File No. 333-
As filed with the SEC on June 13, 2007
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No. __
Post-Effective Amendment No. __
(Check appropriate box or boxes)
FEDERATED MDT FUNDS
(Exact Name of Registrant as Specified in Charter)
1-800-341-7400
(Area Code and Telephone Number)
5800 CORPORATE DRIVE
PITTSBURGH, PENNSYLVANIA 15237-7000
(Address of Principal Executive Offices)
JOHN W. MCGONIGLE, ESQUIRE
FEDERATED INVESTORS TOWER
1001 LIBERTY AVENUE
PITTSBURGH, PENNSYLVANIA 15222-3779
(Name and Address of Agent for Service)
Copies to:
MELANIE C. MALONEY, ESQUIRE
DICKSTEIN SHAPIRO LLP
1825 EYE STREET, NW
WASHINGTON, DC 20006
(202) 828-2218
- 1 -
ACQUISITION OF THE ASSETS OF
FEDERATED CONSERVATIVE ALLOCATION FUND
FEDERATED MODERATE ALLOCATION FUND
FEDERATED GROWTH ALLOCATION FUND
PORTFOLIOS OF FEDERATED MANAGED ALLOCATION PORTFOLIOS
BY AND IN EXCHANGE FOR SHARES OF
FEDERATED MDT BALANCED FUND
A PORTFOLIO OF FEDERATED MDT FUNDS
Approximate Date of Proposed Public Offering: As soon as
practicable after this Registration Statement becomes effective
under the Securities Act of 1933, as amended.
Title of Securities Being Registered: Class A Shares and Class C Shares,
without par value,
of Federated MDT Balanced Fund
It is proposed that this filing will become effective
on August 23, 2007 pursuant to Rule 488.
NO FILING FEE IS DUE BECAUSE REGISTRANT IS RELYING ON SECTION 24(F) OF THE
INVESTMENT COMPANY ACT OF 1940, AS AMENDED.
Federated Managed Allocation Portfolios
Federated Conservative Allocation Fund
Federated Moderate Allocation Fund
Federated Growth Allocation Fund
PROXY STATEMENT - PLEASE VOTE!
TIME IS OF THE ESSENCE . . . VOTING ONLY TAKES A FEW MINUTES AND YOUR
PARTICIPATION IS IMPORTANT! ACT NOW TO HELP AVOID ADDITIONAL EXPENSE.
Federated Conservative Allocation Fund, Federated Moderate Allocation Fund, and
Federated Growth Allocation Fund (the "Acquired Funds") will hold a joint annual
meeting of shareholders on October 12, 2007. IT IS IMPORTANT FOR YOU TO VOTE.
We recommend that you read the Proxy Statement in its entirety.
WHY AM I BEING ASKED TO VOTE?
Mutual funds are required to obtain shareholders' votes for certain types of
changes, like the one included in this Prospectus/Proxy Statement. You have a
right to vote on these changes.
WHAT AM I BEING ASKED TO VOTE ON?
{circle}A proposed reorganization pursuant to which Federated MDT Balanced
Fund, a portfolio of Federated MDT Series ("FMDTBF") would acquire the
assets of each of Federated Conservative Allocation Fund ("FCOAF"),
Federated Moderate Allocation Fund ("FMAF"), and Federated Growth
Allocation Fund ("FGAF"), portfolios of Federated Managed Allocation
Portfolios, in exchange for shares of FMDTBF to be distributed pro rata by
FCOAF, FMAF, and FGAF in complete liquidation and termination of each of
FCOAF, FMAF, and FGAF (each a "Reorganization" and collectively, the
"Reorganizations").
{circle}To transact such other business as may properly come before the
special meeting or any adjournment thereof.
WHY ARE THE REORGANIZATIONS BEING PROPOSED?
The Board of Trustees believes that the Reorganizations of the Acquired Funds
into FMDTBF are in the best interest of the Acquired Funds and its shareholders.
The Board considered various factors in reviewing this proposal:
{circle}The compatibility of the Acquired Funds' and FMDTBF's investment
objectives, policies and limitations.
{circle}The viability of the Acquired Funds absent approval of the proposed
Reorganizations.
{circle}The greater long-term viability of FMDTBF.
{circle}The fact that the Reorganizations are expected to be "tax-free" for
federal income tax purposes (and that the Funds will receive an opinion of
counsel to this effect).
{circle}That the proposed Reorganizations may result in lower fees, as a
percentage of net assets, for certain shareholders of the Acquired Funds.
{circle}The undertaking by the Adviser or its affiliates to pay all costs and
expenses of preparing, printing and mailing this Proxy
Statement/Prospectus and solicitation expenses of the Reorganizations.
HOW DO I VOTE MY SHARES?
You may vote by telephone at the toll-free number shown on your ballot, in
person at the meeting, or complete and return the enclosed proxy card. If you:
1. Choose to help save the Funds time and postage costs by voting
by telephone; please do not return your proxy card.
2. Do not respond at all, we may contact you by telephone to
request that you cast your vote.
3. Sign and return the proxy card without indicating a
preference, your vote will be cast "for" the proposals in this Proxy
Statement.
WHAT SHOULD I DO IN CONNECTION WITH THE REORGANIZATIONS?
You need not and should not do anything for the Reorganizations except vote your
shares today. If approved, the Reorganizations will take place automatically.
We request that you do not attempt to make the exchange yourself, as this will
disrupt the management of the Funds' portfolio.
WHOM DO I CALL IF I HAVE QUESTIONS ABOUT THE PROXY STATEMENT?
Call your Investment Professional or a Federated Client Service Representative.
Federated's toll-free number is 1-800-341-7400.
After careful consideration, the Board of Trustees has unanimously approved
these proposals.
The Board recommends that you read the enclosed materials carefully and vote FOR
the proposals.
FEDERATED MANAGED ALLOCATION PORTFOLIOS
FEDERATED CONSERVATIVE ALLOCATION FUND
FEDERATED MODERATE ALLOCATION FUND
FEDERATED GROWTH ALLOCATION FUND
NOTICE OF
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD OCTOBER 12, 2007
TO SHAREHOLDERS OF FEDERATED CONSERVATIVE ALLOCATION FUND, FEDERATED MODERATE
ALLOCATION FUND AND FEDERATED GROWTH ALLOCATION FUND, each a Portfolio of
Federated Managed Allocation Portfolios. A special meeting of the shareholders
of Federated Conservative Allocation Fund ("FCOAF"), Federated Moderate
Allocation Fund ("FMAF"), and Federated Growth Allocation Fund ("FGAF") will be
held at 5800 Corporate Drive, Pittsburgh, Pennsylvania 15237-7000, at 2:00 p.m.
(Eastern time), on October 12, 2007, for the following purposes:
1. To approve or disapprove proposed Agreements and Plans of Reorganization
pursuant to which Federated MDT Balanced Fund ("FMDTBF"), a portfolio of
Federated MDT Series would acquire the assets of each of FCOAF, FMAF, and
FGAF in exchange for shares of FMDTBF to be distributed pro rata by FCOAF,
FMAF, and FGAF in complete liquidation and termination of each of FCOAF,
FMAF and FGAF; and
2. To transact such other business as may properly come before the special
meeting or any adjournment thereof.
The Board of Trustees has fixed August 20, 2007, as the record date for
determination of those shareholders of FCOAF, FMAF and FGAF entitled to vote at
the meeting.
By Order of the Board of
Trustees,
John W. McGonigle
Secretary
August 28, 2007
YOU CAN HELP AVOID THE NECESSITY AND EXPENSE OF SENDING FOLLOW-UP LETTERS TO
ENSURE A QUORUM BY PROMPTLY SIGNING AND RETURNING THE ENCLOSED PROXY CARD. IF
YOU ARE UNABLE TO ATTEND THE MEETING, PLEASE MARK, SIGN, DATE AND RETURN THE
ENCLOSED PROXY CARD SO THAT THE NECESSARY QUORUM MAY BE REPRESENTED AT THE
SPECIAL MEETING. THE ENCLOSED ENVELOPE REQUIRES NO POSTAGE IF MAILED IN THE
UNITED STATES.
PROSPECTUS/PROXY STATEMENT
________________
ACQUISITION OF THE ASSETS OF
FEDERATED CONSERVATIVE ALLOCATION FUND
FEDERATED MODERATE ALLOCATION FUND
AND
FEDERATED GROWTH ALLOCATION FUND
EACH A PORTFOLIO OF FEDERATED MANAGED ALLOCATION PORTFOLIOS
(A MASSACHUSETTS BUSINESS TRUST)
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, Pennsylvania 15237-7000
Telephone No: 1-800-245-5000
BY AND IN EXCHANGE FOR SHARES OF
FEDERATED MDT BALANCED FUND, A PORTFOLIO OF FEDERATED MDT SERIES
(A MASSACHUSETTS BUSINESS TRUST)
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, Pennsylvania 15237-7000
Telephone No: 1-800-245-5000
This Prospectus/Proxy Statement describes the proposals whereby Federated
Conservative Allocation Fund, Federated Moderate Allocation Fund, and Federated
Growth Allocation Fund (each an "Acquired Fund" and collectively, the "Acquired
Funds"), each a portfolio of Federated Managed Allocation Portfolios (the
"Trust"), would transfer all of their assets to Federated MDT Balanced Fund
("FMDTBF"), a portfolio of Federated MDT Series (the "MDT Trust"), in exchange
for shares of FMDTBF (each a "Reorganization" and collectively the
"Reorganizations"). FMDTBF shares will be distributed pro-rata by each Acquired
Fund to their shareholders in complete liquidation and dissolution of the
applicable Acquired Fund. If a Reorganization is approved, each owner of an
Acquired Fund's Institutional Shares will become owners of Class A Shares of
FMDTBF, while each owner of an Acquired Fund's Select Shares will become owners
of Class C Shares of FMDTBF, in each case having a total net asset value ("NAV")
equal to the total NAV of his or her holdings in the Acquired Fund on the date
of the Reorganization.
The Acquired Funds and FMDTBF (each a "Fund" and collectively the
"Funds") investment objectives are as follows:
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FUND |INVESTMENT OBJECTIVE
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FCOAF |To seek total return with an emphasis on income and capital appreciation
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FMAF |To seek capital appreciation with income as a secondary objective
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FGAF |To seek capital appreciation
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FMDTBF|Long-term growth of capital and income
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The Board of Trustees (the "Board") of the Trust believe that the proposed
Reorganizations are in the best interests of each of the Acquired Funds and its
shareholders. Consummation of one of the Reorganizations is not a condition to
the closing of either of the other two Reorganizations.
This Prospectus/Proxy Statement should be retained for future reference.
It sets forth concisely the information about the Funds that a prospective
investor should know before investing. This Prospectus/Proxy Statement is
accompanied by the Prospectus for the Class A and Class C Shares of FMDTBF dated
December 11, 2006. A Statement of Additional Information ("SAI") for Class A
and Class C Shares of FMDTBF dated December 11, 2006 as well as an SAI dated
August 28, 2007, relating to this Prospectus/Proxy Statement, each containing
additional information, have been filed with the Securities and Exchange
Commission ("SEC") and are incorporated herein by reference. Prospectuses and
SAIs dated January 31, 2007 for the Institutional Shares and Select Shares of
the Acquired Funds are also incorporated herein by reference. Further
information about FMDTBF's performance is contained in its Semi- Annual Report
for Class A Shares and Class C Shares dated January 31, 2007, which is
incorporated herein by reference. Further information about each of the
Acquired Fund's performance is contained in its Annual Report dated November 30,
2006 and its Semi-Annual Report dated May 31, 2007, which are incorporated
herein by reference. Copies of these materials and other information about
FMDTBF and the Acquired Funds may be obtained without charge by writing to or
calling FMDTBF at the address and telephone number shown on the previous page.
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED
THESE SECURITIES, OR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS/PROXY STATEMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS/PROXY STATEMENT
AND IN THE MATERIALS EXPRESSLY INCORPORATED HEREIN BY REFERENCE AND, IF GIVEN OR
MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE FUNDS.
SHARES OF THE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK. SHARES OF THE FUNDS ARE NOT FEDERALLY INSURED BY,
GUARANTEED BY, OBLIGATIONS OF, OR OTHERWISE SUPPORTED BY THE U.S. GOVERNMENT,
THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY
OTHER GOVERNMENTAL AGENCY. AN INVESTMENT IN THE FUNDS INVOLVES INVESTMENT
RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED.
TABLE OF CONTENTS
Page
SUMMARY
Reasons for the Proposed Reorganizations.........................
Tax Consequences.................................................
Comparison of Investment Objectives, Policies and Limitations....
Comparison of Risks
Comparative Fee Tables (Class A Shares)..........................
Comparative Fee Tables (Class C Shares)..........................
Comparison of Potential Risks and Rewards: Performance Information
Investment Adviser ..............................................
Portfolio Management Information.................................
Advisory Fees, Service Fees, Shareholder Fees and Other Expenses.
Purchase, Redemption and Exchange Procedures; Dividends and Distributions
Frequent Trading; Portfolio Holdings Information.................
INFORMATION ABOUT THE REORGANIZATIONS
Description of the Plan of Reorganizations.......................
Description of FMDTBF Shares and Capitalization..................
Federal Income Tax Consequences..................................
Comparative Information on Shareholder Rights....................
INFORMATION ABOUT FEDERATED MDT BALANCE FUND AND FEDERATED
CONSERVATIVE ALLOCATION FUND, FEDERATED MODERATE ALLOCATION
FUND AND FEDERATED GROWTH ALLOCATION FUND
Where to Find Additional Information.............................
Legal Proceedings................................................
ABOUT THE PROXY SOLICITATION AND THE SPECIAL MEETING
Proxies, Quorum and Voting at the Special Meeting................
Share Ownership of the Funds.....................................
Interest of Certain Persons......................................
OTHER MATTERS AND DISCRETION OF ATTORNEYS NAMED IN THE PROXY.........
AGREEMENT AND PLAN OF REORGANIZATION (EXHIBIT A).....................
THE ACQUIRED FUNDS MANAGEMENT DISCUSSION OF
FUND PERFORMANCE (EXHIBIT B).........................................
SUMMARY
This summary is qualified in its entirety by reference to the additional
information contained elsewhere in this Prospectus/Proxy Statement, or
incorporated by reference into this Prospectus/Proxy Statement. A copy of the
Agreement and Plan of Reorganization (the "Plan") pursuant to which each
Reorganization will be conducted is attached to this Prospectus/Proxy Statement
as Exhibit A. The prospectus of FMDTBF's Class A and Class C Shares,
accompanies this Prospectus/Proxy Statement.
REASONS FOR THE PROPOSED REORGANIZATIONS
The Board of the Trust has determined that a combination of the Acquired
Funds into FMDTBF is in the best interest of each of the Acquired Funds and its
shareholders.
The following tables show the total return performance of the
Institutional Shares and Select Shares of FMAF, FCOAF, and FGAF, which are based
on net asset values, for the past five calendar years, performance of broad
based market indices, net sales of FMAF, FCOAF, and FGAF for each calendar year,
and their net assets at each calendar year end.
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| FMAF | 2002 | 2003 | 2004 |2005 | 2006 |
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|TOTAL RETURN | | | | | |
|INSTITUTIONAL SHARES |(9.98)% |21.72%|7.09% |2.62%|12.01%|
--------------------------------------------------------------------------
|SELECT SHARES |(10.64)%|21.03%|6.34% |1.91%|11.24%|
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|LEHMAN BROTHERS AGGREGATE BOND INDEX|10.26 % |4.10 %|4.34% |2.43%|4.33% |
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|STANDARD & POOR'S 500 INDEX |(22.10)%|28.68%|10.88%|4.91%|15.79%|
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|NET SALES OF FUND SHARES(MM) | $(31) |$(23) |$(18) |$(27)|$(25) |
--------------------------------------------------------------------------
|FUND NET ASSETS (MM) | $148 | $153 | $144 |$120 | $107 |
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| FCOAF | 2002 | 2003 | 2004 |2005 | 2006 |
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|TOTAL RETURN | | | | | |
|INSTITUTIONAL SHARES |(3.91)% |15.85%| .18% |2.12%|9.39% |
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|SELECT SHARES |(4.58)% |15.04%|5.45% |1.40%|8.70% |
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|LEHMAN BROTHERS AGGREGATE BOND INDEX|10.26 % |4.10 %|4.34% |2.43%|4.33% |
--------------------------------------------------------------------------
|STANDARD & POOR'S 500 INDEX |(22.10)%|28.68%|10.88%|4.91%|15.79%|
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|NET SALES OF FUND SHARES(MM) | $(40) |$(13) |$(15) |$(19)|$(22) |
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|FUND NET ASSETS(MM) | $112 | $115 | $106 | $88 | $73 |
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--------------------------------------------------------------------------
| FGAF | 2002 | 2003 | 2004 |2005 | 2006 |
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|TOTAL RETURN | | | | | |
|INSTITUTIONAL SHARES |(17.07)%|26.10%|7.56% |2.86%|14.51%|
--------------------------------------------------------------------------
|SELECT SHARES |(17.65)%|25.19%|6.85% |2.17%|13.63%|
--------------------------------------------------------------------------
|LEHMAN BROTHERS AGGREGATE BOND INDEX|10.26 % |4.10 %|4.34% |2.43%|4.33% |
--------------------------------------------------------------------------
|STANDARD & POOR'S 500 INDEX |(22.10)%|28.68%|10.88%|4.91%|15.79%|
--------------------------------------------------------------------------
|NET SALES OF FUND SHARES (MM) | $(27) |$(13) |$(10) |$(14)|$(18) |
--------------------------------------------------------------------------
|FUND NET ASSETS (MM) | $82 | $88 | $83 | $72 | $63 |
--------------------------------------------------------------------------
As the tables illustrate, despite the generally satisfactory performance
of each of the Acquired Funds, net sales of the Acquired Funds' shares and the
Acquired Funds' net assets have not grown, but rather declined.
The adviser to the Acquired Funds, Federated Equity Management Company of
Pennsylvania (the "Adviser") believes that the Reorganizations will result in a
more viable investment for shareholders of the Acquired Funds.
The Board of the Trust has voted to recommend the approval of the Plans to
holders of shares of the Acquired Funds. Pursuant to the Plans, FMDTBF would
acquire all of the assets of each Acquired Fund in exchange for Class A Shares
and Class C Shares of FMDTBF (the "Exchange"). Immediately following the
Exchange, each Acquired Fund will distribute the Class A Shares and Class C
Shares of FMDTBF received in the Exchange pro rata to holders of its
Institutional Shares and Select Shares, respectively, in a complete liquidation
and termination of the Acquired Funds. As a result of the Reorganizations, each
holder of Institutional Shares of the Acquired Funds will become the owner of
Class A Shares of FMDTBF and each holder of Select Shares of the Acquired Funds
will become the owner of Class C Shares of FMDTBF, in each case having a total
net asset value equal to the total net asset value of his or her holdings in the
Acquired Funds on the date of the Reorganization, i.e., the Closing Date (as
hereinafter defined). Shareholders of each Acquired Fund will vote separately
on the Plan applicable to the particular Acquired Fund and consummation of one
of the Reorganizations is not a condition to the closing of either of the other
two Reorganizations.
In considering the proposed Reorganizations, the Board of the Trust took
into consideration a number of factors, including: (1) the compatibility of each
Acquired Fund's and FMDTBF's investment objectives, policies and limitations;
(2) the viability of the Acquired Funds absent approval of the proposed
Reorganizations; (3) the greater long-term viability of FMDTBF; (4) the fact
that the Reorganizations are expected to be "tax-free" for federal income tax
purposes (and that the Funds will receive an opinion of counsel to this effect);
(5) that the proposed Reorganizations may result in lower fees, as a percentage
of net assets, for certain shareholders of the Acquired Funds; and (6) the
undertaking by the Adviser or its affiliates to pay all costs and expenses of
preparing, printing and mailing this Proxy Statement/Prospectus and solicitation
expenses of the Reorganizations.
The Board concluded to recommend to shareholders of the Acquired Funds
that they vote to approve the Reorganizations. Pursuant to Rule 17a-8 under the
Investment Company Act of 1940 Act (the "1940 Act"), the Board of the Trust,
including a majority of the Trustees who are not "interested persons" within the
meaning of Section 2(a)(19) of the 1940 Act, determined that each Reorganization
is in the best interests of the applicable Acquired Fund and its shareholders,
and that the interests of the Acquired Fund's shareholders would not be diluted
as a result of each applicable Reorganization.
The Board of Trustees of the MDT Trust, which consists of the same
individuals as the Board of the Trust, approved the Reorganizations on behalf of
FMDTBF. Pursuant to Rule 17a-8 under the 1940 Act, the Board of the MDT Trust,
including a majority of the Trustees who are not "interested persons,"
determined that the Reorganizations are in the best interest of FMDTBF and its
shareholders, and that the interests of existing FMDTBF shareholders would not
be diluted as a result of the Reorganizations.
TAX CONSEQUENCES
As a condition to each Reorganization each Acquired Fund and FMDTBF will
receive an opinion of counsel to the effect that such Reorganization shall be
tax-free for each Acquired Fund; its shareholders and for FMDTBF. However, the
shareholders of the Acquired Funds, as a result of the Reorganizations, are
likely to be exposed to a capital gain distribution as a result of selling
portfolio securities prior to the Reorganizations. The table below shows the
capital gains and the per share impact on the sale of the portfolio securities
on each of the Acquired Funds. The table is based on the assumption that
certain of the Acquired Funds' portfolio holdings as of April 18, 2007 are sold
prior to the Closing Date (as hereinafter defined). It is anticipated that all
of the Acquired Funds' holdings in Capital Appreciation Core Fund and Federated
International Capital Appreciation Fund as well as certain fixed income mutual
funds will be sold prior to the Reorganizations. However, it is also
anticipated that certain of the Acquired Funds' investments in certain fixed-
income funds will not be sold and will carryover to FMDTBF. The table is
representative of market values as of April 18, 2007 and trial balances as of
April 16, 2007.
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| | |Long-Term Cap Gain Amount|Short-Term Cap Gain Amount|
----------------------------------------------------------------------------
| |Total Cap Gain|Long-Term Gain |Per Share|Short-Term Gain |Per Share|
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|FCOAF*|$3,037,944 |$2,968,737 |$0.5404 |$69,207 |$0.0126 |
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|FMAF* |$12,288,228 |$12,166,744 |$1.561 |$121,488 |$0.01559 |
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|FGAF* |$2,320,775 |$2,294,230 |$0.5907 |$26,545 |$0.00683 |
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*FCOAF and FMAF do not have a capital loss carryforward. FGAF's total
capital gains are net of a $3.9 million capital loss carryforward.
CLOSING
Each Plan of Reorganization provides for the Reorganization to occur on
the Closing Date, which is expected to be on or about July 18, 2007, or such
other date(s) as the parties may agree to in writing (the "Closing Date"). Each
Plan of Reorganization provides that the assets of the Acquired Fund will be
transferred to FMDTBF as of 4:00 p.m. Eastern time on the Closing Date of the
Reorganization (the "Effective Time"). In exchange for the transfer of these
assets, FMDTBF will simultaneously issue a number of full and fractional Class A
Shares and Class C Shares of FMDTBF to Institutional and Select Share Class
Shareholders of the Acquired Fund, respectively, in an amount equal to the
number of Acquired Fund shares then outstanding and having an aggregate net
asset value equal to the net assets of the Acquired Fund.
THE BOARD OF TRUSTEES OF FEDERATED MANAGED ALLOCATION PORTFOLIOS
RECOMMENDS THAT YOU VOTE "FOR" APPROVAL OF EACH REORGANIZATION.
COMPARISON OF INVESTMENT OBJECTIVES, POLICIES AND LIMITATIONS
The Funds' investment objectives are as follows:
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FUND |INVESTMENT OBJECTIVE
-------------------------------------------------------------------------------
FCOAF |To seek total return with an emphasis on income and capital appreciation
-------------------------------------------------------------------------------
FMAF |To seek capital appreciation with income as a secondary objective
-------------------------------------------------------------------------------
FGAF |To seek capital appreciation
-------------------------------------------------------------------------------
FMDTBF|Long-term growth of capital and income
-------------------------------------------------------------------------------
The Acquired Funds pursue their investment objectives by investing in a
mix of equity and fixed-income investments. The Adviser determines what portion
of the Acquired Funds' portfolios to invest in equity securities and what
portion to invest in fixed-income securities. The Adviser has discretion to
adjust the equity and fixed-income portions of the portfolio +/- 15% from the
stated neutral exposure points listed in the following table:
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|ACQUIRED FUND|EQUITY NEUTRAL POSITION|FIXED-INCOME NEUTRAL POSITION|
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|FCOAF | 40% | 60% |
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|FMAF | 60% | 40% |
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|FGAF | 80% | 20% |
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FMDTBF also pursues its investment objective by investing in a mix of
equity and fixed-income investments. However, FMDTBF normally invests between
60% and 80% of its assets in equity securities and between 20% and 40% in fixed-
income securities.
With regard to the Acquired Funds' equity allocation, the Adviser invests
primarily in the common stock of domestic companies with large and medium market
capitalizations that offer superior growth prospects or whose stock is deemed to
be undervalued. A portion of each of the Acquired Funds' portfolios may be
invested in foreign securities and common stock of domestic companies with small
market capitalizations. FMDTBF invests primarily in domestic stocks and uses
the MDT quantitative methodology, which screens for stocks that meet certain
valuation and performance metrics, and also ensures that the portfolio is
diversified by business, industry and sector. The model used selects stocks
primarily in the Russell 3000 Index. The Russell 3000 Index measures the
performance of the 3,000 largest U.S. companies by market capitalization
representing approximately 98% of the investable domestic equity market. As of
September 30, 2006, companies in the Russell 3000 Index ranged in market
capitalization from $40 million to $406 billion. With regard to investing in
foreign equity securities, FMDTBF primarily invests in exchange traded funds
that track a foreign market index but may also invest directly in foreign
securities.
The fixed-income portion of the Acquired Funds is primarily invested in
U.S. dollar denominated investment grade fixed income securities, which include
U.S. government agency and treasury securities, investment grade corporate debt
securities and mortgage backed securities. A portion of the Acquired Funds'
portfolios may also be invested in foreign investment grade debt securities and
domestic and foreign non-investment grade debt securities. The fixed-income
portion of FMDTBF's portfolios will be primarily invested in domestic investment
grade debt securities, including corporate debt securities, U.S. government
obligations, and mortgage backed securities. FMDTBF's adviser, Federated MDT
LLC ("FMDTBF Adviser") selects fixed-income securities by using fundamental
credit research to identify relative value in the market. A portion of FMDTBF's
portfolio may also be invested in noninvestment grade fixed-income securities
when the Adviser believes the risk return prospects of the sector to be
attractive.
The Acquired Funds do not currently invest principally in REITs.
Conversely the prospectus of FMDTBF lists REITs as a principal security in which
FMDTBF is permitted to invest. Therefore, FMDTBF's investment strategy
contemplates investing in REITs to a greater extent than the Acquired Funds.
The following chart compares the investment limitations of the Acquired
Funds with the investment limitations of FMDTBF.
INVESTMENT LIMITATIONS
ACQUIRED FUNDS FMDTBF
DIVERSIFICATION OF INVESTMENTS (fundamental) DIVERSIFICATION
With respect to securities comprising 75% of the value of its total assets, a Fund will not purchase securities of OF INVESTMENTS
any one issuer (other than cash; cash items; securities issued or guaranteed by the government of the United States (fundamental)
or its agencies or instrumentalities and repurchase agreements collateralized by such U.S. government securities; Same.
and securities of other investment companies) if, as a result, more than 5% of the value of its total assets would
be invested in the securities of that issuer, or the Fund would own more than 10% of the outstanding voting
securities of that issuer.
BORROWING MONEY AND ISSUING SENIOR SECURITIES (fundamental) BORROWING MONEY
A Fund may borrow money, directly or indirectly, and issue senior securities to the maximum extent permitted under AND ISSUING
the Investment Company Act of 1940, as amended. SENIOR
SECURITIES
(fundamental)
Same.
INVESTING IN REAL ESTATE (fundamental) INVESTING IN
A Fund may not purchase or sell real estate, provided that this restriction does not prevent a Fund from investing REAL ESTATE
in issuers which invest, deal, or otherwise engage in transactions in real estate or interests therein, or (fundamental)
investing in securities that are secured by real estate or interests therein. A Fund may exercise its rights under Same.
agreements relating to such securities, including the right to enforce security interests and to hold real estate
acquired by reason of such enforcement until that real estate can be liquidated in an orderly manner.
COMMODITIES (fundamental) COMMODITIES
A Fund may not purchase or sell physical commodities, provided that the Funds may purchase securities of companies (fundamental)
that deal in commodities. The Fund may
invest in
commodities to
the maximum
extent permitted
under the 1940
Act.
UNDERWRITING (fundamental) UNDERWRITING
A Fund may not underwrite the securities of other issuers, except that a Fund may engage in transactions involving (fundamental)
the acquisition, disposition or resale of its portfolio securities, under circumstances where it may be considered Same.
to be an underwriter under the Securities Act of 1933.
CONCENTRATION OF INVESTMENTS (fundamental) CONCENTRATION
A Fund will not make investments that will result in the concentration of its investments in the securities of (fundamental)
issuers primarily engaged in the same industry. Government securities, municipal securities and bank instruments Same.
will not be deemed to constitute an industry.
LENDING (fundamental) LENDING
A Fund may not make loans, provided that this restriction does not prevent a Fund from purchasing debt obligations, (fundamental)
entering into repurchase agreements, lending its assets to broker/dealers or institutional investors and investing The Fund may not
in loans, including assignments and participation interests. make loans if,
as a result,
more than 33
1/3% of the
Fund's total
assets would be
loaned to other
parties, except
that the Fund
may (i) purchase
or hold debt
instruments in
accordance with
its investment
objective and
policies; (ii)
enter into
repurchase
agreements;
(iii) lend its
securities, and
(iv) it may make
loans to
affiliated
investment
companies in
accordance with
SEC exemptive
relief.
BUYING ON MARGIN (non-fundamental) BUYING ON MARGIN
A Fund will not purchase securities on margin, provided that a Fund may obtain short-term credits necessary for the (non-
clearance of purchases and sales of securities and further provided that a Fund may make margin deposits in fundamental)
connection with its use of financial options and futures, forward and spot currency contracts, swap transactions Same.
and other financial contracts or derivative instruments.
PLEDGING ASSETS (non-fundamental) PLEDGING ASSETS
A Fund will not mortgage, pledge, or hypothecate any of its assets, provided that this shall not apply to the (non-
transfer of securities in connection with any permissible borrowing or to collateral arrangements in connection fundamental)
with permissible activities. Same.
ILLIQUID SECURITIES (non-fundamental) ILLIQUID
A Fund will not purchase securities for which there is no readily available market, or enter into repurchase SECURITIES (non-
agreements or purchase time deposits that a Fund cannot dispose of within seven days, if immediately after and as a fundamental)
result, the value of such securities would exceed, in the aggregate, 15% of a Fund's net assets. Same.
COMPARISON OF RISKS
All mutual funds take investment risks. Therefore, it is possible to lose
money by investing in any of the Acquired Funds or FMDTBF.
Since the Acquired Funds and FMDTBF all invest in equity securities, each
of the Funds are subject to stock market risks. Sock market risks are the risks
that the value of equity securities in a fund's portfolio will fluctuate and, as
a result, a fund's share price may decline suddenly or over a sustained period
of time. The Funds are subject to the risks associated with growth and value
stocks. Growth stocks have high valuations and are therefore more volatile than
value stocks. Value stocks, while less volatile, may lag the returns
experienced in growth stocks.
The Acquired Funds and FMDTBF are each subject to credit risks which
include the possibility that issuers of securities in which the Funds invest may
default in the payment of principal or interest and could cause the Funds to
lose money. Additionally the Funds are each subject to interest rate risks.
Interest rate risks generally describe the risks that prices of fixed income
securities generally fall when interest rates rise, and those interest rate
changes will have a greater effect on the price of fixed-income securities with
longer durations.
The Acquired Funds and FMDTBF are subject to call risks which includes the
possibility that an issuer of a security held by the Funds may redeem the
security prior to maturity at a price below its current market value.
The Acquired Funds and FMDTBF are subject to prepayment risks. The Funds
may be susceptible to prepayment risk when homeowners pay their mortgages in
response to lower interest rates, and will require the Funds to reinvest their
proceeds at the then available lower interest rates. In addition, the prices of
mortgage-backed securities may not rise to as great an extent as that of other
fixed-income securities.
The Acquired Funds and FMDTBF are exposed to the risks involved in
investing their assets in noninvestment-grade securities and securities in the
lowest investment-grade category (for example, Baa or BBB). These securities
may be subject to greater interest rate, credit and liquidity risks than
investment grade securities. The noninvestment grade securities in which the
Acquired Funds and FMDTBF invest may not be readily marketable and therefore
there may be less trading opportunities for these securities which could subject
the Acquired Funds and FMDTBF to liquidity risk.
The Acquired Funds and FMDTBF may invest in derivative instruments. The
use of derivative instruments involves risks different from, or possibly greater
than, the risks associated with investing directly in securities and other
traditional instruments. Derivatives are subject to a number of risks including
liquidity, interest rate, market and credit risk. They also involve the risk of
mispricing or improper valuation, the risk that changes in the value of the
derivative may not correlate perfectly with the underlying asset, rate or index,
and the risk of default or bankruptcy of the other party to a swap agreement.
Gains or losses involving some futures, options and other derivatives may be
substantial - in part because a relatively small price movement in these
securities may result in an immediate and substantial gain or loss for the
Funds.
The Acquired Funds and FMDTBF are exposed to risks of foreign securities.
Investing in foreign securities poses additional risks to the Acquired Funds and
to FMDTBF. Foreign economic or political conditions may be less favorable than
those of the United States. Foreign financial markets may also have fewer
investor protections. The Acquired Funds and FMDTBF are also subject to
currency risks because the exchange rates for currencies fluctuate daily which
results in the foreign securities in which the Funds invests being more volatile
than the prices of those securities offered exclusively in the U.S.
Additionally both the Acquired Funds and FMDTBF are subject to the risks
associated with American Depositary Receipts. Finally, the Acquired Funds and
FMDTBF are subject to emerging market risk. Securities issued in emerging
markets generally entail greater risks than securities issued or traded in
developed markets.
The Acquired Funds and FMDTBF are subject to the risks associated with
investment in smaller companies which increases the level of volatility as
compared to funds that only invest in large-capitalization companies.
Additionally the Acquired Funds and FMDTBF are subject to risks of investing in
Exchange-Traded Funds.
The Acquired Funds and FMDTBF are subject to sector risks. Therefore the
Funds' performance may be more susceptible to any developments which affect
those sectors emphasized by the Acquired Funds and FMDTBF.
FMDTBF may invest principally in REITs and is therefore more susceptible
than the Acquired Funds to the risks associated with investment in REITs.
For a more complete discussion of the risks of investing in the Acquired
Funds and FMDTBF please see the Funds prospectuses, which are incorporated by
reference into this Proxy Statement/Prospectus.
PURCHASE, REDEMPTION AND EXCHANGE OF SHARES
The following table highlights certain purchase, redemption and exchange
features of FMAF, FCOAF, and FGAF as compared to such features of FMDTBF.
PURCHASE, REDEMPTION FMAP PORTFOLIOS FMDTBF
AND EXCHANGE FEATURES (FMAF, FCOAF, FGAF)
Initial Sales Charge Institutional Class A shares: 5.50% is the maximum sales charge applicable to Class A shares (as a
(as a percentage of Shares: None percentage of offering price)
offering price) Class C shares: None
* SHAREHOLDERS AS OF THE DATE OF THE REORGANIZATION WILL NOT BE SUBJECT TO A SALES CHARGE
ON FUTURE PURCHASES OF FMDTBF, IF SUCH PURCHASES ARE MADE IN THE SAME ACCOUNT(S).
Select Shares: None
Reductions and Not Applicable Class A shares:
Waivers of Initial {circle}Larger Purchases;
Sales Charges
{circle}Concurrent and Accumulated Purchases;
{circle}Letter of Intent.
*WAIVERS OF SALES CHARGES FOR SHAREHOLDERS WHO RECEIVE SHARES OF THE FMDTBF IN A
REORGANIZATION.
Class C shares: Not applicable because there is no initial sales charge on Class C
shares.
Contingent Deferred Institutional Class A shares: Investments of $1,000,000 or more, and financial intermediary receives
Sales Charge (CDSC) Shares: None an advance commission on the sale, you will pay a 0.75% CDSC on any such shares redeemed
within 24 months of purchase.
Class C shares: You will pay a 1.00% CDSC if you redeem Shares within 12 months of the
purchase date.
Select Shares: None
CDSC Waivers Not Applicable Class C shares CDSC waiver:
{circle}Purchased through a financial intermediary that did not receive an advanced
commission on the purchase;
{circle}Following the death of the last surviving shareholder on the account or your
post-purchase disability, as defined in Section 72(m)(7) of the Internal Revenue Code;
{circle}Minimum distributions required from an Individual Retirement Account or other
Retirement Plan to a shareholder who has attained the age of 70 1/2;
{circle}Purchased within 120 days of a previous redemption of shares, to the extent that
the value of the shares purchased was equal to or less than the value of the previous
redemption;
{circle}Purchased by Trustees, employees of the Fund, the Adviser, the Distributor and
their affiliates;
{circle}Purchased with reinvested dividends or capital gains;
{circle}Redeemed by the Fund when it closes an account for not meeting the minimum
balance requirements; or
{circle}Purchased pursuant to the exchange privilege if the shares were held for the
applicable CDSC holding period.
Redemption Fees Institutional Class A shares: None
Shares: None Class C shares: None
Select Shares: None
Purchases/Redemptions Institutional and Class A and Class C shares: You may purchase Shares through a financial intermediary,
Select Shares: You directly from the Fund or through an exchange from another Federated fund. The Fund
may purchase Shares reserves the right to reject any request to purchase or exchange Shares. Where the Fund
through a financial offers more than one Share class and you do not specify the class choice on your New
intermediary, Account Form or form of payment (e.g., Federal Reserve wire or check), you automatically
directly from the will receive Class A Shares.
Funds or through an
exchange from
another Federated
fund. The Funds
reserve the right to
reject any request
to purchase or
exchange Shares.
Redemptions Policies Reserves right to Reserves right to delay delivery of redemption proceeds up to seven days.
delay delivery of
redemption proceeds 10% of the value of redemptions
up to seven days. from a retirement account in the Fund may be withheld for taxes. This withholding only
applies to certain types of retirement accounts.
Exchanges Institutional and Class A and Class C shares:
Select Shares:
You may exchange You may exchange Shares of the Fund into shares of the same class of another Federated
Shares of a Fund for fund. To do this, you must:
shares of any {circle}ensure that the account registrations are identical;
Federated fund or {circle}meet any minimum initial investment requirements; and
share class that {circle}receive a prospectus for the fund into which you wish to exchange.
does not have a
stated sales charge
or contingent
deferred sales
charge, except
Liberty U.S.
Government Money
Market Trust and
Class K Shares. To
do this, you must:
{circle}ensure
that the
account
registrations
are identical;
{circle}meet any
minimum
initial
investment
requirements;
and
{circle}receive a
prospectus for
the fund into
which you wish
to exchange.
Dividends and Institutional Shares The Fund declares and pays any dividends annually to shareholders. Dividends are paid to
Distributions and Select Shares: all shareholders invested in the Fund on the record date. The record date is the date on
Each Fund declares which a shareholder must officially own Shares in order to earn a dividend.
and pays any
dividends quarterly In addition, the Fund pays any capital gains at least annually. Your dividends and
to shareholders. capital gains distributions will be automatically reinvested in additional Shares without
Dividends are paid a sales charge, unless you elect cash payments. Dividends may also be reinvested without
to all shareholders sales charges in shares of any class of any other Federated fund of which you are already
invested in a Fund a shareholder.
on the record date.
The record date is
the date on which a
shareholder must
officially own
Shares in order to
earn a dividend.
In addition, the
Funds pay any
capital gains at
least annually. Your
dividends and
capital gains
distributions will
be automatically
reinvested in
additional Shares
without a sales
charge, unless you
elect cash payments.
Dividends may also
be reinvested
without sales
charges in shares of
any class of any
other Federated fund
of which you are
already a
shareholder.
COMPARATIVE FEE TABLES
Like all mutual funds, the Acquired Funds and FMDTBF incur certain
expenses in their operations. These expenses include management fees, as well
as costs of maintaining accounts, administration, providing shareholder liaison
and distribution services and other activities. Set forth in the tables below
is information regarding the fees and expenses currently incurred by the
Institutional Shares and Select Shares of the Acquired Funds and Class A Shares
and Class C Shares of FMDTBF respectively, and pro forma fees for FMDTBF after
giving effect to the applicable Reorganization and also after giving effect to
all of the Reorganizations.
- 1 -
FCOAF - FMDTBF
This table describes (1) the actual fees and expenses that you may pay if
you buy and hold Institutional Shares of FCOAF as of its most recent prospectus
dated January 31, 2007; (2) the anticipated fees and expenses that you may pay
if you buy and hold Class A Shares of FMDTBF as of its most recent prospectus
dated December 11, 2006; and (3) the proforma fees and expenses of Class A
Shares of FMDTBF on a combined basis after giving effect to the Reorganization.
As described below, the proforma operating expenses of FMDTBF are shown after
giving effect to a contractual waiver of expenses by Federated MDTA LLC to limit
total operating expenses to not more than 1.50% (excluding "Acquired Fund Fees
and Expenses"), which will continue through December 8, 2008.
FEDERATED FEDERATED
CONSERVATIVE MDT
ALLOCATION BALANCED
FUND - FEDERATED MDT BALANCED FUND- FUND-
INSTITUTIONAL CLASS A SHARES CLASS A
SHAREHOLDER FEES SHARES SHARES
PRO
FORMA
COMBINED
Fees Paid Directly From Your Investment
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of
offering price) None 5.50% 5.50%1
Maximum Deferred Sales Charge (Load) (as a percentage of original
purchase price or redemption proceeds, as applicable) None 0.00% 0.00%
Maximum Sales Charge (Load) Imposed on Reinvested Dividends (and other
Distributions) (as a percentage of offering price) None None None
Redemption Fee (as a percentage of amount redeemed, if applicable) None None None
Exchange Fee None None None
ANNUAL FUND OPERATING EXPENSES (Before Waivers) 2
Expenses That are Deducted From Fund Assets (as a percentage of average
net assets)
Management Fee 0.75%3 0.75%4 0.75%4
Distribution (12b-1) Fee None 0.25%5 0.25%5
Other Expenses 0.83%6 0.65%6 0.60%7
Acquired Fund Fees and Expenses8 0.31% 0.04% 0.04%
Total Annual Fund Operating Expenses 1.89% 1.69% 1.64%
Fee Waiver and/or Expense Reimbursement (contractual)
0.00% 0.15% 0.10%
Total Annual Fund Operating Expenses (after contractual waivers)
1.89%9 1.54% 1.54%
1 Shareholders of the Acquired Funds who receive FMDTBF's Class A Shares as a
result of the Reorganization will not be subject to a sales charge on
future purchases of FMDTBF, if such purchases are made in the same
account(s).
2 With respect to FCOAF, the percentages shown are based on expenses for the
entire fiscal year ended November 30, 2006. However, the rate at which
expenses are accrued during the fiscal year may not be constant and, at any
particular point, may be greater or less than the stated average
percentage. Although not contractually obligated to do so, the shareholder
services provider and the administrator waived or elected not to charge
certain amounts. In addition, the Adviser, distributor and shareholder
services provider have agreed to reimburse certain investment adviser fees
and operating expenses as a result of investments in other funds which are
managed by a common Adviser or an affiliate of the Adviser. These are shown
below along with the net expenses the Funds actually paid for the fiscal
year ended November 30, 2006. With respect to FMDTBF and FMDTBF Pro Forma
Combined, the percentages shown are based on anticipated expenses for the
fiscal period ending July 31, 2007. However, the rate at which expenses are
accrued during the fiscal year may not be constant and, at any particular
point, may be greater or less than the stated average percentage. Although
not contractually obligated to do so (except as discussed in Note 2), the
distributor and the administrator expect to waive certain amounts.
These are shown below along with the net expenses the Fund expects to pay
for the fiscal period ending July 31, 2007.
Total Waivers of Fund Expenses 0.43% 0.12% 0.17%
Total Actual Annual Fund
Operating Expenses (after waivers) 1.46% 1.42% 1.37%
3 The Adviser for FCOAF voluntarily reimbursed a portion of the management
fee. The management fee paid by FCOAF (after the voluntary reimbursement)
was 0.59% for the fiscal year ended November 30, 2006.
4 Under the investment advisory contract, the Adviser of FMDTBF and FMDTBF
Pro Forma Combined is obligated to waive all or a portion of its investment
advisory fee which it is otherwise entitled to receive, and/or reimburse
other operating expenses (excluding "Acquired Fund Fees and Expenses",
interest, taxes and brokerage commissions), in order to limit the aggregate
annual operating expenses for the Fund's Class A Shares to not more than
1.50% of its daily net assets. Any waivers by the administrator and/or
distributor that reduce such expenses (as discussed elsewhere in these
notes) may have the effect of reducing the amount to be waived or
reimbursed by the Adviser pursuant to the contractual commitment. It is
anticipated that this commitment will expire on December 8, 2008.
5 Although not contractually obligated to do so, FMDTBF and FMDTBF Pro Forma
Combined do not anticipate accruing or charging the distribution (12b-1)
fee for Class A Shares during the fiscal period ending July 31, 2007.
6 With respect to FCOAF, other expenses include a shareholder fee/account
administration fee which is used to compensate intermediaries for
shareholder services or account administrative services. Also includes a
recordkeeping fee which is used to compensate intermediaries for
recordkeeping services. The administrator and shareholder services provider
voluntarily waived a portion of its fee. Additionally, the shareholder
services provider elected not to charge, and therefore FCOAF's
Institutional Shares did not accrue a portion of its fee. The administrator
and shareholder services provider can terminate this voluntary waiver
and/or reduction at any time. The distributor and shareholder services
provider have agreed to reimburse certain other operating expenses as a
result of investments in other funds which are managed by a common Adviser
or an affiliate of the Adviser. Total other operating expenses incurred by
the Institutional Shares of FCOAF (after the voluntary waiver reduction and
reimbursements) were 0.56% for the fiscal year ended November 30, 2006.
7 With respect to FMDTBF and FMDTBF Pro Forma Combined, other expenses
include a shareholder fee/account administration fee which is used to
compensate intermediaries for shareholder services or account
administrative services. Also includes a recordkeeping fee which is used to
compensate intermediaries for recordkeeping services. Although not
contractually obligated to do so, the administrator expects to voluntarily
waive a portion of its fee. This voluntary waiver can be terminated at any
time. Total Other Expenses paid by FMDTBF and FMDTBF Pro Forma Combined
Class A Shares (after the anticipated waiver) are expected to be 0.63% and
0.58%, respectively for the fiscal period ending July 31, 2007.
8 The Funds' shareholders indirectly bear the expenses of the acquired funds
in which each Fund invests. The Fund's estimated indirect expense from
investing in the acquired funds is based upon the average allocation of the
Fund's investment in the acquired funds and upon the actual total operating
expenses of the acquired funds (including any current waivers and expense
limitations) for the fiscal year ended November 30, 2006 or period ending
July 31, 2007. Actual acquired fund expenses incurred by each Fund may vary
with changes in the allocation of the Fund assets among the acquired funds
and with other events that directly affect the expenses of the acquired
funds.
9 The Adviser and its affiliates have voluntarily agreed to waive their fees
and/or reimburse expenses so that the total operating expenses incurred by
the Institutional Shares of FCOAF (after the voluntary waivers and
reimbursements) will not exceed 1.28% (excluding "Acquired Fund Fees and
Expenses") for the fiscal year ending November 30, 2007. Although these
actions are voluntary, the Adviser and its affiliates have agreed not to
terminate these waivers and/or reimbursements until after January 31, 2008.
EXAMPLE
This example is intended to help you compare the cost of investing in the
indicated Funds with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in FCOAF's Institutional Shares or
FMDTBF and FMDTBF Pro Forma Combined Class A Shares for the time periods
indicated and then redeem all of your shares at the end of those periods. The
Example also assumes that your investment has a 5% return each year and that,
for FCOAF's Institutional Shares and FMDTBF and FMDTBF Pro Forma Combined
Class A Shares operating expenses are before waivers as shown in the table and
remain the same. For FMDTBF's Class A Shares, the 1 Year dollar amount and
the dollar amounts for the first and second year of the 3, 5 and 10 Years
columns reflect the contractually imposed expense limitation of 1.50% for
Class A Shares (plus 0.04% of "Acquired Fund Fees and Expenses"). FMDTBF's
Adviser has agreed to keep this limitation in effect through December 8, 2008.
