United States
Securities and Exchange Commission
Washington, D.C. 20549
Amended
Form N-CSR
Certified Shareholder Report of Registered
Management Investment Companies
811-1
(Investment Company Act File Number)
Federated Stock and Bond Fund
(Exact Name of Registrant as Specified in Charter)
Federated Investors Funds
4000 Ericsson Drive
Warrendale, Pennsylvania 15086-7561
(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)
Date of Fiscal Year End: 11/30/2009
Date of Reporting Period: 11/30/2009
Item 1. | Reports to Stockholders |
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Federated Stock and Bond Fund
Established 1934
ANNUAL SHAREHOLDER REPORT
November 30, 2009
Class A Shares
Class B Shares
Class C Shares
Class K Shares
FINANCIAL HIGHLIGHTS
SHAREHOLDER EXPENSE EXAMPLE
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
PORTFOLIO OF INVESTMENTS SUMMARY TABLES
PORTFOLIO OF INVESTMENTS
STATEMENT OF ASSETS AND LIABILITIES
STATEMENT OF OPERATIONS
STATEMENT OF CHANGES IN NET ASSETS
NOTES TO FINANCIAL STATEMENTS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
BOARD OF TRUSTEES AND TRUST OFFICERS
EVALUATION AND APPROVAL OF ADVISORY CONTRACT
VOTING PROXIES ON FUND PORTFOLIO SECURITIES
QUARTERLY PORTFOLIO SCHEDULE
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Financial Highlights - Class A Shares
(For a Share Outstanding Throughout Each Period)
Year Ended November 30 | 2009 | 2008 | 2007 | 20061 | 2005 |
Net Asset Value, Beginning of Period | $13.11 | $19.99 | $20.55 | $18.95 | $18.38 |
Income From Investment Operations: |
Net investment income | 0.29 | 0.40 | 0.41 | 0.38 | 0.31 |
Net realized and unrealized gain (loss) on investments, futures contracts, swap contracts and foreign currency transactions | 2.52 | (4.91) | 1.42 | 1.93 | 0.56 |
TOTAL FROM INVESTMENT OPERATIONS | 2.81 | (4.51) | 1.83 | 2.31 | 0.87 |
Less Distributions: |
Distributions from net investment income | (0.27) | (0.42) | (0.40) | (0.38) | (0.30) |
Distributions from net realized gain on investments, futures contracts, swap contracts and foreign currency transactions | — | (1.95) | (1.99) | (0.33) | — |
TOTAL DISTRIBUTIONS | (0.27) | (2.37) | (2.39) | (0.71) | (0.30) |
Net Asset Value, End of Period | $15.65 | $13.11 | $19.99 | $20.55 | $18.95 |
Total Return2 | 21.84% | (25.39)% | 9.88% | 12.55%3 | 4.75%3,4 |
Ratios to Average Net Assets: |
Net expenses | 1.25%5 | 1.25%5 | 1.25%5 | 1.17%5 | 1.16%5 |
Net investment income | 2.00% | 2.48% | 2.07% | 1.90% | 1.63% |
Expense waiver/reimbursement6 | 0.26% | 0.19% | 0.10% | 0.12% | 0.08% |
Supplemental Data: |
Net assets, end of period (000 omitted) | $149,696 | $125,373 | $195,687 | $198,289 | $234,204 |
Portfolio turnover | 254% | 190% | 135% | 106% | 50% |
1 | Beginning with the year ended November 30, 2006, the Fund was audited by KPMG LLP. The previous year was audited by another independent registered public accounting firm. |
2 | Based on net asset value, which does not reflect the sales charge, redemption fee or contingent deferred sales charge, if applicable. |
3 | During the period, the Fund was reimbursed by an affiliated shareholder services provider, which had an impact of 0.01% and 0.02% on the total return for the years ended November 30, 2006 and 2005, respectively. |
4 | During the period, the Fund was reimbursed by the Adviser, which had an impact of less than 0.01% on the total return. |
5 | The net expense ratio is calculated without reduction for expense offset arrangements. The net expense ratios are 1.24%, 1.25%, 1.24%, 1.16% and 1.16% for the years ended November 30, 2009, 2008, 2007, 2006 and 2005 respectively, after taking into account these expense reductions. |
6 | This expense decrease is reflected in both the net expense and the net investment income ratios shown above. |
See Notes which are an integral part of the Financial Statements
Annual Shareholder ReportFinancial Highlights - Class B Shares
(For a Share Outstanding Throughout Each Period)
Year Ended November 30 | 2009 | 2008 | 2007 | 20061 | 2005 |
Net Asset Value, Beginning of Period | $13.09 | $19.96 | $20.52 | $18.93 | $18.36 |
Income From Investment Operations: |
Net investment income | 0.15 | 0.26 | 0.25 | 0.20 | 0.14 |
Net realized and unrealized gain (loss) on investments, futures contracts, swap contracts and foreign currency transactions | 2.55 | (4.89) | 1.43 | 1.94 | 0.58 |
TOTAL FROM INVESTMENT OPERATIONS | 2.70 | (4.63) | 1.68 | 2.14 | 0.72 |
Less Distributions: |
Distributions from net investment income | (0.18) | (0.29) | (0.25) | (0.22) | (0.15) |
Distributions from net realized gain on investments, futures contracts, swap contracts and foreign currency transactions | — | (1.95) | (1.99) | (0.33) | — |
TOTAL DISTRIBUTIONS | (0.18) | (2.24) | (2.24) | (0.55) | (0.15) |
Net Asset Value, End of Period | $15.61 | $13.09 | $19.96 | $20.52 | $18.93 |
Total Return2 | 20.86% | (25.97)% | 9.05% | 11.59% | 3.95%3 |
Ratios to Average Net Assets: |
Net expenses | 2.05%4 | 2.05%4 | 2.03%4 | 1.99%4 | 1.95%4 |
Net investment income | 1.23% | 1.72% | 1.31% | 1.07% | 0.84% |
Expense waiver/reimbursement5 | 0.26% | 0.17% | 0.10% | 0.11% | 0.06% |
Supplemental Data: |
Net assets, end of period (000 omitted) | $20,151 | $21,637 | $41,365 | $50,182 | $63,151 |
Portfolio turnover | 254% | 190% | 135% | 106% | 50% |
1 | Beginning with the year ended November 30, 2006, the Fund was audited by KPMG LLP. The previous year was audited by another independent registered public accounting firm. |
2 | Based on net asset value, which does not reflect the sales charge, redemption fee or contingent deferred sales charge, if applicable. |
3 | During the period, the Fund was reimbursed by the Adviser, which had an impact of less than 0.01% on the total return. |
4 | The net expense ratio is calculated without reduction for expense offset arrangements. The net expense ratios are 2.04%, 2.05%, 2.03%, 1.98% and 1.95% for the years ended November 30, 2009, 2008, 2007, 2006 and 2005 respectively, after taking into account these expense reductions. |
5 | This expense decrease is reflected in both the net expense and the net investment income ratios shown above. |
See Notes which are an integral part of the Financial Statements
Annual Shareholder ReportFinancial Highlights - Class C Shares
(For a Share Outstanding Throughout Each Period)
Year Ended November 30 | 2009 | 2008 | 2007 | 20061 | 2005 |
Net Asset Value, Beginning of Period | $13.04 | $19.90 | $20.47 | $18.88 | $18.31 |
Income From Investment Operations: |
Net investment income | 0.18 | 0.26 | 0.26 | 0.22 | 0.17 |
Net realized and unrealized gain (loss) on investments, futures contracts, swap contracts and foreign currency transactions | 2.51 | (4.87) | 1.42 | 1.94 | 0.56 |
TOTAL FROM INVESTMENT OPERATIONS | 2.69 | (4.61) | 1.68 | 2.16 | 0.73 |
Less Distributions: |
Distributions from net investment income | (0.18) | (0.30) | (0.26) | (0.24) | (0.16) |
Distributions from net realized gain on investments, futures contracts, swap contracts and foreign currency transactions | — | (1.95) | (1.99) | (0.33) | — |
TOTAL DISTRIBUTIONS | (0.18) | (2.25) | (2.25) | (0.57) | (0.16) |
Net Asset Value, End of Period | $15.55 | $13.04 | $19.90 | $20.47 | $18.88 |
Total Return2 | 20.86% | (25.98)% | 9.05% | 11.69% | 3.98%3 |
Ratios to Average Net Assets: |
Net expenses | 2.05%4 | 2.05%4 | 2.00%4 | 1.95%4 | 1.93%4 |
Net investment income | 1.18% | 1.66% | 1.30% | 1.11% | 0.88% |
Expense waiver/reimbursement5 | 0.21% | 0.16% | 0.10% | 0.11% | 0.06% |
Supplemental Data: |
Net assets, end of period (000 omitted) | $28,278 | $20,603 | $26,572 | $27,033 | $28,922 |
Portfolio turnover | 254% | 190% | 135% | 106% | 50% |
1 | Beginning with the year ended November 30, 2006, the Fund was audited by KPMG LLP. The previous year was audited by another independent registered public accounting firm. |
2 | Based on net asset value, which does not reflect the sales charge, redemption fee or contingent deferred sales charge, if applicable. |
3 | During the period, the Fund was reimbursed by the Adviser, which had an impact of less than 0.01% on the total return. |
4 | The net expense ratio is calculated without reduction for expense offset arrangements. The net expense ratios are 2.04%, 2.05%, 2.00%, 1.95% and 1.93% for the years ended November 30, 2009, 2008, 2007, 2006 and 2005 respectively, after taking into account these expense reductions. |
5 | This expense decrease is reflected in both the net expense and the net investment income ratios shown above. |
See Notes which are an integral part of the Financial Statements
Annual Shareholder ReportFinancial Highlights - Class K Shares
(For a Share Outstanding Throughout Each Period)
Year Ended November 30 | 2009 | 2008 | 2007 | 20061 | 2005 |
Net Asset Value, Beginning of Period | $13.13 | $20.02 | $20.57 | $18.98 | $18.40 |
Income From Investment Operations: |
Net investment income | 0.26 | 0.30 | 0.33 | 0.28 | 0.25 |
Net realized and unrealized gain (loss) on investments, futures contracts, swap contracts and foreign currency transactions | 2.50 | (4.90) | 1.43 | 1.94 | 0.53 |
TOTAL FROM INVESTMENT OPERATIONS | 2.76 | (4.60) | 1.76 | 2.22 | 0.78 |
Less Distributions: |
Distributions from net investment income | (0.21) | (0.34) | (0.32) | (0.30) | (0.20) |
Distributions from net realized gain on investments, futures contracts, swap contracts and foreign currency transactions | — | (1.95) | (1.99) | (0.33) | — |
TOTAL DISTRIBUTIONS | (0.21) | (2.29) | (2.31) | (0.63) | (0.20) |
Net Asset Value, End of Period | $15.68 | $13.13 | $20.02 | $20.57 | $18.98 |
Total Return2 | 21.30% | (25.76)% | 9.44% | 11.98% | 4.27%3 |
Ratios to Average Net Assets: |
Net expenses | 1.75%4 | 1.75%4 | 1.70%4 | 1.68%4 | 1.65%4 |
Net investment income | 1.41% | 1.93% | 1.55% | 1.42% | 1.31% |
Expense waiver/reimbursement5 | 0.18% | 0.14% | 0.10% | 0.11% | 0.05% |
Supplemental Data: |
Net assets, end of period (000 omitted) | $47,254 | $18,947 | $16,070 | $10,234 | $1,048 |
Portfolio turnover | 254% | 190% | 135% | 106% | 50% |
1 | Beginning with the year ended November 30, 2006, the Fund was audited by KPMG LLP. The previous year was audited by another independent registered public accounting firm. |
2 | Based on net asset value, which does not reflect the sales charge, redemption fee or contingent deferred sales charge, if applicable. |
3 | During the period, the Fund was reimbursed by the Adviser, which had an impact of less than 0.01% on the total return. |
4 | The net expense ratio is calculated without reduction for expense offset arrangements. The net expense ratios are 1.74%, 1.75%, 1.70%, 1.67% and 1.65% for the years ended November 30, 2009, 2008, 2007, 2006 and 2005 respectively, after taking into account these expense reductions. |
5 | This expense decrease is reflected in both the net expense and the net investment income ratios shown above. |
See Notes which are an integral part of the Financial Statements
Annual Shareholder ReportShareholder Expense Example (unaudited)
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase or redemption payments; and (2) ongoing costs, including management fees and to the extent applicable, distribution (12b-1) fees and/or shareholder services fees and other Fund expenses. This Example is intended to help you to understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. It is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from June 1, 2009 to November 30, 2009.
The first section of the table below provides information about actual account values and actual expenses. You may use the information in this section, together with the amount you invested, to estimate the expenses that you incurred over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first section under the heading entitled “Expenses Paid During Period” to estimate the expenses attributable to your investment during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second section of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. Thus, you should not use the hypothetical account values and expenses to estimate the actual ending account balance or your expenses for the period. Rather, these figures are required to be provided to enable you to compare the ongoing costs of investing in the Fund with other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Annual Shareholder ReportBeginning Account Value 6/1/2009 | Ending Account Value 11/30/2009 | Expenses Paid During Period1 |
Actual: |
Class A Shares | $1,000 | $1,139.50 | $6.70 |
Class B Shares | $1,000 | $1,135.60 | $10.97 |
Class C Shares | $1,000 | $1,135.30 | $10.97 |
Class K Shares | $1,000 | $1,137.40 | $9.38 |
Hypothetical (assuming a 5% return before expenses): |
Class A Shares | $1,000 | $1,018.80 | $6.33 |
Class B Shares | $1,000 | $1,014.79 | $10.35 |
Class C Shares | $1,000 | $1,014.79 | $10.35 |
Class K Shares | $1,000 | $1,016.29 | $8.85 |
1 | Expenses are equal to the Fund's annualized net expense ratios, multiplied by the average account value over the period, multiplied by 183/365 (to reflect the one-half-year period). The annualized net expense ratios are as follows: |
Class A Shares | 1.25% |
Class B Shares | 2.05% |
Class C Shares | 2.05% |
Class K Shares | 1.75% |
Performance data quoted represents past performance which is no guarantee of future results. Investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Mutual fund performance changes over time and current performance may be lower or higher than what is stated. For current to the most recent month-end performance and after-tax returns, visit FederatedInvestors.com or call 1-800-341-7400.
Management's Discussion of Fund
Performance (unaudited)
For the fiscal year ended November 30, 2009, the Fund's Class A Shares, Class B Shares, Class C Shares and Class K Shares produced total returns of 21.84%, 20.86%, 20.86% and 21.30%, respectively, at net asset value. That compares with a 23.09% return for the Fund's Blended Index (as described below) and 26.15% for Morningstar's Moderate Allocation Funds Category Average.1 The Fund's Blended Index is comprised of 50% of the return of the Russell 3000 Index,2 10% of the return of the MSCI All Country World ex US Index3 and 40% of the return of the Barclays Capital U.S. Universal Index4 which had total returns of 27.17%, 46.44%, and 14.18%, respectively, during the reporting period. The Fund's total return for the fiscal year reflected actual cash flows, transaction costs and other expenses which were not reflected in the total return data of the indices.
The following discussion will focus on the performance of the Fund's
Class A Shares.
1 | Morningstar's Moderate Allocation is the category of funds which seek to provide both capital appreciation and income by investing in stocks, bonds and cash. These funds typically invest between 50% to 70% of assets in equities and the remainder in fixed income and cash. Investments cannot be made in an average. |
2 | The Russell 3000 Index measures the performance of the largest 3000 U.S. companies representing approximately 98% of the investable U.S. equity market. The Russell 3000 Index is constructed to provide a comprehensive, unbiased, and stable barometer of the broad market and is completely reconstituted annually to ensure new and growing equities are reflected. |
3 | The MSCI ACWI (All Country World Index) ex-U.S. Index is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed and emerging markets. As of June 2009 the MSCI ACWI consisted of 44 country indices comprising 22 developed and 22 emerging market country indices. |
4 | The Barclays Capital U.S. Universal Index represents the union of the U.S. Aggregate Index, U.S. Corporate High-Yield, Investment Grade 144A Index, Eurodollar Index, U.S. Emerging Markets Index, and the non-ERISA eligible portion of the CMBS Index. The index covers USD-denominated, taxable bonds that are rated either investment-grade or below investment-grade. |
Domestic Equities
Domestic equities, as measured by the S&P 500 Index5 (S&P 500), experienced substantial volatility throughout the reporting period. The fiscal year began with markets reeling from the fall-out caused by the failure of Lehman Brothers. With the credit crisis, the S&P 500 moved sharply lower, losing nearly 25% between the start of the fiscal year and the market bottom on March 9, 2009. In response to frozen credit markets, bank failures and rapidly deteriorating macroeconomic fundamentals, the Federal Reserve cut interest rates to a range between 0% and 0.25% at the December 16, 2008 Federal Open Market Committee meeting before eventually implementing a program of quantitative easing. Likewise, Congress supported the banking sector via the Troubled Asset Relief Program (TARP) while also passing a $787 billion stimulus plan. These measures, combined with aggressive cost cutting by corporations, led to better-than-expected earnings results in both the second and third quarters of 2009. As a result, the S&P 500 rallied 62% off of the March 9, 2009 low to finish the fiscal year up 22.25% (up 25.39% on a total return basis). Eight out of ten sectors posted positive returns. The three best-performing S&P 500 sectors were: Information Technology, 54.0%; Materials, 42.1%; and Consumer Discretionary, 39.8%. The three lagging sectors were: Telecommunication Services, (1.0)%; Utilities, (1.0)%; and Energy, 7.81%.
5 | The S&P 500 Index is an unmanaged capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. The index is unmanaged and, unlike the Fund, is not affected by cash flows. Investments cannot be made directly in an index. |
World markets followed a similar path as the United States. Equity markets experienced severe weakness in the opening months of the fiscal year, but rebounded as world governments enacted a wide range of economic bailout measures including the guaranteeing of bank deposits and money market investments, direct investment into financial institutions, nationalization of failing banks, direct purchases of commercial paper and economic stimulus plans. Several countries, including Iceland, Ukraine, Hungary, Belarus and Pakistan, bordered on collapse and required emergency International Monetary Fund bailout packages. As equity markets recovered, emerging markets outperformed significantly. With substantially less exposure to toxic assets, relatively benign debt levels and better demographic and macroeconomic fundamentals, investors poured into emerging markets. As such, the MSCI Emerging Markets Index7 finished the fiscal year with a return of 85.12%. Foreign currencies appreciated against the U.S. dollar in response to aggressive monetary policy and record fiscal deficits. The euro appreciated 18.3%, the sterling rose 6.9% and the yen gained 10.5% against the U.S. dollar during the reporting period.
Interest Rates
Interest rates were mixed over the reporting period, as shorter maturity yields fell while longer maturity yields rose. Long-term rates rose on increasing worries about a pickup of inflation on aggressive monetary easing. Spread bonds, on the other hand, performed well on expectations that credit-related bonds would do well in a growing economic environment.
The two-year Treasury yield fell 0.31% over the past 12 months and finished the reporting period at 0.66%, while the 30-year Treasury yield rose 0.76% in the period to finish at 4.19%. The yield to worst of the Barclay's Capital U.S. Aggregate Bond Index8 stood at 3.40% on November 30, 2009, compared to 4.96% 12 months earlier.
6 | International investing involves special risks including currency risk, increased volatility of foreign securities, political risks and differences in auditing and other financial standards. |
7 | The MSCI Emerging Markets Index is a free float-adjusted market capitalization index that is designed to measure equity market performance of emerging markets. As of June 2009, the MSCI Emerging Markets Index consisted of the following 22 emerging market country indices: Brazil, Chile, China, Colombia, Czech Republic, Egypt, Hungary, India, Indonesia, Israel, Korea, Malaysia, Mexico, Morocco, Peru, Philippines, Poland, Russia, South Africa, Taiwan, Thailand and Turkey. |
8 | The Barclay's Capital U.S. Aggregate Bond Index is an unmanaged index composed of securities from the Barclay's Capital Government/Corporate Bond Index, Mortgage-Backed Securities Index and the Asset-Backed Securities Index. Total return comprises price appreciation/depreciation and income as a percentage of the original investment. Investments cannot be made directly in an index. |
Asset Allocation Strategy Performance
For the reporting period, overall asset allocation strategy added to performance, primarily due to the Fund's successful domestic equity industry group weighting decisions. Likewise, the Fund also benefitted from global developed country allocation decisions. The main detractors from performance included the Fund's market capitalization allocation and the stock-versus-bond allocation. Despite strong absolute returns, U.S. small caps underperformed large caps for the fiscal year, thus detracting from relative performance. Additionally, markets faced severe shifts in macroeconomic fundamentals, and the Fund overweighted stocks too early in the cycle. The Fund was overweight equities at the beginning of the year, which negatively impacted performance as markets continued to sell-off before bottoming on March 9, 2009.
Domestic Equities Performance
In the equity portion of the Fund, a focus on high quality in a strong low quality rally was the primary driver of the Fund's relative underperformance.
The fund was most negatively impacted from stock selection in Consumer Discretionary, Health Care and Consumer Staples. The stocks that were the largest detractors from performance were:
●Cephalon Inc., a biopharmaceutical company which engages in the discovery, development, and commercialization of products for the central nervous system, inflammatory diseases, pain and oncology therapeutic areas. In general, health care stocks underperformed during the fiscal year as investors preferred more cyclical names during the stock market recovery. Uncertainties surrounding possible health care reform in the United States also affected the sector. Cephalon, Inc. was down 25.60% for the period.
●JetBlue Airways Corp., which provides passenger air transportation services in the United States. The stock was negatively impacted by a significant slowdown in consumer spending due to the credit and housing crises. For the reporting period, the stock lost 52.17%.
●Lowe's Companies, Inc., which, together with its subsidiaries, operates as a home improvement retailer in the United States and Canada. The firm was hurt by the precipitous decline in the real estate market as well as a sharp slowdown in consumer spending. The stock was down 24.96% over the reporting period.
On the positive side, the Fund benefitted from stock selection decisions in Energy, Materials and Financials. The stocks that aided relative performance included:
●The Goldman Sachs Group, Inc., a bank holding company, specializing in investment banking, trading and principal investments, asset management and securities services. The firm benefitted from being the first U.S. bank to repay TARP loans and was up 117.43% for the period.
●
Annual Shareholder Report●EMC Corp/Massachusetts, which provides enterprise storage systems, software, networks and services. The stock rallied as cyclical sectors, like information technology, led the recovery off of the March 9th lows. The stock was up 59.22% for the period.
Fixed-Income Performance9
The bond portion of the Fund outperformed its benchmark by a significant margin during the 12-month reporting period due mostly to sector management. Currency management had a very slight benefit. Duration10 management detracted from performance, and security selection in total had a slight negative impact on performance. Sector calls helped performance due to a considerable overweight in residential Mortgage Backed Securities, Commercial Mortgage-Backed Securities (CMBS), emerging markets and corporates (both investment-grade and high-yield corporates). Security selection was a significant positive for performance in the CMBS sector while the Federated Emerging Market Core Fund, The High Yield Bond Fund, and Federated Mortgage-Backed Securities Fund portfolios were a drag on performance. Security selection detracted from relative performance in the investment-grade sector. Union Central Life, Regional Diversified, Pacific Life and the Camp Pendelton bonds each underperformed in the past year, while the Textron Trust Preferred Securities, Prologis, AXA Financial and Enterprise Rent-A-Car were good performers, offsetting some of the drag from overall security selection.
9 | Bond prices are sensitive to changes in interest rates and a rise in interest rates can cause a decline in their prices. |
10 | Duration is a measure of a security's price sensitivity to changes in interest rates. Securities with longer durations are more sensitive to changes in interest rates than securities of shorter durations. |
GROWTH OF A $10,000 INVESTMENT - CLASS A SHARES
The graph below illustrates the hypothetical investment of $10,0001 in Federated Stock and Bond Fund (Class A Shares) (the “Fund”) from October 31, 1999 to November 30, 2009, compared to a blend of indexes comprised of 50% of the Russell 3000 Index (RU3000)2, 10% of the MSCI All Country World ex US Index (MSCI ACWI ex US)2 and 40% of the Barclays Capital U.S. Universal Index (BCUSU)2 (the “Blended Index”),2 the Standard and Poor's 500 Index (S&P 500),2 the Barclays Capital Aggregate Bond Index (BCAB)2 and the Lipper Balanced Funds Average (LBFA).3
Average Annual Total Returns4 for the Period Ended 11/30/2009 |
1 Year | 15.16% |
5 Years | 2.16% |
10 Years | 2.70% |
![](https://capedge.com/proxy/N-CSRA/0001193125-10-157239/g81114img885afbe21.jpg)
Performance data quoted represents past performance which is no guarantee of future results. Investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Mutual fund performance changes over time and current performance may be lower or higher than what is stated. For current to the most recent month-end performance and after-tax returns, visit FederatedInvestors.com or call 1-800-341-7400. Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Mutual funds are not obligations of or guaranteed by any bank and are not federally insured. Total returns shown include the maximum sales charge of 5.50%.
Annual Shareholder Report1 | Represents a hypothetical investment of $10,000 in the Fund after deducting the maximum sales charge of 5.50% ($10,000 investment minus $550 sales charge = $9,450). The Fund's performance assumes the reinvestment of all dividends and distributions. The Blended Index, S&P 500, BCAB and LBFA have been adjusted to reflect reinvestment of dividends on securities in the indexes and the average. |
2 | The Blended Index is a custom blended index comprised of the 50% of the RU3000, 10% of the MSCI ACWI ex US and 40% of the BCUSU. The RU3000 measures the performance of the largest 3,000 U.S. companies representing approximately 98% of the investable U.S. equity market. The Russell 3000 Index is constructed to provide a comprehensive, unbiased and stable barometer of the broad market and is completely reconstituted annually to ensure new and growing equities are reflected. The MSCI ACWI ex US is a free float-adjusted, market capitalization-weighted index that is designed to measure the equity market performance of developed and emerging markets. As of June 2009, the MSCI ACWI consisted of 44 country indices comprising 22 developed and 22 emerging market country indices. The BCUSU represents the union of the U.S. Aggregate Index, U.S. Corporate High-Yield, Investment Grade 144A Index, Eurodollar Index, U.S. Emerging Markets Index and the non-ERISA eligible portion of the CMBS Index. The index covers USD-denominated, taxable bonds that are rated either investment-grade or below investment-grade. The S&P 500 is an unmanaged, capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. The BCAB is an unmanaged index composed of securities from the Barclay's Capital Government/Corporate Bond Index, Mortgage-Backed Securities Index and the Asset-Backed Securities Index. The RU3000, MSCI ACWI ex US, BCUSU, S&P 500 and BCAB are not adjusted to reflect sales charges, expenses or other fees that the Securities and Exchange Commission (SEC) requires to be reflected in the Fund's performance. The indexes are unmanaged and, unlike the Fund, are not affected by cash flows. It is not possible to invest directly in an index. |
3 | The LBFA represents the average of the total returns reported by all of the mutual funds designated by Lipper, Inc. as falling into the category indicated, and is not adjusted to reflect any sales charges. However, these total returns are reported net of expenses or other fees that the SEC requires to be reflected in the Fund's performance. |
4 | Total returns quoted reflect all applicable sales charges. |
GROWTH OF A $10,000 INVESTMENT - CLASS B SHARES
The graph below illustrates the hypothetical investment of $10,0001 in Federated Stock and Bond Fund (Class B Shares) (the “Fund”) from October 31, 1999 to November 30, 2009, compared to a blend of indexes comprised of 50% of the Russell 3000 Index (RU3000)2, 10% of the MSCI All Country World ex US Index (MSCI ACWI ex US)2 and 40% of the Barclays Capital U.S. Universal Index (BCUSU)2 (the “Blended Index”),2 the Standard and Poor's 500 Index (S&P 500),2 the Barclays Capital Aggregate Bond Index (BCAB)2 and the Lipper Balanced Funds Average (LBFA).3
Average Annual Total Returns4 for the Period Ended 11/30/2009 |
1 Year | 15.36% |
5 Years | 2.19% |
10 Years | 2.65% |
![](https://capedge.com/proxy/N-CSRA/0001193125-10-157239/g81114img5ae2d7952.jpg)
Performance data quoted represents past performance which is no guarantee of future results. Investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Mutual fund performance changes over time and current performance may be lower or higher than what is stated. For current to the most recent month-end performance and after-tax returns, visit FederatedInvestors.com or call 1-800-341-7400. Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Mutual funds are not obligations of or guaranteed by any bank and are not federally insured. Total returns shown include the maximum contingent deferred sales charge of 5.50%, as applicable.
Annual Shareholder Report1 | Represents a hypothetical investment of $10,000 in the Fund. The maximum contingent deferred sales charge is 5.50% on any redemption of shares held up to one year from the purchase date. The Fund's performance assumes the reinvestment of all dividends and distributions. The Blended Index, S&P 500, BCAB and LBFA have been adjusted to reflect reinvestment of dividends on securities in the indexes and the average. |
2 | The Blended Index is a custom blended index comprised of the 50% of the RU3000, 10% of the MSCI ACWI ex US and 40% of the BCUSU. The RU3000 measures the performance of the largest 3,000 U.S. companies representing approximately 98% of the investable U.S. equity market. The Russell 3000 Index is constructed to provide a comprehensive, unbiased and stable barometer of the broad market and is completely reconstituted annually to ensure new and growing equities are reflected. The MSCI ACWI ex US is a free float-adjusted, market capitalization-weighted index that is designed to measure the equity market performance of developed and emerging markets. As of June 2009, the MSCI ACWI consisted of 44 country indices comprising 22 developed and 22 emerging market country indices. The BCUSU represents the union of the U.S. Aggregate Index, U.S. Corporate High-Yield, Investment Grade 144A Index, Eurodollar Index, U.S. Emerging Markets Index and the non-ERISA eligible portion of the CMBS Index. The index covers USD-denominated, taxable bonds that are rated either investment-grade or below investment-grade. The S&P 500 is an unmanaged, capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. The BCAB is an unmanaged index composed of securities from the Barclay's Capital Government/Corporate Bond Index, Mortgage-Backed Securities Index and the Asset-Backed Securities Index. The RU3000, MSCI ACWI ex US, BCUSU, S&P 500 and BCAB are not adjusted to reflect sales charges, expenses or other fees that the SEC requires to be reflected in the Fund's performance. The indexes are unmanaged and, unlike the Fund, are not affected by cash flows. It is not possible to invest directly in an index. |
3 | The LBFA represents the average of the total returns reported by all of the mutual funds designated by Lipper, Inc. as falling into the category indicated, and is not adjusted to reflect any sales charges. However, these total returns are reported net of expenses or other fees that the SEC requires to be reflected in the Fund's performance. |
4 | Total returns quoted reflect all applicable contingent deferred sales charges. |
GROWTH OF A $10,000 INVESTMENT - CLASS C SHARES
The graph below illustrates the hypothetical investment of $10,0001 in Federated Stock and Bond Fund (Class C Shares) (the “Fund”) from October 31, 1999 to November 30, 2009, compared to a blend of indexes comprised of 50% of the Russell 3000 Index (RU3000)2, 10% of the MSCI All Country World ex US Index (MSCI ACWI ex US)2 and 40% of the Barclays Capital U.S. Universal Index (BCUSU)2 (the “Blended Index”),2 the Standard and Poor's 500 Index (S&P 500),2 the Barclays Capital Aggregate Bond Index (BCAB)2 and the Lipper Balanced Funds Average (LBFA).3
Average Annual Total Returns4 for the Period Ended 11/30/2009 |
1 Year | 19.86% |
5 Years | 2.53% |
10 Years | 2.50% |
![](https://capedge.com/proxy/N-CSRA/0001193125-10-157239/g81114img82b338113.jpg)
Performance data quoted represents past performance which is no guarantee of future results. Investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Mutual fund performance changes over time and current performance may be lower or higher than what is stated. For current to the most recent month-end performance and after-tax returns, visit FederatedInvestors.com or call 1-800-341-7400. Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Mutual funds are not obligations of or guaranteed by any bank and are not federally insured. Total returns shown include the maximum contingent deferred sales charge of 1.00%, as applicable.
Annual Shareholder Report1 | Represents a hypothetical investment of $10,000 in the Fund. A 1.00% contingent deferred sales charge would be applied on any redemption less than one year from the purchase date. The Fund's performance assumes the reinvestment of all dividends and distributions. The Blended Index, S&P 500, BCAB and the LBFA have been adjusted to reflect reinvestment of dividends on securities in the indexes and the average. |
2 | The Blended Index is a custom blended index comprised of the 50% of the RU3000, 10% of the MSCI ACWI ex US and 40% of the BCUSU. The RU3000 measures the performance of the largest 3,000 U.S. companies representing approximately 98% of the investable U.S. equity market. The Russell 3000 Index is constructed to provide a comprehensive, unbiased and stable barometer of the broad market and is completely reconstituted annually to ensure new and growing equities are reflected. The MSCI ACWI ex US is a free float-adjusted, market capitalization-weighted index that is designed to measure the equity market performance of developed and emerging markets. As of June 2009, the MSCI ACWI consisted of 44 country indices comprising 22 developed and 22 emerging market country indices. The BCUSU represents the union of the U.S. Aggregate Index, U.S. Corporate High-Yield, Investment Grade 144A Index, Eurodollar Index, U.S. Emerging Markets Index and the non-ERISA eligible portion of the CMBS Index. The index covers USD-denominated, taxable bonds that are rated either investment-grade or below investment-grade. The S&P 500 is an unmanaged, capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. The BCAB is an unmanaged index composed of securities from the Barclay's Capital Government/Corporate Bond Index, Mortgage-Backed Securities Index and the Asset-Backed Securities Index. The RU3000, MSCI ACWI ex US, BCUSU, S&P 500 and BCAB are not adjusted to reflect sales charges, expenses or other fees that the SEC requires to be reflected in the Fund's performance. The indexes are unmanaged and, unlike the Fund, are not affected by cash flows. It is not possible to invest directly in an index. |
3 | The LBFA represents the average of the total returns reported by all of the mutual funds designated by Lipper, Inc. as falling into the category indicated, and is not adjusted to reflect any sales charges. However, these total returns are reported net of expenses or other fees that the SEC requires to be reflected in the Fund's performance. |
4 | Total returns quoted reflect all applicable contingent deferred sales charges. |
GROWTH OF A $10,000 INVESTMENT - CLASS K SHARES
The Fund's Class K Shares commenced operations on April 8, 2003. The Fund offers four other classes of shares, Class A Shares, Class B Shares, Class C Shares and Institutional Shares. For the period prior to the commencement of operations of the Class K Shares, the performance information shown is for the Fund's Class A Shares, adjusted to reflect the expenses of Class K Shares. The graph below illustrates the hypothetical investment of $10,0001 in Federated Stock and Bond Fund (Class K Shares) (the “Fund”) from October 31, 1999 to November 30, 2009, compared to a blend of indexes comprised of 50% of the Russell 3000 Index (RU3000)2, 10% of the MSCI All Country World ex US Index (MSCI ACWI ex US)2 and 40% of the Barclays Capital U.S. Universal Index (BCUSU)2 (the “Blended Index”),2 the Standard and Poor's 500 Index (S&P 500),2 the Barclays Capital Aggregate Bond Index (BCAB)2 and the Lipper Balanced Funds Average (LBFA).3
Average Annual Total Returns for the Period Ended 11/30/2009 |
1 Year | 21.30% |
5 Years | 2.85% |
10 Years | 2.82% |
![](https://capedge.com/proxy/N-CSRA/0001193125-10-157239/g81114imgfeeade774.jpg)
Performance data quoted represents past performance which is no guarantee of future results. Investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Mutual fund performance changes over time and current performance may be lower or higher than what is stated. For current to the most recent month-end performance and after-tax returns, visit FederatedInvestors.com or call 1-800-341-7400. Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Mutual funds are not obligations of or guaranteed by any bank and are not federally insured.
