas
Robert M. Kowit
Richard J. Lazarchic
Steven Lehman
Marian R. Marinack
William M. Painter
Jeffrey A. Petro
Keith J. Sabol
Frank Semack
Aash M. Shah
Michael W. Sirianni, Jr.
Christopher Smith
Edward J. Tiedge
Leonardo A. Vila
Paige M. Wilhelm
George B. Wright
Assistant Vice Presidents: Arminda Aviles
Nancy J. Belz
Lee R. Cunningham, II
James H. Davis, II
Jacqueline A. Drastal
Paul S. Drotch
Salvatore A. Esposito
Donna M. Fabiano
Gary E. Farwell
Eamonn G. Folan
John T. Gentry
John W. Harris
Nathan H. Kehm
John C. Kerber
Grant K. McKay
Christopher Matyszewski
Natalie F. Metz
Thomas Mitchell
Joseph M. Natoli
Trent Neville
Ihab Salib
Roberto Sanchez-Dahl, Sr.
James W. Schaub
John Sheehy
John Sidawi
Matthew K. Stapen
Diane Tolby
Timothy G. Trebilcock
Steven J. Wagner
Lori A. Wolff
Secretary: G. Andrew Bonnewell
Treasurer: Thomas R. Donahue
Assistant Secretaries: C. Grant Anderson
Karen M. Brownlee
Leslie K. Ross
Assistant Treasurer: Dennis McAuley, III
The business address of each of the Officers of the investment
adviser is Federated Investors Tower, 1001 Liberty Avenue,
Pittsburgh, Pennsylvania 15222-3779. These individuals are also
officers of a majority of the investment advisers to the
investment companies in the Federated Fund Complex described in
Part B of this Registration Statement.
Item 27. Principal Underwriters:
(a)......Federated Securities Corp. the Distributor for shares of the
Registrant, acts as principal underwriter for the following .... open-end
investment companies, including the Registrant:
Cash Trust Series II; Cash Trust Series, Inc.; CCB Funds; Edward D. Jones & Co.
Daily Passport Cash Trust; Federated Adjustable Rate U.S. Government Fund, Inc.;
Federated American Leaders Fund, Inc.; Federated ARMs Fund; Federated Core
Trust; Federated Equity Funds; Federated Equity Income Fund, Inc.; Federated
Fund for U.S. Government Securities, Inc.; Federated GNMA Trust; Federated
Government Income Securities, Inc.; Federated Government Trust; Federated High
Income Bond Fund, Inc.; Federated High Yield Trust; Federated Income Securities
Trust; Federated Income Trust; Federated Index Trust; Federated Institutional
Trust; Federated Insurance Series; Federated Municipal Opportunities Fund, Inc.;
Federated Municipal Securities Fund, Inc.; Federated Municipal Trust; Federated
Short-Term Municipal Trust; Federated Stock and Bond Fund, Inc.; Federated Stock
Trust; Federated Tax-Free Trust; Federated Total Return Series, Inc.; Federated
U.S. Government Bond Fund; Federated U.S. Government Securities Fund: 1-3 Years;
Federated U.S. Government Securities Fund: 2-5 Years; Federated U.S. Government
Securities Fund: 5-10 Years; Federated Utility Fund, Inc.; Fixed Income
Securities, Inc.; Hibernia Funds; Independence One Mutual Funds; Intermediate
Municipal Trust; International Series, Inc.; Investment Series Funds, Inc.;
Managed Series Trust; Marshall Funds, Inc.; Money Market Management, Inc.; Money
Market Obligations Trust; Money Market Obligations Trust II; Money Market Trust;
Municipal Securities Income Trust; Newpoint Funds; Regions Funds; RIGGS Funds;
SouthTrust Funds; Tax-Free Instruments Trust; The Planters Funds; The Wachovia
Funds; The Wachovia Municipal Funds; Vision Group of Funds, Inc.; World
Investment Series, Inc.; Blanchard Funds; Blanchard Precious Metals Fund, Inc.;
DG Investor Series; High Yield Cash Trust; Investment Series Trust; Star Funds;
Targeted Duration Trust; The Virtus Funds; and Trust for Financial Institutions.