Accordingly, the third year of the 3, 5 and 10 Years columns reflects the
contractually imposed expense limitation of 1.50% (plus 0.04% of "Acquired
Fund Fees and Expenses") for four months and the "Total Annual Fund Operating
Expenses" of the FMDTBF's Class A Shares without any waivers for the remainder
of the year. The fourth and later years within the 5 and 10 Years columns
reflect the "Total Annual Fund Operating Expenses" of the FMDTBF's Class A
Shares without any waivers. Although your actual costs and returns may be
higher or lower, based on these assumptions your costs would be:
-------------------------------------------------------------
| 1 Year 3 Years 5 Years 10 Years|
| |
| |
|FCOAF, INSTITUTIONAL SHARES $192 $594 $1,021 $2,212 |
-------------------------------------------------------------
| |
| |
|FMDTBF, CLASS A SHARES $698 $1,020 $1,385 $2,409 |
-------------------------------------------------------------
| |
|FMDTBF, CLASS A SHARES |
|PRO FORMA COMBINED $698 $1,017 $1,371 $2,368 |
-------------------------------------------------------------
- 2 -
FMAF - FMDTBF
This table describes (1) the actual fees and expenses that you may pay if
you buy and hold Institutional Shares of FMAF as of its most recent prospectus
dated January 31, 2007; (2) the anticipated fees and expenses that you may pay
if you buy and hold Class A Shares of FMDTBF as of its most recent prospectus
dated December 11, 2006; and (3) the proforma fees and expenses of Class A
Shares of FMDTBF on a combined basis after giving effect to the Reorganization.
As described below, the proforma operating expenses of FMDTBF are shown after
giving effect to a contractual waiver of expenses by Federated MDTA LLC to limit
total operating expenses to not more than 1.50% (excluding "Acquired Fund Fees
and Expenses"), which will continue through December 8, 2008.
FEDERATED FEDERATED
MODERATE MDT
ALLOCATION BALANCED
FUND - FEDERATED MDT FUND-
INSTITUTIONAL BALANCED FUND- CLASS A
SHAREHOLDER FEES SHARES CLASS A SHARES SHARES
PRO
FORMA
COMBINED
Fees Paid Directly From Your Investment
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price)
None 5.50% 5.50%1
Maximum Deferred Sales Charge (Load) (as a percentage of original purchase price or
redemption proceeds, as applicable) None 0.00% 0.00%
Maximum Sales Charge (Load) Imposed on Reinvested Dividends (and other Distributions) (as a
percentage of offering price) None None None
Redemption Fee (as a percentage of amount redeemed, if applicable) None None None
Exchange Fee None None None
ANNUAL FUND OPERATING EXPENSES (Before Waivers) 2
Expenses That are Deducted From Fund Assets (as a percentage of average net assets)
Management Fee 0.75%3 0.75%4 0.75%4
Distribution (12b-1) Fee None 0.25%5 0.25%5
Other Expenses 0.73%6 0.65%7 0.56%7
Acquired Fund Fees and Expenses8 0.27% 0.04% 0.04%
Total Annual Fund Operating Expenses 1.75% 1.69% 1.60%
Fee Waiver and/or Expense Reimbursement (contractual)
0.00% 0.15% 0.06%
Total Annual Fund Operating Expenses (after contractual waivers)
1.75%9 1.54% 1.54%
1 Shareholders of the Acquired Funds who receive FMDTBF's Class A Shares as a
result of the Reorganization will not be subject to a sales charge on
future purchases of FMDTBF, if such purchases are made in the same
account(s).
2 With respect to FMAF, the percentages shown are based on expenses for the
entire fiscal year ended November 30, 2006. However, the rate at which
expenses are accrued during the fiscal year may not be constant and, at any
particular point, may be greater or less than the stated average
percentage. Although not contractually obligated to do so, the shareholder
services provider and the administrator waived or elected not to charge
certain amounts. In addition, the Adviser, distributor and shareholder
services provider have agreed to reimburse certain investment adviser fees
and operating expenses as a result of investments in other funds which are
managed by a common Adviser or an affiliate of the Adviser. These are shown
below along with the net expenses the Funds actually paid for the fiscal
year ended November 30, 2006. With respect to FMDTBF and FMDTBF Pro Forma
Combined, the percentages shown are based on anticipated expenses for the
fiscal period ending July 31, 2007. However, the rate at which expenses are
accrued during the fiscal year may not be constant and, at any particular
point, may be greater or less than the stated average percentage. Although
not contractually obligated to do so (except as discussed in Note 2), the
distributor and the administrator expect to waive certain amounts. These
are shown below along with the net expenses the Fund expects to pay for the
fiscal period ending July 31, 2007.
Total Waivers of Fund Expenses 0.39% 0.12% 0.19%
Total Actual Annual
Fund Operating Expenses (after waivers) 1.36% 1.42% 1.35%
3 The Adviser for FMAF voluntarily reimbursed a portion of the management
fee. The management fee paid by FMAF (after the voluntary reimbursement)
was 0.61% for the fiscal year ended November 30, 2006.
4 Under the investment advisory contract, the Adviser of FMDTBF and FMDTBF
Pro Forma Combined is obligated to waive all or a portion of its investment
advisory fee which it is otherwise entitled to receive, and/or reimburse
other operating expenses (excluding "Acquired Fund Fees and Expenses",
interest, taxes and brokerage commissions), in order to limit the aggregate
annual operating expenses for the Fund's Class A Shares to not more than
1.50% of its daily net assets. Any waivers by the administrator and/or
distributor that reduce such expenses (as discussed elsewhere in these
notes) may have the effect of reducing the amount to be waived or
reimbursed by the Adviser pursuant to the contractual commitment. It is
anticipated that this commitment will expire in December 8, 2008.
5 Although not contractually obligated to do so, FMDTBF and FMDTBF Pro Forma
Combined do not anticipate accruing or charging the distribution (12b-1)
fee for Class A Shares during the fiscal period ending July 31, 2007.
6 With respect to FMAF, other expenses include a shareholder fee/account
administration fee which is used to compensate intermediaries for
shareholder services or account administrative services. Also includes a
recordkeeping fee which is used to compensate intermediaries for
recordkeeping services. The administrator and shareholder services provider
voluntarily waived a portion of its fee. Additionally, the shareholder
services provider elected not to charge, and therefore FMAF's Institutional
Shares did not accrue a portion of its fee. The administrator and
shareholder services provider can terminate this voluntary waiver and/or
reduction at any time. The distributor and shareholder services provider
have agreed to reimburse certain other operating expenses as a result of
investments in other funds which are managed by a common Adviser or an
affiliate of the Adviser. Total other operating expenses incurred by the
Institutional Shares of FMAF (after the voluntary waiver reduction and
reimbursements) were 0.48% for the fiscal year ended November 30, 2006.
7 With respect to FMDTBF and FMDTBF Pro Forma Combined, other expenses
include a shareholder fee/account administration fee which is used to
compensate intermediaries for shareholder services or account
administrative services. Also includes a recordkeeping fee which is used to
compensate intermediaries for recordkeeping services. Although not
contractually obligated to do so, the administrator expects to voluntarily
waive a portion of its fee. This voluntary waiver can be terminated at any
time. Total Other Expenses paid by FMDTBF and FMDTBF Class A Shares (after
the anticipated waiver) are expected to be 0.63% and 0.56%, respectively
for the fiscal period ending July 31, 2007.
8 The Fund's shareholders indirectly bear the expenses of the acquired funds
in which each Fund invests. The Fund's estimated indirect expense from
investing in the acquired funds is based upon the average allocation of the
Fund's investment in the acquired funds and upon the actual total operating
expenses of the acquired funds (including any current waivers and expense
limitations) for the fiscal year ended November 30, 2006 or period ending
July 31, 2007. Actual acquired fund expenses incurred by each Fund may vary
with changes in the allocation of the Fund assets among the acquired funds
and with other events that directly affect the expenses of the acquired
funds.
9 The Adviser and its affiliates have voluntarily agreed to waive their fees
and/or reimburse expenses so that the total operating expenses incurred by
the Institutional Shares of FMAF (after the voluntary waivers and
reimbursements) will not exceed 1.20% (excluding "Acquired Fund Fees and
Expenses") for the fiscal year ending November 30, 2007. Although these
actions are voluntary, the Adviser and its affiliates have agreed not to
terminate these waivers and/or reimbursements until after January 31, 2008.
EXAMPLE
This example is intended to help you compare the cost of investing in the
indicated Funds with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in FMAF's Institutional Shares or
FMDTBF and FMDTBF Pro Forma Combined Class A Shares for the time periods
indicated and then redeem all of your shares at the end of those periods. The
Example also assumes that your investment has a 5% return each year and that,
for FMAF's Institutional Shares and FMDTBF and FMDTBF Pro Forma Combined Class
A Shares operating expenses are before waivers as shown in the table and
remain the same. For FMDTBF's Class A Shares, the 1 Year dollar amount and
the dollar amounts for the first and second year of the 3, 5 and 10 Years
columns reflect the contractually imposed expense limitation of 1.50% for
Class A Shares (plus 0.04% of "Acquired Fund Fees and Expenses"). FMDTBF's
Adviser has agreed to keep this limitation in effect through December 8, 2008.
Accordingly, the third year of the 3, 5 and 10 Years columns reflects the
contractually imposed expense limitation of 1.50% (plus 0.04% of "Acquired
Fund Fees and Expenses") for four months and the "Total Annual Fund Operating
Expenses" of the FMDTBF's Class A Shares without any waivers for the remainder
of the year. The fourth and later years within the 5 and 10 Years columns
reflect the "Total Annual Fund Operating Expenses" of the FMDTBF's Class A
Shares without any waivers. Although your actual costs and returns may be
higher or lower, based on these assumptions your costs would be:
------------------------------------------------------------
| 1 Year 3 Years 5 Years 10 Years|
| |
| |
|FMAF, INSTITUTIONAL SHARES $178 $551 $ 949 $2,062 |
------------------------------------------------------------
| |
| |
|FMDTBF, CLASS A SHARES $698 $1,020 $1,385 $2,409 |
------------------------------------------------------------
| |
|FMDTBF, CLASS A SHARES |
|PRO FORMA COMBINED $698 $1,014 $1,360 $2,334 |
------------------------------------------------------------
FGAF - FMDTBF
This table describes (1) the actual fees and expenses that you may pay if
you buy and hold Institutional Shares of FGAF as of its most recent prospectus
dated January 31, 2007; (2) the anticipated fees and expenses that you may pay
if you buy and hold Class A Shares of FMDTBF as of its most recent prospectus
dated December 11, 2006; and (3) the proforma fees and expenses of Class A
Shares of FMDTBF on a combined basis after giving effect to the Reorganization.
As described below, the proforma operating expenses of FMDTBF are shown after
giving effect to a contractual waiver of expenses by Federated MDTA LLC to limit
total operating expenses to not more than 1.50% (excluding "Acquired Fund Fees
and Expenses"), which will continue through December 8, 2008.
FEDERATED FEDERATED
GROWTH MDT
ALLOCATION BALANCED
FUND - FEDERATED MDT FUND-
INSTITUTIONAL BALANCED CLASS A
SHAREHOLDER FEES SHARES FUND- CLASS A SHARES
SHARES PRO
FORMA
COMBINED
Fees Paid Directly From Your Investment
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price)
None 5.50% 5.50%1
Maximum Deferred Sales Charge (Load) (as a percentage of original purchase price or
redemption proceeds, as applicable) None 0.00% 0.00%
Maximum Sales Charge (Load) Imposed on Reinvested Dividends (and other Distributions) (as a
percentage of offering price) None None None
Redemption Fee (as a percentage of amount redeemed, if applicable) None None None
Exchange Fee None None None
ANNUAL FUND OPERATING EXPENSES (Before Waivers) 2
Expenses That are Deducted From Fund Assets (as a percentage of average net assets)
Management Fee 0.75%3 0.75%4 0.75%4
Distribution (12b-1) Fee None 0.25%5 0.25%5
Other Expenses 1.03%6 0.65%7 0.62%7
Acquired Fund Fees and Expenses8 0.22% 0.04% 0.04%
Total Annual Fund Operating Expenses 2.00% 1.69% 1.66%
Fee Waiver and/or Expense Reimbursement (contractual)
0.00% 0.15% 0.12%
Total Annual Fund Operating Expenses (after contractual waivers)
2.00%9 1.54% 1.54%
1 Shareholders of the Acquired Funds who receive FMDTBF's Class A Shares as a
result of the Reorganization will not be subject to a sales charge on
future purchases of FMDTBF, if such purchases are made in the same
account(s).
2 With respect to FGAF, the percentages shown are based on expenses for the
entire fiscal year ended November 30, 2006. However, the rate at which
expenses are accrued during the fiscal year may not be constant and, at any
particular point, may be greater or less than the stated average
percentage. Although not contractually obligated to do so, the shareholder
services provider and the administrator waived or elected not to charge
certain amounts. In addition, the Adviser, distributor and shareholder
services provider have agreed to reimburse certain investment adviser fees
and operating expenses as a result of investments in other funds which are
managed by a common Adviser or an affiliate of the Adviser. These are shown
below along with the net expenses the Funds actually paid for the fiscal
year ended November 30, 2006. With respect to FMDTBF and FMDTBF Pro Forma
Combined, the percentages shown are based on anticipated expenses for the
fiscal period ending July 31, 2007. However, the rate at which expenses are
accrued during the fiscal year may not be constant and, at any particular
point, may be greater or less than the stated average percentage. Although
not contractually obligated to do so (except as discussed in Note 2), the
distributor and the administrator expect to waive certain amounts. These
are shown below along with the net expenses the Fund expects to pay for the
fiscal period ending July 31, 2007.
Total Waivers of Fund Expenses 0.38% 0.12% 0.15%
Total Actual Annual Fund
Operating Expenses (after waivers) 1.62% 1.42% 1.39%
3 The Adviser for FGAF voluntarily reimbursed a portion of the management
fee. The management fee paid by FGAF (after the voluntary reimbursement)
was 0.64% for the fiscal year ended November 30, 2006.
4 Under the investment advisory contract, the Adviser of FMDTBF and FMDTBF
Pro Forma Combined is obligated to waive all or a portion of its investment
advisory fee which it is otherwise entitled to receive, and/or reimburse
other operating expenses (excluding "Acquired Fund Fees and Expenses",
interest, taxes and brokerage commissions), in order to limit the aggregate
annual operating expenses for the Fund's Class A Shares to not more than
1.50% of its daily net assets. Any waivers by the administrator and/or
distributor that reduce such expenses (as discussed elsewhere in these
notes) may have the effect of reducing the amount to be waived or
reimbursed by the Adviser pursuant to the contractual commitment. It is
anticipated that this commitment will expire in December 8, 2008.
5 Although not contractually obligated to do so, FMDTBF and FMDTBF Pro Forma
Combined do not anticipate accruing or charging the distribution (12b-1)
fee for Class A Shares during the fiscal period ending July 31, 2007.
6 With respect to FGAF, other expenses include a shareholder fee/account
administration fee which is used to compensate intermediaries for
shareholder services or account administrative services. Also includes a
recordkeeping fee which is used to compensate intermediaries for
recordkeeping services. The administrator and shareholder services provider
voluntarily waived a portion of its fee. Additionally, the shareholder
services provider elected not to charge, and therefore FGAF's Institutional
Shares did not accrue a portion of its fee. The administrator and
shareholder services provider can terminate this voluntary waiver and/or
reduction at any time. The distributor and shareholder services provider
have agreed to reimburse certain other operating expenses as a result of
investments in other funds which are managed by a common Adviser or an
affiliate of the Adviser. Total other operating expenses incurred by the
Institutional Shares of FGAF (after the voluntary waiver reduction and
reimbursements) were 0.76% for the fiscal year ended November 30, 2006.
7 With respect to FMDTBF and FMDTBF Pro Forma Combined, other expenses
include a shareholder fee/account administration fee which is used to
compensate intermediaries for shareholder services or account
administrative services. Also includes a recordkeeping fee which is used to
compensate intermediaries for recordkeeping services. Although not
contractually obligated to do so, the administrator expects to voluntarily
waive a portion of its fee. This voluntary waiver can be terminated at any
time. Total Other Expenses paid by FMDTBF and FMDTBF Class A Shares (after
the anticipated waiver) are expected to be 0.63% and 0.60%, respectively
for the fiscal period ending July 31, 2007.
8 The Funds' shareholders indirectly bear the expenses of the acquired funds
in which the Fund invests. The Fund's estimated indirect expense from
investing in the acquired funds is based upon the average allocation of the
Fund's investment in the acquired funds and upon the actual total operating
expenses of the acquired funds (including any current waivers and expense
limitations) for the fiscal year ended November 30, 2006 or period ending
July 31, 2007. Actual acquired fund expenses incurred by each Fund may vary
with changes in the allocation of the Fund assets among the acquired funds
and with other events that directly affect the expenses of the acquired
funds.
9 The Adviser and its affiliates have voluntarily agreed to waive their fees
and/or reimburse expenses so that the total operating expenses incurred by
the Institutional Shares of FGAF (after the voluntary waivers and
reimbursements) will not exceed 1.45% (excluding "Acquired Fund Fees and
Expenses") for the fiscal year ending November 30, 2007. Although these
actions are voluntary, the Adviser and its affiliates have agreed not to
terminate these waivers and/or reimbursements until after January 31, 2008.
EXAMPLE
This example is intended to help you compare the cost of investing in the
indicated Funds with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in FGAF's Institutional Shares or
FMDTBF and FMDTBF Pro Forma Combined Class A Shares for the time periods
indicated and then redeem all of your shares at the end of those periods. The
Example also assumes that your investment has a 5% return each year and that,
for FGAF's Institutional Shares and FMDTBF and FMDTBF Pro Forma Combined Class
A Shares operating expenses are before waivers as shown in the table and
remain the same. For FMDTBF's Class A Shares, the 1 Year dollar amount and
the dollar amounts for the first and second year of the 3, 5 and 10 Years
columns reflect the contractually imposed expense limitation of 1.50% for
Class A Shares (plus 0.04% of "Acquired Fund Fees and Expenses"). FMDTBF's
Adviser has agreed to keep this limitation in effect through December 8, 2008.
Accordingly, the third year of the 3, 5 and 10 Years columns reflects the
contractually imposed expense limitation of 1.50% (plus 0.04% of "Acquired
Fund Fees and Expenses") for four months and the "Total Annual Fund Operating
Expenses" of the FMDTBF's Class A Shares without any waivers for the remainder
of the year. The fourth and later years within the 5 and 10 Years columns
reflect the "Total Annual Fund Operating Expenses" of the FMDTBF's Class A
Shares without any waivers. Although your actual costs and returns may be
higher or lower, based on these assumptions your costs would be:
------------------------------------------------------------
| 1 Year 3 Years 5 Years 10 Years|
| |
| |
|FGAF, INSTITUTIONAL SHARES $203 $627 $1,078 $2,327 |
------------------------------------------------------------
| |
| |
|FMDTBF, CLASS A SHARES $698 $1,020 $1,385 $2,409 |
------------------------------------------------------------
| |
|FMDTBF, CLASS A SHARES |
|PRO FORMA COMBINED $698 $1,018 $1,377 $2,384 |
------------------------------------------------------------
ACQUIRED FUNDS - FMDTBF
This table describes: (1) the actual fees and expenses that you may pay if
you buy and hold Institutional Shares of the Acquired Funds as of their most
recent prospectus dated January 31, 2007; (2) the anticipated fees and expenses
that you may pay if you buy and hold Class A Shares of FMDTBF as of its most
recent prospectus dated December 11, 2006; and (3) the proforma fees and
expenses of Class A Shares of FMDTBF on a combined basis after giving effect to
all three Reorganizations. As described below, the proforma operating expenses
of FMDTBF are shown after giving effect to a contractual waiver of expenses by
Federated MDTA LLC to limit total operating expenses to not more than 1.50%
(excluding "Acquired Fund Fees and Expenses"), which will continue through
December 8, 2008.
FEDERATED FEDERATED FEDERATED FEDERATED
CONSERVATIVE MODERATE GROWTH FEDERATED MDT BALANCED FUND- CLASS A SHARES
ALLOCATION ALLOCATION ALLOCATION MDT PRO FORMA COMBINED
FUND - FUND - FUND - BALANCED
INSTITUTIONAL INSTITUTIONAL INSTITUTIONAL FUND-
SHAREHOLDER FEES SHARES SHARES SHARES CLASS A
SHARES
Fees Paid Directly From Your Investment
Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of offering price) None None None 5.50%1 5.50%1
Maximum Deferred Sales Charge (Load) (as a
percentage of original purchase price or None None None 0.00% 0.00%
redemption proceeds, as applicable)
Maximum Sales Charge (Load) Imposed on
Reinvested Dividends (and other Distributions) None None None None None
(as a percentage of offering price)
Redemption Fee (as a percentage of amount None None None None None
redeemed, if applicable)
Exchange Fee None None None None None
ANNUAL FUND OPERATING EXPENSES (Before Waivers)
2
Expenses That are Deducted From Fund Assets (as
a percentage of average net assets)
Management Fee 0.75%3 0.75%3 0.75%3 0.75%4 0.75%4
Distribution (12b-1) Fee None None None 0.25%5 0.25%5
Other Expenses 0.83%6 0.73%6 1.03%6 0.65%7 0.54%7
Acquired Fund Fees and Expenses8 0.31% 0.27% 0.22% 0.04% 0.04%
Total Annual Fund Operating Expenses 1.89% 1.75% 2.00% 1.69% 1.58%
Fee Waiver and/or Expense Reimbursement
(contractual) 0.00% 0.00% 0.00% 0.15% 0.04%
Total Annual Fund Operating Expenses (after
contractual waivers) 1.89%9 1.75%9 2.00%9 1.54% 1.54%
1 Shareholders of the Acquired Funds who receive FMDTBF's Class A Shares as a result of the
Reorganization will not be subject to a sales charge on future purchases of FMDTBF, if such None
purchases are made in the same account(s).
2 With respect to the Acquired Funds, the percentages shown are based on expenses for the entire fiscal
year ended November 30, 2006. However, the rate at which expenses are accrued during the fiscal year 1.00%
may not be constant and, at any particular point, may be greater or less than the stated average
percentage. Although not contractually obligated to do so, the shareholder services provider and the
administrator waived or elected not to charge certain amounts. In addition, the Adviser, distributor
and shareholder services provider have agreed to reimburse certain investment adviser fees and
operating expenses as a result of investments in other funds which are managed by a common Adviser or
an affiliate of the Adviser. These are shown below along with the net expenses the Acquired Funds
actually paid for the fiscal year ended November 30, 2006. With respect to FMDTBF and FMDTBF Pro
Forma Combined, the percentages shown are based on anticipated expenses for the fiscal period ending
July 31, 2007. However, the rate at which expenses are accrued during the fiscal year may not be
constant and, at any particular point, may be greater or less than the stated average percentage.
Although not contractually obligated to do so (except as discussed in Note 2), the distributor and the
administrator expect to waive certain amounts. These are shown below along with the net expenses the
Funds expect to pay for the fiscal period ending July 31, 2007.
Total Waivers of Fund Expenses 0.43% 0.39% 0.38% 0.12%
0.21%
Total Actual Annual Fund Operating Expenses (after 1.46% 1.36% 1.62% 1.42% 1.33%
waivers)
3 The Adviser for the Acquired Funds voluntarily reimbursed a portion of the management fee. The None
management fee paid by FCOAF, FMAF and FGAF (after the voluntary reimbursement) was 0.59%, 0.61% and
0.64%, respectively for the fiscal year ended November 30, 2006.
4 Under the investment advisory contract, the Adviser of FMDTBF and FMDTBF Pro Forma Combined is
obligated to waive all or a portion of its investment advisory fee which it is otherwise entitled to
receive, and/or reimburse other operating expenses (excluding "Acquired Fund Fees and Expenses",
interest, taxes and brokerage commissions), in order to limit the aggregate annual operating expenses
for the Fund's Class A Shares to not more than 1.50% of its daily net assets. Any waivers by the
administrator and/or distributor that reduce such expenses (as discussed elsewhere in these notes) may
have the effect of reducing the amount to be waived or reimbursed by the Adviser pursuant to the
contractual commitment. It is anticipated that this commitment will expire in December 8, 2008.
5 Although not contractually obligated to do so, FMDTBF and FMDTBF Pro Forma Combined do not anticipate
accruing or charging the distribution (12b-1) fee for Class A Shares during the fiscal period ending
July 31, 2007.
6 With respect to the Acquired Funds, other expenses include a shareholder fee/account administration 0.75%3
fee which is used to compensate intermediaries for shareholder services or account administrative
services. Also includes a recordkeeping fee which is used to compensate intermediaries for
recordkeeping services. The administrator and shareholder services provider voluntarily waived a
portion of their fee. Additionally, the shareholder services provider elected not to charge, and
therefore the Funds' Institutional Shares did not accrue a portion of their fee. The administrator
and shareholder services provider can terminate this voluntary waiver and/or reduction at any time.
The distributor and shareholder services provider have agreed to reimburse certain other operating
expenses as a result of investments in other funds which are managed by a common Adviser or an
affiliate of the Adviser. Total other operating expenses incurred by the Institutional Shares of
FCOAF, FMAF and FGAF (after the voluntary waiver reduction and reimbursements) were 0.56%, 0.48% and
0.76%, respectively for the fiscal year ended November 30, 2006.
7 With respect to FMDTBF and FMDTBF Pro Forma Combined, other expenses includes a shareholder 0.75%
fee/account administration fee which is used to compensate intermediaries for shareholder services or
account administrative services. Also includes a recordkeeping fee which is used to compensate
intermediaries for recordkeeping services. Although not contractually obligated to do so, the
administrator expects to voluntarily waive a portion of its fee. This voluntary waiver can be
terminated at any time. Total Other Expenses paid by FMDTBF and FMDTBF Class A Shares (after the
anticipated waiver) are expected to be 0.63% and 0.54%, respectively for the fiscal period ending July
31, 2007.
8 The Funds shareholders indirectly bear the expenses of the acquired funds in which each Fund invests. 0.54%6
The Fund's estimated indirect expense from investing in the acquired funds is based upon the average
allocation of the Fund's investment in the acquired funds and upon the actual total operating expenses
of the acquired funds (including any current waivers and expense limitations) for the fiscal years
ended November 30, 2006 or period ending July 31, 2007. Actual acquired fund expenses incurred by each
Fund may vary with changes in the allocation of the Fund assets among the acquired funds and with other
events that directly affect the expenses of the acquired funds.
9 The Adviser and its affiliates have voluntarily agreed to waive their fees and/or reimburse expenses so 0.04%
that the total operating expenses incurred by the Institutional Shares of FCOAF, FMAF and FGAF (after
the voluntary waivers and reimbursements) will not exceed 1.28%, 1.20% and 1.45%, respectively
(excluding "Acquired Fund Fees and Expenses") for the fiscal year ending November 30, 2007. Although
these actions are voluntary, the Adviser and its affiliates have agreed not to terminate these waivers
and/or reimbursements until after January 31, 2008.
EXAMPLE
This example is intended to help you compare the cost of investing in the
indicated Funds with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in the Acquired Funds'
Institutional Shares or FMDTBF and FMDTBF Pro Forma Combined Class A Shares
for the time periods indicated and then redeem all of your shares at the end
of those periods. The Example also assumes that your investment has a 5%
return each year and that, for the Acquired Funds' Institutional Shares and
FMDTBF and FMDTBF Pro Forma Combined Class A Shares operating expenses are
before waivers as shown in the table and remain the same. For FMDTBF's Class
A Shares, the 1 Year dollar amount and the dollar amounts for the first and
second year of the 3, 5 and 10 Years columns reflect the contractually imposed
expense limitation of 1.50% for Class A Shares (plus 0.04% of "Acquired Fund
Fees and Expenses"). FMDTBF's Adviser has agreed to keep this limitation in
effect through December 8, 2008. Accordingly, the third year of the 3, 5 and
10 Years columns reflects the contractually imposed expense limitation of
1.50% (plus 0.04% of "Acquired Fund Fees and Expenses") for four months and
the "Total Annual Fund Operating Expenses" of FMDTBF's Class A Shares without
any waivers for the remainder of the year. The fourth and later years within
the 5 and 10 Years columns reflect the "Total Annual Fund Operating Expenses"
of the FMDTBF's Class A Shares without any waivers. Although your actual
costs and returns may be higher or lower, based on these assumptions your
costs would be:
-------------------------------------------------------------
| 1 Year 3 Years 5 Years 10 Years|
| |
| |
|FCOAF, INSTITUTIONAL SHARES $192 $594 $1,021 $2,212 |
-------------------------------------------------------------
| |
| |
|FMAF, INSTITUTIONAL SHARES $178 $551 $ 949 $2,062 |
-------------------------------------------------------------
| |
| |
|FGAF, INSTITUTIONAL SHARES $203 $627 $1,078 $2,327 |
-------------------------------------------------------------
| |
| |
|FMDTBF, CLASS A SHARES $698 $1,020 $1,385 $2,409 |
-------------------------------------------------------------
| |
|FMDTBF, CLASS A SHARES |
|PRO FORMA COMBINED $698 $1,013 $1,355 $2,318 |
-------------------------------------------------------------
- 3 -
FCOAF - FMDTBF
This table describes (1) the actual fees and expenses that you may pay if
you buy and hold Select Shares of FCOAF as of its most recent prospectus dated
January 31, 2007; (2) the anticipated fees and expenses that you may pay if you
buy and hold Class C Shares of FMDTBF as of its most recent prospectus dated
December 11, 2006; and (3) the proforma fees and expenses of Class C Shares of
FMDTBF on a combined basis after giving effect to the Reorganization. As
described below, the proforma operating expenses of FMDTBF are shown after
giving effect to a contractual waiver of expenses by Federated MDTA LLC to limit
total operating expenses to not more than 2.25% (excluding "Acquired Fund Fees
and Expenses"), which will continue through December 8, 2008.
FEDERATED
FEDERATED MDT
CONSERVATIVE BALANCED
ALLOCATION FEDERATED MDT FUND-
FUND - SELECT BALANCED FUND- CLASS C
SHAREHOLDER FEES SHARES CLASS C SHARES SHARES
PRO FORMA
COMBINED
Fees Paid Directly From Your Investment
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price)
None None None
Maximum Deferred Sales Charge (Load) (as a percentage of original purchase price or
redemption proceeds, as applicable) None 1.00% 1.00%
Maximum Sales Charge (Load) Imposed on Reinvested Dividends (and other Distributions) (as a
percentage of offering price) None None None
Redemption Fee (as a percentage of amount redeemed, if applicable) None None None
Exchange Fee None None None
ANNUAL FUND OPERATING EXPENSES (Before Waivers) 11
Expenses That are Deducted From Fund Assets (as a percentage of average net assets)
Management Fee 0.75%2 0.75%3 0.75%3
Distribution (12b-1) Fee 0.75%4 0.75% 0.75%
Other Expenses 0.83%5 0.65%6 0.60%6
Acquired Fund Fees and Expenses7 0.31% 0.04% 0.04%
Total Annual Fund Operating Expenses 2.64%8 2.19% 2.14%
1 With respect to FCOAF, the percentages shown are based on expenses for the
entire fiscal year ended November 30, 2006. However, the rate at which
expenses are accrued during the fiscal year may not be constant and, at any
particular point, may be greater or less than the stated average
percentage. Although not contractually obligated to do so, the distributor
and the administrator waived certain amounts. In addition, the Adviser,
distributor and shareholder services provider have agreed to reimburse
certain investment adviser fees and operating expenses as a result of
investments in other funds which are managed by a common Adviser or an
affiliate of the Adviser. These are shown below along with the net expenses
the Funds actually paid for the fiscal year ended November 30, 2006. With
respect to FMDTBF and FMDTBF Pro Forma Combined, the percentages shown are
based on anticipated expenses for the fiscal period ending July 31, 2007.
However, the rate at which expenses are accrued during the fiscal year may
not be constant and, at any particular point, may be greater or less than
the stated average percentage. Although not contractually obligated to do
so (except as discussed in Note 2), the administrator expects to waive
certain amounts. These are shown below along with the net expenses the Fund
expects to pay for the fiscal period ending July 31, 2007.
Total Waivers of Fund Expenses 0.48% 0.02% 0.02%
Total Actual Annual Fund
Operating Expenses (after waivers) 2.16% 2.17% 2.12%
2 The Adviser for FCOAF voluntarily reimbursed a portion of the management
fee. The management fee paid by FCOAF (after the voluntary reimbursement)
was 0.59% for the fiscal year ended November 30, 2006.
3 Under the investment advisory contract, the Adviser of FMDTBF and FMDTBF
Pro Forma Combined is obligated to waive all or a portion of its investment
advisory fee which it is otherwise entitled to receive, and/or reimburse
other operating expenses (excluding "Acquired Fund Fees and Expenses",
interest, taxes and brokerage commissions), in order to limit the aggregate
annual operating expenses for the Fund's Class C Shares to not more than
2.25% of its daily net assets. Any waivers by the administrator and/or
distributor that reduce such expenses (as discussed elsewhere in these
notes) may have the effect of reducing the amount to be waived or
reimbursed by the Adviser pursuant to the contractual commitment. It is
anticipated that this commitment will expire in December 8, 2008.
4 With respect to FCOAF, a portion of the distribution (12b-1) fee has been
voluntarily waived. This voluntary waiver can be terminated at any time.
The distribution (12b-1) fee has been voluntarily waived. This voluntary
waiver can be terminated at any time. The distribution (12b-1) fee incurred
by the Select Shares of FCOAF (after the voluntary waiver) was 0.50% for
the fiscal year ended November 30, 2006.
5 With respect to FCOAF, other expenses include a shareholder fee/account
administration fee which is used to compensate intermediaries for
shareholder services or account administrative services. Also includes a
recordkeeping fee which is used to compensate intermediaries for
recordkeeping services. The administrator voluntarily waived a portion of
its fee. The administrator can terminate this voluntary waiver at any time.
The distributor and shareholder services provider have agreed to reimburse
certain other operating expenses as a result of investments in other funds
which are managed by a common Adviser or an affiliate of the Adviser. Total
other operating expenses paid by the Select Shares of FCOAF (after the
voluntary waiver reduction and reimbursements) were 0.76% for the fiscal
year ended November 30, 2006.
6 With respect to FMDTBF and FMDTBF Pro Forma Combined, other expenses
include a shareholder fee/account administration fee which is used to
compensate intermediaries for shareholder services or account
administrative services. Also includes a recordkeeping fee which is used to
compensate intermediaries for recordkeeping services. Although not
contractually obligated to do so, the administrator expects to voluntarily
waive a portion of its fee. This voluntary waiver can be terminated at any
time. Total Other Expenses paid by FMDTBF and FMDTBF Class C Shares (after
the anticipated waiver) are expected to be 0.63% and 0.58%, respectively
for the fiscal period ending July 31, 2007.
7 The Funds' shareholders indirectly bear the expenses of the acquired funds
in which each Fund invests. The Fund's estimated indirect expense from
investing in the acquired funds is based upon the average allocation of the
Fund's investment in the acquired funds and upon the actual total operating
expenses of the acquired funds (including any current waivers and expense
limitations) for the fiscal years ended November 30, 2006 or period ending
July 31, 2007. Actual acquired fund expenses incurred by each Fund may vary
with changes in the allocation of the Fund assets among the acquired funds
and with other events that directly affect the expenses of the acquired
funds.
8 The Adviser and its affiliates have voluntarily agreed to waive their fees
and/or reimburse expenses so that the total operating expenses incurred by
the Select Shares of FCOAF (after the voluntary waivers and reimbursements)
will not exceed 1.98% (excluding "Acquired Fund Fees and Expenses") for the
fiscal year ending November 30, 2007. Although these actions are voluntary,
the Adviser and its affiliates have agreed not to terminate these waivers
and/or reimbursements until after January 31, 2008.
EXAMPLE
This example is intended to help you compare the cost of investing in the
indicated Funds with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in the FCOAF's Select Shares or
FMDTBF and FMDTBF Pro Forma Combined Class C Shares for the time periods
indicated and then redeem all of your shares at the end of those periods. The
Example also assumes that your investment has a 5% return each year and that,
for the Acquired Funds' Select Shares and FMDTBF and FMDTBF Pro Forma Combined
Class C Shares operating expenses are before waiver as shown in the table and
remain the same. Although your actual costs and returns may be higher or
lower, based on thses assumptions your costs would be:
-------------------------------------------------------------------
| 1 Year 3 Years 5 Years 10 Years|
| |
|FCOAF, SELECT SHARES |
-------------------------------------------------------------------
| Expenses assuming redemption |
| $267 $820 $1,400 $2,973 |
-------------------------------------------------------------------
| Expenses assuming no redemption |
| $267 $820 $1,400 $2,973 |
-------------------------------------------------------------------
| |
|FMDTBF, CLASS C SHARES |
-------------------------------------------------------------------
| Expenses assuming redemption |
| $322 $685 $1,175 $2,524 |
-------------------------------------------------------------------
| Expenses assuming no redemption |
| $222 $685 $1,175 $2,524 |
-------------------------------------------------------------------
|FMDTBF, CLASS C SHARES |
| PRO FORMA COMBINED |
-------------------------------------------------------------------
| Expenses assuming redemption |
| $317 $670 $1,149 $2,472 |
-------------------------------------------------------------------
| Expenses assuming no redemption |
| $217 $670 $1,149 $2,472 |
-------------------------------------------------------------------
- 4 -
FMAF - FMDTBF
This table describes (1) the actual fees and expenses that you may pay if
you buy and hold Select Shares of FMAF as of its most recent prospectus dated
January 31, 2007; (2) the anticipated fees and expenses that you may pay if you
buy and hold Class C Shares of FMDTBF as of its most recent prospectus dated
December 11, 2006; and (3) the proforma fees and expenses of Class C Shares of
FMDTBF on a combined basis after giving effect to the Reorganization. As
described below, the proforma operating expenses of FMDTBF are shown after
giving effect to a contractual waiver of expenses by Federated MDTA LLC to limit
total operating expenses to not more than 2.25% (excluding "Acquired Fund Fees
and Expenses"), which will continue through December 8, 2008.
FEDERATED
FEDERATED MDT
MODERATE BALANCED
ALLOCATION FEDERATED MDT FUND-
FUND - BALANCED FUND- CLASS C
SHAREHOLDER FEES SELECT CLASS C SHARES SHARES
SHARES PRO FORMA
COMBINED
Fees Paid Directly From Your Investment
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price)
None None None
Maximum Deferred Sales Charge (Load) (as a percentage of original purchase price or redemption
proceeds, as applicable) None 1.00% 1.00%
Maximum Sales Charge (Load) Imposed on Reinvested Dividends (and other Distributions) (as a
percentage of offering price) None None None
Redemption Fee (as a percentage of amount redeemed, if applicable) None None None
Exchange Fee None None None
ANNUAL FUND OPERATING EXPENSES (Before Waivers) 11
Expenses That are Deducted From Fund Assets (as a percentage of average net assets)
Management Fee 0.75%2 0.75%3 0.75%3
Distribution (12b-1) Fee 0.75%4 0.75% 0.75%
Other Expenses 0.73%5 0.65%6 0.56%6
Acquired Fund Fees and Expenses7 0.27% 0.04% 0.04%
Total Annual Fund Operating Expenses 2.50%8 2.19% 2.10%
1 With respect to FMAF, the percentages shown are based on expenses for the
entire fiscal year ended November 30, 2006. However, the rate at which
expenses are accrued during the fiscal year may not be constant and, at any
particular point, may be greater or less than the stated average
percentage. Although not contractually obligated to do so, the distributor
and the administrator waived certain amounts. In addition, the Adviser,
distributor and shareholder services provider have agreed to reimburse
certain investment adviser fees and operating expenses as a result of
investments in other funds which are managed by a common Adviser or an
affiliate of the Adviser. These are shown below along with the net expenses
the Funds actually paid for the fiscal year ended November 30, 2006. With
respect to FMDTBF and FMDTBF Pro Forma Combined, the percentages shown are
based on anticipated expenses for the fiscal period ending July 31, 2007.
However, the rate at which expenses are accrued during the fiscal year may
not be constant and, at any particular point, may be greater or less than
the stated average percentage. Although not contractually obligated to do
so (except as discussed in Note 2), the administrator expects to waive
certain amounts. These are shown below along with the net expenses the Fund
expects to pay for the fiscal period ending July 31, 2007.
Total Waivers of Fund Expenses 0.44% 0.02% 0.00%
Total Actual Annual
Fund Operating Expenses (after waivers) 2.06% 2.17% 2.10%
2 The Adviser for FMAF voluntarily reimbursed a portion of the management
fee. The management fee paid by FMAF (after the voluntary reimbursement)
was 0.61% for the fiscal year ended November 30, 2006.
3 Under the investment advisory contract, the Adviser of FMDTBF and FMDTBF
Pro Forma Combined is obligated to waive all or a portion of its investment
advisory fee which it is otherwise entitled to receive, and/or reimburse
other operating expenses (excluding "Acquired Fund Fees and Expenses",
interest, taxes and brokerage commissions), in order to limit the aggregate
annual operating expenses for the Fund's Class C Shares to not more than
2.25% of its daily net assets. Any waivers by the administrator and/or
distributor that reduce such expenses (as discussed elsewhere in these
notes) may have the effect of reducing the amount to be waived or
reimbursed by the Adviser pursuant to the contractual commitment. It is
anticipated that this commitment will expire in December 8, 2008.
4 With respect to FMAF, a portion of the distribution (12b-1) fee has been
voluntarily waived. This voluntary waiver can be terminated at any time.
The distribution (12b-1) fee has been voluntarily waived. This voluntary
waiver can be terminated at any time. The distribution (12b-1) fee incurred
by the Select Shares of FMAF (after the voluntary waiver) was 0.50% for the
fiscal year ended November 30, 2006.
5 With respect to FMAF, other expenses include a shareholder fee/account
administration fee which is used to compensate intermediaries for
shareholder services or account administrative services. Also includes a
recordkeeping fee which is used to compensate intermediaries for
recordkeeping services. The administrator voluntarily waived a portion of
its fee. The administrator can terminate this voluntary waiver at any time.
The distributor and shareholder services provider have agreed to reimburse
certain other operating expenses as a result of investments in other funds
which are managed by a common Adviser or an affiliate of the Adviser. Total
other operating expenses paid by the Select Shares of FMAF (after the
voluntary waiver reduction and reimbursements) were 0.68% for the fiscal
year ended November 30, 2006.
6 With respect to FMDTBF and FMDTBF Pro Forma Combined, other expenses
include a shareholder fee/account administration fee which is used to
compensate intermediaries for shareholder services or account
administrative services. Also includes a recordkeeping fee which is used to
compensate intermediaries for recordkeeping services. Although not
contractually obligated to do so, the administrator expects to voluntarily
waive a portion of its fee. This voluntary waiver can be terminated at any
time. Total Other Expenses paid by FMDTBF and FMDTBF Class C Shares (after
the anticipated waiver) are expected to be 0.63% and 0.56%, respectively
for the fiscal period ending July 31, 2007.
7 The Funds' shareholders indirectly bear the expenses of the acquired funds
in which each Fund invests. The Fund's estimated indirect expense from
investing in the acquired funds is based upon the average allocation of the
Fund's investment in the acquired funds and upon the actual total operating
expenses of the acquired funds (including any current waivers and expense
limitations) for the fiscal years ended November 30, 2006 or period ending
July 31, 2007. Actual acquired fund expenses incurred by each Fund may vary
with changes in the allocation of the Fund assets among the acquired funds
and with other events that directly affect the expenses of the acquired
funds.
8 The Adviser and its affiliates have voluntarily agreed to waive their fees
and/or reimburse expenses so that the total operating expenses incurred by
the Select Shares of FMAF (after the voluntary waivers and reimbursements)
will not exceed 1.90% (excluding "Acquired Fund Fees and Expenses") for the
fiscal year ending November 30, 2007. Although these actions are voluntary,
the Adviser and its affiliates have agreed not to terminate these waivers
and/or reimbursements until after January 31, 2008.
EXAMPLE
This example is intended to help you compare the cost of investing in the
indicated Funds with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in FMAF's Select Shares or FMDTBF
and FMDTBF Pro Forma Combined Class C Shares for the time periods indicated
and then redeem all of your shares at the end of those periods. The Example
also assumes that your investment has a 5% return each year and that, for the
Acquired Funds' Select Shares and FMDTBF and FMDTBF Pro Forma Combined Class C
Shares operating expenses are before waivers as shown in the table and remain
the same. Although your actual costs and returns may be higher or lower,
based on thses assumptions your costs would be:
-------------------------------------------------------------------
| 1 Year 3 Years 5 Years 10 Years|
| |
|FMAF, SELECT SHARES |
-------------------------------------------------------------------
| Expenses assuming redemption |
| $253 $779 $1,331 $2,836 |
-------------------------------------------------------------------
| Expenses assuming no redemption |
| $253 $779 $1,331 $2,836 |
-------------------------------------------------------------------
| |
|FMDTBF, CLASS C SHARES |
-------------------------------------------------------------------
| Expenses assuming redemption |
| $322 $685 $1,175 $2,524 |
-------------------------------------------------------------------
| Expenses assuming no redemption |
| $222 $685 $1,175 $2,524 |
-------------------------------------------------------------------
|FMDTBF, CLASS C SHARES |
| PRO FORMA COMBINED |
-------------------------------------------------------------------
| Expenses assuming redemption |
| $313 $658 $1,129 $2,431 |
-------------------------------------------------------------------
| Expenses assuming no redemption |
| $213 $658 $1,129 $2,431 |
-------------------------------------------------------------------
- 5 -
FGAF - FMDTBF
This table describes (1) the actual fees and expenses that you may pay if
you buy and hold Select Shares of FGAF as of its most recent prospectus dated
January 31, 2007; (2) the anticipated fees and expenses that you may pay if you
buy and hold Class C Shares of FMDTBF as of its most recent prospectus dated
December 11, 2006; and (3) the proforma fees and expenses of Class C Shares of
FMDTBF on a combined basis after giving effect to the merger. As described
below, the proforma operating expenses of FMDTBF are shown after giving effect
to a contractual waiver of expenses by Federated MDTA LLC to limit total
operating expenses to not more than 2.25% (excluding "Acquired Fund Fees and
Expenses"), which will continue through December 8, 2008.
FEDERATED
FEDERATED MDT
GROWTH BALANCED
ALLOCATION FEDERATED MDT FUND-
FUND - BALANCED FUND- CLASS C
SHAREHOLDER FEES SELECT CLASS C SHARES SHARES
SHARES PRO FORMA
COMBINED
Fees Paid Directly From Your Investment
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price)
None None None
Maximum Deferred Sales Charge (Load) (as a percentage of original purchase price or
redemption proceeds, as applicable) None 1.00% 1.00%
Maximum Sales Charge (Load) Imposed on Reinvested Dividends (and other Distributions) (as a
percentage of offering price) None None None
Redemption Fee (as a percentage of amount redeemed, if applicable) None None None
Exchange Fee None None None
ANNUAL FUND OPERATING EXPENSES (Before Waivers) 11
Expenses That are Deducted From Fund Assets (as a percentage of average net assets)
Management Fee 0.75%2 0.75%3 0.75%3
Distribution (12b-1) Fee 0.75%4 0.75% 0.75%
Other Expenses 1.03%5 0.65%6 0.62%6
Acquired Fund Fees and Expenses7 0.22% 0.04% 0.04%
Total Annual Fund Operating Expenses 2.75%8 2.19% 2.16%
1 With respect to FGAF, the percentages shown are based on expenses for the
entire fiscal year ended November 30, 2006. However, the rate at which
expenses are accrued during the fiscal year may not be constant and, at any
particular point, may be greater or less than the stated average
percentage. Although not contractually obligated to do so, the distributor
and the administrator waived certain amounts. In addition, the Adviser,
distributor and shareholder services provider have agreed to reimburse
certain investment adviser fees and operating expenses as a result of
investments in other funds which are managed by a common Adviser or an
affiliate of the Adviser. These are shown below along with the net expenses
the Funds actually paid for the fiscal year ended November 30, 2006. With
respect to FMDTBF and FMDTBF Pro Forma Combined, the percentages shown are
based on anticipated expenses for the fiscal period ending July 31, 2007.
However, the rate at which expenses are accrued during the fiscal year may
not be constant and, at any particular point, may be greater or less than
the stated average percentage. Although not contractually obligated to do
so (except as discussed in Note 2), the administrator expects to waive
certain amounts. These are shown below along with the net expenses the Fund
expects to pay for the fiscal period ending July 31, 2007.
Total Waivers of Fund Expenses 0.43% 0.02% 0.02%
Total Actual Annual Fund
Operating Expenses (after waivers) 2.32% 2.17% 2.14%
2 The Adviser for FGAF voluntarily reimbursed a portion of the management
fee. The management fee paid by FGAF (after the voluntary reimbursement)
was 0.64% for the fiscal year ended November 30, 2006.
3 Under the investment advisory contract, the Adviser of FMDTBF and FMDTBF
Pro Forma Combined is obligated to waive all or a portion of its investment
advisory fee which it is otherwise entitled to receive, and/or reimburse
other operating expenses (excluding "Acquired Fund Fees and Expenses",
interest, taxes and brokerage commissions), in order to limit the aggregate
annual operating expenses for the Fund's Class C Shares to not more than
2.25% of its daily net assets. Any waivers by the administrator and/or
distributor that reduce such expenses (as discussed elsewhere in these
notes) may have the effect of reducing the amount to be waived or
reimbursed by the Adviser pursuant to the contractual commitment. It is
anticipated that this commitment will expire in December 8, 2008.
4 With respect to FGAF, a portion of the distribution (12b-1) fee has been
voluntarily waived. This voluntary waiver can be terminated at any time.
The distribution (12b-1) fee has been voluntarily waived. This voluntary
waiver can be terminated at any time. The distribution (12b-1) fee paid by
the Select Shares of FGAF (after the voluntary waiver) was 0.50% for the
fiscal year ended November 30, 2006.