Annual Shareholder Report1 | Represents a hypothetical investment of $10,000 in the Fund. The Fund's performance assumes the reinvestment of all dividends and distributions. The Blended Index, S&P 500, BCAB and LBFA have been adjusted to reflect reinvestment of dividends on securities in the indexes and the average. |
2 | The Blended Index is a custom blended index comprised of the 50% of the RU3000, 10% of the MSCI ACWI ex US and 40% of the BCUSU. The RU3000 measures the performance of the largest 3,000 U.S. companies representing approximately 98% of the investable U.S. equity market. The Russell 3000 Index is constructed to provide a comprehensive, unbiased and stable barometer of the broad market and is completely reconstituted annually to ensure new and growing equities are reflected. The MSCI ACWI ex US is a free float-adjusted, market capitalization-weighted index that is designed to measure the equity market performance of developed and emerging markets. As of June 2009, the MSCI ACWI consisted of 44 country indices comprising 22 developed and 22 emerging market country indices. The BCUSU represents the union of the U.S. Aggregate Index, U.S. Corporate High-Yield, Investment Grade 144A Index, Eurodollar Index, U.S. Emerging Markets Index and the non-ERISA eligible portion of the CMBS Index. The index covers USD-denominated, taxable bonds that are rated either investment-grade or below investment-grade. The S&P 500 is an unmanaged, capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. The BCAB is an unmanaged index composed of securities from the Barclay's Capital Government/Corporate Bond Index, Mortgage-Backed Securities Index and the Asset-Backed Securities Index. The RU3000, MSCI ACWI ex US, BCUSU, S&P 500 and BCAB are not adjusted to reflect sales charges, expenses or other fees that the SEC requires to be reflected in the Fund's performance. The indexes are unmanaged and, unlike the Fund, are not affected by cash flows. It is not possible to invest directly in an index. |
3 | The LBFA represents the average of the total returns reported by all of the mutual funds designated by Lipper, Inc. as falling into the category indicated, and is not adjusted to reflect any sales charges. However, these total returns are reported net of expenses or other fees that the SEC requires to be reflected in the Fund's performance. |
Portfolio of Investments Summary Tables (unaudited)
At November 30, 2009, the Fund's portfolio composition1 was as follows:
Portfolio Composition | Percentage of Total Net Assets2 |
Domestic Equity Securities | 53.7% |
Corporate Debt Securities | 11.8% |
International Equity Securities | 7.2% |
U.S. Treasury and Agency Securities | 5.8% |
Mortgage-Backed Securities3 | 4.8% |
Foreign Debt Securities | 1.6% |
Asset-Backed Securities | 0.9% |
Municipal Security4 | 0.0% |
Derivative Contracts5 | 0.2% |
Cash Equivalents6 | 14.8% |
Other Assets and Liabilities — Net7 | (0.8)% |
TOTAL | 100% |
1 | See the Fund's Prospectus and Statement of Additional Information for a description of these security types. |
2 | As of the date specified above, the Fund owned shares of one or more affiliated investment companies. For purposes of this table, the affiliated investment company (other than an affiliated money market mutual fund) is not treated as a single portfolio security, but rather the Fund is treated as owning a pro rata portion of each security and each other asset and liability owned by the affiliated investment company. Accordingly, the percentages of total net assets shown in the table will differ from those presented on the Portfolio of Investments. |
3 | For purposes of this table, Mortgage-Backed Securities include mortgage-backed securities guaranteed by Government Sponsored Entities and adjustable rate mortgage-backed securities. |
4 | Represents less than 0.1%. |
5 | Based upon net unrealized appreciation (depreciation) or value of the derivative contracts as applicable. Derivative contracts may consist of futures, forwards, options and swaps. The impact of a derivative contract on the Fund's performance may be larger than its unrealized appreciation (depreciation) or value may indicate. In many cases, the notional value or amount of a derivative contract may provide a better indication of the contract's significance to the portfolio. More complete information regarding the Fund's direct investments in derivative contracts, including unrealized appreciation (depreciation), value and notional values or amounts of such contracts, can be found in the table at the end of the Portfolio of Investments included in this report. |
6 | Cash Equivalents include any investments in money market mutual funds and/or overnight repurchase agreements. |
7 | Assets, other than investments in securities and derivative contracts, less liabilities. See Statement of Assets and Liabilities. |
At November 30, 2009, the Fund's sector composition8 was as follows:
Sector Composition of Equity Holdings | Percentage of Equity Securities |
Information Technology | 21.8% |
Financials | 15.0% |
Sector Composition of Equity Holdings | Percentage of Equity Securities |
Consumer Staples | 14.7% |
Industrials | 11.3% |
Energy | 8.7% |
Materials | 8.7% |
Health Care | 8.6% |
Consumer Discretionary | 5.9% |
Utilities | 5.3% |
TOTAL | 100.0% |
8 | Sector classifications are based upon, and individual portfolio securities are assigned to, the classifications of the Global Industry Classification Standard (GICS) except that the Adviser assigns a classification to securities not classified by the GICS and to securities for which the Adviser does not have access to the classification made by the GICS. |
Portfolio of Investments
November 30, 2009
Shares or Principal Amount | Value in U.S. Dollars |
Common Stocks – 37.7% |
Consumer Discretionary – 2.2% |
3,392 | 1 | Apollo Group, Inc., Class A | 193,581 |
8,870 | Block (H&R), Inc. | 180,061 |
11,585 | Carnival Corp. | 371,068 |
11,500 | 1 | Coach, Inc. | 399,625 |
9,400 | Dollar General Corp. | 216,200 |
10,440 | 1 | Gymboree Corp. | 416,765 |
7,659 | International Game Technology | 144,679 |
1,000 | 1 | Lear Corp. | 62,990 |
6,760 | Marriott International, Inc., Class A | 173,866 |
33,383 | McDonald's Corp. | 2,111,475 |
19,298 | 1 | Starbucks Corp. | 422,626 |
5,084 | Starwood Hotels & Resorts | 162,790 |
5,402 | Target Corp. | 251,517 |
12,393 | Yum! Brands, Inc. | 437,101 |
TOTAL | 5,544,344 |
Consumer Staples – 5.6% |
35,420 | Altria Group, Inc. | 666,250 |
10,956 | Archer-Daniels-Midland Co. | 337,554 |
15,221 | Avon Products, Inc. | 521,319 |
3,502 | Colgate-Palmolive Co. | 294,833 |
7,694 | ConAgra Foods, Inc. | 170,730 |
13,130 | General Mills, Inc. | 892,840 |
5,449 | Heinz (H.J.) Co. | 231,310 |
14,819 | Kellogg Co. | 779,183 |
2,846 | Kimberly-Clark Corp. | 187,751 |
25,378 | Kraft Foods, Inc., Class A | 674,547 |
17,337 | Kroger Co. | 394,243 |
2,845 | Lorillard, Inc. | 221,654 |
2,674 | Molson Coors Brewing Co., Class B | 120,892 |
11,114 | Nestle SA | 525,749 |
26,917 | PepsiCo, Inc. | 1,674,776 |
32,612 | Philip Morris International Inc. | 1,568,311 |
23,712 | Procter & Gamble Co. | 1,478,443 |
2,925 | Reynolds American, Inc. | 146,133 |
Shares or Principal Amount | Value in U.S. Dollars |
39,758 | The Coca-Cola Co. | 2,274,158 |
11,540 | Wal-Mart Stores, Inc. | 629,507 |
TOTAL | 13,790,183 |
Energy – 3.3% |
2,429 | Anadarko Petroleum Corp. | 144,598 |
4,948 | Apache Corp. | 471,446 |
3,100 | CONSOL Energy, Inc. | 142,352 |
3,250 | Chesapeake Energy Corp. | 77,740 |
22,479 | Chevron Corp. | 1,754,261 |
7,483 | ConocoPhillips | 387,395 |
2,216 | Devon Energy Corp. | 149,248 |
1,263 | EOG Resources, Inc. | 109,237 |
32,496 | Exxon Mobil Corp. | 2,439,475 |
4,529 | Halliburton Co. | 132,971 |
1,464 | Hess Corp. | 84,853 |
3,540 | Marathon Oil Corp. | 115,475 |
27 | 1 | NRG Energy, Inc. | 646 |
2,080 | 1 | National-Oilwell, Inc. | 89,482 |
873 | Noble Energy, Inc. | 56,963 |
4,017 | Occidental Petroleum Corp. | 324,533 |
13,900 | Schlumberger Ltd. | 888,071 |
1,692 | 1 | Southwestern Energy Co. | 74,380 |
3,207 | Spectra Energy Corp. | 62,248 |
2,949 | 1 | Transocean Ltd. | 251,815 |
9,195 | XTO Energy, Inc. | 390,236 |
TOTAL | 8,147,425 |
Financials – 5.6% |
2,845 | AON Corp. | 110,187 |
6,500 | Ace, Ltd. | 316,615 |
4,900 | Aflac, Inc. | 225,547 |
5,571 | Allstate Corp. | 158,272 |
11,712 | American Express Co. | 489,913 |
1,238 | Avalonbay Communities, Inc. | 89,433 |
1,136 | BB&T Corp. | 28,286 |
111,252 | Bank of America Corp. | 1,763,344 |
2,137 | Boston Properties, Inc. | 143,136 |
663 | CME Group, Inc. | 217,616 |
Shares or Principal Amount | Value in U.S. Dollars |
4,381 | Capital One Financial Corp. | 168,055 |
3,583 | Chubb Corp. | 179,652 |
134,849 | Citigroup, Inc. | 554,229 |
4,231 | Equity Residential Properties Trust | 136,280 |
1,341 | Fifth Third Bancorp | 13,517 |
1,486 | Franklin Resources, Inc. | 160,533 |
8,155 | Goldman Sachs Group, Inc. | 1,383,577 |
4,471 | HCP Inc. | 139,942 |
3,974 | Hartford Financial Services Group, Inc. | 97,204 |
1,832 | Health Care REIT, Inc. | 81,616 |
9,478 | Host Hotels & Resorts, Inc. | 99,709 |
834 | Hudson City Bancorp, Inc. | 11,084 |
55,088 | J.P. Morgan Chase & Co. | 2,340,689 |
3,208 | Lincoln National Corp. | 73,495 |
3,699 | Loews Corp. | 131,019 |
5,472 | Marsh & McLennan Cos., Inc. | 123,394 |
8,744 | MetLife, Inc. | 298,957 |
13,754 | Morgan Stanley | 434,351 |
789 | PNC Financial Services Group | 44,981 |
3,343 | Principal Financial Group | 84,879 |
6,976 | Progressive Corp. Ohio | 116,988 |
6,750 | Prologis Trust | 88,290 |
4,722 | Prudential Financial | 235,392 |
2,086 | Public Storage | 166,004 |
2,073 | Regions Financial Corp. | 12,148 |
9,599 | Schwab (Charles) Corp. | 175,950 |
4,339 | Simon Property Group, Inc. | 315,272 |
4,937 | State Street Corp. | 203,898 |
867 | SunTrust Banks, Inc. | 20,487 |
8,700 | T. Rowe Price Group, Inc. | 425,691 |
12,010 | The Bank of New York Mellon Corp. | 319,946 |
15,372 | The Travelers Cos, Inc. | 805,339 |
19,306 | U.S. Bancorp | 465,854 |
3,434 | Unum Group | 65,383 |
2,390 | Ventas, Inc. | 102,603 |
2,383 | Vornado Realty Trust | 155,991 |
Shares or Principal Amount | Value in U.S. Dollars |
8,168 | Wells Fargo & Co. | 229,031 |
TOTAL | 14,003,779 |
Health Care – 3.2% |
17,094 | Abbott Laboratories | 931,452 |
3,651 | Aetna, Inc. | 106,281 |
3,009 | 1 | Amgen, Inc. | 169,557 |
819 | Bard (C.R.), Inc. | 67,330 |
11,086 | Baxter International, Inc. | 604,741 |
2,002 | Becton, Dickinson & Co. | 149,750 |
12,547 | 1 | Boston Scientific Corp. | 105,018 |
5,753 | Bristol-Myers Squibb Co. | 145,608 |
2,292 | CIGNA Corp. | 73,527 |
2,993 | Cardinal Health, Inc. | 96,464 |
1,352 | 1 | Celgene Corp. | 74,968 |
4,600 | 1 | Cephalon, Inc. | 252,770 |
2,226 | 1 | Express Scripts, Inc., Class A | 190,991 |
2,623 | 1 | Gilead Sciences, Inc. | 120,789 |
1,455 | 1 | Humana, Inc. | 60,397 |
319 | 1 | Intuitive Surgical, Inc. | 89,492 |
16,378 | Johnson & Johnson | 1,029,194 |
904 | 1 | Laboratory Corp. of America Holdings | 65,956 |
2,922 | Lilly (Eli) & Co. | 107,325 |
2,208 | McKesson HBOC, Inc. | 136,940 |
3,903 | 1 | Medco Health Solutions, Inc. | 246,514 |
9,232 | Medtronic, Inc. | 391,806 |
18,731 | Merck & Co., Inc. | 678,234 |
52,157 | Pfizer, Inc. | 947,693 |
1,311 | Quest Diagnostics, Inc. | 75,959 |
2,886 | 1 | St. Jude Medical, Inc. | 105,945 |
2,341 | Stryker Corp. | 117,986 |
1,196 | 1 | Thermo Fisher Scientific Inc. | 56,487 |
16,935 | UnitedHealth Group, Inc. | 485,527 |
3,944 | 1 | Wellpoint, Inc. | 213,094 |
1,809 | 1 | Zimmer Holdings, Inc. | 107,039 |
TOTAL | 8,004,834 |
Industrials – 4.3% |
9,230 | 3M Co. | 714,771 |
Shares or Principal Amount | Value in U.S. Dollars |
682 | Avery Dennison Corp. | 25,616 |
5,967 | Boeing Co. | 312,730 |
1,594 | Burlington Northern Santa Fe | 156,690 |
1,021 | C.H. Robinson Worldwide, Inc. | 56,911 |
2,385 | CSX Corp. | 113,240 |
9,313 | Caterpillar, Inc. | 543,786 |
784 | Cintas Corp. | 22,023 |
1,628 | Cummins, Inc. | 73,097 |
2,135 | Danaher Corp. | 151,414 |
3,448 | Deere & Co. | 184,503 |
1,250 | Donnelley (R.R.) & Sons Co. | 25,725 |
314 | Dun & Bradstreet Corp. | 24,677 |
1,343 | Eaton Corp. | 85,818 |
6,175 | Emerson Electric Co. | 255,707 |
5,468 | FedEx Corp. | 461,773 |
7,399 | Fluor Corp. | 314,310 |
3,175 | General Dynamics Corp. | 209,233 |
115,521 | General Electric Co. | 1,850,646 |
6,197 | Honeywell International, Inc. | 238,399 |
1,504 | ITT Corp. | 77,787 |
3,172 | Illinois Tool Works, Inc. | 154,286 |
1,095 | 1 | Iron Mountain, Inc. | 26,280 |
2,674 | Lockheed Martin Corp. | 206,513 |
15,283 | Norfolk Southern Corp. | 785,546 |
2,619 | Northrop Grumman Corp. | 143,521 |
3,011 | PACCAR, Inc. | 111,648 |
1,280 | Pitney Bowes, Inc. | 29,491 |
1,165 | Precision Castparts Corp. | 120,787 |
15,253 | Raytheon Co. | 785,987 |
1,962 | Republic Services, Inc. | 55,328 |
920 | Robert Half International, Inc. | 20,544 |
524 | 1 | Stericycle, Inc. | 28,679 |
13,535 | Tyco International Ltd. | 485,500 |
3,111 | Union Pacific Corp. | 196,802 |
6,075 | United Parcel Service, Inc. | 349,130 |
16,064 | United Technologies Corp. | 1,080,143 |
Shares or Principal Amount | Value in U.S. Dollars |
2,941 | Waste Management, Inc. | 96,582 |
TOTAL | 10,575,623 |
Information Technology – 8.2% |
6,155 | 1 | Adobe Systems, Inc. | 215,917 |
6,041 | Altera Corp. | 127,042 |
5,949 | Analog Devices, Inc. | 178,411 |
5,947 | 1 | Apple, Inc. | 1,188,865 |
27,230 | Applied Materials, Inc. | 335,201 |
5,798 | Automatic Data Processing, Inc. | 251,923 |
26,175 | 1 | Broadcom Corp. | 764,310 |
4,681 | CA, Inc. | 103,450 |
49,134 | 1 | Cisco Systems, Inc. | 1,149,736 |
3,416 | 1 | Cognizant Technology Solutions Corp. | 150,065 |
7,967 | Corning, Inc. | 132,890 |
8,805 | 1 | Dell, Inc. | 124,327 |
18,118 | 1 | EMC Corp. Mass | 304,926 |
13,052 | 1 | eBay, Inc. | 319,383 |
4,033 | 1 | Google Inc. | 2,351,239 |
24,517 | Hewlett-Packard Co. | 1,202,804 |
129,232 | Intel Corp. | 2,481,254 |
12,049 | International Business Machines Corp. | 1,522,391 |
3,782 | 1 | Intuit, Inc. | 110,472 |
4,558 | Linear Technology Corp. | 122,929 |
1,109 | Mastercard, Inc. Class A | 267,114 |
3,800 | 1 | McAfee, Inc. | 144,970 |
17,945 | 1 | Micron Technology, Inc. | 134,946 |
108,904 | Microsoft Corp. | 3,202,867 |
11,158 | Motorola, Inc. | 89,376 |
11,168 | 1 | NVIDIA Corp. | 145,854 |
45,828 | Oracle Corp. | 1,011,882 |
3,764 | Paychex, Inc. | 118,001 |
17,596 | Qualcomm, Inc. | 791,820 |
9,634 | 1 | Symantec Corp. | 171,004 |
25,970 | Texas Instruments, Inc. | 656,781 |
8,044 | Western Union Co. | 148,412 |
5,702 | Xilinx, Inc. | 129,093 |
Shares or Principal Amount | Value in U.S. Dollars |
14,055 | 1 | Yahoo, Inc. | 210,403 |
TOTAL | 20,360,058 |
Materials – 3.3% |
4,309 | Air Products & Chemicals, Inc. | 357,345 |
20,182 | Alcoa, Inc. | 252,679 |
2,654 | BHP Billiton LTD — SPON ADR | 199,846 |
1,972 | Ball Corp. | 97,437 |
13,802 | Barrick Gold Corp. | 589,207 |
23,460 | Dow Chemical Co. | 651,719 |
18,549 | Du Pont (E.I.) de Nemours & Co. | 641,425 |
4,922 | Ecolab, Inc. | 221,047 |
8,425 | Freeport-McMoRan Copper & Gold, Inc. | 697,590 |
8,902 | International Paper Co. | 226,556 |
11,185 | Monsanto Co. | 903,189 |
10,187 | Newmont Mining Corp. | 546,431 |
6,693 | Nucor Corp. | 283,850 |
3,567 | 1 | Owens-Illinois, Inc. | 111,540 |
3,366 | PPG Industries, Inc. | 200,041 |
3,600 | Potash Corp. of Saskatchewan, Inc. | 404,712 |
13,039 | Praxair, Inc. | 1,069,589 |
2,491 | Sigma-Aldrich Corp. | 132,870 |
6,382 | United States Steel Corp. | 285,020 |
2,552 | Vulcan Materials Co. | 123,721 |
4,365 | Weyerhaeuser Co. | 169,973 |
TOTAL | 8,165,787 |
Utilities – 2.0% |
9,181 | 1 | AES Corp. | 116,966 |
3,276 | Ameren Corp. | 85,143 |
6,582 | American Electric Power Co., Inc. | 211,875 |
3,754 | Consolidated Edison Co. | 161,084 |
2,714 | Constellation Energy Group | 86,359 |
2,287 | DTE Energy Co. | 91,732 |
8,137 | Dominion Resources, Inc. | 296,024 |
17,986 | Duke Energy Corp. | 300,006 |
1,819 | EQT Corp. | 74,852 |
4,492 | Edison International | 152,953 |
2,695 | Entergy Corp. | 211,962 |
Shares or Principal Amount | Value in U.S. Dollars |
9,230 | Exelon Corp. | 444,701 |
5,702 | FPL Group, Inc. | 296,333 |
4,303 | FirstEnergy Corp. | 185,373 |
5,081 | P G & E Corp. | 215,130 |
5,217 | PPL Corp. | 159,223 |
12,016 | Progress Energy, Inc. | 469,705 |
7,066 | Public Service Enterprises Group, Inc. | 221,590 |
2,411 | Questar Corp. | 95,644 |
3,518 | Sempra Energy | 186,947 |
23,859 | Southern Co. | 765,635 |
6,340 | Xcel Energy, Inc. | 128,829 |
TOTAL | 4,958,066 |
TOTAL COMMON STOCKS (IDENTIFIED COST $82,604,297) | 93,550,099 |
Asset-Backed Securities – 0.9% |
$19,075 | 2,3 | 125 Home Loan Owner Trust 1998-1A B1, 9.76%, 2/15/2029 | 15,832 |
250,000 | Banc of America Commercial Mortgage, Inc. 2007-4 A4, 5.935%, 2/10/2051 | 212,926 |
800,000 | Citigroup/Deutsche Bank Commercial Mortgage 2007-CD5, Series 2007-CD5, 5.886%, 11/15/2044 | 685,544 |
350,000 | LB-UBS Commercial Mortgage Trust 2008-C1 A2, 6.318%, 4/15/2041 | 330,831 |
100,000 | Merrill Lynch Mortgage Trust 2008-C1 AM, 6.461%, 2/12/2051 | 70,311 |
400,000 | Merrill Lynch/Countrywide Commercial Mortgage 2007-6, Series 2007-6, 5.485%, 03/12/2051 | 331,479 |
315,000 | Morgan Stanley Capital I 2006-IQ12 A4, 5.332%, 12/15/2043 | 302,060 |
250,000 | Morgan Stanley Capital, Inc. A4, 6.076%, 6/11/2049 | 209,319 |
TOTAL ASSET-BACKED SECURITIES (IDENTIFIED COST $2,441,592) | 2,158,302 |
Collateralized Mortgage Obligations – 0.3% |
800,000 | Citigroup/Deutsche Bank Commercial Mortgage 2007-CD4 A3, 5.293%, 12/11/2049 | 757,438 |
5,743 | 2,3 | SMFC Trust Asset-Backed Certificates, 1997-A B1-4, 7.719%, 1/28/2027 | 3,446 |
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS (IDENTIFIED COST $816,269) | 760,884 |
Corporate Bonds – 6.9% |
Basic Industry — Chemicals – 0.1% |
95,000 | Dow Chemical Co., Note, 8.550%, 05/15/2019 | 112,540 |
40,000 | Du Pont (E.I.) de Nemours & Co., 5.000%, 01/15/2013 | 43,595 |
Shares or Principal Amount | Value in U.S. Dollars |
$100,000 | Praxair, Inc., 4.625%, 03/30/2015 | 109,661 |
35,000 | Rohm & Haas Co., 6.000%, 09/15/2017 | 36,472 |
TOTAL | 302,268 |
Basic Industry — Metals & Mining – 0.3% |
80,000 | Alcan, Inc., 5.000%, 06/01/2015 | 83,583 |
70,000 | Alcoa, Inc., Note, 5.550%, 02/01/2017 | 70,434 |
90,000 | Allegheny Technologies, Inc., Sr. Note, 9.375%, 06/01/2019 | 103,800 |
10,000 | BHP Finance (USA), Inc., 6.500%, 04/01/2019 | 11,761 |
200,000 | Barrick Gold Corp., 6.950%, 04/01/2019 | 234,034 |
120,000 | Newmont Mining Corp., Company Guarantee, 5.875%, 04/01/2035 | 114,233 |
120,000 | Rio Tinto Finance USA Ltd., 5.875%, 07/15/2013 | 130,631 |
100,000 | 2,3 | Xstrata Finance Canada Ltd., Unsecd. Note, 5.500%, 11/16/2011 | 104,629 |
TOTAL | 853,105 |
Basic Industry — Paper – 0.1% |
30,000 | International Paper Co., Sr. Unsecd. Note, 7.500%, 08/15/2021 | 33,607 |
20,000 | Louisiana-Pacific Corp., 8.875%, 08/15/2010 | 20,500 |
150,000 | Pope & Talbot, Inc., 8.375%, 6/1/2013 | 1,388 |
100,000 | Weyerhaeuser Co., Deb., 7.375%, 03/15/2032 | 91,524 |
TOTAL | 147,019 |
Capital Goods — Aerospace & Defense – 0.1% |
50,000 | 2,3 | BAE Systems Holdings, Inc., 5.200%, 08/15/2015 | 54,129 |
100,000 | Boeing Co., 4.875%, 02/15/2020 | 104,249 |
25,000 | Lockheed Martin Corp., Sr. Note, 4.121%, 03/14/2013 | 26,583 |
TOTAL | 184,961 |
Capital Goods — Building Materials – 0.0% |
50,000 | RPM International, Inc., 6.500%, 02/15/2018 | 51,873 |
40,000 | RPM International, Inc., Sr. Unsecd. Note, 6.125%, 10/15/2019 | 40,917 |
TOTAL | 92,790 |
Capital Goods — Diversified Manufacturing – 0.2% |
20,000 | Dover Corp., Note, 5.450%, 03/15/2018 | 21,944 |
70,000 | Emerson Electric Co., 4.875%, 10/15/2019 | 74,517 |
68,000 | 2,3 | Hutchison Whampoa International Ltd., 6.500%, 02/13/2013 | 75,145 |
100,000 | Roper Industries, Inc., Sr. Unsecd. Note, 6.250%, 09/01/2019 | 107,109 |
90,000 | 2,3 | Textron Financial Corp., Jr. Sub. Note, 6.000%, 02/15/2067 | 63,450 |
50,000 | Thomas & Betts Corp., Note, 7.250%, 06/01/2013 | 51,211 |
TOTAL | 393,376 |
Shares or Principal Amount | Value in U.S. Dollars |
Capital Goods — Environmental – 0.1% |
$110,000 | 2,3 | Republic Services, Inc., Sr. Unsecd. Note, Series 144A, 5.500%, 09/15/2019 | 115,496 |
25,000 | Waste Management, Inc., 7.375%, 03/11/2019 | 29,255 |
TOTAL | 144,751 |
Capital Goods — Packaging – 0.0% |
40,000 | Pactiv Corp., 6.400%, 01/15/2018 | 42,324 |
Communications — Media & Cable – 0.2% |
27,000 | Comcast Cable Communications Holdings, Company Guarantee, 8.375%, 03/15/2013 | 31,678 |
100,000 | Comcast Corp., 7.050%, 03/15/2033 | 110,284 |
100,000 | Comcast Corp., Company Guarantee, 6.500%, 01/15/2017 | 111,995 |
120,000 | Time Warner Cable, Inc., Company Guarantee, 6.750%, 06/15/2039 | 127,863 |
20,000 | Time Warner Cable, Inc., Company Guarantee, 8.250%, 04/01/2019 | 24,456 |
50,000 | Time Warner Cable, Inc., Company Guarantee, 8.750%, 02/14/2019 | 62,492 |
50,000 | Time Warner Cable, Inc., Sr. Unsecd. Note, 5.850%, 05/01/2017 | 53,530 |
TOTAL | 522,298 |
Communications — Media Noncable – 0.1% |
120,000 | News America Holdings, Inc., Sr. Deb., 9.250%, 02/01/2013 | 142,238 |
90,000 | 2,3 | News America, Inc., 5.650%, 08/15/2020 | 95,528 |
TOTAL | 237,766 |
Communications — Telecom Wireless – 0.2% |
130,000 | AT&T Wireless Services, Inc., 8.750%, 03/01/2031 | 172,447 |
90,000 | America Movil S.A.B. de C.V., Note, 5.750%, 01/15/2015 | 97,058 |
20,000 | Vodafone Group PLC, 5.350%, 02/27/2012 | 21,569 |
90,000 | Vodafone Group PLC, Note, 5.625%, 02/27/2017 | 98,781 |
TOTAL | 389,855 |
Communications — Telecom Wirelines – 0.2% |
15,000 | CenturyTel, Inc., Sr. Note, 6.150%, 09/15/2019 | 15,480 |
150,000 | Deutsche Telekom International Finance BV, 4.875%, 07/08/2014 | 160,810 |
45,000 | France Telecom SA, Sr. Unsecd. Note, 5.375%, 07/08/2019 | 49,262 |
100,000 | Telefonica SA, Sr. Note, 5.855%, 02/04/2013 | 110,536 |
40,000 | Verizon Communications, Inc., 6.100%, 04/15/2018 | 44,419 |
50,000 | Verizon Communications, Inc., Sr. Unsecd. Note, 6.350%, 04/01/2019 | 56,387 |
TOTAL | 436,894 |
Consumer Cyclical — Automotive – 0.0% |
70,000 | DaimlerChrysler North America Holding Corp., 6.500%, 11/15/2013 | 76,954 |
Shares or Principal Amount | Value in U.S. Dollars |
Consumer Cyclical — Entertainment – 0.2% |
$80,000 | International Speedway Corp., 5.400%, 04/15/2014 | 84,030 |
280,000 | Time Warner, Inc., Company Guarantee, 6.875%, 05/01/2012 | 310,443 |
TOTAL | 394,473 |
Consumer Cyclical — Lodging – 0.0% |
50,000 | Wyndham Worldwide Corp., Sr. Unsecd. Note, 6.000%, 12/01/2016 | 46,652 |
Consumer Cyclical — Retailers – 0.2% |
187,274 | 2,3 | CVS Caremark Corp., Pass Thru Cert., 5.298%, 01/11/2027 | 180,772 |
60,000 | Costco Wholesale Corp., 5.300%, 03/15/2012 | 65,318 |
20,000 | JC Penney Corp., Inc., Sr. Unsecd. Note, 5.750%, 02/15/2018 | 19,000 |
70,000 | Target Corp., Note, 5.875%, 07/15/2016 | 78,367 |
40,000 | Wal-Mart Stores, Inc., 6.200%, 04/15/2038 | 45,474 |
TOTAL | 388,931 |
Consumer Non-Cyclical — Food/Beverage – 0.3% |
90,000 | 2,3 | Bacardi Ltd., Sr. Note, 7.450%, 04/01/2014 | 103,840 |
70,000 | Bottling Group LLC, Note, 5.500%, 04/01/2016 | 78,462 |
30,000 | Coca-Cola Enterprises, Inc., 4.250%, 03/01/2015 | 32,221 |
80,000 | Diageo Capital PLC, Company Guarantee, 7.375%, 01/15/2014 | 94,355 |
60,000 | General Mills, Inc., Note, 5.700%, 02/15/2017 | 66,756 |
125,000 | Kraft Foods, Inc., Note, 5.250%, 10/01/2013 | 134,989 |
100,000 | Kraft Foods, Inc., Sr. Unsecd. Note, 6.125%, 02/01/2018 | 108,056 |
50,000 | PepsiCo, Inc., 4.650%, 02/15/2013 | 54,311 |
30,000 | 2,3 | Ralcorp Holdings, Inc., Sr. Note, 6.625%, 8/15/2039 | 31,113 |
15,000 | Sysco Corp., Sr. Note, 5.375%, 03/17/2019 | 16,644 |
TOTAL | 720,747 |
Consumer Non-Cyclical — Health Care – 0.0% |
20,000 | Express Scripts, Inc., Sr. Unsecd. Note, 7.25%, 6/15/2019 | 23,606 |
75,000 | Quest Diagnostics, Inc., Sr. Unsecd. Note, 6.400%, 07/01/2017 | 82,540 |
TOTAL | 106,146 |
Consumer Non-Cyclical — Pharmaceuticals – 0.1% |
40,000 | Abbott Laboratories, 5.150%, 11/30/2012 | 44,555 |
100,000 | Genentech, Inc., Note, 4.750%, 07/15/2015 | 110,407 |
80,000 | Pfizer, Inc., Sr. Unsecd. Note, 6.200%, 03/15/2019 | 92,300 |
TOTAL | 247,262 |
Consumer Non-Cyclical — Products – 0.0% |
45,000 | Philips Electronics NV, 5.750%, 03/11/2018 | 49,500 |
Consumer Non-Cyclical — Supermarkets – 0.0% |
25,000 | Kroger Co., Bond, 6.900%, 04/15/2038 | 29,611 |
Shares or Principal Amount | Value in U.S. Dollars |
Consumer Non-Cyclical — Tobacco – 0.0% |
$70,000 | Altria Group, Inc., 9.250%, 08/06/2019 | 85,621 |
Energy — Independent – 0.1% |
120,000 | Canadian Natural Resources Ltd., 4.900%, 12/01/2014 | 128,889 |
30,000 | EOG Resources, Inc., Note, 5.625%, 06/01/2019 | 33,510 |
25,000 | Pemex Project Funding Master, 5.750%, 12/15/2015 | 26,117 |
80,000 | 2,3 | Petroleos Mexicanos, 4.875%, 03/15/2015 | 81,164 |
20,000 | XTO Energy, Inc., 6.750%, 08/01/2037 | 22,562 |
25,000 | XTO Energy, Inc., Sr. Unsecd. Note, 6.250%, 08/01/2017 | 27,872 |
TOTAL | 320,114 |
Energy — Integrated – 0.1% |
60,000 | Conoco, Inc., Sr. Note, 6.950%, 04/15/2029 | 70,613 |
100,000 | ConocoPhillips Australia Funding Co., 5.500%, 04/15/2013 | 110,391 |
35,000 | Petro-Canada, Deb., 7.000%, 11/15/2028 | 38,262 |
33,340 | 2,3 | Qatar Petroleum, 5.579%, 05/30/2011 | 34,423 |
100,000 | 2,3 | StatoilHydro ASA, 5.125%, 4/30/2014 | 110,817 |
TOTAL | 364,506 |
Energy — Oil Field Services – 0.0% |
50,000 | Noble Drilling Corp., Sr. Note, 7.5%, 3/15/2019 | 56,222 |
25,000 | Weatherford International Ltd., 6.000%, 03/15/2018 | 26,154 |
20,000 | Weatherford International Ltd., 7.000%, 03/15/2038 | 21,127 |
TOTAL | 103,503 |
Energy — Refining – 0.1% |
110,000 | Premcor Refining Group, Inc., 6.125%, 05/01/2011 | 116,219 |
25,000 | Valero Energy Corp., 9.375%, 03/15/2019 | 30,141 |
TOTAL | 146,360 |
Financial Institution — Banking – 1.0% |
50,000 | Bank of America Corp., Sr. Note, 5.375%, 06/15/2014 | 52,771 |
120,000 | Bank of America Corp., Sr. Note, 7.375%, 5/15/2014 | 135,026 |
100,000 | 2,3 | Barclays Bank PLC, 5.926%, 12/31/2049 | 72,500 |
70,000 | Capital One Financial Corp., Sr. Note, 7.375%, 05/23/2014 | 80,615 |
80,000 | Citigroup, Inc., Note, 5.125%, 05/05/2014 | 81,493 |
60,000 | 2,3 | Commonwealth Bank of Australia, Sr. Unsecd. Note, Series 144A, 3.750%, 10/15/2014 | 61,534 |
200,000 | First Union Institutional, Bond, 8.04%, 12/1/2026 | 195,000 |
50,000 | Goldman Sachs Group, Inc., 6.125%, 02/15/2033 | 51,838 |
150,000 | Goldman Sachs Group, Inc., Sr. Note, 6.150%, 04/01/2018 | 162,702 |
320,000 | Goldman Sachs Group, Inc., Sr. Unsecd. Note, 5.125%, 01/15/2015 | 340,298 |
Shares or Principal Amount | Value in U.S. Dollars |
$100,000 | HSBC Finance Capital Trust IX, Note, 5.911%, 11/30/2035 | 78,500 |
100,000 | HSBC Finance Corp., 5.000%, 06/30/2015 | 104,785 |
75,000 | Household Finance Corp., Unsecd. Note, 4.75%, 7/15/2013 | 78,608 |
90,000 | M & T Bank Corp., 5.375%, 05/24/2012 | 94,263 |
30,000 | Merrill Lynch & Co., Inc., Sr. Unsecd. Note, 6.050%, 08/15/2012 | 32,388 |
100,000 | Morgan Stanley Group, Inc., 5.300%, 03/01/2013 | 106,804 |
100,000 | Morgan Stanley, Sr. Unsecd. Note, 6.625%, 04/01/2018 | 109,185 |
30,000 | Northern Trust Corp., 4.625%, 05/01/2014 | 32,756 |
15,000 | PNC Funding Corp., Sub. Note, 5.625%, 02/01/2017 | 15,241 |
472,650 | 2,3 | Regional Diversified Funding, 9.250%, 03/15/2030 | 254,309 |
20,000 | State Street Corp., Sr. Note, 4.300%, 05/30/2014 | 21,313 |
100,000 | U.S. Bank, N.A., 6.300%, 02/04/2014 | 113,490 |
140,000 | Wachovia Corp., 5.750%, 02/01/2018 | 147,946 |
40,000 | Wilmington Trust Corp., Sub. Note, 8.500%, 04/02/2018 | 39,886 |
TOTAL | 2,463,251 |
Financial Institution — Brokerage – 0.3% |
220,000 | Blackrock, Inc., 6.250%, 09/15/2017 | 243,718 |
50,000 | Charles Schwab Corp., Sr. Unsecd. Note, 4.950%, 06/01/2014 | 54,232 |
40,000 | Eaton Vance Corp., 6.500%, 10/02/2017 | 43,214 |
100,000 | 2,3 | FMR LLC, 4.75%, 3/01/2013 | 101,889 |
25,000 | Janus Capital Group, Inc., Sr. Note, 6.500%, 06/15/2012 | 25,284 |
30,000 | Janus Capital Group, Inc., Sr. Note, 6.950%, 06/15/2017 | 28,936 |
95,000 | Jefferies Group, Inc., Sr. Unsecd. Note, 8.500%, 07/15/2019 | 104,481 |
60,000 | Lehman Brothers Holdings, Note, 4.8%, 3/13/2014 | 12,000 |
30,000 | Nuveen Investments, 5.500%, 09/15/2015 | 20,700 |
30,000 | Nuveen Investments, 5%, 9/15/2010 | 29,737 |
75,000 | Raymond James Financial, Inc., 8.600%, 08/15/2019 | 83,381 |
TOTAL | 747,572 |
Financial Institution — Finance Noncaptive – 0.5% |
160,000 | American Express Co., Sr. Unsecd. Note, 8.125%, 05/20/2019 | 192,674 |
60,000 | American Express Credit Corp., Sr. Unsecd. Note, 5.125%, 08/25/2014 | 63,869 |
100,000 | American International Group, Inc., Sr. Note, 4.700%, 10/01/2010 | 99,062 |
120,000 | Berkshire Hathaway, Inc., Company Guarantee, 5.000%, 08/15/2013 | 131,625 |
120,000 | Capital One Capital IV, 6.745%, 02/17/2037 | 95,400 |
20,000 | Capital One Capital V, 10.250%, 08/15/2039 | 22,055 |
510,000 | General Electric Capital Corp., 5.625%, 05/01/2018 | 531,737 |
30,000 | General Electric Capital Corp., Note, Series MTN, 6.750%, 03/15/2032 | 31,377 |
Shares or Principal Amount | Value in U.S. Dollars |
$80,000 | International Lease Finance Corp., 4.875%, 09/01/2010 | 77,650 |
30,000 | 2,3 | Macquarie Group Ltd., Note, Series 144A, 7.625%, 8/13/2019 | 32,863 |
TOTAL | 1,278,312 |
Financial Institution — Insurance — Health – 0.1% |
50,000 | CIGNA Corp., 6.350%, 03/15/2018 | 50,882 |
50,000 | UnitedHealth Group, Inc., Bond, 6.000%, 02/15/2018 | 53,314 |
50,000 | Wellpoint, Inc., 5.850%, 01/15/2036 | 48,994 |
TOTAL | 153,190 |
Financial Institution — Insurance — Life – 0.6% |
100,000 | AXA-UAP, Sub. Note, 8.600%, 12/15/2030 | 116,609 |
100,000 | 2,3 | Massachusetts Mutual Life Insurance Co., Sub. Note, 8.875%, 06/01/2039 | 123,886 |
90,000 | MetLife, Inc., 6.750%, 06/01/2016 | 103,442 |
10,000 | MetLife, Inc., Jr. Sub. Note, 10.750%, 08/01/2069 | 12,183 |
80,000 | 2,3 | New York Life Insurance Co., Sub. Note, 6.750%, 11/15/2039 | 80,979 |
300,000 | 2,3 | Pacific LifeCorp., Bond, 6.600%, 09/15/2033 | 255,635 |
50,000 | Prudential Financial, Inc., 5.150%, 01/15/2013 | 52,992 |
40,000 | Prudential Financial, Inc., 6.625%, 12/01/2037 | 41,409 |
10,000 | Prudential Financial, Inc., Sr. Note, 7.375%, 06/15/2019 | 11,380 |
100,000 | Prudential Financial, Inc., Sr. Unsecd. Note, 4.750%, 09/17/2015 | 102,366 |
750,000 | 2 | Union Central Life Ins Co, Note, 8.2%, 11/1/2026 | 704,991 |
TOTAL | 1,605,872 |
Financial Institution — Insurance — P&C – 0.2% |
80,000 | ACE INA Holdings, Inc., Sr. Note, 5.700%, 02/15/2017 | 87,365 |
80,000 | CNA Financial Corp., 6.500%, 08/15/2016 | 79,590 |
15,000 | Chubb Corp., Sr. Note, 5.750%, 05/15/2018 | 16,661 |
50,000 | Horace Mann Educators Corp., Sr. Note, 6.850%, 04/15/2016 | 50,302 |
100,000 | 2,3 | Liberty Mutual Group, Inc., Unsecd. Note, 5.750%, 03/15/2014 | 101,028 |
30,000 | 2,3 | Nationwide Mutual Insurance Co., Note, Series 144A, 9.375%, 08/15/2039 | 31,367 |
10,000 | The Travelers Cos., Inc., Sr. Unsecd. Note, 5.500%, 12/01/2015 | 11,198 |
TOTAL | 377,511 |
Financial Institution — REITs – 0.2% |
45,000 | Avalonbay Communities, Inc., Sr. Unsecd. Note, Series MTN, 5.700%, 03/15/2017 | 47,139 |
75,000 | Boston Properties LP, Sr. Unsecd. Note, 5.875%, 10/15/2019 | 77,151 |
40,000 | Equity One, Inc., Bond, 6.000%, 09/15/2017 | 36,966 |
40,000 | Liberty Property LP, 6.625%, 10/01/2017 | 40,588 |
Shares or Principal Amount | Value in U.S. Dollars |
$120,000 | Prologis, Sr. Note, 5.500%, 04/01/2012 | 122,546 |
20,000 | Prologis, Sr. Note, 7.625%, 8/15/2014 | 21,473 |
40,000 | Simon Property Group LP, 6.750%, 05/15/2014 | 43,938 |
50,000 | Simon Property Group, Inc., 6.350%, 08/28/2012 | 54,065 |
TOTAL | 443,866 |
Foreign-Local-Government – 0.0% |
50,000 | Quebec, Province of, Note, Series MTNA, 7.035%, 3/10/2026 | 61,788 |
Municipal Services – 0.1% |
140,000 | 2,3 | Army Hawaii Family Housing , 5.524%, 6/15/2050 | 100,631 |
100,000 | 2,3 | Camp Pendleton & Quantico Housing LLC, 5.572%, 10/01/2050 | 72,232 |
TOTAL | 172,863 |
Technology – 0.3% |
20,000 | Cisco Systems, Inc., Sr. Unsecd. Note, 5.500%, 02/22/2016 | 22,532 |
40,000 | Dell Computer Corp., Deb., 7.100%, 04/15/2028 | 44,692 |
60,000 | Dun & Bradstreet Corp., Sr. Unsecd. Note, 5.500%, 03/15/2011 | 62,732 |
105,000 | Fiserv, Inc., Sr. Note, 6.800%, 11/20/2017 | 118,664 |
50,000 | Harris Corp., 5.950%, 12/01/2017 | 54,286 |