Federated Securities Corp. also acts as principal underwriter for the
following closed-end investment company: Liberty Term Trust, Inc.- 1999.
<TABLE>
<CAPTION>
<S> <C> <C>
(b)
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Distributor With Registrant
Richard B. Fisher Chairman, Chief Executive Vice President
Federated Investors Tower Officer, Chief Operating
1001 Liberty Avenue Officer,
Pittsburgh, PA 15222-3779 Federated Securities Corp.
Arthur L. Cherry Director, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
John B. Fisher President-Institutional Sales --
Federated Investors Tower and Director,
1001 Liberty Avenue Federated Securities Corp.
Pittsburgh, PA 15222-3779
Thomas R. Donahue Director, Assistant Secretary --
Federated Investors Tower and Treasurer,
1001 Liberty Avenue Federated Securities Corp.
Pittsburgh, PA 15222-3779
James F. Getz President-Broker/Dealer and --
Federated Investors Tower Director,
1001 Liberty Avenue Federated Securities Corp.
Pittsburgh, PA 15222-3779
David M. Taylor Executive Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Mark W. Bloss Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Richard W. Boyd Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Distributor With Registrant
Laura M. Deger Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Theodore Fadool, Jr. Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Bryant R. Fisher Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Christopher T. Fives Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
James S. Hamilton Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
James M. Heaton Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Keith Nixon Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Solon A. Person, IV Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Ronald M. Petnuch Senior Vice President,
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Timothy C. Pillion Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Thomas E. Territ Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Ernest G. Anderson Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Teresa M. Antoszyk Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Distributor With Registrant
John B. Bohnet Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Jane E. Broeren-Lambesis Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Matthew W. Brown Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
David J. Callahan Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Mark Carroll Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Steven R. Cohen Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Mary J. Combs Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
R. Edmond Connell, Jr. Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
R. Leonard Corton, Jr. Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Kevin J. Crenny Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Daniel T. Culbertson Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
G. Michael Cullen Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Marc C. Danile Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
<PAGE>
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Distributor With Registrant
Robert J. Deuberry Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
William C. Doyle Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Jill Ehrenfeld Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Mark D. Fisher Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Mark A. Gessner Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Joseph D. Gibbons Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
John K. Goettlicher Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Craig S. Gonzales Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
G. Tad Gullickson Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Dayna C. Haferkamp Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Bruce E. Hastings Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
James E. Hickey Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Charlene H. Jennings Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
<PAGE>
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Distributor With Registrant
H. Joseph Kennedy Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Michael W. Koenig Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Dennis M. Laffey Vice President,
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Christopher A. Layton Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Michael H. Liss Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Michael R. Manning Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Amy Michalisyn Vice President,
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Mark J. Miehl Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Richard C. Mihm Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Alec H. Neilly Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Thomas A. Peter III Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Robert F. Phillips Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Richard A. Recker Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
<PAGE>
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Distributor With Registrant
Eugene B. Reed Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Paul V. Riordan Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
John Rogers Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Brian S. Ronayne Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Thomas S. Schinabeck Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Larry Sebbens Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Edward J. Segura Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Edward L. Smith Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
David W. Spears Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
John A. Staley Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Colin B. Starks Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Jeffrey A. Stewart Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
William C. Tustin Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
<PAGE>
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Distributor With Registrant
Paul A. Uhlman Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Miles J. Wallace Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Richard B. Watts Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Edward J. Wojnarowski Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Michael P. Wolff Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Robert W. Bauman Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Edward R. Bozek Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Beth C. Dell Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Donald C. Edwards Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
David L. Immonen Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
John T. Glickson Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Ernest L. Linane Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Renee L. Martin Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
<PAGE>
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Distributor With Registrant
Kirk A. Montgomery Secretary, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Timothy S. Johnson Assistant Secretary, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Victor R. Siclari Assistant Secretary, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Denis McAuley III Assistant Treasurer, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
</TABLE>
(c) Not applicable.