5 With respect to FGAF, other expenses include a shareholder fee/account
administration fee which is used to compensate intermediaries for
shareholder services or account administrative services. Also includes a
recordkeeping fee which is used to compensate intermediaries for
recordkeeping services. The administrator voluntarily waived a portion of
its fee. The administrator can terminate this voluntary waiver at any time.
The distributor and shareholder services provider have agreed to reimburse
certain other operating expenses as a result of investments in other funds
which are managed by a common Adviser or an affiliate of the Adviser. Total
other operating expenses incurred by the Select Shares of FGAF (after the
voluntary waiver reduction and reimbursements) were 0.96% for the fiscal
year ended November 30, 2006.
6 With respect to FMDTBF and FMDTBF Pro Forma Combined, other expenses
include a shareholder fee/account administration fee which is used to
compensate intermediaries for shareholder services or account
administrative services. Also includes a recordkeeping fee which is used to
compensate intermediaries for recordkeeping services. Although not
contractually obligated to do so, the administrator expects to voluntarily
waive a portion of its fee. This voluntary waiver can be terminated at any
time. Total Other Expenses paid by FMDTBF and FMDTBF Class C Shares (after
the anticipated waiver) are expected to be 0.63% and 0.60%, respectively
for the fiscal period ending July 31, 2007.
7 The Funds' shareholders indirectly bear the expenses of the acquired funds
in which each Fund invests. The Fund's estimated indirect expense from
investing in the acquired funds is based upon the average allocation of the
Fund's investment in the acquired funds and upon the actual total operating
expenses of the acquired funds (including any current waivers and expense
limitations) for the fiscal years ended November 30, 2006 or period ending
July 31, 2007. Actual acquired fund expenses incurred by each Fund may vary
with changes in the allocation of the Fund assets among the acquired funds
and with other events that directly affect the expenses of the acquired
funds.
8 The Adviser and its affiliates have voluntarily agreed to waive their fees
and/or reimburse expenses so that the total operating expenses incurred by
the Select Shares of FGAF (after the voluntary waivers and reimbursements)
will not exceed 2.15% (excluding "Acquired Fund Fees and Expenses") for the
fiscal year ending November 30, 2007. Although these actions are voluntary,
the Adviser and its affiliates have agreed not to terminate these waivers
and/or reimbursements until after January 31, 2008.
EXAMPLE
This example is intended to help you compare the cost of investing in the
indicated Funds with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in FGAF's Select Shares or FMDTBF
and FMDTBF Pro Forma Combined's Class C Shares for the time periods indicated
and then redeem all of your shares at the end of those periods. The Example
also assumes that your investment has a 5% return each year and that, for the
Acquired Funds' Select Shares and FMDTBF and FMDTBF Pro Forma Combined's Class
C Shares operating expenses are before waiver as shown in the Table and remain
the same. Although your actual costs and returns may be higher or lower,
based on thses assumptions your costs would be:
-------------------------------------------------------------------
| 1 Year 3 Years 5 Years 10 Years|
| |
|FGAF, SELECT SHARES |
-------------------------------------------------------------------
| Expenses assuming redemption |
| $278 $853 $1,454 $3,080 |
-------------------------------------------------------------------
| Expenses assuming no redemption |
| $278 $853 $1,454 $3,080 |
-------------------------------------------------------------------
| |
|FMDTBF, CLASS C SHARES |
-------------------------------------------------------------------
| Expenses assuming redemption |
| $322 $685 $1,175 $2,524 |
-------------------------------------------------------------------
| Expenses assuming no redemption |
| $222 $685 $1,175 $2,524 |
-------------------------------------------------------------------
|FMDTBF, CLASS C SHARES |
| PRO FORMA COMBINED |
-------------------------------------------------------------------
| Expenses assuming redemption |
| $319 $676 $1,159 $2,493 |
-------------------------------------------------------------------
| Expenses assuming no redemption |
| $219 $676 $1,159 $2,493 |
-------------------------------------------------------------------
- 6 -
ACQUIRED FUNDS - FMDTBF
This table describes (1) the actual fees and expenses that you may pay if
you buy and hold Select Shares of the Acquired Funds as of its most recent
prospectus dated January 31, 2007; (2) the anticipated fees and expenses that
you may pay if you buy and hold Class C Shares of FMDTBF as of its most recent
prospectus dated December 11, 2006; and (3) the proforma fees and expenses of
Class C Shares of FMDTBF on a combined basis after giving effect to the
Reorganization. As described below, the proforma operating expenses of FMDTBF
are shown after giving effect to a contractual waiver of expenses by Federated
MDTA LLC to limit total operating expenses to not more than 2.25% (excluding
"Acquired Fund Fees and Expenses"), which will continue through December 8,
2008.
FEDERATED
FEDERATED FEDERATED FEDERATED FEDERATED MDT
CONSERVATIVE MODERATE GROWTH MDT BALANCED
ALLOCATION ALLOCATION ALLOCATION BALANCED FUND-
FUND - SELECT FUND - FUND - FUND- CLASS C
SHAREHOLDER FEES SHARES SELECT SELECT CLASS C SHARES
SHARES SHARES SHARES PRO FORMA
COMBINED
Fees Paid Directly From Your Investment
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of
offering price) None None None None None
Maximum Deferred Sales Charge (Load) (as a percentage of original
purchase price or redemption proceeds, as applicable) None None None 1.00% 1.00%
Maximum Sales Charge (Load) Imposed on Reinvested Dividends (and other
Distributions) (as a percentage of offering price) None None None None None
Redemption Fee (as a percentage of amount redeemed, if applicable) None None None None None
Exchange Fee None None None None None
ANNUAL FUND OPERATING EXPENSES (Before Waivers) 11
Expenses That are Deducted From Fund Assets (as a percentage of average
net assets)
Management Fee 0.75%2 0.75%2 0.75%2 0.75%3 0.75%3
Distribution (12b-1) Fee 0.75%4 0.75%4 0.75%4 0.75% 0.75%
Other Expenses 0.83%5 0.73%5 1.03%5 0.65%6 0.54%6
Acquired Fund Fees and Expenses7 0.31% 0.27% 0.22% 0.04% 0.04%
Total Annual Fund Operating Expenses 2.64%8 2.50%8 2.75%8 2.19% 2.08%
1 With respect to the Acquired Funds, the percentages shown are based on
expenses for the entire fiscal year ended November 30, 2006. However, the
rate at which expenses are accrued during the fiscal year may not be
constant and, at any particular point, may be greater or less than the
stated average percentage. Although not contractually obligated to do so,
the distributor and the administrator waived certain amounts. In addition,
the Adviser, distributor and shareholder services provider have agreed to
reimburse certain investment adviser fees and operating expenses as a
result of investments in other funds which are managed by a common Adviser
or an affiliate of the Adviser. These are shown below along with the net
expenses the Funds actually paid for the fiscal year ended November 30,
2006. With respect to FMDTBF and FMDTBF Pro Forma Combined, the percentages
shown are based on anticipated expenses for the fiscal period ending July
31, 2007. However, the rate at which expenses are accrued during the fiscal
year may not be constant and, at any particular point, may be greater or
less than the stated average percentage. Although not contractually
obligated to do so (except as discussed in Note 2), the administrator
expects to waive certain amounts. These are shown below along with the net
expenses the Fund expects to pay for the fiscal period ending July 31,
2007.
Total Waivers of Fund Expenses 0.48% 0.44% 0.43% 0.02% 0.00%
Total Actual Annual
Fund Operating Expenses (after waivers) 2.16% 2.06% 2.32% 2.17% 2.08%
2 The Adviser for the Acquired Funds voluntarily reimbursed a portion of the
management fee. The management fee paid by FCOAF, FMAF and FGAF (after the
voluntary reimbursement) was 0.59%, 0.61% and 0.64%, respectively for the
fiscal year ended November 30, 2006.
3 Under the investment advisory contract, the Adviser of FMDTBF and FMDTBF
Pro Forma Combined is obligated to waive all or a portion of its investment
advisory fee which it is otherwise entitled to receive, and/or reimburse
other operating expenses (excluding "Acquired Fund Fees and Expenses",
interest, taxes and brokerage commissions), in order to limit the aggregate
annual operating expenses for the Fund's Class C Shares to not more than
2.25% of its daily net assets. Any waivers by the administrator and/or
distributor that reduce such expenses (as discussed elsewhere in these
notes) may have the effect of reducing the amount to be waived or
reimbursed by the Adviser pursuant to the contractual commitment. It is
anticipated that this commitment will expire in December 8, 2008.
4 With respect to the Acquired Funds, a portion of the distribution (12b-1)
fee has been voluntarily waived. This voluntary waiver can be terminated at
any time. The distribution (12b-1) fee has been voluntarily waived. This
voluntary waiver can be terminated at any time. The distribution (12b-1)
fee paid by the Select Shares of FCOAF, FMAF and FGAF (after the voluntary
waiver) was 0.50% for the fiscal year ended November 30, 2006.
5 With respect to the Acquired Funds, other expenses include a shareholder
fee/account administration fee which is used to compensate intermediaries
for shareholder services or account administrative services. Also includes
a recordkeeping fee which is used to compensate intermediaries for
recordkeeping services. The administrator voluntarily waived a portion of
its fee. The administrator can terminate this voluntary waiver at any time.
The distributor and shareholder services provider have agreed to reimburse
certain other operating expenses as a result of investments in other funds
which are managed by a common Adviser or an affiliate of the Adviser. Total
other operating expenses incurred by the Select Shares of FCOAF, FMAF and
FGAF (after the voluntary waiver reduction and reimbursements) were 0.76%,
0.68% and 0.96%, respectively for the fiscal year ended November 30, 2006.
6 With respect to FMDTBF and FMDTBF Pro Forma Combined, other expenses
include a shareholder fee/account administration fee which is used to
compensate intermediaries for shareholder services or account
administrative services. Also includes a recordkeeping fee which is used to
compensate intermediaries for recordkeeping services. Although not
contractually obligated to do so, the administrator expects to voluntarily
waive a portion of its fee. This voluntary waiver can be terminated at any
time. Total Other Expenses paid by FMDTBF and FMDTBF Class C Shares (after
the anticipated waiver) are expected to be 0.63% and 0.54%, respectively
for the fiscal period ending July 31, 2007.
7 The Funds' shareholders indirectly bear the expenses of the acquired funds
in which each Fund invests. The Fund's estimated indirect expense from
investing in the acquired funds is based upon the average allocation of the
Fund's investment in the acquired funds and upon the actual total operating
expenses of the acquired funds (including any current waivers and expense
limitations) for the fiscal years ended November 30, 2006 or period ending
July 31, 2007. Actual acquired fund expenses incurred by each Fund may vary
with changes in the allocation of the Fund assets among the acquired funds
and with other events that directly affect the expenses of the acquired
funds.
8 The Adviser and its affiliates have voluntarily agreed to waive their fees
and/or reimburse expenses so that the total operating expenses incurred by
the Select Shares of FCOAF, FMAF and FGAF (after the voluntary waivers and
reimbursements) will not exceed 1.98%, 1.90% and 2.15%, respectively
(excluding "Acquired Fund Fees and Expenses") for the fiscal year ending
November 30, 2007. Although these actions are voluntary, the Adviser and
its affiliates have agreed not to terminate these waivers and/or
reimbursements until after January 31, 2008.
EXAMPLE
This example is intended to help you compare the cost of investing in the
indicated Funds with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in the Acquired Funds' Select
Shares or FMDTBF and FMDTBF Pro Forma Combined Class C Shares for the time
periods indicated and then redeem all of your shares at the end of those
periods. The Example also assumes that your investment has a 5% return each
year and that, for the Acquired Funds' Select Shares and FMDTBF and FMDTBF Pro
Forma Combined Class C Shares'operating expenses are before waiver as shown in
the table and remain the same. Although your actual costs and returns may be
higher or lower, based on these assumptions your costs would be:
--------------------------------------------------------------------
| 1 Year 3 Years 5 Years 10 Years|
| |
|FCOAF, SELECT SHARES |
--------------------------------------------------------------------
| Expenses assuming redemption |
| $267 $820 $1,400 $2,973 |
--------------------------------------------------------------------
| Expenses assuming no redemption |
| $267 $820 $1,400 $2,973 |
--------------------------------------------------------------------
| |
|FMAF, SELECT SHARES |
--------------------------------------------------------------------
| Expenses assuming redemption |
| $253 $779 $1,331 $2,836 |
--------------------------------------------------------------------
| Expenses assuming no redemption |
| $253 $779 $1,331 $2,836 |
--------------------------------------------------------------------
| |
|FGAF, SELECT SHARES |
--------------------------------------------------------------------
| Expenses assuming redemption |
| $278 $853 $1,454 $3,080 |
--------------------------------------------------------------------
| Expenses assuming no redemption |
| $278 $853 $1,454 $3,080 |
--------------------------------------------------------------------
| |
|FMDTBF, CLASS C SHARES |
--------------------------------------------------------------------
| Expenses assuming redemption |
| $322 $685 $1,175 $2,524 |
--------------------------------------------------------------------
| Expenses assuming no redemption |
| $222 $685 $1,175 $2,524 |
--------------------------------------------------------------------
|FMDTBF, CLASS C SHARES |
| PRO FORMA COMBINED |
--------------------------------------------------------------------
| Expenses assuming redemption |
| $311 $652 $1,119 $2,410 |
--------------------------------------------------------------------
| Expenses assuming no redemption |
| $211 $652 $1,119 $2,410 |
--------------------------------------------------------------------
Attached as Exhibit B to this Prospectus/Proxy Statement is the
Management's Discussion of Fund Performance and a line graph for the most recent
fiscal year for the Acquired Funds.
- 7 -
COMPARISON OF POTENTIAL RISKS AND REWARDS: PERFORMANCE INFORMATION
The performance information shown below will help you analyze each
Acquired Fund's investment risks in light of its historical returns. The bar
charts show the variability of the Acquired Funds' Institutional Shares and
FMDTBF Class A Shares total returns on a calendar year basis for the years
indicated. The Average Annual Total Return Tables show returns averaged over
the stated periods, and include comparative performance information. The
figures assume reinvestment of dividends and distributions. Each Fund's
performance will fluctuate, and past performance is no guarantee of future
results.
RISK/RETURN BAR CHART AND TABLE
The performance information shown below will help you analyze each of the
Acquired Fund's investment risks in light of its historical returns. The bar
chart shows the variability of each of the Acquired Fund's Institutional Shares
total returns on a calendar year-by-year basis. The Average Annual Total Return
table shows returns averaged over the stated periods, and includes comparative
performance information. The Fund's performance will fluctuate, and past
performance (before and after taxes) is no guarantee of future results.
FCOAF's Institutional Shares are sold without a sales charge (load). The total
returns in the bar chart above are based upon net asset value.
Within the period shown in the bar chart, the FCOAF's Institutional Shares
highest quarterly return was 9.08% (quarter ended June 30, 2003). Its lowest
quarterly return was (5.40)% (quarter ended September 30, 2002).
AVERAGE ANNUAL TOTAL RETURN TABLE
Return Before Taxes is shown for FCOAF's Institutional Shares. In addition,
Return After Taxes is shown for Institutional Shares to illustrate the effect of
federal taxes on FCOAF's returns. Actual after-tax returns depend upon each
investor's personal tax situation, and are likely to differ from those shown.
The table also shows returns for the Standard & Poor's 500 Index (S&P 500) and
the Lehman Brothers Aggregate Bond Index (LBAB), each a broad-based market
index. Index returns do not reflect taxes, sales charges, expenses or other
fees that the SEC requires to be reflected in the Fund's performance. Indexes
are unmanaged and, unlike the FCOAF, are not affected by cashflows. It is not
possible to invest directly in an index.
(For the periods ended December 31, 2006)
1 YEAR 5 YEARS 10 YEARS
INSTITUTIONAL SHARES:
Return Before Taxes 9.39% 5.72% 5.58%
Return After Taxes on Distributions1 7.93% 4.74% 3.89%
Return After Taxes on Distributions
and Sale of Fund Shares1
6.69% 4.41% 3.84%
S&P 500 15.80% 6.19% 8.42%
LBAB 4.33% 5.06% 6.24%
1 After-tax returns are calculated using a standard set of assumptions. The
stated returns assume the highest historical FEDERAL income and capital
gains tax rates. Return After Taxes on Distributions assumes a continued
investment in the Fund and shows the effect of taxes on Fund distributions.
Returns After Taxes on Distributions and Sale of Fund Shares assumes all
Shares were redeemed at the end of each measurement period, and shows the
effect of any taxable gain (or offsetting loss) on redemption, as well as
the effects of taxes on Fund distributions. These after-tax returns do NOT
reflect the effect of any applicable STATE and LOCAL taxes. After-tax
returns are not relevant to investors holding Shares through tax-deferred
programs, such as IRA or 401(k) plans.
- 8 -
RISK/RETURN BAR CHART AND TABLE
The performance information shown below will help you analyze FMAF's investment
risks in light of its historical returns. The bar chart shows the variability of
FMAF's Institutional Shares total returns on a calendar year-by-year basis. The
Average Annual Total Return table shows returns averaged over the stated
periods, and includes comparative performance information. The Fund's
performance will fluctuate, and past performance (before and after taxes) is no
guarantee of future results.
FMAF's Institutional Shares are sold without a sales charge (load). The total
returns in the bar chart above are based upon net asset value.
Within the period shown in the bar chart, the FMAF's Institutional Shares
highest quarterly return was 12.66% (quarter ended June 30, 2003). Its lowest
quarterly return was (9.42)% (quarter ended September 30, 2002).
AVERAGE ANNUAL TOTAL RETURN TABLE
Return Before Taxes is shown for FMAF's Institutional Shares. In addition,
Return After Taxes is shown for Institutional Shares to illustrate the effect of
federal taxes on Fund returns. Actual after-tax returns depend upon each
investor's personal tax situation, and are likely to differ from those shown.
The table also shows returns for the Standard & Poor's 500 Index (S&P 500) and
the Lehman Brothers Aggregate Bond Index (LBAB), each a broad-based market
index. Index returns do not reflect taxes, sales charges, expenses or other
fees that the SEC requires to be reflected in FMAF's performance. Indexes are
unmanaged and, unlike the FMAF, are not affected by cashflows. It is not
possible to invest directly in an index.
(For the periods ended December 31, 2006)
1 YEAR 5 YEARS 10 YEARS
INSTITUTIONAL SHARES:
Return Before Taxes 12.01% 6.17% 5.78%
Return After Taxes on Distributions1 10.76% 5.52% 4.35%
Return After Taxes on Distributions
and Sale of Fund Shares1
8.39% 5.02% 4.22%
S&P 500 15.80% 6.19% 8.42%
LBAB 4.33% 5.06% 6.24%
1 After-tax returns are calculated using a standard set of assumptions. The
stated returns assume the highest historical FEDERAL income and capital
gains tax rates. Return After Taxes on Distributions assumes a continued
investment in the Fund and shows the effect of taxes on Fund distributions.
Returns After Taxes on Distributions and Sale of Fund Shares assumes all
shares were redeemed at the end of each measurement period, and shows the
effect of any taxable gain (or offsetting loss) on redemption, as well as
the effects of taxes on Fund distributions. These after-tax returns do NOT
reflect the effect of any applicable STATE and LOCAL taxes. After-tax
returns are not relevant to investors holding shares through tax-deferred
programs, such as IRA or 401(k) plans.
- 9 -
RISK/RETURN BAR CHART AND TABLE
The performance information shown below will help you analyze FGAF's investment
risks in light of its historical returns. The bar chart shows the variability of
FGAF's Institutional Shares total returns on a calendar year-by-year basis. The
Average Annual Total Return table shows returns averaged over the stated
periods, and includes comparative performance information. The Fund's
performance will fluctuate, and past performance (before and after taxes) is no
guarantee of future results.
FGAF's Institutional Shares are sold without a sales charge (load). The total
returns in the bar chart above are based upon net asset value.
Within the period shown in the bar chart, FGAF's Institutional Shares highest
quarterly return was 15.71% (quarter ended December 31, 1998). Its lowest
quarterly return was (14.07)% (quarter ended September 30, 2002).
AVERAGE ANNUAL TOTAL RETURN TABLE
Return Before Taxes is shown for FGAF's Institutional Shares. In addition,
Return After Taxes is shown for Institutional Shares to illustrate the effect of
federal taxes on FGAF's returns. Actual after-tax returns depend upon each
investor's personal tax situation, and are likely to differ from those shown.
The table also shows returns for the Standard & Poor's 500 Index (S&P 500) and
the Lehman Brothers Aggregate Bond Index (LBAB), each a broad-based market
index. Index returns do not reflect taxes, sales charges, expenses or other
fees that the SEC requires to be reflected in the Fund's performance. Indexes
are unmanaged and, unlike FGAF, are not affected by cashflows. It is not
possible to invest directly in an index.
(For the periods ended December 31, 2006)
1 YEAR 5 YEARS 10 YEARS
INSTITUTIONAL SHARES:
Return Before Taxes 14.51% 5.79% 5.30%
Return After Taxes on Distributions1 14.07% 5.56% 4.32%
Return After Taxes on Distributions
and Sale of Fund Shares1
9.42% 4.88% 4.07 %
S&P 500 15.80% 6.19% 8.42%
LBAB 4.33% 5.06% 6.24%
1 After-tax returns are calculated using a standard set of assumptions. The
stated returns assume the highest historical FEDERAL income and capital
gains tax rates. Return After Taxes on Distributions assumes a continued
investment in the Fund and shows the effect of taxes on Fund distributions.
Returns After Taxes on Distributions and Sale of Fund Shares assumes all
shares were redeemed at the end of each measurement period, and shows the
effect of any taxable gain (or offsetting loss) on redemption, as well as
the effects of taxes on Fund distributions. These after-tax returns do NOT
reflect the effect of any applicable STATE and LOCAL taxes. After-tax
returns are not relevant to investors holding shares through tax-deferred
programs, such as IRA or 401(k) plans.
FEDERATED MDT BALANCED FUND
RISK/RETURN BAR CHART-CLASS A SHARES
FMDTBF is the successor to MDT Balanced Fund pursuant to a reorganization that
was completed on or about the close of business on December 8, 2006. Prior to
that date, the FMDTBF had no investment operations. Accordingly, the
performance information and financial information provided in this prospectus
for periods prior to December 11, 2006, is historical information for the MDT
Balanced Fund. The MDT Balanced Fund was managed by MDT Advisors and has the
same investment objectives and strategies as FMDTBF.
FMDTBF Class A Shares commenced operations on September 15, 2005. For the
period prior to the commencement of operations of Class A Shares, the
performance information shown in the bar chart below is for FMDTBF's
Institutional Shares, adjusted to reflect the expenses of FMDTBF's Class A
Shares.
The performance information shown below will help you analyze FMDTBF's
investment risks in light of its historical returns. The bar chart shows the
variability of FMDTBF's Class A Shares total returns on a calendar year-by-year
basis. The Average Annual Total Return table shows returns averaged over the
stated periods, and includes comparative performance information. The Fund's
performance will fluctuate, and past performance (before and after taxes) is no
guarantee of future results.
The total returns shown in the bar chart do not reflect the payment of any sales
charges or recurring shareholder account fees. If these charges or fees had been
included, the returns shown would have been lower.
FMDTBF's Class A Shares total return for the 3 month period from January 1, 2007
to March 31, 2007 was 1.35%.
Within the period shown in the bar chart, FMDTBF's Class A Shares highest
quarterly return was 9.49% (quarter ended December 31, 2003). Its lowest
quarterly return was (1.20)% (quarter ended June 30, 2004).
AVERAGE ANNUAL TOTAL RETURN TABLE
The Average Annual Total Returns for FMDTBF's Class A Shares and Class C Shares
are reduced to reflect applicable sales charges. Return Before Taxes is shown
for both classes. In addition, Return After Taxes is shown for FMDTBF's Class A
Shares to illustrate the effect of federal taxes on the FMDTBF's returns.
Actual after-tax returns depend on each investor's personal tax situation, and
are likely to differ from those shown. The table also shows returns for the
Standard & Poor's 500 Index (S&P 500), a broad-based market index, the Lipper
Balanced Funds Investment Objective Index (LBFIOI) and the Lehman Brothers
Aggregate Bond Index (LBAB). Index returns do not reflect taxes, sales charges,
expenses or other fees that the Securities and Exchange Commission requires to
be reflected in FMDTBF's performance. Indexes are unmanaged and unlike the
FMDTBF are not affected by cash flows. It is not possible to invest directly in
an index.
(For the periods ended December 31, 2006)
START OF
1 YEAR PERFOMANCE1
CLASS A SHARES2
Return Before Taxes 4.26% 12.27%
Return After Taxes on Distributions3 2.78% 10.54%
Return After Taxes on Distributions
and Sale of Fund Shares3 3.38% 9.86%
CLASS C SHARES2
Return Before Taxes 7.25% 12.45%
S&P 5004 15.79% 14.95%
LBFIOI5 11.60% 12.00%
LBAB6 4.33% 4.02%
1 FMDTBF's Institutional Shares commenced operations on October 1, 2002.
Class A Shares and Class C Shares commenced operations on September 15,
2005. The returns for the three indexes have been calculated since the
inception of FMDTBF's Institutional Shares.
2 FMDTBF's Class A Shares and Class C Shares total returns for the period
prior to their inception dates are those of FMDTBF's Institutional Shares,
but adjusted to reflect the sales charges or contingent deferred sales
charge (CDSC) and expenses applicable to each respective Class.
3 After-tax returns are calculated using a standard set of assumptions. The
stated returns assume the highest historical FEDERAL income and capital
gains tax rates. Return After Taxes on Distributions assumes a continued
investment in FMDTBF's and shows the effect of taxes on Fund distributions.
Return After Taxes on Distributions and Sale of Fund Shares assumes all
shares were redeemed at the end of each measurement period, and shows the
effect of any taxable gain (or offsetting loss) on redemption, as well as
the effects of taxes on Fund distributions. These after-tax returns do NOT
reflect the effect of any applicable STATE and LOCAL taxes. After-tax
returns are not relevant to investors holding Shares through tax-deferred
programs, such as IRA or 401(k) plans.
4 The S&P 500 Index consists of 500 stocks chosen from market size, liquidity
and industry group representation. It is a market-weighted index (stock
price times number of shares outstanding), with each stock's weight in the
Index proportionate to its market value. The "500" is one of the most
widely used benchmarks of U.S. equity performance. The performance of the
index assumes the reinvestment of dividends or other distributions but does
not reflect deductions for fees, expenses or taxes.
5 The Lipper Balanced Funds Investment Objective Index is the average of the
30 largest funds in the Lipper Balanced Funds category. These funds, by
portfolio practice, aim to conserve principal by maintaining at all times a
balanced portfolio of at least 50% in equity securities and at least 25% in
fixed-income securities. Typically the equity/bond ratio is approximately
60%/40%. The return of the index assumes the reinvestment of any dividends
or other distributions.
6 The Lehman Brothers Aggregate Bond Index is composed of securities from the
Lehman Brothers 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. Indices are rebalanced monthly by market capitalization.
- 10 -
FINANCIAL HIGHLIGHTS
The financial highlights tables below are intended to help you understand
the Acquired Funds' and FMDTBF's financial performance for the periods shown.
"Total Returns" show how much investment in each of the Acquired Funds and
FMDTBF would have increased or (decreased) during that period, assuming you had
reinvested all dividends and distributions.
The Acquired Funds' information in the tables below for the period ended
November 30, 2006 has been audited by KPMG LLP, an independent registered public
accounting firm, whose report, along with the Acquired Funds' audited financial
statements, are included in the Acquired Funds' Annual Report. FMDTBF's
information on the tables below for the period ended July 31, 2006 (formerly MDT
Balanced Fund) has been audited by Ernst & Young LLP, an independent registered
public accounting firm, whose report, along with FMDTBF's audited financial
statement are included in FMDTBF's Annual Report. FMDTBF's unaudited financial
statements are included in its Semi-Annual Report dated January 31, 2007.
FEDERATED CONSERVATIVE ALLOCATION FUND
FINANCIAL HIGHLIGHTS - INSTITUTIONAL SHARES
(For a Share Outstanding Throughout Each Period)
YEAR ENDED NOVEMBER 30 2006 1 2005 2004 2003 2002
NET ASSET VALUE, BEGINNING OF PERIOD $11.04 $10.91 $10.50 $9.70 $10.22
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.30 0.26 0.24 0.24 2 0.31
Net realized and unrealized gain (loss) on investments, foreign 0.82 0.14 0.48 0.81 (0.57 )
currency transactions and futures contracts
TOTAL FROM INVESTMENT OPERATIONS 1.12 0.40 0.72 1.05 (0.26 )
LESS DISTRIBUTIONS:
Distributions from net investment income (0.27 ) (0.27 ) (0.31 ) (0.25 ) (0.26 )
NET ASSET VALUE, END OF PERIOD $11.89 $11.04 $10.91 $10.50 $9.70
TOTAL RETURN3 10.35 % 3.66 % 7.00 % 10.99 % (2.56 )%
RATIOS TO AVERAGE NET ASSETS:
Net expenses 1.15 % 1.04 % 1.04 % 1.23 % 1.15 %
Net investment income 2.55 % 2.27 % 2.18 % 2.39 % 3.01 %
Expense waiver/reimbursement4 0.39 % 0.41 % 0.41 % 0.21 % 0.20 %
SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $49,648 $56,321 $67,497 $74,512 $76,842
Portfolio turnover 14 % 10 % 28 % 103 % 11 %
1 For the year ended November 30, 2006, FCOAF was audited by KPMG LLP. The
previous years were audited by another independent registered public
accounting firm.
2 Per share numbers have been calculated using the average shares method.
3 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, if any, are not annualized.
4 This expense decrease is reflected in both the net expense and the net
investment income ratios shown above.
Further information about FCOAF's performance is contained in the Annual Report,
dated November 30, 2006, which can be obtained free of charge.
- 11 -
FEDERATED MODERATE ALLOCATION FUND
FINANCIAL HIGHLIGHTS - INSTITUTIONAL SHARES
(For a Share Outstanding Throughout Each Period)
YEAR ENDED NOVEMBER 30 2006 1 2005 2004 2003 2002
NET ASSET VALUE, BEGINNING OF PERIOD $12.18 $11.84 $11.17 $9.99 $10.91
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.25 0.21 0.19 0.17 0.22
Net realized and unrealized gain (loss) on investments, foreign 1.26 0.35 0.72 1.18 )
currency transactions and futures contracts (0.95
TOTAL FROM 1.51 0.56 1.35 (0.73 )
INVESTMENT OPERATIONS
LESS DISTRIBUTIONS:
Distributions from net investment income (0.23 ) (0.22 ) (0.24 ) (0.17 ) (0.19 )
NET ASSET VALUE, END OF PERIOD $13.46 $12.18 $11.84 $11.17 $9.99
TOTAL RETURN2 12.57 % 4.74 % 8.24 % 13.68 % (6.76 )%
RATIOS TO AVERAGE NET ASSETS:
Net expenses 1.09 % 0.97 % 1.03 % 1.20 % 1.09 %
Net investment income 1.94 % 1.70 % 1.64 % 1.69 % 2.16 %
Expense waiver/reimbursement3 0.35 % 0.38 % 0.37 % 0.20 % 0.20 %
SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $65,479 $72,298 $88,612 $91,789 $95,288
Portfolio turnover 9 % 7 % 24 % 121 % 23 %
1 For the year ended November 30, 2006, FMAF was audited by KPMG LLP. The
previous years were 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. Total
returns for periods of less than one year, if any, are not annualized.
3 This expense decrease is reflected in both the net expense and the net
investment income ratios shown above.
Further information about FMAF's performance is contained in the Annual Report,
dated November 30, 2006, which can be obtained free of charge.
- 12 -
FEDERATED GROWTH ALLOCATION FUND
FINANCIAL HIGHLIGHTS - INSTITUTIONAL SHARES
(For a Share Outstanding Throughout Each Period)
YEAR ENDED NOVEMBER 30 2006 1 2005 2004 2003 2002
NET ASSET VALUE, BEGINNING OF PERIOD $12.86 $12.29 $11.30 $9.93 $11.39
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.13 2 0.09 2 0.10 2 0.08 2 0.12
Net realized and unrealized gain (loss) on investments, foreign currency 1.74 0.60 0.93 1.36 (1.47 )
transactions and futures contracts
TOTAL FROM INVESTMENT OPERATIONS 1.87 0.69 1.03 1.44 (1.35 )
LESS DISTRIBUTIONS:
Distributions from net investment income (0.12 ) (0.12 ) (0.04 ) (0.07 ) (0.11 )
NET ASSET VALUE, END OF PERIOD $14.61 $12.86 $12.29 $11.30 $9.93
TOTAL RETURN3 14.60 % 5.60 % 9.11 % 14.56 % (11.95 )%
RATIOS TO AVERAGE NET ASSETS:
Net expenses 1.40 % 1.27 % 1.30 % 1.41 % 1.28 %4
Net investment income 0.94 % 0.75 % 0.78 % 0.78 % 0.98 %
Expense waiver/reimbursement5 0.34 % 0.38 % 0.36 % 0.22 % 0.20 %
SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $32,894 $37,097 $43,261 $46,069 $48,840
Portfolio turnover 3 % 5 % 20 % 145 % 14 %
1 For the year ended November 30, 2006, FGAF was audited by KPMG LLP. The
previous years were audited by another independent registered public
accounting firm.
2 Per share numbers have been calculated using the average shares method.
3 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, if any, are not annualized.
4 The expense ratio is calculated without the reduction for fees paid
indirectly for directed brokerage arrangements.
5 This net expense decrease is reflected in both the net expense and the net
investment income ratios shown above.
Further information about FGAF's performance is contained in the Annual Report,
dated November 30, 2006, which can be obtained free of charge.
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FEDERATED CONSERVATIVE ALLOCATION FUND
FINANCIAL HIGHLIGHTS - SELECT SHARES
(For a Share Outstanding Throughout Each Period)
YEAR ENDED NOVEMBER 30 2006 1 2005 2004 2003 2002
NET ASSET VALUE, BEGINNING OF PERIOD $11.03 $10.90 $10.49 $9.69 $10.22
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.20 0.17 0.16 0.17 2 0.23
Net realized and unrealized gain (loss) on 0.84 0.15 0.49 0.81 (0.57 )
investments, foreign currency transactions and
futures contracts
TOTAL FROM INVESTMENT OPERATIONS 1.04 0.32 0.65 0.98 (0.34 )
LESS DISTRIBUTIONS:
Distributions from net investment income (0.19 ) (0.19 ) (0.24 ) (0.18 ) (0.19 )
NET ASSET VALUE, END OF PERIOD $11.88 $11.03 $10.90 $10.49 $9.69
TOTAL RETURN3 9.58 % 2.93 % 6.26 % 10.22 % (3.31 )%
RATIOS TO AVERAGE NET ASSETS:
Net expenses 1.85 % 1.74 % 1.74 % 1.93 % 1.85 %
Net investment income 1.86 % 1.57 % 1.48 % 1.68 % 2.31 %
Expense waiver/reimbursement4 0.48 % 0.48 % 0.46 % 0.26 % 0.25 %
SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $25,909 $32,089 $37,939 $38,975 $38,481
Portfolio turnover 14 % 10 % 28 % 103 % 11 %
1 For the year ended November 30, 2006, FCOAF was audited by KPMG LLP. The
previous years were audited by another independent registered public
accounting firm.
2 Per share numbers have been calculated using the average shares method.
3 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, if any, are not annualized.
4 This expense decrease is reflected in both the net expense and the net
investment income ratios shown above.
Further information about FCOAF's performance is contained in the Annual Report,
dated November 30, 2006, which can be obtained free of charge.
- 14 -
FEDERATED MODERATE ALLOCATION FUND
FINANCIAL HIGHLIGHTS - SELECT SHARES
(For a Share Outstanding Throughout Each Period)
YEAR ENDED NOVEMBER 30 2006 1 2005 2004 2003 2002
NET ASSET VALUE, BEGINNING OF PERIOD $12.15 $11.82 $11.15 $9.96 $10.87
INCOME FROM INVESTMENT OPERATION:
Net investment income 0.16 0.12 0.11 0.10 0.15
Net realized and unrealized gain (loss) on 1.26 0.34 0.72 1.19 )
investments, foreign currency transactions and (0.94
futures contracts
TOTAL FROM INVESTMENT OPERATIONS 1.42 0.46 1.29 (0.79 )
LESS DISTRIBUTIONS:
Distributions from net investment income (0.14 ) (0.13 ) (0.16 ) (0.10 ) (0.12 )
NET ASSET VALUE, END OF PERIOD $13.43 $12.15 $11.82 $11.15 $9.96
TOTAL RETURN2 11.81 % 3.93 % 7.50 %3 13.03 % (7.36 )%
RATIOS TO AVERAGE NET ASSETS:
Net expenses 1.79 % 1.67 % 1.73 % 1.90 % 1.79 %
Net investment income 1.24 % 1.00 % 0.94 % 0.99 % 1.46 %
Expense waiver/reimbursement4 0.44 % 0.45 % 0.42 % 0.25 % 0.25 %
SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $43,047 $48,454 $55,954 $56,747 $58,706
Portfolio turnover 9 % 7 % 24 % 121 % 23 %
1 For the year ended November 30, 2006, FMAF was audited by KPMG LLP. The
previous years were 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. Total
returns for periods of less than one year, if any, are not annualized.
3 During the year ended November 30, 2004, the Fund was reimbursed by the
Adviser, which had an impact of 0.09% on the total return.
4 This expense decrease is reflected in both the net expense and the net
investment income ratios shown above.
Further information about FMAF's performance is contained in the Annual Report,
dated November 30, 2006, which can be obtained free of charge.
- 15 -
FEDERATED GROWTH ALLOCATION FUND
FINANCIAL HIGHLIGHTS - SELECT SHARES
(For a Share Outstanding Throughout Each Period)
YEAR ENDED NOVEMBER 30 2006 1 2005 2004 2003 2002
NET ASSET VALUE, BEGINNING OF PERIOD $12.77 $12.22 $11.28 $9.92 $11.38
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.03 2 0.01 2 0.01 2 0.01 2 0.03
Net realized and unrealized gain (loss) on investments, foreign currency 1.74 0.58 0.93 1.36 (1.46 )
transactions and futures contracts
TOTAL FROM INVESTMENT OPERATIONS 1.77 0.59 0.94 1.37 (1.43 )
LESS DISTRIBUTIONS:
Distributions from net investment income (0.03 ) (0.04 ) (0.00 )3 (0.01 ) (0.03 )
NET ASSET VALUE, END OF PERIOD $14.51 $12.77 $12.22 $11.28 $9.92
TOTAL RETURN4 13.85 % 4.82 % 8.33 %5 13.81 % (12.60 )%
RATIOS TO AVERAGE NET ASSETS:
Net expenses 2.10 % 1.97 % 2.00 % 2.11 % 1.98 %6
Net investment income 0.25 % 0.06 % 0.10 % 0.08 % 0.28 %
Expense waiver/reimbursement7 0.43 % 0.45 % 0.41 % 0.27 % 0.25 %
SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $30,543 $35,183 $38,684 $38,481 $38,719
Portfolio turnover 3 % 5 % 20 % 145 % 14 %
1 For the year ended November 30, 2006, FGAF was audited by KPMG LLP. The
previous years were audited by another independent registered public
accounting firm.
2 Per share numbers have been calculated using the average shares method.
3 Represents less than $0.01.
4 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, if any, are not annualized.
5 During the year ended November 30, 2004, FGAF was reimbursed by the
Adviser, which had an impact of 0.09% on the total return.
6 The net expense ratio is calculated without the reduction for fees paid
indirectly for directed brokerage arrangements.
7 This expense decrease is reflected in both the net expense and the net
investment income ratios shown above.
Further information about FGAF's performance is contained in the Annual Report,
dated November 30, 2006, which can be obtained free of charge.
- 16 -
MDT SERIES-BALANCED FUND
FINANCIAL HIGHLIGHTS - CLASS A SHARES
(For a Share Outstanding Throughout Each Period)
PERIOD ENDED 1
JULY 31, 2006
NET ASSET VALUE, BEGINNING OF PERIOD $13.67
INCOME FROM INVESTMENT OPERATIONS:
NET INVESTMENT INCOME 0.18 2
Net realized and unrealized gain on investments 0.46
TOTAL FROM INVESTMENT OPERATIONS 0.64
LESS DISTRIBUTIONS:
Distributions from net investment income (0.17 )
Distributions from net realized gain on investments (0.93 )
TOTAL DISTRIBUTIONS (1.10 )
NET ASSET VALUE, END OF PERIOD $13.21
TOTAL RETURN(3) 4.85 %
RATIOS TO AVERAGE NET ASSETS:
Net expenses 1.50 %4
Net investment income 1.60 %4
Expense waiver/reimbursement5 0.17 %4
SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $1,962
Portfolio turnover6 139 %
1 Reflects operations for the period from September 15, 2005 (date of initial
public investment) to July 31, 2006.
2 Based on average shares outstanding.
3 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, if any, are not annualized.
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. Percentages indicated were
calculated for the year ended July 31, 2006.
See Notes which are an integral part of the Financial Statements
- 17 -
MDT SERIES-BALANCED FUND
FINANCIAL HIGHLIGHTS-CLASS C SHARES
(For a Share Outstanding Throughout Each Period)
PERIOD ENDED 1
JULY 31, 2006
NET ASSET VALUE, BEGINNING OF PERIOD $13.67
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.10 2
Net realized and unrealized gain on investments 0.44
TOTAL FROM INVESTMENT OPERATIONS 0.54
LESS DISTRIBUTIONS:
Distributions from net investment income (0.15 )
Distributions from net realized gain on investments (0.93 )
TOTAL DISTRIBUTIONS (1.08 )
NET ASSET VALUE, END OF PERIOD $13.13
TOTAL RETURN3 4.04 %
RATIOS TO AVERAGE NET ASSETS:
Net expenses 2.25 %4
Net investment income 0.85 %4
Expense waiver/reimbursement5 0.17 %4
SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $3910
Portfolio turnover6 139 %
1 Reflects operations for the period from September 15, 2005 (date of initial
public investment) to July 31, 2006.
2 Based on average shares outstanding.
3 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, if any, are not annualized.
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. Percentages indicated were
calculated for the year ended July 31, 2006.
See Notes which are an integral part of the Financial Statements
- 18 -
INVESTMENT ADVISER
The Board of the Trust selects and oversees the Acquired Funds' Adviser,
Federated Equity Management Company of Pennsylvania, a subsidiary of Federated
Investors, Inc. ("Federated"). The Adviser manages each Acquired Fund's assets,
including buying and selling portfolio securities. The Adviser is registered as
an investment adviser under the Investment Advisers Act of 1940. Federated
Advisory Services Company (FASC), an affiliate of the Adviser, provides
research, quantitative analysis, equity trading and transaction settlement and
certain support services to the Adviser. The address of the Adviser and FASC is
Federated Investors Tower, 1001 Liberty Avenue, Pittsburgh, PA 15222-3779.
The Board of the MDT Trust selects and oversees FMDTBF's Adviser,
Federated MDTA LLC, which is also a subsidiary of Federated Investors, Inc..
Federated MDTA LLC is responsible for the day-to-day management of FMDTBF in
accordance with FMDTBF's investment objectives and policies (subject to the
general supervision of the MDT Trust's Board). This includes making investment
decisions, and buying and selling securities. FASC provides research,
quantitative analysis, equity trading and transaction settlement and certain
support services to the Adviser. The fee for these services is paid by the
Adviser and not by FMDTBF. The address of the Adviser is 125 Cambridge Park
Drive, Cambridge, Massachusetts, 02140.
The Acquired Funds' and FMDTBF's Advisers have delegated daily management
of certain assets to the Sub-Adviser, Federated Investment Management Company,
who is paid by the Adviser and not by the Acquired Funds or FMDTBF. The Sub-
Adviser's address is Federated Investors Tower, 1001 Liberty Avenue, Pittsburgh,
PA 15222-3779.
The Adviser, Sub-Adviser and other subsidiaries of Federated advise
approximately 148 equity, fixed-income, and money market mutual funds as well as
a variety of customized separately managed accounts, which totaled approximately
$237 billion in assets as of December 31, 2006. Federated was established in
1955 and is one of the largest investment managers in the United States with
approximately 1,243 employees. Federated provides investment products to nearly
5,500 investment professionals and institutions.
PORTFOLIO MANAGEMENT INFORMATION
The following individuals serve as Portfolio Managers for the Acquired
Funds.
NAME ASSET BIOGRAPHY
(PORTFOLIO CATEGORY
MANAGER MANAGED
SINCE)
CAROL R. Domestic Carol R. Miller has been the Acquired Funds' Portfolio Manager since November 2005. Ms. Miller joined
MILLER Large Cap Federated as a Senior Vice President and Senior Portfolio Manager in November 2005. Ms. Miller was an
(November Stocks Adjunct Professor of the Portfolio Management Course at Ohio State University from March 2005 until
2005) June 2005. From April 2003 until September 2004, Ms. Miller served as Managing Director, Growth Team
Leader at Banc One Investment Advisors and from December 1999 until April 2003, she served as
Director of Equity Securities at Nationwide Insurance. Ms. Miller is a Chartered Financial Analyst.
She earned her B.S. in Finance and Accounting from Ohio State University and her M.B.A. in Finance
from Ohio State University.
JOSEPH M. Fixed Mr. Balestrino joined Federated in 1986 and has been a Senior Portfolio Manager and Senior Vice
BALESTRINO Income President of the Acquired Funds' Adviser since 1998. He was a Portfolio Manager and a Vice President
(Inception) Securities of the Funds' Adviser from 1995 to 1998. Mr.Balestrino served as a Portfolio Manager and an Assistant
Vice President of the Funds' Adviser from 1993 to 1995. Mr.Balestrino is a Chartered Financial
Analyst and received his Master's Degree in Urban and Regional Planning from the University of
Pittsburgh.
GARY P. Asset Gary P. Sabol has been the Portfolio Manager responsible for the asset allocation of the Fund since
SABOL Allocation July 2007. Mr. Sabol joined Federated in April 1992 as a Fund Analyst. Since May 2005, Mr. Sabol
has been the Manager of the Equity Performance Attribution and Risk Management Team, providing
analysis to global equity funds. He became a Vice President of the Fund's Adviser in February 2007.
Mr. Sabol earned his B.S. in Finance and his M.S. in Finance and Accounting from Duquesne University.
The following individuals serve as Portfolio Managers for FMDTBF.
DR. DAVID M. GOLDSMITH
David M. Goldsmith, Ph.D., Chief Investment Officer, has been FMDTBF's Portfolio
Manager for the equity portion of the Fund since December 11, 2006, and prior
thereto was the Portfolio Manager of the MDT Balanced Fund since its inception
in September 2005. Dr. Goldsmith joined MDT Advisers (the predecessor to the
Adviser) in 1990. He was responsible for the initial development and launch of
the Optimum Q Process which drives the Federated MDT equity strategies. Dr.
Goldsmith currently leads the Federated MDTA LLC Investment Team which is
responsible for the ongoing development and implementation of the Optimum Q
Process. He received an A.B., Summa Cum Laude, in Economics from Princeton
University, where he won the Wolf Balleison Memorial Prize for the outstanding
senior thesis in economics. Dr. Goldsmith also received a Ph. D. in Economics
with a concentration in Finance from Harvard University.
JOHN M. SHERMAN
John M. Sherman, C.F.A., has been FMDTBF's Portfolio Manager responsible for
asset allocation (including the selection of any exchange-traded funds and
derivatives used in the asset allocation process) and the selection of REIT
securities for the Fund since December 11, 2006, and prior thereto was the
Portfolio Manager of the MDT Balanced Fund since its inception in September
2005. Mr. Sherman joined MDT Advisers (the predecessor to the Adviser) in 2000.
He has over 15 years of experience analyzing financial markets. Prior to
joining the Adviser, Mr. Sherman served as a Vice President and Senior Analyst
for Citizens Financial Group from 1999 to 2000 and as a Senior Analyst for the
FDIC from 1991-1999. He is a member of the CFA Institute and the Boston
Security Analysts Society. He holds a designation as a Chartered Financial
Analyst. He received a B.S.B.A. from North Adams State College, and an M.B.A.
from Boston University Graduate School of Management.
JOSEPH M. BALESTRINO
Joseph M. Balestrino has been the Fund's Portfolio Manager for the fixed-income
portion of the Fund since December 11, 2006. Mr. Balestrino joined Federated in
1986 and has been a Senior Portfolio Manager and Senior Vice President of the
Fund's Sub-Adviser since 1998. He was a Portfolio Manager and a Vice President
of the Fund's Sub-Adviser from 1995 to 1998. Mr. Balestrino served as a
Portfolio Manager and an Assistant Vice President of the Sub-Adviser from 1993
to 1995. Mr. Balestrino is a Chartered Financial Analyst and received his
Master's Degree in Urban and Regional Planning from the University of
Pittsburgh.
CHRISTOPHER J. SMITH
Christopher J. Smith has been FMDTBF's Portfolio Manager for the fixed-income
portion of the Fund since December 11, 2006. Mr. Smith joined Federated in 1995
as a Portfolio Manager and a Vice President of a Federated advisory subsidiary.
He has been a Vice President of the Fund's Sub-Adviser since 1997. He was an
Assistant Vice President of Provident Life & Accident Insurance Company from
1987 through 1994. Mr. Smith is a Chartered Financial Analyst. He received his
M.A. in Economics and Finance from the University of Kentucky.