60,000 | Hewlett-Packard Co., Note, 5.400%, 03/01/2017 | 66,422 |
200,000 | IBM Corp., Sr. Note, 5.700%, 09/14/2017 | 224,896 |
100,000 | Oracle Corp., Sr. Unsecd. Note, Series WI, 5.000%, 01/15/2011 | 104,909 |
TOTAL | 699,133 |
Transportation — Railroads – 0.1% |
100,000 | Burlington Northern Santa Fe Corp., 4.875%, 01/15/2015 | 107,436 |
50,000 | Union Pacific Corp., 4.875%, 01/15/2015 | 53,355 |
45,000 | Union Pacific Corp., Bond, 6.625%, 2/01/2029 | 50,906 |
TOTAL | 211,697 |
Transportation — Services – 0.0% |
75,000 | 2,3 | Enterprise Rent-A-Car USA Finance Co., 6.375%, 10/15/2017 | 78,488 |
Utility — Electric – 0.5% |
60,000 | Appalachian Power Co., Sr. Unsecd. Note, 7.950%, 01/15/2020 | 74,669 |
50,000 | Cleveland Electric Illuminating Co., Sr. Unsecd. Note, 5.950%, 12/15/2036 | 48,355 |
50,000 | Commonwealth Edison Co., 1st Mtg. Bond, 5.800%, 03/15/2018 | 54,814 |
40,000 | Consolidated Edison Co., Sr. Unsecd. Note, 5.500%, 09/15/2016 | 43,238 |
10,000 | Consolidated Edison Co., Sr. Unsecd. Note, 6.650%, 04/01/2019 | 11,783 |
60,000 | 2,3 | Electricite De France, 5.500%, 01/26/2014 | 66,861 |
Shares or Principal Amount | Value in U.S. Dollars |
$50,000 | 2,3 | FirstEnergy Solutions Corp., Company Guarantee, Series 144A, 6.050%, 08/15/2021 | 52,773 |
90,000 | 2,3 | FirstEnergy Solutions Corp., Series 144A, 4.800%, 02/15/2015 | 95,147 |
83,270 | 2,3 | Great River Energy, 1st Mtg. Note, 5.829%, 07/01/2017 | 90,138 |
120,000 | MidAmerican Energy Co., 4.650%, 10/01/2014 | 129,494 |
100,000 | National Rural Utilities Cooperative Finance Corp., Sr. Unsecd. Note, 10.375%, 11/01/2018 | 136,045 |
30,000 | Northern States Power Co., MN, 1st Mtg. Bond, 5.250%, 03/01/2018 | 32,699 |
60,000 | PPL Energy Supply LLC, Sr. Unsecd. Note, 6.000%, 12/15/2036 | 58,037 |
40,000 | Progress Energy, Inc., 7.050%, 03/15/2019 | 46,654 |
100,000 | Union Electric Co., 6.000%, 04/01/2018 | 109,162 |
120,000 | Virginia Electric & Power Co., Sr. Unsecd. Note, 5.000%, 06/30/2019 | 127,057 |
80,000 | Virginia Electric & Power Co., Sr. Unsecd. Note, 5.100%, 11/30/2012 | 87,639 |
TOTAL | 1,264,565 |
Utility — Natural Gas Distributor – 0.1% |
120,000 | Atmos Energy Corp., 5.125%, 01/15/2013 | 129,109 |
15,000 | Atmos Energy Corp., 8.500%, 03/15/2019 | 18,989 |
60,000 | Sempra Energy, Sr. Unsecd. Note, 6.500%, 06/01/2016 | 66,922 |
TOTAL | 215,020 |
Utility — Natural Gas Pipelines – 0.2% |
100,000 | Duke Capital Corp., Sr. Note, 6.250%, 02/15/2013 | 109,493 |
70,000 | Enbridge, Inc., Sr. Note, 5.600%, 04/01/2017 | 76,332 |
110,000 | Enterprise Products Operating LLC, Company Guarantee, 9.750%, 01/31/2014 | 134,117 |
100,000 | Kinder Morgan Energy Partners LP, Sr. Unsecd. Note, 5.800%, 03/15/2035 | 94,305 |
TOTAL | 414,247 |
TOTAL CORPORATE BONDS (IDENTIFIED COST $16,693,653) | 17,015,162 |
Government AgencY – 1.1% |
2,550,000 | Federal Home Loan Mortgage Corp., 4.625%, 10/25/2012 (IDENTIFIED COST $2,551,026) | 2,793,165 |
Governments/Agencies – 0.1% |
Sovereign – 0.1% |
75,000 | United Mexican States, 6.625%, 03/03/2015 | 85,087 |
30,000 | United Mexican States, Series MTNA, 6.750%, 09/27/2034 | 34,055 |
TOTAL GOVERNMENTS/AGENCIES (IDENTIFIED COST $106,742) | 119,142 |
Shares or Principal Amount | Value in U.S. Dollars |
Mortgage-Backed Securities – 0.4% |
$9,271 | Federal Home Loan Mortgage Corp. Pool C00592, 7.000%, 3/1/2028 | 10,239 |
7,288 | Federal Home Loan Mortgage Corp. Pool C00896, 7.500%, 12/1/2029 | 8,064 |
20,431 | Federal Home Loan Mortgage Corp. Pool C17281, 6.500%, 11/1/2028 | 22,286 |
16,502 | Federal Home Loan Mortgage Corp. Pool C19588, 6.500%, 12/1/2028 | 18,001 |
5,563 | Federal Home Loan Mortgage Corp. Pool C25621, 6.500%, 5/1/2029 | 6,068 |
24,878 | Federal Home Loan Mortgage Corp. Pool C76361, 6.000%, 2/1/2033 | 26,954 |
68,163 | Federal Home Loan Mortgage Corp. Pool E01545, 5.000%, 15 Year, 1/1/2019 | 73,055 |
5,665 | Federal Home Loan Mortgage Corp. Pool E20252, 7.000%, 15 Year, 7/1/2011 | 5,874 |
1,346 | Federal Home Loan Mortgage Corp. Pool E77591, 6.500%, 7/1/2014 | 1,443 |
18,506 | Federal Home Loan Mortgage Corp. Pool E99510, 5.500%, 9/1/2018 | 20,002 |
20,564 | Federal Home Loan Mortgage Corp. Pool G01444, 6.500%, 8/1/2032 | 22,419 |
13,204 | Federal National Mortgage Association Pool 251697, 6.500%, 30 Year, 5/1/2028 | 14,416 |
32,606 | Federal National Mortgage Association Pool 252334, 6.500%, 30 Year, 2/1/2029 | 35,497 |
75,582 | Federal National Mortgage Association Pool 254720, 4.500%, 5/1/2018 | 80,217 |
74,557 | Federal National Mortgage Association Pool 254802, 4.500%, 7/1/2018 | 79,129 |
35,189 | Federal National Mortgage Association Pool 254905, 6.000%, 10/1/2033 | 38,067 |
70,222 | Federal National Mortgage Association Pool 255075, 5.500%, 2/1/2024 | 75,155 |
80,030 | Federal National Mortgage Association Pool 255079, 5.000%, 2/1/2019 | 85,724 |
3,420 | Federal National Mortgage Association Pool 303168, 9.500%, 30 Year, 2/1/2025 | 4,031 |
1,862 | Federal National Mortgage Association Pool 323159, 7.500%, 4/1/2028 | 2,062 |
14,759 | Federal National Mortgage Association Pool 323640, 7.500%, 4/1/2029 | 16,348 |
651 | Federal National Mortgage Association Pool 323970, 7.000%, 15 Year, 10/1/2014 | 698 |
27,133 | Federal National Mortgage Association Pool 428865, 7.000%, 6/1/2028 | 30,065 |
2,912 | Federal National Mortgage Association Pool 443215, 6.000%, 10/1/2028 | 3,161 |
1,531 | Federal National Mortgage Association Pool 511365, 7.000%, 8/1/2029 | 1,696 |
284 | Federal National Mortgage Association Pool 514184, 7.500%, 9/1/2029 | 315 |
$67,158 | Federal National Mortgage Association Pool 545993, 6.000%, 11/1/2032 | 72,736 |
26,995 | Federal National Mortgage Association Pool 555272, 6.000%, 3/1/2033 | 29,237 |
62,012 | Federal National Mortgage Association Pool 713974, 5.500%, 7/1/2033 | 66,268 |
81,626 | Federal National Mortgage Association Pool 721502, 5.000%, 7/1/2033 | 85,975 |
1,480 | Government National Mortgage Association Pool 352214, 7.000%, 4/15/2023 | 1,621 |
Shares or Principal Amount | Value in U.S. Dollars |
6,131 | Government National Mortgage Association Pool 451522, 7.500%, 30 Year, 10/15/2027 | 6,767 |
13,594 | Government National Mortgage Association Pool 462556, 6.500%, 2/15/2028 | 14,809 |
487 | Government National Mortgage Association Pool 462739, 7.500%, 5/15/2028 | 538 |
705 | Government National Mortgage Association Pool 464835, 6.500%, 9/15/2028 | 767 |
10,787 | Government National Mortgage Association Pool 469699, 7.000%, 11/15/2028 | 11,876 |
12,404 | Government National Mortgage Association Pool 486760, 6.500%, 12/15/2028 | 13,515 |
2,372 | Government National Mortgage Association Pool 780339, 8.000%, 30 Year, 12/15/2023 | 2,628 |
15,018 | Government National Mortgage Association Pool 780453, 7.500%, 30 Year, 12/15/2025 | 16,564 |
14,325 | Government National Mortgage Association Pool 780584, 7.000%, 30 Year, 6/15/2027 | 15,794 |
TOTAL MORTGAGE-BACKED SECURITIES (IDENTIFIED COST $958,314) | 1,020,081 |
Municipal – 0.0% |
Illinois – 0.0% |
90,000 | Chicago, IL Metropolitan Water Reclamation District, Direct Payment Taxable Limited GO Build America Bonds, 5.720%, 12/01/2038 (IDENTIFIED COST $90,000) | 95,291 |
U.S. Treasury – 4.7% |
425,000 | 4,5 | United States Treasury Bill, 0.06%, 12/10/2009 | 424,994 |
3,250,000 | 4,5 | United States Treasury Bill, 0.06%, 2/4/2010 | 3,249,912 |
400,000 | 4,5 | United States Treasury Bill, 0.065%, 2/18/2010 | 399,987 |
3,700,000 | 4,5 | United States Treasury Bill, 0.08%, 1/21/2010 | 3,699,974 |
1,600,000 | 4,5 | United States Treasury Bill, 0.115%, 12/31/2009 | 1,599,908 |
1,830,000 | 4,5 | United States Treasury Bill, 0.15%, 12/3/2009 | 1,829,992 |
500,000 | United States Treasury Bond, 3.500%, 2/15/2039 | 441,484 |
$100,000 | United States Treasury Note, 3.125%, 8/31/2013 | 106,219 |
TOTAL U.S. TREASURY (IDENTIFIED COST $11,787,748) | 11,752,470 |
Exchange-Traded Funds – 23.2% |
22,326 | iShares MSCI Brazil Index Fund | 1,711,735 |
14,990 | iShares MSCI Canada Index Fund | 388,691 |
68,178 | iShares MSCI EAFE Index Fund | 3,778,425 |
116,535 | iShares MSCI Emerging Market Index Fund | 4,721,998 |
Shares or Principal Amount | Value in U.S. Dollars |
36,047 | 1 | iShares MSCI South Korea Index Fund | 1,599,766 |
391,652 | 1 | iShares Russell 1000 Index Fund | 23,589,200 |
345,811 | iShares Russell 2000 Index Fund | 20,091,619 |
22,208 | 1 | SPDR S&P China ETF | 1,609,192 |
TOTAL EXCHANGE-TRADED FUNDS (IDENTIFIED COST $50,235,289) | 57,490,626 |
Mutual Funds – 25.0%;6 |
199,106 | Emerging Markets Fixed Income Core Fund | 4,786,699 |
946,934 | Federated Mortgage Core Portfolio | 9,677,667 |
1,867,382 | High Yield Bond Portfolio | 11,484,402 |
36,095,022 | 7 | Prime Value Obligations Fund, Institutional Shares, 0.22% | 36,095,022 |
TOTAL MUTUAL FUNDS (IDENTIFIED COST $59,546,221) | 62,043,790 |
TOTAL INVESTMENTS — 100.3% (IDENTIFIED COST $227,831,151)8 | 248,799,012 |
OTHER ASSETS AND LIABILITIES - NET — (0.3)%9 | (643,382) |
TOTAL NET ASSETS — 100% | $248,155,630 |
At November 30, 2009, the Fund had the following outstanding futures contracts:
Description | Number of Contracts | Notional Value | Expiration Date | Unrealized Appreciation/ (Depreciation) |
1ASX SPI 200 Index Short Futures | 108 | $12,676,500 | December 2009 | $(301,812) |
1OMX 30 Index Short Futures | 640 | $60,080,000 | December 2009 | $296,519 |
1SGX MSCI Singapore Index Short Futures | 191 | $12,560,160 | December 2009 | $230,987 |
1Swiss Market Index Short Futures | 306 | $19,112,760 | December 2009 | $85,303 |
1Topix Index Short Futures | 40 | $336,000,000 | December 2009 | $173,774 |
1United States Treasury Bonds 30-Year Short Futures | 18 | $2,208,938 | March 2010 | $(45,316) |
1United States Treasury Notes 2-Year Short Futures | 30 | $6,536,719 | March 2010 | $(17,877) |
1United States Treasury Notes 5-Year Short Futures | 40 | $4,690,625 | March 2010 | $(42,274) |
1AEX Index Long Futures | 45 | $2,751,300 | December 2009 | $(213,689) |
1CAC 40 Index Long Futures | 320 | $11,758,400 | December 2009 | $(863,068) |
1DAX Index Long Futures | 64 | $9,018,400 | December 2009 | $415,652 |
1FTSE 100 Index Long Futures | 320 | $16,628,800 | December 2009 | $1,003,042 |
1FTSE/MIB Index Long Futures | 35 | $3,841,600 | December 2009 | $(93,678) |
1Hang Seng Index Long Futures | 105 | $114,177,000 | December 2009 | $(646,796) |
Description | Number of Contracts | Notional Value | Expiration Date | Unrealized Appreciation/ (Depreciation) |
1IBEX 35 Index Long Futures | 45 | $5,252,850 | December 2009 | $(199,567) |
1MSCI E-Mini EAFE Index Long Futures | 19 | $1,483,900 | December 2009 | $(8,559) |
1Russell 2000 Mini Index Long Futures | 10 | $579,200 | December 2009 | $(11,483) |
1S & P 500 Index Long Futures | 33 | $9,032,100 | December 2009 | $611,193 |
1S&P/TSE 60 Index Long Futures | 57 | $7,746,300 | December 2009 | $213,628 |
NET UNREALIZED APPRECIATION ON FUTURES CONTRACTS | $585,979 |
At November 30, 2009, the Fund had the following open swap contract:
Credit Default Swap Counterparty | Goldman Sachs & Co. |
Reference Entity | Series 12 Investment Grade Index |
Buy/Sell | Sell |
Pay/Receive Fixed Rate | 1.00% |
Expiration Date | 6/20/2014 |
Implied Credit Spread at 11/30/200910 | 0.48% |
Notional Amount | $9,920,000 |
Market Value | $(32,854) |
Upfront Premiums Paid/(Received) | $(255,787) |
Unrealized Appreciation | $222,933 |
Settlement Date | Foreign Currency Units to Deliver/ Receive | In Exchange For | Unrealized Appreciation/ (Depreciation) |
Contracts Purchased: | ||
12/2/2009 | 12,810,634 Australian Dollar | $11,716,606 | $16,657 |
12/2/2009 | 7,470,781 Canadian Dollar | $7,030,132 | $48,491 |
12/2/2009 | 306,704 Canadian Dollar | $290,101 | $503 |
12/2/2009 | 32,391,246 Euro | $48,247,409 | $389,702 |
12/2/2009 | 1,560,492 Euro | $2,320,904 | $22,254 |
12/3/2009 | 343,561,484 Japanese Yen | $3,983,322 | $(8,756) |
12/2/2009 | 16,471,084 Pound Sterling | $27,365,388 | $(268,818) |
12/2/2009 | 642,290 Pound Sterling | $1,079,105 | $(22,474) |
12/2/2009 | 62,169,688 Swedish Krona | $8,892,818 | $24,810 |
12/2/2009 | 19,575,952 Swiss Francs | $19,497,960 | $(8,735) |
1/6/2010 | 7,777,485 Canadian Dollar | $7,368,532 | $628 |
1/6/2010 | 32,651,737 Euro | $48,953,443 | $69,528 |
1/6/2010 | 16,624,373 Pound Sterling | $27,270,289 | $72,604 |
Contracts Sold: | ||
12/2/2009 | 12,537,084 Australian Dollar | $11,385,678 | $(97,040) |
12/2/2009 | 273,550 Australian Dollar | $253,586 | $3,042 |
12/2/2009 | 7,777,485 Canadian Dollar | $7,368,532 | $(698) |
12/2/2009 | 33,951,738 Euro | $50,907,236 | $(73,034) |
12/2/2009 | 17,113,374 Pound Sterling | $28,077,912 | $(75,289) |
12/2/2009 | 62,067,825 Swedish Krona | $8,870,608 | $(32,408) |
12/2/2009 | 101,863 Swedish Krona | $14,810 | $198 |
12/2/2009 | 18,703,600 Swiss Francs | $18,402,716 | $(218,022) |
12/2/2009 | 872,352 Swiss Francs | $858,462 | $(10,025) |
12/3/2009 | 341,599,700 Japanese Yen | $3,770,375 | $(181,517) |
12/3/2009 | 1,961,784 Japanese Yen | $21,984 | $(711) |
1/6/2010 | 12,602,633 Australian Dollar | $11,487,300 | $(16,201) |
1/6/2010 | 333,800,000 Japanese Yen | $3,870,818 | $8,472 |
1/6/2010 | 19,110,952 Swiss Francs | $19,038,985 | $7,702 |
1/7/2010 | 60,037,061 Swedish Krona | $8,588,772 | $(24,141) |
NET UNREALIZED DEPRECIATION ON FOREIGN EXCHANGE CONTRACTS | $(373,278) |
Net Unrealized Appreciation/Depreciation on Futures Contracts, Swap Contract and Foreign Exchange Contracts is included in “Other Assets and Liabilities — Net”.
Annual Shareholder Report1 | Non-income producing security. |
2 | Denotes a restricted security that either: (a) cannot be offered for public sale without first being registered, or being able to take advantage of an exemption from registration, under the Securities Act of 1933; or (b) is subject to a contractual restriction on public sales. At November 30, 2009, these restricted securities amounted to $3,447,035, which represented 1.4% of total net assets. |
3 | Denotes a restricted security that may be resold without restriction to “qualified institutional buyers” as defined in Rule 144A under the Securities Act of 1933 and that the Fund has determined to be liquid under criteria established by the Fund's Board of Trustees (the “Trustees”). At November 30, 2009, these liquid restricted securities amounted to $2,742,044, which represented 1.1% of total net assets. |
4 | Pledged as collateral to ensure the Fund is able to satisfy the obligations of its outstanding futures contracts. |
5 | Discount rate at time of purchase. |
6 | Affiliated companies. |
7 | 7-Day net yield. |
8 | The cost of investments for federal tax purposes amounts to $231,155,224. |
9 | Assets, other than investments in securities, less liabilities. See Statement of Assets and Liabilities. |
10 | Implied credit spreads, represented in absolute terms, utilized in determining the market value of credit default swap agreements serve as an indicator of the current status of the payment/performance risk and represent the likelihood or risk of default for the credit derivative. The implied credit spread of a particular referenced entity reflects the cost of buying/selling protection and may include upfront payments required to be made to enter into the agreement. Wider credit spreads represent a deterioration of the referenced entity's credit soundness and a greater likelihood or risk of default or other credit event occurring as defined under the terms of the agreement. A credit spread identified as “Defaulted” indicates a credit event has occurred for the referenced entity or obligation. |
Note: The categories of investments are shown as a percentage of total net assets at November 30, 2009.
Various inputs are used in determining the value of the Fund's investments. These inputs are summarized in the three broad levels listed below:
Level 1 — quoted prices in active markets for identical securities
Level 2 — other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.)
Level 3 — significant unobservable inputs (including the Fund's own assumptions in determining the fair value of investments)
The inputs or methodology used for valuing securities are not an indication of the risk associated with investing in those securities.
Annual Shareholder ReportValuation Inputs | ||||
Level 1 - Quoted Prices and Investments in Mutual Funds* | Level 2 - Other Significant Observable Inputs | Level 3 - Significant Unobservable Inputs | Total | |
Equity Securities: | ||||
Domestic | $89,517,516 | $ — | $ — | $89,517,516 |
International | 3,506,834 | 525,749 | — | 4,032,583 |
Debt Securities: | ||||
Asset-Backed Securities | — | 2,158,302 | — | 2,158,302 |
Collateralized Mortgage Obligations | — | 760,884 | — | 760,884 |
Corporate Bonds | — | 17,015,162 | — | 17,015,162 |
Government Agencies | — | 2,793,165 | — | 2,793,165 |
Governments/Agencies | — | 119,142 | — | 119,142 |
Mortgage-Backed Securities | — | 1,020,081 | — | 1,020,081 |
Municipal | — | 95,291 | — | 95,291 |
U.S. Treasury | — | 11,752,470 | — | 11,752,470 |
Exchange-Traded Funds | 57,490,626 | — | — | 57,490,626 |
Mutual Funds | 62,043,790 | — | — | 62,043,790 |
TOTAL SECURITIES | $212,558,766 | $36,240,246 | $ — | $248,799,012 |
OTHER FINANCIAL INSTRUMENTS** | $460,934 | $(25,300) | $ — | $435,634 |
*Emerging Markets Fixed Income Core Fund (EMCORE) is an affiliated limited partnership offered only to registered investment companies and other accredited investors. EMCORE invests primarily in emerging markets fixed-income securities. |
** | Other financial instruments include futures contracts, swap contracts and foreign exchange contracts. |
The following acronyms are used throughout this portfolio:
ADR | — American Depositary Receipt |
MTN | — Medium Term Note |
REITs | — Real Estate Investment Trusts |
See Notes which are an integral part of the Financial Statements
Annual Shareholder ReportStatement of Assets and Liabilities
November 30, 2009
Assets: |
Total investments in securities, at value including $62,043,790 of investments in affiliated issuers (Note 5) (identified cost $227,831,151) | $248,799,012 |
Cash | 16,036 |
Income receivable | 556,520 |
Receivable for investments sold | 66,560 |
Receivable for shares sold | 206,868 |
Receivable for foreign exchange contracts | 664,591 |
Receivable for periodic payments from swap contracts | 19,565 |
Other receivables | 5,570 |
TOTAL ASSETS | 250,334,722 |
Liabilities: |
Payable for investments purchased | $80,000 |
Payable for shares redeemed | 463,868 |
Payable for foreign exchange contracts | 1,037,869 |
Payable for daily variation margin | 302,260 |
Income distribution payable | 11,841 |
Swaps, at value (premiums received $255,787) | 32,854 |
Payable for investment adviser fee (Note 5) | 749 |
Payable for transfer and dividend disbursing agent fees and expenses | 77,681 |
Payable for Directors'/Trustees' fees | 2,843 |
Payable for distribution services fee (Note 5) | 48,577 |
Payable for shareholder services fee (Note 5) | 39,794 |
Accrued expenses | 80,756 |
TOTAL LIABILITIES | 2,179,092 |
Net assets for 15,864,690 shares outstanding | $248,155,630 |
Net Assets Consist of: |
Paid-in capital | $265,377,267 |
Net unrealized appreciation of investments, futures contracts, swap contracts and translation of assets and liabilities in foreign currency | 21,408,749 |
Accumulated net realized loss on investments, futures contracts, swap contracts and foreign currency transactions | (38,573,661) |
Distributions in excess of net investment income | (56,725) |
TOTAL NET ASSETS | $248,155,630 |
Net Asset Value, Offering Price and Redemption Proceeds Per Share |
Class A Shares: |
Net asset value per share ($149,696,003 ÷ 9,563,632 shares outstanding), no par value, unlimited shares authorized | $15.65 |
Offering price per share (100/94.50 of $15.65) | $16.56 |
Redemption proceeds per share | $15.65 |
Class B Shares: |
Net asset value per share ($20,150,846 ÷ 1,290,750 shares outstanding), no par value, unlimited shares authorized | $15.61 |
Offering price per share | $15.61 |
Redemption proceeds per share (94.50/100 of $15.61) | $14.75 |
Class C Shares: |
Net asset value per share ($28,278,271 ÷ 1,818,411 shares outstanding), no par value, unlimited shares authorized | $15.55 |
Offering price per share | $15.55 |
Redemption proceeds per share (99.00/100 of $15.55) | $15.39 |
Class K Shares: |
Net asset value per share ($47,254,069 ÷ 3,014,519 shares outstanding), no par value, unlimited shares authorized | $15.68 |
Offering price per share | $15.68 |
Redemption proceeds per share | $15.68 |
Institutional Shares: |
Net asset value per share ($2,776,441 ÷ 177,378 shares outstanding), no par value, unlimited shares authorized | $15.65 |
Offering price per share | $15.65 |
Redemption proceeds per share | $15.65 |
See Notes which are an integral part of the Financial Statements
Annual Shareholder ReportStatement of Operations
Year Ended November 30, 2009
Investment Income: |
Dividends (including $2,232,461 received from affiliated issuers (Note 5) and net of foreign taxes withheld of $24,801) | $4,778,547 |
Interest | 1,707,239 |
Investment income allocated from affiliated partnership (Note 5) | $220,339 |
Expenses allocated from affiliated partnership (Note 5) | (717) |
Net income allocated from affiliated partnership | 219,622 |
TOTAL INCOME AND ALLOCATED EXPENSES | 6,705,408 |
Expenses: |
Investment adviser fee (Note 5) | 1,452,949 |
Administrative personnel and services fee (Note 5) | 288,851 |
Custodian fees | 44,745 |
Transfer and dividend disbursing agent fees and expenses — Class A Shares | 294,736 |
Transfer and dividend disbursing agent fees and expenses — Class B Shares | 53,513 |
Transfer and dividend disbursing agent fees and expenses — Class C Shares | 50,062 |
Transfer and dividend disbursing agent fees and expenses — Class K Shares | 120,038 |
Transfer and dividend disbursing agent fees and expenses — Institutional Shares | 1,414 |
Directors'/Trustees' fees | 13,278 |
Auditing fees | 26,250 |
Legal fees | 12,052 |
Portfolio accounting fees | 124,846 |
Distribution services fee — Class B Shares (Note 5) | 148,340 |
Distribution services fee — Class C Shares (Note 5) | 170,529 |
Distribution services fee — Class K Shares (Note 5) | 155,255 |
Shareholder services fee — Class A Shares (Note 5) | 324,837 |
Shareholder services fee — Class B Shares (Note 5) | 49,447 |
Shareholder services fee — Class C Shares (Note 5) | 56,289 |
Account administration fee — Class A Shares | 2,771 |
Account administration fee — Class C Shares | 363 |
Share registration costs | 64,011 |
Printing and postage | 106,740 |
Insurance premiums | 4,188 |
Miscellaneous | 5,989 |
TOTAL EXPENSES | 3,571,493 |
Waivers, Reimbursements and Expense Reduction: |
Waiver/reimbursement of investment adviser fee (Note 5) | $(287,768) |
Waiver of administrative personnel and services fee (Note 5) | (57,635) |
Waiver of distribution services fee — Class K Shares (Note 5) | (615) |
Reimbursement of transfer and dividend disbursing agent fees and expenses — Class A Shares (Note 5) | (103,291) |
Reimbursement of transfer and dividend disbursing agent fees and expenses — Class B Shares (Note 5) | (15,588) |
Reimbursement of transfer and dividend disbursing agent fees and expenses — Class C Shares (Note 5) | (6,887) |
Fees paid indirectly from directed brokerage arrangements (Note 6) | (20,630) |
TOTAL WAIVERS, REIMBURSEMENTS AND EXPENSE REDUCTION | $(492,414) |
Net expenses | $3,079,079 |
Net investment income | 3,626,329 |
Realized and Unrealized Gain (Loss) on Investments, Futures Contracts, Swap Contracts and Foreign Currency Transactions: |
Net realized loss on investments and foreign currency transactions (including realized gain of $26,870 on sales of investments in affiliated issuers) (Note 5) | (3,314,633) |
Net realized gain on futures contracts | 3,825,915 |
Net realized gain on swap contracts | 99,956 |
Net realized loss allocated from affiliated partnership (Note 5) | (63,219) |
Net change in unrealized depreciation of investments and translation of assets and liabilities in foreign currency | 37,621,136 |
Net change in unrealized appreciation of futures contracts | 257,311 |
Net change in unrealized appreciation of swap contracts | 57,201 |
Net realized and unrealized gain on investments, futures contracts, swap contracts and foreign currency transactions | 38,483,667 |
Change in net assets resulting from operations | $42,109,996 |
See Notes which are an integral part of the Financial Statements
Annual Shareholder ReportStatement of Changes in Net Assets
Year Ended November 30 | 2009 | 2008 |
Increase (Decrease) in Net Assets |
Operations: |
Net investment income | $3,626,329 | $5,553,895 |
Net realized gain (loss) on investments including allocation from affiliated partnership, futures contracts, swap contracts and foreign currency transactions | 548,019 | (29,685,004) |
Realized gain distributions from affiliated investment company shares | — | 3,037,079 |
Net change in unrealized appreciation/depreciation of investments, futures contracts, swap contracts and translation of assets and liabilities in foreign currency | 37,935,648 | (46,314,638) |
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS | 42,109,996 | (67,408,668) |
Distributions to Shareholders: |
Distributions from net investment income |
Class A Shares | (2,629,338) | (4,209,600) |
Class B Shares | (267,729) | (558,754) |
Class C Shares | (285,201) | (436,499) |
Class K Shares | (384,837) | (373,935) |
Institutional Shares | (19,202) | — |
Distributions from net realized gain on investments, futures contracts, swap contracts and foreign currency transactions |
Class A Shares | — | (18,997,795) |
Class B Shares | — | (3,970,690) |
Class C Shares | — | (2,615,505) |
Class K Shares | — | (1,610,535) |
CHANGE IN NET ASSETS RESULTING FROM DISTRIBUTIONS TO SHAREHOLDERS | (3,586,307) | (32,773,313) |
Year Ended November 30 | 2009 | 2008 |
Share Transactions: |
Proceeds from sale of shares | 69,643,362 | 61,467,368 |
Proceeds from shares issued in connection with the tax-free transfer of assets from Federated Target ETF Fund 2015 | 5,272,582 | — |
Proceeds from shares issued in connection with the tax-free transfer of assets from Federated Target ETF Fund 2025 | 8,053,895 | — |
Proceeds from shares issued in connection with the tax-free transfer of assets from Federated Target ETF Fund 2035 | 6,951,526 | — |
Net asset value of shares issued to shareholders in payment of distributions declared | 3,363,174 | 30,823,744 |
Cost of shares redeemed | (70,213,064) | (85,242,261) |
CHANGE IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS | 23,071,475 | 7,048,851 |
Change in net assets | 61,595,164 | (93,133,130) |
Net Assets: |
Beginning of period | 186,560,466 | 279,693,596 |
End of period (including distributions in excess of net investment income of $(56,725) and $(224,475), respectively) | $248,155,630 | $186,560,466 |
See Notes which are an integral part of the Financial Statements
Annual Shareholder ReportNotes to Financial Statements
November 30, 2009
Federated Stock and Bond Fund (formerly, Federated Stock and Bond Fund, Inc.) (the “Fund”), is registered under the Investment Company Act of 1940, as amended (the “Act”), as a diversified, open-end management investment company. The Fund offers five classes of shares: Class A Shares, Class B Shares, Class C Shares, Class K Shares and Institutional Shares. All shares of the Fund have equal rights with respect to voting, except on class-specific matters. The financial highlights of the Institutional Shares are presented separately. The primary investment objective of the Fund is to provide relative safety of capital with the possibility of long-term growth of capital and income. Consideration is also given to current income.
Effective June 12, 2009, the Fund began offering Institutional Shares.
On June 15, 2009, the Fund received assets from Federated Target ETF Fund 2015 (FT2015), Federated Target ETF Fund 2025 (FT2025) and Federated Target ETF Fund 2035 (FT2035) (collectively, “Acquired Funds”) as a result of a tax-free reorganization, as follows:
Shares of the Fund Issued | Acquired Funds Net Assets Received | Unrealized Appreciation1 | Net Assets of the Fund Immediately Prior to Combination | Net Assets of the Fund Immediately After Combination |
FT2015 | 374,734 | $5,272,582 | $244,522 |
FT2025 | 572,336 | 8,053,895 | 705,623 |
FT2035 | 494,024 | 6,951,526 | 499,642 |
TOTAL | 1,441,094 | $20,278,003 | $1,449,787 | $200,320,350 | $220,598,353 |
1 | Unrealized appreciation is included in the Acquired Funds Net Assets Received amount shown above. |
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. These policies are in conformity with U.S. generally accepted accounting principles (GAAP).
Investment Valuation
In calculating its net asset value (NAV), the Fund generally values investments as follows:
- Equity securities listed on an exchange or traded through a regulated market system are valued at their last reported sale price or official closing price in their principal exchange or market.
- Fixed-income securities acquired with remaining maturities greater than 60 days are fair valued using price evaluations provided by a pricing service approved by the Trustees.
- Fixed-income securities acquired with remaining maturities of 60 days or less are valued at their cost (adjusted for the accretion of any discount or amortization of any premium).
- Shares of other mutual funds are valued based upon their reported NAVs.
- Derivative contracts listed on exchanges are valued at their reported settlement or closing price.
- Over-the-counter (OTC) derivative contracts are fair valued using price evaluations provided by a pricing service approved by the Trustees.
Fair Valuation and Significant Events Procedures
The Trustees have authorized the use of pricing services to provide evaluations of the current fair value of certain investments for purposes of calculating the NAV. Factors considered by pricing services in evaluating an investment include the yields or prices of investments of comparable quality, coupon, maturity, call rights and other potential prepayments, terms and type, reported transactions, indications as to values from dealers and general market conditions. Some pricing services provide a single price evaluation reflecting the bid-side of the market for an investment (a “bid” evaluation). Other pricing services offer both bid evaluations and price evaluations indicative of a price between the prices bid and asked for the investment (a “mid” evaluation). The Fund normally uses bid evaluations for U.S. Treasury and Agency securities, mortgage-backed securities and municipal securities. The Fund normally uses mid evaluations for other types of fixed-income securities and OTC derivative contracts. In the event that market quotations and price evaluations are not available for an investment, the fair value of the investment is determined in accordance with procedures adopted by the Trustees.
The Trustees also have adopted procedures requiring an investment to be priced at its fair value whenever the Adviser determines that a significant event affecting the value of the investment has occurred between the time as of which the price of the investment would otherwise be determined and the time as of which the NAV is computed. An event is considered significant if there is both an affirmative expectation that the investment's value will change in response to the event and a reasonable basis for quantifying the resulting change in value. Examples of significant events that may occur after the close of the principal market on which a security is traded, or after the time of a price evaluation provided by a pricing service or a dealer, include:
- With respect to securities traded in foreign markets, significant trends in U.S. equity markets or in the trading of foreign securities index futures or options contracts;
- With respect to price evaluations of fixed-income securities determined before the close of regular trading on the NYSE, actions by the Federal Reserve Open Market Committee and other significant trends in U.S. fixed-income markets;
- Political or other developments affecting the economy or markets in which an issuer conducts its operations or its securities are traded; and
- Announcements concerning matters such as acquisitions, recapitalizations, litigation developments, a natural disaster affecting the issuer's operations or regulatory changes or market developments affecting the issuer's industry.