Item 28. Location of Accounts and Records:
All accounts and records required to be maintained by Section
31(a) of the Investment Company Act of 1940 and Rules 31a-1
through 31a-3 promulgated thereunder are maintained at one of
the following locations:
<TABLE>
<CAPTION>
<S> <C>
Registrant Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
(Notices should be sent to the Agent for Service at above
address)
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
Federated Shareholder P.O. Box 8600
Services Company Boston, MA 02266-8600
("Transfer Agent and
Dividend Disbursing Agent")
Federated Services Company Federated Investors Tower
("Administrator") 1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Federated Investment Federated Investors Tower
Management Company 1001 Liberty Avenue
("Adviser") Pittsburgh, PA 15222-3779
State Street Bank and Pittsburgh, PA 15222-3779
Trust Company P.O. Box 8600
("Custodian") Boston, MA 02266-8600
</TABLE>
Item 29. Management Services: Not applicable.
Item 30. Undertakings:
Registrant hereby undertakes to comply with the provisions of
Section 16(c) of the 1940 Act with respect to the removal of
Trustees and the calling of special shareholder meetings by
shareholders.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant, FEDERATED MANAGED ALLOCATION PORTFOLIOS
(formerly, Managed Series Trust), certifies that it meets all of the
requirements for effectiveness of this Amendment to its Registration Statement
pursuant to Rule 485(b) under the Securities Act of 1933 and has duly caused
this Amendment to its Registration Statement to be signed on its behalf by the
undersigned, duly authorized, in the City of Pittsburgh and Commonwealth of
Pennsylvania, on the 28th day of January, 2000.
FEDERATED MANAGED ALLOCATION PORTFOLIOS
(formerly, Managed Series Trust)
BY: /s/ C. Grant Anderson
C. Grant Anderson, Assistant Secretary
Attorney in Fact for John F. Donahue
January 28, 2000
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to its Registration Statement has been signed below by the following person in
the capacity and on the date indicated:
<TABLE>
<CAPTION>
<S> <C> <C>
NAME TITLE DATE
By: /s/ C. Grant Anderson
C. Grant Anderson Attorney In Fact January 28, 2000
ASSISTANT SECRETARY For the Persons
Listed Below
NAME TITLE
John F. Donahue* Chairman and Trustee
(Chief Executive Officer)
Glen R. Johnson* President
Richard J. Thomas* Treasurer
(Principal Financial and
Accounting Officer)
J. Thomas Madden* Chief Investment Officer
Thomas G. Bigley * Trustee
John T. Conroy, Jr.* Trustee
Nicholas P. Constantakis* Trustee
John F. Cunningham* Trustee
Lawrence D. Ellis, M.D.* Trustee
Peter E. Madden* Trustee
Charles F. Mansfield, Jr.* Trustee
John E. Murray, Jr.* Trustee
Marjorie P. Smuts* Trustee
John S. Walsh* Trustee
* By Power of Attorney
</TABLE>
Exhibit (j) under Form N-1A
Exhibit 23 under Item 601/Reg. S-K
INDEPENDENT AUDITORS' CONSENT
To the Trustees and Shareholders of
Federated Managed Allocation Portfolios:
We consent to the use in Post-Effective Amendment No. 12 to Registration
Statement 33-51247 of Federated Managed Allocation Portfolios (comprised of the
following portfolios: Federated Managed Income Portfolio, Federated Managed
Conservative Growth Portfolio, Federated Managed Moderate Growth Portfolio and
Federated Managed Growth Portfolio) of our reports dated January 14, 2000
appearing in the Prospectuses, which are a part of such Registration Statement,
and to the reference to us under the heading "Financial Highlights" in such
Prospectuses.
By: /s/DELOITTE & TOUCHE
Deloitte & Touche
Boston, Massachusetts
January 28, 2000
Exhibit (o)(i) under Form N-1A
Exhibit 24 under Item 601/Reg. S-K
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and
appoints the Secretary and Assistant Secretaries of Managed Series Trust and
each of them, their true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution for them and in their names, place and
stead, in any and all capacities, to sign any and all documents to be filed with
the Securities and Exchange Commission pursuant to the Securities Act of 1933,
the Securities Exchange Act of 1934 and the Investment Company Act of 1940, by
means of the Securities and Exchange Commission's electronic disclosure system
known as EDGAR; and to file the same, with all exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to sign and perform each and every act and thing requisite and
necessary to be done in connection therewith, as fully to all intents and
purposes as each of them might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, or their
or his substitute or substitutes, may lawfully do or cause to be done by virtue
thereof.