Each Fund's SAI provides additional information about each applicable
Portfolio Manager's compensation, management of other accounts and ownership of
securities in the applicable Fund.
ADVISORY FEES, SERVICE FEES, SHAREHOLDER FEES AND OTHER EXPENSES
INVESTMENT ADVISORY FEES
The annual advisory fee for each of the Acquired Funds is 0.75% of its (or
such Fund's) average daily net assets. The Adviser may voluntarily choose to
waive a portion of its advisory fee or reimburse other expenses of the Acquired
Funds. This voluntary waiver or reimbursement may be terminated by the Adviser
at any time in its sole discretion. The annual advisory fee for FMDTBF is 0.75%
of FMDTBF's average daily net assets. The Adviser may similarly voluntarily
choose to waive a portion of its advisory fee or reimburse FMDTBF for certain
expenses and may likewise terminate such waiver or reimbursement at any time in
its sole discretion. A discussion of the Board's review of the Acquired Funds'
investment advisory contract is available in the Acquired Funds' Annual Reports
dated November 30, 2006 and a discussion of the Board's review of FMDTBF's
investment advisory contract is available in FMDTBF's Semi-Annual Report dated
January 1, 2007.
- 19 -
ADMINISTRATIVE FEES
Federated Administrative Services ("FAS"), an affiliate of the Adviser,
serves as administrator to both the Acquired Funds and FMDTBF and provides
certain administrative personnel and services as necessary. FAS provides these
services at an annual rate based on the average aggregate daily net assets of
the Funds and most of the other Federated funds advised by the Adviser or its
affiliates. The rate charged by FAS is based on a scale that ranges from 0.150%
on the first $5 billion of average aggregate daily nets assets to 0.075% on
assets over $20 billion. FAS' minimum annual administrative fee with respect to
each Fund is $150,000 per portfolio and $40,000 per each additional class of
shares. FAS may choose to voluntarily waive a portion of its fee.
The Funds and their affiliated service providers may pay fees as described
below to financial intermediaries (such as broker-dealers, banks, investment
advisers or third-party administrators) whose customers are shareholders of the
Funds.
SERVICE FEES
The Acquired Funds and FMDTBF each have entered into a Shareholder
Services Agreement under which it may make payments of up to 0.25% of the
average daily net assets of the Fund to obtain certain personal services for
shareholders and the maintenance of shareholder accounts. The Shareholder
Services Agreement provides that Federated Shareholder Services Company
("FSSC"), an affiliate of the Adviser, either will perform shareholder services
directly or will select financial institutions to perform such services.
Financial institutions will receive fees based upon shares owned by their
clients or customers. The schedule of such fees and the basis upon which such
fees will be paid is determined from time to time by each Fund and FSSC.
RULE 12B-1 FEES
Federated Securities Corp. ("FSC"), an affiliate of the Adviser, is the
principal distributor (the "Distributor") for shares of the Funds. The Acquired
Funds and FMDTBF have adopted a Rule 12b-1 Distribution Plan (the "Distribution
Plan") pursuant to which they may pay a fee to the distributor in an amount
computed at an annual rate of 0.75% of the average daily net assets of the Class
C Shares of FMDTBF and Select Shares of the Acquired Funds and 0.25% of the
average daily net assets of Class A Shares of FMDTBF to finance any activity
which is principally intended to result in the sale of shares subject to the
Distribution Plan.
ACCOUNT ADMINISTRATION FEES
The Funds may pay Account Administration Fees of up to 0.25% of average
net assets to banks that are not registered as broker-dealers or investment
advisers for providing administrative services to the Funds and shareholders.
If a financial intermediary receives Account Administration Fees on an account,
it is not eligible to also receive Service Fees or Recordkeeping Fees on that
same account.
RECORDKEEPING FEES
The Funds may pay Recordkeeping Fees on an average net assets basis or on
a per account per year basis to financial intermediaries for providing
recordkeeping services to the Funds and shareholders. If a financial
intermediary receives Recordkeeping Fees on an account, it is not eligible to
also receive Account Administration Fees or Networking Fees on that same
account.
- 20 -
NETWORKING FEES
The Funds may reimburse Networking Fees on a per account per year basis to
financial intermediaries for providing administrative services to the Funds and
shareholders on certain non-omnibus accounts. If a financial intermediary
receives Networking Fees on an account, it is not eligible to also receive
Recordkeeping Fees on that same account.
ADDITIONAL PAYMENTS TO FINANCIAL INTERMEDIARIES
The Funds' Distributor may pay out of its own resources amounts (including
items of material value) to certain financial intermediaries that support the
sale of Shares or provide services to Fund shareholders. The amounts of these
payments could be significant, and may create an incentive for the financial
intermediary or its employees or associated persons to recommend or sell Shares
of the Fund to you. In some cases, such payments may be made by or funded from
the resources of companies affiliated with the Distributor (including the
Adviser). These payments are not reflected in the fees and expenses listed in
the fee table section of the Fund's prospectus and described above because they
are not paid by the Fund.
These payments are negotiated and may be based on such factors as the
number or value of Shares that the financial intermediary sells or may sell; the
value of client assets invested; or the type and nature of services or support
furnished by the financial intermediary. These payments may be in addition to
payments made by the Fund to the financial intermediary under a Rule 12b-1 Plan
and/or Service Fees arrangement. In connection with these payments, the
financial intermediary may elevate the prominence or profile of the Fund and/or
other Federated funds within the financial intermediary's organization by, for
example, placement on a list of preferred or recommended funds, and/or granting
the Distributor preferential or enhanced opportunities to promote the funds in
various ways within the financial intermediary's organization. You can ask your
financial intermediary for information about any payments it receives from the
Distributor or the Fund and any services provided.
PURCHASE, REDEMPTION AND EXCHANGE PROCEDURES; DIVIDENDS AND DISTRIBUTIONS; TAX
INFORMATION; FREQUENT TRADING; PORTFOLIO HOLDINGS INFORMATION
The transfer agent and dividend-disbursing agent for each of the Funds is
State Street Bank and Trust Company. Procedures for the purchase, exchange, and
redemption of FMDTBF's Shares are substantially similar to the procedures
applicable to the purchase, exchange, and redemption of the Acquired Funds'
Shares, subject to the differences addressed below. Reference is made to the
Prospectuses of FMDTBF and the Prospectuses of the Acquired Funds, each of which
is incorporated by reference, for a complete description of the purchase,
exchange, and redemption procedures applicable to purchases, exchanges, and
redemptions of FMDTBF's Shares and the Acquired Funds' Shares, respectively.
Set forth below is a brief description of the significant purchase, exchange,
and redemption procedures applicable to FMDTBF's and the Acquired Funds' Shares.
PURCHASES
Shares of FMDTBF and the Acquired Funds may be purchased, redeemed or
exchanged any day the New York Stock Exchange (NYSE) is open. When the Funds
receive your transaction request in proper form (as described in the
Prospectus), it is processed at the next calculated net asset value (NAV), plus
any applicable front-end sales charge (public offering price). NAV for all
Funds is determined as of the end of regular trading on the NYSE (normally 4:00
p.m. Eastern time) each day the NYSE is open.
Purchases of each of the Funds may be made through a financial
intermediary, directly from the Fund or through an exchange from another
Federated fund. Each Fund reserves the right to reject any request to purchase
or exchange shares.
- 21 -
Purchasers of the Acquired Funds' Institutional Shares and Select Shares
are not subject to a front-end sales charge. Purchasers of FMDTBF's Class A
Shares incur a front-end sales charge of 5.50% of the public offering price on
purchase amounts less than $50,000. The sales charges are subject to the
breakpoint discounts and rights of accumulation, described in FMDTBF's
Prospectus for its Class A Shares. Shareholders as of the date of the
applicable Reorganization will not be subject to a sales charge on future
purchases of FMDTBF, if such purchases are made in the same account(s).
Purchasers of FMDTBF's Class C Shares may incur a contingent deferred
sales charge of up to 1% of the Share price at the time of purchase or
redemption, whichever is lower, on redemptions of FMDTBF's Class C Shares held
for one year or less. The contingent deferred sales charges are subject to
certain waivers as further described in FMDTBF's prospectus, which includes a
waiver for shareholders whose financial intermediary did not receive an advance
commission on the purchase.
The following charts show the minimum initial and subsequent investment
amounts for each Fund:
FUND INITIAL INVESTMENT SUBSEQUENT INVESTMENT SYSTEMATIC INVESTMENT
MINIMUM MINIMUM PROGRAM SUBSEQUENT MINIMUM
FMDTBF- CLASS A SHARES $1,500 $100 $50/$50
FMDTBF- CLASS C SHARES $1,500 $100 $50/$50
THE ACQUIRED FUNDS- INSTITUTIONAL $25,000(1) None None
SHARES
THE ACQUIRED FUNDS- SELECT SHARES $1,500 None None
1. An account may be opened with a smaller amount as long as the $25,000
minimum is reached within 90 days.
Due to the high cost of maintaining accounts with low balances, accounts
may be closed if redemptions or exchanges cause the account balance to fall
below the minimum initial investment amount. Before an account is closed, you
will be notified and allowed 30 days to purchase additional Shares to meet the
minimum.
In addition to purchases by wire and by check, all Funds offer the
following purchase options: (i) Through an Exchange: Shareholders may purchase
through an exchange from the same class of another Federated fund. You must
meet the minimum initial investment requirement for purchasing Shares and both
accounts must have identical registrations; (ii) By Automated Clearing House
(ACH): Once you have opened your account, you may purchase additional Shares
through a depository institution that is an ACH member; (iii) all classes except
the Acquired Fund's Institutional Shares can purchase Shares by using the
Systematic Investment Program (SIP).
- 22 -
REDEMPTIONS AND EXCHANGES
Redemptions and exchanges of each Fund may be made through a financial
intermediary or directly from the Fund by telephone or by mailing a written
request. Shares of each of the Funds may be redeemed for cash or exchanged for
shares of the same class of other Federated funds on days on which the Fund
computes its NAV.
Each Fund has an exchange privilege that allows shareholders to exchange
Shares of the Fund into shares of the same class of another Federated fund.
Any questions about the foregoing procedures may be directed to, and
assistance in effecting purchases, redemptions or exchanges of each Fund may be
obtained by calling 1-800-341-7400.
DIVIDENDS AND DISTRIBUTIONS
The Acquired Funds declare and pay any dividends quarterly to shareholders
while FMDTBF declares and pays any dividends annually to shareholders. In
addition each of the Funds pay any capital gains at least annually. Dividends
and capital gains distributions will be automatically reinvested in additional
Shares without a sales charge, unless you elect a cash payment.
FREQUENT TRADING
Frequent or short-term trading into and out of the Funds can have adverse
consequences for the Funds and shareholders who use the Funds as a long-term
investment vehicle. Such trading in significant amounts can disrupt a Fund's
investment strategies (e.g., by requiring it to sell investments at inopportune
times or maintain excessive short-term or cash positions to support
redemptions), increase brokerage and administrative costs and affect the timing
and amount of taxable gains distributed by the Funds. Investors engaged in such
trading may also seek to profit by anticipating changes in the Funds' NAV in
advance of the time as of which NAV is calculated.
The Funds' Board has approved policies and procedures intended to
discourage excessive frequent or short-term trading of the Funds' Shares. These
policies and procedures are identical for each of the Funds and are described in
each Fund's Prospectus, incorporated herein by reference.
PORTFOLIO HOLDINGS DISCLOSURE POLICIES
Each Fund's SAI contains a description of the Fund's policies and
procedures with respect to the disclosure of its portfolio securities. The SAIs
are available on Federated's website at FederatedInvestors.com.
- 23 -
INFORMATION ABOUT THE REORGANIZATIONS
DESCRIPTION OF THE PLAN OF REORGANIZATIONS
Each Plan provides for a Reorganization to occur on the Closing Date,
which is expected to be on or after July 18, 2007. On the Closing Date, all of
the assets of the Acquired Funds will be transferred to FMDTBF. In exchange for
the transfer of these assets, FMDTBF will simultaneously issue to the Acquired
Funds a number of full and fractional Class A Shares and Class C Shares of
FMDTBF equal in value to the aggregate NAV of the Institutional Shares and
Select Shares, respectively, of the Acquired Funds calculated as of 4:00 p.m. on
the Closing Date.
Following the transfer of assets in exchange for Class A Shares and Class
C Shares of FMDTBF, the Acquired Funds will distribute the Class A Shares and
Class C Shares of FMDTBF pro rata to shareholders of record of Institutional
Shares and Select Shares of the Acquired Funds, respectively, in complete
liquidation of the Acquired Funds. Shareholders of the Acquired Funds owning
shares at the closing on the Closing Date of the Reorganizations will receive a
number of Class A Shares or Class C Shares of FMDTBF with the same aggregate
value as the shareholder had in the Acquired Funds immediately before the
applicable Reorganization. This distribution will be accomplished by the
establishment of accounts in the names of the Acquired Funds' shareholders on
the share records of FMDTBF's transfer agent. The Acquired Funds will then be
terminated. FMDTBF does not issue share certificates to shareholders.
The transfer of shareholder accounts from the Acquired Funds to FMDTBF
will occur automatically. It is not necessary for shareholders of the Acquired
Funds to take any action to effect the transfer. PLEASE DO NOT ATTEMPT TO MAKE
THE TRANSFER YOURSELF. IF YOU DO SO, YOU MAY DISRUPT THE MANAGEMENT OF THE
ACQUIRED FUNDS' PORTFOLIOS, AND YOU MAY INCUR SALES CHARGES OR CONTINGENT
DEFERRED SALES CHARGES THAT YOU WOULD NOT INCUR IN THE REORGANIZATION.
Each Plan contains customary representations, warranties and conditions.
Each Plan provides that the consummation of the Reorganization is conditioned
upon, among other things: (i) approval of the Reorganization by the Acquired
Fund's shareholders; and (ii) the receipt by the Funds of an opinion to the
effect that the Reorganization will be tax-free to the Acquired Fund, its
shareholders and FMDTBF. Each Plan may be terminated if, before the Closing
Date, any of the required conditions has not been met, the representations and
warranties are not true or the Board and/or the Board of MDT Trust determines
that the Reorganization is not in the best interest of the shareholders of the
Acquired Funds or FMDTBF.
The expenses of the Reorganizations will be paid by the Adviser or its
affiliates. Reorganization expenses include, without limitation: expenses
associated with the preparation and filing of this Prospectus/Proxy Statement;
postage; printing; accounting fees; legal fees incurred by Acquired Funds and
FMDTBF; proxy solicitation costs; and other related administrative or
operational costs.
The foregoing brief summary of the Plans is qualified in its entirety by
the terms and provisions of the Plan, a copy of which is attached hereto as
Exhibit A and incorporated herein by reference.
- 24 -
DESCRIPTION OF THE ACQUIRED FUNDS' SHARES AND CAPITALIZATION
Class A Shares and Class C Shares of FMDTBF to be issued to shareholders
of the Acquired Funds' Institutional Shares and Select Shares, respectively,
under the Plan will be fully paid and non-assessable when issued, transferable
without restriction and will have no preemptive or conversion rights. Reference
is hereby made to the Prospectuses of FMDTBF provided herewith for additional
information about Class A Shares and Class C Shares of FMDTBF.
The following table sets forth the unaudited capitalization of Federated
Conservative Allocation Fund, Federated Moderate Allocation Fund and Federated
Growth Allocation Fund into Federated MDT Balanced Fund as of June 30, 2007.
Total Shares Net Asset
Net Outstanding Value
Fund Assets* Per Share
Federated Conservative Allocation Fund - Institutional Shares
$41,820,471 3,530,687 $11.84
Adjustments (554,141)
Federated Moderate Allocation Fund - Institutional Shares
$64,180,649 4,651,029 $13.80
Adjustments (83,011)
Federated Growth Allocation Fund - Institutional Shares
$31,061,498 1,957,457 $15.87
Adjustments 253,326
Federated MDT Balanced Fund - Class A Shares
$51,659,761 3,677,385 $14.05
Federated MDT Balanced Fund, Pro Forma Combined - Class A Shares
$188,722,379 13,432,732 $14.05
Federated Conservative Allocation Fund - Select Shares
$21,689,231 1,831,918 $11.84
Adjustments (272,663)
Federated Moderated Allocation Fund - Select Shares
$40,365,479 2,926,990 $13.79
Adjustments (25,086)
Federated Growth Allocation Fund - Select Shares
$28,558,011 1,813,546 $15.75
Adjustments 239,510
Federated MDT Balanced Fund - Class C Shares
$15,823,159 1,137,898 $13.91
Federated MDT Balanced Fund, Pro Forma Combined - Class C Shares
$106,435,880 7,652,113 $13.91
* Does not reflect additional $84,314,482 assets of Federated MDT Balanced Fund
represented by other share classes.
The following table sets forth the unaudited capitalization of Federated
Conservative Allocation Fund into Federated MDT Balanced Fund as of June 30,
2007.
Total Shares Net Asset
Net Outstanding Value
Fund Assets* Per Share
Federated Conservative Allocation Fund - Institutional Shares
$41,820,471 3,530,687 $11.84
Adjustments (554,141)
Federated MDT Balanced Fund - Class A Shares
$51,659,761 3,677,385 $14.05
Federated MDT Balanced Fund, Pro Forma Combined - Class A Shares
$93,480,232 6,653,931 $14.05
Federated Conservative Allocation Fund - Select Shares
$21,689,231 1,831,918 $11.84
Adjustments (272,663)
Federated MDT Balanced Fund - Class C Shares
$15,823,159 1,137,898 $13.91
Federated MDT Balanced Fund, Pro Forma Combined - Class C Shares
$37,512,390 2,697,153 $13.91
* Does not reflect additional $84,314,482 assets of Federated MDT Balanced Fund
represented by other share classes.
The following table sets forth the unaudited capitalization of Federated
Moderate Allocation Fund into Federated MDT Balanced Fund as of June 30, 2007.
Total Shares Net Asset
Net Outstanding Value
Fund Assets* Per Share
Federated Moderate Allocation Fund - Institutional Shares
$64,180,649 4,651,029 $13.80
Adjustments (83,011)
Federated MDT Balanced Fund - Class A Shares
$51,659,761 3,677,385 $14.05
Federated MDT Balanced Fund, Pro Forma Combined - Class A Shares
$115,840,410 8,245,403 $14.05
Federated Moderated Allocation Fund - Select Shares
$40,365,479 2,926,990 $13.79
Adjustments (25,086)
Federated MDT Balanced Fund - Class C Shares
$15,823,159 1,137,898 $13.91
Federated MDT Balanced Fund, Pro Forma Combined - Class C Shares
$56,188,638 4,039,802 $13.91
* Does not reflect additional $84,314,482 assets of Federated MDT Balanced Fund
represented by other share classes.
The following table sets forth the unaudited capitalization of Federated
Growth Allocation Fund into Federated MDT Balanced Fund as of June 30, 2007.
Total Shares Net Asset
Net Outstanding Value
Fund Assets* Per Share
Federated Growth Allocation Fund - Institutional Shares
$31,061,498 1,957,457 $15.87
Adjustments 253,326
Federated MDT Balanced Fund - Class A Shares
$51,659,761 3,677,385 $14.05
Federated MDT Balanced Fund, Pro Forma Combined - Class A Shares
$82,721,259 5,888,168 $14.05
Federated Growth Allocation Fund - Select Shares
$28,558,011 1,813,546 $15.75
Adjustments 239,510
Federated MDT Balanced Fund - Class C Shares
$15,823,159 1,137,898 $13.91
Federated MDT Balanced Fund, Pro Forma Combined - Class C Shares
$44,381,170 3,190,954 $13.91
* Does not reflect additional $84,314,482 assets of Federated MDT Balanced Fund
represented by other share classes.
- 25 -
FEDERAL INCOME TAX CONSEQUENCES
As a condition to each Reorganization, FMDTBF and the Acquired Fund will
receive an opinion of counsel to the effect that, on the basis of the existing
provisions of the Internal Revenue Code of 1986, as amended (the "Code"),
current administrative rules and court decisions, for federal income tax
purposes:
{circle}the Reorganization as set forth in the applicable Plan will
constitute a tax-free reorganization under section 368(a) of the Code, and
the Acquired Fund and FMDTBF each will be a "party to a reorganization"
within the meaning of section 368(b) of the Code;
{circle}no gain or loss will be recognized by FMDTBF upon its receipt of the
Acquired Fund's assets in exchange for Class A Shares and Class C Shares
of FMDTBF;
{circle}no gain or loss will be recognized by the Acquired Fund upon transfer
of its assets to FMDTBF in exchange for FMDTBF Class A Shares and Class C
Shares or upon the distribution of FMDTBF's shares to the Acquired Fund's
shareholders in exchange for their Institutional Shares and Select
Shares;
{circle}no gain or loss will be recognized by shareholders of the Acquired
Fund upon exchange of their Institutional Shares and Select Shares for
FMDTBF's Class A Shares and Class C Shares;
{circle}the aggregate tax basis of the Class A Shares and Class C Shares of
FMDTBF received by each shareholder of the Acquired Fund pursuant to the
Plan will be the same as the aggregate tax basis of the shares of the
Acquired Fund held by such shareholder immediately prior to the
Reorganization;
{circle}the holding period of FMDTBF Class A Shares and Class C Shares
received by each shareholder of the Acquired Fund pursuant to the Plan
will include the period during which the Acquired Fund's Institutional
Shares and Select Shares exchanged therefor were held by such shareholder,
provided the shares of the Acquired Fund were held as capital assets on
the date of the Reorganization;
{circle}the tax basis of the assets of the Acquired Fund acquired by FMDTBF
will be the same as the tax basis of such assets to the Acquired Fund
immediately prior to the Reorganization; and
{circle}the holding period of the Acquired Fund assets in the hands of FMDTBF
will include the period during which those assets were held by the
Acquired Fund.
The foregoing opinion may state that no opinion is expressed as to the
effect of the applicable Reorganization on FMDTBF, the Acquired Fund or the
Acquired Fund's shareholders with respect to any asset as to which unrealized
gain or loss is required to be recognized for federal income tax purposes at the
end of a taxable year (or on the termination or transfer thereof) under a mark-
to-market system of accounting.
- 26 -
Shareholders of the Acquired Funds should consult their tax advisors
regarding the effect, if any, of the Reorganizations in light of their
individual circumstances. Because the foregoing discussion only relates to the
federal income tax consequences of the Reorganizations, those shareholders also
should consult their tax advisors about state and local tax consequences, if
any, of the Reorganizations.
Before the Reorganizations, it is anticipated that the Acquired Funds will
distribute ordinary income and realized capital gains, to shareholders of the
Acquired Funds. (See page 3 for a discussion of the anticipated capital gains
distributions).
COMPARATIVE INFORMATION ON SHAREHOLDER RIGHTS
FMDTBF and each of the Acquired Funds are open-end management investment
companies organized as business trusts under the laws of the Commonwealth of
Massachusetts. The rights of shareholders of FMDTBF and the Acquired Funds,
relating to voting, distributions and redemptions, are substantively similar.
The chart below describes some of the differences between your rights as a
shareholder of the Acquired Funds and your rights as a shareholder of FMDTBF.
CATEGORY ACQUIRED FUNDS FMDTBF
PREEMPTIVE Shareholders shall have no pre-emptive or other rights to subscribe to any additional Shares or other Same
RIGHTS securities issued by the Trust. No action may be brought by a Shareholder on behalf of the Trust
unless a prior demand regarding such matter has been made on the Trustees and Shareholders of the
Trust.
PREFERENCES None None
APPRAISAL None None
RIGHTS
CONVERSION None None
RIGHTS
EXCHANGE The Trustees shall have the authority to provide that the holders of Shares of any Series or Class Same
RIGHTS (other shall have the right to exchange said Shares for Shares of one or more other Series or Classes in
than the accordance with such requirements and procedures as may be established by the Trustees.
right to
exchange for
shares of the
same class of
other
Federated
mutual funds
as provided
in the
prospectuses
of the Funds)
MINIMUM Institutional Shares - $25,000 Class A Shares
ACCOUNT SIZE Select Shares - $1,500 - $1,500
Class C
Shares- $1,500
ANNUAL Not Required Not Required
MEETINGS
RIGHT TO CALL A Shareholders' meeting shall be held as specified in Section 2 of Article IV at the principal office Same
SHAREHOLDER of the Trust or such other place as the Trustees may designate. Special meetings of the Shareholders
MEETINGS may be called by the Trustees or the Chief Executive Officer of the Trust and shall be called by the
Trustees upon the written request of Shareholders owning at least one-tenth of the outstanding Shares
of all Series and Classes entitled to vote. Shareholders shall be entitled to at least fifteen days'
notice of any meeting.
NOTICE OF Except as above provided, notices of any special meeting of the shareholders of the Trust or a Same
MEETINGS particular Series or Class, shall be given by the Secretary by delivering or mailing, postage prepaid,
to each shareholder entitled to vote at said meeting, a written or printed notification of such
meeting, at least seven business days before the meeting, to such address as may be registered with the
Trust by the shareholder. No notice of any meeting of Shareholders need be given to a Shareholder if a
written waiver of notice, executed before or after the meeting by such Shareholder or his or her
attorney thereunto duly authorized, is filed with the records of the meeting. Notice may be waived as
provided in Article XIII of these By-Laws.
RECORD DATE The Trustees may close the Share transfer books of the Trust maintained with respect to any Series or Same
FOR MEETINGS Class for a period not exceeding ninety (90) days preceding the date of any meeting of Shareholders of
the Trust or any Series or Class, or the date for the payment of any dividend or the making of any
distribution to Shareholders, or the date for the allotment of rights, or the date when any change or
conversion or exchange of Shares of any Series or Class shall go into effect or the last day on which
the consent or dissent of Shareholders of any Series or Class may be effectively expressed for any
purpose; or in lieu of closing the Share transfer books as aforesaid, the Trustees may fix in advance a
date, not exceeding ninety (90) days preceding the date of any meeting of Shareholders of the Trust or
any Series or Class, or the date for the payment of any dividend or the making of any distribution to
Shareholders of any Series or Class, or the date for the allotment of rights, or the date when any
change or conversion or exchange of Shares of any Series or Class shall go into effect, or the last day
on which the consent or dissent of Shareholders of any Series or Class may be effectively expressed for
any purpose, as a record date for the determination of the Shareholders entitled to notice of, and, to
vote at, any such meeting and any adjournment thereof, or entitled to receive payment of any such
dividend or distribution, or to any such allotment of rights, or to change, convert or exchange shares
of any Series or Class, or to exercise the rights in respect of any such change, conversion or exchange
of shares, or to exercise the right to give such consent or dissent, and in such case such Shareholders
and only such Shareholders as shall be Shareholders of record on the date so fixed shall be entitled to
such notice of, and to vote at, such meeting, or to receive payment of such dividend or distribution,
or to receive such allotment or rights, or to change, convert or exchange Shares of any Series or Class
or to exercise such rights, as the case may be, notwithstanding, after such date fixed aforesaid, any
transfer of any Shares on the books of the Trust maintained with respect to any Series or Class.
Nothing in the foregoing sentence shall be construed as precluding the Trustees from setting different
record dates for different Series or Classes.
QUORUM FOR Except as otherwise provided by law, to constitute a quorum for the transaction of any business at any Except as
MEETINGS meeting of Shareholders there must be present, in person or by proxy, holders of more than one-half of otherwise
the total number of outstanding Shares of all Series and Classes entitled to vote at such meeting. provided by
When any one or more Series or Classes is entitled to vote as a single Series or Class, more than one- law, the
half of the Shares of each such Series or Class entitled to vote shall constitute a quorum at a presence in
Shareholders' meeting of that Series or Class. If a quorum shall not be present for the purpose of any person or by
vote that may properly come before the meeting, the Shares present in person or by proxy and entitled proxy of the
to vote at such meeting on such matter may, by plurality vote, adjourn the meeting from time to time to holders of (a)
such place and time without further notice than by announcement to be given at the meeting until a one-half of
quorum entitled to vote on such matter shall be present, whereupon any such matter may be voted upon at the Shares of
the meeting as though held when originally convened. the Trust on
all matters
requiring a
Majority
Shareholder
Vote, as
defined in the
Investment
Company Act of
1940, or (b)
one-third of
the Shares of
the Trust on
all other
matters
permitted by
law, in each
case, entitled
to vote
without regard
to Class shall
constitute a
quorum at any
meeting of the
Shareholders,
except with
respect to any
matter which
by law
requires the
separate
approval of
one or more
Series or
Classes, in
which case the
presence in
person or by
proxy of the
holders of
one-half or
one-third, as
set forth
above, of the
Shares of each
Series or
Class entitled
to vote
separately on
the matter
shall
constitute a
quorum. When
any one or
more Series or
Class is
entitled to
vote as a
single Series
or Class, more
than one-half,
or one-third,
as
appropriate,
of the Shares
of each such
Series or
Class entitled
to vote shall
constitute a
quorum at a
Shareholders'
meeting of
that Series or
Class. If a
quorum shall
not be present
for the
purpose of any
vote that may
properly come
before the
meeting, the
Shares present
in person or
by proxy and
entitled to
vote at such
meeting on
such matter
may, by
plurality
vote, adjourn
the meeting
from time to
time to such
place and time
without
further notice
than by
announcement
to be given at
the meeting
until a quorum
entitled to
vote on such
matter shall
be present,
whereupon any
such matter
may be voted
upon at the
meeting as
though held
when
originally
convened.
VOTE REQUIRED Subject to any applicable requirement of law or of this Declaration of Trust or the By-Laws, a Same
FOR ELECTION plurality of the votes cast shall elect a Trustee, and all other matters shall be decided by a majority
OF DIRECTORS of the votes cast and entitled to vote thereon.
OR TRUSTEES
ADJOURNMENT If a quorum shall not be present for the purpose of any vote that may properly come before the meeting, If a quorum
OF MEETINGS the Shares present in person or by proxy and entitled to vote at such meeting on such matter may, by shall not be
plurality vote, adjourn the meeting from time to time to such place and time without further notice present for
than by announcement to be given at the meeting until a quorum entitled to vote on such matter shall be the purpose of
present, whereupon any such matter may be voted upon at the meeting as though held when originally any vote that
convened. may properly
come before
the meeting,
the Shares
present in
person or by
proxy and
entitle to
vote at such
meeting on
such matter
may, by
plurality
vote, adjourn
the meeting
from time to
time to such
place and time
without
further notice
than by
announcement
to be given at
the meeting
until a quorum
entitle to
vote on such
matter shall
be present.
REMOVAL OF A Trustee may be removed at any special meeting of Shareholders of the Trust by a vote of two-thirds of Same
DIRECTORS OR the outstanding Shares.
TRUSTEES BY
SHAREHOLDERS
PERSONAL No Trustee, officer, employee or agent of the Trust shall have the power to bind any other Trustee, Same
LIABILITY OF officer, employee or agent of the Trust personally. The Trustees, officers, employees or agents of the
OFFICERS, Trust in incurring any debts, liabilities or obligations, or in taking or omitting any other actions
DIRECTORS AND for or in connection with the Trust, are, and each shall be deemed to be, acting as Trustee, officer,
TRUSTEES employee or agent of the Trust and not in his own individual capacity.
Trustees and officers of the Trust shall be liable for their willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of the office of Trustee or
officer, as the case may be, and for nothing else.
PERSONAL No Shareholder or former Shareholder of any Series or Class shall be liable solely by reason of his The Trustees,
LIABILITY OF being or having been a Shareholder for any debt, claim, action, demand, suit, proceeding, judgment, officers,
SHAREHOLDERS decree, liability or obligation of any kind, against or with respect to the Trust or any Series or employees or
Class arising out of any action taken or omitted for or on behalf of the Trust or such Series or Class, agents of the
and the Trust or such Series or Class shall be solely liable therefor and resort shall be had solely to Trust shall
the property of the relevant Series or Class of the Trust for the payment or performance thereof. have no power
to bind any
Shareholder of
any Series or
Class
personally or
to call upon
such
Shareholder
for the
payment of any
sum of money
or assessment
whatsoever,
other than
such as the
Shareholder
may at any
time agree to
pay by way of
subscription
for any Shares
or otherwise.
No Shareholder
or former
Shareholder of
any Series or
Class shall be
liable solely
by reason of
his being or
having been a
Shareholder
for any debt,
claim, action,
demand, suit,
proceeding,
judgment,
decree,
liability or
obligation of
any kind,
against or
with respect
to the Trust
or any Series
or Class
arising out of
any action
taken or
omitted for or
on behalf of
the Trust or
such Series or
Class, and the
Trust or such
Series or
Class shall be
solely liable
therefor and
resort shall
be had solely
to the
property of
the relevant
Series or
Class of the
Trust for the
payment or
performance
thereof.
NUMBER OF The number of Shares authorized shall be unlimited. Same
AUTHORIZED
SHARES; PAR
VALUE
- 27 -
INFORMATION ABOUT FMDTBF
AND THE ACQUIRED FUNDS
WHERE TO FIND ADDITIONAL INFORMATION
Information about the Acquired Funds is included in its Prospectus and its
SAI dated January 31, 2007, each of which is incorporated herein by reference.
Information about FMDTBF is included in its Prospectus and its SAI, dated
December 11, 2006, each of which is incorporated herein by reference. A copy of
the Prospectus for FMDTBF accompanies this Prospectus/Proxy Statement. Copies
of the SAI of FMDTBF, the Prospectus and SAI of the Acquired Funds and the SAI
dated August 28, 2007, relating to this Prospectus/Proxy Statement, all of which
have been filed with the SEC, may be obtained without charge by contacting the
Funds at 1-800-341-7400 or by writing to Federated Investors Funds, 5800
Corporate Drive, Pittsburgh, Pennsylvania 15237-7000. The Prospectuses and SAIs
of the Acquired Funds and FMDTBF are also available electronically at
Federated's website at FederatedInvestors.com.
FMDTBF and the Trust, on behalf of the Acquired Funds, is subject to the
informational requirements of the Securities Act of 1933, the Securities
Exchange Act of 1934, and the 1940 Act, and in accordance therewith file reports
and other information with the SEC. Reports, proxy and information statements
and other information filed by FMDTBF and by the Trust on behalf of the Acquired
Funds, can be obtained by calling or writing the Funds and can also be inspected
and copied by the public at the public reference facilities maintained by the
SEC in Washington, DC located at Room 1580, 100 F Street, N.E., Washington DC
20549. Copies of such material can be obtained at prescribed rates from the
Public Reference Branch, Office of Consumer Affairs and Information Services,
SEC, Washington DC 20549, or obtained electronically from the EDGAR database on
the SEC's website (www.sec.gov).
LEGAL PROCEEDINGS
Since October 2003, Federated and related entities (collectively,
"Federated"), and various 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
certain institutional traders, which allegedly caused financial injury to the
mutual fund shareholders. These lawsuits began to be filed shortly after
Federated's first public announcement that it had received requests for
information on shareholder trading activities in the Funds from the SEC, the
Office of the New York State Attorney General ("NYAG"), and other authorities.
In that regard, on November 28, 2005, Federated announced that it had reached
final settlements with the SEC and the NYAG with respect to those matters.
Specifically, the SEC and NYAG settled proceedings against three Federated
subsidiaries involving undisclosed market timing arrangements and late trading.
The SEC made findings: that Federated Investment Management Company ("FIMC"), an
SEC-registered investment adviser to various Funds, and Federated Securities
Corp., an SEC-registered broker-dealer and distributor for the Funds, violated
provisions of the Investment Advisers Act and Investment Company Act by
approving, but not disclosing, three market timing arrangements, or the
associated conflict of interest between FIMC and the funds involved in the
arrangements, either to other fund shareholders or to the funds' board; and that
Federated Shareholder Services Company, formerly an SEC-registered transfer
agent, failed to prevent a customer and a Federated employee from late trading
in violation of provisions of the Investment Company Act. The NYAG found that
such conduct violated provisions of New York State law. Federated entered into
the settlements without admitting or denying the regulators' findings. As
Federated previously reported in 2004, it has already paid approximately $8.0
million to certain funds as determined by an independent consultant. As part of
these settlements, Federated agreed to pay disgorgement and a civil money
penalty in the aggregate amount of an additional $72 million and, among other
things, agreed that it would not serve as investment adviser to any registered
investment company unless (i) at least 75% of the fund's directors are
independent of Federated, (ii) the chairman of each such fund is independent of
Federated, (iii) no action may be taken by the Fund's board or any committee
thereof unless approved by a majority of the independent trustees of the fund or
committee, respectively, and (iv) the fund appoints a "senior officer" who
reports to the independent trustees and is responsible for monitoring compliance
by the fund with applicable laws and fiduciary duties and for managing the
process by which management fees charged to a fund are approved. The settlements
are described in Federated's announcement which, along with previous press
releases and related communications on those matters, is available in the "About
Us" section of Federated's website at FederatedInvestors.com.
Federated and various Funds have also been named as defendants in several
additional lawsuits, the majority of which are now pending in the United States
District Court for the Western District of Pennsylvania, alleging, among other
things, excessive advisory and Rule 12b-1 fees.
The board of the Funds has retained the law firm of Dickstein Shapiro LLP
to represent the Funds in these lawsuits. Federated and the Funds, and their
respective counsel, are reviewing the allegations and intend to defend this
litigation. Additional lawsuits based upon similar allegations may be filed in
the future. The potential impact of these lawsuits, all of which seek
unquantified damages, attorneys' fees, and expenses, and future potential
similar suits is uncertain. Although we do not believe that these lawsuits will
have a material adverse effect on the Funds, there can be no assurance that
these suits, ongoing adverse publicity and/or other developments resulting from
the regulatory investigations will not result in increased Fund redemptions,
reduced sales of Fund shares, or other adverse consequences for the Funds.
THE BOARD OF TRUSTEES OF THE ACQUIRED FUNDS UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDERS APPROVE EACH
AGREEMENT AND PLAN OF REORGANIZATION
ABOUT THE PROXY SOLICITATION AND THE MEETING
Proxies are being solicited by the Board of Trustees of the Trust, on
behalf of its portfolios, the Acquired Funds. The proxies will be voted at the
special meeting of shareholders of the Acquired Funds to be held at 2:00 p.m. on
October 12, 2007, at 5800 Corporate Drive, Pittsburgh, Pennsylvania 15237-7000
(such special meeting and any adjournment or postponement thereof are referred
to as the "Special Meeting").
The cost of the solicitation, including the printing and mailing of proxy
materials, will be borne by the Adviser or its affiliates. In addition to
solicitations through the mail, proxies may be solicited by officers, employees,
and agents of the Adviser, or its affiliates or, if necessary, a communications
firm retained for this purpose. Such solicitations may be by telephone, through
the Internet or otherwise. Any telephonic solicitations will follow procedures
designed to ensure accuracy and prevent fraud, including requiring identifying
shareholder information, recording the shareholder's instructions, and
confirming to the shareholder after the fact. Shareholders who communicate
proxies by telephone or by other electronic means have the same power and
authority to issue, revoke, or otherwise change their voting instructions as
shareholders submitting proxies in written form. The Adviser may reimburse
custodians, nominees, and fiduciaries for the reasonable costs incurred by them
in connection with forwarding solicitation materials to the beneficial owners of
shares held of record by such persons.
The purpose of the Special Meeting is set forth in the accompanying
Notice. The Board knows of no business other than that mentioned in the Notice
that will be presented for consideration at the Special Meeting. Should other
business properly be brought before the Special Meeting, proxies will be voted
in accordance with the best judgment of the persons named as proxies. This
Prospectus/Proxy Statement and the enclosed proxy card are expected to be mailed
on or about September 7, 2007, to shareholders of record at the close of
business on August 20, 2007 (the "Record Date").
- 28 -
The Acquired Funds' Annual Reports, which include audited financial
statements for their fiscal year ended November 30, 2006, and its Semi-Annual
Report containing unaudited financial statements for the six-month period ended
May 31, 2007, were previously mailed to shareholders of the Acquired Funds.
FMDTBF's Semi-Annual Report containing unaudited financial statements for the
six-month period ended January 31, 2007, were previously mailed to shareholders
of FMDTBF. The Acquired Funds and FMDTBF will each promptly provide, without
charge and upon request, to each person to whom this Prospectus/Proxy Statement
is delivered, a copy of its Annual Report and/or the Semi-Annual Report.
Requests for Annual Reports or Semi-Annual Reports for FMDTBF or the Acquired
Funds may be made by writing to the Funds' principal executive offices or by
calling the toll-free telephone number, 1-800-341-7400. The principal executive
office for each of the Funds is located at Federated Investors Funds, 5800
Corporate Drive, Pittsburgh, Pennsylvania 15237-7000. These reports are also
available electronically at Federated's website at FederatedInvestors.com.
PROXIES, QUORUM AND VOTING AT THE SPECIAL MEETING
Only shareholders of record on the Record Date will be entitled to vote at
the Special Meeting. Each Institutional and Select Share of each Acquired Fund
is entitled to one vote. Each Acquired Fund will vote separately for each
Reorganization and consummation of one Reorganization is not a condition to
closing either of the other two Reorganizations. Fractional shares are
entitled to proportionate shares of one vote. The votes of shareholders of
FMDTBF are not being solicited since their approval is not required in order to
effect the Reorganizations.
Any person giving a proxy has the power to revoke it any time prior to its
exercise by executing a superseding proxy or by submitting a written notice of
revocation to the Secretary of the Trust. In addition, although mere attendance
at the Special Meeting will not revoke a proxy, a shareholder present at the
Special Meeting may withdraw his or her proxy and vote in person. All properly
executed and unrevoked proxies received in time for the Special Meeting will be
voted in accordance with the instructions contained in the proxies. If no
instruction is given on the proxy, the persons named as proxies will vote the
shares represented thereby in favor of approval of the applicable Plan of
Reorganization.
In order to hold the Special Meeting, a "quorum" of shareholders of each
of the Acquired Funds must be present. Holders of one-half of the total number
of Institutional and Select Shares of the Acquired Funds entitled to vote,
present in person or by proxy, shall be required to constitute a quorum for the
purpose of voting on the proposal.
For purposes of determining a quorum for transacting business at the
Special Meeting, abstentions and broker "non-votes" (that is, proxies from
brokers or nominees indicating that such persons have not received instructions
from the beneficial owner or other persons entitled to vote shares on a
particular matter with respect to which the brokers or nominees do not have
discretionary power) will be treated as shares that are present but which have
not been voted. For this reason, abstentions and broker non-votes will have the
effect of a "no" vote for purposes of obtaining the requisite approval of each
proposal.
If a quorum is not present, the persons named as proxies may vote those
proxies that have been received to adjourn the Special Meeting, without further
notice except for announcement at the Special Meeting, to a later date not to
exceed 120 days after the original Record Date. In the event that a quorum is
present but sufficient votes in favor of the proposal have not been received,
the persons named as proxies may propose one or more adjournments of the Special
Meeting to permit further solicitations of proxies with respect to the proposal.
All such adjournments will require the affirmative vote of a majority of the
shares present in person or by proxy at the session of the Special Meeting to be
adjourned. The persons named as proxies will vote AGAINST an adjournment those
proxies that they are required to vote against the proposal, and will vote in
FAVOR of such an adjournment all other proxies that they are authorized to vote.
A shareholder vote may be taken on the proposal in this Prospectus/Proxy
Statement prior to any such adjournment if sufficient votes have been received
for approval.
SHARE OWNERSHIP OF THE FUNDS
Officers and Trustees of the Trust own less than 1% of each class of the
Acquired Funds' outstanding shares.
(to be filed by amendment)
At the close of business on the Record Date, the following persons owned,
to the knowledge of management, more than 5% of the outstanding shares of each
class of the Acquired Funds:
INSTITUTIONAL SHARES:
SELECT SHARES:
Officers and Trustees of FMDTBF own less than 1% of each class of FMDTBF's
outstanding shares.
At the close of business on the Record Date, the following persons owned,
to the knowledge of management, more than 5% of the outstanding shares of each
class of FMDTBF:
CLASS A SHARES:
CLASS C SHARES:
Shareholders owning 25% or more of outstanding Shares may be in control
and be able to affect the outcome of certain matters presented for a vote of
shareholders.
- 29 -
INTERESTS OF CERTAIN PERSONS
The Acquired Funds are managed by the Adviser. FMDTBF is managed by the
FMDTBF Adviser. The Adviser and FMDTBF Adviser are both subsidiaries of
Federated. All of the voting securities of Federated are owned by a trust, the
trustees of which are John F. Donahue, his wife and his son, J. Christopher
Donahue. John F. Donahue and J. Christopher Donahue currently serve as trustees
of the Trust and the MDT Trust.
OTHER MATTERS AND DISCRETION OF ATTORNEYS NAMED IN THE PROXY
The Acquired Funds are not required, and do not intend, to hold regular
annual meetings of shareholders. Shareholders wishing to submit proposals for
consideration for inclusion in a Proxy Statement for the next meeting of
shareholders should send their written proposals to Federated Managed Allocation
Portfolios, Federated Investors Funds, 5800 Corporate Drive, Pittsburgh,
Pennsylvania 15237-7000, so that they are received within a reasonable time
before any such meeting.
No business other than the matters described above is expected to come
before the Special Meeting, but should any other matter requiring a vote of
shareholders arise, including any question as to an adjournment or postponement
of the Special Meeting, the persons named on the enclosed proxy card will vote
on such matters according to their best judgment in the interests of the
Acquired Funds.
SHAREHOLDERS ARE REQUESTED TO COMPLETE, DATE AND SIGN THE ENCLOSED
PROXY CARD AND RETURN IT IN THE ENCLOSED ENVELOPE, WHICH NEEDS
NO POSTAGE IF MAILED IN THE UNITED STATES.
By Order of the Board of Trustees,
John W. McGonigle
Secretary
August 28, 2007
- 30 -
EXHIBIT A
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made as of
this 18th day of July, 2007, by and between FEDERATED MDT BALANCED FUND (the
"Acquiring Fund"), a portfolio of Federated MDT Series (the "Acquiring Fund
Trust") a Massachusetts business trust, with its principal place of business at
5800 Corporate Drive, Pittsburgh, PA, 15237, and FEDERATED MANAGED ALLOCATION
PORTFOLIOS, a Massachusetts business trust, with its principal place of business
at 5800 Corporate Drive, Pittsburgh, PA, 15237 (the "Acquired Fund Trust"), with
respect to its portfolio Federated ______________ Allocation Fund, a (the
"Acquired Fund").
This Agreement is intended to be, and is adopted as, a plan of
reorganization within the meaning of Section 368 of the United States Internal
Revenue Code of 1986, as amended (the "Code") and the Treasury Regulations
promulgated thereunder. The reorganization will consist of: (i) the transfer
of all of the assets of the Acquired Fund in exchange for Class A and Class C
Shares of the Acquiring Fund, ("Acquiring Fund Class A Shares"); and (ii) the
distribution of Class A Shares of the Acquiring Fund to the holders of the
Acquired Fund's Institutional Shares and the distribution of Class C Shares of
the Acquiring Fund to the holders of the Acquired Fund's Select Shares and
(iii) the liquidation of the Acquired Fund as provided herein, all upon the
terms and conditions set forth in this Agreement (the "Reorganization").
WHEREAS, the Acquired Fund is a separate portfolio of the Acquired Fund
Trust, the Acquiring Fund is a separate portfolio of the Acquiring Fund Trust,
and the Acquiring Fund Trust and the Acquired Fund Trust are open-end,
registered management investment companies and the Acquired Fund owns securities
that generally are assets of the character in which the Acquiring Fund is
permitted to invest;
WHEREAS, the Acquiring Fund and the Acquired Fund are authorized to issue
their shares of beneficial interests;
WHEREAS, the Trustees of the Acquiring Fund Trust have determined that
the Reorganization, with respect to the Acquiring Fund, is in the best interests
of the Acquiring Fund and that the interests of the existing shareholders of the
Acquiring Fund will not be diluted as a result of the Reorganization;
WHEREAS, the Trustees of the Acquired Fund Trust have determined that the
Reorganization, with respect to the Acquired Fund, is in the best interests of
the Acquired Fund and that the interests of the existing shareholders of the
Acquired Fund will not be diluted as a result of the Reorganization;
NOW, THEREFORE, in consideration of the premises and of the covenants and
agreements hereinafter set forth, the parties hereto covenant and agree as
follows:
ARTICLE*I
TRANSFER OF ASSETS OF THE ACQUIRED FUND IN EXCHANGE FOR ACQUIRING FUND SHARES
AND LIQUIDATION OF THE ACQUIRED FUND
1.1 THE EXCHANGE. Subject to the terms and conditions contained herein
and on the basis of the representations and warranties contained herein, the
Acquired Fund agrees to transfer all of its assets, as set forth in
paragraph 1.2, to the Acquiring Fund. In exchange, the Acquiring Fund agrees:
(i) to deliver to the Acquired Fund the number of each class of full and
fractional Acquiring Fund Shares, determined by (a) multiplying the shares
outstanding of each class of the Acquired Fund by (b) the ratio computed by
dividing (x) the net asset value per share of such class of the Acquired Fund by
(y) the net asset value per share of the corresponding class of Acquiring Fund
Shares computed in the manner and as of the time and date set forth in
paragraph 2.2. Holders of the Acquired Fund's Institutional Shares will receive
Acquiring Fund Class A Shares and holders of the Acquired Fund's Select Shares
will receive Acquiring Fund Class C Shares. Such transactions shall take place
at the closing on the Closing Date provided for in paragraph 3.1.