The Trustees have approved the use of a pricing service to determine the fair value of equity securities traded principally in foreign markets when the Adviser determines that there has been a significant trend in the U.S. equity markets or in index futures trading. For other significant events, the Fund may seek to obtain more current quotations or price evaluations from alternative pricing sources. If a reliable alternative pricing source is not available, the Fund will determine the fair value of the investment using another method approved by the Trustees.
Annual Shareholder ReportIt is the policy of the Fund to require the other party to a repurchase agreement to transfer to the Fund's custodian or sub-custodian eligible securities or cash with a market value (after transaction costs) at least equal to the repurchase price to be paid under the repurchase agreement. The eligible securities are transferred to accounts with the custodian or sub-custodian in which the Fund holds a “securities entitlement” and exercises “control” as those terms are defined in the Uniform Commercial Code. The Fund has established procedures for monitoring the market value of the transferred securities and requiring the transfer of additional eligible securities if necessary to equal at least the repurchase price. These procedures also allow the other party to require securities to be transferred from the account to the extent that their market value exceeds the repurchase price or in exchange for other eligible securities of equivalent market value.
With respect to agreements to repurchase U.S. government securities and cash items, the Fund treats the repurchase agreement as an investment in the underlying securities and not as an obligation of the other party to the repurchase agreement. Other repurchase agreements are treated as obligations of the other party secured by the underlying securities. Nevertheless, the insolvency of the other party or other failure to repurchase the securities may delay the disposition of the underlying securities or cause the Fund to receive less than the full repurchase price. Under the terms of the repurchase agreement, any amounts received by the Fund in excess of the repurchase price and related transaction costs must be remitted to the other party.
The Fund may enter into repurchase agreements in which eligible securities are transferred into joint trading accounts maintained by the custodian or sub-custodian for investment companies and other clients advised by the Fund's Adviser and its affiliates. The Fund will participate on a pro rata basis with the other investment companies and clients in its share of the securities transferred under such repurchase agreements and in its share of proceeds from any repurchase or other disposition of such securities.
Investment Income, Gains and Losses, Expenses and Distributions
Investment transactions are accounted for on a trade-date basis. Realized gains and losses from investment transactions are recorded on an identified-cost basis. Interest income and expenses are accrued daily. Dividend income and distributions to shareholders are recorded on the ex-dividend date. Foreign dividends are recorded on the ex-dividend date or when the Fund is informed of the ex-dividend date. Positive or negative inflation adjustments on Treasury Inflation-Protected Securities are included in interest income. Distributions of net investment income are declared and paid quarterly. Non-cash dividends included in dividend income, if any, are recorded at fair value. Investment income, realized and unrealized gains and losses and certain fund-level expenses are allocated to each class based on relative average daily net assets, except that Class A Shares, Class B Shares, Class C Shares, Class K Shares and Institutional Shares may bear distribution services fees, shareholder services fees, account administration fees and certain transfer and dividend disbursing agent fees unique to those classes. The Fund may also invest in Emerging Markets Fixed Income Core Fund (EMCORE), a portfolio of Federated Core Trust II, L.P., which is a limited partnership established under the laws of the state of Delaware. The Fund records daily its proportionate share of income, expenses, realized and unrealized gains and losses from EMCORE. Dividends are declared separately for each class. No class has preferential dividend rights; differences in per share dividend rates are generally due to differences in separate class expenses.
Annual Shareholder ReportAll premiums and discounts on fixed-income securities are amortized/accreted for financial statement purposes. Gains and losses realized on principal payment of mortgage-backed securities (paydown gains and losses) are classified as part of investment income.
Federal Taxes
It is the Fund's policy to comply with the Subchapter M provision of the Internal Revenue Code (the “Code”) and to distribute to shareholders each year substantially all of its income. Accordingly, no provision for federal income tax is necessary. As of and during the year ended November 30, 2009, the Fund did not have a liability for any uncertain tax positions. The Fund recognizes interest and penalties, if any, related to tax liabilities as income tax expense in the Statement of Operations. As of September 5, 2008, the Fund's domicile and form of organization changed from a Maryland Corporation to a Massachusetts business Trust. As of November 30, 2009, tax years 2006 through 2009 remain subject to examination by the Fund's major tax jurisdictions, which include the United States of America, the state of Maryland, the Commonwealth of Massachusetts and the Commonwealth of Pennsylvania.
The Fund may be subject to taxes imposed by governments of countries in which it invests. Such taxes are generally based on either income or gains earned or repatriated. The Fund accrues and applies such taxes to net investment income, net realized gains and net unrealized gains as income and/or gains are earned.
Other Taxes
Through September 4, 2008, as an open-end management investment company incorporated in the state of Maryland but domiciled in the Commonwealth of Pennsylvania, the Fund is subject to the Pennsylvania Franchise Tax. This franchise tax is assessed annually on the value of the Fund, as represented by average net assets for the tax year.
When-Issued and Delayed Delivery Transactions
The Fund may engage in when-issued or delayed delivery transactions. The Fund records when-issued securities on the trade date and maintains security positions such that sufficient liquid assets will be available to make payment for the securities purchased. Securities purchased on a when-issued or delayed delivery basis are marked to market daily and begin earning interest on the settlement date. Losses may occur on these transactions due to changes in market conditions or the failure of counterparties to perform under the contract.
Swap Contracts
Swap contracts involve two parties that agree to exchange the returns (or the differential in rates of return) earned or realized on particular predetermined investments, instruments, indices or other measures. The gross returns to be exchanged or “swapped” between parties are generally calculated with respect to a “notional amount” for a predetermined period of time. The Fund may enter into interest rate, total return, credit default, currency and other swap agreements. Risks may arise upon entering into swap agreements from the potential inability of the counterparties to meet the terms of their contract from unanticipated changes in the value of the swap agreement. The Fund uses credit default swaps to manage exposure to a given issuer or sector by either selling protection to increase exposure, or buying protection to reduce exposure. The “buyer” in a credit default swap is obligated to pay the “seller” a periodic stream of payments over the term of the contract provided that no event of default on an underlying reference obligation has occurred. If an event of default occurs, the seller must pay the buyer the full notional value, or the “par value”, of the reference obligation Annual Shareholder ReportThe Fund's maximum risk of loss from counterparty credit risk, either as the protection buyer or as the protection seller, is the fair value of the contract. This risk is mitigated by having a master netting arrangement between the Fund and the counterparty and by the posting of collateral by the counterparty to the Fund to cover the Fund's exposure to the counterparty.
Upfront payments received or paid by the Fund will be reflected as an asset or liability on the Statement of Assets and Liabilities. Changes in the value of swap contracts are included in swaps, at value, on the Statement of Assets and Liabilities, and periodic payments are reported as Net realized gain (loss) on swap contracts in the Statement of Operations.
Swap contracts outstanding at period end are listed after the Fund's Portfolio of Investments.
Futures Contracts
The Fund purchases and sells financial futures contracts to manage cash flows, enhance yield and to potentially reduce transaction costs. Upon entering into a financial futures contract with a broker, the Fund is required to deposit in a segregated account a specified amount of cash or U.S. government securities. Futures contracts are valued daily and unrealized gains or losses are recorded in a “variation margin” account. Daily, the Fund receives from or pays to the broker a specified amount of cash based upon changes in the variation margin account. When a contract is closed, the Fund recognizes a realized gain or loss. Futures contracts have market risks, including the risk that the change in the value of the contract may not correlate with the changes in the value of the underlying securities. There is minimal counterparty risk to the Fund since futures are exchange traded and the exchange's clearinghouse, as counterparty to all exchange traded futures, guarantees the futures against default.
Futures contracts outstanding at period end are listed after the Fund's Portfolio of Investments.
Foreign Exchange Contracts
The Fund may enter into foreign exchange contracts for the delayed delivery of securities or foreign currency exchange transactions. The Fund may enter into foreign exchange contracts to protect assets against adverse changes in foreign currency exchange rates or exchange control regulations. Purchased contracts are used to acquire exposure to foreign currencies, whereas, contracts to sell are used to hedge the Fund's securities against currency fluctuations. Risks may arise upon entering into these transactions from the potential inability Annual Shareholder ReportForeign exchange contracts outstanding at period end are listed after the Fund's Portfolio of Investments.
Foreign Currency Translation
The accounting records of the Fund are maintained in U.S. dollars. All assets and liabilities denominated in foreign currencies (FCs) are translated into U.S. dollars based on the rates of exchange of such currencies against U.S. dollars on the date of valuation. Purchases and sales of securities, income and expenses are translated at the rate of exchange quoted on the respective date that such transactions are recorded. The Fund does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss from investments.
Reported net realized foreign exchange gains or losses arise from sales of portfolio securities, sales and maturities of short-term securities, sales of FCs, currency gains or losses realized between the trade and settlement dates on securities transactions, the difference between the amounts of dividends, interest and foreign withholding taxes recorded on the Fund's books, and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in the value of assets and liabilities other than investments in securities at fiscal year end, resulting from changes in the exchange rate.
Restricted Securities
The Fund may purchase securities which are considered restricted. Restricted securities are securities that either: (a) cannot be offered for public sale without first being registered, or being able to take advantage of an exemption from registration, under the Securities Act of 1933; or (b) are subject to contractual restrictions on public sales. In some cases, when a security cannot be offered for public sale without first being registered, the issuer of the restricted security has agreed to register such securities for resale, at the issuer's expense, either upon demand by the Fund or in connection with another registered offering of the securities. Many such restricted securities may be resold in the secondary market in transactions exempt from registration. Restricted securities may be determined to be liquid under criteria established by the Trustees. The Fund will not incur any registration costs upon such resales. The Fund's restricted securities are valued at the price provided by dealers in the secondary market or, if no market prices are available, at the fair value as determined in accordance with procedures established by and under the general supervision of the Trustees.
Annual Shareholder ReportSecurity | Acquisition Date | Acquisition Cost | Market Value |
Union Central Life Ins Co, Note, 8.2%, 11/1/2026 | 3/31/1999 | $783,526 | $704,991 |
Additional Disclosure Related to Derivative Instruments
Fair Value of Derivative Instruments | ||||
Asset | Liability | |||
Statement of Assets and Liabilities Location | Fair Value | Statement of Assets and Liabilities Location | Fair Value | |
Derivatives not accounted for as hedging instruments under ASC Topic 815 | ||||
Interest rate contracts | — | $ — | Payable for daily variation margin | $105,467* |
Equity contracts | — | — | Payable for daily variation margin | (691,446)* |
Foreign exchange contracts | Receivable for foreign exchange contracts | 664,591 | Payable for foreign exchange contracts | 1,037,869 |
Credit contracts | Receivable for periodic payments from swap contracts | 19,565 | swaps, at value | 32,854 |
Total derivatives not accounted for as hedging instruments under ASC Topic 815 | $684,156 | $484,744 |
* | Includes cumulative appreciation/depreciation of futures contracts as reported in the footnotes to the Portfolio of Investments. Only the current day's variation margin is reported within the Statement of Assets and Liabilities. |
The Effect of Derivative Instruments on the Statement of Operations for the Year Ended November 30, 2009
Amount of Realized Gain or (Loss) on Derivatives Recognized in Income | ||||
Credit Default Swaps | Futures | Forward Currency Contracts | Total | |
Interest rate contracts | $ — | $(190,823) | $ — | $(190,823) |
Equity contracts | — | 4,016,738 | — | 4,016,738 |
Foreign exchange contracts | — | — | (3,212) | (3,212) |
Credit contracts | 99,956 | — | — | 99,956 |
Total | $99,956 | $3,825,915 | $(3,212) | $3,922,659 |
Change in Unrealized Appreciation or (Depreciation) on Derivatives Recognized in Income | ||||
Credit Default Swaps | Futures | Forward Currency Contracts | Total | |
Interest rate contracts | $ — | $(270,452) | $ — | $(270,452) |
Equity contracts | — | 527,763 | — | 527,763 |
Foreign exchange contracts | — | — | (373,278) | (373,278) |
Credit contracts | 57,201 | — | — | 57,201 |
Total | $57,201 | $257,311 | $(373,278) | $(58,766) |
Other
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts of assets, liabilities, expenses and revenues reported in the financial statements. Actual results could differ from those estimated.
3. shares of beneficial interest
The following tables summarize share activity:
Year Ended November 30 | 2009 | 2008 | |
Class A Shares: | Shares | Amount | Shares | Amount |
Shares sold | 1,851,463 | $25,328,003 | 1,736,691 | $28,811,635 |
Proceeds from shares issued in connection with the tax-free transfer of assets from Federated Target ETF Fund 2015 | 138,737 | 1,950,574 | — | — |
Proceeds from shares issued in connection with the tax-free transfer of assets from Federated Target ETF Fund 2025 | 192,254 | 2,703,126 | — | — |
Proceeds from shares issued in connection with the tax-free transfer of assets from Federated Target ETF Fund 2035 | 184,524 | 2,594,400 | — | — |
Shares issued to shareholders in payment of distributions declared | 182,962 | 2,452,902 | 1,246,091 | 21,865,220 |
Shares redeemed | (2,550,336) | (34,968,933) | (3,205,676) | (52,219,023) |
NET CHANGE RESULTING FROM CLASS A SHARE TRANSACTIONS | (396) | $60,072 | (222,894) | $(1,542,168) |
Year Ended November 30 | 2009 | 2008 | |
Class B Shares: | Shares | Amount | Shares | Amount |
Shares sold | 274,805 | $3,808,687 | 253,445 | $4,287,345 |
Shares issued to shareholders in payment of distributions declared | 19,052 | 250,988 | 242,313 | 4,277,122 |
Shares redeemed | (656,572) | (8,884,783) | (914,395) | (15,004,715) |
NET CHANGE RESULTING FROM CLASS B SHARE TRANSACTIONS | (362,715) | $(4,825,108) | (418,637) | $(6,440,248) |
Year Ended November 30 | 2009 | 2008 | |
Class C Shares: | Shares | Amount | Shares | Amount |
Shares sold | 1,002,107 | $13,808,180 | 643,591 | $10,471,614 |
Shares issued to shareholders in payment of distributions declared | 19,606 | 258,296 | 154,274 | 2,697,569 |
Shares redeemed | (783,732) | (10,601,445) | (552,725) | (8,864,283) |
NET CHANGE RESULTING FROM CLASS C SHARE TRANSACTIONS | 237,981 | $3,465,031 | 245,140 | $4,304,900 |
Year Ended November 30 | 2009 | 2008 | |
Class K Shares: | Shares | Amount | Shares | Amount |
Shares sold | 1,822,012 | $25,416,459 | 1,099,593 | $17,896,774 |
Proceeds from shares issued in connection with the tax-free transfer of assets from Federated Target ETF Fund 2015 | 192,931 | 2,716,507 | — | — |
Proceeds from shares issued in connection with the tax-free transfer of assets from Federated Target ETF Fund 2025 | 339,137 | 4,775,071 | — | — |
Proceeds from shares issued in connection with the tax-free transfer of assets from Federated Target ETF Fund 2035 | 269,074 | 3,788,720 | — | — |
Shares issued to shareholders in payment of distributions declared | 28,544 | 384,790 | 113,667 | 1,983,833 |
Shares redeemed | (1,080,496) | (15,220,214) | (572,618) | (9,154,240) |
NET CHANGE RESULTING FROM CLASS K SHARE TRANSACTIONS | 1,571,202 | $21,861,333 | 640,642 | $10,726,367 |
Period Ended 11/30/20091 | Year Ended 11/30/2008 | ||
Institutional Shares: | Shares | Amount | Shares | Amount |
Shares sold | 86,196 | $1,282,033 | — | $ — |
Proceeds from shares issued in connection with the tax-free transfer of assets from Federated Target ETF Fund 2015 | 43,066 | 605,501 | — | — |
Proceeds from shares issued in connection with the tax-free transfer of assets from Federated Target ETF Fund 2025 | 40,945 | 575,698 | — | — |
Proceeds from shares issued in connection with the tax-free transfer of assets from Federated Target ETF Fund 2035 | 40,426 | 568,406 | — | — |
Shares issued to shareholders in payment of distributions declared | 1,079 | 16,198 | — | — |
Shares redeemed | (34,334) | (537,689) | — | — |
NET CHANGE RESULTING FROM INSTITUTIONAL SHARE TRANSACTIONS | 177,378 | $2,510,147 | — | $ — |
NET CHANGE RESULTING FROM FUND SHARE TRANSACTIONS | 1,623,450 | $23,071,475 | 244,251 | $7,048,851 |
1 | Reflects operations from June 12, 2009, (date of initial investment) to November 30, 2009. |
The timing and character of income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP. These differences are due in part to differing treatments for foreign currency transactions, reclassification of income for defaulted securities, partnership income reclassifications, swap income reclassifications, expiration of capital loss carryforwards and discount accretion/premium amortization on debt securities.
For the year ended November 30, 2009, permanent differences identified and reclassified among the components of net assets were as follows:
Increase (Decrease) | ||
Paid-In Capital | Undistributed Net Investment Income (Loss) | Accumulated Net Realized Gain (Loss) |
$8,121,591 | $127,728 | $(8,249,319) |
Net investment income (loss), net realized gains (losses), and net assets were not affected by this reclassification.
The tax character of distributions as reported on the Statement of Changes in Net Assets for the years ended November 30, 2009 and 2008, was as follows:
Annual Shareholder Report2009 | 2008 |
Ordinary income1 | $3,586,307 | $15,440,201 |
Long-term capital gains | $ — | $17,333,112 |
1 | For tax purposes, short-term capital gain distributions are considered ordinary income distributions. |
As of November 30, 2009, the components of distributable earnings on a tax basis were as follows:
Distributions in excess of ordinary income | $(82,025) |
Net unrealized appreciation | $15,689,996 |
Capital loss carryforwards | $(32,829,608) |
The difference between book-basis and tax-basis net unrealized appreciation/depreciation is attributable in part to differing treatments for the deferral of losses on wash sales, partnership transactions, defaulted bond interest and discount accretion/premium amortization on debt securities.
At November 30, 2009, the cost of investments for federal tax purposes was $231,155,224. The net unrealized appreciation of investments for federal tax purposes excluding any unrealized appreciation/depreciation resulting from changes in foreign currency exchange rates, outstanding foreign commitments, futures contracts and swap contracts was $17,643,788. This consists of net unrealized appreciation from investments for those securities having an excess of value over cost of $20,070,842 and net unrealized depreciation from investments for those securities having an excess of cost over value of $2,427,054.
Annual Shareholder ReportExpiration Year | Expiration Amount |
2010 | $1,244,627 |
2015 | $1,453,609 |
2016 | $25,710,105 |
2017 | $4,421,267 |
As a result of the tax-free transfer of assets from Vintage Balanced Fund, Federated Target ETF Fund 2015, Federated Target ETF Fund 2025 and Federated Target ETF Fund 2035, certain capital loss carryforwards listed above may be limited.
Capital loss carryforwards of $1,127,965 expired during the year ended November 30, 2009.
5. INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Investment Adviser Fee
Federated Global Investment Management Corp. is the Fund's investment adviser (the “Adviser”). The advisory agreement between the Fund and the Adviser provides for an annual fee equal to: (a) a maximum of 0.55% of the average daily net assets of the Fund; and (b) 4.50% of the gross income of the Fund, excluding gains or losses. Subject to the terms described in the Expense Limitation note, the Adviser may voluntarily choose to waive any portion of its fee. The Adviser can modify or terminate this voluntary waiver at any time at its sole discretion. For the year ended November 30, 2009, the Adviser voluntarily waived $271,612 of its fee. For the year ended November 30, 2009, an affiliate of the adviser reimbursed $125,766 of transfer and dividend disbursing agent fees and expenses.
Certain of the Fund's assets are managed by Federated Investment Management Company (FIMCO) and Federated Equity Management Company of Pennsylvania (FEMCOPA) (the “Sub-Advisers”). Under the terms of a sub-advisory agreement between the Adviser and the Sub-Advisers, the Sub-Advisers receive an allocable portion of the Fund's adviser fee. The fee is paid by the Adviser out of its resources and is not an incremental Fund expense. For the year ended November 30, 2009, FIMCO and FEMCOPA earned fees of $197,451 and $590,549, respectively.
Administrative Fee
Federated Administrative Services (FAS), under the Administrative Services Agreement, provides the Fund with administrative personnel and services. The fee paid to FAS is based on the average aggregate daily net assets of certain Federated funds as specified below:
Annual Shareholder ReportAdministrative Fee | Average Aggregate Daily Net Assets of the Federated Funds |
0.150% | on the first $5 billion |
0.125% | on the next $5 billion |
0.100% | on the next $10 billion |
0.075% | on assets in excess of $20 billion |
The administrative fee received during any fiscal year shall be at least $150,000 per portfolio and $40,000 per each additional class of Shares. Subject to the terms described in the Expense Limitation note, FAS may voluntarily choose to waive any portion of its fee. FAS can modify or terminate this voluntary waiver at any time at its sole discretion. For the year ended November 30, 2009, the net fee paid to FAS was 0.111% of average daily net assets of the Fund. FAS waived $57,635 of its fee.
Distribution Services Fee
The Fund has adopted a Distribution Plan (the “Plan”) pursuant to Rule 12b-1 under the Act. Under the terms of the Plan, the Fund will compensate Federated Securities Corp. (FSC), the principal distributor, from the daily net assets of the Fund's Class B Shares, Class C Shares and Class K Shares to finance activities intended to result in the sale of these shares. The Plan provides that the Fund may incur distribution expenses at the following percentages of average daily net assets annually, to compensate FSC:
Share Class Name | Percentage of Average Daily Net Assets of Class |
Class B Shares | 0.75% |
Class C Shares | 0.75% |
Class K Shares | 0.50% |
Subject to the terms described in the Expense Limitation note, FSC may voluntarily choose to waive any portion of its fee. FSC can modify or terminate this voluntary waiver at any time at its sole discretion. For the year ended November 30, 2009, FSC voluntarily waived $615 of its fee. When FSC receives fees, it may pay some or all of them to financial intermediaries whose customers purchase shares. For the year ended November 30, 2009, FSC retained $8,507 of fees paid by the Fund.
Sales Charges
Front-end sales charges and contingent deferred sales charges (CDSC) do not represent expenses of the Fund. They are deducted from the proceeds of sales of Fund shares prior to investment or from redemption proceeds prior to remittance, as applicable. For the year ended November 30, 2009, FSC retained $16,165 in sales charges from the sale of Class A Shares. FSC also retained $175 of CDSC relating to redemptions of Class C Shares.
Shareholder Services Fee
The Fund may pay fees (Service Fees) up to 0.25% of the average daily net assets of the Fund's Class A Shares, Class B Shares and Class C Shares to financial intermediaries or to Federated Shareholder Services Company (FSSC) for providing services to shareholders and maintaining shareholder accounts. Financial intermediaries may include a company affiliated with management of Federated Investors, Inc. A financial intermediary affiliated with management of Federated Investors, Inc. received $1,386 of Service Fees for the year ended November 30, Annual Shareholder ReportInterfund Transactions
During the year ended November 30, 2009, the Fund engaged in purchase and sale transactions with funds that have a common investment adviser (or affiliated investment advisers), common Directors/Trustees, and/or common Officers. These purchase and sale transactions complied with Rule 17a-7 under the Act and amounted to $64,273 and $26,071, respectively.
Expense Limitation
The Adviser and its affiliates (which may include FSC, FAS and FSSC) have voluntarily agreed to waive their fees and/or reimburse expenses so that the total operating expenses (as shown in the financial highlights) paid by the Fund's Class A Shares, Class B Shares, Class C Shares, Class K Shares and Institutional Shares (after the voluntary waivers and reimbursements) will not exceed 1.25%, 2.05%, 2.05%, 1.75% and 1.00%, respectively, through the later of (the “Termination Date”): (a) January 31, 2011; or (b) the date of the Fund's next effective prospectus. While the Adviser and its affiliates currently do not anticipate terminating these arrangements prior to the Termination Date, these arrangements may only be terminated prior to the Termination Date with the agreement of the Trustees.
General
Certain Officers and Trustees of the Fund are Officers and Directors or Trustees of the above companies.
Transactions with Affiliated Companies
Affiliated holdings are mutual funds which are managed by the Adviser or an affiliate of the Adviser. The Adviser has agreed to reimburse the Fund for certain investment adviser fees as a result of transactions in other affiliated mutual funds. For the year ended November 30, 2009, the Adviser reimbursed $16,156. Transactions with affiliated companies during the year ended November 30, 2009 were as follows:
Affiliates | Balance of Shares Held 11/30/2008 | Purchases/ Additions | Sales/ Reductions | Balance of Shares Held 11/30/2009 | Value | Dividend Income/ Affiliated Investment Income |
Emerging Markets Fixed Income Core Fund | 47,274 | 250,112 | 98,280 | 199,106 | $4,786,699 | $220,339 |
Federated Inter- Continental Fund, Institutional Shares | 8,746 | 558 | 9,304 | — | — | 17,754 |
Federated Mortgage Core Portfolio | 4,526,393 | 624,629 | 4,204,088 | 946,934 | 9,677,667 | 1,296,208 |
High Yield Bond Portfolio | 835,952 | 1,909,967 | 878,537 | 1,867,382 | 11,484,402 | 803,909 |
Affiliates | Balance of Shares Held 11/30/2008 | Purchases/ Additions | Sales/ Reductions | Balance of Shares Held 11/30/2009 | Value | Dividend Income/ Affiliated Investment Income |
Prime Value Obligations Fund, Institutional Shares | 4,610,280 | 267,250,160 | 235,765,418 | 36,095,022 | 36,095,022 | 114,590 |
TOTAL OF AFFILIATED TRANSACTIONS | 10,028,645 | 270,035,426 | 240,955,627 | 39,108,444 | $62,043,790 | $2,452,800 |
The Fund directs portfolio trades to a broker that in turn pays a portion of the Fund's operating expenses. For the year ended November 30, 2009, the Fund's expenses were reduced by $20,630 under these arrangements.
Purchases and sales of investments, excluding long-term U.S. government securities and short-term obligations (and in-kind contributions), for the year ended November 30, 2009, were as follows:
Purchases | $484,030,920 |
Sales | $516,527,904 |
The Fund participates in a $100,000,000 unsecured, uncommitted revolving line of credit (LOC) agreement with PNC Bank. The LOC was made available for extraordinary or emergency purposes, primarily for financing redemption payments. Borrowings are charged interest at a rate offered to the Fund by PNC Bank at the time of the borrowing. As of November 30, 2009, there were no outstanding loans. During the year ended November 30, 2009, the Fund did not utilize the LOC.
Pursuant to an Exemptive Order issued by the Securities and Exchange Commission (SEC), the Fund, along with other funds advised by subsidiaries of Federated Investors, Inc., may participate in an interfund lending program. This program provides an alternative credit facility allowing the Fund to borrow from other participating affiliated funds. As of November 30, 2009, there were no outstanding loans. During the year ended November 30, 2009, the program was not utilized.
Since October 2003, Federated Investors, Inc. and related entities (collectively, Federated) and various Federated funds (Federated Funds) have been named as defendants in several class action lawsuits now pending in the United States District Court for the District of Maryland. The lawsuits were purportedly filed on behalf of people who purchased, owned and/or redeemed shares of Federated-sponsored mutual funds during specified periods beginning November 1, 1998. The suits are generally similar in alleging that Federated engaged in illegal and improper trading practices including market timing and late trading in concert with Annual Shareholder ReportManagement has evaluated subsequent events through January 22, 2010, the date the financial statements were issued, and determined that no events have occurred that require additional disclosure
12. FEDERAL TAX INFORMATION (UNAUDITED)
For the fiscal year ended November 30, 2009, 73.53% of total income distributions made by the Fund are qualifying dividends which may be subject to a maximum tax rate of 15%, as provided for by the Jobs and Growth Tax Relief Act of 2003. Complete information is reported in conjunction with the reporting of your distributions on Form 1099-DIV.
Of the ordinary income distributions made by the Fund during the year ended
November 30, 2009, 58.06% qualify for the dividend received deduction available to corporate shareholders.
Report of Independent Registered Public Accounting Firm
TO THE BOARD OF trusteeS AND THE SHAREHOLDERS OF FEDERATED STOCK AND BOND FUND:
We have audited the accompanying statement of assets and liabilities, including the portfolio of investments, of the Federated Stock and Bond Fund (the “Fund”), as of November 30, 2009, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years in the four-year period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. The financial highlights for the periods presented prior to December 1, 2005, were audited by other independent registered public accountants whose report thereon dated January 23, 2006, expressed an unqualified opinion on those statements.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of November 30, 2009 by correspondence with the custodian and transfer agent. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the Federated Stock and Bond Fund as of November 30, 2009, and the results of its operations for the year then ended, the changes in its net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years in the four-year period then ended, in conformity with U.S. generally accepted accounting principles.
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Boston, Massachusetts
January 22, 2010
Board of Trustees and Trust Officers
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. The following tables give information about each Board member and the senior officers of the Fund. Where required, the tables separately list Board members who are “interested persons” of the Fund (i.e., “Interested” Board members) and those who are not (i.e., “Independent” Board members). Unless otherwise noted, the address of each person listed is Federated Investors Tower, 1001 Liberty Avenue, Pittsburgh, PA 15222. The address of all Independent Board members listed is 4000 Ericsson Drive, Warrendale, PA 15086-7561; Attention: Mutual Fund Board. As of December 31, 2009, the Trust comprised one portfolio, and the Federated Fund Complex consisted of 43 investment companies (comprising 145 portfolios). Unless otherwise noted, each Officer is elected annually. Unless otherwise noted, each Board member oversees all portfolios in the Federated Fund Complex and serves for an indefinite term. The Fund's Statement of Additional Information includes additional information about Trust Trustees and is available, without charge and upon request, by calling 1-800-341-7400.
Interested Trustees Background
Name Birth Date Positions Held with Trust Date Service Began | Principal Occupation(s) for Past Five Years, Other Directorships Held and Previous Position(s) |
John F. Donahue* Birth Date: July 28, 1924 TRUSTEE Began serving: December 1956 | Principal Occupations: Director or Trustee of the Federated Fund Complex; Chairman and Director, Federated Investors, Inc.; Chairman of the Federated Fund Complex's Executive Committee. Previous Positions: Chairman of the Federated Fund Complex; Trustee, Federated Investment Management Company; Chairman and Director, Federated Investment Counseling. |
J. Christopher Donahue* Birth Date: April 11, 1949 PRESIDENT AND TRUSTEE Began serving: November 1998 | Principal Occupations: Principal Executive Officer and President of the Federated Fund Complex; Director or Trustee of some of the Funds in the Federated Fund Complex; President, Chief Executive Officer and Director, Federated Investors, Inc.; Chairman and Trustee, Federated Investment Management Company; Trustee, Federated Investment Counseling; Chairman and Director, Federated Global Investment Management Corp.; Chairman, Federated Equity Management Company of Pennsylvania and Passport Research, Ltd. (investment advisory subsidiary of Federated); Trustee, Federated Shareholder Services Company; Director, Federated Services Company. Previous Positions: President, Federated Investment Counseling; President and Chief Executive Officer, Federated Investment Management Company, Federated Global Investment Management Corp. and Passport Research, Ltd. |
* | Family relationships and reasons for “interested” status: John F. Donahue is the father of J. Christopher Donahue; both are “interested” due to their beneficial ownership of shares of Federated Investors, Inc. and the positions they hold with Federated and its subsidiaries. |
INDEPENDENT Trustees Background
Name Birth Date Positions Held with Trust Date Service Began | Principal Occupation(s) for Past Five Years, Other Directorships Held and Previous Position(s) |
Thomas G. Bigley Birth Date: February 3, 1934 TRUSTEE Began serving: November 1994 | Principal Occupation: Director or Trustee of the Federated Fund Complex. Other Directorships Held: Director, Member of Executive Committee, Children's Hospital of Pittsburgh; Director, University of Pittsburgh. Previous Position: Senior Partner, Ernst & Young LLP. |
John T. Conroy, Jr., Ph.D. Birth Date: June 23, 1937 TRUSTEE Began serving: August 1991 | Principal Occupations: Director or Trustee of the Federated Fund Complex; Chairman of the Board, Investment Properties Corporation; Partner or Trustee in private real estate ventures in Southwest Florida; Assistant Professor in Theology, Blessed Edmund Rice School for Pastoral Ministry. Previous Positions: President, Investment Properties Corporation; Senior Vice President, John R. Wood and Associates, Inc., Realtors; President, Naples Property Management, Inc. and Northgate Village Development Corporation. |
Nicholas P. Constantakis Birth Date: September 3, 1939 TRUSTEE Began serving: November 1998 | Principal Occupation: Director or Trustee of the Federated Fund Complex. Other Directorship Held: Director and Chairman of the Audit Committee, Michael Baker Corporation (architecture, engineering and construction services). Previous Position: Partner, Andersen Worldwide SC. |
John F. Cunningham Birth Date: March 5, 1943 TRUSTEE Began serving: November 1998 | Principal Occupation: Director or Trustee of the Federated Fund Complex. Other Directorships Held: Chairman, President and Chief Executive Officer, Cunningham & Co., Inc. (strategic business consulting); Trustee Associate, Boston College. Previous Positions: Director, Redgate Communications and EMC Corporation (computer storage systems); 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. |
Peter E. Madden Birth Date: March 16, 1942 TRUSTEE Began serving: August 1991 | Principal Occupation: Director or Trustee, and Chairman of the Board of Directors or Trustees, of the Federated Fund Complex. Other Directorship Held: Board of Overseers, Babson College. Previous Positions: Representative, Commonwealth of Massachusetts General Court; President, Chief Operating Officer and Director, State Street Bank and Trust Company and State Street Corporation (retired); Director, VISA USA and VISA International; Chairman and Director, Massachusetts Bankers Association; Director, Depository Trust Corporation; Director, The Boston Stock Exchange. |
Name Birth Date Positions Held with Trust Date Service Began | Principal Occupation(s) for Past Five Years, Other Directorships Held and Previous Position(s) |
Charles F. Mansfield, Jr. Birth Date: April 10, 1945 TRUSTEE Began serving: November 1998 | Principal Occupations: Director or Trustee and Chairman of the Audit Committee of the Federated Fund Complex; Management Consultant. Previous Positions: Chief Executive Officer, PBTC International Bank; Partner, Arthur Young & Company (now Ernst & Young LLP); Chief Financial Officer of Retail Banking Sector, Chase Manhattan Bank; Senior Vice President, HSBC Bank USA (formerly, Marine Midland Bank); Vice President, Citibank; Assistant Professor of Banking and Finance, Frank G. Zarb School of Business, Hofstra University; Executive Vice President DVC Group, Inc. (marketing, communications and technology). |
R. James Nicholson Birth Date: February 4, 1938 TRUSTEE Began serving: January 2008 | Principal Occupations: Director or Trustee of the Federated Fund Complex; Senior Counsel, Brownstein Hyatt Farber Schrek, P.C.; Former Secretary of the U.S. Dept. of Veterans Affairs; Former U.S. Ambassador to the Holy See; Former Chairman of the Republican National Committee. Other Directorships Held: Director, Horatio Alger Association; Director, The Daniels Fund. Previous Positions: Colonel, U.S. Army Reserve; Partner, Calkins, Kramer, Grimshaw and Harring, P.C.; General Counsel, Colorado Association of Housing and Building; Chairman and CEO, Nicholson Enterprises, Inc. (real estate holding company); Chairman and CEO, Renaissance Homes of Colorado. |
Thomas M. O'Neill Birth Date: June 14, 1951 TRUSTEE Began serving: October 2006 | Principal Occupations: Director or Trustee of the Federated Fund Complex; Sole Proprietor, Navigator Management Company (investment and strategic consulting). Other Directorships Held: Board of Overseers, Children's Hospital of Boston; Visiting Committee on Athletics, Harvard College. Previous Positions: Chief Executive Officer and President, Managing Director and Chief Investment Officer, Fleet Investment Advisors; President and Chief Executive Officer, Aeltus Investment Management, Inc.; General Partner, Hellman, Jordan Management Co., Boston, MA; Chief Investment Officer, The Putnam Companies, Boston, MA; Credit Analyst and Lending Officer, Fleet Bank; Director and Consultant, EZE Castle Software (investment order management software); Director, Midway Pacific (lumber). |
John S. Walsh Birth Date: November 28, 1957 TRUSTEE Began serving: November 1998 | Principal Occupations: Director or Trustee of the Federated Fund Complex; President and Director, Heat Wagon, Inc. (manufacturer of construction temporary heaters); President and Director, Manufacturers Products, Inc. (distributor of portable construction heaters); President, Portable Heater Parts, a division of Manufacturers Products, Inc. Previous Position: Vice President, Walsh & Kelly, Inc. |
Name Birth Date Positions Held with Trust Date Service Began | Principal Occupation(s) for Past Five Years, Other Directorships Held and Previous Position(s) |
James F. Will Birth Date: October 12, 1938 TRUSTEE Began serving: April 2006 | Principal Occupations: Director or Trustee of the Federated Fund Complex; formerly, Vice Chancellor and President, Saint Vincent College. Other Directorships Held: Trustee, Saint Vincent College; Alleghany Corporation. Previous Positions: Chairman, President and Chief Executive Officer, Armco, Inc.; President and Chief Executive Officer, Cyclops Industries; President and Chief Operating Officer, Kaiser Steel Corporation. |
Name Birth Date Address Positions Held with Trust Date Service Began | Principal Occupation(s) for Past Five Years and Previous Position(s) |
John W. McGonigle Birth Date: October 26, 1938 EXECUTIVE VICE PRESIDENT AND SECRETARY Began serving: September 1969 | Principal Occupations: Executive Vice President and Secretary of the Federated Fund Complex; Vice Chairman, Executive Vice President, Secretary and Director, Federated Investors, Inc. Previous Positions: Trustee, Federated Investment Management Company and Federated Investment Counseling; Director, Federated Global Investment Management Corp., Federated Services Company and Federated Securities Corp. |
Richard A. Novak Birth Date: December 25, 1963 TREASURER Began serving: January 2006 | Principal Occupations: Principal Financial Officer and Treasurer of the Federated Fund Complex; Senior Vice President, Federated Administrative Services; Financial and Operations Principal for Federated Securities Corp., Edgewood Services, Inc. and Southpointe Distribution Services, Inc. Previous Positions: Controller of Federated Investors, Inc.; Vice President, Finance of Federated Services Company; held various financial management positions within The Mercy Hospital of Pittsburgh; Auditor, Arthur Andersen & Co. |
Richard B. Fisher Birth Date: May 17, 1923 VICE PRESIDENT Began serving: May 1976 | Principal Occupations: Vice Chairman or Vice President of some of the Funds in the Federated Fund Complex; Vice Chairman, Federated Investors, Inc.; Chairman, Federated Securities Corp. Previous Positions: President and Director or Trustee of some of the Funds in the Federated Fund Complex; Executive Vice President, Federated Investors, Inc.; Director and Chief Executive Officer, Federated Securities Corp. |
Name Birth Date Address Positions Held with Trust Date Service Began | Principal Occupation(s) for Past Five Years and Previous Position(s) |
John B. Fisher Birth Date: May 16, 1956 VICE PRESIDENT Began serving: November 2004 | Principal Occupations: President, Director/Trustee and CEO, Federated Advisory Services Company, Federated Equity Management Company of Pennsylvania, Federated Global Investment Management Corp., Federated Investment Counseling, Federated Investment Management Company; President and CEO of Passport Research, Ltd.; President of some of the Funds in the Federated Fund Complex and Director, Federated Investors Trust Company. Previous Positions: President and Director of the Institutional Sales Division of Federated Securities Corp.; President and Director of Federated Investment Counseling; Director, Edgewood Securities Corp.; Director, Federated Services Company; Director, Federated Investors, Inc.; Chairman and Director, Southpointe Distribution Services, Inc. and President, Technology, Federated Services Company. |
Brian P. Bouda Birth Date: February 28, 1947 CHIEF COMPLIANCE OFFICER AND SENIOR VICE PRESIDENT Began serving: August 2004 | Principal Occupations: Senior Vice President and Chief Compliance Officer of the Federated Fund Complex; Vice President and Chief Compliance Officer of Federated Investors, Inc. and Chief Compliance Officer of its subsidiaries. Mr. Bouda joined Federated in 1999 and is a member of the American Bar Association and the State Bar Association of Wisconsin. |
Stephen F. Auth Birth Date: September 3, 1956 450 Lexington Avenue Suite 3700 New York, NY 10017-3943 CHIEF INVESTMENT OFFICER Began serving: November 2002 | Principal Occupations: Mr. Auth is Chief Investment Officer of this Fund and various other Funds in the Federated Fund Complex; Executive Vice President, Federated Investment Counseling, Federated Global Investment Management Corp. and Federated Equity Management Company of Pennsylvania. Previous Positions: Executive Vice President, Federated Investment Management Company, and Passport Research, Ltd. (investment advisory subsidiary of Federated); Senior Vice President, Global Portfolio Management Services Division; Senior Vice President, Federated Investment Management Company and Passport Research, Ltd.; Senior Managing Director and Portfolio Manager, Prudential Investments. |
Evaluation and Approval of Advisory Contract - May 2009
Federated Stock and Bond Fund (the “Fund”)
The Fund's Board reviewed the Fund's investment advisory and subadvisory contracts at meetings held in May 2009. The Board's decision regarding these contracts reflects the exercise of its business judgment on whether to continue the existing arrangements.