<TABLE>
<CAPTION>
<S> <C> <C>
SIGNATURES TITLE DATE
/s/ John F. Donahue Chairman and Trustee January 3, 2000
- -------------------------------------------------
John F. Donahue (Chief Executive Officer)
/s/ Glen R. Johnson President January 3, 2000
- -------------------------------------------------
Glen R. Johnson
/s/ Richard J. Thomas Treasurer January 3, 2000
- -------------------------------------------------
Richard J. Thomas (Principal Financial and
Accounting Officer)
/s/ Thomas G. Bigley Trustee January 3, 2000
- -------------------------------------------------
Thomas G. Bigley
<PAGE>
SIGNATURES TITLE DATE
/s/ John T. Conroy, Jr. Trustee January 3, 2000
- -------------------------------------------------
John T. Conroy, Jr.
/s/ Lawrence D. Ellis, M.D. Trustee January 3, 2000
Lawrence D. Ellis, M.D.
/s/ Peter E. Madden Trustee January 3, 2000
- -------------------------------------------------
Peter E. Madden
/s/ John E. Murray, Jr. Trustee January 3, 2000
- -------------------------------------------------
John E. Murray, Jr.
/s/ Marjorie P. Smuts Trustee January 3, 2000
- -------------------------------------------------
Marjorie P. Smuts
</TABLE>
Sworn to and subscribed before me this 3rd day of January, 2000
/s/ Madaline P. Kelly
Madaline P. Kelly
Notarial Seal
Madaline P. Kelly, Notary Public
Baldwin Boro, Allegheny County
My Commission Expires Feb. 22, 2000
Member, Pennsylvania Association of Notaries
Exhibit (o)(ii) under Form N-1A
Exhibit 24 under Item 601/Reg. S-K
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and
appoints the Secretary and Assistant Secretaries of Managed Series Trust and
each of them, their true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution for them and in their names, place and
stead, in any and all capacities, to sign any and all documents to be filed with
the Securities and Exchange Commission pursuant to the Securities Act of 1933,
the Securities Exchange Act of 1934 and the Investment Company Act of 1940, by
means of the Securities and Exchange Commission's electronic disclosure system
known as EDGAR; and to file the same, with all exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to sign and perform each and every act and thing requisite and
necessary to be done in connection therewith, as fully to all intents and
purposes as each of them might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, or their
or his substitute or substitutes, may lawfully do or cause to be done by virtue
thereof.
<TABLE>
<CAPTION>
<S> <C> <C>
SIGNATURES TITLE DATE
/s/ John S. Walsh Trustee January 3, 2000
- -------------------------------------------------
John S. Walsh
</TABLE>
Sworn to and subscribed before me this 3rd day of January, 2000
/s/ Madaline P. Kelly
Madaline P. Kelly
Notarial Seal
Madaline P. Kelly, Notary Public
Baldwin Boro, Allegheny County
My Commission Expires Feb. 22, 2000
Member, Pennsylvania Association of Notaries
Exhibit (o)(iii) under Form N-1A
Exhibit 24 under Item 601/Reg. S-K
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and
appoints the Secretary and Assistant Secretaries of Managed Series Trust and
each of them, their true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution for them and in their names, place and
stead, in any and all capacities, to sign any and all documents to be filed with
the Securities and Exchange Commission pursuant to the Securities Act of 1933,
the Securities Exchange Act of 1934 and the Investment Company Act of 1940, by
means of the Securities and Exchange Commission's electronic disclosure system
known as EDGAR; and to file the same, with all exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to sign and perform each and every act and thing requisite and
necessary to be done in connection therewith, as fully to all intents and
purposes as each of them might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, or their
or his substitute or substitutes, may lawfully do or cause to be done by virtue
thereof.