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1.2 ASSETS TO BE ACQUIRED. The assets of the Acquired Fund to be
acquired by the Acquiring Fund shall consist of property having a value equal to
the total net assets of the Acquired Fund, including, without limitation, cash,
securities, commodities, interests in futures and dividends or interest
receivable, owned by the Acquired Fund and any deferred or prepaid expenses
shown as an asset on the books of the Acquired Fund on the Closing Date.
The Acquired Fund has provided the Acquiring Fund with its most recent
audited financial statements, which contain a list of all of the Acquired Fund's
assets as of the date of such statements. The Acquired Fund hereby represents
that as of the date of the execution of this Agreement, there have been no
changes in its financial position as reflected in such financial statements
other than those occurring in the ordinary course of business in connection with
fluctuations in value of its investment portfolio, the purchase and sale of
securities, the issuance and redemption of the Acquired Fund's shares and the
payment of normal operating expenses, dividends and capital gains distributions.
1.3 LIABILITIES TO BE DISCHARGED. The Acquired Fund will discharge all
of its liabilities and obligations prior to the Closing Date.
1.4 LIQUIDATION AND DISTRIBUTION. On or as soon after the Closing Date
as is conveniently practicable: (a) the Acquired Fund will distribute in
complete liquidation of the Acquired Fund, pro rata to its shareholders of
record, determined as of the close of business on the Closing Date (the
"Acquired Fund Shareholders"), all of the Acquiring Fund Shares received by the
Acquired Fund pursuant to paragraph 1.1; and (b) the Acquired Fund will
thereupon proceed to dissolve and terminate as set forth in paragraph 1.8 below.
Such distribution will be accomplished by the transfer of Acquiring Fund Shares
credited to the account of the Acquired Fund on the books of the Acquiring Fund
to open accounts on the share records of the Acquiring Fund in the name of the
Acquired Fund Shareholders, and representing the respective pro rata number of
Acquiring Fund Shares due such shareholders. All issued and outstanding shares
of the Acquired Fund (the "Acquired Fund's Shares") will simultaneously be
canceled on the books of the Acquired Fund. The Acquiring Fund shall not issue
certificates representing Acquiring Fund Shares in connection with such
transfer. After the Closing Date, the Acquired Fund shall not conduct any
business except in connection with its termination.
1.5 OWNERSHIP OF SHARES. Ownership of Acquiring Fund Shares will be
shown on the books of the Acquiring Fund's transfer agent. Acquiring Fund Shares
will be issued simultaneously to the Acquired Fund, in an amount equal in value
to the aggregate net asset value of the Acquired Fund's Shares, to be
distributed to Acquired Fund Shareholders.
1.6 TRANSFER TAXES. Any transfer taxes payable upon the issuance of
Acquiring Fund Shares in a name other than the registered holder of the Acquired
Fund's shares on the books of the Acquired Fund as of that time shall, as a
condition of such issuance and transfer, be paid by the person to whom such
Acquiring Fund Shares are to be issued and transferred.
1.7 REPORTING RESPONSIBILITY. Any reporting responsibility of the
Acquired Fund is and shall remain the responsibility of the Acquired Fund.
1.8 TERMINATION. The Acquired Fund shall be terminated promptly
following the Closing Date and the making of all distributions pursuant to
paragraph 1.4.
1.9 BOOKS AND RECORDS. All books and records of the Acquired Fund,
including all books and records required to be maintained under the Investment
Company Act of 1940 (the "1940 Act"), and the rules and regulations thereunder,
shall be available to the Acquiring Fund from and after the Closing Date and
shall be turned over to the Acquiring Fund as soon as practicable following the
Closing Date.
1.10 SALES LOAD ON ACQUIRING FUND SHARES. Shareholders of the
Institutional Shares of the Acquired Fund as of the Closing Date shall not be
subject to the sales load of the Class A Shares of the Acquiring Fund on future
purchases of the Acquiring Fund if made in the same account.
ARTICLE*II
VALUATION
2.1 VALUATION OF ASSETS. The value of the Acquired Fund's assets to be
acquired by the Acquiring Fund hereunder shall be the value of such assets at
the closing on the Closing Date, using the valuation procedures set forth in the
Acquiring Fund's Declaration of Trust and the Acquiring Fund's then current
prospectus and statement of additional information or such other valuation
procedures as shall be mutually agreed upon by the parties.
2.2 VALUATION OF SHARES. The net asset value per share of Acquiring
Fund Shares shall be the net asset value per share computed at the closing on
the Closing Date, using the valuation procedures set forth in the Acquiring
Fund's Declaration of Trust and the Acquiring Fund's then current prospectus and
statement of additional information, or such other valuation procedures as shall
be mutually agreed upon by the parties.
2.3 SHARES TO BE ISSUED. The number of each class of the Acquiring
Fund Shares to be issued (including fractional shares, if any) in exchange for
the Acquired Fund's assets, shall be determined by (a) multiplying the shares
outstanding of each class of the Acquired Fund by (b) the ratio computed by
(x) dividing the net asset value per share of each class of the Acquired Fund by
(y) the net asset value per share of the corresponding class of the Acquiring
Fund determined in accordance with paragraph 2.2.
2.4 DETERMINATION OF VALUE. All computations of value shall be made by
State Street Bank and Trust Company, on behalf of the Acquiring Fund and the
Acquired Fund.
ARTICLE*III
CLOSING AND CLOSING DATE
3.1 CLOSING DATE. The closing shall occur on or about October 26,
2007, or such other date(s) as the parties may agree to in writing (the "Closing
Date"). All acts taking place at the closing shall be deemed to take place at
4:00 p.m. Eastern Time on the Closing Date unless otherwise provided herein.
The closing shall be held at the offices of Federated Services Company, 1001
Liberty Avenue, Pittsburgh, Pennsylvania 15222-3779, or at such other time
and/or place as the parties may agree.
3.2 CUSTODIAN'S CERTIFICATE. State Street Bank and Trust Company, as
custodian for the Acquired Fund (the "Custodian"), shall deliver at the Closing
a certificate of an authorized officer stating that: (a) the Acquired Fund's
portfolio securities, cash, and any other assets have been delivered in proper
form to the Acquiring Fund on the Closing Date; and (b) all necessary taxes
including all applicable federal and state stock transfer stamps, if any, shall
have been paid, or provision for payment shall have been made, in conjunction
with the delivery of portfolio securities by the Acquired Fund.
3.3 EFFECT OF SUSPENSION IN TRADING. In the event that on the
scheduled Closing Date, either: (a) the NYSE or another primary exchange on
which the portfolio securities of the Acquiring Fund or the Acquired Fund are
purchased or sold, shall be closed to trading or trading on such exchange shall
be restricted; or (b) trading or the reporting of trading on the NYSE or
elsewhere shall be disrupted so that accurate appraisal of the value of the net
assets of the Acquiring Fund or the Acquired Fund is impracticable, the Closing
Date shall be postponed until the first business day after the day when trading
is fully resumed and reporting is restored.
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3.4 TRANSFER AGENT'S CERTIFICATE. State Street Bank and Trust Company,
as transfer agent for the Acquired Fund as of the Closing Date, shall deliver at
the Closing a certificate of an authorized officer stating that its records
contain the names and addresses of Acquired Fund Shareholders, and the number
and percentage ownership of outstanding shares owned by each such shareholder
immediately prior to the Closing. The Acquiring Fund shall issue and deliver,
or cause State Street Bank and Trust Company, its transfer agent, to issue and
deliver, a confirmation evidencing Acquiring Funds' Shares to be credited on the
Closing Date to the Secretary of the Acquired Fund Trust or provide evidence
satisfactory to the Acquired Fund that the Acquiring Fund Shares have been
credited to the Acquired Fund's account on the books of the Acquiring Fund. At
the Closing, each party shall deliver to the other such bills of sale, checks,
assignments, share certificates, receipts and other documents, if any, as such
other party or its counsel may reasonably request.
ARTICLE*IV
REPRESENTATIONS AND WARRANTIES
4.1 REPRESENTATIONS OF THE ACQUIRED FUND. The Acquired Fund Trust, on
behalf of the Acquired Fund, represents and warrant to the Acquiring Fund, as
follows:
a) The Acquired Fund is legally designated as a
separate portfolio of a trust duly organized,
validly existing, and in good standing under the
laws of the Commonwealth of Massachusetts.
b) The Acquired Fund Trust is registered as an open-
end management investment company under the 1940
Act, and the Acquired Fund Trust registration
with the Securities and Exchange Commission (the
"Commission") as an investment company under the
1940 Act is in full force and effect.
c) The current prospectus and statement of
additional information of the Acquired Fund
conforms in all material respects to the
applicable requirements of the Securities Act of
1933 (the "1933 Act") and the 1940 Act, and the
rules and regulations thereunder, and do not
include any untrue statement of a material fact
or omit to state any material fact required to be
stated or necessary to make the statements
therein, in light of the circumstances under
which they were made, not misleading.
d) The Acquired Fund is not, and the execution,
delivery, and performance of this Agreement
(subject to shareholder approval) will not,
result in the violation of any provision of the
Acquired Fund Trust's Declaration of Trust or By-
Laws or of any material agreement, indenture,
instrument, contract, lease, or other undertaking
to which the Acquired Fund is a party or by which
it is bound.
e) The Acquired Fund has no material contracts or
other commitments (other than this Agreement)
that will be terminated with liability to it
before the Closing Date, except for liabilities,
if any, to be discharged as provided in
paragraph 1.3 hereof.
f) Except as otherwise disclosed in its current
prospectus, no litigation, administrative
proceeding, or investigation of or before any
court or governmental body is presently pending
or to its knowledge threatened against the
Acquired Fund or any of its properties or assets,
which, if adversely determined, would materially
and adversely affect its financial condition, the
conduct of its business, or the ability of the
Acquired Fund to carry out the transactions
contemplated by this Agreement. The Acquired
Fund knows of no facts that might form the basis
for the institution of such proceedings and is
not a party to or subject to the provisions of
any order, decree, or judgment of any court or
governmental body that materially and adversely
affects their business or their ability to
consummate the transactions contemplated herein.
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g) The audited financial statements of the Acquired
Fund as of November 30, 2006, and for the fiscal
year then ended have been prepared in accordance
with generally accepted accounting principles,
and such statements (copies of which have been
furnished to the Acquiring Fund) fairly reflect
the financial condition of the Acquired Fund as
of such date, and there are no known contingent
liabilities of the Acquired Fund as of such date
that are not disclosed in such statements.
h) The unaudited financial statements of the
Acquired Fund as of May 31, 2007, and for the six
months then ended have been prepared in
accordance with generally accepted accounting
principles, and such statements (copies of which
have been furnished to the Acquiring Fund) fairly
reflect the financial condition of the Acquired
Fund as of such date, and there are no known
contingent liabilities of the Acquired Fund as of
such date that are not disclosed in such
statements.
i) Since the date of the financial statements
referred to in paragraph (h) above, there have
been no material adverse changes in the Acquired
Fund's financial condition, assets, liabilities
or business (other than changes occurring in the
ordinary course of business), or any incurrence
by the Acquired Fund of indebtedness maturing
more than one year from the date such
indebtedness was incurred, except as otherwise
disclosed to and accepted by the Acquiring Fund.
For the purposes of this paragraph (i), a decline
in the net asset value of the Acquired Fund shall
not constitute a material adverse change.
j) All federal and other tax returns and reports of
the Acquired Fund required by law to be filed,
have been filed, and all federal and other taxes
shown due on such returns and reports have been
paid, or provision shall have been made for the
payment thereof. To the best of the Acquired
Fund's knowledge, no such return is currently
under audit, and no assessment has been asserted
with respect to such returns.
k) All issued and outstanding shares of the Acquired
Fund are duly and validly issued and outstanding,
fully paid and non-assessable by the Acquired
Fund. All of the issued and outstanding shares
of the Acquired Fund will, at the time of the
Closing Date, be held by the persons and in the
amounts set forth in the records of the Acquired
Fund's transfer agent as provided in
paragraph 3.4. The Acquired Fund has no
outstanding options, warrants, or other rights to
subscribe for or purchase any of the Acquired
Fund's shares, and has no outstanding securities
convertible into any of the Acquired Fund's
shares.
l) At the Closing Date, the Acquired Fund will have
good and marketable title to the Acquired Fund
assets to be transferred to the Acquiring Fund
pursuant to paragraph 1.2, and full right, power,
and authority to sell, assign, transfer, and
deliver such assets hereunder, free of any lien
or other encumbrance, except those liens or
encumbrances to which the Acquiring Fund has
received notice, and, upon delivery and payment
for such assets, and the filing of any articles,
certificates or other documents under the laws of
the Commonwealth of Massachusetts, the Acquiring
Fund will acquire good and marketable title,
subject to no restrictions on the full transfer
of such assets, other than such restrictions as
might arise under the 1933 Act, and other than as
disclosed to and accepted by the Acquiring Fund.
m) The execution, delivery and performance of this
Agreement have been duly authorized by all
necessary action on the part of the Acquired
Fund. Subject to approval by the Acquired Fund
Shareholders, this Agreement constitutes a valid
and binding obligation of the Acquired Fund,
enforceable in accordance with its terms, subject
as to enforcement, to bankruptcy, insolvency,
reorganization, moratorium, and other laws
relating to or affecting creditors' rights and to
general equity principles.
A-4
n) The information to be furnished by the Acquired
Fund for use in no-action letters, applications
for orders, registration statements, proxy
materials, and other documents that may be
necessary in connection with the transactions
contemplated herein shall be accurate and
complete in all material respects and shall
comply in all material respects with federal
securities and other laws and regulations.
o) From the effective date of the Registration
Statement (as defined in paragraph 5.7), through
the time of the meeting of the Acquired Fund
Shareholders and on the Closing Date, any written
information furnished by the Acquired Fund Trust
with respect to the Acquired Fund for use in the
Proxy Materials (as defined in paragraph 5.7), or
any other materials provided in connection with
the Reorganization, does not and will not contain
any untrue statement of a material fact or omit
to state a material fact required to be stated or
necessary to make the statements, in light of the
circumstances under which such statements were
made, not misleading.
p) The Acquired Fund has elected to qualify and has
qualified as a "regulated investment company"
under the Code (a "RIC"), as of and since its
first taxable year; has been a RIC under the Code
at all times since the end of its first taxable
year when it so qualified; and qualifies and will
continue to qualify as a RIC under the Code for
its taxable year ending upon its liquidation.
q) No governmental consents, approvals,
authorizations or filings are required under the
1933 Act, the Securities Exchange Act of 1934
(the "1934 Act"), the 1940 Act or Massachusetts
law for the execution of this Agreement by the
Acquired Fund Trust, for itself and on behalf of
the Acquired Fund, except for the effectiveness
of the Registration Statement, and the filing of
any articles, certificates or other documents
that may be required under Massachusetts law, and
except for such other consents, approvals,
authorizations and filings as have been made or
received, and such consents, approvals,
authorizations and filings as may be required
subsequent to the Closing Date, it being
understood, however, that this Agreement and the
transactions contemplated herein must be approved
by the shareholders of the Acquired Fund as
described in paragraph 5.2.
4.2 REPRESENTATIONS OF THE ACQUIRING FUND. The Acquiring Fund Trust,
on behalf of the Acquiring Fund, represents and warrants to the Acquired Fund,
as follows:
a) The Acquiring Fund Trust is registered as an
open-end management investment company under the
1940 Act, and the Acquiring Fund Trust's
registration with the Commission as an investment
company under the 1940 Act is in full force and
effect, and the Acquiring Fund Trust is duly
organized and validly existing in good standing
under the laws of the Commonwealth of
Massachusetts.
b) The current prospectus and statement of
additional information of the Acquiring Fund
conforms in all material respects to the
applicable requirements of the 1933 Act and the
1940 Act and the rules and regulations
thereunder, and do not include any untrue
statement of a material fact or omit to state any
material fact required to be stated or necessary
to make such statements therein, in light of the
circumstances under which they were made, not
misleading.
c) The Acquiring Fund is not, and the execution,
delivery and performance of this Agreement will
not, result in a violation of the Acquiring Fund
Trust's Declaration of Trust or By-Laws or of any
material agreement, indenture, instrument,
contract, lease, or other undertaking to which
the Acquiring Fund is a party or by which it is
bound.
A-5
d) Except as otherwise disclosed in its prospectus,
no litigation, administrative proceeding or
investigation of or before any court or
governmental body is presently pending or to its
knowledge threatened against the Acquiring Fund
or any of its properties or assets, which, if
adversely determined, would materially and
adversely affect its financial condition, the
conduct of its business or the ability of the
Acquiring Fund to carry out the transactions
contemplated by this Agreement. The Acquiring
Fund knows of no facts that might form the basis
for the institution of such proceedings and it is
not a party to or subject to the provisions of
any order, decree, or judgment of any court or
governmental body that materially and adversely
affects its business or its ability to consummate
the transactions contemplated herein.
e) The unaudited financial statements of the
Acquiring Fund as of January 31, 2007 have been
prepared in accordance with generally accepted
accounting principles, and such statements
(copies of which have been furnished to the
Acquired Fund) fairly reflect the financial
condition of the Acquiring Fund as of such date,
and there are no known contingent liabilities of
the Acquiring Fund as of such date that are not
disclosed in such statements.
f) Since the date of the unaudited financial
statements referred to in paragraph (e) above,
there have been no material adverse changes in
the Acquiring Fund's financial condition, assets,
liabilities or business (other than changes
occurring in the ordinary course of business), or
any incurrence by the Acquiring Fund of
indebtedness maturing more than one year from the
date such indebtedness was incurred, except as
otherwise disclosed to and accepted by the
Acquired Fund. For the purposes of this
paragraph (g), a decline in the net asset value
of the Acquiring Fund shall not constitute a
material adverse change.
g) All federal and other tax returns and reports of
the Acquiring Fund required by law to be filed
have been filed. All federal and other taxes
shown due on such returns and reports have been
paid or provision shall have been made for their
payment. To the best of the Acquiring Fund's
knowledge, no such return is currently under
audit, and no assessment has been asserted with
respect to such returns.
h) All issued and outstanding Acquiring Fund Shares
are duly and validly issued and outstanding,
fully paid and non-assessable by the Acquiring
Fund. The Acquiring Fund has no outstanding
options, warrants, or other rights to subscribe
for or purchase any Acquiring Fund Shares, and
there are no outstanding securities convertible
into any Acquiring Fund Shares.
i) The execution, delivery and performance of this
Agreement have been duly authorized by all
necessary action on the part of the Acquiring
Fund, and this Agreement constitutes a valid and
binding obligation of the Acquiring Fund,
enforceable in accordance with its terms, subject
as to enforcement, to bankruptcy, insolvency,
reorganization, moratorium, and other laws
relating to or affecting creditors' rights and to
general equity principles.
j) Acquiring Fund Shares to be issued and delivered
to the Acquired Fund for the account of the
Acquired Fund Shareholders pursuant to the terms
of this Agreement will, at the Closing Date, have
been duly authorized. When so issued and
delivered, such shares will be duly and validly
issued Acquiring Fund Shares, and will be fully
paid and non-assessable.
k) The information to be furnished by the Acquiring
Fund for use in no-action letters, registration
statements, proxy materials, and other documents
that may be necessary in connection with the
transactions contemplated herein shall be
accurate and complete in all material respects
and shall comply in all material respects with
federal securities and other laws and
regulations.
A-6
l) From the effective date of the Registration
Statement (as defined in paragraph 5.7), through
the time of the meeting of the Acquired Fund
Shareholders and on the Closing Date, any written
information furnished by the Acquiring Fund for
use in the Proxy Materials (as defined in
paragraph 5.7), or any other materials provided
in connection with the Reorganization, does not
and will not contain any untrue statement of a
material fact or omit to state a material fact
required to be stated or necessary to make the
statements, in light of the circumstances under
which such statements were made, not misleading.
m) The Acquiring Fund has elected to qualify and has
qualified as a RIC under the Code as of and since
its first taxable year; has been a RIC under the
Code at all times since the end of its first
taxable year when it so qualified; and qualifies
and shall continue to qualify as a RIC under the
Code for its current taxable year.
n) No governmental consents, approvals,
authorizations or filings are required under the
1933 Act, the 1934 Act, the 1940 Act or
Massachusetts law for the execution of this
Agreement by the Acquiring Fund, or the
performance of the Agreement by the Acquiring
Fund, except for the effectiveness of the
Registration Statement, and the filing of any
articles, certificates or other documents that
may be required under Massachusetts law, and such
other consents, approvals, authorizations and
filings as have been made or received, and except
for such consents, approvals, authorizations and
filings as may be required subsequent to the
Closing Date.
o) The Acquiring Fund agrees to use all reasonable
efforts to obtain the approvals and
authorizations required by the 1933 Act, the 1940
Act, and any state Blue Sky or securities laws as
it may deem appropriate in order to continue its
operations after the Closing Date.
ARTICLE*I
COVENANTS OF THE ACQUIRING FUND AND THE ACQUIRED FUND
5.1 OPERATION IN ORDINARY COURSE. The Acquiring Fund and the Acquired
Fund will each operate its respective business in the ordinary course between
the date of this Agreement and the Closing Date, it being understood that such
ordinary course of business will include customary dividends and shareholder
purchases and redemptions.
5.2 APPROVAL OF SHAREHOLDERS. The Acquired Fund Trust will call a
special meeting of the Acquired Fund Shareholders to consider and act upon this
Agreement and to take all other appropriate action necessary to obtain approval
of the transactions contemplated herein.
5.3 INVESTMENT REPRESENTATION. The Acquired Fund covenants that the
Acquiring Fund Shares to be issued pursuant to this Agreement are not being
acquired for the purpose of making any distribution, other than in connection
with the Reorganization and in accordance with the terms of this Agreement.
5.4 ADDITIONAL INFORMATION. The Acquired Fund will assist the
Acquiring Fund in obtaining such information as the Acquiring Fund reasonably
requests concerning the beneficial ownership of the Acquired Fund's shares.
5.5 FURTHER ACTION. Subject to the provisions of this Agreement, the
Acquiring Fund and the Acquired Fund will each take or cause to be taken, all
action, and do or cause to be done, all things reasonably necessary, proper or
advisable to consummate and make effective the transactions contemplated by this
Agreement, including any actions required to be taken after the Closing Date.
A-7
5.6 STATEMENT OF EARNINGS AND PROFITS. As promptly as practicable, but
in any case within sixty days after the Closing Date, the Acquired Fund shall
furnish the Acquiring Fund, in such form as is reasonably satisfactory to the
Acquiring Fund, a statement of the earnings and profits of the Acquired Fund for
federal income tax purposes that will be carried over by the Acquiring Fund as a
result of Section 381 of the Code, and which will be certified by the Acquired
Fund Trust's Treasurer.
5.7 PREPARATION OF REGISTRATION STATEMENT AND SCHEDULE 14A PROXY
STATEMENT. The Acquiring Fund will prepare and file with the Commission a
registration statement on Form N-14 relating to the Acquiring Fund Shares to be
issued to shareholders of the Acquired Fund (the "Registration Statement"). The
Registration Statement on Form N-14 shall include a proxy statement and a
prospectus of the Acquiring Fund relating to the transactions contemplated by
this Agreement. The Registration Statement shall be in compliance with the 1933
Act, the 1934 Act and the 1940 Act, as applicable. Each party will provide the
other party with the materials and information necessary to prepare the
registration statement on Form N-14 (the "Proxy Materials"), for inclusion
therein, in connection with the meeting of the Acquired Fund Shareholders to
consider the approval of this Agreement and the transactions contemplated
herein.
5.8 On or before the Closing Date, the Acquired Fund shall have
declared and paid a dividend or dividends which, together with all previous such
dividends, shall have the effect of distributing to its shareholders all of the
Acquired Fund's investment company taxable income (computed without regard to
any deduction for dividends paid), if any, plus the excess, if any, of its
interest income excludible from gross income under Section 103(a) of the Code
over its deductions disallowed under Sections 265 and 171(a)(2) of the Code for
all taxable periods or years ending on or before the Closing Date, and all of
its net capital gains realized (after reduction for any capital loss carry
forward), if any, in all taxable periods or years ending on or before the
Closing Date.
ARTICLE*II
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRED FUND
The obligations of the Acquired Fund to consummate the transactions
provided for herein shall be subject, at its election, to the performance by the
Acquiring Fund of all the obligations to be performed by the Acquiring Fund
pursuant to this Agreement on or before the Closing Date, and, in addition,
subject to the following conditions:
All representations, covenants, and warranties of the Acquiring Fund
contained in this Agreement shall be true and correct in all material respects
as of the date hereof and as of the Closing Date, with the same force and effect
as if made on and as of the Closing Date. The Acquiring Fund shall have
delivered to the Acquired Fund a certificate executed in the Acquiring Fund's
name by the Acquiring Fund Trust's President or Vice President and its Treasurer
or Assistant Treasurer, in form and substance satisfactory to the Acquired Fund
and dated as of the Closing Date, to such effect and as to such other matters as
the Acquired Fund shall reasonably request.
ARTICLE*III
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND
The obligations of the Acquiring Fund to consummate the transactions
provided for herein shall be subject, at its election, to the performance by the
Acquired Fund of all the obligations to be performed by the Acquired Fund
pursuant to this Agreement, on or before the Closing Date and, in addition,
shall be subject to the following conditions:
A-8
All representations, covenants, and warranties of the Acquired Fund
contained in this Agreement shall be true and correct in all material respects
as of the date hereof and as of the Closing Date, with the same force and effect
as if made on and as of such Closing Date. The Acquired Fund shall have
delivered to the Acquiring Fund on such Closing Date a certificate executed in
the Acquired Fund's name by the Acquired Fund Trust's President or Vice
President and the Treasurer or Assistant Treasurer, in form and substance
satisfactory to the Acquiring Fund and dated as of such Closing Date, to such
effect and as to such other matters as the Acquiring Fund shall reasonably
request.
The Acquired Fund shall have delivered to the Acquiring Fund a statement
of the Acquired Fund's assets and liabilities, together with a list of each
Acquired Fund's portfolio securities showing the tax costs of such securities by
lot and the holding periods of such securities, as of the Closing Date,
certified by the Treasurer of the Acquired Fund Trust.
ARTICLE*IV
FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE
ACQUIRING FUND AND ACQUIRED FUND
If any of the conditions set forth below do not exist on or before the
Closing Date with respect to the Acquired Fund or the Acquiring Fund, the other
party to this Agreement shall, at its option, not be required to consummate the
transactions contemplated by this Agreement:
8.1 This Agreement and the transactions contemplated herein, with
respect to the Acquired Fund, shall have been approved by the requisite vote of
the holders of the outstanding shares of the Acquired Fund in accordance with
applicable law and the provisions of the Acquired Fund Trust's Declaration of
Trust and By-Laws. Certified copies of the resolutions evidencing such approval
shall have been delivered to the Acquiring Fund. Notwithstanding anything
herein to the contrary, neither the Acquiring Fund nor the Acquired Fund may
waive the conditions set forth in this paragraph 8.1.
8.2 On the Closing Date, the Commission shall not have issued an
unfavorable report under Section 25(b) of the 1940 Act, or instituted any
proceeding seeking to enjoin the consummation of the transactions contemplated
by this Agreement under Section 25(c) of the 1940 Act. Furthermore, no action,
suit or other proceeding shall be threatened or pending before any court or
governmental agency in which it is sought to restrain or prohibit, or obtain
damages or other relief in connection with this Agreement or the transactions
contemplated herein.
8.3 All required consents of other parties and all other consents,
orders, and permits of federal, state and local regulatory authorities
(including those of the Commission and of State securities authorities,
including any necessary "no-action" positions and exemptive orders from such
federal and state authorities) to permit consummation of the transactions
contemplated herein shall have been obtained, except where failure to obtain any
such consent, order, or permit would not involve a risk of a material adverse
effect on the assets or properties of the Acquiring Fund or the Acquired Fund,
provided that either party hereto may waive any such conditions for itself.
8.4 The Registration Statement shall have become effective under the
1933 Act, and no stop orders suspending the effectiveness thereof shall have
been issued. To the best knowledge of the parties to this Agreement, no
investigation or proceeding for that purpose shall have been instituted or be
pending, threatened or contemplated under the 1933 Act.
8.5 The parties shall have received an opinion of counsel substantially
to the effect that for federal income tax purposes:
A-9
a) The transfer of all of the Acquired Fund's assets
to the Acquiring Fund solely in exchange for
Acquiring Fund Shares (followed by the
distribution of Acquiring Fund Shares to the
Acquired Fund Shareholders in dissolution and
liquidation of the Acquired Funds) will
constitute a "reorganization" within the meaning
of Section 368(a) of the Code, and the Acquiring
Fund and the Acquired Fund will each be a "party
to a reorganization" within the meaning of
Section 368(b) of the Code.
b) No gain or loss will be recognized by the
Acquiring Fund upon the receipt of the assets of
the Acquired Fund solely in exchange for
Acquiring Fund Shares.
c) No gain or loss will be recognized by the
Acquired Fund upon the transfer of the Acquired
Fund's assets to the Acquiring Fund solely in
exchange for Acquiring Fund Shares or upon the
distribution (whether actual or constructive) of
Acquiring Fund Shares to Acquired Fund
Shareholders in exchange for their Acquired
Fund's Shares.
d) No gain or loss will be recognized by any
Acquired Fund Shareholder upon the exchange of
its Acquired Fund's Shares for Acquiring Fund
Shares.
e) The aggregate tax basis of the Acquiring Fund
Shares received by each Acquired Fund Shareholder
pursuant to the Reorganization will be the same
as the aggregate tax basis of the Acquired Fund's
Shares held by it immediately prior to the
Reorganization. The holding period of Acquiring
Fund Shares received by each Acquired Fund
Shareholder will include the period during which
the Acquired Fund's Shares exchanged therefor
were held by such shareholder, provided the
Acquired Fund's Shares are held as capital assets
at the time of the Reorganization.
f) The tax basis of the Acquired Fund's assets
acquired by the Acquiring Fund will be the same
as the tax basis of such assets to the Acquired
Fund immediately prior to the Reorganization.
The holding period of the assets of the Acquired
Fund in the hands of the Acquiring Fund will
include the period during which those assets were
held by the Acquired Fund.
Such opinion shall be based on customary assumptions and such
representations as counsel may reasonably request, and the Acquired Fund
and Acquiring Fund will cooperate to make and certify the accuracy of
such representations. The foregoing opinion may state that no opinion is
expressed as to the effect of the Reorganization on the Acquiring Fund,
the Acquired Fund or any Acquired Fund Shareholder with respect to any
asset as to which unrealized gain or loss is required to be reorganized
for federal income tax purposes at the end of a taxable year (or on the
termination or transfer thereof) under a mark-to-market system of
accounting. Notwithstanding anything herein to the contrary, neither the
Acquiring Fund nor the Acquired Fund may waive the conditions set forth
in this paragraph 8.5.
ARTICLE*I
EXPENSES
Federated Equity Management Company of Pennsylvania or its affiliates
will pay all expenses associated with Acquiring Fund's and Acquired Fund's
participation in the Reorganization, provided, however, that Acquiring Fund
shall bear expenses associated with Registration of Acquiring Fund Shares under
the 1933 Act and the qualification of Acquiring Fund Shares for sale in the
various states. Reorganization expenses include, without limitation:
(a) expenses associated with the preparation and filing of the Proxy Materials;
(b) postage; (c) printing; (d) accounting fees; (e) legal fees incurred by each
Fund; (f) solicitation costs of the transaction; and (g) other related
administrative or operational costs.
ARTICLE*II
ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES
10.1 The Acquiring Fund Trust, on behalf of the Acquiring Fund, and the
Acquired Fund Trust, on behalf of the Acquired Fund, agrees that neither party
has made to the other party any representation, warranty and/or covenant not set
forth herein, and that this Agreement constitutes the entire agreement between
the parties.
10.2 Except as specified in the next sentence set forth in this
paragraph 10.2, the representations, warranties, and covenants contained in this
Agreement or in any document delivered pursuant to or in connection with this
Agreement, shall not survive the consummation of the transactions contemplated
hereunder. The covenants to be performed after the Closing Date shall continue
in effect beyond the consummation of the transactions contemplated hereunder.
ARTICLE*III
TERMINATION
This Agreement may be terminated by the mutual agreement of the Acquiring
Fund Trust and the Acquired Fund Trust. In addition, either the Acquiring Fund
Trust or the Acquired Fund Trust may at its option terminate this Agreement at
or before the Closing Date due to:
a) a breach by the other of any representation,
warranty, or agreement contained herein to be
performed at or before the Closing Date, if not
cured within 30 days;
b) a condition herein expressed to be precedent to
the obligations of the terminating party that has
not been met and it reasonably appears that it
will not or cannot be met; or
c) a determination by a party's Board of Trustees,
that the consummation of the transactions
contemplated herein are not in the best interest
of the Acquiring Fund Trust, or the Acquired Fund
Trust, or the Acquiring Fund, or the Acquired
Fund, respectively, and notice given to the other
party hereto.
In the event of any such termination, in the absence of willful default,
there shall be no liability for damages on the part of either the Acquiring
Fund, the Acquired Fund or the Acquiring Fund Trust or the Acquired Fund Trust,
or their respective trustees or officers, to the other party or its trustees or
officers.
ARTICLE*I
AMENDMENTS
This Agreement may be amended, modified, or supplemented in such manner
as may be mutually agreed upon in writing by the officers of the Acquired Fund
Trust and the Acquiring Fund Trust as specifically authorized by their
respective Board of Trustees; provided, however, that following the meeting of
the Acquired Fund Shareholders called by the Acquired Fund pursuant to
paragraph 5.2 of this Agreement, no such amendment may have the effect of
changing the provisions for determining the number of Acquiring Fund Shares to
be issued to the Acquired Fund Shareholders under this Agreement to the
detriment of such shareholders without their further approval.
ARTICLE*II
HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT;
LIMITATION OF LIABILITY
The Article and paragraph headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original.
This Agreement shall be governed by and construed in accordance with the
laws of the Commonwealth of Pennsylvania.
This Agreement shall bind and inure to the benefit of the parties hereto
and their respective successors and assigns, but, except as provided in this
paragraph, no assignment or transfer hereof or of any rights or obligations
hereunder shall be made by any party without the written consent of the other
party. Nothing herein expressed or implied is intended or shall be construed to
confer upon or give any person, firm, or corporation, other than the parties
hereto and their respective successors and assigns, any rights or remedies under
or by reason of this Agreement.
It is expressly agreed that the obligations of the Acquired Fund
hereunder shall not be binding upon any of the Acquired Fund Trustees,
shareholders, nominees, officers, agents, or employees of the Acquired Fund
Trust personally, but shall bind only the Acquired Fund Trust property of the
Acquired Fund, as provided in the Declaration of Trust of the Acquired Fund
Trust. The execution and delivery of this Agreement have been authorized by the
Trustees of the Acquired Fund Trust on behalf of the Acquired Fund and signed by
authorized officers of the Acquired Fund Trust, acting as such. Neither the
authorization by such Trustees nor the execution and delivery by such officers
shall be deemed to have been made by any of them individually or to impose any
liability on any of them personally, but shall bind only the Acquired Fund Trust
property of the Acquired Fund as provided in the Acquired Fund Trust's
Declaration of Trust.
[Signature Page Follows]
A-10
IN WITNESS WHEREOF, the parties have duly executed this Agreement, all as
of the date first written above.
FEDERATED MANAGED ALLOCATION PORTFOLIOS
on behalf of
Federated _________ Allocation Fund
John W. McGonigle, Secretary
FEDERATED MDT SERIES ON BEHALF OF
FEDERATED BALANCED FUND
J. Christopher Donahue, President
A-11
EXHIBIT B
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE FOR FEDERATED MODERATE ALLOCATION
FUND
Federated Moderate Allocation Fund's Institutional Shares and Select Shares had
total returns of 12.57% and 11.81%, respectively, based on net asset value, for
the one year reporting period ended November 30, 2006. The Standard & Poor's 500
Index (S&P 500)1 and the Lehman Brothers Aggregate Bond Index (LBAB) 2 had total
returns of 14.23% and 5.94%, respectively.
MARKETS
Stock prices rose during the first five months of the reporting period before
falling during May and June. The total return of the S&P 500 from December to
April was 5.64%, and from May to June was (2.75)%. Stock prices rose again in
the final five months of the reporting period with the S&P 500 returning 11.18%.
Foreign stock returns, aided by currency gains, were significantly higher than
U.S. stock returns. Total returns for the Morgan Stanley Capital International
(MSCI) All Country World Ex. U.S. Index3 was 28.73% in U.S. dollars and 18.77%
in local currency.
Interest rates rose during the first seven months of the reporting period before
declining during the final five months. Between November 30, 2005 and June 30,
2006, the average yield to maturity of the LBAB increased from 5.20% to 5.81%
before declining to 5.15% on November 30, 2006. Within the bond asset classes,
emerging markets bonds, foreign developed market bonds and high yield bonds had
the highest returns. Foreign developed market bond returns were significantly
increased by currency gains.
FUND
The asset allocation of the fund is set relative to a neutral position of 60% in
equities and 40% in fixed income. During the reporting period, the fund
benefited from a larger than neutral allocation to stocks that was maintained
for the entire period. The benefits from this larger allocation to stocks were
greatest during the stock market rally from July to November. The returns of the
fund were reduced by this strategy during May and June when stock prices
declined. Within the equity portion, the fund maintained a larger than normal
allocation to foreign stocks4 that increased returns. Relative to their
benchmarks, the returns of the stock portion of the fund were positively
impacted by the performance of the Capital Appreciation Core Fund and negatively
affected by the performance of the Federated International Capital Appreciation
Fund.
Within the bond portion, the fund benefited from maintaining a shorter duration5
than the LBAB during the period of rising interest rates in the first seven
months of the reporting period and a slightly longer duration than the index
during the last portion of the year when interest rates were falling. In
addition, the fund benefited from exposure to high yield bonds6 and foreign
bonds that are not part of the fixed income benchmark. In addition, the total
return of the fund's shares reflects the negative impact of actual cash flows,
transaction costs and other expenses.
1 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.
Indexes are unmanaged and investments cannot be made directly in an index.
2 Lehman Brothers Aggregate Bond Index is an unmanaged index composed from the
Lehman Brothers 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.
Indexes are rebalanced monthly by market capitalization. Investments cannot be
made directly in an index.
3 MSCI-All Country World Ex. U.S. Index is an unmanaged index representing
48 developed and emerging markets around the world that collectively comprise
virtually all of the foreign equity stock markets. Investments cannot be made
directly in an index.
4 International investing involves special risks including currency risk,
increased volatility of foreign securities, political risks and differences in
auditing and other financial standards.
5 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.
6 Bond prices are sensitive to changes in interest rates and a rise in interest
rates can cause a decline in their prices. High yield, lower-rated securities
generally entail greater market, credit and liquidity risks than investment
grade securities and may include higher volatility and higher risk of default.
B-1
GROWTH OF A $25,000 INVESTMENT-INSTITUTIONAL SHARES
The graph below illustrates the hypothetical investment of $25,0001 in Federated
Moderate Allocation Fund (Institutional Shares) (the "Fund") from November 30,
1996 to November 30, 2006 compared to the Lehman Brothers Aggregate Bond Index
(LBAB)2, the Standard and Poor's 500 Index (S&P 500)2 and the 60% Standard and
Poor's 500 Index /40% Lehman Brothers Aggregate Bond Index (60% S&P 500/40%
LBAB)2.
AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIOD ENDED 11/30/2006
1 Year 12.57%
5 Years 6.23%
10 Years 5.73%
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.
1 Represents a hypothetical investment of $25,000 in the Fund. The Fund's
performance assumes the reinvestment of all dividends and distributions. The
LBAB, S&P 500 and the 60% S&P 500/40% LBAB have been adjusted to reflect
reinvestment of dividends on securities in the indexes.
2 The LBAB, S&P 500 and the 60% S&P 500/40% LBAB 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 60%
S&P 500/40% LBAB is a weighted index that combines components of the S&P 500
and the LBAB. Figures shown for the index assume constant weighting of 60% S&P
500 and 40% LBAB throughout the period. The indexes are unmanaged and, unlike
the Fund, are not affected by cash flows. It is not possible to invest
directly in an index.
B-2
GROWTH OF A $10,000 INVESTMENT-SELECT SHARES
The graph below illustrates the hypothetical investment of $10,0001 in Federated
Moderate Allocation Fund (Select Shares) (the "Fund") from November 30, 1996 to
November 30, 2006 compared to the Lehman Brothers Aggregate Bond Index (LBAB),2
the Standard & Poor's 500 Index (S&P 500)2 and the 60% Standard & Poor's 500
Index /40% Lehman Brothers Aggregate Bond Index (60% S&P 500/40% LBAB)2.
---------------------------------------------------------------------
|AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIOD ENDED 11/30/2006| |
---------------------------------------------------------------------
|1 Year |11.81%|
---------------------------------------------------------------------
|5 Years |5.52% |
---------------------------------------------------------------------
|10 Years |5.00% |
---------------------------------------------------------------------
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.
1 Represents a hypothetical investment of $10,000 in the Fund. The Fund's
performance assumes the reinvestment of all dividends and distributions. The
LBAB, S&P 500 and the 60% S&P 500/40% LBAB have been adjusted to reflect
reinvestment of dividends on securities in the indexes.
2 The LBAB, S&P 500 and the 60% S&P 500/40% LBAB are not adjusted to reflect
sales charges, expenses, or other fees that the SEC requires to be reflected
in the Fund's performance. The 60% S&P 500/40% LBAB is a weighted index that
combines components of the S&P 500 and the LBAB. Figures shown for the index
assume constant weighting of 60% S&P 500 and 40% LBAB throughout the period.
The indexes are unmanaged and, unlike the Fund, are not affected by cash
flows. It is not possible to invest directly in an index.
B-3
Management's Discussion of Fund Performance for Federated Conservative
Allocation Fund
Federated Conservative Allocation Fund's Institutional Shares and Select Shares
had total returns of 10.35% and 9.58%, respectively, based on net asset value,
for the one year reporting period ended November 30, 2006. The Standard & Poor's
500 Index (S&P 500) 1 and the Lehman Brothers Aggregate Bond Index (LBAB) 2 had
total returns of 14.23% and 5.94%, respectively.
MARKETS
Stock prices rose during the first five months of the reporting period before
falling during May and June. The total return of the S&P 500 from December to
April was 5.64%, and from May to June was (2.75)%. Stock prices rose again in
the final five months of the reporting period with the S&P 500 returning 11.18%.
Foreign stock returns, aided by currency gains, were significantly higher than
U.S. stock returns. Total returns for the Morgan Stanley Capital International
(MSCI) All Country World Ex. U.S. Index3 was 28.73% in U.S. dollars and 18.77%
in local currency.
Interest rates rose during the first seven months of the reporting period before
declining during the final five months. Between November 30, 2005 and June 30,
2006, the average yield to maturity of the LBAB increased from 5.20% to 5.81%
before declining to 5.15% on November 30, 2006. Within the bond asset classes,
emerging markets bonds, foreign developed market bonds and high yield bonds had
the highest returns. Foreign developed market bond returns were significantly
increased by currency gains.
FUND
The asset allocation of the fund is set relative to a neutral position of 40% in
equities and 60% in fixed income. During the reporting period, the fund
benefited from a larger than neutral allocation to stocks that was maintained
for the entire period. The benefits from this larger allocation to stocks were
greatest during the stock market rally from July to November. The returns of the
fund were reduced by this strategy during May and June when stock prices
declined. Within the equity portion, the fund maintained a larger than normal
allocation to foreign stocks4 that increased returns. Relative to their
benchmarks, the returns of the stock portion of the fund were positively
impacted by the performance of the Capital Appreciation Core Fund and negatively
affected by the performance of the Federated International Capital Appreciation
Fund.
Within the bond portion, the fund benefited from maintaining a shorter duration5
than the Lehman Aggregate during the period of rising interest rates in the
first seven months of the reporting period and a slightly longer duration than
the index during the last portion of the year when interest rates were falling.
In addition, the fund benefited from exposure to high yield bonds and foreign
bonds6 that are not part of the fixed income benchmark.
In addition, the total return of the fund's shares reflects the negative impact
of actual cash flows, transaction costs and other expenses.
1 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.
Indexes are unmanaged and investments cannot be made directly in an index.
2 Lehman Brothers Aggregate Bond Index is an unmanaged index composed from the
Lehman Brothers 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.
Indexes are rebalanced monthly by market capitalization. Investments cannot be
made directly in an index.
3 MSCI-All Country World Ex. U.S. Index is an unmanaged index representing
48 developed and emerging markets around the world that collectively comprise
virtually all of the foreign equity stock markets. Investments cannot be made
directly in an index.
4 International investing involves special risks including currency risk,
increased volatility of foreign securities, political risks and differences in
auditing and other financial standards.
5 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.
6 Bond prices are sensitive to changes in interest rates and a rise in interest
rates can cause a decline in their prices. High yield, lower-rated securities
generally entail greater market, credit and liquidity risks than investment
grade securities and may include higher volatility and higher risk of default.
B-4
GROWTH OF A $25,000 INVESTMENT-INSTITUTIONAL SHARES
The graph below illustrates the hypothetical investment of $25,0001 in Federated
Conservative Allocation Fund (Institutional Shares) (the "Fund") from November
30, 1996 to November 30, 2006 compared to the Lehman Brothers Aggregate Bond
Index (LBAB)2, the Standard and Poor's 500 Index (S&P 500)2 and the 40% Standard
and Poor's 500 Index /60% Lehman Brothers Aggregate Bond Index (40% S&P 500/60%
LBAB)2.
AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIOD ENDED 11/30/2006
1 Year 10.35%
5 Years 5.77%
10 Years 5.56%
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.
1 Represents a hypothetical investment of $25,000 in the Fund. The Fund's
performance assumes the reinvestment of all dividends and distributions. The
LBAB, S&P 500 and the 40% S&P 500/60% LBAB have been adjusted to reflect
reinvestment of dividends on securities in the indexes.
2 The LBAB, S&P 500 and the 40% S&P 500/60% LBAB 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 40% S&P
500/60% LBAB is a weighted index that combines components of the S&P 500 and the
LBAB. Figures shown for the index assumes constant weighting of 40% S&P 500 and
60% LBAB throughout the period. The indexes are unmanaged and unlike the Fund,
are not affected by cash flows. It is not possible to invest directly in an
index.
B-5
GROWTH OF A $10,000 INVESTMENT-SELECT SHARES
The graph below illustrates the hypothetical investment of $10,0001 in Federated
Conservative Allocation Fund (Select Shares) (the "Fund") from November 30, 1996
to November 30, 2006 compared to the Lehman Brothers Aggregate Bond Index
(LBAB)2, the Standard and Poor's 500 Index (S&P 500)2 and the 40% Standard and
Poor's 500 Index /60% Lehman Brothers Aggregate Bond Index (40% S&P 500/60%
LBAB)2.
AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIOD ENDED 11/30/2006
1 Year 9.58%
5 Years 5.02%
10 Years 4.82%
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.
1 Represents a hypothetical investment of $10,000 in the Fund. The Fund's
performance assumes the reinvestment of all dividends and distributions. The
LBAB, S&P 500 and the 40% S&P 500/60% LBAB have been adjusted to reflect
reinvestment of dividends on securities in the indexes.
2 The LBAB, S&P 500 and the 40% S&P 500/60% LBAB are not adjusted to reflect
sales charges, expenses, or other fees that the SEC requires to be reflected in
the Fund's performance. The 40% S&P 500/60% LBAB is a weighted index that
combines components of the S&P 500 and the LBAB. Figures shown for the index
assumes constant weighting of 40% S&P 500 and 60% LBAB throughout the period.
The indexes are unmanaged and unlike the Fund, are not affected by cash flows.
It is not possible to invest directly in an index.
B-6
Management's Discussion of Fund Performance for Federated Growth Allocation Fund
The Federated Growth Allocation Fund's Institutional Shares and Select Shares
had total returns of 14.60% and 13.85%, respectively, based on net asset value,
for the one year reporting period ended November 30, 2006. The Standard & Poor's
500 Index (S&P 500)1 and the Lehman Brothers Aggregate Bond Index (LBAB)2 had
total returns of 14.23% and 5.94% respectively.
MARKETS
Stock prices rose during the first five months of the reporting period before
falling during May and June. The total return of the S&P 500 from December to
April was 5.64%, and from May to June was (2.75)%. Stock prices rose again in
the final five months of the reporting period with the S&P 500 returning 11.18%.
Foreign stock returns, aided by currency gains, were significantly higher than
U.S. stock returns. Total returns for the Morgan Stanley Capital International
(MSCI) All Country World Ex. U.S. Index3 was 28.73% in U.S. dollars and 18.77%
in local currency.
Interest rates rose during the first seven months of the reporting period before
declining during the final five months. Between November 30, 2005 and June 30,
2006, the average yield to maturity of the LBAB increased from 5.20% to 5.81%
before declining to 5.15% on November 30, 2006. Within the bond asset classes,
emerging markets bonds, foreign developed market bonds and high yield bonds had
the highest returns. Foreign developed market bond returns were significantly
increased by currency gains.
FUND
The asset allocation of the fund is set relative to a neutral position of 80% in
equities and 20% in fixed income. During the reporting period, the fund
benefited from a larger than neutral allocation to stocks that was maintained
for the entire period. The benefits from this larger allocation to stocks were
greatest during the stock market rally from July to November. The returns of the
fund were reduced by this strategy during May and June when stock prices
declined. Within the equity portion, the fund maintained a larger than normal
allocation to foreign stocks4 that increased returns. Relative to their
benchmarks, the returns of the stock portion of the fund were positively
impacted by the performance of the Capital Appreciation Core Fund and negatively
affected by the performance of the Federated International Capital Appreciation
Fund.