In this connection, the Federated funds' Board had previously appointed a Senior Officer, whose duties include specified responsibilities relating to the process by which advisory fees are to be charged to a Federated fund. The Senior Officer has the authority to retain consultants, experts, or staff as may be reasonably necessary to assist in the performance of his duties, reports directly to the Board, and may be terminated only with the approval of a majority of the independent members of the Board. The Senior Officer prepared and furnished to the Board an independent, written evaluation that covered topics discussed below. The Board considered that evaluation, along with other information, in deciding to approve the advisory and subadvisory contracts.
During its review of these contracts, the Board considered compensation and benefits received by the Adviser and subadviser. This included the fees received for services provided to the Fund by other entities in the Federated organization and research services received by the Adviser from brokers that execute Federated fund trades, as well as advisory fees. The Board is also familiar with and considered judicial decisions concerning allegedly excessive investment advisory fees, which have indicated that the following factors may be relevant to an Adviser's fiduciary duty with respect to its receipt of compensation from a fund: the nature and quality of the services provided by the Adviser, including the performance of the fund; the Adviser's cost of providing the services; the extent to which the Adviser may realize “economies of scale” as a fund grows larger; any indirect benefits that may accrue to the Adviser and its affiliates as a result of the Adviser's relationship with a fund; performance and expenses of comparable funds; and the extent to which the independent Board members are fully informed about all facts the Board deems relevant bearing on the Adviser's services and fees. The Board further considered management fees (including any components thereof) charged to institutional and other clients of the Adviser and subadviser for what might be viewed as like services, and the cost to the Adviser and its affiliates of supplying services pursuant to the management fee agreements, excluding any intra-corporate profit and profit margins of the Adviser and its affiliates for supplying such services. The Board was aware of these factors and was guided by them in its review of the Fund's advisory and subadvisory contracts to the extent it considered them to be appropriate and relevant, as discussed further below.
Annual Shareholder ReportThe Senior Officer reviewed reports compiled by Federated, using data supplied by independent fund ranking organizations, regarding the performance of, and fees charged by, other mutual funds, noting his view that comparisons to fund peer groups are highly important in judging the reasonableness of proposed fees.
For the one-year, three-year and five-year periods covered by the report, the Fund's performance was above the median of the relevant peer group.
The Board also received financial information about Federated, including reports on the compensation and benefits Federated derived from its relationships with the Federated funds. These reports covered not only the fees under the advisory contracts, but also fees received by Federated's subsidiaries for providing other services to the Federated funds under separate contracts (e.g., for serving as the Federated funds' administrator). The reports also discussed any indirect benefit Federated may derive from its receipt of research services from brokers who execute Federated fund trades. In addition, the Board considered the fact that, in order for a fund to be competitive in the marketplace, Federated and its affiliates frequently waived fees and/or Annual Shareholder ReportFederated furnished reports, requested by the Senior Officer, that reported revenues on a fund-by-fund basis and made estimates of the allocation of expenses on a fund-by-fund basis, using allocation methodologies specified by the Senior Officer. The Senior Officer noted that, although they may apply consistent allocation processes, the inherent difficulties in allocating costs (and the unavoidable arbitrary aspects of that exercise) and the lack of consensus on how to allocate those costs may render such allocation reports unreliable. The allocation reports were considered in the analysis by the Board but were determined to be of limited use.
The Board and the Senior Officer also reviewed a report compiled by Federated comparing profitability information for Federated to other publicly held fund management companies. In this regard, the Senior Officer noted the limited availability of such information, but nonetheless concluded that Federated's profit margins did not appear to be excessive and the Board agreed.
The Senior Officer's evaluation also discussed the notion of possible realization of “economies of scale” as a fund grows larger. The Board considered in this regard that the Adviser has made significant and long-term investments in areas that support all of the Federated funds, such as personnel and processes for the portfolio management, compliance, and risk management functions; and systems technology; and that the benefits of these efforts (as well as any economies, should they exist) were likely to be enjoyed by the fund complex as a whole. Finally, the Board also noted the absence of any applicable regulatory or industry guidelines on this subject, which (as discussed in the Senior Officer's evaluation) is compounded by the lack of any common industry practice or general pattern with respect to structuring fund advisory fees with “breakpoints” that serve to reduce the fee as the fund attains a certain size. The Senior Officer did not recommend institution of breakpoints in pricing Federated's fund advisory services at this time.
It was noted in the materials for the Board meeting that for the period covered by the report, the Fund's investment advisory fee, after waivers and expense reimbursements, if any, was above the median of the relevant peer group. The Board reviewed the fees and other expenses of the Fund with the Adviser and was satisfied that the overall expense structure of the Fund remained competitive. The Board will continue to monitor advisory fees and other expenses borne by the Fund.
The Senior Officer's evaluation noted his belief that the information and observations contained in his evaluation supported a finding that the proposed management fees are reasonable, and that Federated appeared to provide appropriate administrative services to the Fund for the fees paid. Under these Annual Shareholder ReportIn its decision to continue an existing investment advisory contract, the Board was mindful of the potential disruptions of the Fund's operations and various risks, uncertainties and other effects that could occur as a result of a decision to terminate or not renew an advisory contract. In particular, the Board recognized that many shareholders have invested in the Fund on the strength of the Adviser's industry standing and reputation and with the expectation that the Adviser will have a continuing role in providing advisory services to the Fund. Thus, the Board's approval of the advisory contract reflected the fact that it is the shareholders who have effectively selected the Adviser by virtue of having invested in the Fund.
The Board based its decision to approve the advisory and subadvisory contracts on the totality of the circumstances and relevant factors and with a view to past and future long-term considerations. Not all of the factors and considerations identified above were necessarily relevant to the Fund, nor did the Board consider any one of them to be determinative. With respect to the factors that were relevant, the Board's decision to approve the contract reflects its determination that Federated's performance and actions provided a satisfactory basis to support the decision to continue the existing arrangements.
Annual Shareholder ReportVoting Proxies on Fund Portfolio Securities
A description of the policies and procedures that the Fund uses to determine how to vote proxies, if any, relating to securities held in the Fund's portfolio is available, without charge and upon request, by calling 1-800-341-7400. A report on “Form N-PX” of how the Fund voted any such proxies during the most recent 12-month period ended June 30 is available from Federated's Web site at FederatedInvestors.com. To access this information from the “Products” section of the Web site, click on the “Prospectuses and Regulatory Reports” link under “Related Information,” then select the appropriate link opposite the name of the Fund; or select the name of the Fund and from the Fund's page, click on the “Prospectuses and Regulatory Reports” link. Form N-PX filings are also available at the SEC's Web site at www.sec.gov.
Quarterly Portfolio Schedule
The Fund files with the SEC a complete schedule of its portfolio holdings, as of the close of the first and third quarters of its fiscal year, on “Form N-Q.” These filings are available on the SEC's Web site at www.sec.gov and may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. (Call 1-800-SEC-0330 for information on the operation of the Public Reference Room.) You may also access this information from the “Products” section of Federated's Web site at FederatedInvestors.com by clicking on “Portfolio Holdings” under “Related Information,” then selecting the appropriate link opposite the name of the Fund; or select the name of the Fund and from the Fund's page, click on the “Portfolio Holdings” link.
Annual Shareholder ReportMutual funds are not bank deposits or obligations, are not guaranteed by any bank and are not insured or guaranteed by the U.S. government, the Federal Deposit Insurance Corporation, the Federal Reserve Board or any other government agency. Investment in mutual funds involves investment risk, including the possible loss of principal.
This Report is authorized for distribution to prospective investors only when preceded or accompanied by the Fund's Prospectus, which contains facts concerning its objective and policies, management fees, expenses and other information.
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Federated Stock and Bond Fund
Federated Investors Funds
4000 Ericsson Drive
Warrendale, PA 15086-7561
Contact us at FederatedInvestors.com
or call 1-800-341-7400.
Federated Securities Corp., Distributor
Cusip 313911109
Cusip 313911208
Cusip 313911307
Cusip 313911406
G01454-01 (1/10)
Federated is a registered mark of Federated Investors, Inc.
2010 © Federated Investors, Inc.
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Federated Stock and Bond Fund
ANNUAL SHAREHOLDER REPORT
November 30, 2009
Institutional Shares
FINANCIAL HIGHLIGHTS
SHAREHOLDER EXPENSE EXAMPLE
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
PORTFOLIO OF INVESTMENTS SUMMARY TABLES
PORTFOLIO OF INVESTMENTS
STATEMENT OF ASSETS AND LIABILITIES
STATEMENT OF OPERATIONS
STATEMENT OF CHANGES IN NET ASSETS
NOTES TO FINANCIAL STATEMENTS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
BOARD OF TRUSTEES AND TRUST OFFICERS
EVALUATION AND APPROVAL OF ADVISORY CONTRACT
VOTING PROXIES ON FUND PORTFOLIO SECURITIES
QUARTERLY PORTFOLIO SCHEDULE
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Financial Highlights - Institutional Shares
(For a Share Outstanding Throughout the Period)
Period Ended November 30 | 20091 |
Net Asset Value, Beginning of Period | $14.06 |
Income From Investment Operations: |
Net investment income | 0.13 |
Net realized and unrealized gain on investments, futures contracts, swap contracts and foreign currency transactions | 1.56 |
TOTAL FROM INVESTMENT OPERATIONS | 1.69 |
Less Distributions: |
Distributions from net investment income | (0.10) |
Net Asset Value, End of Period | $15.65 |
Total Return2 | 12.07% |
Ratios to Average Net Assets: |
Net expenses | 1.00%3,4 |
Net investment income | 1.91%4 |
Expense waiver/reimbursement5 | 0.13%4 |
Supplemental Data: |
Net assets, end of period (000 omitted) | $2,776 |
Portfolio turnover | 254%6 |
1 | Reflects operations for the period from June 12, 2009 (date of initial investment) to November 30, 2009. |
2 | Based on net asset value, which does not reflect the sales charge, redemption fee or contingent deferred sales charge, if applicable. Total returns for periods of less than one year are not annualized. |
3 | The net expense ratio is calculated without reduction for expense offset arrangements. The net expense ratio is 1.00% for the period ended November 30, 2009, after taking into account this expense reduction. |
4 | Computed on an annualized basis. |
5 | This expense decrease is reflected in both the net expense and the net investment income ratios shown above. |
6 | Portfolio turnover is calculated at the Fund level. Percentage indicated was calculated for the year ended November 30, 2009. |
See Notes which are an integral part of the Financial Statements
Annual Shareholder ReportShareholder Expense Example (unaudited)
As a shareholder of the Fund, you incur ongoing costs, including management fees and to the extent applicable, distribution (12b-1) fees and/or shareholder services fees and other Fund expenses. This Example is intended to help you to understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. It is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from June 1, 20091 to November 30, 2009.
The first section of the table below provides information about actual account values and actual expenses. You may use the information in this section, together with the amount you invested, to estimate the expenses that you incurred over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first section under the heading entitled “Expenses Paid During Period” to estimate the expenses attributable to your investment during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second section of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. Thus, you should not use the hypothetical account values and expenses to estimate the actual ending account balance or your expenses for the period. Rather, these figures are required to be provided to enable you to compare the ongoing costs of investing in the Fund with other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Annual Shareholder ReportBeginning Account Value 6/1/2009 | Ending Account Value 11/30/2009 | Expenses Paid During Period1 |
Actual | $1,000 | $1,120.70 | $5.00 |
Hypothetical (assuming a 5% return before expenses) | $1,000 | $1,020.05 | $5.06 |
1 | “Actual” expense information for the Fund's Institutional Shares is for the period from June 12, 2009 (date of initial investment) to November 30, 2009. Actual expenses are equal to the annualized net expense ratio of 1.00%, multiplied by 172/365 (to reflect the period from initial investment to November 30, 2009). “Hypothetical” expense information is presented on the basis of the full one-half year period to enable comparison to other funds. It is based on assuming the same net expense ratio and average account value over the period, but is multiplied by 183/365 (to reflect the full half-year-period). |
Performance data quoted represents past performance which is no guarantee of future results. Investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Mutual fund performance changes over time and current performance may be lower or higher than what is stated. For current to the most recent month-end performance and after-tax returns, visit FederatedInvestors.com or call 1-800-341-7400.
Management's Discussion of Fund
Performance (unaudited)
For the fiscal year ended November 30, 2009, the Fund's Institutional Shares produced a total return of 12.07% at net asset value.1 That compares with a 23.09% return for the Fund's Blended Index (as described below) and 26.15% for Morningstar's Moderate Allocation Funds Category Average.2 The Fund's Blended Index is comprised of 50% of the return of the Russell 3000 Index,3 10% of the return of the MSCI All Country World ex-U.S. Index4 and 40% of the return of the Barclays Capital U.S. Universal Index5 which had total returns of 27.17%, 46.44% and 14.18%, respectively, during the reporting period. The Fund's total return for the fiscal year reflected actual cash flows, transaction costs and other expenses which were not reflected in the total return data of the indices.
1 | Reflects the reporting period of June 12, 2009 (date of initial public investment) through November 30, 2009 |
2 | Morningstar's Moderate Allocation is the category of funds which seek to provide both capital appreciation and income by investing in stocks, bonds and cash. These funds typically invest between 50% to 70% of assets in equities and the remainder in fixed income and cash. Investments cannot be made in an average. |
3 | The Russell 3000 Index measures the performance of the largest 3,000 U.S. companies representing approximately 98% of the investable U.S. equity market. The Russell 3000 Index is constructed to provide a comprehensive, unbiased, and stable barometer of the broad market and is completely reconstituted annually to ensure new and growing equities are reflected. |
4 | The MSCI ACWI (All Country World Index) ex-U.S. Index is a free float-adjusted, market capitalization-weighted index that is designed to measure the equity market performance of developed and emerging markets. As of June 2009 the MSCI ACWI consisted of 44 country indices comprising 22 developed and 22 emerging market country indices. |
5 | The Barclays Capital U.S. Universal Index represents the union of the U.S. Aggregate Index, U.S. Corporate High-Yield, Investment Grade 144A Index, Eurodollar Index, U.S. Emerging Markets Index, and the non-ERISA eligible portion of the CMBS Index. The index covers USD- denominated, taxable bonds that are rated either investment-grade or below investment-grade. |
Domestic Equities
Domestic equities, as measured by the S&P 500 Index6 (S&P 500), experienced substantial volatility throughout the reporting period. The fiscal year began with markets reeling from the fall-out caused by the failure of Lehman Brothers. With the credit crisis, the S&P 500 moved sharply lower, losing nearly 25% between the start of the fiscal year and the market bottom on March 9, 2009. In response to frozen credit markets, bank failures and rapidly deteriorating macroeconomic fundamentals, the Federal Reserve cut interest rates to a range between 0% and 0.25% at the December 16, 2008, Federal Open Market Committee meeting before eventually implementing a program of quantitative easing. Likewise, Congress supported the banking sector via the Troubled Asset Relief Program (TARP) while also passing a $787 billion stimulus plan. These measures, combined with aggressive cost cutting by corporations, led to better-than-expected earnings results in both the second and third quarters of 2009. As a result, the S&P 500 rallied 62% off of the March 9, 2009 low to finish the fiscal year up 22.25% (up 25.39% on a total return basis). Eight out of 10 sectors posted positive returns. The three best-performing S&P 500 sectors were: Information Technology, 54.0%; Materials, 42.1%; and Consumer Discretionary, 39.8%. The three lagging sectors were: Telecommunication Services, (1.0)%; Utilities, (1.0)%; and Energy, 7.81%.
6 | The S&P 500 Index is an unmanaged capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. The index is unmanaged and, unlike the Fund, is not affected by cash flows. Investments cannot be made directly in an index. |
World markets followed a similar path as the United States. Equity markets experienced severe weakness in the opening months of the fiscal year, but rebounded as world governments enacted a wide range of economic bailout measures including the guaranteeing of bank deposits and money market investments, direct investment into financial institutions, nationalization of failing banks, direct purchases of commercial paper and economic stimulus plans. Several countries, including Iceland, Ukraine, Hungary, Belarus and Pakistan, bordered on collapse and required emergency International Monetary Fund bailout packages. As equity markets recovered, emerging markets outperformed significantly. With substantially less exposure to toxic assets, relatively benign debt levels and better demographic and macroeconomic fundamentals, investors poured into emerging markets. As such, the MSCI Emerging Markets Index8 finished the fiscal year with a return of 85.12%. Foreign currencies appreciated against the U.S. dollar in response to aggressive monetary policy and record fiscal deficits. The euro appreciated 18.3%, the sterling rose 6.9% and the yen gained 10.5% against the U.S. dollar during the reporting period.
Interest Rates
Interest rates were mixed over the reporting period, as shorter maturity yields fell while longer maturity yields rose. Long-term rates rose on increasing worries about a pickup of inflation on aggressive monetary easing. Spread bonds, on the other hand, performed well on expectations that credit-related bonds would do well in a growing economic environment.
The two-year Treasury yield fell 0.31% over the past 12 months and finished the reporting period at 0.66%, while the 30-year Treasury yield rose 0.76% in the period to finish at 4.19%. The yield to worst of the Barclay's Capital U.S. Aggregate Bond Index9 stood at 3.40% on November 30, 2009, compared to 4.96% 12 months earlier.
7 | International investing involves special risks including currency risk, increased volatility of foreign securities, political risks and differences in auditing and other financial standards. |
8 | The MSCI Emerging Markets Index is a free float-adjusted market capitalization index that is designed to measure equity market performance of emerging markets. As of June 2009 the MSCI Emerging Markets Index consisted of the following 22 emerging market country indices: Brazil, Chile, China, Colombia, Czech Republic, Egypt, Hungary, India, Indonesia, Israel, Korea, Malaysia, Mexico, Morocco, Peru, Philippines, Poland, Russia, South Africa, Taiwan, Thailand and Turkey. |
9 | The Barclay's Capital U.S. Aggregate Bond Index is an unmanaged index composed of securities from the Barclay's Capital Government/Corporate Bond Index, Mortgage-Backed Securities Index and the Asset-Backed Securities Index. Total return comprises price appreciation/depreciation and income as a percentage of the original investment. Investments cannot be made directly in an index. |
Asset Allocation Strategy Performance
For the reporting period, overall asset allocation strategy added to performance, primarily due to the Fund's successful domestic equity industry group weighting decisions. Likewise, the Fund also benefitted from global developed country allocation decisions. The main detractors from performance included the Fund's market capitalization allocation and the stock-versus-bond allocation. Despite strong absolute returns, U.S. small caps underperformed large caps for the fiscal year, thus detracting from relative performance. Additionally, markets faced severe shifts in macroeconomic fundamentals, and the Fund overweighted stocks too early in the cycle. The Fund was overweight equities at the beginning of the year, which negatively impacted performance as markets continued to sell-off before bottoming on March 9, 2009.
Domestic Equities Performance
In the equity portion of the Fund, a focus on high quality in a strong low quality rally was the primary driver of the Fund's relative underperformance.
The Fund was most negatively impacted from stock selection in Consumer Discretionary, Health Care and Consumer Staples. The stocks that were the largest detractors from performance were:
●Cephalon Inc., a biopharmaceutical company which engages in the discovery, development, and commercialization of products for the central nervous system, inflammatory diseases, pain, and oncology therapeutic areas. In general, health care stocks underperformed during the fiscal year as investors preferred more cyclical names during the stock market recovery. Uncertainties surrounding possible health care reform in the United States also affected the sector. Cephalon, Inc. was down 25.60% for the period.
●JetBlue Airways Corp., which provides passenger air transportation services in the United States. The stock was negatively impacted by a significant slowdown in consumer spending due to the credit and housing crises. For the reporting period, the stock lost 52.17%.
●Lowe's Companies, Inc., which, together with its subsidiaries, operates as a home improvement retailer in the United States and Canada. The firm was hurt by the precipitous decline in the real estate market as well as a sharp slowdown in consumer spending. The stock was down 24.96% over the reporting period.
On the positive side, the Fund benefitted from stock selection decisions in Energy, Materials and Financials. The stocks that aided relative performance included:
●The Goldman Sachs Group, Inc., a bank holding company, specializing in investment banking, trading and principal investments, asset management and securities services. The firm benefitted from being the first U.S. bank to repay TARP loans and was up 117.43% for the period.
● Annual Shareholder Report●EMC Corp/Massachusetts, which provides enterprise storage systems, software, networks and services. The stock rallied as cyclical sectors, like information technology, led the recovery off of the March 9th lows. The stock was up 59.22% for the period.
Fixed-Income Performance10
The bond portion of the Fund outperformed its benchmark by a significant margin during the 12-month reporting period due mostly to sector management. Currency management had a very slight benefit. Duration11 management detracted from performance, and security selection in total had a slight negative impact on performance. Sector calls helped performance due to a considerable overweight in residential Mortgage Backed Securities, Commercial Mortgage-Backed Securities (CMBS), emerging markets and corporates (both investment-grade & high-yield corporates). Security selection was a significant positive for performance in the CMBS sector while the Federated Emerging Market Core Fund, The High Yield Bond Fund, and Federated Mortgage-Backed Securities Fund portfolios were a drag on performance. Security selection detracted from relative performance in the investment-grade sector. Union Central Life, Regional Diversified, Pacific Life and the Camp Pendelton bonds each underperformed in the past year, while the Textron Trust Preferred Securities, Prologis, AXA Financial and Enterprise Rent-A-Car were good performers, offsetting some of the drag from overall security selection.
10 | Bond prices are sensitive to changes in interest rates and a rise in interest rates can cause a decline in their prices. |
11 | Duration is a measure of a security's price sensitivity to changes in interest rates. Securities with longer durations are more sensitive to changes in interest rates than securities of shorter duration. |
GROWTH OF A $10,000 INVESTMENT - INSTITUTIONAL SHARES
The Fund's Institutional Shares commenced operations on June 12, 2009. The Fund offers four other classes of shares: Class A Shares, Class B Shares, Class C Shares and Class K Shares. For the period prior to the commencement of operations of the Institutional Shares, the performance information shown is for the Fund's Class A Shares, adjusted to reflect the expenses of Institutional Shares. The graph below illustrates the hypothetical investment of $10,0001 in Federated Stock and Bond Fund (Institutional Shares) (the “Fund”) from October 31, 1999 to November 30, 2009, compared to a blend of indexes comprised of 50% of the Russell 3000 Index (RU3000),2 10% of the MSCI All Country World ex US Index (MSCI ACWI ex US)2 and 40% of the Barclays Capital U.S. Universal Index (BCUSU)2 (the “Blended Index”),2 the Standard and Poor's 500 Index (S&P 500)2, the Barclays Capital Aggregate Bond Index (BCAB)2 and the Lipper Balanced Funds Average (LBFA).3
Average Annual Total Returns for the Period Ended 11/30/2009 |
1 Year | 21.80% |
5 Years | 3.08% |
10 Years | 3.11% |
![](https://capedge.com/proxy/N-CSRA/0001193125-10-157239/g81114img439f3d281.jpg)
Performance data quoted represents past performance which is no guarantee of future results. Investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Mutual fund performance changes over time and current performance may be lower or higher than what is stated. For current to the most recent month-end performance and after-tax returns, visit FederatedInvestors.com or call 1-800-341-7400. Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Mutual funds are not obligations of or guaranteed by any bank and are not federally insured.
Annual Shareholder Report1 | Represents a hypothetical investment of $10,000 in the Fund. The Fund's performance assumes the reinvestment of all dividends and distributions. The Blended Index, S&P 500, BCAB and LBFA have been adjusted to reflect reinvestment of dividends on securities in the indexes and the average. |
2 | The Blended Index is a custom blended index comprised of the 50% of the RU3000, 10% of the MSCI ACWI ex US and 40% of the BCUSU. The RU3000 measures the performance of the largest 3,000 U.S. companies representing approximately 98% of the investable U.S. equity market. The Russell 3000 Index is constructed to provide a comprehensive, unbiased and stable barometer of the broad market and is completely reconstituted annually to ensure new and growing equities are reflected. The MSCI ACWI ex US is a free float-adjusted, market capitalization-weighted index that is designed to measure the equity market performance of developed and emerging markets. As of June 2009, the MSCI ACWI consisted of 44 country indices comprising 22 developed and 22 emerging market country indices. The BCUSU represents the union of the U.S. Aggregate Index, U.S. Corporate High-Yield, Investment Grade 144A Index, Eurodollar Index, U.S. Emerging Markets Index and the non-ERISA eligible portion of the CMBS Index. The index covers USD-denominated, taxable bonds that are rated either investment-grade or below investment-grade. The S&P 500 is an unmanaged, capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. The BCAB is an unmanaged index composed of securities from the Barclay's Capital Government/Corporate Bond Index, Mortgage-Backed Securities Index and the Asset-Backed Securities Index. The RU3000, MSCI ACWI ex US, BCUSU, S&P 500 and BCAB are not adjusted to reflect sales charges, expenses or other fees that the Securities and Exchange Commission requires to be reflected in the Fund's performance. The indexes are unmanaged and, unlike the Fund, are not affected by cash flows. It is not possible to invest directly in an index. |
3 | The LBFA represents the average of the total returns reported by all of the mutual funds designated by Lipper, Inc. as falling into the category indicated, and is not adjusted to reflect any sales charges. However, these total returns are reported net of expenses or other fees that the SEC requires to be reflected in the Fund's performance. |
Portfolio of Investments Summary Tables (unaudited)
At November 30, 2009, the Fund's portfolio composition1 was as follows:
Portfolio Composition | Percentage of Total Net Assets2 |
Domestic Equity Securities | 53.7% |
Corporate Debt Securities | 11.8% |
International Equity Securities | 7.2% |
U.S. Treasury and Agency Securities | 5.8% |
Mortgage-Backed Securities3 | 4.8% |
Foreign Debt Securities | 1.6% |
Asset-Backed Securities | 0.9% |
Municipal Security4 | 0.0% |
Derivative Contracts5 | 0.2% |
Cash Equivalents6 | 14.8% |
Other Assets and Liabilities — Net7 | (0.8)% |
TOTAL | 100% |
1 | See the Fund's Prospectus and Statement of Additional Information for a description of these security types. |
2 | As of the date specified above, the Fund owned shares of one or more affiliated investment companies. For purposes of this table, the affiliated investment company (other than an affiliated money market mutual fund) is not treated as a single portfolio security, but rather the Fund is treated as owning a pro rata portion of each security and each other asset and liability owned by the affiliated investment company. Accordingly, the percentages of total net assets shown in the table will differ from those presented on the Portfolio of Investments. |
3 | For purposes of this table, Mortgage-Backed Securities include mortgage-backed securities guaranteed by Government Sponsored Entities and adjustable rate mortgage-backed securities. |
4 | Represents less than 0.1%. |
5 | Based upon net unrealized appreciation (depreciation) or value of the derivative contracts as applicable. Derivative contracts may consist of futures, forwards, options and swaps. The impact of a derivative contract on the Fund's performance may be larger than its unrealized appreciation (depreciation) or value may indicate. In many cases, the notional value or amount of a derivative contract may provide a better indication of the contract's significance to the portfolio. More complete information regarding the Fund's direct investments in derivative contracts, including unrealized appreciation (depreciation), value and notional values or amounts of such contracts, can be found in the table at the end of the Portfolio of Investments included in this report. |
6 | Cash Equivalents include any investments in money market mutual funds and/or overnight repurchase agreements. |
7 | Assets, other than investments in securities and derivative contracts, less liabilities. See Statement of Assets and Liabilities. |
At November 30, 2009, the Fund's sector composition8 was as follows:
Sector Composition of Equity Holdings | Percentage of Equity Securities |
Information Technology | 21.8% |
Financials | 15.0% |
Sector Composition of Equity Holdings | Percentage of Equity Securities |
Consumer Staples | 14.7% |
Industrials | 11.3% |
Energy | 8.7% |
Materials | 8.7% |
Health Care | 8.6% |
Consumer Discretionary | 5.9% |
Utilities | 5.3% |
TOTAL | 100.0% |
8 | Sector classifications are based upon, and individual portfolio securities are assigned to, the classifications of the Global Industry Classification Standard (GICS) except that the Adviser assigns a classification to securities not classified by the GICS and to securities for which the Adviser does not have access to the classification made by the GICS. |
Portfolio of Investments
November 30, 2009
Shares or Principal Amount | Value in U.S. Dollars |
Common Stocks – 37.7% |
Consumer Discretionary – 2.2% |
3,392 | 1 | Apollo Group, Inc., Class A | 193,581 |
8,870 | Block (H&R), Inc. | 180,061 |
11,585 | Carnival Corp. | 371,068 |
11,500 | 1 | Coach, Inc. | 399,625 |
9,400 | Dollar General Corp. | 216,200 |
10,440 | 1 | Gymboree Corp. | 416,765 |
7,659 | International Game Technology | 144,679 |
1,000 | 1 | Lear Corp. | 62,990 |
6,760 | Marriott International, Inc., Class A | 173,866 |
33,383 | McDonald's Corp. | 2,111,475 |
19,298 | 1 | Starbucks Corp. | 422,626 |
5,084 | Starwood Hotels & Resorts | 162,790 |
5,402 | Target Corp. | 251,517 |
12,393 | Yum! Brands, Inc. | 437,101 |
TOTAL | 5,544,344 |
Consumer Staples – 5.6% |
35,420 | Altria Group, Inc. | 666,250 |
10,956 | Archer-Daniels-Midland Co. | 337,554 |
15,221 | Avon Products, Inc. | 521,319 |
3,502 | Colgate-Palmolive Co. | 294,833 |
7,694 | ConAgra Foods, Inc. | 170,730 |
13,130 | General Mills, Inc. | 892,840 |
5,449 | Heinz (H.J.) Co. | 231,310 |
14,819 | Kellogg Co. | 779,183 |
2,846 | Kimberly-Clark Corp. | 187,751 |
25,378 | Kraft Foods, Inc., Class A | 674,547 |
17,337 | Kroger Co. | 394,243 |
2,845 | Lorillard, Inc. | 221,654 |
2,674 | Molson Coors Brewing Co., Class B | 120,892 |
11,114 | Nestle SA | 525,749 |
26,917 | PepsiCo, Inc. | 1,674,776 |
32,612 | Philip Morris International Inc. | 1,568,311 |
23,712 | Procter & Gamble Co. | 1,478,443 |
2,925 | Reynolds American, Inc. | 146,133 |
Shares or Principal Amount | Value in U.S. Dollars |
39,758 | The Coca-Cola Co. | 2,274,158 |
11,540 | Wal-Mart Stores, Inc. | 629,507 |
TOTAL | 13,790,183 |
Energy – 3.3% |
2,429 | Anadarko Petroleum Corp. | 144,598 |
4,948 | Apache Corp. | 471,446 |
3,100 | CONSOL Energy, Inc. | 142,352 |
3,250 | Chesapeake Energy Corp. | 77,740 |
22,479 | Chevron Corp. | 1,754,261 |
7,483 | ConocoPhillips | 387,395 |
2,216 | Devon Energy Corp. | 149,248 |
1,263 | EOG Resources, Inc. | 109,237 |
32,496 | Exxon Mobil Corp. | 2,439,475 |
4,529 | Halliburton Co. | 132,971 |
1,464 | Hess Corp. | 84,853 |
3,540 | Marathon Oil Corp. | 115,475 |
27 | 1 | NRG Energy, Inc. | 646 |
2,080 | 1 | National-Oilwell, Inc. | 89,482 |
873 | Noble Energy, Inc. | 56,963 |
4,017 | Occidental Petroleum Corp. | 324,533 |
13,900 | Schlumberger Ltd. | 888,071 |
1,692 | 1 | Southwestern Energy Co. | 74,380 |
3,207 | Spectra Energy Corp. | 62,248 |
2,949 | 1 | Transocean Ltd. | 251,815 |
9,195 | XTO Energy, Inc. | 390,236 |
TOTAL | 8,147,425 |
Financials – 5.6% |
2,845 | AON Corp. | 110,187 |
6,500 | Ace, Ltd. | 316,615 |
4,900 | Aflac, Inc. | 225,547 |
5,571 | Allstate Corp. | 158,272 |
11,712 | American Express Co. | 489,913 |
1,238 | Avalonbay Communities, Inc. | 89,433 |