<TABLE>
<CAPTION>
<S> <C> <C>
SIGNATURES TITLE DATE
/s/ Charles F. Mansfield Trustee January 3, 2000
- -------------------------------------------------
Charles F. Mansfield
</TABLE>
Sworn to and subscribed before me this 3rd day of January, 2000
/s/ Madaline P. Kelly
Madaline P. Kelly
Notarial Seal
Madaline P. Kelly, Notary Public
Baldwin Boro, Allegheny County
My Commission Expires Feb. 22, 2000
Member, Pennsylvania Association of Notaries
Exhibit (o)(iv) under Form N-1A
Exhibit 24 under Item 601/Reg. S-K
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and
appoints the Secretary and Assistant Secretaries of Managed Series Trust and
each of them, their true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution for them and in their names, place and
stead, in any and all capacities, to sign any and all documents to be filed with
the Securities and Exchange Commission pursuant to the Securities Act of 1933,
the Securities Exchange Act of 1934 and the Investment Company Act of 1940, by
means of the Securities and Exchange Commission's electronic disclosure system
known as EDGAR; and to file the same, with all exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to sign and perform each and every act and thing requisite and
necessary to be done in connection therewith, as fully to all intents and
purposes as each of them might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, or their
or his substitute or substitutes, may lawfully do or cause to be done by virtue
thereof.
<TABLE>
<CAPTION>
<S> <C> <C>
SIGNATURES TITLE DATE
/s/ John F. Cunningham Trustee January 3, 2000
- -------------------------------------------------
John F. Cunningham
</TABLE>
Sworn to and subscribed before me this 3rd day of January, 2000
/s/ Madaline P. Kelly
Madaline P. Kelly
Notarial Seal
Madaline P. Kelly, Notary Public
Baldwin Boro, Allegheny County
My Commission Expires Feb. 22, 2000
Member, Pennsylvania Association of Notaries
Exhibit (o)(v) under Form N-1A
Exhibit 24 under Item 601/Reg. S-K
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and
appoints the Secretary and Assistant Secretaries of Managed Series Trust and
each of them, their true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution for them and in their names, place and
stead, in any and all capacities, to sign any and all documents to be filed with
the Securities and Exchange Commission pursuant to the Securities Act of 1933,
the Securities Exchange Act of 1934 and the Investment Company Act of 1940, by
means of the Securities and Exchange Commission's electronic disclosure system
known as EDGAR; and to file the same, with all exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to sign and perform each and every act and thing requisite and
necessary to be done in connection therewith, as fully to all intents and
purposes as each of them might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, or their
or his substitute or substitutes, may lawfully do or cause to be done by virtue
thereof.
<TABLE>
<CAPTION>
<S> <C> <C>
SIGNATURES TITLE DATE
/s/ J. Thomas Madden Chief Investment Officer January 3, 2000
- -------------------------------------------------
J. Thomas Madden
</TABLE>
Sworn to and subscribed before me this 3rd day of January, 2000
/s/ Madaline P. Kelly
Madaline P. Kelly
Notarial Seal
Madaline P. Kelly, Notary Public
Baldwin Boro, Allegheny County
My Commission Expires Feb. 22, 2000
Member, Pennsylvania Association of Notaries
Exhibit (o)(vi) under Form N-1A
Exhibit 24 under Item 601/Reg. S-K
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and
appoints the Secretary and Assistant Secretaries of Managed Series Trust and
each of them, their true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution for them and in their names, place and
stead, in any and all capacities, to sign any and all documents to be filed with
the Securities and Exchange Commission pursuant to the Securities Act of 1933,
the Securities Exchange Act of 1934 and the Investment Company Act of 1940, by
means of the Securities and Exchange Commission's electronic disclosure system
known as EDGAR; and to file the same, with all exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to sign and perform each and every act and thing requisite and
necessary to be done in connection therewith, as fully to all intents and
purposes as each of them might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, or their
or his substitute or substitutes, may lawfully do or cause to be done by virtue
thereof.
<TABLE>
<CAPTION>
<S> <C> <C>
SIGNATURES TITLE DATE
/s/ Nicholas P. Constantakis Trustee January 27, 2000
- -------------------------------------------------
Nicholas P. Constantakis
</TABLE>
Sworn to and subscribed before me this 27th day of January, 2000
/s/ Loretta Y. Crum
Loretta Y. Crum
Notarial Seal
Loretta Y. Crum, Notary Public
Pittsburgh, Allegheny County
My Commission Expires Aug. 23, 2002
Member, Pennsylvania Association of Notaries