Within the bond portion, the fund benefited from maintaining a shorter duration5
than the Lehman Aggregate during the period of rising interest rates in the
first seven months of the reporting period and a slightly longer duration than
the index during the last portion of the year when interest rates were falling.
In addition, the fund benefited from exposure to high yield bonds and foreign
bonds6 that are not part of the fixed income benchmark.
In addition, the total return of the fund's shares reflects the negative impact
of actual cash flows, transaction costs and other expenses.
1 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.
Indexes are unmanaged and investments cannot be made directly in an index.
2 Lehman Brothers Aggregate Bond Index is an unmanaged index composed from the
Lehman Brothers 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.
Indexes are rebalanced monthly by market capitalization. Investments cannot be
made directly in an index.
3 MSCI-All Country World Ex. U.S. Index is an unmanaged index representing
48 developed and emerging markets around the world that collectively comprise
virtually all of the foreign equity stock markets. Investments cannot be made
directly in an index.
4 International investing involves special risks including currency risk,
increased volatility of foreign securities, political risks and differences in
auditing and other financial standards.
5 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.
6 Bond prices are sensitive to changes in interest rates and a rise in interest
rates can cause a decline in their prices. High yield, lower-rated securities
generally entail greater market, credit and liquidity risks than investment
grade securities and may include higher volatility and higher risk of default.
B-7
GROWTH OF A $25,000 INVESTMENT-INSTITUTIONAL SHARES
The graph below illustrates the hypothetical investment of $25,0001 in Federated
Growth Allocation Fund (Institutional Shares) (the "Fund") from November 30,
1996 to November 30, 2006 compared to the Lehman Brothers Aggregate Bond Index
(LBAB),2 the Standard and Poor's 500 Index (S&P 500)2 and the 80% Standard and
Poor's 500 Index /20% Lehman Brothers Aggregate Bond Index (80% S&P 500/20%
LBAB)2.
AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIOD ENDED 11/30/2006
1 Year 14.60%
5 Years 5.90%
10 Years 5.26%
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.
1 Represents a hypothetical investment of $25,000 in the Fund. The Fund's
performance assumes the reinvestment of all dividends and distributions. The
LBAB, S&P 500 and the 80% S&P 500/20% LBAB have been adjusted to reflect
reinvestment of dividends on securities in the indexes.
2 The LBAB, S&P 500 and the 80% S&P 500/20% LBAB 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 80%
S&P 500/20% LBAB is a weighted index that combines components of the S&P 500
and the LBAB. Figures shown for the index assumes constant weighting of 80%
S&P 500 and 20% LBAB throughout the period. The indexes are unmanaged and,
unlike the Fund, are not affected by cash flows. It is not possible to invest
directly in an index.
B-8
GROWTH OF A $10,000 INVESTMENT-SELECT SHARES
The graph below illustrates the hypothetical investment of $10,0001 in Federated
Growth Allocation Fund (Select Shares) (the "Fund") from November 30, 1996 to
November 30, 2006 compared to the Lehman Brothers Aggregate Bond Index (LBAB),2
the Standard & Poor's 500 Index (S&P 500)2 and the 80% Standard & Poor's 500
Index /20% Lehman Brothers Aggregate Bond Index (80% S&P 500/20% LBAB)2.
AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIOD ENDED 11/30/2006
1 Year 13.85%
5 Years 5.16%
10 Years 4.52%
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.
1 Represents a hypothetical investment of $10,000 in the Fund. The Fund's
performance assumes the reinvestment of all dividends and distributions.
The LBAB, S&P 500 and the 80% S&P 500/20% LBAB have been adjusted to
reflect reinvestment of dividends on securities in the indexes.
2 The LBAB, S&P 500 and the 80% S&P 500/20% LBAB are not adjusted to reflect
sales charges, expenses, or other fees that the SEC requires to be
reflected in the Fund's performance. The 80% S&P 500/20% LBAB is a weighted
index that combines components of the S&P 500 and the LBAB. Figures shown
for the index assumes constant weighting of 80% S&P 500 and 20% LBAB
throughout the period. The indexes are unmanaged and, unlike the Fund, are
not affected by cash flows. It is not possible to invest directly in an
index.
B-9
STATEMENT OF ADDITIONAL INFORMATION
AUGUST 28, 2007
ACQUISITION OF THE ASSETS OF
FEDERATED CONSERVATIVE ALLOCATION FUND
FEDERATED MODERATE ALLOCATION FUND
FEDERATED GROWTH ALLOCATION FUND
PORTFOLIOS OF FEDERATED MANAGED ALLOCATION PORTFOLIOS
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, Pennsylvania 15237-7000
Telephone No: 1-800-341-7400
BY AND IN EXCHANGE FOR
FEDERATED MDT BALANCED FUND, A PORTFOLIO OF FEDERATED MDT SERIES
A PORTFOLIO OF FEDERATED MDT SERIES
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, Pennsylvania 15237-7000
Telephone No: 1-800-341-7400
This Statement of Additional Information dated August 28, 2007, is not a
prospectus. A Prospectus/Proxy Statement dated August 28, 2007, related to the
above-referenced matter may be obtained from Federated MDT Balanced Fund, on
behalf of Federated MDT Series, by writing or calling Federated MDT Series at
the address and telephone number shown above. This Statement of Additional
Information should be read in conjunction with such Prospectus/Proxy Statement.
TABLE OF CONTENTS
1. Statement of Additional Information of Federated Conservative Allocation
Fund, Federated Moderate Allocation Fund, and Federated Growth Allocation
Fund, portfolios of Federated Managed Allocation Portfolios, dated January
31, 2007.
2. Statement of Additional Information of Federated MDT Balanced Fund, a
portfolio of Federated MDT Series, dated December 11, 2006.
3. Pro Forma Financial Statements of Federated Conservative Allocation Fund,
Federated Moderate Allocation Fund, and Federated Growth Allocation Fund,
portfolios of Federated Managed Allocation Portfolios, dated January 31,
2007.
- 1 -
INFORMATION INCORPORATED BY REFERENCE
The Statement of Additional Information of Federated Conservative
Allocation Fund, Federated Moderate Allocation Fund and Federated Growth
Allocation Fund (the "Acquired Funds"), portfolios of Federated Managed
Allocation Portfolios (the "Trust"), dated January 31, 2007, is incorporated by
reference to the Acquired Funds Post-Effective Amendment No. 27 to its
Registration Statement on Form N-1A (File No. 811-1729), which was filed with
the Securities and Exchange Commission on or about January 30, 2007. A copy may
be obtained from the Federated Managed Allocation Portfolios at 1001 Liberty
Avenue, Pittsburgh, PA 15222-3779 or by calling
1-800-341-7400.
The Statement of Additional Information of Federated MDT Balanced Fund
(FMDTBF), a portfolio of Federated MDT Series (the "Federated Trust"), dated
December 11, 2006 is incorporated by reference to Federated MDT Series' Post-
Effective Amendment No. 1 to its Registration Statement on Form N-1A (File No.
811-21904), which was filed with the Securities and Exchange Commission on or
about November 28, 2006. A copy may be obtained from the Federated Trust at
Federated Investors Funds 5800 Corporate Drive Pittsburgh, Pennsylvania 15237-
7000 or by calling 1-800-341-7400.
The audited financial statements of the Acquired Fund, dated November 30,
2006, are incorporated by reference to the Annual Report to shareholders of the
Acquired Funds which was filed with the Securities and Exchange Commission
pursuant to Section 30(b) of the Investment Company Act of 1940, as amended, on
or about January 31, 2007.
- 1 -
PRO FORMA FINANCIAL STATEMENTS FOR THE PERIOD ENDED JANUARY 31, 2007 (UNAUDITED)
INTRODUCTION
The accompanying unaudited Pro Forma Combining Portfolios of Investments,
Statements of Assets and Liabilities and Statements of Operations (Pro Forma
Financial Statements) reflect the accounts of Federated Conservative Allocation
Fund (FCAF), Federated Moderated Allocation Fund (FMAF), Federated Growth
Allocation Fund (FGAF) (collectively, the "Acquired Funds") and Federated MDT
Balanced Fund (FMDTBF), for the period ended ended January 31, 2007. MDT
Balanced Fund (the "Predecessor Fund") was reorganized into FMDTBF as of the
close of business on December 8, 2006. Prior to the reorganization, FMDTBF had
no investment operations. FMDTBF is the successor to the Predecessor Fund. For
the purposes of these Pro Forma Financial Statements, the financial information
covers the periods from August 1, 2006 to January 31, 2007. These statements
have been derived from the books and records utilized in calculating daily net
asset values at January 31, 2007.
The Pro Forma Financial Statements give effect to the proposed exchange of
assets of each of the Acquired Funds for Class A Shares and Class C Shares of
FMDTBF. Under generally accepted accounting principles, FMDTBF will be the
surviving entity for accounting purposes with its historical cost of investment
securities and results of operations being carried forward.
The Pro Forma Financial Statements have been adjusted to reflect the anticipated
advisory fee arrangement for the surviving entity. Certain other operating
costs have also been adjusted to reflect anticipated expenses of the combined
entity. Other costs which may change as a result of the reorganization are
currently undeterminable.
- 2 -
FEDERATED CONSERVATIVE ALLOCATION FUND
FEDERATED MODERATE ALLOCATION FUND
FEDERATED GROWTH ALLOCATION FUND
FEDERATED MDT BALANCED FUND
PRO FORMA COMBINING PORTFOLIO OF INVESTMENTS
JANUARY 31, 2007 (UNAUDITED)
FEDERATED FEDERATED FEDERATED FEDERATED FEDERATED FEDERATED FEDERATED FEDERATED
CONSERVATIVE MODERATED GROWTH MDT CONSERVATIVE MODERATE GROWTH MDT
ALLOCATION ALLOCATION ALLOCATION BALANCED PRO FORMA ALLOCATION ALLOCATION ALLOCATION BALANCED PRO FORMA
FUND FUND FUND FUND COMBINED FUND FUND FUND FUND COMBINED
SHARES OR PRINCIPAL AMOUNT VALUE
COMMON STOCKS - 21.0%
AEROSPACE & DEFENSE - 0.1%
0 0 0 800 800 Lockheed 0 0 0 $77,752 $77,752
Martin Corp.
0 0 0 6,400 6,400 Raytheon Co. 0 0 0 332,160 332,160
0 0 0 800 800 United 0 0 0 54,416 54,416
Technologies
Corp.
0 0 0 464,328 464,328
BIOTECHNOLOGY - 0.4%
0 0 0 1,500 1,500 Celgene Corp.* 0 0 0 108,615 108,615
0 0 0 14,700 14,700 Genentech, 0 0 0 1,284,339 1,284,339
Inc.*
0 0 0 4,300 4,300 Medimmune, 0 0 0 149,038 149,038
Inc.*
0 0 0 1,541,992 1,541,992
BUILDING PRODUCTS - 0.0%
0 0 0 3,200 3,200 American 0 0 0 158,048 158,048
Standard
Companies
CAPITAL MARKETS - 1.6%
0 0 0 600 600 Affiliated 0 0 0 66,840 66,840
Managers
Group*
0 0 0 4,700 4,700 Bear Stearns & 0 0 0 774,795 774,795
Co., Inc.
0 0 0 900 900 Lehman 0 0 0 74,016 74,016
Brothers
Holdings, Inc.
0 0 0 17,900 17,900 Merrill Lynch 0 0 0 1,674,724 1,674,724
& Co., Inc.
0 0 0 38,500 38,500 Morgan Stanley 0 0 0 3,187,415 3,187,415
0 0 0 5,777,790 5,777,790
CHEMICALS - 0.3%
0 0 0 500 500 Ashland, Inc. 0 0 0 34,775 34,775
0 0 0 26,300 26,300 Dow Chemical 0 0 0 1,092,502 1,092,502
Co.
0 0 0 2,100 2,100 Nalco Holding 0 0 0 48,279 48,279
Co.*
0 0 0 1,175,556 1,175,556
COMMERCIAL BANKS - 1.4%
0 0 0 300 300 City National 0 0 0 21,579 21,579
Corp.
0 0 0 7,400 7,400 Comerica, Inc. 0 0 0 438,820 438,820
0 0 0 3,100 3,100 Fifth Third 0 0 0 123,690 123,690
Bancorp
0 0 0 700 700 Huntington 0 0 0 16,296 16,296
Bancshares,
Inc.
0 0 0 62,500 62,500 J.P. Morgan 0 0 0 3,183,125 3,183,125
Chase & Co.
0 0 0 11,157 11,157 KeyCorp 0 0 0 425,863 425,863
0 0 0 12,000 12,000 National City 0 0 0 454,200 454,200
Corp.
0 0 0 3,600 3,600 SunTrust 0 0 0 299,160 299,160
Banks, Inc.
0 0 0 2,300 2,300 UnionBanCal 0 0 0 148,626 148,626
Corp.
0 0 0 5,111,359 5,111,359
COMMERCIAL SERVICES & SUPPLIES - 0.2%
0 0 0 500 500 Brinks Co. 0 0 0 31,075 31,075
0 0 0 900 900 Dun & 0 0 0 76,500 76,500
Bradstreet
Corp.
0 0 0 1,000 1,000 Equifax, Inc. 0 0 0 41,530 41,530
0 0 0 1,700 1,700 Miller Herman, 0 0 0 63,920 63,920
Inc.
0 0 0 2,900 2,900 Pitney Bowes, 0 0 0 138,823 138,823
Inc.
0 0 0 5,100 5,100 Robert Half 0 0 0 207,570 207,570
International,
Inc.
0 0 0 1,400 1,400 TeleTech 0 0 0 37,730 37,730
Holdings,
Inc.*
0 0 0 500 500 United 0 0 0 25,480 25,480
Stationers,
Inc.*
0 0 0 622,628 622,628
COMMUNICATIONS EQUIPMENT - 0.0%
0 0 0 1,700 1,700 Comverse 0 0 0 32,895 32,895
Technology,
Inc.*
0 0 0 800 800 F5 Networks, 0 0 0 57,152 57,152
Inc.*
0 0 0 90,047 90,047
COMPUTERS & PERIPHERALS - 0.5%
0 0 0 15,200 15,200 Apple, Inc.* 0 0 0 1,303,096 1,303,096
0 0 0 9,400 9,400 Network 0 0 0 353,440 353,440
Appliance,
Inc.*
0 0 0 1,656,536 1,656,536
CONSTRUCTION MATERIALS - 0.1%
0 0 0 600 600 Texas 0 0 0 44,052 44,052
Industries,
Inc.
0 0 0 1,800 1,800 Vulcan 0 0 0 183,312 183,312
Materials Co.
0 0 0 227,364 227,364
CONSUMER FINANCE - 0.1%
0 0 0 5,000 5,000 AmeriCredit 0 0 0 135,700 135,700
Corp.*
0 0 0 2,200 2,200 First 0 0 0 119,680 119,680
Marblehead
Corp.*
0 0 0 255,380 255,380
CONTAINERS & PACKAGING - 0.1%
0 0 0 1,300 1,300 Crown 0 0 0 28,691 28,691
Holdings,
Inc.*
0 0 0 800 800 Sealed Air 0 0 0 52,720 52,720
Corp.
0 0 0 1,600 1,600 Temple-Inland, 0 0 0 79,904 79,904
Inc.
0 0 0 161,315 161,315
DIVERSIFIED CONSUMER SERVICES - 0.0%
0 0 0 800 800 ITT 0 0 0 62,080 62,080
Educational
Services,
Inc.*
0 0 0 1,600 1,600 Weight 0 0 0 86,448 86,448
Watchers
International,
Inc.*
0 0 0 148,528 148,528
DIVERSIFIED FINANCIAL SERVICES - 0.3%
0 0 0 13,300 13,300 CIT Group Inc. 0 0 0 784,168 784,168
0 0 0 300 300 Chicago 0 0 0 168,990 168,990
Mercantile
Exchange
Holdings, Inc.
0 0 0 4,200 4,200 Moody's Corp. 0 0 0 300,552 300,552
0 0 0 1,253,710 1,253,710
DIVERSIFIED TELECOMMUNICATIONS SERVICES - 0.1%
0 0 0 7,000 7,000 Embarq Corp. 0 0 0 388,570 388,570
ELECTRIC UTILITIES - 0.1%
0 0 0 4,400 4,400 Allegheny 0 0 0 204,688 204,688
Energy, Inc.*
0 0 0 2,900 2,900 Edison 0 0 0 130,442 130,442
International
0 0 0 1,300 1,300 FirstEnergy 0 0 0 77,129 77,129
Corp.
0 0 0 1,300 1,300 Portland 0 0 0 33,982 33,982
General
Electric Co.
0 0 0 4,700 4,700 Reliant 0 0 0 69,936 69,936
Resources,
Inc.*
0 0 0 516,177 516,177
ELECTRICAL EQUIPMENT - 0.2%
0 0 0 13,800 13,800 Honeywell 0 0 0 630,522 630,522
International,
Inc.
0 0 0 500 500 Roper 0 0 0 25,960 25,960
Industries,
Inc.
0 0 0 656,482 656,482
ELECTRONIC EQUIPMENT & INSTRUMENTS - 0.2%
0 0 0 2,900 2,900 Amphenol 0 0 0 196,388 196,388
Corp., Class A
0 0 0 5,400 5,400 Avnet, Inc.* 0 0 0 167,670 167,670
0 0 0 1,200 1,200 Daktronics, 0 0 0 41,484 41,484
Inc.
0 0 0 4,500 4,500 Ingram Micor, 0 0 0 87,795 87,795
Inc., Class A*
0 0 0 2,000 2,000 National 0 0 0 57,620 57,620
Instruments
Corp.
0 0 0 100 100 Tech Data 0 0 0 3,714 3,714
Corp.*
0 0 0 554,671 554,671
ENERGY EQUIPMENT & SERVICES - 1.0%
0 0 0 3,300 3,300 Cameron 0 0 0 173,250 173,250
International
Corp.*
0 0 0 300 300 FMC 0 0 0 18,579 18,579
Technologies,
Inc.*
0 0 0 1,500 1,500 GlobalSanaFe 0 0 0 87,015 87,015
Corp.
0 0 0 1,900 1,900 Oceaneering 0 0 0 74,993 74,993
International,
Inc.*
0 0 0 4,200 4,200 Patterson-UTI 0 0 0 101,430 101,430
Energy, Inc.
0 0 0 500 500 SEACOR 0 0 0 50,615 50,615
Holdings,
Inc.*
0 0 0 39,900 39,900 Schlumberger 0 0 0 2,533,251 2,533,251
Ltd.
0 0 0 6,000 6,000 Transocean 0 0 0 464,220 464,220
Sedco Forex,
Inc.*
0 0 0 3,503,353 3,503,353
FOOD & STAPLES - RETAILING - 0.1%
0 0 0 4,100 4,100 Costco 0 0 0 230,338 230,338
Wholesale
Corp.
0 0 0 1,800 1,800 Kroger Co. 0 0 0 46,080 46,080
0 0 0 1,100 1,100 Longs Drug 0 0 0 47,300 47,300
Stores Corp.
0 0 0 323,718 323,718
FOOD PRODUCTS - 0.1%
0 0 0 5,700 5,700 Kellogg Co. 0 0 0 280,839 280,839
0 0 0 3,500 3,500 Kraft Foods, 0 0 0 122,220 122,220
Inc. Class A
0 0 0 403,059 403,059
GAS UTILITIES - 0.0%
0 0 0 1,700 1,700 Energen Corp. 0 0 0 78,676 78,676
HEALTH CARE EQUIPMENT & SUPPLIES - 0.5%
0 0 0 1,600 1,600 Dentsply 0 0 0 49,344 49,344
International,
Inc.
0 0 0 1,700 1,700 Immucor, Inc.* 0 0 0 53,618 53,618
0 0 0 25,500 25,500 Medtronic, 0 0 0 1,362,975 1,362,975
Inc.
0 0 0 600 600 Mentor Corp. 0 0 0 30,594 30,594
0 0 0 5,300 5,300 St. Jude 0 0 0 226,628 226,628
Medical, Inc.*
0 0 0 1,723,159 1,723,159
HEALTH CARE PROVIDERS & SERVICES - 0.4%
0 0 0 8,800 8,800 Cardinal 0 0 0 628,496 628,496
Health, Inc.
0 0 0 1,300 1,300 DaVita, Inc.* 0 0 0 70,980 70,980
0 0 0 900 900 Lincare 0 0 0 35,415 35,415
Holdings,
Inc.*
0 0 0 3,500 3,500 Medco Health 0 0 0 207,235 207,235
Solutions,
Inc.*
0 0 0 1,600 1,600 Psychiatric 0 0 0 62,304 62,304
Solutions,
Inc.*
0 0 0 6,800 6,800 WellPoint, 0 0 0 532,984 532,984
Inc.*
0 0 0 1,537,414 1,537,414
HEALTH CARE TECHNOLOGY - 0.0%
0 0 0 2,900 2,900 IMS Health, 0 0 0 83,694 83,694
Inc.
HOTELS RESTAURANTS & LEISURE - 0.1%
0 0 0 700 700 LifeTime 0 0 0 37,940 37,940
Fitness, Inc.*
0 0 0 400 400 Wynn Resorts 0 0 0 44,696 44,696
Ltd.*
0 0 0 5,200 5,200 Yum! Brands, 0 0 0 312,052 312,052
Inc.
0 0 0 394,688 394,688
HOUSEHOLD DURABLES - 0.2%
0 0 0 2,500 2,500 Beazer Homes 0 0 0 108,775 108,775
USA, Inc.
0 0 0 2,400 2,400 Centex Corp. 0 0 0 128,856 128,856
0 0 0 3,100 3,100 KB HOME 0 0 0 168,082 168,082
0 0 0 800 800 M.D.C. 0 0 0 46,616 46,616
Holdings, Inc.
0 0 0 400 400 Mertiage 0 0 0 17,780 17,780
Corp.*
0 0 0 8,800 8,800 Pulte Homes, 0 0 0 302,192 302,192
Inc.
0 0 0 1,500 1,500 Ryland Group, 0 0 0 84,270 84,270
Inc.
0 0 0 1,800 1,800 Standard- 0 0 0 49,392 49,392
Pacific Corp.
0 0 0 905,963 905,963
HOUSEHOLD PRODUCTS - 1.0%
0 0 0 8,500 8,500 Kimberly-Clark 0 0 0 589,900 589,900
Corp.
0 0 0 50,400 50,400 Proctor & 0 0 0 3,269,448 3,269,448
Gamble Co.
0 0 0 3,859,348 3,859,348
INDEPENDENT POWER PRODUCERS - 0.0%
0 0 0 1,100 1,100 AES Corp.* 0 0 0 22,869 22,869
INDUSTRIAL CONGLOMERATES - 0.3%
0 0 0 14,000 14,000 3M Co. 0 0 0 1,040,200 1,040,200
0 0 0 3,600 3,600 McDermott 0 0 0 185,904 185,904
International,
Inc.*
0 0 0 500 500 Teleflex, Inc. 0 0 0 33,390 33,390
0 0 0 1,259,494 1,259,494
INSURANCE - 3.4%
0 0 0 25,950 25,950 Allstate Corp. 0 0 0 1,561,152 1,561,152
0 0 0 5,000 5,000 Ambac 0 0 0 440,500 440,500
Financial
Group, Inc.
0 0 0 4,050 4,050 American 0 0 0 143,046 143,046
Financial
Group, Inc.
0 0 0 47,800 47,800 American 0 0 0 3,271,910 3,271,910
International
Group, Inc.
0 0 0 4,700 4,700 Assurant, Inc. 0 0 0 261,226 261,226
0 0 0 6,600 6,600 Berkley, W.R. 0 0 0 218,394 218,394
Corp.
0 0 0 2,700 2,700 CNA Financial 0 0 0 109,755 109,755
Corp.*
0 0 0 14,600 14,600 Chubb Corp. 0 0 0 759,784 759,784
0 0 0 2,300 2,300 Commerce 0 0 0 69,414 69,414
Group, Inc.
0 0 0 2,100 2,100 HCC Insurance 0 0 0 65,583 65,583
Holdings, Inc.
0 0 0 1,600 1,600 Hanover 0 0 0 76,880 76,880
Insurance
Group, Inc.*
0 0 0 3,800 3,800 Hartford 0 0 0 360,658 360,658
Financial
Services
Group, Inc.
0 0 0 11,300 11,300 Loews Corp. 0 0 0 491,098 491,098
0 0 0 5,200 5,200 MBIA, Inc. 0 0 0 373,516 373,516
0 0 0 30,600 30,600 Metlife, Inc. 0 0 0 1,900,872 1,900,872
0 0 0 1,900 1,900 Nationwide 0 0 0 103,835 103,835
Financial
Services, Inc.
- Class A
0 0 0 1,400 1,400 Odyssey Re 0 0 0 55,230 55,230
Holdings Corp.
0 0 0 1,600 1,600 Ohio Casualty 0 0 0 47,264 47,264
Corp.
0 0 0 22,900 22,900 Progressive 0 0 0 531,051 531,051
Corp., Ohio
0 0 0 2,000 2,000 Reinsurance 0 0 0 116,300 116,300
Group of
America, Inc.
0 0 0 4,200 4,200 Safeco Corp. 0 0 0 268,842 268,842
0 0 0 400 400 Safety 0 0 0 19,536 19,536
Insurance
Group, Inc.
0 0 0 1,000 1,000 StanCorp 0 0 0 47,850 47,850
Financial
Group, Inc.
0 0 0 26,200 26,200 The St. Paul 0 0 0 1,332,270 1,332,270
Travelers
Companies,
Inc.
0 0 0 12,625,966 12,625,966
INTERNET & CATALOG RETAIL - 0.1%
0 0 0 2,500 2,500 Expedia, Inc.* 0 0 0 53,625 53,625
0 0 0 3,500 3,500 AC Interactive 0 0 0 134,400 134,400
Corp.*
0 0 0 1,100 1,100 Nutri/System, 0 0 0 48,455 48,455
Inc.*
0 0 0 236,480 236,480
INTERNET SOFTWARE & SERVICES - 0.1%
0 0 0 5,400 5,400 eBay, Inc.* 0 0 0 174,906 174,906
0 0 0 3,000 3,000 ValueClick, 0 0 0 76,560 76,560
Inc.*
0 0 0 251,466 251,466
IT SERVICES - 0.2%
0 0 0 800 800 Alliance Data 0 0 0 54,344 54,344
Systems Corp.*
0 0 0 3,700 3,700 Automatic Data 0 0 0 176,564 176,564
Processing,
Inc.
0 0 0 1,300 1,300 Ceridan Corp. 0 0 0 38,961 38,961
- New*
0 0 0 1,000 1,000 Checkfree 0 0 0 41,430 41,430
Corp.*
0 0 0 3,500 3,500 Cognizant 0 0 0 298,515 298,515
Technology
Solutions
Corp.*
0 0 0 2,300 2,300 Computer 0 0 0 120,658 120,658
Sciences
Corp.*
0 0 0 2,300 2,300 Fiserv, Inc.* 0 0 0 120,911 120,911
0 0 0 851,383 851,383
LEISURE EQUIPMENT & PRODUCTS - 0.0%
0 0 0 1,200 1,200 Brunswick 0 0 0 40,932 40,932
Corp.
LIFE SCIENCES TOOLS & SERVICES - 0.0%
0 0 0 1,700 1,700 Waters Corp.* 0 0 0 96,373 96,373
MACHINERY - 0.2%
0 0 0 1,200 1,200 Briggs & 0 0 0 35,568 35,568
Stratton Corp.
0 0 0 3,100 3,100 Danaher Corp. 0 0 0 229,586 229,586
0 0 0 2,900 2,900 Deere & Co. 0 0 0 290,812 290,812
0 0 0 555,966 555,966
MEDIA - 1.0%
0 0 0 40,900 40,900 Comcast Corp., 0 0 0 1,812,688 1,812,688
Class A*
0 0 0 5,400 5,400 Discovery 0 0 0 89,478 89,478
Holding Co.,
Class A*
0 0 0 1,300 1,300 Lamar 0 0 0 86,164 86,164
Advertising
Co.
0 0 0 5,900 5,900 McGraw-Hill 0 0 0 395,772 395,772
Cos., Inc.
0 0 0 2,900 2,900 Omnicom Group, 0 0 0 305,080 305,080
Inc.
0 0 0 39,900 39,900 Time Warner, 0 0 0 872,613 872,613
Inc.
0 0 0 4,800 4,800 Viacom, Inc., 0 0 0 195,216 195,216
Class B - new*
0 0 0 3,757,011 3,757,011
METALS & MINING - 0.1%
0 0 0 4,500 4,500 Commercial 0 0 0 121,995 121,995
Metals Corp.
0 0 0 900 900 Metal 0 0 0 36,936 36,936
Management,
Inc.
0 0 0 900 900 Quanex Corp. 0 0 0 35,271 35,271
0 0 0 2,100 2,100 Worthington 0 0 0 40,278 40,278
Industries,
Inc.
0 0 0 234,480 234,480
MULTI-UTILITIES - 0.1%
0 0 0 5,200 5,200 PG&E Corp. 0 0 0 242,736 242,736
0 0 0 700 700 SCANA Corp. 0 0 0 28,504 28,504
0 0 0 271,240 271,240
MULTILINE RETAIL - 0.2%
0 0 0 3,900 3,900 Sears Holdings 0 0 0 688,935 688,935
Corp.*
OIL GAS & CONSUMABLE FUELS - 2.3%
0 0 0 27,700 27,700 Anadarko 0 0 0 1,211,875 1,211,875
Petroleum
Corp.
0 0 0 43,100 43,100 Chevron Corp. 0 0 0 3,141,128 3,141,128
0 0 0 15,200 15,200 Devon Energy 0 0 0 1,065,368 1,065,368
Corp.
0 0 0 1,300 1,300 General 0 0 0 47,437 47,437
Maritime Corp.
*
0 0 0 15,500 15,500 Marathon Oil 0 0 0 1,400,270 1,400,270
Corp.
0 0 0 2,100 2,100 OMI Corp. 0 0 0 46,326 46,326
0 0 0 3,900 3,900 Pioneer 0 0 0 159,900 159,900
Natural
Resources,
Inc.
0 0 0 2,200 2,200 Pogo Producing 0 0 0 109,010 109,010
Co.
0 0 0 3,200 3,200 Tesoro 0 0 0 263,648 263,648
Petroleum
Corp.
0 0 0 18,900 18,900 Valero Energy 0 0 0 1,025,892 1,025,892
Corp.
0 0 0 8,470,854 8,470,854
PAPER & FOREST PRODUCTS - 0.0%
0 0 0 3,400 3,400 MeadWestvaco 0 0 0 102,476 102,476
Corp.
PERSONAL PRODUCTS - 0.0%
0 0 0 2,200 2,200 Avon Products, 0 0 0 75,658 75,658
Inc.
PHARMACEUTICALS- 0.3%
0 0 0 10,600 10,600 Johnson & 0 0 0 708,080 708,080
Johnson
0 0 0 16,400 16,400 Schering 0 0 0 410,000 410,000
Plough Corp.
0 0 0 1,118,080 1,118,080
REAL ESTATE INVESTMENT TRUSTS - 2.4%
0 0 0 6,000 6,000 AMB Property 0 0 0 365,100 365,100
Corp.
0 0 0 4,200 4,200 Alexandria 0 0 0 455,112 455,112
Real Estate
Equities, Inc.
0 0 0 9,650 9,650 Archstone- 0 0 0 609,977 609,977
Smith Trust
0 0 0 4,100 4,100 Avalonbay 0 0 0 608,276 608,276
Communities,
Inc.
0 0 0 6,350 6,350 Boston 0 0 0 800,671 800,671
Properties,
Inc.
0 0 0 4,450 4,450 Developers 0 0 0 298,684 298,684
Diversified
Realty Corp.
0 0 0 9,900 9,900 Equity 0 0 0 557,172 557,172
Residential
Properties
Trust
0 0 0 2,800 2,800 Federal Realty 0 0 0 261,576 261,576
Investment
Trust
0 0 0 5,000 5,000 General Growth 0 0 0 307,600 307,600
Properties,
Inc.
0 0 0 9,900 9,900 Health Care 0 0 0 408,375 408,375
Property
Investors,
Inc.
0 0 0 15,000 15,000 Host Hotels & 0 0 0 397,050 397,050
Resorts, Inc.
0 0 0 6,100 6,100 Kimco Realty 0 0 0 302,560 302,560
Corp.
0 0 0 7,700 7,700 ProLogis Trust 0 0 0 500,500 500,500
0 0 0 4,500 4,500 Public 0 0 0 489,420 489,420
Storage, Inc.
0 0 0 5,300 5,300 SL Green 0 0 0 776,874 776,874
Realty Corp.
0 0 0 7,000 7,000 Simon Property 0 0 0 800,730 800,730
Group, Inc.
0 0 0 6,200 6,200 Taubman 0 0 0 361,274 361,274
Centers, Inc.
0 0 0 4,850 4,850 Vornado Realty 0 0 0 593,398 593,398
Trust
0 0 0 8,894,349 8,894,349
ROAD & RAIL - 0.3%
0 0 0 2,000 2,000 Burlington 0 0 0 160,720 160,720
Northern Santa
Fe
0 0 0 1,800 1,800 Con-way, Inc. 0 0 0 89,532 89,532
0 0 0 15,700 15,700 Norfolk 0 0 0 779,505 779,505
Southern Corp.
0 0 0 2,200 2,200 Ryder Systems, 0 0 0 119,988 119,988
Inc.
0 0 0 1,800 1,800 Werner 0 0 0 34,218 34,218
Enterpirses,
Inc.
0 0 0 1,183,963 1,183,963
SEMICONDUCTOR & SEMICONDUCTOR EQUIPMENT - 0.0%
0 0 0 2,300 2,300 Altera Corp.* 0 0 0 120,520 120,520
SOFTWARE - 0.1%
0 0 0 22,400 22,400 Oracle Corp.* 0 0 0 384,384 384,384
0 0 0 700 700 Quality 0 0 0 29,701 29,701
Systems, Inc.
0 0 0 1,800 1,800 THQ, Inc.* 0 0 0 54,540 54,540
0 0 0 468,625 468,625
SPECIALTY RETAIL - 0.3%
0 0 0 700 700 AutoZone, 0 0 0 87,941 87,941
Inc.*
0 0 0 3,100 3,100 CarMax, Inc.* 0 0 0 178,033 178,033
0 0 0 600 600 Children's 0 0 0 32,526 32,526
Place Retail
Stores, Inc.*
0 0 0 1,100 1,100 Dick's 0 0 0 56,639 56,639
Sporting
Goods, Inc.*
0 0 0 1,400 1,400 Guess?, Inc.* 0 0 0 100,954 100,954
0 0 0 800 800 Gymboree 0 0 0 34,632 34,632
Corp.*
0 0 0 17,600 17,600 Home Depot, 0 0 0 717,024 717,024
Inc.
0 0 0 800 800 J Crew Group, 0 0 0 29,064 29,064
Inc.*
0 0 0 100 100 Zale Corp.* 0 0 0 2,752 2,752
0 0 0 1,239,565 1,239,565
TEXTILES, APPAREL & LUXURY GOODS - 0.2%
0 0 0 13,800 13,800 Coach, Inc.* 0 0 0 632,868 632,868
0 0 0 1,200 1,200 Crocs, Inc.* 0 0 0 60,408 60,408
0 0 0 693,276 693,276
THRIFTS & MORTGAGE FINANCE - 0.3%
0 0 0 1,200 1,200 Downey 0 0 0 85,848 85,848
Financial
Corp.
0 0 0 2,000 2,000 Federal Home 0 0 0 129,860 129,860
Loan Mortgage
Corp.
0 0 0 1,000 1,000 FirstFed 0 0 0 68,950 68,950
Financial
Corp.*
0 0 0 3,800 3,800 MGIC 0 0 0 234,536 234,536
Investment
Corp.
0 0 0 3,600 3,600 PMI Group, 0 0 0 172,152 172,152
Inc.
0 0 0 3,700 3,700 Radian Group, 0 0 0 222,814 222,814
Inc.
0 0 0 914,160 914,160
WIRELESS TELECOMMUNICATION SERVICES - 0.0%
0 0 0 400 400 U.S. Cellular 0 0 0 28,840 28,840
Corp.*
TOTAL COMMON 0 0 0 77,776,514 77,776,514
STOCKS (COST
$68,470,848)
ASSET-BACKED SECURITIES- 0.3%
0 0 0 58,994 58,994 CS First 0 0 0 58,460 58,460
Boston
Mortgage
Securities
Corp. 2002-
HE4, Class AF,
5.51%,
8/25/2032
0 0 0 648,723 648,723 Community 0 0 0 638,909 638,909
Program Loan
Trust 1987-A,
Class A4,
4.50%,
10/1/2018
0 0 0 452,714 452,714 MMCA 0 0 0 451,692 451,692
Automobile
Trust 2002-2,
Class C,
5.55%,
3/15/2010
0 0 0 140,000 140,000 Morgan Stanley 0 0 0 137,539 137,539
Capital I
2006-IQ12 A4,
5.319%,
12/15/2043
TOTAL ASSET- 0 0 0 1,286,600 1,286,600
BACKED
SECURITIES
(IDENTIFIED
COST
$1,297,142)
COLLATERALIZED MORTGAGE OBLIGATIONS- 0.2%
0 0 0 469,749 469,749 Bear Stearns 0 0 0 314,914 314,914
Asset Backed
Securities,
Inc. 2005-AC6,
Class 21PO,
0.00%,
9/25/2020
0 0 0 5,692 5,692 Bear Stearns 0 0 0 5,592 5,592
Mortgage
Securities,
Inc. 1997-6,
Class 1A,
6.66%,
3/25/2031
0 0 0 16,838 16,838 Federal Home 0 0 0 16,784 16,784
Loan Mortgage
Corp. REMIC
1311 K, 7.00%
7/15/2022
0 0 0 33,518 33,518 Federal Home 0 0 0 33,419 33,419
Loan Mortgage
Corp. REMIC
1384 D, 7.00%
9/15/2022
0 0 0 39,298 39,298 Federal Home 0 0 0 40,806 40,806
Loan Mortgage
Corp. REMIC
1595 D, 7.00%
10/15/2013
0 0 0 75,000 75,000 Federal Home 0 0 0 75,595 75,595
Loan Mortgage
Corp. REMIC
2497 JH, 6.00%
9/15/2032
0 0 0 67,057 67,057 Federal Home 0 0 0 66,830 66,830
Loan Mortgage
Corp. REMIC
2676 JA, 4.00%
5/15/2016
0 0 0 82,752 82,752 Federal 0 0 0 91,131 91,131
National
Mortgage
Association
REMIC 1993-113
SB, 9.75%,
7/25/2023
0 0 0 16,017 16,017 Federal 0 0 0 16,653 16,653
National
Mortgage
Association
REMIC 2001-37
GA, 8.00%,
7/25/2016
0 0 0 20,980 20,980 Federal 0 0 0 19,423 19,423
National
Mortgage
Association
REMIC 2003-35
UC, 3.75%,
5/25/2033
0 0 0 20,173 20,173 Government 0 0 0 20,434 20,434
National
Mortgage
Association
REMIC 1999-29
PB, 7.25%,
7/16/2028
0 0 0 61,195 61,195 Government 0 0 0 61,806 61,806
National
Mortgage
Association
REMIC 2002-17
B, 6.00%,
3/20/2032
TOTAL 0 0 0 763,387 763,387
COLLATERALIZED
MORTGAGE
OBLIGATIONS
(IDENTIFIED
COST $810,587)
CORPORATE NOTES & BONDS - 3.5%
BASIC INDUSTRY - CHEMICALS - 0.0%
0 0 0 75,000 75,000 Albemarle 0 0 0 70,787 70,787
Corp., Sr.
Note, 5.10%,
2/1/2015
BASIC INDUSTRY - METALS & MINING - 0.1%
0 0 0 35,000 35,000 Alcoa, Inc., 0 0 0 34,865 34,865
Note, 5.55%,
2/1/2017
0 0 0 100,000 100,000 BHP Finance 0 0 0 98,176 98,176
(USA), Inc.,
Company
Guarantee,
5.25%,
12/15/2015
0 0 0 150,000 150,000 Vale Overseas 0 0 0 152,438 152,438
Limited,
6.875%,
11/21/2036
0 0 0 150,000 150,000 (1)(2) Xstrata 0 0 0 148,831 148,831
Finance Canada
L, Unsecd.
Note, 5.50%,
11/16/2011
0 0 0 434,310 434,310
CAPITAL GOODS - AEROSPACE & DEFENSE - 0.1%
0 0 0 125,000 125,000 Boeing Co., 0 0 0 123,821 123,821
Note 5.125%,
2/15/2013
0 0 0 200,000 200,000 Raytheon Co., 0 0 0 199,311 199,311
Unsecd. Note,
5.375%,
4/1/2013
0 0 0 323,132 323,132
CAPITAL GOODS - DIVERSIFIED MANUFACTURING - 0.0%
0 0 0 100,000 100,000 Emerson 0 0 0 101,619 101,619
Electric Co.,
Unsecd. Note,
5.75%,
11/1/2011
CAPITAL GOODS - ENVIRONMENTAL - 0.0%
0 0 0 100,000 100,000 Waste 0 0 0 105,994 105,994
Management,
Inc., 7.375%,
8/1/2010
COMMUNICATIONS - MEDIA & CABLE - 0.1%
0 0 0 100,000 100,000 Comcast Corp., 0 0 0 108,102 108,102
Sr. Note,
7.125%,
6/15/2013
0 0 0 75,000 75,000 Cox 0 0 0 73,425 73,425
Communications,
Inc., Unsecd.
Note, 5.45%,
12/15/2014
0 0 0 181,527 181,527
COMMUNICATIONS - MEDIA NONCABLE - 0.1%
0 0 0 100,000 100,000 British Sky 0 0 0 106,113 106,113
Broadcasting
Group PLC,
8.20%,
7/15/2009
0 0 0 75,000 75,000 News America 0 0 0 86,120 86,120
Holdings,
Company
Guarantee,
8.00%,
10/17/2016
0 0 0 75,000 75,000 News America 0 0 0 87,556 87,556
Holdings, Sr.
Deb., 9.25%,
2/1/2013
0 0 0 279,789 279,789
COMMUNICATIONS - TELECOM WIRELESS - 0.1%
0 0 0 150,000 150,000 AT&T Wireless 0 0 0 195,113 195,113
Services, Sr.
Note, 8.75%,
3/1/2031
0 0 0 100,000 100,000 Cingular 0 0 0 104,657 104,657
Wirless LLC,
Sr. Note,
6.50%,
12/15/2011
0 0 0 100,000 100,000 Sprint Capital 0 0 0 110,853 110,853
Corp., Note,
8.375%,
3/15/2012
0 0 0 410,623 410,623
COMMUNICATIONS - TELECOM WIRELINES - 0.2%
0 0 0 400,000 400,000 GTE North, 0 0 0 409,847 409,847
Inc., Deb.,
Series D,
6.90%,
11/1/2008
0 0 0 75,000 75,000 Telefonica SA, 0 0 0 81,052 81,052
Company
Guarantee,
7.045%,
6/20/2036
0 0 0 100,000 100,000 Telefonos de 0 0 0 98,050 98,050
Mexico, Note,
4.50%,
11/19/2008
0 0 0 588,949 588,949
CONSUMER CYCLICAL - AUTOMOTIVE - 0.1%
0 0 0 75,000 75,000 DaimlerChrysler 0 0 0 73,208 73,208
North America,
Sr. Note,
4.875%,
6/15/2010
0 0 0 50,000 50,000 DaimlerChrysler 0 0 0 51,329 51,329
North America
Holding Corp.,
Sr. Note,
6.50%,
11/15/2013
0 0 0 300,000 300,000 General Motors 0 0 0 300,000 300,000
Acceptance,
Note, 6.125%,
2/1/2007
0 0 0 424,537 424,537
CONSUMER CYCLICAL - ENTERTAINMENT - 0.0%
0 0 0 75,000 75,000 Disney Co., 0 0 0 76,131 76,131
Note, 5.70%,
7/15/2011
0 0 0 100,000 100,000 Time Warner, 0 0 0 99,804 99,804
Inc., 5.50%,
11/15/2011
0 0 0 175,935 175,935
CONSUMER CYCLICAL - LODGING - 0.0%
0 0 0 100,000 100,000 (1)(2) Wyndham 0 0 0 98,533 98,533
Worldwide
Corp., Sr.
Unsecd. Note,
6.00%,
12/1/2016
CONSUMER CYCLICAL - RETAILERS - 0.1%
0 0 0 125,000 125,000 Home Depot, 0 0 0 120,917 120,917
Inc., 5.40%,
3/1/2016
0 0 0 100,000 100,000 Target Corp., 0 0 0 102,518 102,518
5.875%,
3/1/2012
0 0 0 223,435 223,435
CONSUMER NON-CYCLICAL - FOOD/BEVERAGE - 0.1%
0 0 0 100,000 100,000 Bottling Group 0 0 0 99,850 99,850
LLC, Note
5.50%,
4/1/2016
0 0 0 40,000 40,000 General Mills, 0 0 0 39,966 39,966
Inc., Note,
5.70%,
2/15/2017
0 0 0 75,000 75,000 Kraft Foods, 0 0 0 73,913 73,913
Inc., Note,
5.25%,
10/1/2013
0 0 0 50,000 50,000 Kraft Foods, 0 0 0 51,746 51,746
Inc., Note,
6.25%,
6/1/2012
0 0 0 265,475 265,475
CONSUMER NON-CYCLICAL - HEALTH CARE - 0.0%
0 0 0 100,000 100,000 Medtronic, 0 0 0 97,138 97,138
Inc., Note,
Series B,
4.375%,
9/15/2010
CONSUMER NON-CYCLICAL - PHARMACEUTICALS - 0.1%
0 0 0 75,000 75,000 Abbott 0 0 0 75,300 75,300
Laboratories,
Note, 5.375%,
5/15/2009
0 0 0 100,000 100,000 Genentech, 0 0 0 95,371 95,371
Inc., Sr.
Note, 4.75%,
7/15/2015
0 0 0 125,000 125,000 Lilly (Eli) & 0 0 0 134,551 134,551
Co., Unsecd.
Note, 6.57%,
1/1/2016
0 0 0 100,000 100,000 Pharmacia 0 0 0 108,202 108,202
Corp., Sr.
Deb., 6.50%,
12/1/2018
0 0 0 100,000 100,000 Wyeth, Unsecd. 0 0 0 100,060 100,060
Note, 5.50%,
2/1/2014
0 0 0 513,484 513,484
CONSUMER NON-CYCLICAL - SUPERMARKETS - 0.1%
0 0 0 250,000 250,000 Safeway, Inc. 0 0 0 249,120 249,120
Notes 4.800%,
07/16/2007
CONSUMER NON-CYCLICAL - TOBACCO - 0.0%
0 0 0 75,000 75,000 Altria Group, 0 0 0 81,642 81,642
Inc., Note,
7.00%,
11/4/2013
ENERGY - INDEPENDENT - 0.1%
0 0 0 55,000 55,000 Anadarko 0 0 0 54,619 54,619
Petroleum
Corp., Sr.
Note, 5.95%,
9/15/2016
0 0 0 50,000 50,000 Canadian 0 0 0 47,106 47,106
Natural
Resources,
4.90%,
12/1/2014
0 0 0 150,000 150,000 Pemex Project 0 0 0 166,995 166,995
Funding
Master,
Company
Guarantee,
9.125%,
10/13/2010
0 0 0 268,720 268,720
ENERGY - INTEGRATED - 0.1%
0 0 0 75,000 75,000 Conoco Funding 0 0 0 87,594 87,594
Co., 7.25%,
10/15/2031
0 0 0 75,000 75,000 ConocoPhillip 0 0 0 75,374 75,374
Australia,
5.50%,
4/15/2013
0 0 0 100,000 100,000 Husky Oil 0 0 0 111,698 111,698
Ltd., Sr.
Deb., 7.55%,
11/15/2016
0 0 0 274,666 274,666
ENERGY - REFINING - 0.1%
0 0 0 100,000 100,000 Valero Energy 0 0 0 105,703 105,703
Corp., 6.875%,
4/15/2012
0 0 0 50,000 50,000 Valero Energy 0 0 0 56,955 56,955
Corp., 7.50%,
4/15/2032
0 0 0 75,000 75,000 Valero Energy 0 0 0 70,358 70,358
Corp., Note,
4.75%,
4/1/2014
0 0 0 233,016 233,016
FINANCIAL INSTITUTIONS - BANKING - 0.6%
0 0 0 200,000 200,000 Bank of 0 0 0 199,437 199,437
America Corp.,
Sr. Note,
5.375%,
6/15/2014
0 0 0 120,000 120,000 Capital One 0 0 0 121,157 121,157
Capital IV,
6.745%,
2/17/2037
0 0 0 200,000 200,000 Citigroup, 0 0 0 199,021 199,021
Inc., Note,
5.125%,
2/14/2011
0 0 0 100,000 100,000 Credit Suisse 0 0 0 100,898 100,898
First Boston,
Sr. Note,
5.50%,
8/16/2011
0 0 0 100,000 100,000 HSBC Finance 0 0 0 100,851 100,851
Capital Trust,
Note, 5.911%,
11/30/2035
0 0 0 200,000 200,000 HSBC Finance 0 0 0 197,015 197,015
Corp., 4.75%,
4/15/2010
0 0 0 100,000 100,000 Household 0 0 0 107,417 107,417
Finance Corp.,
Note, 7.00%,
5/15/2012
0 0 0 150,000 150,000 J.P. Morgan 0 0 0 152,735 152,735
Chase & Co.,
5.75%,
1/2/2013
0 0 0 100,000 100,000 Marshall & 0 0 0 97,444 97,444
Ilsley Bank,
Sr. Note,
4.40%,
3/15/2010
0 0 0 200,000 200,000 Northern Trust 0 0 0 200,039 200,039
Corp., Sr.