1,136 | BB&T Corp. | 28,286 |
111,252 | Bank of America Corp. | 1,763,344 |
2,137 | Boston Properties, Inc. | 143,136 |
663 | CME Group, Inc. | 217,616 |
Shares or Principal Amount | Value in U.S. Dollars |
4,381 | Capital One Financial Corp. | 168,055 |
3,583 | Chubb Corp. | 179,652 |
134,849 | Citigroup, Inc. | 554,229 |
4,231 | Equity Residential Properties Trust | 136,280 |
1,341 | Fifth Third Bancorp | 13,517 |
1,486 | Franklin Resources, Inc. | 160,533 |
8,155 | Goldman Sachs Group, Inc. | 1,383,577 |
4,471 | HCP Inc. | 139,942 |
3,974 | Hartford Financial Services Group, Inc. | 97,204 |
1,832 | Health Care REIT, Inc. | 81,616 |
9,478 | Host Hotels & Resorts, Inc. | 99,709 |
834 | Hudson City Bancorp, Inc. | 11,084 |
55,088 | J.P. Morgan Chase & Co. | 2,340,689 |
3,208 | Lincoln National Corp. | 73,495 |
3,699 | Loews Corp. | 131,019 |
5,472 | Marsh & McLennan Cos., Inc. | 123,394 |
8,744 | MetLife, Inc. | 298,957 |
13,754 | Morgan Stanley | 434,351 |
789 | PNC Financial Services Group | 44,981 |
3,343 | Principal Financial Group | 84,879 |
6,976 | Progressive Corp. Ohio | 116,988 |
6,750 | Prologis Trust | 88,290 |
4,722 | Prudential Financial | 235,392 |
2,086 | Public Storage | 166,004 |
2,073 | Regions Financial Corp. | 12,148 |
9,599 | Schwab (Charles) Corp. | 175,950 |
4,339 | Simon Property Group, Inc. | 315,272 |
4,937 | State Street Corp. | 203,898 |
867 | SunTrust Banks, Inc. | 20,487 |
8,700 | T. Rowe Price Group, Inc. | 425,691 |
12,010 | The Bank of New York Mellon Corp. | 319,946 |
15,372 | The Travelers Cos, Inc. | 805,339 |
19,306 | U.S. Bancorp | 465,854 |
3,434 | Unum Group | 65,383 |
2,390 | Ventas, Inc. | 102,603 |
2,383 | Vornado Realty Trust | 155,991 |
Shares or Principal Amount | Value in U.S. Dollars |
8,168 | Wells Fargo & Co. | 229,031 |
TOTAL | 14,003,779 |
Health Care – 3.2% |
17,094 | Abbott Laboratories | 931,452 |
3,651 | Aetna, Inc. | 106,281 |
3,009 | 1 | Amgen, Inc. | 169,557 |
819 | Bard (C.R.), Inc. | 67,330 |
11,086 | Baxter International, Inc. | 604,741 |
2,002 | Becton, Dickinson & Co. | 149,750 |
12,547 | 1 | Boston Scientific Corp. | 105,018 |
5,753 | Bristol-Myers Squibb Co. | 145,608 |
2,292 | CIGNA Corp. | 73,527 |
2,993 | Cardinal Health, Inc. | 96,464 |
1,352 | 1 | Celgene Corp. | 74,968 |
4,600 | 1 | Cephalon, Inc. | 252,770 |
2,226 | 1 | Express Scripts, Inc., Class A | 190,991 |
2,623 | 1 | Gilead Sciences, Inc. | 120,789 |
1,455 | 1 | Humana, Inc. | 60,397 |
319 | 1 | Intuitive Surgical, Inc. | 89,492 |
16,378 | Johnson & Johnson | 1,029,194 |
904 | 1 | Laboratory Corp. of America Holdings | 65,956 |
2,922 | Lilly (Eli) & Co. | 107,325 |
2,208 | McKesson HBOC, Inc. | 136,940 |
3,903 | 1 | Medco Health Solutions, Inc. | 246,514 |
9,232 | Medtronic, Inc. | 391,806 |
18,731 | Merck & Co., Inc. | 678,234 |
52,157 | Pfizer, Inc. | 947,693 |
1,311 | Quest Diagnostics, Inc. | 75,959 |
2,886 | 1 | St. Jude Medical, Inc. | 105,945 |
2,341 | Stryker Corp. | 117,986 |
1,196 | 1 | Thermo Fisher Scientific Inc. | 56,487 |
16,935 | UnitedHealth Group, Inc. | 485,527 |
3,944 | 1 | Wellpoint, Inc. | 213,094 |
1,809 | 1 | Zimmer Holdings, Inc. | 107,039 |
TOTAL | 8,004,834 |
Industrials – 4.3% |
9,230 | 3M Co. | 714,771 |
Shares or Principal Amount | Value in U.S. Dollars |
682 | Avery Dennison Corp. | 25,616 |
5,967 | Boeing Co. | 312,730 |
1,594 | Burlington Northern Santa Fe | 156,690 |
1,021 | C.H. Robinson Worldwide, Inc. | 56,911 |
2,385 | CSX Corp. | 113,240 |
9,313 | Caterpillar, Inc. | 543,786 |
784 | Cintas Corp. | 22,023 |
1,628 | Cummins, Inc. | 73,097 |
2,135 | Danaher Corp. | 151,414 |
3,448 | Deere & Co. | 184,503 |
1,250 | Donnelley (R.R.) & Sons Co. | 25,725 |
314 | Dun & Bradstreet Corp. | 24,677 |
1,343 | Eaton Corp. | 85,818 |
6,175 | Emerson Electric Co. | 255,707 |
5,468 | FedEx Corp. | 461,773 |
7,399 | Fluor Corp. | 314,310 |
3,175 | General Dynamics Corp. | 209,233 |
115,521 | General Electric Co. | 1,850,646 |
6,197 | Honeywell International, Inc. | 238,399 |
1,504 | ITT Corp. | 77,787 |
3,172 | Illinois Tool Works, Inc. | 154,286 |
1,095 | 1 | Iron Mountain, Inc. | 26,280 |
2,674 | Lockheed Martin Corp. | 206,513 |
15,283 | Norfolk Southern Corp. | 785,546 |
2,619 | Northrop Grumman Corp. | 143,521 |
3,011 | PACCAR, Inc. | 111,648 |
1,280 | Pitney Bowes, Inc. | 29,491 |
1,165 | Precision Castparts Corp. | 120,787 |
15,253 | Raytheon Co. | 785,987 |
1,962 | Republic Services, Inc. | 55,328 |
920 | Robert Half International, Inc. | 20,544 |
524 | 1 | Stericycle, Inc. | 28,679 |
13,535 | Tyco International Ltd. | 485,500 |
3,111 | Union Pacific Corp. | 196,802 |
6,075 | United Parcel Service, Inc. | 349,130 |
16,064 | United Technologies Corp. | 1,080,143 |
Shares or Principal Amount | Value in U.S. Dollars |
2,941 | Waste Management, Inc. | 96,582 |
TOTAL | 10,575,623 |
Information Technology – 8.2% |
6,155 | 1 | Adobe Systems, Inc. | 215,917 |
6,041 | Altera Corp. | 127,042 |
5,949 | Analog Devices, Inc. | 178,411 |
5,947 | 1 | Apple, Inc. | 1,188,865 |
27,230 | Applied Materials, Inc. | 335,201 |
5,798 | Automatic Data Processing, Inc. | 251,923 |
26,175 | 1 | Broadcom Corp. | 764,310 |
4,681 | CA, Inc. | 103,450 |
49,134 | 1 | Cisco Systems, Inc. | 1,149,736 |
3,416 | 1 | Cognizant Technology Solutions Corp. | 150,065 |
7,967 | Corning, Inc. | 132,890 |
8,805 | 1 | Dell, Inc. | 124,327 |
18,118 | 1 | EMC Corp. Mass | 304,926 |
13,052 | 1 | eBay, Inc. | 319,383 |
4,033 | 1 | Google Inc. | 2,351,239 |
24,517 | Hewlett-Packard Co. | 1,202,804 |
129,232 | Intel Corp. | 2,481,254 |
12,049 | International Business Machines Corp. | 1,522,391 |
3,782 | 1 | Intuit, Inc. | 110,472 |
4,558 | Linear Technology Corp. | 122,929 |
1,109 | Mastercard, Inc. Class A | 267,114 |
3,800 | 1 | McAfee, Inc. | 144,970 |
17,945 | 1 | Micron Technology, Inc. | 134,946 |
108,904 | Microsoft Corp. | 3,202,867 |
11,158 | Motorola, Inc. | 89,376 |
11,168 | 1 | NVIDIA Corp. | 145,854 |
45,828 | Oracle Corp. | 1,011,882 |
3,764 | Paychex, Inc. | 118,001 |
17,596 | Qualcomm, Inc. | 791,820 |
9,634 | 1 | Symantec Corp. | 171,004 |
25,970 | Texas Instruments, Inc. | 656,781 |
8,044 | Western Union Co. | 148,412 |
5,702 | Xilinx, Inc. | 129,093 |
Shares or Principal Amount | Value in U.S. Dollars |
14,055 | 1 | Yahoo, Inc. | 210,403 |
TOTAL | 20,360,058 |
Materials – 3.3% |
4,309 | Air Products & Chemicals, Inc. | 357,345 |
20,182 | Alcoa, Inc. | 252,679 |
2,654 | BHP Billiton LTD — SPON ADR | 199,846 |
1,972 | Ball Corp. | 97,437 |
13,802 | Barrick Gold Corp. | 589,207 |
23,460 | Dow Chemical Co. | 651,719 |
18,549 | Du Pont (E.I.) de Nemours & Co. | 641,425 |
4,922 | Ecolab, Inc. | 221,047 |
8,425 | Freeport-McMoRan Copper & Gold, Inc. | 697,590 |
8,902 | International Paper Co. | 226,556 |
11,185 | Monsanto Co. | 903,189 |
10,187 | Newmont Mining Corp. | 546,431 |
6,693 | Nucor Corp. | 283,850 |
3,567 | 1 | Owens-Illinois, Inc. | 111,540 |
3,366 | PPG Industries, Inc. | 200,041 |
3,600 | Potash Corp. of Saskatchewan, Inc. | 404,712 |
13,039 | Praxair, Inc. | 1,069,589 |
2,491 | Sigma-Aldrich Corp. | 132,870 |
6,382 | United States Steel Corp. | 285,020 |
2,552 | Vulcan Materials Co. | 123,721 |
4,365 | Weyerhaeuser Co. | 169,973 |
TOTAL | 8,165,787 |
Utilities – 2.0% |
9,181 | 1 | AES Corp. | 116,966 |
3,276 | Ameren Corp. | 85,143 |
6,582 | American Electric Power Co., Inc. | 211,875 |
3,754 | Consolidated Edison Co. | 161,084 |
2,714 | Constellation Energy Group | 86,359 |
2,287 | DTE Energy Co. | 91,732 |
8,137 | Dominion Resources, Inc. | 296,024 |
17,986 | Duke Energy Corp. | 300,006 |
1,819 | EQT Corp. | 74,852 |
4,492 | Edison International | 152,953 |
2,695 | Entergy Corp. | 211,962 |
Shares or Principal Amount | Value in U.S. Dollars |
9,230 | Exelon Corp. | 444,701 |
5,702 | FPL Group, Inc. | 296,333 |
4,303 | FirstEnergy Corp. | 185,373 |
5,081 | P G & E Corp. | 215,130 |
5,217 | PPL Corp. | 159,223 |
12,016 | Progress Energy, Inc. | 469,705 |
7,066 | Public Service Enterprises Group, Inc. | 221,590 |
2,411 | Questar Corp. | 95,644 |
3,518 | Sempra Energy | 186,947 |
23,859 | Southern Co. | 765,635 |
6,340 | Xcel Energy, Inc. | 128,829 |
TOTAL | 4,958,066 |
TOTAL COMMON STOCKS (IDENTIFIED COST $82,604,297) | 93,550,099 |
Asset-Backed Securities – 0.9% |
$19,075 | 2,3 | 125 Home Loan Owner Trust 1998-1A B1, 9.76%, 2/15/2029 | 15,832 |
250,000 | Banc of America Commercial Mortgage, Inc. 2007-4 A4, 5.935%, 2/10/2051 | 212,926 |
800,000 | Citigroup/Deutsche Bank Commercial Mortgage 2007-CD5, Series 2007-CD5, 5.886%, 11/15/2044 | 685,544 |
350,000 | LB-UBS Commercial Mortgage Trust 2008-C1 A2, 6.318%, 4/15/2041 | 330,831 |
100,000 | Merrill Lynch Mortgage Trust 2008-C1 AM, 6.461%, 2/12/2051 | 70,311 |
400,000 | Merrill Lynch/Countrywide Commercial Mortgage 2007-6, Series 2007-6, 5.485%, 03/12/2051 | 331,479 |
315,000 | Morgan Stanley Capital I 2006-IQ12 A4, 5.332%, 12/15/2043 | 302,060 |
250,000 | Morgan Stanley Capital, Inc. A4, 6.076%, 6/11/2049 | 209,319 |
TOTAL ASSET-BACKED SECURITIES (IDENTIFIED COST $2,441,592) | 2,158,302 |
Collateralized Mortgage Obligations – 0.3% |
800,000 | Citigroup/Deutsche Bank Commercial Mortgage 2007-CD4 A3, 5.293%, 12/11/2049 | 757,438 |
5,743 | 2,3 | SMFC Trust Asset-Backed Certificates, 1997-A B1-4, 7.719%, 1/28/2027 | 3,446 |
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS (IDENTIFIED COST $816,269) | 760,884 |
Corporate Bonds – 6.9% |
Basic Industry — Chemicals – 0.1% |
95,000 | Dow Chemical Co., Note, 8.550%, 05/15/2019 | 112,540 |
40,000 | Du Pont (E.I.) de Nemours & Co., 5.000%, 01/15/2013 | 43,595 |
Shares or Principal Amount | Value in U.S. Dollars |
$100,000 | Praxair, Inc., 4.625%, 03/30/2015 | 109,661 |
35,000 | Rohm & Haas Co., 6.000%, 09/15/2017 | 36,472 |
TOTAL | 302,268 |
Basic Industry — Metals & Mining – 0.3% |
80,000 | Alcan, Inc., 5.000%, 06/01/2015 | 83,583 |
70,000 | Alcoa, Inc., Note, 5.550%, 02/01/2017 | 70,434 |
90,000 | Allegheny Technologies, Inc., Sr. Note, 9.375%, 06/01/2019 | 103,800 |
10,000 | BHP Finance (USA), Inc., 6.500%, 04/01/2019 | 11,761 |
200,000 | Barrick Gold Corp., 6.950%, 04/01/2019 | 234,034 |
120,000 | Newmont Mining Corp., Company Guarantee, 5.875%, 04/01/2035 | 114,233 |
120,000 | Rio Tinto Finance USA Ltd., 5.875%, 07/15/2013 | 130,631 |
100,000 | 2,3 | Xstrata Finance Canada Ltd., Unsecd. Note, 5.500%, 11/16/2011 | 104,629 |
TOTAL | 853,105 |
Basic Industry — Paper – 0.1% |
30,000 | International Paper Co., Sr. Unsecd. Note, 7.500%, 08/15/2021 | 33,607 |
20,000 | Louisiana-Pacific Corp., 8.875%, 08/15/2010 | 20,500 |
150,000 | Pope & Talbot, Inc., 8.375%, 6/1/2013 | 1,388 |
100,000 | Weyerhaeuser Co., Deb., 7.375%, 03/15/2032 | 91,524 |
TOTAL | 147,019 |
Capital Goods — Aerospace & Defense – 0.1% |
50,000 | 2,3 | BAE Systems Holdings, Inc., 5.200%, 08/15/2015 | 54,129 |
100,000 | Boeing Co., 4.875%, 02/15/2020 | 104,249 |
25,000 | Lockheed Martin Corp., Sr. Note, 4.121%, 03/14/2013 | 26,583 |
TOTAL | 184,961 |
Capital Goods — Building Materials – 0.0% |
50,000 | RPM International, Inc., 6.500%, 02/15/2018 | 51,873 |
40,000 | RPM International, Inc., Sr. Unsecd. Note, 6.125%, 10/15/2019 | 40,917 |
TOTAL | 92,790 |
Capital Goods — Diversified Manufacturing – 0.2% |
20,000 | Dover Corp., Note, 5.450%, 03/15/2018 | 21,944 |
70,000 | Emerson Electric Co., 4.875%, 10/15/2019 | 74,517 |
68,000 | 2,3 | Hutchison Whampoa International Ltd., 6.500%, 02/13/2013 | 75,145 |
100,000 | Roper Industries, Inc., Sr. Unsecd. Note, 6.250%, 09/01/2019 | 107,109 |
90,000 | 2,3 | Textron Financial Corp., Jr. Sub. Note, 6.000%, 02/15/2067 | 63,450 |
50,000 | Thomas & Betts Corp., Note, 7.250%, 06/01/2013 | 51,211 |
TOTAL | 393,376 |
Shares or Principal Amount | Value in U.S. Dollars |
Capital Goods — Environmental – 0.1% |
$110,000 | 2,3 | Republic Services, Inc., Sr. Unsecd. Note, Series 144A, 5.500%, 09/15/2019 | 115,496 |
25,000 | Waste Management, Inc., 7.375%, 03/11/2019 | 29,255 |
TOTAL | 144,751 |
Capital Goods — Packaging – 0.0% |
40,000 | Pactiv Corp., 6.400%, 01/15/2018 | 42,324 |
Communications — Media & Cable – 0.2% |
27,000 | Comcast Cable Communications Holdings, Company Guarantee, 8.375%, 03/15/2013 | 31,678 |
100,000 | Comcast Corp., 7.050%, 03/15/2033 | 110,284 |
100,000 | Comcast Corp., Company Guarantee, 6.500%, 01/15/2017 | 111,995 |
120,000 | Time Warner Cable, Inc., Company Guarantee, 6.750%, 06/15/2039 | 127,863 |
20,000 | Time Warner Cable, Inc., Company Guarantee, 8.250%, 04/01/2019 | 24,456 |
50,000 | Time Warner Cable, Inc., Company Guarantee, 8.750%, 02/14/2019 | 62,492 |
50,000 | Time Warner Cable, Inc., Sr. Unsecd. Note, 5.850%, 05/01/2017 | 53,530 |
TOTAL | 522,298 |
Communications — Media Noncable – 0.1% |
120,000 | News America Holdings, Inc., Sr. Deb., 9.250%, 02/01/2013 | 142,238 |
90,000 | 2,3 | News America, Inc., 5.650%, 08/15/2020 | 95,528 |
TOTAL | 237,766 |
Communications — Telecom Wireless – 0.2% |
130,000 | AT&T Wireless Services, Inc., 8.750%, 03/01/2031 | 172,447 |
90,000 | America Movil S.A.B. de C.V., Note, 5.750%, 01/15/2015 | 97,058 |
20,000 | Vodafone Group PLC, 5.350%, 02/27/2012 | 21,569 |
90,000 | Vodafone Group PLC, Note, 5.625%, 02/27/2017 | 98,781 |
TOTAL | 389,855 |
Communications — Telecom Wirelines – 0.2% |
15,000 | CenturyTel, Inc., Sr. Note, 6.150%, 09/15/2019 | 15,480 |
150,000 | Deutsche Telekom International Finance BV, 4.875%, 07/08/2014 | 160,810 |
45,000 | France Telecom SA, Sr. Unsecd. Note, 5.375%, 07/08/2019 | 49,262 |
100,000 | Telefonica SA, Sr. Note, 5.855%, 02/04/2013 | 110,536 |
40,000 | Verizon Communications, Inc., 6.100%, 04/15/2018 | 44,419 |
50,000 | Verizon Communications, Inc., Sr. Unsecd. Note, 6.350%, 04/01/2019 | 56,387 |
TOTAL | 436,894 |
Consumer Cyclical — Automotive – 0.0% |
70,000 | DaimlerChrysler North America Holding Corp., 6.500%, 11/15/2013 | 76,954 |
Shares or Principal Amount | Value in U.S. Dollars |
Consumer Cyclical — Entertainment – 0.2% |
$80,000 | International Speedway Corp., 5.400%, 04/15/2014 | 84,030 |
280,000 | Time Warner, Inc., Company Guarantee, 6.875%, 05/01/2012 | 310,443 |
TOTAL | 394,473 |
Consumer Cyclical — Lodging – 0.0% |
50,000 | Wyndham Worldwide Corp., Sr. Unsecd. Note, 6.000%, 12/01/2016 | 46,652 |
Consumer Cyclical — Retailers – 0.2% |
187,274 | 2,3 | CVS Caremark Corp., Pass Thru Cert., 5.298%, 01/11/2027 | 180,772 |
60,000 | Costco Wholesale Corp., 5.300%, 03/15/2012 | 65,318 |
20,000 | JC Penney Corp., Inc., Sr. Unsecd. Note, 5.750%, 02/15/2018 | 19,000 |
70,000 | Target Corp., Note, 5.875%, 07/15/2016 | 78,367 |
40,000 | Wal-Mart Stores, Inc., 6.200%, 04/15/2038 | 45,474 |
TOTAL | 388,931 |
Consumer Non-Cyclical — Food/Beverage – 0.3% |
90,000 | 2,3 | Bacardi Ltd., Sr. Note, 7.450%, 04/01/2014 | 103,840 |
70,000 | Bottling Group LLC, Note, 5.500%, 04/01/2016 | 78,462 |
30,000 | Coca-Cola Enterprises, Inc., 4.250%, 03/01/2015 | 32,221 |
80,000 | Diageo Capital PLC, Company Guarantee, 7.375%, 01/15/2014 | 94,355 |
60,000 | General Mills, Inc., Note, 5.700%, 02/15/2017 | 66,756 |
125,000 | Kraft Foods, Inc., Note, 5.250%, 10/01/2013 | 134,989 |
100,000 | Kraft Foods, Inc., Sr. Unsecd. Note, 6.125%, 02/01/2018 | 108,056 |
50,000 | PepsiCo, Inc., 4.650%, 02/15/2013 | 54,311 |
30,000 | 2,3 | Ralcorp Holdings, Inc., Sr. Note, 6.625%, 8/15/2039 | 31,113 |
15,000 | Sysco Corp., Sr. Note, 5.375%, 03/17/2019 | 16,644 |
TOTAL | 720,747 |
Consumer Non-Cyclical — Health Care – 0.0% |
20,000 | Express Scripts, Inc., Sr. Unsecd. Note, 7.25%, 6/15/2019 | 23,606 |
75,000 | Quest Diagnostics, Inc., Sr. Unsecd. Note, 6.400%, 07/01/2017 | 82,540 |
TOTAL | 106,146 |
Consumer Non-Cyclical — Pharmaceuticals – 0.1% |
40,000 | Abbott Laboratories, 5.150%, 11/30/2012 | 44,555 |
100,000 | Genentech, Inc., Note, 4.750%, 07/15/2015 | 110,407 |
80,000 | Pfizer, Inc., Sr. Unsecd. Note, 6.200%, 03/15/2019 | 92,300 |
TOTAL | 247,262 |
Consumer Non-Cyclical — Products – 0.0% |
45,000 | Philips Electronics NV, 5.750%, 03/11/2018 | 49,500 |
Consumer Non-Cyclical — Supermarkets – 0.0% |
25,000 | Kroger Co., Bond, 6.900%, 04/15/2038 | 29,611 |
Shares or Principal Amount | Value in U.S. Dollars |
Consumer Non-Cyclical — Tobacco – 0.0% |
$70,000 | Altria Group, Inc., 9.250%, 08/06/2019 | 85,621 |
Energy — Independent – 0.1% |
120,000 | Canadian Natural Resources Ltd., 4.900%, 12/01/2014 | 128,889 |
30,000 | EOG Resources, Inc., Note, 5.625%, 06/01/2019 | 33,510 |
25,000 | Pemex Project Funding Master, 5.750%, 12/15/2015 | 26,117 |
80,000 | 2,3 | Petroleos Mexicanos, 4.875%, 03/15/2015 | 81,164 |
20,000 | XTO Energy, Inc., 6.750%, 08/01/2037 | 22,562 |
25,000 | XTO Energy, Inc., Sr. Unsecd. Note, 6.250%, 08/01/2017 | 27,872 |
TOTAL | 320,114 |
Energy — Integrated – 0.1% |
60,000 | Conoco, Inc., Sr. Note, 6.950%, 04/15/2029 | 70,613 |
100,000 | ConocoPhillips Australia Funding Co., 5.500%, 04/15/2013 | 110,391 |
35,000 | Petro-Canada, Deb., 7.000%, 11/15/2028 | 38,262 |
33,340 | 2,3 | Qatar Petroleum, 5.579%, 05/30/2011 | 34,423 |
100,000 | 2,3 | StatoilHydro ASA, 5.125%, 4/30/2014 | 110,817 |
TOTAL | 364,506 |
Energy — Oil Field Services – 0.0% |
50,000 | Noble Drilling Corp., Sr. Note, 7.5%, 3/15/2019 | 56,222 |
25,000 | Weatherford International Ltd., 6.000%, 03/15/2018 | 26,154 |
20,000 | Weatherford International Ltd., 7.000%, 03/15/2038 | 21,127 |
TOTAL | 103,503 |
Energy — Refining – 0.1% |
110,000 | Premcor Refining Group, Inc., 6.125%, 05/01/2011 | 116,219 |
25,000 | Valero Energy Corp., 9.375%, 03/15/2019 | 30,141 |
TOTAL | 146,360 |
Financial Institution — Banking – 1.0% |
50,000 | Bank of America Corp., Sr. Note, 5.375%, 06/15/2014 | 52,771 |
120,000 | Bank of America Corp., Sr. Note, 7.375%, 5/15/2014 | 135,026 |
100,000 | 2,3 | Barclays Bank PLC, 5.926%, 12/31/2049 | 72,500 |
70,000 | Capital One Financial Corp., Sr. Note, 7.375%, 05/23/2014 | 80,615 |
80,000 | Citigroup, Inc., Note, 5.125%, 05/05/2014 | 81,493 |
60,000 | 2,3 | Commonwealth Bank of Australia, Sr. Unsecd. Note, Series 144A, 3.750%, 10/15/2014 | 61,534 |
200,000 | First Union Institutional, Bond, 8.04%, 12/1/2026 | 195,000 |
50,000 | Goldman Sachs Group, Inc., 6.125%, 02/15/2033 | 51,838 |
150,000 | Goldman Sachs Group, Inc., Sr. Note, 6.150%, 04/01/2018 | 162,702 |
320,000 | Goldman Sachs Group, Inc., Sr. Unsecd. Note, 5.125%, 01/15/2015 | 340,298 |
Shares or Principal Amount | Value in U.S. Dollars |
$100,000 | HSBC Finance Capital Trust IX, Note, 5.911%, 11/30/2035 | 78,500 |
100,000 | HSBC Finance Corp., 5.000%, 06/30/2015 | 104,785 |
75,000 | Household Finance Corp., Unsecd. Note, 4.75%, 7/15/2013 | 78,608 |
90,000 | M & T Bank Corp., 5.375%, 05/24/2012 | 94,263 |
30,000 | Merrill Lynch & Co., Inc., Sr. Unsecd. Note, 6.050%, 08/15/2012 | 32,388 |
100,000 | Morgan Stanley Group, Inc., 5.300%, 03/01/2013 | 106,804 |
100,000 | Morgan Stanley, Sr. Unsecd. Note, 6.625%, 04/01/2018 | 109,185 |
30,000 | Northern Trust Corp., 4.625%, 05/01/2014 | 32,756 |
15,000 | PNC Funding Corp., Sub. Note, 5.625%, 02/01/2017 | 15,241 |
472,650 | 2,3 | Regional Diversified Funding, 9.250%, 03/15/2030 | 254,309 |
20,000 | State Street Corp., Sr. Note, 4.300%, 05/30/2014 | 21,313 |
100,000 | U.S. Bank, N.A., 6.300%, 02/04/2014 | 113,490 |
140,000 | Wachovia Corp., 5.750%, 02/01/2018 | 147,946 |
40,000 | Wilmington Trust Corp., Sub. Note, 8.500%, 04/02/2018 | 39,886 |
TOTAL | 2,463,251 |
Financial Institution — Brokerage – 0.3% |
220,000 | Blackrock, Inc., 6.250%, 09/15/2017 | 243,718 |
50,000 | Charles Schwab Corp., Sr. Unsecd. Note, 4.950%, 06/01/2014 | 54,232 |
40,000 | Eaton Vance Corp., 6.500%, 10/02/2017 | 43,214 |
100,000 | 2,3 | FMR LLC, 4.75%, 3/01/2013 | 101,889 |
25,000 | Janus Capital Group, Inc., Sr. Note, 6.500%, 06/15/2012 | 25,284 |
30,000 | Janus Capital Group, Inc., Sr. Note, 6.950%, 06/15/2017 | 28,936 |
95,000 | Jefferies Group, Inc., Sr. Unsecd. Note, 8.500%, 07/15/2019 | 104,481 |
60,000 | Lehman Brothers Holdings, Note, 4.8%, 3/13/2014 | 12,000 |
30,000 | Nuveen Investments, 5.500%, 09/15/2015 | 20,700 |
30,000 | Nuveen Investments, 5%, 9/15/2010 | 29,737 |
75,000 | Raymond James Financial, Inc., 8.600%, 08/15/2019 | 83,381 |
TOTAL | 747,572 |
Financial Institution — Finance Noncaptive – 0.5% |
160,000 | American Express Co., Sr. Unsecd. Note, 8.125%, 05/20/2019 | 192,674 |
60,000 | American Express Credit Corp., Sr. Unsecd. Note, 5.125%, 08/25/2014 | 63,869 |
100,000 | American International Group, Inc., Sr. Note, 4.700%, 10/01/2010 | 99,062 |
120,000 | Berkshire Hathaway, Inc., Company Guarantee, 5.000%, 08/15/2013 | 131,625 |
120,000 | Capital One Capital IV, 6.745%, 02/17/2037 | 95,400 |
20,000 | Capital One Capital V, 10.250%, 08/15/2039 | 22,055 |
510,000 | General Electric Capital Corp., 5.625%, 05/01/2018 | 531,737 |
30,000 | General Electric Capital Corp., Note, Series MTN, 6.750%, 03/15/2032 | 31,377 |
Shares or Principal Amount | Value in U.S. Dollars |
$80,000 | International Lease Finance Corp., 4.875%, 09/01/2010 | 77,650 |
30,000 | 2,3 | Macquarie Group Ltd., Note, Series 144A, 7.625%, 8/13/2019 | 32,863 |
TOTAL | 1,278,312 |
Financial Institution — Insurance — Health – 0.1% |
50,000 | CIGNA Corp., 6.350%, 03/15/2018 | 50,882 |
50,000 | UnitedHealth Group, Inc., Bond, 6.000%, 02/15/2018 | 53,314 |
50,000 | Wellpoint, Inc., 5.850%, 01/15/2036 | 48,994 |
TOTAL | 153,190 |
Financial Institution — Insurance — Life – 0.6% |
100,000 | AXA-UAP, Sub. Note, 8.600%, 12/15/2030 | 116,609 |
100,000 | 2,3 | Massachusetts Mutual Life Insurance Co., Sub. Note, 8.875%, 06/01/2039 | 123,886 |
90,000 | MetLife, Inc., 6.750%, 06/01/2016 | 103,442 |
10,000 | MetLife, Inc., Jr. Sub. Note, 10.750%, 08/01/2069 | 12,183 |
80,000 | 2,3 | New York Life Insurance Co., Sub. Note, 6.750%, 11/15/2039 | 80,979 |
300,000 | 2,3 | Pacific LifeCorp., Bond, 6.600%, 09/15/2033 | 255,635 |
50,000 | Prudential Financial, Inc., 5.150%, 01/15/2013 | 52,992 |
40,000 | Prudential Financial, Inc., 6.625%, 12/01/2037 | 41,409 |
10,000 | Prudential Financial, Inc., Sr. Note, 7.375%, 06/15/2019 | 11,380 |
100,000 | Prudential Financial, Inc., Sr. Unsecd. Note, 4.750%, 09/17/2015 | 102,366 |
750,000 | 2 | Union Central Life Ins Co, Note, 8.2%, 11/1/2026 | 704,991 |
TOTAL | 1,605,872 |
Financial Institution — Insurance — P&C – 0.2% |
80,000 | ACE INA Holdings, Inc., Sr. Note, 5.700%, 02/15/2017 | 87,365 |
80,000 | CNA Financial Corp., 6.500%, 08/15/2016 | 79,590 |
15,000 | Chubb Corp., Sr. Note, 5.750%, 05/15/2018 | 16,661 |
50,000 | Horace Mann Educators Corp., Sr. Note, 6.850%, 04/15/2016 | 50,302 |
100,000 | 2,3 | Liberty Mutual Group, Inc., Unsecd. Note, 5.750%, 03/15/2014 | 101,028 |
30,000 | 2,3 | Nationwide Mutual Insurance Co., Note, Series 144A, 9.375%, 08/15/2039 | 31,367 |
10,000 | The Travelers Cos., Inc., Sr. Unsecd. Note, 5.500%, 12/01/2015 | 11,198 |
TOTAL | 377,511 |
Financial Institution — REITs – 0.2% |
45,000 | Avalonbay Communities, Inc., Sr. Unsecd. Note, Series MTN, 5.700%, 03/15/2017 | 47,139 |
75,000 | Boston Properties LP, Sr. Unsecd. Note, 5.875%, 10/15/2019 | 77,151 |
40,000 | Equity One, Inc., Bond, 6.000%, 09/15/2017 | 36,966 |
40,000 | Liberty Property LP, 6.625%, 10/01/2017 | 40,588 |
Shares or Principal Amount | Value in U.S. Dollars |
$120,000 | Prologis, Sr. Note, 5.500%, 04/01/2012 | 122,546 |
20,000 | Prologis, Sr. Note, 7.625%, 8/15/2014 | 21,473 |
40,000 | Simon Property Group LP, 6.750%, 05/15/2014 | 43,938 |
50,000 | Simon Property Group, Inc., 6.350%, 08/28/2012 | 54,065 |
TOTAL | 443,866 |
Foreign-Local-Government – 0.0% |
50,000 | Quebec, Province of, Note, Series MTNA, 7.035%, 3/10/2026 | 61,788 |
Municipal Services – 0.1% |
140,000 | 2,3 | Army Hawaii Family Housing , 5.524%, 6/15/2050 | 100,631 |
100,000 | 2,3 | Camp Pendleton & Quantico Housing LLC, 5.572%, 10/01/2050 | 72,232 |
TOTAL | 172,863 |
Technology – 0.3% |
20,000 | Cisco Systems, Inc., Sr. Unsecd. Note, 5.500%, 02/22/2016 | 22,532 |
40,000 | Dell Computer Corp., Deb., 7.100%, 04/15/2028 | 44,692 |
60,000 | Dun & Bradstreet Corp., Sr. Unsecd. Note, 5.500%, 03/15/2011 | 62,732 |
105,000 | Fiserv, Inc., Sr. Note, 6.800%, 11/20/2017 | 118,664 |
50,000 | Harris Corp., 5.950%, 12/01/2017 | 54,286 |
60,000 | Hewlett-Packard Co., Note, 5.400%, 03/01/2017 | 66,422 |
200,000 | IBM Corp., Sr. Note, 5.700%, 09/14/2017 | 224,896 |
100,000 | Oracle Corp., Sr. Unsecd. Note, Series WI, 5.000%, 01/15/2011 | 104,909 |
TOTAL | 699,133 |
Transportation — Railroads – 0.1% |
100,000 | Burlington Northern Santa Fe Corp., 4.875%, 01/15/2015 | 107,436 |
50,000 | Union Pacific Corp., 4.875%, 01/15/2015 | 53,355 |
45,000 | Union Pacific Corp., Bond, 6.625%, 2/01/2029 | 50,906 |
TOTAL | 211,697 |
Transportation — Services – 0.0% |
75,000 | 2,3 | Enterprise Rent-A-Car USA Finance Co., 6.375%, 10/15/2017 | 78,488 |
Utility — Electric – 0.5% |
60,000 | Appalachian Power Co., Sr. Unsecd. Note, 7.950%, 01/15/2020 | 74,669 |
50,000 | Cleveland Electric Illuminating Co., Sr. Unsecd. Note, 5.950%, 12/15/2036 | 48,355 |
50,000 | Commonwealth Edison Co., 1st Mtg. Bond, 5.800%, 03/15/2018 | 54,814 |
40,000 | Consolidated Edison Co., Sr. Unsecd. Note, 5.500%, 09/15/2016 | 43,238 |
10,000 | Consolidated Edison Co., Sr. Unsecd. Note, 6.650%, 04/01/2019 | 11,783 |
60,000 | 2,3 | Electricite De France, 5.500%, 01/26/2014 | 66,861 |
Shares or Principal Amount | Value in U.S. Dollars |
$50,000 | 2,3 | FirstEnergy Solutions Corp., Company Guarantee, Series 144A, 6.050%, 08/15/2021 | 52,773 |
90,000 | 2,3 | FirstEnergy Solutions Corp., Series 144A, 4.800%, 02/15/2015 | 95,147 |
83,270 | 2,3 | Great River Energy, 1st Mtg. Note, 5.829%, 07/01/2017 | 90,138 |
120,000 | MidAmerican Energy Co., 4.650%, 10/01/2014 | 129,494 |
100,000 | National Rural Utilities Cooperative Finance Corp., Sr. Unsecd. Note, 10.375%, 11/01/2018 | 136,045 |
30,000 | Northern States Power Co., MN, 1st Mtg. Bond, 5.250%, 03/01/2018 | 32,699 |
60,000 | PPL Energy Supply LLC, Sr. Unsecd. Note, 6.000%, 12/15/2036 | 58,037 |
40,000 | Progress Energy, Inc., 7.050%, 03/15/2019 | 46,654 |
100,000 | Union Electric Co., 6.000%, 04/01/2018 | 109,162 |
120,000 | Virginia Electric & Power Co., Sr. Unsecd. Note, 5.000%, 06/30/2019 | 127,057 |
80,000 | Virginia Electric & Power Co., Sr. Unsecd. Note, 5.100%, 11/30/2012 | 87,639 |
TOTAL | 1,264,565 |
Utility — Natural Gas Distributor – 0.1% |
120,000 | Atmos Energy Corp., 5.125%, 01/15/2013 | 129,109 |
15,000 | Atmos Energy Corp., 8.500%, 03/15/2019 | 18,989 |
60,000 | Sempra Energy, Sr. Unsecd. Note, 6.500%, 06/01/2016 | 66,922 |
TOTAL | 215,020 |
Utility — Natural Gas Pipelines – 0.2% |
100,000 | Duke Capital Corp., Sr. Note, 6.250%, 02/15/2013 | 109,493 |
70,000 | Enbridge, Inc., Sr. Note, 5.600%, 04/01/2017 | 76,332 |
110,000 | Enterprise Products Operating LLC, Company Guarantee, 9.750%, 01/31/2014 | 134,117 |
100,000 | Kinder Morgan Energy Partners LP, Sr. Unsecd. Note, 5.800%, 03/15/2035 | 94,305 |
TOTAL | 414,247 |
TOTAL CORPORATE BONDS (IDENTIFIED COST $16,693,653) | 17,015,162 |
Government AgencY – 1.1% |
2,550,000 | Federal Home Loan Mortgage Corp., 4.625%, 10/25/2012 (IDENTIFIED COST $2,551,026) | 2,793,165 |
Governments/Agencies – 0.1% |
Sovereign – 0.1% |
75,000 | United Mexican States, 6.625%, 03/03/2015 | 85,087 |
30,000 | United Mexican States, Series MTNA, 6.750%, 09/27/2034 | 34,055 |
TOTAL GOVERNMENTS/AGENCIES (IDENTIFIED COST $106,742) | 119,142 |
Shares or Principal Amount | Value in U.S. Dollars |
Mortgage-Backed Securities – 0.4% |
$9,271 | Federal Home Loan Mortgage Corp. Pool C00592, 7.000%, 3/1/2028 | 10,239 |
7,288 | Federal Home Loan Mortgage Corp. Pool C00896, 7.500%, 12/1/2029 | 8,064 |
20,431 | Federal Home Loan Mortgage Corp. Pool C17281, 6.500%, 11/1/2028 | 22,286 |
16,502 | Federal Home Loan Mortgage Corp. Pool C19588, 6.500%, 12/1/2028 | 18,001 |
5,563 | Federal Home Loan Mortgage Corp. Pool C25621, 6.500%, 5/1/2029 | 6,068 |
24,878 | Federal Home Loan Mortgage Corp. Pool C76361, 6.000%, 2/1/2033 | 26,954 |
68,163 | Federal Home Loan Mortgage Corp. Pool E01545, 5.000%, 15 Year, 1/1/2019 | 73,055 |
5,665 | Federal Home Loan Mortgage Corp. Pool E20252, 7.000%, 15 Year, 7/1/2011 | 5,874 |
1,346 | Federal Home Loan Mortgage Corp. Pool E77591, 6.500%, 7/1/2014 | 1,443 |
18,506 | Federal Home Loan Mortgage Corp. Pool E99510, 5.500%, 9/1/2018 | 20,002 |
20,564 | Federal Home Loan Mortgage Corp. Pool G01444, 6.500%, 8/1/2032 | 22,419 |
13,204 | Federal National Mortgage Association Pool 251697, 6.500%, 30 Year, 5/1/2028 | 14,416 |
32,606 | Federal National Mortgage Association Pool 252334, 6.500%, 30 Year, 2/1/2029 | 35,497 |
75,582 | Federal National Mortgage Association Pool 254720, 4.500%, 5/1/2018 | 80,217 |
74,557 | Federal National Mortgage Association Pool 254802, 4.500%, 7/1/2018 | 79,129 |
35,189 | Federal National Mortgage Association Pool 254905, 6.000%, 10/1/2033 | 38,067 |
70,222 | Federal National Mortgage Association Pool 255075, 5.500%, 2/1/2024 | 75,155 |
80,030 | Federal National Mortgage Association Pool 255079, 5.000%, 2/1/2019 | 85,724 |
3,420 | Federal National Mortgage Association Pool 303168, 9.500%, 30 Year, 2/1/2025 | 4,031 |
1,862 | Federal National Mortgage Association Pool 323159, 7.500%, 4/1/2028 | 2,062 |
14,759 | Federal National Mortgage Association Pool 323640, 7.500%, 4/1/2029 | 16,348 |
651 | Federal National Mortgage Association Pool 323970, 7.000%, 15 Year, 10/1/2014 | 698 |
27,133 | Federal National Mortgage Association Pool 428865, 7.000%, 6/1/2028 | 30,065 |
2,912 | Federal National Mortgage Association Pool 443215, 6.000%, 10/1/2028 | 3,161 |
1,531 | Federal National Mortgage Association Pool 511365, 7.000%, 8/1/2029 | 1,696 |
284 | Federal National Mortgage Association Pool 514184, 7.500%, 9/1/2029 | 315 |
$67,158 | Federal National Mortgage Association Pool 545993, 6.000%, 11/1/2032 | 72,736 |
26,995 | Federal National Mortgage Association Pool 555272, 6.000%, 3/1/2033 | 29,237 |
62,012 | Federal National Mortgage Association Pool 713974, 5.500%, 7/1/2033 | 66,268 |
81,626 | Federal National Mortgage Association Pool 721502, 5.000%, 7/1/2033 | 85,975 |
1,480 | Government National Mortgage Association Pool 352214, 7.000%, 4/15/2023 | 1,621 |
Shares or Principal Amount | Value in U.S. Dollars |
6,131 | Government National Mortgage Association Pool 451522, 7.500%, 30 Year, 10/15/2027 | 6,767 |
13,594 | Government National Mortgage Association Pool 462556, 6.500%, 2/15/2028 | 14,809 |
487 | Government National Mortgage Association Pool 462739, 7.500%, 5/15/2028 | 538 |
705 | Government National Mortgage Association Pool 464835, 6.500%, 9/15/2028 | 767 |
10,787 | Government National Mortgage Association Pool 469699, 7.000%, 11/15/2028 | 11,876 |
12,404 | Government National Mortgage Association Pool 486760, 6.500%, 12/15/2028 | 13,515 |
2,372 | Government National Mortgage Association Pool 780339, 8.000%, 30 Year, 12/15/2023 | 2,628 |
15,018 | Government National Mortgage Association Pool 780453, 7.500%, 30 Year, 12/15/2025 | 16,564 |
14,325 | Government National Mortgage Association Pool 780584, 7.000%, 30 Year, 6/15/2027 | 15,794 |
TOTAL MORTGAGE-BACKED SECURITIES (IDENTIFIED COST $958,314) | 1,020,081 |
Municipal – 0.0% |
Illinois – 0.0% |
90,000 | Chicago, IL Metropolitan Water Reclamation District, Direct Payment Taxable Limited GO Build America Bonds, 5.720%, 12/01/2038 (IDENTIFIED COST $90,000) | 95,291 |
U.S. Treasury – 4.7% |
425,000 | 4,5 | United States Treasury Bill, 0.06%, 12/10/2009 | 424,994 |
3,250,000 | 4,5 | United States Treasury Bill, 0.06%, 2/4/2010 | 3,249,912 |
400,000 | 4,5 | United States Treasury Bill, 0.065%, 2/18/2010 | 399,987 |
3,700,000 | 4,5 | United States Treasury Bill, 0.08%, 1/21/2010 | 3,699,974 |
1,600,000 | 4,5 | United States Treasury Bill, 0.115%, 12/31/2009 | 1,599,908 |
1,830,000 | 4,5 | United States Treasury Bill, 0.15%, 12/3/2009 | 1,829,992 |
500,000 | United States Treasury Bond, 3.500%, 2/15/2039 | 441,484 |
$100,000 | United States Treasury Note, 3.125%, 8/31/2013 | 106,219 |
TOTAL U.S. TREASURY (IDENTIFIED COST $11,787,748) | 11,752,470 |
Exchange-Traded Funds – 23.2% |
22,326 | iShares MSCI Brazil Index Fund | 1,711,735 |
14,990 | iShares MSCI Canada Index Fund | 388,691 |
68,178 | iShares MSCI EAFE Index Fund | 3,778,425 |
116,535 | iShares MSCI Emerging Market Index Fund | 4,721,998 |
Shares or Principal Amount | Value in U.S. Dollars |
36,047 | 1 | iShares MSCI South Korea Index Fund | 1,599,766 |
391,652 | 1 | iShares Russell 1000 Index Fund | 23,589,200 |
345,811 | iShares Russell 2000 Index Fund | 20,091,619 |
22,208 | 1 | SPDR S&P China ETF | 1,609,192 |
TOTAL EXCHANGE-TRADED FUNDS (IDENTIFIED COST $50,235,289) | 57,490,626 |
Mutual Funds – 25.0%;6 |
199,106 | Emerging Markets Fixed Income Core Fund | 4,786,699 |
946,934 | Federated Mortgage Core Portfolio | 9,677,667 |
1,867,382 | High Yield Bond Portfolio | 11,484,402 |
36,095,022 | 7 | Prime Value Obligations Fund, Institutional Shares, 0.22% | 36,095,022 |
TOTAL MUTUAL FUNDS (IDENTIFIED COST $59,546,221) | 62,043,790 |
TOTAL INVESTMENTS — 100.3% (IDENTIFIED COST $227,831,151)8 | 248,799,012 |
OTHER ASSETS AND LIABILITIES - NET — (0.3)%9 | (643,382) |
TOTAL NET ASSETS — 100% | $248,155,630 |
At November 30, 2009, the Fund had the following outstanding futures contracts:
Description | Number of Contracts | Notional Value | Expiration Date | Unrealized Appreciation/ (Depreciation) |
1ASX SPI 200 Index Short Futures | 108 | $12,676,500 | December 2009 | $(301,812) |
1OMX 30 Index Short Futures | 640 | $60,080,000 | December 2009 | $296,519 |
1SGX MSCI Singapore Index Short Futures | 191 | $12,560,160 | December 2009 | $230,987 |
1Swiss Market Index Short Futures | 306 | $19,112,760 | December 2009 | $85,303 |
1Topix Index Short Futures | 40 | $336,000,000 | December 2009 | $173,774 |
1United States Treasury Bonds 30-Year Short Futures | 18 | $2,208,938 | March 2010 | $(45,316) |
1United States Treasury Notes 2-Year Short Futures | 30 | $6,536,719 | March 2010 | $(17,877) |
1United States Treasury Notes 5-Year Short Futures | 40 | $4,690,625 | March 2010 | $(42,274) |
1AEX Index Long Futures | 45 | $2,751,300 | December 2009 | $(213,689) |
1CAC 40 Index Long Futures | 320 | $11,758,400 | December 2009 | $(863,068) |
1DAX Index Long Futures | 64 | $9,018,400 | December 2009 | $415,652 |
1FTSE 100 Index Long Futures | 320 | $16,628,800 | December 2009 | $1,003,042 |
1FTSE/MIB Index Long Futures | 35 | $3,841,600 | December 2009 | $(93,678) |
1Hang Seng Index Long Futures | 105 | $114,177,000 | December 2009 | $(646,796) |
Description | Number of Contracts | Notional Value | Expiration Date | Unrealized Appreciation/ (Depreciation) |
1IBEX 35 Index Long Futures | 45 | $5,252,850 | December 2009 | $(199,567) |
1MSCI E-Mini EAFE Index Long Futures | 19 | $1,483,900 | December 2009 | $(8,559) |
1Russell 2000 Mini Index Long Futures | 10 | $579,200 | December 2009 | $(11,483) |
1S & P 500 Index Long Futures | 33 | $9,032,100 | December 2009 | $611,193 |
1S&P/TSE 60 Index Long Futures | 57 | $7,746,300 | December 2009 | $213,628 |
NET UNREALIZED APPRECIATION ON FUTURES CONTRACTS | $585,979 |
At November 30, 2009, the Fund had the following open swap contract:
Credit Default Swap Counterparty | Goldman Sachs & Co. |
Reference Entity | Series 12 Investment Grade Index |
Buy/Sell | Sell |
Pay/Receive Fixed Rate | 1.00% |
Expiration Date | 6/20/2014 |
Implied Credit Spread at 11/30/200910 | 0.48% |
Notional Amount | $9,920,000 |
Market Value | $(32,854) |
Upfront Premiums Paid/(Received) | $(255,787) |
Unrealized Appreciation | $222,933 |
Settlement Date | Foreign Currency Units to Deliver/ Receive | In Exchange For | Unrealized Appreciation/ (Depreciation) |
Contracts Purchased: | ||
12/2/2009 | 12,810,634 Australian Dollar | $11,716,606 | $16,657 |
12/2/2009 | 7,470,781 Canadian Dollar | $7,030,132 | $48,491 |
12/2/2009 | 306,704 Canadian Dollar | $290,101 | $503 |
12/2/2009 | 32,391,246 Euro | $48,247,409 | $389,702 |
12/2/2009 | 1,560,492 Euro | $2,320,904 | $22,254 |
12/3/2009 | 343,561,484 Japanese Yen | $3,983,322 | $(8,756) |
12/2/2009 | 16,471,084 Pound Sterling | $27,365,388 | $(268,818) |
12/2/2009 | 642,290 Pound Sterling | $1,079,105 | $(22,474) |
12/2/2009 | 62,169,688 Swedish Krona | $8,892,818 | $24,810 |
12/2/2009 | 19,575,952 Swiss Francs | $19,497,960 | $(8,735) |
1/6/2010 | 7,777,485 Canadian Dollar | $7,368,532 | $628 |
1/6/2010 | 32,651,737 Euro | $48,953,443 | $69,528 |
1/6/2010 | 16,624,373 Pound Sterling | $27,270,289 | $72,604 |
Contracts Sold: | ||
12/2/2009 | 12,537,084 Australian Dollar | $11,385,678 | $(97,040) |
12/2/2009 | 273,550 Australian Dollar | $253,586 | $3,042 |
12/2/2009 | 7,777,485 Canadian Dollar | $7,368,532 | $(698) |
12/2/2009 | 33,951,738 Euro | $50,907,236 | $(73,034) |
12/2/2009 | 17,113,374 Pound Sterling | $28,077,912 | $(75,289) |
12/2/2009 | 62,067,825 Swedish Krona | $8,870,608 | $(32,408) |
12/2/2009 | 101,863 Swedish Krona | $14,810 | $198 |
12/2/2009 | 18,703,600 Swiss Francs | $18,402,716 | $(218,022) |
12/2/2009 | 872,352 Swiss Francs | $858,462 | $(10,025) |
12/3/2009 | 341,599,700 Japanese Yen | $3,770,375 | $(181,517) |
12/3/2009 | 1,961,784 Japanese Yen | $21,984 | $(711) |
1/6/2010 | 12,602,633 Australian Dollar | $11,487,300 | $(16,201) |
1/6/2010 | 333,800,000 Japanese Yen | $3,870,818 | $8,472 |
1/6/2010 | 19,110,952 Swiss Francs | $19,038,985 | $7,702 |
1/7/2010 | 60,037,061 Swedish Krona | $8,588,772 | $(24,141) |
NET UNREALIZED DEPRECIATION ON FOREIGN EXCHANGE CONTRACTS | $(373,278) |
Net Unrealized Appreciation/Depreciation on Futures Contracts, Swap Contract and Foreign Exchange Contracts is included in “Other Assets and Liabilities — Net”.