Note, 5.30%,
8/29/2011
0 0 0 100,000 100,000 PNC Funding 0 0 0 105,310 105,310
Corp., Sub.
Note, 7.50%,
11/1/2009
0 0 0 100,000 100,000 Popular North 0 0 0 100,078 100,078
America,
5.65%,
4/15/2009
0 0 0 250,000 250,000 US BANK NA, 0 0 0 242,308 242,308
Sub. Note,
4.95%,
10/30/2014
0 0 0 250,000 250,000 Wachovia Bank 0 0 0 238,601 238,601
NA, 4.80%,
11/1/2014
0 0 0 100,000 100,000 Wells Fargo 0 0 0 104,116 104,116
Bank NA, Sub.
Noet, 6.45%,
2/1/2011
0 0 0 75,000 75,000 Zions Bancorp, 0 0 0 73,204 73,204
Sub. Note,
5.50%,
11/16/2015
0 0 0 2,339,631 2,339,631
FINANCIAL INSTITUTIONS - BROKERAGE - 0.3%
0 0 0 100,000 100,000 Amvescap PLC, 0 0 0 97,471 97,471
Sr. Note,
4.50%,
12/15/2009
0 0 0 100,000 100,000 Bear Stearns & 0 0 0 96,046 96,046
Cos., Inc.,
Unsecd. Note,
3.25%,
3/25/2009
0 0 0 150,000 150,000 Goldman Sachs 0 0 0 148,556 148,556
Group, Inc.,
Note, 5.25%,
10/15/2013
0 0 0 400,000 400,000 Merrill Lynch 0 0 0 400,160 400,160
& Co., Inc.,
Sr. Unsub.,
Series CORE,
5.908%,
1/31/2008
0 0 0 150,000 150,000 Merrill Lynch 0 0 0 149,715 149,715
& Co., Inc.,
Unsub. Note,
5.45%,
7/15/2014
0 0 0 100,000 100,000 Morgan 0 0 0 96,616 96,616
Stanley, Note,
4.00%,
1/15/2010
0 0 0 988,564 988,564
FINANCIAL INSTITUTIONS - FINANCE NONCAPTIVE- 0.4%
0 0 0 100,000 100,000 American 0 0 0 99,049 99,049
Express Co.,
Global Sr.
Note, 4.75%,
6/17/2009
0 0 0 100,000 100,000 American 0 0 0 95,029 95,029
General
Finance Corp.,
4.00%,
3/15/2011
0 0 0 150,000 150,000 Berkshire 0 0 0 145,363 145,363
Hathaway,
Inc., Company
Guarantee,
4.85%,
1/15/2015
0 0 0 364,000 364,000 General 0 0 0 360,192 360,192
Electric
Capital, Note,
4.875%
10/21/2010
0 0 0 100,000 100,000 General 0 0 0 97,104 97,104
Electric
Capital, Note,
4.875%
3/4/2015
0 0 0 200,000 200,000 (1)(2) ILFC E- 0 0 0 201,248 201,248
Capital Trust
I, 5.90%,
12/21/2065
0 0 0 100,000 100,000 International 0 0 0 98,644 98,644
Lease Finance
Corp., Note,
4.875%,
9/1/2010
0 0 0 75,000 75,000 SLM Corp. 0 0 0 72,147 72,147
Note, 4.00%,
1/15/2010
0 0 0 300,000 300,000 SLM Corp. 0 0 0 293,321 293,321
Note, Series
A, 3.950%,
8/15/2008
0 0 0 1,462,097 1,462,097
FINANCIAL INSTITUTIONS - INSURANCE - HEALTH- 0.0%
0 0 0 75,000 75,000 Aetna US 0 0 0 75,960 75,960
Healthcare,
Sr. Note,
5.75%,
6/15/2011
FINANCIAL INSTITUTIONS - INSURANCE - LIFE- 0.0%
0 0 0 100,000 100,000 AXA-UAP, Sub. 0 0 0 129,156 129,156
Note, 8.60%,
12/15/2030
FINANCIAL INSTITUTIONS - INSURANCE - P&C - 0.2%
0 0 0 100,000 100,000 St. Paul 0 0 0 99,632 99,632
Travelers Co.,
Inc., Sr.
Unsecd. Note,
5.50%,
12/1/2015
0 0 0 500,000 500,000 (1)(2) ZFS 0 0 0 507,375 507,375
Finance USA
Trust I, Jr.
Sub. Note,
6.15%,
12/15/2065
0 0 0 607,007 607,007
FINANCIAL INSTITUTIONS - REITS- 0.0%
0 0 0 75,000 75,000 Health Care 0 0 0 75,488 75,488
Property
Investments,
Inc., 5.95%,
9/15/2011
FOREIGN-LOCAL-GOVERNMENT - 0.0%
0 0 0 100,000 100,000 Ontario, 0 0 0 95,660 95,660
Province of,
Note, 4.50%,
2/3/2015
TECHNOLOGY - 0.1%
0 0 0 75,000 75,000 Cisco Systems, 0 0 0 75,045 75,045
Inc., Sr.
Note, 5.25%,
2/22/2011
0 0 0 100,000 100,000 Dell Computer 0 0 0 108,150 108,150
Corp., Sr.
Deb., 7.10%,
4/15/2028
0 0 0 100,000 100,000 Oracle Corp., 0 0 0 98,849 98,849
Sr. Unsecd.
Note, Series
WI, 5.00%,
1/15/2011
0 0 0 282,044 282,044
TRANSPORTATION - AIRLINES - 0.0%
0 0 0 75,000 75,000 Southwest 0 0 0 77,870 77,870
Airlines Co.,
6.50%,
3/1/2012
0 0 0 50,000 50,000 Southwest 0 0 0 54,324 54,324
Airlines Co.,
Deb., 7.375%,
3/1/2027
0 0 0 132,194 132,194
TRANSPORTATION - RAILROADS - 0.1%
0 0 0 75,000 75,000 Burlington 0 0 0 71,588 71,588
Northern Santa
Fe Corp., Sr.
Note, 4.875%,
1/15/2015
0 0 0 100,000 100,000 Norfolk 0 0 0 104,746 104,746
Southern
Corp., Sr.
Note, 6.75%,
2/15/2011
0 0 0 100,000 100,000 Union Pacific 0 0 0 95,513 95,513
Corp., 4.875%,
1/15/2015
0 0 0 271,847 271,847
TRANSPORTATION - SERVICES - 0.0%
0 0 0 100,000 100,000 FedEx Corp., 0 0 0 100,486 100,486
Note, 5.50%,
8/15/2009
UTILITY - ELECTRIC - 0.3%
0 0 0 100,000 100,000 Cleveland 0 0 0 95,955 95,955
Electric
Illum, Sr.
Unsecd. Note,
5.95%,
12/15/2036
0 0 0 100,000 100,000 Consolidated 0 0 0 100,282 100,282
Edison Col,
Sr. Unsecd.
Note, Series
2006C, 5.50%,
9/15/2016
0 0 0 100,000 100,000 Exelon 0 0 0 98,167 98,167
Generation
Co., Sr. Note,
5.35%,
1/15/2015
0 0 0 100,000 100,000 First Energy 0 0 0 104,176 104,176
Corp, Note,
Series B,
6.45%,
11/15/2011
0 0 0 100,000 100,000 PSEG Power 0 0 0 108,535 108,535
LLC, Company
Guarantee,
7.75%,
4/15/2011
0 0 0 75,000 75,000 PSI Energy, 0 0 0 77,202 77,202
Inc., Bond,
6.05%,
6/15/2016
0 0 0 100,000 100,000 Pacific Gas & 0 0 0 95,519 95,519
Electric Co.,
Unsecd. Note,
4.20%,
3/1/2011
0 0 0 300,000 300,000 Wisconsin 0 0 0 301,582 301,582
Power & Light
Co., Note,
7.00%,
6/15/2007
0 0 0 981,418 981,418
UTILITY - NATURAL GAS DISTRIBUTOR - 0.0%
0 0 0 100,000 100,000 Atmos Energy 0 0 0 96,448 96,448
Corp., Sr.
Note, 4.00%,
10/15/2009
TOTAL 0 0 0 13,040,431 13,040,431
CORPORATE
NOTES & BONDS
(IDENTIFIED
COST
$13,191,085)
GOVERNMENT AGENCIES- 2.5%
0 0 0 4,000,000 4,000,000 Federal Home 0 0 0 4,048,648 4,048,648
Loan Bank
System, Bond,
5.375%,
8/19/2011
0 0 0 1,000,000 1,000,000 Federal Home 0 0 0 970,660 970,660
Loan Mortgage
Corp., 4.125%,
7/12/2010
0 0 0 1,000,000 1,000,000 Federal Home 0 0 0 1,007,235 1,007,235
Loan Mortgage
Corp., 5.25%,
7/18/2011
0 0 0 1,000,000 1,000,000 Federal Home 0 0 0 1,027,315 1,027,315
Loan Mortgage
Corp., 5.50%,
7/18/2016
0 0 0 2,000,000 2,000,000 Federal 0 0 0 2,005,974 2,005,974
National
Mortgage
Association,
Note, 5.25%,
1/15/2009
TOTAL 0 0 0 9,059,832 9,059,832
GOVERNMENT
AGENCIES
(IDENTIFIED
COST
$9,088,751)
MORTGAGE-BACKED SECURITIES- 0.0%
0 0 0 28,977 28,977 Federal 0 0 0 29,662 29,662
National
Mortgage
Association,
Pool 408761
7.00%,
12/1/2012
0 0 0 12,635 12,635 Federal 0 0 0 13,130 13,130
National
Mortgage
Association,
Pool 512255,
7.50%,
9/1/2014
0 0 0 42,172 42,172 Federal 0 0 0 43,197 43,197
National
Mortgage
Association,
Pool 609554,
7.50%,
10/1/2016
TOTAL 0 0 0 85,989 85,989
MORTGAGE-
BACKED
SECURITIES
(IDENTIFIED
COST $86,490)
U.S. TREASURY - 1.7%
0 0 0 1,197,372 1,197,372 U.S. Treasury 0 0 0 1,209,912 1,209,912
Inflation
Protected
Note, 2.500%,
7/15/2016
0 0 0 1,250,000 1,250,000 United States 0 0 0 1,170,233 1,170,233
Treasury Bond,
4.500%,
2/15/2036
0 0 0 4,000,000 4,000,000 United States 0 0 0 3,809,615 3,809,615
Treasury Note,
3.875%,
2/15/2013
TOTAL U.S. 0 0 0 6,189,760 6,189,760
TREASURY
(IDENTIFIED
COST
$6,287,764)
EXCHANGE TRADED FUNDS - 2.9%
0 0 0 142,450 142,450 iShares MSCI 0 0 0 10,575,488 10,575,488
EAFE Index
Fund
(Identified
Cost
$8,320,096)
MUTUAL FUND - 66.3%
2,285,092 4,707,718 3,501,915 0 10,494,725 (4) Capital 32,474,447 66,903,463 49,766,297 0 149,144,207
Appreciation
Core Fund
39,017 34,511 7,170 42,893 123,591 (4) Emerging 817,868 723,416 150,294 899,113 2,590,691
Markets Fixed
Income Core
Fund
745,226 661,081 136,795 0 1,543,102 (4) Federated 7,407,542 6,571,140 1,359,738 0 15,338,420
Intermediate
Corporate Bond
Fund
99,385 88,188 18,214 0 205,787 (4) Federated 1,039,568 922,444 190,518 0 2,152,530
International
Bond Fund,
Class A Shares
138,244 293,816 219,197 0 651,257 (4) Federated 1,654,776 3,516,980 2,623,793 0 7,795,549
International
Capital
Appreciation
Fund, Class A
Shares
1,340,269 1,188,879 245,895 807,927 3,582,970 (4) Federated 13,201,647 11,710,458 2,422,063 7,958,084 35,292,252
Mortgage Core
Portfolio
605,709 536,940 111,037 0 1,253,686 (4) Federated 6,632,509 5,879,495 1,215,856 0 13,727,860
U.S.
Government
Bond Fund
616,663 547,317 113,208 0 1,277,188 (4) Federated 6,672,291 5,921,973 1,224,908 0 13,819,172
U.S.
Government
Securities
Fund, 2-5
Years,
Institutional
Shares
268,468 238,307 49,234 270,466 826,475 (4) High Yield 1,852,430 1,644,317 339,714 1,866,216 5,702,677
Bond Portfolio
TOTAL MUTUAL 71,753,078 103,793,686 59,293,181 10,723,413 245,563,358
FUNDS
(IDENTIFIED
COST
$242,677,175)
REPURCHASE AGREEMENTS - 1.7%
$643,000 $1,121,000 $502,000 $- $2,266,000 Bank of 643,000 1,121,000 502,000 0 2,266,000
America, NA,
5.29%, dated
1/31/2007,
maturing
2/1/2007
- - - 3,949,000 3,949,000 Mizuho 0 0 0 3,949,000 3,949,000
Securities
USA, Inc.,
5.23%, dated
1/31/2007,
maturing
2/1/2007
TOTAL 643,000 1,121,000 502,000 3,949,000 6,215,000
REPURCHASE
AGREEMENTS (AT
COST)
TOTAL 72,396,078 104,914,68659,795,181 133,450,414 370,556,359
INVESTMENTS
(IDENTIFIED
COST
$356,444,938)
- 100.1%
OTHER ASSETS (573,252) (395,809)
AND 116,530 90,669 (29,756)
LIABILITIES -
(0.1)%
TOTAL NET $ $105,005,355 $59,765,425 $132,877,162 $370,160,550
ASSETS - 100% 72,512,608
Note: The categories of investments are shown as a percentage of total net
assets at January 31, 2007.
* Non Income Producing
(1) 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 January 31, 2007,
these restricted securities amounted to $955,987, which represents 0.3% of
combined total net assets.
(2) Denotes a restricted security that may be resold without restriction to
"qualified institutional buyers" as defined by 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. At January 31, 2007,
these liquid restricted securities amounted to $955,987, which represented
0.3% of combined total net assets.
(3) Pledged as collateral to ensure FMDTBF is able to satisfy the obligations
of its outstanding long futures contracts.
(4) All or a portion of this security will be sold as a result of the
reorganization.
At January 31, 2007, FMDTBF had the following outstanding futures contracts:
Number of Notional Expiration Unrealized
Description Contracts Value Date Appreciation
United States
Treasury Notes 10 13 $1,387,750 March 2007 $3,195
Year Futures - Long
- 3 -
FEDERATED CONSERVATIVE ALLOCATION FUND
FEDERATED MODERATE ALLOCATION FUND
FEDERATED GROWTH
ALLOCATION FUND
FEDERATED MDT BALANCED
FUND (A)
PRO FORMA COMBINING
STATEMENTS OF ASSETS &
LIABILITIES
JANUARY 31, 2007
(UNAUDITED)
FEDERATED FEDERATED FEDERATED FEDERATED
CONSERVATIVE MODERATE GROWTH MDT
ALLOCATION ALLOCATION ALLOCATION BALANCED PRO FORMA PRO FORMA
FUND FUND FUND FUND ADJUSTMENT COMBINED
ASSETS:
Investments in $72,396,078 $104,914,686 $59,795,181 $133,450,414 $0 $370,556,359
securities, at value
Cash 416 719 55,099 0 56,692
458
Income receivable 138,009 28,589 490,275 0 812,451
155,578
Receivable for 0 0 0 1,951,046 0 1,951,046
investments sold
Receivable for daily 0 0 0 5,078 0 5,078
variation margin
Receivable for shares 23,709 22,652 490,141 0 550,118
sold 13,616
Total assets 0 373,931,744
72,565,730 105,076,820 59,847,141 136,442,053
LIABILITIES:
Payable for 0 0 0 3,227,423 0 3,227,423
investments purchased
Payable for shares 1,200 0 0 189,772 0 190,972
redeemed
Payable for investment 0 0 0 58,585 0 58,585
adviser fee
Payable for 0 0 239 3,351 0 3,590
Directors'/Trustees'
fees
Payable for 0 0 12,482 6,465 0 18,947
distribution services
fees
Payable for 0 0 11,035 17,189 0 28,224
shareholder services
fees
Accrued expenses 51,922 71,465 57,960 62,106 0 243,453
Total liabilities 53,122 71,465 81,716 3,564,891 0 3,771,194
NET ASSETS $72,512,608 $105,005,355 $59,765,425 $132,877,162 $0 $370,160,550
NET ASSETS CONSIST OF:
Paid-in capital $66,266,447 $91,847,684 $53,761,838 $119,990,246 $0 331,866,215
Net unrealized 11,128,889 8,054,184 11,169,995 0 35,896,481
appreciation of 5,543,413
investments
Accumulated net 1,884,860 (2,023,939) 1,361,224 0 1,785,184
realized gain (loss) 563,039
on investments
Undistributed net 0 612,670
investment income 139,709 143,922 (26,658) 355,697
Total Net Assets $72,512,608 $105,005,355 $59,765,425 $132,877,162 $0 $370,160,550
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PROCEEDS PER SHARE
INSTITUTIONAL SHARES:
NET ASSETS $47,616,221 $64,279,748 $31,569,657 (b) $
$81,798,718 $(143,465,626) 81,798,718
SHARES OUTSTANDING 4,143,746 4,905,077 2,139,756 6,016,580 (b) 6,016,580
(11,188,579)
NET ASSET VALUE PER $11.49 $13.10 $14.75 $13.60 $13.60
SHARE
OFFERING PRICE PER $11.49 $13.10 $14.75 $13.60 $13.60
SHARE
REDEMPTION PROCEEDS $11.49 $13.10 $14.75 $13.60 $13.60
PER SHARE
CLASS A SHARES:
NET ASSETS $ - $ - $ - (b)
$39,521,221 $143,465,626 $182,986,847
SHARES OUTSTANDING 0 0 0 2,912,633 (b) 13,484,897
10,572,264
NET ASSET VALUE PER $0.00 $0.00 $0.00 $13.57 $13.57
SHARE
OFFERING PRICE PER $0.00 $0.00 $0.00 $14.36 * $14.36 *
SHARE*
REDEMPTION PROCEEDS $0.00 $0.00 $0.00 $13.57 $13.57
PER SHARE
CLASS C SHARES:
NET ASSETS $ - $ - $ - $93,817,765 (b)
$11,557,128 $105,374,893
SHARES OUTSTANDING 0 0 0 857,794 (b) 7,822,736
6,964,942
NET ASSET VALUE PER $0.00 $0.00 $0.00 $13.47 $13.47
SHARE
OFFERING PRICE PER $0.00 $0.00 $0.00 $13.61 ** $13.61
SHARE
REDEMPTION PROCEEDS $0.00 $0.00 $0.00 $13.34 *** $13.34 ***
PER SHARE
CLASS K SHARES:
NET ASSETS $ - $ - $ - $95 $ $95
-
SHARES OUTSTANDING 0 0 0 7 7
-
NET ASSET VALUE PER $0.00 $0.00 $0.00 $13.60 $13.60
SHARE
OFFERING PRICE PER $0.00 $0.00 $0.00 $13.60 $13.60
SHARE
REDEMPTION PROCEEDS $0.00 $0.00 $0.00 $13.60 $13.60
PER SHARE
SELECT SHARES:
NET ASSETS $24,896,389 $40,725,609 $28,195,767 $ (b) $ -
- (93,817,765)
SHARES OUTSTANDING 3,111,836 1,926,908 0 (b) 0
2,169,061 (7,207,805)
NET ASSET VALUE PER $11.48 $13.09 $14.63 $0.00 $0.00
SHARE
OFFERING PRICE PER $11.48 $13.09 $14.63 $0.00 $0.00
SHARE
REDEMPTION PROCEEDS $11.48 $13.09 $14.63 $0.00 $0.00
PER SHARE
Investments, at $71,797,141 $103,509,848 $58,854,335 $122,283,614 $0 $356,444,938
identified cost
Investments in $71,753,078 $103,793,686 $59,293,181 $10,723,413 $0 $245,563,358
affiliated issuers
*Computation of offering price per share 100/94.50 of net
asset value.
**Computation of offering price per share 100/99 of net
asset value.
**Computation of redemption price per share 99/100 of net
asset value.
(a) MDT Balanced Fund was reorganized into Federated MDT Balanced Fund as of the close of business on December
8, 2006. Prior to the reorganization, Federated MDT Balanced Fund had no investment operations. Federated MDT
Balanced Fund is the successor to MDT Balanced Fund.
(b) Adjustment to reflect share balance as a result of
the combination.
- 4 -
FEDERATED CONSERVATIVE ALLOCATION
FUND
FEDERATED MODERATE ALLOCATION
FUND
FEDERATED GROWTH ALLOCATION FUND
FEDERATED MDT BALANCED FUND
PRO FORMA COMBINING STATEMENTS OF
OPERATIONS
SIX MONTHS ENDED JANUARY 31, 2007
(UNAUDITED)
FEDERATED FEDERATED FEDERATED FEDERATED
CONSERVATIVE MODERATE GROWTH MDT
ALLOCATION ALLOCATION ALLOCATION BALANCED PRO FORMA PRO FORMA
FUND FUND FUND FUND ADJUSTMENT COMBINED
INVESTMENT INCOME:
Dividends $1,145,981 $1,109,048 $340,315 $867,491 $0 $3,462,835
Interest 17,983 38,224 39,893 956,499 0 1,052,599
Investment income allocated from 330,296 638,767 483,785 7,971 0 1,460,819
affiliated partnerships
TOTAL INVESTMENT INCOME: 1,494,260 1,786,039 863,993 1,831,961 0 5,976,253
EXPENSES:
Investment advisory fee 286,750 404,625 238,398 417,680 0 1,347,453
Administrative personnel and 98,595 100,835 96,277 115,946 (268,640) (a) 143,013
services fee
Custodian fees 4,001 4,259 3,534 19,922 (1,178) (b) 30,538
Transfer and dividend disbursing 46,144 66,202 66,589 112,388 (34,650) (c) 256,673
agent fees and expenses
Directors'/Trustees' fees 2,062 2,215 2,015 1,614 (4,075) (d) 3,831
Auditing fees 12,714 13,864 4,474 10,082 (31,052) (e) 10,082
Legal fees 5,511 5,376 5,404 4,537 (15,283) (f) 5,545
Portfolio accounting fees 27,496 27,406 27,270 42,415 (68,273) (g) 56,314
Distribution services fee - Class 0 0 0 18,948 151,595 (h) 170,543
A Shares
Distribution services fee - Class 0 0 0 34,989 469,391 (h) 504,380
C Shares
Distribution services fee - 101,026 162,371 116,219 0 (379,616) (h) 0
Select Shares
Shareholder services fee - Class 0 0 0 13,539 51,862 (i) 65,401
A Shares
Shareholder services fee - Class 0 0 0 3,650 35,685 (i) 39,335
C Shares
Shareholder services fee - 47,060 74,658 32,508 0 (154,226) (i) 0
Institutional Shares
Shareholder services fee - Select 37,321 59,637 42,382 0 (139,340) (i) 0
Shares
Share registration costs 14,641 14,417 13,996 30,724 (24,853) (j) 48,925
Printing and postage 13,612 17,683 19,639 18,702 (33,151) (k) 36,485
Insurance premiums 2,903 2,958 2,906 4,607 (8,585) (l) 4,789
Miscellaneous 2,734 3,843 2,454 2,439 (7,084) (m) 4,386
EXPENSES BEFORE ALLOCATION 702,570 960,349 674,065 852,182 (461,473) 2,727,693
Expenses allocated from 10,866 21,858 16,838 78 0 49,640
partnerships
TOTAL EXPENSES 713,436 982,207 690,903 852,260 (461,473) 2,777,333
WAIVERS AND REIMBURSEMENTS--
Waiver/Reimbursement of (n) 0
investment adviser fee (50,829) (57,128) (26,539) (76,553) 211,049
Waiver of administrative (17,261) (17,104) (17,327) (57,249) 102,832 (o) (6,109)
personnel and services fee
Waiver of distribution services (33,581) (54,034) (38,716) 0 126,331 (p) 0
fee - Select Shares
Reimbursement of shareholder (37,023) (61,121) (25,301) 0 123,445 (q) 0
services fee - Institutional
Shares
Reimbursement of transfer and 0 0 0 (8,286) 0 (8,286)
dividend disbursing agent fees
and expenses
Reimbursement of other (13,133) (18,280) (8,582) 0 39,995 (r) 0
operating expenses
TOTAL WAIVERS AND REIMBURSEMENTS (151,827) (207,667) (116,465) (142,088) 603,652 (14,395)
NET EXPENSES 561,609 774,540 574,438 710,172 142,179 2,762,938
NET INVESTMENT INCOME $932,651 $1,011,499 $289,555 $1,121,789 ($142,179) $3,213,315
REALIZED AND UNREALIZED GAIN ON
INVESTMENTS:
Net realized gain on investments 308,985 1,906,188 729,875 1,869,675 0 4,814,723
Net realized gain allocated from 2,059,988 6,625,630 3,248,999 3,965 0 11,938,582
partnerships
Realized gain distributions from 103,951 219,231 170,449 0 0 493,631
affiliated investment company
shares
Net change in unrealized 2,215,343 3,664,863 2,498,194 6,469,699 0 14,848,099
appreciation (depreciation) of
investments
Net realized and unrealized 4,688,267 12,415,912 6,647,517 8,343,339 0 32,095,035
gain on investments
Change in net assets $5,620,918 $13,427,411 $6,937,072 $9,465,128 ($142,179) $35,308,350
resulting from operations
* MDT Balanced Fund was reorganized into Federated MDT Balanced Fund as of the close of business on December 8, 2006.
Prior to the reorganization, Federated MDT Balanced Fund had no investment operations. Federated MDT Balanced Fund is
the successor to MDT Balanced Fund.
(See Notes to Pro Forma Financial
Statements)
- 5 -
FEDERATED CONSERVATIVE ALLOCATION FUND
FEDERATED MODERATE ALLOCATION FUND
FEDERATED GROWTH ALLOCATION FUND
FEDERATED MDT BALANCED FUND
NOTES TO PRO FORMA FINANCIAL STATEMENTS
SIX MONTHS ENDED JANUARY 31, 2007 (UNAUDITED)
NOTE 1. DESCRIPTION OF THE FUND
FCAF, FMAF and FGAF, each a series of Federated Managed Allocation Portfolios,
are registered under the Investment Company Act of 1940, as amended (the "Act),
as an open-end management investment company. Each Fund consists of two classes
of shares: Institutional Shares and Select Shares.
FMDTBF, a series of Federated MDT Series, is registered under the Act as an
open-end, management investment company. MDT Balanced Fund (the "Predecessor
Fund") was reorganized into FMDTBF as of the close of business on December 8,
2006. Prior to the reorganization, FMDTBF had no investment operations. FMDTBF
is the successor to the Predecessor Fund. For the purposes of these Pro Forma
Financial Statements, the financial information covers the period from August 1,
2006 to January 31, 2007. FMDTBF consists of four classes of shares: Class A
Shares, Class C Shares, Class K Shares and Institutional Shares. Class K Shares
became effective December 11, 2006.
NOTE 2. BASIS OF COMBINATION
The accompanying unaudited Pro Forma Combining Portfolios of Investments,
Statements of Assets and Liabilities and Statements of Operations (Pro Forma
Financial Statements) reflect the accounts of the Acquired Funds and FMDTBF for
the six months ended January 31, 2007. These statements have been derived from
the books and records utilized in calculating daily net asset values at January
31, 2007.
The Pro Forma Financial Statements should be read in conjunction with the
historical financial statements of the Acquired Funds and FMDTBF which have been
incorporated by reference in the Statement of Additional Information. The Funds
follow generally accepted accounting principles in the United States of America
applicable to management investment companies which are disclosed in the
historical financial statements.
The Pro Forma Financial Statements give effect to the proposed exchange of
assets of the Acquired Funds for Class A Shares and Class C Shares of FMDTBF.
Under generally accepted accounting principles, FMDTBF will be the surviving
entity for accounting purposes with its historical cost of investment securities
and results of operations being carried forward.
The Pro Forma Financial Statements have been adjusted to reflect the investment
advisory fee arrangement for the surviving entity. Certain other operating
costs have also been adjusted to reflect anticipated expenses of the combined
entity. Other costs which may change as a result of the reorganization are
currently undeterminable.
For the six months ended January 31, 2007, the Acquired Funds and FMDTBF paid
investment advisory fees computed at the annual rate of 0.75% as a percentage of
average daily net assets.
All costs with respect to the reorganization will be borne by Federated
Investors, Inc. and its affiliates.
NOTE 3. PORTFOLIO VALUATION
Market values of each Fund's portfolio securities are determined as follows:
{circle}for equity securities, according to the last sale price or official
closing price reported in the market in which they are primarily traded
(either a national securities exchange or the over-the-counter market), if
available;
{circle}in the absence of recorded sales for equity securities, according to
the mean between the last closing bid and asked prices;
{circle}futures contracts and options are generally valued at market values
established by the exchanges on which they are traded at the close of
trading on such exchanges. Options traded in the over-the-counter market
are generally valued according to the mean between the last bid and the
last asked price for the option as provided by an investment dealer or
other financial institution that deals in the option. The Board of
Trustees (the "Trustees") may determine in good faith that another method
of valuing such investments is necessary to appraise their fair market
value;
{circle}prices for total return swaps are furnished by an independent pricing
service and are based upon a valuation model incorporating underlying
reference indexes, interest rates, yield curves and other market data or
factors. Prices for credit default swaps are furnished by an independent
pricing service and are based upon a valuation model incorporating default
probabilities, recovery rates and other market data or factors;
{circle}for mortgage-backed securities, based on the aggregate investment
value of the projected cash flows to be generated by the security, as
furnished by an independent pricing service;
{circle}for investments in other open-end regulated investment companies,
based on net asset value (NAV);
{circle}for other fixed-income securities, according to prices as furnished
by an independent pricing service, except that fixed-income securities
with remaining maturities of less than 60 days at the time of purchase are
valued at amortized cost; and
{circle}for all other securities at fair value as determined in accordance
with procedures established by and under the general supervision of the
Trustees.
Prices for fixed-income securities furnished by a pricing service may be based
on a valuation matrix which incorporates both dealer-supplied valuations and
electronic data processing techniques. Such prices (other than prices of
mortgage-backed securities) are generally intended to be indicative of the bid
prices currently offered to institutional investors for the securities, except
that prices for corporate fixed-income and asset-backed securities traded in the
United States are generally intended to be indicative of the mean between such
bid prices and asked prices. The Trustees have approved the use of such pricing
services. A number of pricing services are available, and the Fund may use
various pricing services or discontinue the use of any pricing service.
Prices provided by independent pricing services may be determined without
relying exclusively on quoted prices and may consider institutional trading in
similar groups of securities, yield, quality, stability, risk, coupon rate,
maturity, type of issue, trading characteristics, and other market data or
factors. From time to time, when prices cannot be obtained from an independent
pricing service, securities may be valued based on quotes from broker-dealers or
other financial institutions that trade the securities.
Trading in foreign securities may be completed at times which vary from the
closing of the New York Stock Exchange (NYSE). In computing its NAV, the Fund
values foreign securities using the latest closing price on the exchange on
which they are traded immediately prior to the closing of the NYSE. Certain
foreign currency exchange rates are generally determined at the latest rate
prior to the closing of the NYSE. Foreign securities quoted in foreign
currencies are translated into U.S. dollars at current rates. Events that
affect these values and exchange rates may occur between the times at which they
are determined and the closing of the NYSE. If such events materially affect
the value of portfolio securities, these securities may be valued at their fair
value as determined in good faith by the Trustees, although the actual
calculation may be done by others.
NOTE 4. SHARES OF BENEFICIAL INTEREST
The Pro Forma Class A Shares and Class C Shares net asset value per share
assumes the issuance of 10,572,264 Class A Shares and 6,964,942 Class C Shares,
respectively, of FMDTBF in exchange for 11,188,579 Institutional Shares and
7,207,805 Select Shares of the Acquired Funds which would have been issued at
January 31, 2007 in connection with the proposed reorganization.
NOTE 5. FEDERAL INCOME TAXES
Each fund has elected to be taxed as a "regulated investment company" under the
Internal Revenue Code. After the acquisition, FMDTBF intends to continue to
qualify as a regulated investment company, if such qualification is in the best
interests of its shareholders, by complying with the Subchapter M provision of
the Internal Revenue Code and to distribute to shareholders each year
substantially all of its income. Accordingly, no provisions for federal income
tax are necessary.
The identified cost of investments for the funds is substantially the same for
both financial accounting and federal income tax purposes. The tax cost of
investments will remain unchanged for the combined fund.
NOTE 6. PROFORMA ADJUSTMENTS
(a) Federated Administrative Services (FAS), under the Administrative Services
Agreement, provides FMDTBF with certain administrative personnel and services
necessary to operate the Fund. The fee paid to FAS is based on the average
aggregate daily net assets of certain Federated funds. 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. Under a similar plan, FAS provides
The Acquired Funds with certain administrative personnel and services necessary
to operate the Fund. An adjustment to the combined administrative personnel and
services fee reflects the fee structure of FMDTBF on Federated MDT Pro Forma
Combined Fund's average daily net assets.
(b) Adjustment to reflect custodian fees resulting from the combining of four
portfolios into one.
(c) Adjustment to reflect transfer and dividend disbursing agent fees and
expenses resulting from the combining of four portfolios into one.
(d) Adjustment to reflect directors'/trustees' fees resulting from the
combining of four portfolios into one.
(e) Adjustment to reflect auditing fees resulting from the combining of four
portfolios into one.
(f) Adjustment to reflect legal fees resulting from the combining of four
portfolios into one.
(g) Adjustment to reflect portfolio accounting fees resulting from the
combining of four portfolios into one.
(h) Under a Distribution Plan (the "Plan") pursuant to Rule 12B-1 under the
Act, FMDTBF may incur distribution expenses of 0.25% and 0.75% of the daily net
assets of the Fund's Class A Shares and Class C Shares, respectively, to
compensate Federated Securities Corp. (FSC), the principal distributor. Prior
to the reorganization of the Fund on December 8, 2006, the Predecessor Fund
incurred distribution expenses of 0.25% and 1.00% of the daily net assets of the
Fund's Class A Shares and Class C Shares, respectively. FSC may voluntarily
choose to waive any portion of its fee. Under a similar plan, the Acquired
Funds may incur distribution expenses up to 0.75% of the Select Shares average
daily net assets. Adjustment is to reflect expense structure of FMDTBF on
average daily net assets of Federated MDT Pro Forma Combined Fund.
(i) Effective December 11, 2006, under the terms of a Shareholder Services
Agreement, FMDTBF may pay fees up to 0.25% of the average daily net assets of
Fund's Class A and Class C shares to financial intermediaries or to Federated
Shareholder Services Company (FSSC). Prior to the reorganization, the
Predecessor Fund did not incur a shareholder services fee. Under a similar
plan, the Acquired Funds may pay fees up to 0.25% of the average daily net
assets of Institutional Shares and Select Shares to financial intermediaries or
to FSSC. FSSC or these financial intermediaries may voluntarily choose to waive
any portion of their fee. Adjustment is to reflect expense structure of FMDTBF
on average daily net assets of Federated MDT Pro Forma Combined Fund.
(j) Adjustment to reflect share registration costs resulting from the combining
of four portfolios into one.
(k) Adjustment to reflect share printing and postage resulting from the
combining of four portfolios into one.
(l) Adjustment to reflect share insurance premiums resulting from the combining
of four portfolios into one.
(m) Adjustment to reflect share miscellaneous expenses resulting from the
combining of four portfolios into one.
(n) Under the investment advisory contract, Federated MDTA LLC (the "Adviser")
is contractually obligated to waive, to the extent of its adviser fee, the
amount, if any, in order to limit the aggregate annual operating expenses
(excluding interest, taxes and brokerage commissions) for FMDTBF's Class A
Shares, Class C Shares and Institutional Shares to not more than 1.50%, 2.50%
and 1.25%, respectively, of average daily net assets. The Adviser has agreed to
keep these contractual limitations in place through December 8, 2008. The
Advisor may also voluntarily choose to waive a portion of its fee and/or
reimburse certain operating expenses of FMDTBF. The Advisor can modify or
terminate this voluntary waiver and/or reimbursement at any time at its sole
discretion. An adjustment to the combined waiver of investment adviser fee
reflects the fee structure of FMDTBF on Federated MDT Pro Forma Combined Fund's
average daily net assets.
(o) Effective July 15, 2006, FAS contractually agreed to waive the portion of
its fee which it would otherwise be entitled to receive from the Predecessor
Fund of FMDTBF under the Agreement. The level of fees payable by the
Predecessor Fund of FMDTBF to FAS for the period will not exceed the level of
fees which the Predecessor Fund of FMDTBF would have paid during the period to
its pervious service provider under its previous administrative services
agreement. This contractual commitment ended with the reorganization on
December 8, 2006. In addition, FAS may voluntarily choose to waive any portion
of its fee. FAS can modify or terminate its voluntary waiver at any time at its
sole discretion. An adjustment to the combined waiver of administrative
personnel and services fee reflects the fee structure of FMDTBF on Federated MDT
Pro Forma Combined Fund's average daily net assets.
(p) An adjustment to the combined waiver of distribution services fee reflects
the fee structure of FMDTBF, which does not waive distribution services fee.
(q) An adjustment to the combined waiver and/or reimbursement of shareholder
services fee reflects the fee structure of FMDTBF, which does not waive and/or
reimburse shareholder services fee.
(r) An adjustment to the combined reimbursement of other operating expenses
reflects the fee structure of FMDTBF, which does not reimburse other operating
expenses.
- 6 -
The accompanying unaudited Pro Forma Combining Portfolios of Investments,
Statements of Assets and Liabilities and Statements of Operations (Pro Forma
Financial Statements) reflect the accounts of Federated Conservative Allocation
Fund (FCAF), Federated Moderated Allocation Fund (FMAF), Federated Growth
Allocation Fund (FGAF) (collectively, the "Acquired Funds") and Federated MDT
Balanced Fund (FMDTBF), for the period ended July 31, 2006. MDT Balanced Fund
(the "Predecessor Fund") was reorganized into FMDTBF as of the close of business
on December 8, 2006. Prior to the reorganization, FMDTBF had no investment
operations. FMDTBF is the successor to the Predecessor Fund. For the purposes
of these Pro Forma Financial Statements, the financial information covers the
period from August 1, 2005 to July 31, 2006. These statements have been derived
from the books and records utilized in calculating daily net asset values at
July 31, 2006.
The Pro Forma Financial Statements give effect to the proposed exchange of
assets of each of the Acquired Funds for Class A Shares and Class C Shares of
FMDTBF. Under generally accepted accounting principles, FMDTBF will be the
surviving entity for accounting purposes with its historical cost of investment
securities and results of operations being carried forward.
The Pro Forma Financial Statements have been adjusted to reflect the anticipated
advisory fee arrangement for the surviving entity. Certain other operating
costs have also been adjusted to reflect anticipated expenses of the combined
entity. Other costs which may change as a result of the reorganization are
currently undeterminable.
- 7 -
FEDERATED CONSERVATIVE ALLOCATION FUND
FEDERATED MODERATE ALLOCATION FUND
FEDERATED GROWTH ALLOCATION FUND
FEDERATED MDT BALANCED FUND (1)
PRO FORMA COMBINING PORTFOLIO OF INVESTMENTS
JULY 31, 2006
(UNAUDITED)
FEDERATED FEDERATED FEDERATED FEDERATED FEDERATED FEDERATED FEDERATED FEDERATED
CONSERVATIVE MODERATED GROWTH MDT CONSERVATIVE MODERATE GROWTH MDT
ALLOCATION ALLOCATION ALLOCATION BALANCED PRO FORMA ALLOCATION ALLOCATION ALLOCATION BALANCED PRO FORMA
FUND FUND FUND FUND COMBINED FUND FUND FUND FUND COMBINED
SHARES OR PRINCIPAL VALUE
AMOUNT
COMMON STOCKS - 13.9%
AEROSPACE & DEFENSE - 0.1%
0 0 0 1,400 1,400 Honeywell 0 0 0 $54,180 $54,180
International
Inc.
0 0 0 5,100 5,100 Raytheon 0 0 0 229,857 229,857
Company
0 0 0 1,100 1,100 Rockwell 0 0 0 58,707 58,707
Collins,
Inc.
0 0 0 342,744 342,744
BEVERAGES - 0.1%
0 0 0 6,900 6,900 Coca-Cola 0 0 0 307,050 307,050
Co.
0 0 0 1,600 1,600 Hansen 0 0 0 73,584 73,584
Natural
Corp.*
0 0 0 380,634 380,634
BIOTECHNOLOGY - 0.4%
0 0 0 6,100 6,100 Celgene 0 0 0 292,129 292,129
Corp.*
0 0 0 1,400 1,400 Cephalon, 0 0 0 92,036 92,036
Inc.*
0 0 0 11,800 11,800 Genentech, 0 0 0 953,676 953,676
Inc.*
0 0 0 1,337,841 1,337,841
BUILDING PRODUCTS - 0.0%
0 0 0 1,900 1,900 American 0 0 0 73,397 73,397
Standard
Companies
CAPITAL MARKETS - 1.2%
0 0 0 2,900 2,900 Bear Stearns 0 0 0 411,423 411,423
& Co., Inc.
0 0 0 14,500 14,500 Lehman 0 0 0 941,775 941,775
Brothers
Holdings,
Inc.
0 0 0 3,300 3,300 Merrill 0 0 0 240,306 240,306
Lynch & Co.,
Inc.
0 0 0 29,600 29,600 Morgan 0 0 0 1,968,400 1,968,400
Stanley
0 0 0 1,100 1,100 OptionsXpress 0 0 0 28,798 28,798
Holdings,
Inc.
0 0 0 3,590,702 3,590,702
CHEMICALS - 0.0%
0 0 0 300 300 Ashland, 0 0 0 19,953 19,953
Inc.
0 0 0 500 500 FMC Corp. 0 0 0 30,845 30,845
0 0 0 700 700 OM Group, 0 0 0 24,584 24,584
Inc.*
0 0 0 75,382 75,382
COMMERCIAL BANKS - 0.3%
0 0 0 5,600 5,600 Comerica 0 0 0 327,880 327,880
Incorporated
0 0 0 700 700 Huntington 0 0 0 17,045 17,045
Bancshares
Incorporated
0 0 0 1,100 1,100 M & T Bank 0 0 0 134,112 134,112
Corp.
0 0 0 7,700 7,700 National 0 0 0 277,200 277,200
City
Corporation
0 0 0 1,300 1,300 SunTrust 0 0 0 102,531 102,531
Banks, Inc.
0 0 0 1,000 1,000 UnionBanCal 0 0 0 61,790 61,790
Corporation
0 0 0 920,558 920,558
COMMERCIAL SERVICES & SUPPLIES - 0.2%
0 0 0 700 700 Corporate 0 0 0 65,800 65,800
Executive
Board Co.
0 0 0 700 700 Dun & 0 0 0 46,704 46,704
Bradstreet
Corp.*
0 0 0 1,200 1,200 Republic 0 0 0 48,192 48,192
Services,
Inc.
0 0 0 4,100 4,100 Robert Half 0 0 0 132,676 132,676
International
Inc.
0 0 0 7,200 7,200 Waste 0 0 0 247,536 247,536
Management,
Inc.
0 0 0 540,908 540,908
COMMUNICATIONS EQUIPMENT - 0.4%
0 0 0 1,400 1,400 Comverse 0 0 0 27,132 27,132
Technology,
Inc.*
0 0 0 37,700 37,700 QUALCOMM 0 0 0 1,329,302 1,329,302
Incorporated
0 0 0 1,356,434 1,356,434
CONSTRUCTION MATERIALS - 0.0%
0 0 0 1,300 1,300 Martin 0 0 0 104,676 104,676
Marietta
Materials
CONSUMER FINANCE - 0.1%
0 0 0 2,300 2,300 AmeriCredit 0 0 0 56,557 56,557
Corp.*
0 0 0 600 600 CompuCredit 0 0 0 19,602 19,602
Corp.*
0 0 0 1,200 1,200 First 0 0 0 54,960 54,960
Marblehead
Corp.
0 0 0 2,100 2,100 SLM 0 0 0 105,630 105,630
Corporation
0 0 0 236,749 236,749
CONTAINERS & PACKAGING - 0.0%
0 0 0 800 800 Temple- 0 0 0 34,032 34,032
Inland Inc.
DIVERSIFIED CONSUMER SERVICES - 0.0%
0 0 0 1,100 1,100 Apollo 0 0 0 52,052 52,052
Group, Inc.,
Class A*
0 0 0 300 300 ITT 0 0 0 20,226 20,226
Educational
Services,
Inc.*
0 0 0 700 700 Jackson 0 0 0 23,891 23,891
Hewitt Tax
Service,
Inc.
0 0 0 96,169 96,169
DIVERSIFIED FINANCIAL SERVICES - 0.3%
0 0 0 12,500 12,500 CIT Group 0 0 0 573,875 573,875
Inc.
0 0 0 200 200 Chicago 0 0 0 92,240 92,240
Mercantile
Exchange
Holdings,
Inc.
0 0 0 3,300 3,300 Moody's 0 0 0 181,104 181,104
Corporation
0 0 0 847,219 847,219
ELECTRIC UTILITIES - 0.1%
0 0 0 2,900 2,900 Allegheny 0 0 0 119,045 119,045
Energy,
Inc.*
0 0 0 1,200 1,200 Edison 0 0 0 49,656 49,656
International
0 0 0 168,701 168,701
ELECTRICAL EQUIPMENT - 0.0%
0 0 0 1,100 1,100 Rockwell 0 0 0 68,178 68,178
Automation,
Inc.
0 0 0 500 500 Roper 0 0 0 22,600 22,600
Industries,
Inc.
0 0 0 90,778 90,778
ELECTRONIC EQUIPMENT & INSTRUMENTS - 0.1%
0 0 0 700 700 Amphenol 0 0 0 39,256 39,256
Corp., Class
A
0 0 0 2,500 2,500 Arrow 0 0 0 70,650 70,650
Electronics,
Inc.*
0 0 0 3,600 3,600 Ingram 0 0 0 63,468 63,468
Micor, Inc.,
Class A*
0 0 0 400 400 Rogers 0 0 0 22,800 22,800
Corp.*
0 0 0 196,174 196,174
ENERGY EQUIPMENT & SERVICES - 1.3%
0 0 0 8,500 8,500 Baker 0 0 0 679,575 679,575
Hughes, Inc.
0 0 0 800 800 Cameron 0 0 0 40,328 40,328
International
Corp.*
0 0 0 1,500 1,500 Diamond 0 0 0 118,395 118,395
Offshore
Drilling,
Inc.
0 0 0 1,400 1,400 FMC 0 0 0 88,228 88,228
Technologies,
Inc.*
0 0 0 2,200 2,200 Grant 0 0 0 100,122 100,122
Prideco,
Inc.*
0 0 0 14,700 14,700 Hess Corp. 0 0 0 777,630 777,630
0 0 0 3,600 3,600 National- 0 0 0 241,344 241,344
Oilwell,
Inc.*
0 0 0 900 900 Oceaneering 0 0 0 39,348 39,348
International,
Inc.*
0 0 0 29,100 29,100 Schlumberger 0 0 0 1,945,335 1,945,335
Ltd.
0 0 0 800 800 Superior 0 0 0 27,400 27,400
Energy
Services,
Inc.*
0 0 0 400 400 Veritas DGC, 0 0 0 22,908 22,908
Inc.*
0 0 0 4,080,613 4,080,613
FOOD & STAPLES - RETAILING - 0.0%
0 0 0 900 900 Longs Drug 0 0 0 37,008 37,008
Stores Corp.
FOOD PRODUCTS - 0.1%
0 0 0 1,000 1,000 Dean Foods 0 0 0 37,530 37,530
Co.*
0 0 0 3,800 3,800 General 0 0 0 197,220 197,220
Mills, Inc.
0 0 0 2,200 2,200 Hershey 0 0 0 120,934 120,934
Foods Corp.
0 0 0 2,100 2,100 Kellogg Co. 0 0 0 101,157 101,157
0 0 0 456,841 456,841
HEALTH CARE EQUIPMENT & SUPPLIES - 0.2%
0 0 0 600 600 Hologic, 0 0 0 26,946 26,946
Inc.*
0 0 0 200 200 IDEXX 0 0 0 17,700 17,700
Laboratories,
Inc.*
0 0 0 500 500 Intuitive 0 0 0 47,600 47,600
Surgical,
Inc.*
0 0 0 8,800 8,800 Medtronic, 0 0 0 444,576 444,576
Inc.
0 0 0 536,822 536,822
HEALTH CARE PROVIDERS & SERVICES - 0.2%
0 0 0 800 800 CIGNA Corp. 0 0 0 73,000 73,000
0 0 0 4,100 4,100 Cardinal 0 0 0 274,700 274,700
Health, Inc.
0 0 0 2,300 2,300 Caremark Rx, 0 0 0 121,440 121,440
Inc.