Annual Shareholder Report1 | Non-income producing security. |
2 | Denotes a restricted security that either: (a) cannot be offered for public sale without first being registered, or being able to take advantage of an exemption from registration, under the Securities Act of 1933; or (b) is subject to a contractual restriction on public sales. At November 30, 2009, these restricted securities amounted to $3,447,035, which represented 1.4% of total net assets. |
3 | Denotes a restricted security that may be resold without restriction to “qualified institutional buyers” as defined in Rule 144A under the Securities Act of 1933 and that the Fund has determined to be liquid under criteria established by the Fund's Board of Trustees (the “Trustees”). At November 30, 2009, these liquid restricted securities amounted to $2,742,044, which represented 1.1% of total net assets. |
4 | Pledged as collateral to ensure the Fund is able to satisfy the obligations of its outstanding futures contracts. |
5 | Discount rate at time of purchase. |
6 | Affiliated companies. |
7 | 7-Day net yield. |
8 | The cost of investments for federal tax purposes amounts to $231,155,224. |
9 | Assets, other than investments in securities, less liabilities. See Statement of Assets and Liabilities. |
10 | Implied credit spreads, represented in absolute terms, utilized in determining the market value of credit default swap agreements serve as an indicator of the current status of the payment/performance risk and represent the likelihood or risk of default for the credit derivative. The implied credit spread of a particular referenced entity reflects the cost of buying/selling protection and may include upfront payments required to be made to enter into the agreement. Wider credit spreads represent a deterioration of the referenced entity's credit soundness and a greater likelihood or risk of default or other credit event occurring as defined under the terms of the agreement. A credit spread identified as “Defaulted” indicates a credit event has occurred for the referenced entity or obligation. |
Note: The categories of investments are shown as a percentage of total net assets at November 30, 2009.
Various inputs are used in determining the value of the Fund's investments. These inputs are summarized in the three broad levels listed below:
Level 1 — quoted prices in active markets for identical securities
Level 2 — other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.)
Level 3 — significant unobservable inputs (including the Fund's own assumptions in determining the fair value of investments)
The inputs or methodology used for valuing securities are not an indication of the risk associated with investing in those securities.
Annual Shareholder ReportValuation Inputs | ||||
Level 1 - Quoted Prices and Investments in Mutual Funds* | Level 2 - Other Significant Observable Inputs | Level 3 - Significant Unobservable Inputs | Total | |
Equity Securities: | ||||
Domestic | $89,517,516 | $ — | $ — | $89,517,516 |
International | 3,506,834 | 525,749 | — | 4,032,583 |
Debt Securities: | ||||
Asset-Backed Securities | — | 2,158,302 | — | 2,158,302 |
Collateralized Mortgage Obligations | — | 760,884 | — | 760,884 |
Corporate Bonds | — | 17,015,162 | — | 17,015,162 |
Government Agencies | — | 2,793,165 | — | 2,793,165 |
Governments/Agencies | — | 119,142 | — | 119,142 |
Mortgage-Backed Securities | — | 1,020,081 | — | 1,020,081 |
Municipal | — | 95,291 | — | 95,291 |
U.S. Treasury | — | 11,752,470 | — | 11,752,470 |
Exchange-Traded Funds | 57,490,626 | — | — | 57,490,626 |
Mutual Funds | 62,043,790 | — | — | 62,043,790 |
TOTAL SECURITIES | $212,558,766 | $36,240,246 | $ — | $248,799,012 |
OTHER FINANCIAL INSTRUMENTS** | $460,934 | $(25,300) | $ — | $435,634 |
*Emerging Markets Fixed Income Core Fund (EMCORE) is an affiliated limited partnership offered only to registered investment companies and other accredited investors. EMCORE invests primarily in emerging markets fixed-income securities. |
** | Other financial instruments include futures contracts, swap contracts and foreign exchange contracts. |
The following acronyms are used throughout this portfolio:
ADR | — American Depositary Receipt |
MTN | — Medium Term Note |
REITs | — Real Estate Investment Trusts |
See Notes which are an integral part of the Financial Statements
Annual Shareholder ReportStatement of Assets and Liabilities
November 30, 2009
Assets: |
Total investments in securities, at value including $62,043,790 of investments in affiliated issuers (Note 5) (identified cost $227,831,151) | $248,799,012 |
Cash | 16,036 |
Income receivable | 556,520 |
Receivable for investments sold | 66,560 |
Receivable for shares sold | 206,868 |
Receivable for foreign exchange contracts | 664,591 |
Receivable for periodic payments from swap contracts | 19,565 |
Other receivables | 5,570 |
TOTAL ASSETS | 250,334,722 |
Liabilities: |
Payable for investments purchased | $80,000 |
Payable for shares redeemed | 463,868 |
Payable for foreign exchange contracts | 1,037,869 |
Payable for daily variation margin | 302,260 |
Income distribution payable | 11,841 |
Swaps, at value (premiums received $255,787) | 32,854 |
Payable for investment adviser fee (Note 5) | 749 |
Payable for transfer and dividend disbursing agent fees and expenses | 77,681 |
Payable for Directors'/Trustees' fees | 2,843 |
Payable for distribution services fee (Note 5) | 48,577 |
Payable for shareholder services fee (Note 5) | 39,794 |
Accrued expenses | 80,756 |
TOTAL LIABILITIES | 2,179,092 |
Net assets for 15,864,690 shares outstanding | $248,155,630 |
Net Assets Consist of: |
Paid-in capital | $265,377,267 |
Net unrealized appreciation of investments, futures contracts, swap contracts and translation of assets and liabilities in foreign currency | 21,408,749 |
Accumulated net realized loss on investments, futures contracts, swap contracts and foreign currency transactions | (38,573,661) |
Distributions in excess of net investment income | (56,725) |
TOTAL NET ASSETS | $248,155,630 |
Net Asset Value, Offering Price and Redemption Proceeds Per Share |
Class A Shares: |
Net asset value per share ($149,696,003 ÷ 9,563,632 shares outstanding), no par value, unlimited shares authorized | $15.65 |
Offering price per share (100/94.50 of $15.65) | $16.56 |
Redemption proceeds per share | $15.65 |
Class B Shares: |
Net asset value per share ($20,150,846 ÷ 1,290,750 shares outstanding), no par value, unlimited shares authorized | $15.61 |
Offering price per share | $15.61 |
Redemption proceeds per share (94.50/100 of $15.61) | $14.75 |
Class C Shares: |
Net asset value per share ($28,278,271 ÷ 1,818,411 shares outstanding), no par value, unlimited shares authorized | $15.55 |
Offering price per share | $15.55 |
Redemption proceeds per share (99.00/100 of $15.55) | $15.39 |
Class K Shares: |
Net asset value per share ($47,254,069 ÷ 3,014,519 shares outstanding), no par value, unlimited shares authorized | $15.68 |
Offering price per share | $15.68 |
Redemption proceeds per share | $15.68 |
Institutional Shares: |
Net asset value per share ($2,776,441 ÷ 177,378 shares outstanding), no par value, unlimited shares authorized | $15.65 |
Offering price per share | $15.65 |
Redemption proceeds per share | $15.65 |
See Notes which are an integral part of the Financial Statements
Annual Shareholder ReportStatement of Operations
Year Ended November 30, 2009
Investment Income: |
Dividends (including $2,232,461 received from affiliated issuers (Note 5) and net of foreign taxes withheld of $24,801) | $4,778,547 |
Interest | 1,707,239 |
Investment income allocated from affiliated partnership (Note 5) | $220,339 |
Expenses allocated from affiliated partnership (Note 5) | (717) |
Net income allocated from affiliated partnership | 219,622 |
TOTAL INCOME AND ALLOCATED EXPENSES | 6,705,408 |
Expenses: |
Investment adviser fee (Note 5) | 1,452,949 |
Administrative personnel and services fee (Note 5) | 288,851 |
Custodian fees | 44,745 |
Transfer and dividend disbursing agent fees and expenses — Class A Shares | 294,736 |
Transfer and dividend disbursing agent fees and expenses — Class B Shares | 53,513 |
Transfer and dividend disbursing agent fees and expenses — Class C Shares | 50,062 |
Transfer and dividend disbursing agent fees and expenses — Class K Shares | 120,038 |
Transfer and dividend disbursing agent fees and expenses — Institutional Shares | 1,414 |
Directors'/Trustees' fees | 13,278 |
Auditing fees | 26,250 |
Legal fees | 12,052 |
Portfolio accounting fees | 124,846 |
Distribution services fee — Class B Shares (Note 5) | 148,340 |
Distribution services fee — Class C Shares (Note 5) | 170,529 |
Distribution services fee — Class K Shares (Note 5) | 155,255 |
Shareholder services fee — Class A Shares (Note 5) | 324,837 |
Shareholder services fee — Class B Shares (Note 5) | 49,447 |
Shareholder services fee — Class C Shares (Note 5) | 56,289 |
Account administration fee — Class A Shares | 2,771 |
Account administration fee — Class C Shares | 363 |
Share registration costs | 64,011 |
Printing and postage | 106,740 |
Insurance premiums | 4,188 |
Miscellaneous | 5,989 |
TOTAL EXPENSES | 3,571,493 |
Waivers, Reimbursements and Expense Reduction: |
Waiver/reimbursement of investment adviser fee (Note 5) | $(287,768) |
Waiver of administrative personnel and services fee (Note 5) | (57,635) |
Waiver of distribution services fee — Class K Shares (Note 5) | (615) |
Reimbursement of transfer and dividend disbursing agent fees and expenses — Class A Shares (Note 5) | (103,291) |
Reimbursement of transfer and dividend disbursing agent fees and expenses — Class B Shares (Note 5) | (15,588) |
Reimbursement of transfer and dividend disbursing agent fees and expenses — Class C Shares (Note 5) | (6,887) |
Fees paid indirectly from directed brokerage arrangements (Note 6) | (20,630) |
TOTAL WAIVERS, REIMBURSEMENTS AND EXPENSE REDUCTION | $(492,414) |
Net expenses | $3,079,079 |
Net investment income | 3,626,329 |
Realized and Unrealized Gain (Loss) on Investments, Futures Contracts, Swap Contracts and Foreign Currency Transactions: |
Net realized loss on investments and foreign currency transactions (including realized gain of $26,870 on sales of investments in affiliated issuers) (Note 5) | (3,314,633) |
Net realized gain on futures contracts | 3,825,915 |
Net realized gain on swap contracts | 99,956 |
Net realized loss allocated from affiliated partnership (Note 5) | (63,219) |
Net change in unrealized depreciation of investments and translation of assets and liabilities in foreign currency | 37,621,136 |
Net change in unrealized appreciation of futures contracts | 257,311 |
Net change in unrealized appreciation of swap contracts | 57,201 |
Net realized and unrealized gain on investments, futures contracts, swap contracts and foreign currency transactions | 38,483,667 |
Change in net assets resulting from operations | $42,109,996 |
See Notes which are an integral part of the Financial Statements
Annual Shareholder ReportStatement of Changes in Net Assets
Year Ended November 30 | 2009 | 2008 |
Increase (Decrease) in Net Assets |
Operations: |
Net investment income | $3,626,329 | $5,553,895 |
Net realized gain (loss) on investments including allocation from affiliated partnership, futures contracts, swap contracts and foreign currency transactions | 548,019 | (29,685,004) |
Realized gain distributions from affiliated investment company shares | — | 3,037,079 |
Net change in unrealized appreciation/depreciation of investments, futures contracts, swap contracts and translation of assets and liabilities in foreign currency | 37,935,648 | (46,314,638) |
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS | 42,109,996 | (67,408,668) |
Distributions to Shareholders: |
Distributions from net investment income |
Class A Shares | (2,629,338) | (4,209,600) |
Class B Shares | (267,729) | (558,754) |
Class C Shares | (285,201) | (436,499) |
Class K Shares | (384,837) | (373,935) |
Institutional Shares | (19,202) | — |
Distributions from net realized gain on investments, futures contracts, swap contracts and foreign currency transactions |
Class A Shares | — | (18,997,795) |
Class B Shares | — | (3,970,690) |
Class C Shares | — | (2,615,505) |
Class K Shares | — | (1,610,535) |
CHANGE IN NET ASSETS RESULTING FROM DISTRIBUTIONS TO SHAREHOLDERS | (3,586,307) | (32,773,313) |
Year Ended November 30 | 2009 | 2008 |
Share Transactions: |
Proceeds from sale of shares | 69,643,362 | 61,467,368 |
Proceeds from shares issued in connection with the tax-free transfer of assets from Federated Target ETF Fund 2015 | 5,272,582 | — |
Proceeds from shares issued in connection with the tax-free transfer of assets from Federated Target ETF Fund 2025 | 8,053,895 | — |
Proceeds from shares issued in connection with the tax-free transfer of assets from Federated Target ETF Fund 2035 | 6,951,526 | — |
Net asset value of shares issued to shareholders in payment of distributions declared | 3,363,174 | 30,823,744 |
Cost of shares redeemed | (70,213,064) | (85,242,261) |
CHANGE IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS | 23,071,475 | 7,048,851 |
Change in net assets | 61,595,164 | (93,133,130) |
Net Assets: |
Beginning of period | 186,560,466 | 279,693,596 |
End of period (including distributions in excess of net investment income of $(56,725) and $(224,475), respectively) | $248,155,630 | $186,560,466 |
See Notes which are an integral part of the Financial Statements
Annual Shareholder ReportNotes to Financial Statements
November 30, 2009
Federated Stock and Bond Fund (formerly, Federated Stock and Bond Fund, Inc.) (the “Fund”), is registered under the Investment Company Act of 1940, as amended (the “Act”), as a diversified, open-end management investment company. The Fund offers five classes of shares: Class A Shares, Class B Shares, Class C Shares, Class K Shares and Institutional Shares. All shares of the Fund have equal rights with respect to voting, except on class-specific matters. The financial highlights of the Class A Shares, Class B Shares, Class C Shares and Class K Shares are presented separately. The primary investment objective of the Fund is to provide relative safety of capital with the possibility of long-term growth of capital and income. Consideration is also given to current income.
Effective June 12, 2009, the Fund began offering Institutional Shares.
On June 15, 2009, the Fund received assets from Federated Target ETF Fund 2015 (FT2015), Federated Target ETF Fund 2025 (FT2025) and Federated Target ETF Fund 2035 (FT2035) (collectively, “Acquired Funds”) as a result of a tax-free reorganization, as follows:
Shares of the Fund Issued | Acquired Funds Net Assets Received | Unrealized Appreciation1 | Net Assets of the Fund Immediately Prior to Combination | Net Assets of the Fund Immediately After Combination |
FT2015 | 374,734 | $5,272,582 | $244,522 |
FT2025 | 572,336 | 8,053,895 | 705,623 |
FT2035 | 494,024 | 6,951,526 | 499,642 |
TOTAL | 1,441,094 | $20,278,003 | $1,449,787 | $200,320,350 | $220,598,353 |
1 | Unrealized appreciation is included in the Acquired Funds Net Assets Received amount shown above. |
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. These policies are in conformity with U.S. generally accepted accounting principles (GAAP).
Investment Valuation
In calculating its net asset value (NAV), the Fund generally values investments as follows:
- Equity securities listed on an exchange or traded through a regulated market system are valued at their last reported sale price or official closing price in their principal exchange or market.
- Fixed-income securities acquired with remaining maturities greater than 60 days are fair valued using price evaluations provided by a pricing service approved by the Trustees.
- Fixed-income securities acquired with remaining maturities of 60 days or less are valued at their cost (adjusted for the accretion of any discount or amortization of any premium).
- Shares of other mutual funds are valued based upon their reported NAVs.
- Derivative contracts listed on exchanges are valued at their reported settlement or closing price.
- Over-the-counter (OTC) derivative contracts are fair valued using price evaluations provided by a pricing service approved by the Trustees.
Fair Valuation and Significant Events Procedures
The Trustees have authorized the use of pricing services to provide evaluations of the current fair value of certain investments for purposes of calculating the NAV. Factors considered by pricing services in evaluating an investment include the yields or prices of investments of comparable quality, coupon, maturity, call rights and other potential prepayments, terms and type, reported transactions, indications as to values from dealers and general market conditions. Some pricing services provide a single price evaluation reflecting the bid-side of the market for an investment (a “bid” evaluation). Other pricing services offer both bid evaluations and price evaluations indicative of a price between the prices bid and asked for the investment (a “mid” evaluation). The Fund normally uses bid evaluations for U.S. Treasury and Agency securities, mortgage-backed securities and municipal securities. The Fund normally uses mid evaluations for other types of fixed-income securities and OTC derivative contracts. In the event that market quotations and price evaluations are not available for an investment, the fair value of the investment is determined in accordance with procedures adopted by the Trustees.
The Trustees also have adopted procedures requiring an investment to be priced at its fair value whenever the Adviser determines that a significant event affecting the value of the investment has occurred between the time as of which the price of the investment would otherwise be determined and the time as of which the NAV is computed. An event is considered significant if there is both an affirmative expectation that the investment's value will change in response to the event and a reasonable basis for quantifying the resulting change in value. Examples of significant events that may occur after the close of the principal market on which a security is traded, or after the time of a price evaluation provided by a pricing service or a dealer, include:
- With respect to securities traded in foreign markets, significant trends in U.S. equity markets or in the trading of foreign securities index futures or options contracts;
- With respect to price evaluations of fixed-income securities determined before the close of regular trading on the NYSE, actions by the Federal Reserve Open Market Committee and other significant trends in U.S. fixed-income markets;
- Political or other developments affecting the economy or markets in which an issuer conducts its operations or its securities are traded; and
- Announcements concerning matters such as acquisitions, recapitalizations, litigation developments, a natural disaster affecting the issuer's operations or regulatory changes or market developments affecting the issuer's industry.
The Trustees have approved the use of a pricing service to determine the fair value of equity securities traded principally in foreign markets when the Adviser determines that there has been a significant trend in the U.S. equity markets or in index futures trading. For other significant events, the Fund may seek to obtain more current quotations or price evaluations from alternative pricing sources. If a reliable alternative pricing source is not available, the Fund will determine the fair value of the investment using another method approved by the Trustees.
Annual Shareholder ReportIt is the policy of the Fund to require the other party to a repurchase agreement to transfer to the Fund's custodian or sub-custodian eligible securities or cash with a market value (after transaction costs) at least equal to the repurchase price to be paid under the repurchase agreement. The eligible securities are transferred to accounts with the custodian or sub-custodian in which the Fund holds a “securities entitlement” and exercises “control” as those terms are defined in the Uniform Commercial Code. The Fund has established procedures for monitoring the market value of the transferred securities and requiring the transfer of additional eligible securities if necessary to equal at least the repurchase price. These procedures also allow the other party to require securities to be transferred from the account to the extent that their market value exceeds the repurchase price or in exchange for other eligible securities of equivalent market value.
With respect to agreements to repurchase U.S. government securities and cash items, the Fund treats the repurchase agreement as an investment in the underlying securities and not as an obligation of the other party to the repurchase agreement. Other repurchase agreements are treated as obligations of the other party secured by the underlying securities. Nevertheless, the insolvency of the other party or other failure to repurchase the securities may delay the disposition of the underlying securities or cause the Fund to receive less than the full repurchase price. Under the terms of the repurchase agreement, any amounts received by the Fund in excess of the repurchase price and related transaction costs must be remitted to the other party.
The Fund may enter into repurchase agreements in which eligible securities are transferred into joint trading accounts maintained by the custodian or sub-custodian for investment companies and other clients advised by the Fund's Adviser and its affiliates. The Fund will participate on a pro rata basis with the other investment companies and clients in its share of the securities transferred under such repurchase agreements and in its share of proceeds from any repurchase or other disposition of such securities.
Investment Income, Gains and Losses, Expenses and Distributions
Investment transactions are accounted for on a trade-date basis. Realized gains and losses from investment transactions are recorded on an identified-cost basis. Interest income and expenses are accrued daily. Dividend income and distributions to shareholders are recorded on the ex-dividend date. Foreign dividends are recorded on the ex-dividend date or when the Fund is informed of the ex-dividend date. Positive or negative inflation adjustments on Treasury Inflation-Protected Securities are included in interest income. Distributions of net investment income are declared and paid quarterly. Non-cash dividends included in dividend income, if any, are recorded at fair value. Investment income, realized and unrealized gains and losses and certain fund-level expenses are allocated to each class based on relative average daily net assets, except that Class A Shares, Class B Shares, Class C Shares, Class K Shares and Institutional Shares may bear distribution services fees, shareholder services fees, account administration fees and certain transfer and dividend disbursing agent fees unique to those classes. The Fund may also invest in Emerging Markets Fixed Income Core Fund (EMCORE), a portfolio of Federated Core Trust II, L.P., which is a limited partnership established under the laws of the state of Delaware. The Fund records daily its proportionate share of income, expenses, realized and unrealized gains and losses from EMCORE. Dividends are declared separately for each class. No class has preferential dividend rights; differences in per share dividend rates are generally due to differences in separate class expenses.
Annual Shareholder ReportAll premiums and discounts on fixed-income securities are amortized/accreted for financial statement purposes. Gains and losses realized on principal payment of mortgage-backed securities (paydown gains and losses) are classified as part of investment income.
Federal Taxes
It is the Fund's policy to comply with the Subchapter M provision of the Internal Revenue Code (the “Code”) and to distribute to shareholders each year substantially all of its income. Accordingly, no provision for federal income tax is necessary. As of and during the year ended November 30, 2009, the Fund did not have a liability for any uncertain tax positions. The Fund recognizes interest and penalties, if any, related to tax liabilities as income tax expense in the Statement of Operations. As of September 5, 2008, the Fund's domicile and form of organization changed from a Maryland Corporation to a Massachusetts business Trust. As of November 30, 2009, tax years 2006 through 2009 remain subject to examination by the Fund's major tax jurisdictions, which include the United States of America, the state of Maryland, the Commonwealth of Massachusetts and the Commonwealth of Pennsylvania.
The Fund may be subject to taxes imposed by governments of countries in which it invests. Such taxes are generally based on either income or gains earned or repatriated. The Fund accrues and applies such taxes to net investment income, net realized gains and net unrealized gains as income and/or gains are earned.
Other Taxes
Through September 4, 2008, as an open-end management investment company incorporated in the state of Maryland but domiciled in the Commonwealth of Pennsylvania, the Fund is subject to the Pennsylvania Franchise Tax. This franchise tax is assessed annually on the value of the Fund, as represented by average net assets for the tax year.
When-Issued and Delayed Delivery Transactions
The Fund may engage in when-issued or delayed delivery transactions. The Fund records when-issued securities on the trade date and maintains security positions such that sufficient liquid assets will be available to make payment for the securities purchased. Securities purchased on a when-issued or delayed delivery basis are marked to market daily and begin earning interest on the settlement date. Losses may occur on these transactions due to changes in market conditions or the failure of counterparties to perform under the contract.
Swap Contracts
Swap contracts involve two parties that agree to exchange the returns (or the differential in rates of return) earned or realized on particular predetermined investments, instruments, indices or other measures. The gross returns to be exchanged or “swapped” between parties are generally calculated with respect to a “notional amount” for a predetermined period of time. The Fund may enter into interest rate, total return, credit default, currency and other swap agreements. Risks may arise upon entering into swap agreements from the potential inability of the counterparties to meet the terms of their contract from unanticipated changes in the value of the swap agreement. The Fund uses credit default swaps to manage exposure to a given issuer or sector by either selling protection to increase exposure, or buying protection to reduce exposure. The “buyer” in a credit default swap is obligated to pay the “seller” a periodic stream of payments over the term of the contract provided that no event of default on an underlying reference obligation has occurred. If an event of default occurs, the seller must pay the buyer the full notional value, or the “par value”, of the reference obligation Annual Shareholder ReportThe Fund's maximum risk of loss from counterparty credit risk, either as the protection buyer or as the protection seller, is the fair value of the contract. This risk is mitigated by having a master netting arrangement between the Fund and the counterparty and by the posting of collateral by the counterparty to the Fund to cover the Fund's exposure to the counterparty.
Upfront payments received or paid by the Fund will be reflected as an asset or liability on the Statement of Assets and Liabilities. Changes in the value of swap contracts are included in swaps, at value, on the Statement of Assets and Liabilities, and periodic payments are reported as Net realized gain (loss) on swap contracts in the Statement of Operations.
Swap contracts outstanding at period end are listed after the Fund's Portfolio of Investments.
Futures Contracts
The Fund purchases and sells financial futures contracts to manage cash flows, enhance yield and to potentially reduce transaction costs. Upon entering into a financial futures contract with a broker, the Fund is required to deposit in a segregated account a specified amount of cash or U.S. government securities. Futures contracts are valued daily and unrealized gains or losses are recorded in a “variation margin” account. Daily, the Fund receives from or pays to the broker a specified amount of cash based upon changes in the variation margin account. When a contract is closed, the Fund recognizes a realized gain or loss. Futures contracts have market risks, including the risk that the change in the value of the contract may not correlate with the changes in the value of the underlying securities. There is minimal counterparty risk to the Fund since futures are exchange traded and the exchange's clearinghouse, as counterparty to all exchange traded futures, guarantees the futures against default.
Futures contracts outstanding at period end are listed after the Fund's Portfolio of Investments.
Foreign Exchange Contracts
The Fund may enter into foreign exchange contracts for the delayed delivery of securities or foreign currency exchange transactions. The Fund may enter into foreign exchange contracts to protect assets against adverse changes in foreign currency exchange rates or exchange control regulations. Purchased contracts are used to acquire exposure to foreign currencies, whereas, contracts to sell are used to hedge the Fund's securities against currency fluctuations. Risks may arise upon entering into these transactions from the potential inability Annual Shareholder ReportForeign exchange contracts outstanding at period end are listed after the Fund's Portfolio of Investments.
Foreign Currency Translation
The accounting records of the Fund are maintained in U.S. dollars. All assets and liabilities denominated in foreign currencies (FCs) are translated into U.S. dollars based on the rates of exchange of such currencies against U.S. dollars on the date of valuation. Purchases and sales of securities, income and expenses are translated at the rate of exchange quoted on the respective date that such transactions are recorded. The Fund does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss from investments.
Reported net realized foreign exchange gains or losses arise from sales of portfolio securities, sales and maturities of short-term securities, sales of FCs, currency gains or losses realized between the trade and settlement dates on securities transactions, the difference between the amounts of dividends, interest and foreign withholding taxes recorded on the Fund's books, and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in the value of assets and liabilities other than investments in securities at fiscal year end, resulting from changes in the exchange rate.
Restricted Securities
The Fund may purchase securities which are considered restricted. Restricted securities are securities that either: (a) cannot be offered for public sale without first being registered, or being able to take advantage of an exemption from registration, under the Securities Act of 1933; or (b) are subject to contractual restrictions on public sales. In some cases, when a security cannot be offered for public sale without first being registered, the issuer of the restricted security has agreed to register such securities for resale, at the issuer's expense, either upon demand by the Fund or in connection with another registered offering of the securities. Many such restricted securities may be resold in the secondary market in transactions exempt from registration. Restricted securities may be determined to be liquid under criteria established by the Trustees. The Fund will not incur any registration costs upon such resales. The Fund's restricted securities are valued at the price provided by dealers in the secondary market or, if no market prices are available, at the fair value as determined in accordance with procedures established by and under the general supervision of the Trustees.
Annual Shareholder ReportSecurity | Acquisition Date | Acquisition Cost | Market Value |
Union Central Life Ins Co, Note, 8.2%, 11/1/2026 | 3/31/1999 | $783,526 | $704,991 |
Additional Disclosure Related to Derivative Instruments
Fair Value of Derivative Instruments | ||||
Asset | Liability | |||
Statement of Assets and Liabilities Location | Fair Value | Statement of Assets and Liabilities Location | Fair Value | |
Derivatives not accounted for as hedging instruments under ASC Topic 815 | ||||
Interest rate contracts | — | $ — | Payable for daily variation margin | $105,467* |
Equity contracts | — | — | Payable for daily variation margin | (691,446)* |
Foreign exchange contracts | Receivable for foreign exchange contracts | 664,591 | Payable for foreign exchange contracts | 1,037,869 |
Credit contracts | Receivable for periodic payments from swap contracts | 19,565 | swaps, at value | 32,854 |
Total derivatives not accounted for as hedging instruments under ASC Topic 815 | $684,156 | $484,744 |
* | Includes cumulative appreciation/depreciation of futures contracts as reported in the footnotes to the Portfolio of Investments. Only the current day's variation margin is reported within the Statement of Assets and Liabilities. |
Amount of Realized Gain or (Loss) on Derivatives Recognized in Income | ||||
Credit Default Swaps | Futures | Forward Currency Contracts | Total | |
Interest rate contracts | $ — | $(190,823) | $ — | $(190,823) |
Equity contracts | — | 4,016,738 | — | 4,016,738 |
Foreign exchange contracts | — | — | (3,212) | (3,212) |
Credit contracts | 99,956 | — | — | 99,956 |
Total | $99,956 | $3,825,915 | $(3,212) | $3,922,659 |
Change in Unrealized Appreciation or (Depreciation) on Derivatives Recognized in Income | ||||
Credit Default Swaps | Futures | Forward Currency Contracts | Total | |
Interest rate contracts | $ — | $(270,452) | $ — | $(270,452) |
Equity contracts | — | 527,763 | — | 527,763 |
Foreign exchange contracts | — | — | (373,278) | (373,278) |
Credit contracts | 57,201 | — | — | 57,201 |
Total | $57,201 | $257,311 | $(373,278) | $(58,766) |
Other
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts of assets, liabilities, expenses and revenues reported in the financial statements. Actual results could differ from those estimated.
Annual Shareholder ReportThe following tables summarize share activity:
Year Ended November 30 | 2009 | 2008 | |
Class A Shares: | Shares | Amount | Shares | Amount |
Shares sold | 1,851,463 | $25,328,003 | 1,736,691 | $28,811,635 |
Proceeds from shares issued in connection with the tax-free transfer of assets from Federated Target ETF Fund 2015 | 138,737 | 1,950,574 | — | — |
Proceeds from shares issued in connection with the tax-free transfer of assets from Federated Target ETF Fund 2025 | 192,254 | 2,703,126 | — | — |
Proceeds from shares issued in connection with the tax-free transfer of assets from Federated Target ETF Fund 2035 | 184,524 | 2,594,400 | — | — |
Shares issued to shareholders in payment of distributions declared | 182,962 | 2,452,902 | 1,246,091 | 21,865,220 |
Shares redeemed | (2,550,336) | (34,968,933) | (3,205,676) | (52,219,023) |
NET CHANGE RESULTING FROM CLASS A SHARE TRANSACTIONS | (396) | $60,072 | (222,894) | $(1,542,168) |
Year Ended November 30 | 2009 | 2008 | |
Class B Shares: | Shares | Amount | Shares | Amount |
Shares sold | 274,805 | $3,808,687 | 253,445 | $4,287,345 |
Shares issued to shareholders in payment of distributions declared | 19,052 | 250,988 | 242,313 | 4,277,122 |
Shares redeemed | (656,572) | (8,884,783) | (914,395) | (15,004,715) |
NET CHANGE RESULTING FROM CLASS B SHARE TRANSACTIONS | (362,715) | $(4,825,108) | (418,637) | $(6,440,248) |
Year Ended November 30 | 2009 | 2008 | |
Class C Shares: | Shares | Amount | Shares | Amount |
Shares sold | 1,002,107 | $13,808,180 | 643,591 | $10,471,614 |
Shares issued to shareholders in payment of distributions declared | 19,606 | 258,296 | 154,274 | 2,697,569 |
Shares redeemed | (783,732) | (10,601,445) | (552,725) | (8,864,283) |
NET CHANGE RESULTING FROM CLASS C SHARE TRANSACTIONS | 237,981 | $3,465,031 | 245,140 | $4,304,900 |
Year Ended November 30 | 2009 | 2008 | |
Class K Shares: | Shares | Amount | Shares | Amount |
Shares sold | 1,822,012 | $25,416,459 | 1,099,593 | $17,896,774 |
Proceeds from shares issued in connection with the tax-free transfer of assets from Federated Target ETF Fund 2015 | 192,931 | 2,716,507 | — | — |
Proceeds from shares issued in connection with the tax-free transfer of assets from Federated Target ETF Fund 2025 | 339,137 | 4,775,071 | — | — |
Proceeds from shares issued in connection with the tax-free transfer of assets from Federated Target ETF Fund 2035 | 269,074 | 3,788,720 | — | — |
Shares issued to shareholders in payment of distributions declared | 28,544 | 384,790 | 113,667 | 1,983,833 |
Shares redeemed | (1,080,496) | (15,220,214) | (572,618) | (9,154,240) |
NET CHANGE RESULTING FROM CLASS K SHARE TRANSACTIONS | 1,571,202 | $21,861,333 | 640,642 | $10,726,367 |
Period Ended11/30/20091 | Year Ended 11/30/2008 | ||
Institutional Shares: | Shares | Amount | Shares | Amount |
Shares sold | 86,196 | $1,282,033 | — | $ — |
Proceeds from shares issued in connection with the tax-free transfer of assets from Federated Target ETF Fund 2015 | 43,066 | 605,501 | — | — |
Proceeds from shares issued in connection with the tax-free transfer of assets from Federated Target ETF Fund 2025 | 40,945 | 575,698 | — | — |
Proceeds from shares issued in connection with the tax-free transfer of assets from Federated Target ETF Fund 2035 | 40,426 | 568,406 | — | — |
Shares issued to shareholders in payment of distributions declared | 1,079 | 16,198 | — | — |
Shares redeemed | (34,334) | (537,689) | — | — |
NET CHANGE RESULTING FROM INSTITUTIONAL SHARE TRANSACTIONS | 177,378 | $2,510,147 | — | $ — |
NET CHANGE RESULTING FROM FUND SHARE TRANSACTIONS | 1,623,450 | $23,071,475 | 244,251 | $7,048,851 |
1 | Reflects operations from June 12, 2009, (date of initial investment) to November 30, 2009. |
The timing and character of income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP. These differences are due in part to differing treatments for foreign currency transactions, reclassification of income for defaulted securities, partnership income reclassifications, swap income reclassifications, expiration of capital loss carryforwards and discount accretion/premium amortization on debt securities.
For the year ended November 30, 2009, permanent differences identified and reclassified among the components of net assets were as follows:
Increase (Decrease) | ||
Paid-In Capital | Undistributed Net Investment Income (Loss) | Accumulated Net Realized Gain (Loss) |
$8,121,591 | $127,728 | $(8,249,319) |
Net investment income (loss), net realized gains (losses), and net assets were not affected by this reclassification.
The tax character of distributions as reported on the Statement of Changes in Net Assets for the years ended November 30, 2009 and 2008, was as follows:
2009 | 2008 |
Ordinary income1 | $3,586,307 | $15,440,201 |
Long-term capital gains | $ — | $17,333,112 |
1 | For tax purposes, short-term capital gain distributions are considered ordinary income distributions. |
As of November 30, 2009, the components of distributable earnings on a tax basis were as follows:
Distributions in excess of ordinary income | $(82,025) |
Net unrealized appreciation | $15,689,996 |
Capital loss carryforwards | $(32,829,608) |
The difference between book-basis and tax-basis net unrealized appreciation/depreciation is attributable in part to differing treatments for the deferral of losses on wash sales, partnership transactions, defaulted bond interest and discount accretion/premium amortization on debt securities.
At November 30, 2009, the cost of investments for federal tax purposes was $231,155,224. The net unrealized appreciation of investments for federal tax purposes excluding any unrealized appreciation/depreciation resulting from changes in foreign currency exchange rates, outstanding foreign commitments, futures contracts and swap contracts was $17,643,788. This consists of net unrealized appreciation from investments for those securities having an excess of value over cost of $20,070,842 and net unrealized depreciation from investments for those securities having an excess of cost over value of $2,427,054.
Annual Shareholder ReportExpiration Year | Expiration Amount |
2010 | $1,244,627 |
2015 | $1,453,609 |
2016 | $25,710,105 |
2017 | $4,421,267 |
As a result of the tax-free transfer of assets from Vintage Balanced Fund, Federated Target ETF Fund 2015, Federated Target ETF Fund 2025 and Federated Target ETF Fund 2035, certain capital loss carryforwards listed above may be limited.
Capital loss carryforwards of $1,127,965 expired during the year ended November 30, 2009.
5. INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Investment Adviser Fee
Federated Global Investment Management Corp. is the Fund's investment adviser (the “Adviser”). The advisory agreement between the Fund and the Adviser provides for an annual fee equal to: (a) a maximum of 0.55% of the average daily net assets of the Fund; and
(b) 4.50% of the gross income of the Fund, excluding gains or losses. Subject to the terms described in the Expense Limitation note, the Adviser may voluntarily choose to waive any portion of its fee. The Adviser can modify or terminate this voluntary waiver at any time at its sole discretion. For the year ended November 30, 2009, the Adviser voluntarily waived $271,612 of its fee. For the year ended November 30, 2009, an affiliate of the adviser reimbursed $125,766 of transfer and dividend disbursing agent fees and expenses.
Certain of the Fund's assets are managed by Federated Investment Management Company (FIMCO) and Federated Equity Management Company of Pennsylvania (FEMCOPA) (the “Sub-Advisers”). Under the terms of a sub-advisory agreement between the Adviser and the Sub-Advisers, the Sub-Advisers receive an allocable portion of the Fund's adviser fee. The fee is paid by the Adviser out of its resources and is not an incremental Fund expense. For the year ended November 30, 2009, FIMCO and FEMCOPA earned fees of $197,451 and
$590,549, respectively.
Administrative Fee
Federated Administrative Services (FAS), under the Administrative Services Agreement, provides the Fund with administrative personnel and services. The fee paid to FAS is based on the average aggregate daily net assets of certain Federated funds as specified below:
Annual Shareholder ReportAdministrative Fee | Average Aggregate Daily Net Assets of the Federated Funds |
0.150% | on the first $5 billion |
0.125% | on the next $5 billion |
0.100% | on the next $10 billion |
0.075% | on assets in excess of $20 billion |
The administrative fee received during any fiscal year shall be at least $150,000 per portfolio and $40,000 per each additional class of Shares. Subject to the terms described in the Expense Limitation note, FAS may voluntarily choose to waive any portion of its fee. FAS can modify or terminate this voluntary waiver at any time at its sole discretion. For the year ended
November 30, 2009, the net fee paid to FAS was 0.111% of average daily net assets of the Fund. FAS waived $57,635 of its fee.
Distribution Services Fee
The Fund has adopted a Distribution Plan (the “Plan”) pursuant to Rule 12b-1 under the Act. Under the terms of the Plan, the Fund will compensate Federated Securities Corp. (FSC), the principal distributor, from the daily net assets of the Fund's Class B Shares, Class C Shares and Class K Shares to finance activities intended to result in the sale of these shares. The Plan provides that the Fund may incur distribution expenses at the following percentages of average daily net assets annually, to compensate FSC:
Share Class Name | Percentage of Average Daily Net Assets of Class |
Class B Shares | 0.75% |
Class C Shares | 0.75% |
Class K Shares | 0.50% |
Subject to the terms described in the Expense Limitation note, FSC may voluntarily choose to waive any portion of its fee. FSC can modify or terminate this voluntary waiver at any time at its sole discretion. For the year ended November 30, 2009, FSC voluntarily waived $615 of its fee. When FSC receives fees, it may pay some or all of them to financial intermediaries whose customers purchase shares. For the year ended November 30, 2009, FSC retained $8,507 of fees paid by the Fund.
Sales Charges
Front-end sales charges and contingent deferred sales charges (CDSC) do not represent expenses of the Fund. They are deducted from the proceeds of sales of Fund shares prior to investment or from redemption proceeds prior to remittance, as applicable. For the year ended November 30, 2009, FSC retained $16,165 in sales charges from the sale of Class A Shares. FSC also retained $175 of CDSC relating to redemptions of Class C Shares.
Shareholder Services Fee
The Fund may pay fees (Service Fees) up to 0.25% of the average daily net assets of the Fund's Class A Shares, Class B Shares and Class C Shares to financial intermediaries or to Federated Shareholder Services Company (FSSC) for providing services to shareholders and maintaining shareholder accounts. Financial intermediaries may include a company affiliated with management of Federated Investors, Inc. A financial intermediary affiliated with management of Federated Investors, Inc. received $1,386 of Service Fees for the year ended November 30, Annual Shareholder ReportInterfund Transactions
During the year ended November 30, 2009, the Fund engaged in purchase and sale transactions with funds that have a common investment adviser (or affiliated investment advisers), common Directors/Trustees, and/or common Officers. These purchase and sale transactions complied with Rule 17a-7 under the Act and amounted to $64,273 and
$26,071, respectively.
Expense Limitation
The Adviser and its affiliates (which may include FSC, FAS and FSSC) have voluntarily agreed to waive their fees and/or reimburse expenses so that the total operating expenses (as shown in the financial highlights) paid by the Fund's Class A Shares, Class B Shares, Class C Shares, Class K Shares and Institutional Shares (after the voluntary waivers and reimbursements) will not exceed 1.25%, 2.05%, 2.05%, 1.75% and 1.00%, respectively, through the later of (the “Termination Date”): (a) January 31, 2011; or (b) the date of the Fund's next effective prospectus. While the Adviser and its affiliates currently do not anticipate terminating these arrangements prior to the Termination Date, these arrangements may only be terminated prior to the Termination Date with the agreement of the Trustees.
General
Certain Officers and Trustees of the Fund are Officers and Directors or Trustees of the above companies.
Transactions with Affiliated Companies
Affiliated holdings are mutual funds which are managed by the Adviser or an affiliate of the Adviser. The Adviser has agreed to reimburse the Fund for certain investment adviser fees as a result of transactions in other affiliated mutual funds. For the year ended November 30, 2009, the Adviser reimbursed $16,156. Transactions with affiliated companies during the year ended November 30, 2009 were as follows:
Affiliates | Balance of Shares Held 11/30/2008 | Purchases/ Additions | Sales/ Reductions | Balance of Shares Held 11/30/2009 | Value | Dividend Income/ Affiliated Investment Income |
Emerging Markets Fixed Income Core Fund | 47,274 | 250,112 | 98,280 | 199,106 | $4,786,699 | $220,339 |
Federated InterContinental Fund, Institutional Shares | 8,746 | 558 | 9,304 | — | — | 17,754 |
Federated Mortgage Core Portfolio | 4,526,393 | 624,629 | 4,204,088 | 946,934 | 9,677,667 | 1,296,208 |
High Yield Bond Portfolio | 835,952 | 1,909,967 | 878,537 | 1,867,382 | 11,484,402 | 803,909 |
Affiliates | Balance of Shares Held 11/30/2008 | Purchases/ Additions | Sales/ Reductions | Balance of Shares Held 11/30/2009 | Value | Dividend Income/ Affiliated Investment Income |
Prime Value Obligations Fund, Institutional Shares | 4,610,280 | 267,250,160 | 235,765,418 | 36,095,022 | 36,095,022 | 114,590 |
TOTAL OF AFFILIATED TRANSACTIONS | 10,028,645 | 270,035,426 | 240,955,627 | 39,108,444 | $62,043,790 | $2,452,800 |
The Fund directs portfolio trades to a broker that in turn pays a portion of the Fund's operating expenses. For the year ended November 30, 2009, the Fund's expenses were reduced by $20,630 under these arrangements.
Purchases and sales of investments, excluding long-term U.S. government securities and short-term obligations (and in-kind contributions), for the year ended November 30, 2009, were as follows:
Purchases | $484,030,920 |
Sales | $516,527,904 |
The Fund participates in a $100,000,000 unsecured, uncommitted revolving line of credit (LOC) agreement with PNC Bank. The LOC was made available for extraordinary or emergency purposes, primarily for financing redemption payments. Borrowings are charged interest at a rate offered to the Fund by PNC Bank at the time of the borrowing. As of November 30, 2009, there were no outstanding loans. During the year ended November 30, 2009, the Fund did not utilize the LOC.
Pursuant to an Exemptive Order issued by the Securities and Exchange Commission (SEC), the Fund, along with other funds advised by subsidiaries of Federated Investors, Inc., may participate in an interfund lending program. This program provides an alternative credit facility allowing the Fund to borrow from other participating affiliated funds. As of November 30, 2009, there were no outstanding loans. During the year ended November 30, 2009, the program was not utilized.
Since October 2003, Federated Investors, Inc. and related entities (collectively, Federated) and various Federated funds (Federated Funds) have been named as defendants in several class action lawsuits now pending in the United States District Court for the District of Maryland. The lawsuits were purportedly filed on behalf of people who purchased, owned and/or redeemed shares of Federated-sponsored mutual funds during specified periods beginning November 1, 1998. The suits are generally similar in alleging that Federated engaged in illegal and improper trading practices including market timing and late trading in concert with Annual Shareholder ReportManagement has evaluated subsequent events through January 22, 2010, the date the financial statements were issued, and determined that no events have occurred that require additional disclosure
12. FEDERAL TAX INFORMATION (UNAUDITED)
For the fiscal year ended November 30, 2009, 73.53% of total income distributions made by the Fund are qualifying dividends which may be subject to a maximum tax rate of 15%, as provided for by the Jobs and Growth Tax Relief Act of 2003. Complete information is reported in conjunction with the reporting of your distributions on Form 1099-DIV.
Of the ordinary income distributions made by the Fund during the year ended
November 30, 2009, 58.06% qualify for the dividend received deduction available to corporate shareholders.
Report of Independent Registered Public Accounting Firm
TO THE BOARD OF trusteeS AND THE SHAREHOLDERS OF FEDERATED STOCK AND BOND FUND:
We have audited the accompanying statement of assets and liabilities, including the portfolio of investments, of the Federated Stock and Bond Fund (the “Fund”), as of November 30, 2009, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years in the four-year period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. The financial highlights for the periods presented prior to December 1, 2005, were audited by other independent registered public accountants whose report thereon dated January 23, 2006, expressed an unqualified opinion on those statements.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of November 30, 2009 by correspondence with the custodian and transfer agent. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the Federated Stock and Bond Fund as of November 30, 2009, and the results of its operations for the year then ended, the changes in its net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years in the four-year period then ended, in conformity with U.S. generally accepted accounting principles.
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Boston, Massachusetts
January 22, 2010
Board of Trustees and Trust Officers
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. The following tables give information about each Board member and the senior officers of the Fund. Where required, the tables separately list Board members who are “interested persons” of the Fund (i.e., “Interested” Board members) and those who are not (i.e., “Independent” Board members). Unless otherwise noted, the address of each person listed is Federated Investors Tower, 1001 Liberty Avenue, Pittsburgh, PA 15222. The address of all Independent Board members listed is 4000 Ericsson Drive, Warrendale, PA 15086-7561; Attention: Mutual Fund Board. As of December 31, 2009, the Trust comprised one portfolio, and the Federated Fund Complex consisted of 43 investment companies (comprising 145 portfolios). Unless otherwise noted, each Officer is elected annually. Unless otherwise noted, each Board member oversees all portfolios in the Federated Fund Complex and serves for an indefinite term. The Fund's Statement of Additional Information includes additional information about Trust Trustees and is available, without charge and upon request, by calling 1-800-341-7400.
Interested Trustees Background
Name Birth Date Positions Held with Trust Date Service Began | Principal Occupation(s) for Past Five Years, Other Directorships Held and Previous Position(s) |
John F. Donahue* Birth Date: July 28, 1924 TRUSTEE Began serving: December 1956 | Principal Occupations: Director or Trustee of the Federated Fund Complex; Chairman and Director, Federated Investors, Inc.; Chairman of the Federated Fund Complex's Executive Committee. Previous Positions: Chairman of the Federated Fund Complex; Trustee, Federated Investment Management Company; Chairman and Director, Federated Investment Counseling. |
J. Christopher Donahue* Birth Date: April 11, 1949 PRESIDENT AND TRUSTEE Began serving: November 1998 | Principal Occupations: Principal Executive Officer and President of the Federated Fund Complex; Director or Trustee of some of the Funds in the Federated Fund Complex; President, Chief Executive Officer and Director, Federated Investors, Inc.; Chairman and Trustee, Federated Investment Management Company; Trustee, Federated Investment Counseling; Chairman and Director, Federated Global Investment Management Corp.; Chairman, Federated Equity Management Company of Pennsylvania and Passport Research, Ltd. (investment advisory subsidiary of Federated); Trustee, Federated Shareholder Services Company; Director, Federated Services Company. Previous Positions: President, Federated Investment Counseling; President and Chief Executive Officer, Federated Investment Management Company, Federated Global Investment Management Corp. and Passport Research, Ltd. |
* | Family relationships and reasons for “interested” status: John F. Donahue is the father of J. Christopher Donahue; both are “interested” due to their beneficial ownership of shares of Federated Investors, Inc. and the positions they hold with Federated and its subsidiaries. |
INDEPENDENT Trustees Background
Name Birth Date Positions Held with Trust Date Service Began | Principal Occupation(s) for Past Five Years, Other Directorships Held and Previous Position(s) |
John T. Conroy, Jr., Ph.D. Birth Date: June 23, 1937 TRUSTEE Began serving: August 1991 | Principal Occupations: Director or Trustee of the Federated Fund Complex; Chairman of the Board, Investment Properties Corporation; Partner or Trustee in private real estate ventures in Southwest Florida; Assistant Professor in Theology, Blessed Edmund Rice School for Pastoral Ministry. Previous Positions: President, Investment Properties Corporation; Senior Vice President, John R. Wood and Associates, Inc., Realtors; President, Naples Property Management, Inc. and Northgate Village Development Corporation. |
Nicholas P. Constantakis Birth Date: September 3, 1939 TRUSTEE Began serving: November 1998 | Principal Occupation: Director or Trustee of the Federated Fund Complex. Other Directorship Held: Director and Chairman of the Audit Committee, Michael Baker Corporation (architecture, engineering and construction services). Previous Position: Partner, Andersen Worldwide SC. |
John F. Cunningham Birth Date: March 5, 1943 TRUSTEE Began serving: November 1998 | Principal Occupation: Director or Trustee of the Federated Fund Complex. Other Directorships Held: Chairman, President and Chief Executive Officer, Cunningham & Co., Inc. (strategic business consulting); Trustee Associate, Boston College. Previous Positions: Director, Redgate Communications and EMC Corporation (computer storage systems); 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. |
Maureen Lally-Green Birth Date: July 5, 1949 TRUSTEE Began serving: August 2009 | Principal Occupations: Director or Trustee of the Federated Fund Complex; Director, Office of Church Relations, Diocese of Pittsburgh; Adjunct Professor of Law, Duquesne University School of Law. Other Directorships Held: Director, Auberle; Trustee St. Francis University; Director, Ireland Institute of Pittsburgh; Director, UPMC Mercy Hospital; Regent, St. Vincent Seminary; Director, Epilepsy Foundation of Western and Central Pennsylvania; Director, Saint Thomas More Society, Allegheny County; Director, Carlow University. Previous Position: Pennsylvania Superior Court Judge. |
Name Birth Date Positions Held with Trust Date Service Began | Principal Occupation(s) for Past Five Years, Other Directorships Held and Previous Position(s) |
Peter E. Madden Birth Date: March 16, 1942 TRUSTEE Began serving: August 1991 | Principal Occupation: Director or Trustee, and Chairman of the Board of Directors or Trustees, of the Federated Fund Complex. Other Directorship Held: Board of Overseers, Babson College. Previous Positions: Representative, Commonwealth of Massachusetts General Court; President, Chief Operating Officer and Director, State Street Bank and Trust Company and State Street Corporation (retired); 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. Birth Date: April 10, 1945 TRUSTEE Began serving: November 1998 | Principal Occupations: Director or Trustee and Chairman of the Audit Committee of the Federated Fund Complex; Management Consultant. Previous Positions: Chief Executive Officer, PBTC International Bank; Partner, Arthur Young & Company (now Ernst & Young LLP); Chief Financial Officer of Retail Banking Sector, Chase Manhattan Bank; Senior Vice President, HSBC Bank USA (formerly, Marine Midland Bank); Vice President, Citibank; Assistant Professor of Banking and Finance, Frank G. Zarb School of Business, Hofstra University; Executive Vice President DVC Group, Inc. (marketing, communications and technology). |
R. James Nicholson Birth Date: February 4, 1938 TRUSTEE Began serving: January 2008 | Principal Occupations: Director or Trustee of the Federated Fund Complex; Senior Counsel, Brownstein Hyatt Farber Schrek, P.C.; Former Secretary of the U.S. Dept. of Veterans Affairs; Former U.S. Ambassador to the Holy See; Former Chairman of the Republican National Committee. Other Directorships Held: Director, Horatio Alger Association; Director, The Daniels Fund. Previous Positions: Colonel, U.S. Army Reserve; Partner, Calkins, Kramer, Grimshaw and Harring, P.C.; General Counsel, Colorado Association of Housing and Building; Chairman and CEO, Nicholson Enterprises, Inc. (real estate holding company); Chairman and CEO, Renaissance Homes of Colorado. |
Thomas M. O'Neill Birth Date: June 14, 1951 TRUSTEE Began serving: October 2006 | Principal Occupations: Director or Trustee of the Federated Fund Complex; Sole Proprietor, Navigator Management Company (investment and strategic consulting). Other Directorships Held: Board of Overseers, Children's Hospital of Boston; Visiting Committee on Athletics, Harvard College. Previous Positions: Chief Executive Officer and President, Managing Director and Chief Investment Officer, Fleet Investment Advisors; President and Chief Executive Officer, Aeltus Investment Management, Inc.; General Partner, Hellman, Jordan Management Co., Boston, MA; Chief Investment Officer, The Putnam Companies, Boston, MA; Credit Analyst and Lending Officer, Fleet Bank; Director and Consultant, EZE Castle Software (investment order management software); Director, Midway Pacific (lumber). |
Name Birth Date Positions Held with Trust Date Service Began | Principal Occupation(s) for Past Five Years, Other Directorships Held and Previous Position(s) |
John S. Walsh Birth Date: November 28, 1957 TRUSTEE Began serving: November 1998 | Principal Occupations: Director or Trustee of the Federated Fund Complex; President and Director, Heat Wagon, Inc. (manufacturer of construction temporary heaters); President and Director, Manufacturers Products, Inc. (distributor of portable construction heaters); President, Portable Heater Parts, a division of Manufacturers Products, Inc. Previous Position: Vice President, Walsh & Kelly, Inc. |
James F. Will Birth Date: October 12, 1938 TRUSTEE Began serving: April 2006 | Principal Occupations: Director or Trustee of the Federated Fund Complex; formerly, Vice Chancellor and President, Saint Vincent College. Other Directorships Held: Trustee, Saint Vincent College; Alleghany Corporation. Previous Positions: Chairman, President and Chief Executive Officer, Armco, Inc.; President and Chief Executive Officer, Cyclops Industries; President and Chief Operating Officer, Kaiser Steel Corporation. |
Name Birth Date Address Positions Held with Trust Date Service Began | Principal Occupation(s) for Past Five Years and Previous Position(s) |
John W. McGonigle Birth Date: October 26, 1938 EXECUTIVE VICE PRESIDENT AND SECRETARY Began serving: September 1969 | Principal Occupations: Executive Vice President and Secretary of the Federated Fund Complex; Vice Chairman, Executive Vice President, Secretary and Director, Federated Investors, Inc. Previous Positions: Trustee, Federated Investment Management Company and Federated Investment Counseling; Director, Federated Global Investment Management Corp., Federated Services Company and Federated Securities Corp. |
Richard A. Novak Birth Date: December 25, 1963 TREASURER Began serving: January 2006 | Principal Occupations: Principal Financial Officer and Treasurer of the Federated Fund Complex; Senior Vice President, Federated Administrative Services; Financial and Operations Principal for Federated Securities Corp., Edgewood Services, Inc. and Southpointe Distribution Services, Inc. Previous Positions: Controller of Federated Investors, Inc.; Vice President, Finance of Federated Services Company; held various financial management positions within The Mercy Hospital of Pittsburgh; Auditor, Arthur Andersen & Co. |
Richard B. Fisher Birth Date: May 17, 1923 VICE PRESIDENT Began serving: May 1976 | Principal Occupations: Vice Chairman or Vice President of some of the Funds in the Federated Fund Complex; Vice Chairman, Federated Investors, Inc.; Chairman, Federated Securities Corp. Previous Positions: President and Director or Trustee of some of the Funds in the Federated Fund Complex; Executive Vice President, Federated Investors, Inc.; Director and Chief Executive Officer, Federated Securities Corp. |
Name Birth Date Address Positions Held with Trust Date Service Began | Principal Occupation(s) for Past Five Years and Previous Position(s) |
Brian P. Bouda Birth Date: February 28, 1947 CHIEF COMPLIANCE OFFICER AND SENIOR VICE PRESIDENT Began serving: August 2004 | Principal Occupations: Senior Vice President and Chief Compliance Officer of the Federated Fund Complex; Vice President and Chief Compliance Officer of Federated Investors, Inc. and Chief Compliance Officer of its subsidiaries. Mr. Bouda joined Federated in 1999 and is a member of the American Bar Association and the State Bar Association of Wisconsin. |
Stephen F. Auth Birth Date: September 3, 1956 450 Lexington Avenue Suite 3700 New York, NY 10017-3943 CHIEF INVESTMENT OFFICER Began serving: November 2002 | Principal Occupations: Mr. Auth is Chief Investment Officer of this Fund and various other Funds in the Federated Fund Complex; Executive Vice President, Federated Investment Counseling, Federated Global Investment Management Corp. and Federated Equity Management Company of Pennsylvania. Previous Positions: Executive Vice President, Federated Investment Management Company, and Passport Research, Ltd. (investment advisory subsidiary of Federated); Senior Vice President, Global Portfolio Management Services Division; Senior Vice President, Federated Investment Management Company and Passport Research, Ltd.; Senior Managing Director and Portfolio Manager, Prudential Investments. |
Evaluation and Approval of Advisory Contract - May 2009
Federated Stock and Bond Fund (the “Fund”)
The Fund's Board reviewed the Fund's investment advisory and subadvisory contracts at meetings held in May 2009. The Board's decision regarding these contracts reflects the exercise of its business judgment on whether to continue the existing arrangements.
In this connection, the Federated funds' Board had previously appointed a Senior Officer, whose duties include specified responsibilities relating to the process by which advisory fees are to be charged to a Federated fund. The Senior Officer has the authority to retain consultants, experts, or staff as may be reasonably necessary to assist in the performance of his duties, reports directly to the Board, and may be terminated only with the approval of a majority of the independent members of the Board. The Senior Officer prepared and furnished to the Board an independent, written evaluation that covered topics discussed below. The Board considered that evaluation, along with other information, in deciding to approve the advisory and subadvisory contracts.
During its review of these contracts, the Board considered compensation and benefits received by the Adviser and subadviser. This included the fees received for services provided to the Fund by other entities in the Federated organization and research services received by the Adviser from brokers that execute Federated fund trades, as well as advisory fees. The Board is also familiar with and considered judicial decisions concerning allegedly excessive investment advisory fees, which have indicated that the following factors may be relevant to an Adviser's fiduciary duty with respect to its receipt of compensation from a fund: the nature and quality of the services provided by the Adviser, including the performance of the fund; the Adviser's cost of providing the services; the extent to which the Adviser may realize “economies of scale” as a fund grows larger; any indirect benefits that may accrue to the Adviser and its affiliates as a result of the Adviser's relationship with a fund; performance and expenses of comparable funds; and the extent to which the independent Board members are fully informed about all facts the Board deems relevant bearing on the Adviser's services and fees. The Board further considered management fees (including any components thereof) charged to institutional and other clients of the Adviser and subadviser for what might be viewed as like services, and the cost to the Adviser and its affiliates of supplying services pursuant to the management fee agreements, excluding any intra-corporate profit and profit margins of the Adviser and its affiliates for supplying such services. The Board was aware of these factors and was guided by them in its review of the Fund's advisory and subadvisory contracts to the extent it considered them to be appropriate and relevant, as discussed further below.
Annual Shareholder ReportThe Senior Officer reviewed reports compiled by Federated, using data supplied by independent fund ranking organizations, regarding the performance of, and fees charged by, other mutual funds, noting his view that comparisons to fund peer groups are highly important in judging the reasonableness of proposed fees.
For the one-year, three-year and five-year periods covered by the report, the Fund's performance was above the median of the relevant peer group.
The Board also received financial information about Federated, including reports on the compensation and benefits Federated derived from its relationships with the Federated funds. These reports covered not only the fees under the advisory contracts, but also fees received by Federated's subsidiaries for providing other services to the Federated funds under separate contracts (e.g., for serving as the Federated funds' administrator). The reports also discussed any indirect benefit Federated may derive from its receipt of research services from brokers who execute Federated fund trades. In addition, the Board considered the fact that, in order for a fund to be competitive in the marketplace, Federated and its affiliates frequently waived fees and/or Annual Shareholder ReportFederated furnished reports, requested by the Senior Officer, that reported revenues on a fund-by-fund basis and made estimates of the allocation of expenses on a fund-by-fund basis, using allocation methodologies specified by the Senior Officer. The Senior Officer noted that, although they may apply consistent allocation processes, the inherent difficulties in allocating costs (and the unavoidable arbitrary aspects of that exercise) and the lack of consensus on how to allocate those costs may render such allocation reports unreliable. The allocation reports were considered in the analysis by the Board but were determined to be of limited use.
The Board and the Senior Officer also reviewed a report compiled by Federated comparing profitability information for Federated to other publicly held fund management companies. In this regard, the Senior Officer noted the limited availability of such information, but nonetheless concluded that Federated's profit margins did not appear to be excessive and the Board agreed.
The Senior Officer's evaluation also discussed the notion of possible realization of “economies of scale” as a fund grows larger. The Board considered in this regard that the Adviser has made significant and long-term investments in areas that support all of the Federated funds, such as personnel and processes for the portfolio management, compliance, and risk management functions; and systems technology; and that the benefits of these efforts (as well as any economies, should they exist) were likely to be enjoyed by the fund complex as a whole. Finally, the Board also noted the absence of any applicable regulatory or industry guidelines on this subject, which (as discussed in the Senior Officer's evaluation) is compounded by the lack of any common industry practice or general pattern with respect to structuring fund advisory fees with “breakpoints” that serve to reduce the fee as the fund attains a certain size. The Senior Officer did not recommend institution of breakpoints in pricing Federated's fund advisory services at this time.
It was noted in the materials for the Board meeting that for the period covered by the report, the Fund's investment advisory fee, after waivers and expense reimbursements, if any, was above the median of the relevant peer group. The Board reviewed the fees and other expenses of the Fund with the Adviser and was satisfied that the overall expense structure of the Fund remained competitive. The Board will continue to monitor advisory fees and other expenses borne by the Fund.
The Senior Officer's evaluation noted his belief that the information and observations contained in his evaluation supported a finding that the proposed management fees are reasonable, and that Federated appeared to provide appropriate administrative services to the Fund for the fees paid. Under these Annual Shareholder ReportIn its decision to continue an existing investment advisory contract, the Board was mindful of the potential disruptions of the Fund's operations and various risks, uncertainties and other effects that could occur as a result of a decision to terminate or not renew an advisory contract. In particular, the Board recognized that many shareholders have invested in the Fund on the strength of the Adviser's industry standing and reputation and with the expectation that the Adviser will have a continuing role in providing advisory services to the Fund. Thus, the Board's approval of the advisory contract reflected the fact that it is the shareholders who have effectively selected the Adviser by virtue of having invested in the Fund.
The Board based its decision to approve the advisory and subadvisory contracts on the totality of the circumstances and relevant factors and with a view to past and future long-term considerations. Not all of the factors and considerations identified above were necessarily relevant to the Fund, nor did the Board consider any one of them to be determinative. With respect to the factors that were relevant, the Board's decision to approve the contract reflects its determination that Federated's performance and actions provided a satisfactory basis to support the decision to continue the existing arrangements.
Annual Shareholder ReportVoting Proxies on Fund Portfolio Securities
A description of the policies and procedures that the Fund uses to determine how to vote proxies, if any, relating to securities held in the Fund's portfolio is available, without charge and upon request, by calling 1-800-341-7400. A report on “Form N-PX” of how the Fund voted any such proxies during the most recent 12-month period ended June 30 is available from Federated's Web site at FederatedInvestors.com. To access this information from the “Products” section of the Web site, click on the “Prospectuses and Regulatory Reports” link under “Related Information,” then select the appropriate link opposite the name of the Fund; or select the name of the Fund and from the Fund's page, click on the “Prospectuses and Regulatory Reports” link. Form N-PX filings are also available at the SEC's Web site at www.sec.gov.
Quarterly Portfolio Schedule
The Fund files with the SEC a complete schedule of its portfolio holdings, as of the close of the first and third quarters of its fiscal year, on “Form N-Q.” These filings are available on the SEC's Web site at www.sec.gov and may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. (Call 1-800-SEC-0330 for information on the operation of the Public Reference Room.) You may also access this information from the “Products” section of Federated's Web site at FederatedInvestors.com by clicking on “Portfolio Holdings” under “Related Information,” then selecting the appropriate link opposite the name of the Fund; or select the name of the Fund and from the Fund's page, click on the “Portfolio Holdings” link.
Annual Shareholder ReportMutual funds are not bank deposits or obligations, are not guaranteed by any bank and are not insured or guaranteed by the U.S. government, the Federal Deposit Insurance Corporation, the Federal Reserve Board or any other government agency. Investment in mutual funds involves investment risk, including the possible loss of principal.
This Report is authorized for distribution to prospective investors only when preceded or accompanied by the Fund's Prospectus, which contains facts concerning its objective and policies, management fees, expenses and other information.
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Federated Stock and Bond Fund
Federated Investors Funds
4000 Ericsson Drive
Warrendale, PA 15086-7561
Contact us at FederatedInvestors.com
or call 1-800-341-7400.
Federated Securities Corp., Distributor
Cusip 313911505
Q450123 (1/10)
Federated is a registered mark of Federated Investors, Inc.
2010 © Federated Investors, Inc.
Item 12. | Exhibits |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Registrant Federated Stock and Bond Fund | ||
By | /S/ RICHARD A. NOVAK | |
Richard A. Novak | ||
Principal Financial Officer |
Date June 22, 2010
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By | /S/ J. CHRISTOPHER DONAHUE | |
J. Christopher Donahue | ||
Principal Executive Officer | ||
Date June 22, 2010 | ||
By | /S/ RICHARD A. NOVAK | |
Richard A. Novak | ||
Principal Financial Officer | ||
Date June 22, 2010 |