0 0 0 600 600 Express 0 0 0 46,218 46,218
Scripts,
Inc., Class
A*
0 0 0 400 400 LCA Vision, 0 0 0 17,260 17,260
Inc.
0 0 0 1,900 1,900 Laboratory 0 0 0 122,398 122,398
Corporation
of America
Holdings*
0 0 0 700 700 Lincare 0 0 0 24,367 24,367
Holdings,
Inc.*
0 0 0 900 900 Quest 0 0 0 54,108 54,108
Diagnostic,
Inc.
0 0 0 500 500 Universal 0 0 0 28,000 28,000
Health
Services,
Inc., Class
B
0 0 0 500 500 WellPoint, 0 0 0 37,250 37,250
Inc.*
0 0 0 798,741 798,741
HEALTH CARE TECHNOLOGY - 0.0%
0 0 0 3,400 3,400 Emdeon 0 0 0 40,902 40,902
Corp.*
0 0 0 1,500 1,500 IMS Health, 0 0 0 41,160 41,160
Inc.
0 0 0 82,062 82,062
HOTELS RESTAURANTS & LEISURE - 0.5%
0 0 0 4,000 4,000 International 0 0 0 154,640 154,640
Game
Technology
0 0 0 9,200 9,200 Las Vegas 0 0 0 570,676 570,676
Sand Corp.*
0 0 0 20,100 20,100 Starbucks 0 0 0 688,626 688,626
Corp.*
0 0 0 2,700 2,700 Yum! Brands, 0 0 0 121,500 121,500
Inc.
0 0 0 1,535,442 1,535,442
HOUSEHOLD DURABLES - 0.2%
0 0 0 2,400 2,400 Beazer Homes 0 0 0 100,056 100,056
USA, Inc.
0 0 0 3,800 3,800 Centex 0 0 0 179,778 179,778
Corporation
0 0 0 2,200 2,200 KB HOME 0 0 0 93,544 93,544
0 0 0 600 600 Meritage 0 0 0 23,262 23,262
Corp.*
0 0 0 1,500 1,500 Pulte Homes, 0 0 0 42,750 42,750
Inc.
0 0 0 1,100 1,100 The Ryland 0 0 0 44,935 44,935
Group, Inc.
0 0 0 1,400 1,400 Standard- 0 0 0 31,262 31,262
Pacific
Corp.
0 0 0 1,100 1,100 Toll 0 0 0 28,127 28,127
Brothers,
Inc.*
0 0 0 1,100 1,100 WCI 0 0 0 17,281 17,281
Communities,
Inc.*
0 0 0 560,995 560,995
HOUSEHOLD PRODUCTS - 0.1%
0 0 0 5,000 5,000 Kimberly- 0 0 0 305,250 305,250
Clark Corp.
INDEPENDENT POWER PRODUCERS - 0.0%
0 0 0 4,400 4,400 Reliant 0 0 0 55,352 55,352
Resources,
Inc.*
INDUSTRIAL CONGLOMERATES - 0.3%
0 0 0 30,700 30,700 General 0 0 0 1,003,583 1,003,583
Electric Co.
INSURANCE - 2.2%
0 0 0 25,950 25,950 The Allstate 0 0 0 1,474,479 1,474,479
Corporation
0 0 0 3,300 3,300 AMBAC 0 0 0 274,263 274,263
Financial
Group, Inc.
0 0 0 2,100 2,100 American 0 0 0 88,431 88,431
Financial
Group, Inc.
0 0 0 11,400 11,400 American 0 0 0 691,638 691,638
International
Group, Inc.
0 0 0 4,200 4,200 Assurant, 0 0 0 202,314 202,314
Inc.
0 0 0 5,400 5,400 Berkley, 0 0 0 194,400 194,400
W.R. Corp.
0 0 0 300 300 CNA 0 0 0 10,185 10,185
Financial
Corp.*
0 0 0 7,800 7,800 The Chubb 0 0 0 393,276 393,276
Corporation
0 0 0 1,800 1,800 Commerce 0 0 0 54,378 54,378
Group, Inc.
0 0 0 1,300 1,300 Hanover 0 0 0 60,164 60,164
Insurance
Group, Inc.*
0 0 0 9,100 9,100 Hartford 0 0 0 772,044 772,044
Financial
Services
Group, Inc.
0 0 0 500 500 LandAmerica 0 0 0 31,915 31,915
Financial
Group, Inc.
0 0 0 4,000 4,000 MBIA 0 0 0 235,240 235,240
Insurance
Corp.
0 0 0 25,200 25,200 Metlife, 0 0 0 1,310,400 1,310,400
Inc.
0 0 0 1,400 1,400 Nationwide 0 0 0 63,112 63,112
Financial
Services,
Inc. - Class
A
0 0 0 1,200 1,200 Philadelphia 0 0 0 40,644 40,644
Consolidated
Holding
Corp.*
0 0 0 1,800 1,800 Protective 0 0 0 83,358 83,358
Life
Corporation
0 0 0 2,800 2,800 Radian 0 0 0 172,284 172,284
Group, Inc.
0 0 0 1,600 1,600 Reinsurance 0 0 0 79,312 79,312
Group of
America,
Incorporated
0 0 0 4,000 4,000 SAFECO 0 0 0 214,880 214,880
Corporation
0 0 0 700 700 Selective 0 0 0 35,700 35,700
Insurance
Group, Inc.
0 0 0 900 900 StanCorp 0 0 0 38,781 38,781
Financial
Group, Inc.
0 0 0 16,900 16,900 The St. Paul 0 0 0 774,020 774,020
Travelers
Companies,
Inc.
0 0 0 400 400 Torchmark 0 0 0 24,188 24,188
Corporation
0 0 0 500 500 Unitrin, 0 0 0 20,000 20,000
Inc.
0 0 0 7,339,406 7,339,406
INTERNET & CATALOG RETAIL - 0.0%
0 0 0 700 700 Priceline.com, 0 0 0 18,816 18,816
Inc.*
IT SERVICES - 0.1%
0 0 0 2,500 2,500 Cognizant 0 0 0 163,725 163,725
Technology
Solutions
Corp.*
0 0 0 1,600 1,600 Computer 0 0 0 83,824 83,824
Sciences
Corp.*
0 0 0 900 900 DST Systems, 0 0 0 50,679 50,679
Inc.*
0 0 0 1,800 1,800 Fiserv, 0 0 0 78,588 78,588
Inc.*
0 0 0 600 600 Global 0 0 0 25,524 25,524
Payments,
Inc.
0 0 0 402,340 402,340
LEISURE EQUIPMENT & PRODUCTS - 0.0%
0 0 0 1,500 1,500 Brunswick 0 0 0 44,355 44,355
Corp.
MACHINERY - 0.2%
0 0 0 600 600 Bucyrus 0 0 0 29,226 29,226
International,
Inc.
0 0 0 1,500 1,500 Danaher 0 0 0 97,800 97,800
Corp.
0 0 0 3,700 3,700 Deere & 0 0 0 268,509 268,509
Company
0 0 0 800 800 Dover Corp. 0 0 0 37,712 37,712
0 0 0 800 800 Gardner 0 0 0 27,720 27,720
Denver,
Inc.*
0 0 0 1,000 1,000 Ingersoll- 0 0 0 35,800 35,800
Rand Co.,
Class A
0 0 0 2,800 2,800 Joy Global, 0 0 0 105,056 105,056
Inc.
0 0 0 700 700 SPX Corp. 0 0 0 38,255 38,255
0 0 0 2,300 2,300 Timken Co. 0 0 0 74,060 74,060
0 0 0 714,138 714,138
MARINE - 0.0%
0 0 0 700 700 American 0 0 0 38,465 38,465
Commercial
Lines, Inc.*
MEDIA - 0.6%
0 0 0 5,700 5,700 Clear 0 0 0 165,015 165,015
Channel
Communications,
Inc.
0 0 0 13,900 13,900 Comcast 0 0 0 477,882 477,882
Corp., Class
A*
0 0 0 2,600 2,600 Discovery 0 0 0 34,632 34,632
Holding Co.,
Class A*
0 0 0 4,600 4,600 McGraw-Hill 0 0 0 258,980 258,980
Cos., Inc.
0 0 0 39,800 39,800 News Corp., 0 0 0 765,752 765,752
Inc.
0 0 0 2,300 2,300 Omnicom 0 0 0 203,573 203,573
Group, Inc.
0 0 0 9,500 9,500 Time Warner, 0 0 0 156,750 156,750
Inc.
0 0 0 2,062,584 2,062,584
METALS & MINING - 0.1%
0 0 0 500 500 Commercial 0 0 0 11,345 11,345
Metals
Company
0 0 0 1,800 1,800 Phelps Doge 0 0 0 157,212 157,212
Corp.
0 0 0 600 600 Schnitzer 0 0 0 20,340 20,340
Steel
Industries,
Inc. - Class
A
0 0 0 3,900 3,900 United 0 0 0 245,973 245,973
States Steel
Corporation
0 0 0 1,900 1,900 Worthington 0 0 0 38,798 38,798
Industries,
Inc.
0 0 0 473,668 473,668
MULTILINE RETAIL - 0.1%
0 0 0 4,700 4,700 Dollar Tree 0 0 0 63,074 63,074
Stores,
Inc.*
0 0 0 4,400 4,400 Target Corp. 0 0 0 202,048 202,048
0 0 0 265,122 265,122
MULTI-UTILITIES & UNREGULATED POWER - 0.0%
0 0 0 3,800 3,800 PG&E Corp. 0 0 0 158,384 158,384
OIL & GAS - 1.3%
0 0 0 22,500 22,500 Anadarko 0 0 0 1,029,150 1,029,150
Petroleum
Corporation
0 0 0 2,900 2,900 Apache 0 0 0 204,363 204,363
Corporation
0 0 0 30,400 30,400 ChevronTexaco 0 0 0 1,999,712 1,999,712
Corporation
0 0 0 10,000 10,000 Devon Energy 0 0 0 646,400 646,400
Corp.
0 0 0 700 700 General 0 0 0 25,410 25,410
Maritime
Corp.
0 0 0 500 500 Marathon Oil 0 0 0 45,320 45,320
Corp.
0 0 0 1,600 1,600 OMI 0 0 0 35,296 35,296
Corporation
0 0 0 800 800 Overseas 0 0 0 51,512 51,512
Shipholding
Group, Inc.
0 0 0 2,000 2,000 Pogo 0 0 0 88,540 88,540
Producing
Company
0 0 0 600 600 Swift Energy 0 0 0 28,800 28,800
Company*
0 0 0 1,400 1,400 Tesoro 0 0 0 104,720 104,720
Petroleum
Corp.
0 0 0 4,259,223 4,259,223
PAPER & FOREST PRODUCTS - 0.0%
0 0 0 2,900 2,900 Louisiana- 0 0 0 58,000 58,000
Pacific
Corporation
PHARMACEUTICALS- 0.1%
0 0 0 3,400 3,400 Forest 0 0 0 157,454 157,454
Laboratories,
Inc., Class
A*
0 0 0 4,300 4,300 Schering 0 0 0 87,892 87,892
Plough Corp.
0 0 0 245,346 245,346
REAL ESTATE INVESTMENT TRUSTS - 1.4%
0 0 0 3,000 3,000 Alexandria 0 0 0 283,260 283,260
Real Estate
Equities,
Inc.
0 0 0 5,750 5,750 Archstone- 0 0 0 301,703 301,703
Smith Trust
0 0 0 2,700 2,700 Avalonbay 0 0 0 315,684 315,684
Communities,
Inc.
0 0 0 3,650 3,650 Boston 0 0 0 358,430 358,430
Properties,
Inc.
0 0 0 4,950 4,950 Developers 0 0 0 261,261 261,261
Diversified
Realty
Corporation
0 0 0 6,100 6,100 Equity 0 0 0 283,711 283,711
Residential
Properties
Trust
0 0 0 6,100 6,100 General 0 0 0 278,404 278,404
Growth
Properties,
Inc.
0 0 0 3,500 3,500 Health Care 0 0 0 95,970 95,970
Property
Investors,
Inc.
0 0 0 2,800 2,800 Hospitality 0 0 0 121,996 121,996
Properties
Trust
0 0 0 7,200 7,200 Kimco Realty 0 0 0 282,528 282,528
Corporation
0 0 0 4,100 4,100 Plum Creek 0 0 0 139,646 139,646
Timber
Company,
Inc.
0 0 0 3,000 3,000 Post 0 0 0 144,030 144,030
Properties,
Inc.
0 0 0 6,400 6,400 ProLogis 0 0 0 354,240 354,240
0 0 0 3,000 3,000 Public 0 0 0 240,870 240,870
Storage,
Inc.
0 0 0 8,500 8,500 Reckson 0 0 0 378,505 378,505
Associates
Realty Corp.
0 0 0 3,000 3,000 Simon 0 0 0 256,590 256,590
Property
Group, Inc.
0 0 0 7,000 7,000 Tanger 0 0 0 230,300 230,300
Factory
Outlet
Centers,
Inc.
0 0 0 3,650 3,650 Vornado 0 0 0 381,607 381,607
Realty Trust
0 0 0 4,708,735 4,708,735
ROAD & RAIL - 0.1%
0 0 0 400 400 AMERCO* 0 0 0 35,280 35,280
0 0 0 500 500 Arkansas 0 0 0 22,215 22,215
Best
Corporation
0 0 0 1,100 1,100 CSX Corp. 0 0 0 66,748 66,748
0 0 0 1,800 1,800 Swift 0 0 0 48,150 48,150
Transportation
Co., Inc.*
0 0 0 500 500 Union 0 0 0 42,500 42,500
Pacific
Corp.
0 0 0 214,893 214,893
SEMICONDUCTOR & SEMICONDUCTOR EQUIPMENT - 0.5%
0 0 0 6,500 6,500 Altera 0 0 0 112,515 112,515
Corporation*
0 0 0 3,200 3,200 Analog 0 0 0 103,456 103,456
Devices,
Inc.
0 0 0 700 700 Atheros 0 0 0 11,564 11,564
Communications,
Inc.*
0 0 0 7,500 7,500 Linear 0 0 0 242,625 242,625
Technology
Corporation
0 0 0 12,400 12,400 Marvell 0 0 0 230,020 230,020
Technology
Group Ltd.*
0 0 0 7,500 7,500 Maxim 0 0 0 220,350 220,350
Integrated
Products,
Inc.*
0 0 0 1,700 1,700 Novellus 0 0 0 43,027 43,027
Systems,
Inc.*
0 0 0 20,600 20,600 Texas 0 0 0 613,468 613,468
Instruments,
Inc.
0 0 0 1,577,025 1,577,025
SOFTWARE - 0.6%
0 0 0 1,500 1,500 Informatica 0 0 0 20,955 20,955
Corp.*
0 0 0 80,100 80,100 Microsoft 0 0 0 1,924,803 1,924,803
Corp.
0 0 0 2,400 2,400 Red Hat, 0 0 0 56,832 56,832
Inc.*
0 0 0 2,002,590 2,002,590
SPECIALTY RETAIL - 0.1%
0 0 0 500 500 The 0 0 0 27,910 27,910
Children's
Place Retail
Stores,
Inc.*
0 0 0 10,600 10,600 The Gap, 0 0 0 183,910 183,910
Inc.
0 0 0 1,100 1,100 Guess?, 0 0 0 46,860 46,860
Inc.*
0 0 0 1,200 1,200 Pacific 0 0 0 20,016 20,016
Sunwear of
California*
0 0 0 1,050 1,050 Select 0 0 0 21,158 21,158
Comfort
Corporation*
0 0 0 800 800 Talbots, 0 0 0 16,504 16,504
Inc.
0 0 0 700 700 Tiffany & 0 0 0 22,113 22,113
Co.
0 0 0 800 800 Zale Corp.* 0 0 0 20,488 20,488
0 0 0 358,959 358,959
TEXTILES, APPAREL & LUXURY GOODS - 0.1%
0 0 0 8,100 8,100 Coach, Inc.* 0 0 0 232,551 232,551
0 0 0 600 600 Under 0 0 0 24,090 24,090
Armour,
Inc., Class
A*
0 0 0 256,641 256,641
THRIFTS & MORTGAGE FINANCE - 0.1%
0 0 0 1,400 1,400 Corus 0 0 0 32,326 32,326
Bankshares,
Inc.
0 0 0 800 800 Downey 0 0 0 53,080 53,080
Financial
Corp.
0 0 0 800 800 FirstFed 0 0 0 45,160 45,160
Financial
Corp.*
0 0 0 1,800 1,800 Fremont 0 0 0 31,950 31,950
General
Corp.
0 0 0 3,100 3,100 MGIC 0 0 0 176,421 176,421
Investment
Corporation
0 0 0 2,900 2,900 The PMI 0 0 0 123,134 123,134
Group, Inc.
0 0 0 462,071 462,071
TOBACCO - 0.1%
0 0 0 9,000 9,000 Loews Corp. 0 0 0 333,540 333,540
TRADING COMPANIES & DISTRIBUTORS - 0.0%
0 0 0 900 900 Applied 0 0 0 20,988 20,988
Industrial
Technologies,
Inc.
0 0 0 1,000 1,000 WESCO 0 0 0 58,250 58,250
International,
Inc.*
0 0 0 79,238 79,238
TOTAL COMMON 0 0 0 45,919,346 45,919,346
STOCKS (COST
$42,392,816)
ADJUSTABLE RATE MORTGAGES- 0.1%
$0 $0 $0 $166,334 $166,334 Federal Home
Loan
Mortgage
Corp. ARM
420173, 30
Year, 5.75%,
4/1/2030
(Identified 0 0 0 168,727 168,727
Cost
$168,791)
ASSET-BACKED SECURITIES- 1.0%
0 0 0 1,000,000 1,000,000 American 0 0 0 968,937 968,937
Home
Mortgage
Investment
Trust 2004-
3, Class
6A4, 5.01%,
10/25/2034
0 0 0 62,546 62,546 CS First 0 0 0 62,088 62,088
Boston
Mortgage
Securities
Corp. 2002-
HE4, Class
AF, 5.51%,
8/25/2032
0 0 0 698,711 698,711 Community 0 0 0 684,879 684,879
Program Loan
Trust 1987-
A, Class A4,
4.50%,
10/1/2018
0 0 0 452,714 452,714 MMCA 0 0 0 448,825 448,825
Automobile
Trust 2002-
2, Class C,
5.55%,
3/15/2010
0 0 0 500,000 500,000 Nissan Auto 0 0 0 500,607 500,607
Receivables
Owner Trust
2004-C,
Class A4,
5.408%,
3/15/2010
0 0 0 500,000 500,000 People's 0 0 0 481,865 481,865
Choice Home
Loan
Securities
Trust 2004-
1, Class B1,
5.00%,
6/25/2034
TOTAL ASSET- 0 0 0 3,147,201 3,147,201
BACKED
SECURITIES
(IDENTIFIED
COST
$3,177,096)
COLLATERALIZED MORTGAGE OBLIGATIONS- 5.0%
0 0 0 438,578 438,578 Banc of 0 0 0 449,757 449,757
America
Commercial
Mortgage
2000-2,
Class A1,
7.02%,
9/15/2032
0 0 0 85,338 85,338 Banc of 0 0 0 84,074 84,074
America
Funding
Corp. 2003-
1, Class A1,
6.00%,
5/20/2033
0 0 0 482,690 482,690 Bear Stearns 0 0 0 361,143 361,143
Asset Backed
Securities,
Inc. 2005-
AC6, Class
21PO, 0.00%,
9/25/2020
0 0 0 6,315 6,315 Bear Stearns 0 0 0 6,204 6,204
Mortgage
Securities,
Inc. 1997-6,
Class 1A,
6.66%,
3/25/2031
0 0 0 544,180 544,180 CS First 0 0 0 397,972 397,972
Boston
Mortgage
Securities
Corp. 2003-
17, Class
DB4, 5.38%,
6/25/2033
0 0 0 340,174 340,174 Chase 0 0 0 330,916 330,916
Mortgage
Finance
Corp. 2003-
S1, Class
1A1, 5.25%,
2/25/2018
0 0 0 1,000,000 1,000,000 Citicorp 0 0 0 962,265 962,265
Mortgage
Securities,
Inc. 2003-
11, Class
1A4, 5.25%,
12/25/2033
0 0 0 200,000 200,000 Countrywide 0 0 0 187,983 187,983
Alternative
Loan Trust
2005-28CB,
Class 1A4,
5.50%,
8/25/2035
0 0 0 18,858 18,858 Federal Home 0 0 0 18,858 18,858
Loan
Mortgage
Corp. REMIC
1311 K,
7.00%
7/15/2022
0 0 0 37,436 37,436 Federal Home 0 0 0 37,436 37,436
Loan
Mortgage
Corp. REMIC
1384 D,
7.00%
9/15/2022
0 0 0 46,572 46,572 Federal Home 0 0 0 47,854 47,854
Loan
Mortgage
Corp. REMIC
1595 D,
7.00%
10/15/2013
0 0 0 750,000 750,000 Federal Home 0 0 0 731,411 731,411
Loan
Mortgage
Corp. REMIC
1686 PJ,
5.00%
2/15/2024
0 0 0 112,696 112,696 Federal Home 0 0 0 106,335 106,335
Loan
Mortgage
Corp. REMIC
2003-79 NM,
4.00%
5/25/2022
0 0 0 115,361 115,361 Federal Home 0 0 0 115,540 115,540
Loan
Mortgage
Corp. REMIC
2366 VG,
6.00%
6/15/2011
0 0 0 531,253 531,253 Federal Home 0 0 0 530,785 530,785
Loan
Mortgage
Corp. REMIC
2410 OE,
6.38%
2/15/2032
0 0 0 75,000 75,000 Federal Home 0 0 0 74,631 74,631
Loan
Mortgage
Corp. REMIC
2497 JH,
6.00%
9/15/2032
0 0 0 125,000 125,000 Federal Home 0 0 0 123,164 123,164
Loan
Mortgage
Corp. REMIC
2626 NA,
5.00%
6/15/2023
0 0 0 573,891 573,891 Federal Home 0 0 0 507,093 507,093
Loan
Mortgage
Corp. REMIC
2647 A,
3.25%
4/15/2032
0 0 0 237,327 237,327 Federal Home 0 0 0 171,160 171,160
Loan
Mortgage
Corp. REMIC
2648 TS,
5.06%
7/15/2033
0 0 0 500,000 500,000 Federal Home 0 0 0 494,227 494,227
Loan
Mortgage
Corp. REMIC
2663 LN,
4.50%
1/15/2022
0 0 0 150,000 150,000 Federal Home 0 0 0 138,329 138,329
Loan
Mortgage
Corp. REMIC
2672 NB,
4.00%
5/15/2016
0 0 0 164,195 164,195 Federal Home 0 0 0 163,204 163,204
Loan
Mortgage
Corp. REMIC
2676 JA,
4.00%
5/15/2016
0 0 0 153,084 153,084 Federal Home 0 0 0 145,775 145,775
Loan
Mortgage
Corp. REMIC
2756 NA,
5.00%
2/15/2024
0 0 0 370,502 370,502 Federal 0 0 0 400,733 400,733
National
Mortgage
Association
REMIC 1990-
28 X, 9.00%,
3/25/2020
0 0 0 119,105 119,105 Federal 0 0 0 124,089 124,089
National
Mortgage
Association
REMIC 1992-
188 PZ,
7.50%,
10/25/2022
0 0 0 92,856 92,856 Federal 0 0 0 102,389 102,389
National
Mortgage
Association
REMIC 1993-
113 SB,
9.75%,
7/25/2023
0 0 0 745,905 745,905 Federal 0 0 0 762,577 762,577
National
Mortgage
Association
REMIC 1997-
81 PD,
6.35%,
12/18/2027
0 0 0 21,619 21,619 Federal 0 0 0 22,484 22,484
National
Mortgage
Association
REMIC 2001-
37 GA,
8.00%,
7/25/2016
0 0 0 440,406 440,406 Federal 0 0 0 448,823 448,823
National
Mortgage
Association
REMIC 2002-1
HC, 6.50%,
2/25/2022
0 0 0 301,369 301,369 Federal 0 0 0 307,089 307,089
National
Mortgage
Association
REMIC 2002-
22 G, 6.50%,
4/25/2032
0 0 0 325,033 325,033 Federal 0 0 0 299,839 299,839
National
Mortgage
Association
REMIC 2003-
28 GA,
4.00%,
10/25/2032
0 0 0 150,000 150,000 Federal 0 0 0 141,896 141,896
National
Mortgage
Association
REMIC 2003-
32 KC,
5.00%,
5/25/2018
0 0 0 23,137 23,137 Federal 0 0 0 21,077 21,077
National
Mortgage
Association
REMIC 2003-
35 UC,
3.75%,
5/25/2033
0 0 0 922,562 922,562 Federal 0 0 0 827,810 827,810
National
Mortgage
Association
REMIC 2003-
42 CA,
4.00%,
5/25/2033
0 0 0 417,682 417,682 Federal 0 0 0 370,840 370,840
National
Mortgage
Association
REMIC 2003-
49 JE,
3.00%,
4/25/2033
0 0 0 318,623 318,623 Federal 0 0 0 289,962 289,962
National
Mortgage
Association
REMIC 2003-
66 MB,
3.50%,
5/25/2023
0 0 0 867,706 867,706 Federal 0 0 0 798,525 798,525
National
Mortgage
Association
REMIC 2004-2
JA, 5.00%,
2/25/2024
0 0 0 188,881 188,881 Federal 0 0 0 200,319 200,319
National
Mortgage
Association
REMIC G92-44
ZQ, 8.00%,
7/25/2022
0 0 0 279,535 279,535 Government 0 0 0 291,431 291,431
National
Mortgage
Association
REMIC 1996-
10 PD,
7.50%,
6/20/2026
0 0 0 24,940 24,940 Government 0 0 0 25,428 25,428
National
Mortgage
Association
REMIC 1999-
29 PB,
7.25%,
7/16/2028
0 0 0 68,035 68,035 Government 0 0 0 68,131 68,131
National
Mortgage
Association
REMIC 2002-
17 B, 6.00%,
3/20/2032
0 0 0 497,046 497,046 Government 0 0 0 429,520 429,520
National
Mortgage
Association
REMIC 2003-
67 ZA,
5.00%,
8/20/2033
0 0 0 194,465 194,465 Indymac Home 0 0 0 195,114 195,114
Equity Loan
Asset-Backed
Trust 2004-
C, Class
1A1, 5.70%,
3/25/2035
0 0 0 705,857 705,857 MASTR Asset 0 0 0 684,406 684,406
Securitization
Trust 2003-
6, Class
9A1, 4.25%,
7/25/2033
0 0 0 335,807 335,807 Structured 0 0 0 319,330 319,330
Asset
Securities
Corp. 2003-
212A2, Class
2A2, 5.25,
8/25/2033
0 0 0 472,422 472,422 Vendee 0 0 0 482,605 482,605
Mortgage
Trust 1994-
3A, Class
1ZB, 6.50%,
9/15/2024
0 0 0 1,000,000 1,000,000 Washington 0 0 0 970,908 970,908
Mutual 2003-
AR9, Class
1A6, 4.05%,
9/25/2033
0 0 0 100,000 100,000 Washington 0 0 0 100,064 100,064
Mutual Bank,
7.50%,
8/15/2006
0 0 0 656,492 656,492 Wells Fargo 0 0 0 632,720 632,720
Mortgage
backed
Securities
Trust 2004-
8, Class A6,
5.00%,
8/25/2019
0 0 0 1,000,000 1,000,000 Wells Fargo 0 0 0 929,129 929,129
Mortgage
backed
Securities
Trust 2005-
3, Class
A14, 5.50%,
5/25/2035
TOTAL 0 0 0 16,433,354 16,433,354
COLLATERALIZED
MORTGAGE
OBLIGATIONS
(IDENTIFIED
COST
$16,828,594)
CORPORATE NOTES & BONDS - 0.7%
COMMUNICATIONS - TELECOM WIRELESS - 0.1%
0 0 0 400,000 400,000 GTE North, 0 0 0 407,859 407,859
Inc., Deb.,
Series D,
6.90%,
11/1/2008
CONSUMER CYCLICAL - AUTOMOTIVE - 0.1%
0 0 0 300,000 300,000 General 0 0 0 298,346 298,346
Motors
Acceptance
Corporation
Notes
6.125%,
02/01/2007
CONSUMER NON-CYCLICAL - SUPERMARKETS - 0.1%
0 0 0 250,000 250,000 Safeway, 0 0 0 248,071 248,071
Inc. Notes
4.800%,
07/16/2007
FINANCIAL INSTITUTIONS - BANKING - 0.1%
0 0 0 200,000 200,000 CIT Group, 0 0 0 199,207 199,207
Inc.,
Unsecd.
Note,
2.875%,
9/29/2006
FINANCIAL INSTITUTIONS - BROKERAGE - 0.1%
0 0 0 400,000 400,000 Merrill 0 0 0 399,480 399,480
Lynch & Co.,
Inc., Sr.
Unsub.,
Series CORE,
5.898%,
1/31/2008
FINANCIAL INSTITUTIONS - FINANCE NONCAPTIVE- 0.2%
0 0 0 380,000 380,000 International 0 0 0 379,968 379,968
Lease
Finance
Corp., Note,
5.75%,
10/15/2006
0 0 0 300,000 300,000 SLM 0 0 0 290,996 290,996
Corporation
Notes
3.950%,
08/15/2008
0 0 0 670,964 670,964
TOTAL 0 0 0 2,223,927 2,223,927
CORPORATE
NOTES &
BONDS
(IDENTIFIED
COST
$2,258,512)
GOVERNMENT AGENCIES- 1.5%
0 0 0 1,000,000 1,000,000 Federal Home 0 0 0 997,821 997,821
Loan Bank
System,
Bond, 3.50%,
9/8/2006
0 0 0 1,000,000 1,000,000 Federal Home 0 0 0 999,656 999,656
Loan
Mortgage
Corp.,
5.25%,
7/18/2011
0 0 0 1,000,000 1,000,000 Federal Home 0 0 0 960,200 960,200
Loan
Mortgage
Corp.,
Unsecd.
Note,
4.125%,
7/12/2010
0 0 0 2,000,000 2,000,000 Federal 0 0 0 2,002,384 2,002,384
National
Mortgage
Association,
Note, 5.25%,
1/15/2009
TOTAL 0 0 0 4,960,061 4,960,061
GOVERNMENT
AGENCIES
(IDENTIFIED
COST
$4,983,096)
MORTGAGE-BACKED SECURITIES- 0.2%
0 0 0 252,500 252,500 Federal Home 0 0 0 245,762 245,762
Loan
Mortgage
Corp., Pool
E01538,
5.00%,
12/1/2018
0 0 0 31,714 31,714 Federal 0 0 0 32,433 32,433
National
Mortgage
Association,
Pool 408761
7.00%,
12/1/2012
0 0 0 13,263 13,263 Federal 0 0 0 13,664 13,664
National
Mortgage
Association,
Pool 512255,
7.50%,
9/1/2014
0 0 0 44,159 44,159 Federal 0 0 0 45,496 45,496
National
Mortgage
Association,
Pool 609554,
7.50%,
10/1/2016
0 0 0 363,324 363,324 Federal 0 0 0 348,121 348,121
National
Mortgage
Association,
Pool 754886,
4.50%,
9/1/2018
TOTAL 0 0 0 685,476 685,476
MORTGAGE-
BACKED
SECURITIES
(IDENTIFIED
COST
$705,252)
EXCHANGE TRADED FUNDS - 1.1%
0 0 0 54,950 54,950 iShares MSCI 0 0 0 3,622,304 3,622,304
EAFE Index
Fund
(Identified
Cost
$1,945,943)
MUTUAL FUND - 74.8%
2,584,533 5,083,710 4,032,209 0 11,700,452 (2) Capital 32,236,389 63,408,270 50,292,121 0 145,936,780
Appreciation
Core Fund
1,736 1,570 278 0 3,584 (2) Emerging 33,535 30,314 5,365 0 69,214
Markets
Fixed Income
Core Fund
867,589 730,120 145,489 0 1,743,198 (2) 8,519,722 7,169,778 1,428,702 0 17,118,202
Federated
Intermediate
Corporate
Bond Fund
150,921 126,967 25,277 0 303,165 (2) 1,639,005 1,378,864 274,506 0 3,292,375
Federated
International
Bond Fund,
Class A
Shares
246,116 484,563 385,586 0 1,116,265 (2) 2,852,488 5,616,089 4,468,941 0 12,937,518
Federated
International
Capital
Appreciation
Fund, Class
A Shares
1,473,438 1,239,957 246,940 0 2,960,335 (2) 14,351,283 12,077,176 2,405,194 0 28,833,653
Federated
Mortgage
Core
Portfolio
648,672 545,753 108,671 0 1,303,096 (2) 7,051,066 5,932,335 1,181,253 0 14,164,654
Federated
U.S.
Government
Bond Fund
701,439 590,324 117,646 0 1,409,409 (2) 7,568,532 6,369,597 1,269,399 0 15,207,528
Federated
U.S.
Government
Securities
Fund, 2-5
Years,
Institutional
Shares
328,871 276,686 55,104 0 660,661 (2) High 2,183,702 1,837,196 365,890 0 4,386,788
Yield Bond
Portfolio
0 0 0 2,288,104 2,288,104 SSgA Prime 0 0 0 2,288,104 2,288,104
Money Market
Fund (At Net
Asset Value)
TOTAL MUTUAL 76,435,722 103,819,619 61,691,371 2,288,104 244,234,816
FUNDS
(IDENTIFIED
COST
$227,886,730)
REPURCHASE AGREEMENT - 1.6%
$1,179,000 $2,627,000 $1,575,000 $0 $5,381,000 Bank of 1,179,000 2,627,000 1,575,000 0 5,381,000
America
N.A., 5.29%,
dated
7/31/2006,
with a
maturity of
8/1/2006 (at
Amortized
Cost)
TOTAL 77,614,722 106,446,619 63,266,371 79,448,500 326,776,212
INVESTMENTS
(IDENTIFIED
COST
$305,727,830)
- 99.9%
OTHER ASSETS 118,525 74,551 (96,805) 170,965 267,236
AND
LIABILITIES
- 0.1%
TOTAL NET $ $106,521,170 $63,169,566 $79,619,465 $327,043,448
ASSETS - 77,733,247
100%
Note: The categories of investments are shown as a percentage of total net
assets at July 31, 2006.
* Non Income Producing
(1) MDT Balanced Fund was reorganized into Federated MDT Balanced Fund as of
the close of business on December 8, 2006. Prior to the reorganization,
Federated MDT Balanced Fund had no investment operations. Federated MDT
Balanced Fund is the successor to MDT Balanced Fund.
(2) All or a portion of this security will be sold as a result of the
reorganization.
- 8 -
FEDERATED CONSERVATIVE ALLOCATION FUND
FEDERATED MODERATE ALLOCATION FUND
FEDERATED GROWTH ALLOCATION
FUND
FEDERATED MDT BALANCED FUND
(A)
PRO FORMA COMBINING
STATEMENTS OF ASSETS &
LIABILITIES
JULY 31, 2006 (UNAUDITED)
FEDERATED FEDERATED FEDERATED FEDERATED
CONSERVATIVE MODERATE GROWTH MDT
ALLOCATION ALLOCATION ALLOCATION BALANCED PRO FORMA PRO FORMA
FUND FUND FUND FUND ADJUSTMENT COMBINED
ASSETS:
Investments in securities, $77,614,722 $106,446,619 $63,266,371 $79,448,500 $0 $326,776,212
at value
Cash 835 361 26,063 0 27,857
598
Income receivable 157,576 33,685 194,901 0 569,210
183,048
Receivable for investments 0 0 1,980 3,925,155 0 3,927,135
sold
Receivable for shares sold 3,011 0 103,837 0 109,591
2,743
Total assets 0 331,410,005
77,801,111 106,608,041 63,302,397 83,698,456
LIABILITIES:
Payable for investments 0 0 0 3,953,075 0 3,953,075
purchased
Payable for shares redeemed 0 0 18,492 25,000 0 43,492
Payable for investment 0 0 0 23,284 0 23,284
adviser fee
Payable for 69 70 69 10,178 0 10,386
Directors'/Trustees' fees
Payable for distribution 11,763 18,260 13,369 3,025 0 46,417
services fees
Payable for shareholder 8,571 13,585 9,679 0 0 31,835
services fees
Accrued expenses 47,461 54,956 91,222 64,429 0 258,068
Total liabilities 67,864 86,871 132,831 4,078,991 0 4,366,557
NET ASSETS $77,733,247 $106,521,170 $63,169,566 $79,619,465 $0 $327,043,448
NET ASSETS CONSIST OF:
Paid-in capital $74,001,035 $99,135,745 $63,750,578 $68,844,460 $0 $305,731,818
Net unrealized appreciation 7,464,026 5,555,990 4,700,296 0 21,048,382
of investments 3,328,070
Accumulated net realized (354,537) (6,172,721) 5,379,478 0 (965,164)
gain (loss) on investments 182,616
Undistributed net 0 1,228,412
investment income 221,526 275,936 35,719 695,231
Total Net Assets $77,733,247 $106,521,170 $63,169,566 $79,619,465 $0 $327,043,448
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PROCEEDS PER SHARE
INSTITUTIONAL SHARES:
NET ASSETS $49,602,897 $31,225,742 $73,747,134 (b) $73,747,134
$62,930,696 $(143,759,335)
SHARES OUTSTANDING 4,453,677 5,066,798 2,350,322 5,573,783 (b) 5,573,783
(11,870,797)
NET ASSET VALUE PER SHARE $11.14 $12.42 $13.29 $13.23 $13.23
OFFERING PRICE PER SHARE $11.14 $12.42 $13.29 $13.23 $13.23
REDEMPTION PROCEEDS PER $11.14 $12.42 $13.29 $13.23 $13.23
SHARE
CLASS A SHARES:
NET ASSETS $ - $ - $ - $1,962,276 (b) $
$143,759,335 145,721,611
SHARES OUTSTANDING 0 0 0 148,492 (b) 11,031,107
10,882,615
NET ASSET VALUE PER SHARE $0.00 $0.00 $0.00 $13.21 $13.21
OFFERING PRICE PER SHARE* $0.00 $0.00 $0.00 $13.98 * $13.98 *
REDEMPTION PROCEEDS PER $0.00 $0.00 $0.00 $13.21 $13.21
SHARE
CLASS C SHARES:
NET ASSETS $ - $ - $ - $3,910,055 (b) $
$103,664,648 107,574,703
SHARES OUTSTANDING 0 0 0 297,817 (b) 8,193,068
7,895,251
NET ASSET VALUE PER SHARE $0.00 $0.00 $0.00 $13.13 $13.13
OFFERING PRICE PER SHARE $0.00 $0.00 $0.00 $13.13 $13.13
REDEMPTION PROCEEDS PER $0.00 $0.00 $0.00 $13.00 ** $13.00 **
SHARE
SELECT SHARES:
NET ASSETS $28,130,350 $31,943,824 $ - (b) $
$43,590,474 $(103,664,648) -
SHARES OUTSTANDING 3,514,267 2,420,346 0 (b) 0
2,526,139 (8,460,752)
NET ASSET VALUE PER SHARE $11.14 $12.40 $13.20 $0.00 $0.00
OFFERING PRICE PER SHARE $11.14 $12.40 $13.20 $0.00 $0.00
REDEMPTION PROCEEDS PER $11.14 $12.40 $13.20 $0.00 $0.00
SHARE
Investments, at identified $74,286,652 $98,982,593 $57,710,381 $74,748,204 $0 $305,727,830
cost
Investments in affiliated $76,435,722 $103,819,619 $61,691,371 $0 $0 $241,946,712
issuers
*Computation of offering price per share 100/94.50 of net
asset value.
**Computation of redemption price per share 100/99 of net
asset value.
(a) MDT Balanced Fund was reorganized into Federated MDT Balanced Fund as of the close of business on December
8, 2006. Prior to the reorganization, Federated MDT Balanced Fund had no investment operations. Federated MDT
Balanced Fund is the successor to MDT Balanced Fund.
(b) Adjustment to reflect share balance as a result of
the combination.
- 9 -
FEDERATED CONSERVATIVE
ALLOCATION FUND
FEDERATED MODERATE ALLOCATION
FUND
FEDERATED GROWTH ALLOCATION
FUND
FEDERATED MDT BALANCED FUND (1)
PRO FORMA COMBINING STATEMENTS
OF OPERATIONS
FOR THE YEAR ENDED JULY 31,
2006 (UNAUDITED)
FEDERATED FEDERATED FEDERATED FEDERATED
CONSERVATIVE MODERATE GROWTH MDT
ALLOCATION ALLOCATION ALLOCATION BALANCED PRO FORMA PRO FORMA
FUND FUND FUND FUND ADJUSTMENT COMBINED
INVESTMENT INCOME:
Dividends $2,308,159 $2,001,680 $471,448 $838,271 $0 $5,619,558
Interest 39,040 72,044 71,431 1,469,679 0 1,652,194
Investment income allocated 735,552 1,395,942 1,066,222 0 0 3,197,716
from affiliated partnerships
TOTAL INVESTMENT INCOME: 3,082,751 3,469,666 1,609,101 2,307,950 0 10,469,468
EXPENSES:
Investment advisory fee 648,825 893,261 532,690 562,720 0 2,637,496
Administrative personnel and 190,040 190,128 190,011 97,506 (210,491) (a) 457,194
services fee
Custodian fees 5,910 7,461 5,905 32,807 31,793 (b) 83,876
Transfer and dividend 107,069 133,315 153,132 95,765 (290,541) (c) 198,740
disbursing agent fees and
expenses
Directors'/Trustees' fees 4,141 4,752 4,323 31,234 14,576 (d) 59,026
Auditing fees 31,081 31,083 41,711 23,086 (103,875) (e) 23,086
Legal fees 7,274 7,188 7,175 27,491 24,434 (f) 73,562
Portfolio accounting fees 55,122 55,293 55,169 93,403 (68,453) (g) 190,534
Distribution services fee - 0 0 0 934 407,197 (h) 408,131
Class A Shares
Distribution services fee - 0 0 0 9,950 1,137,502 (h) 1,147,452
Class C Shares
Distribution services fee - 234,372 360,002 259,137 0 (853,511) (h) 0
Select Shares
Shareholder services fee - 125,795 164,022 86,327 0 (376,144) (i) 0
Institutional Shares
Shareholder services fee - 76,570 119,288 86,725 0 (282,583) (i) 0
Select Shares
Share registration costs 30,884 31,099 30,081 49,474 (83,564) (j) 57,974
Printing and postage 3,747 3,600 10,299 15,626 4,489 (k) 37,761
Insurance premiums 7,859 8,169 7,851 10,170 (14,705) (l) 19,344
Miscellaneous 4,369 5,630 2,580 4,248 (9,203) (m) 7,624
EXPENSES BEFORE ALLOCATION 1,533,058 2,014,291 1,473,116 1,054,414 (673,079) 5,401,800
Expenses allocated from 17,582 34,286 26,635 0 0 78,503
partnerships
TOTAL EXPENSES 1,550,640 2,048,577 1,499,751 1,054,414 (673,079) 5,480,303
WAIVERS AND REIMBURSEMENTS--
Waiver/Reimbursement of (151,709) 0
investment adviser fee (181,363) (90,198) (102,760) 526,030 (n)
Waiver of administrative (34,134) (33,809) (34,289) (6,109) 107,817 (o) (524)
personnel and services fee
Waiver of distribution (78,063) (119,957) (86,379) 0 284,399 (p) 0
services fee - Select Shares
Waiver of shareholder (69,109) (89,595) (47,241) 0 205,945 (q) 0
services fee - Institutional
Shares
Reimbursement of shareholder (9,622) (11,850) (5,648) 0 27,120 (q) 0
services fee - Institutional
Shares
Reimbursement of other (42,260) (58,561) (33,639) 0 134,460 (r) 0
operating expenses
TOTAL WAIVERS AND (384,897) (495,135) (297,394) (108,869) 1,285,771 (524)
REIMBURSEMENTS
NET EXPENSES 1,165,743 1,553,442 1,202,357 945,545 612,692 5,479,779
NET INVESTMENT INCOME $1,917,008 $1,916,224 $406,744 $1,362,405 ($612,692) $4,989,689
REALIZED AND UNREALIZED GAIN ON
INVESTMENTS:
Net realized gain on 9,666 77,419 1,223,916 6,686,253 0 7,997,254
investments
Net realized gain allocated 2,525,844 2,536,099 3,873,306 0 0 8,935,249
from partnerships
Realized gain distributions 101,830 205,965 153,459 0 0 461,254
from affiliated investment
company shares
Net change in unrealized (2,066,962) (3,679,158) (2,331,011) (3,917,876) 0 (11,995,007)
appreciation (depreciation) of
investments
Net realized and 570,378 (859,675) 2,919,670 2,768,377 0 5,398,750
unrealized gain on investments
Change in net assets $2,487,386 $1,056,549 $3,326,414 $4,130,782 ($612,692) $10,388,439
resulting from operations
* MDT Balanced Fund was reorganized into Federated MDT Balanced Fund as of the close of business on December 8,
2006. Prior to the reorganization, Federated MDT Balanced Fund had no investment operations. Federated MDT
Balanced Fund is the successor to MDT Balanced Fund.
(See Notes to Pro Forma
Financial Statements)
- 10 -
FEDERATED CONSERVATIVE ALLOCATION FUND
FEDERATED MODERATE ALLOCATION FUND
FEDERATED GROWTH ALLOCATION FUND
FEDERATED MDT BALANCED FUND
NOTES TO PRO FORMA FINANCIAL STATEMENTS
YEAR ENDED JULY 31, 2006 (UNAUDITED)
NOTE 1. DESCRIPTION OF THE FUND
FCAF, FMAF and FGAF, each a series of Federated Managed Allocation Portfolios,
are registered under the Investment Company Act of 1940, as amended (the "Act),
as an open-end management investment company. Each Fund consists of two classes
of shares: Institutional Shares and Select Shares.
FMDTBF, a series of Federated MDT Series, is registered under the Act as an
open-end, management investment company. MDT Balanced Fund (the "Predecessor
Fund") was reorganized into FMDTBF as of the close of business on December 8,
2006. Prior to the reorganization, FMDTBF had no investment operations. FMDTBF
is the successor to the Predecessor Fund. For the purposes of these Pro Forma
Financial Statements, the financial information covers the period from August 1,
2005 to July 31, 2006. FMDTBF consists of four classes of shares: Class A
Shares, Class C Shares, Class K Shares and Institutional Shares. Class K Shares
did not become effective until December 11, 2006.
NOTE 2. BASIS OF COMBINATION
The accompanying unaudited Pro Forma Combining Portfolios of Investments,
Statements of Assets and Liabilities and Statements of Operations (Pro Forma
Financial Statements) reflect the accounts of the Acquired Funds and the
Predecessor Fund of FMDTBF for the year ended July 31, 2006. These statements
have been derived from the books and records utilized in calculating daily net
asset values at July 31, 2006.
The Pro Forma Financial Statements should be read in conjunction with the
historical financial statements of the Acquired Funds and the Predecessor Fund
of FMDTBF which have been incorporated by reference in the Statement of
Additional Information. The Funds follow generally accepted accounting
principles in the United States of America applicable to management investment
companies which are disclosed in the historical financial statements.
The Pro Forma Financial Statements give effect to the proposed exchange of
assets of the Acquired Funds for Class A Shares and Class C Shares of the
Predecessor Fund of FMDTBF. Under generally accepted accounting principles, the
Predecessor Fund of FMDTBF will be the surviving entity for accounting purposes
with its historical cost of investment securities and results of operations
being carried forward.
The Pro Forma Financial Statements have been adjusted to reflect the investment
advisory fee arrangement for the surviving entity. Certain other operating
costs have also been adjusted to reflect anticipated expenses of the combined
entity. Other costs which may change as a result of the reorganization are
currently undeterminable.
For the year ended July 31, 2006, the Acquired Funds and the Predecessor Fund of
FMDTBF paid investment advisory fees computed at the annual rate of 0.75% as a
percentage of average daily net assets.
All costs with respect to the reorganization will be borne by Federated
Investors, Inc. and its affiliates.
NOTE 3. PORTFOLIO VALUATION
Market values of each Fund's portfolio securities are determined as follows:
{circle}for equity securities, according to the last sale price or official
closing price reported in the market in which they are primarily traded
(either a national securities exchange or the over-the-counter market), if
available;
{circle}in the absence of recorded sales for equity securities, according to
the mean between the last closing bid and asked prices;
{circle}futures contracts and options are generally valued at market values
established by the exchanges on which they are traded at the close of
trading on such exchanges. Options traded in the over-the-counter market
are generally valued according to the mean between the last bid and the
last asked price for the option as provided by an investment dealer or
other financial institution that deals in the option. The Board of
Trustees (the "Trustees") may determine in good faith that another method
of valuing such investments is necessary to appraise their fair market
value;
{circle}prices for total return swaps are furnished by an independent pricing
service and are based upon a valuation model incorporating underlying
reference indexes, interest rates, yield curves and other market data or
factors. Prices for credit default swaps are furnished by an independent
pricing service and are based upon a valuation model incorporating default
probabilities, recovery rates and other market data or factors;
{circle}for mortgage-backed securities, based on the aggregate investment
value of the projected cash flows to be generated by the security, as
furnished by an independent pricing service;
{circle}for investments in other open-end regulated investment companies,
based on net asset value (NAV);
{circle}for other fixed-income securities, according to prices as furnished
by an independent pricing service, except that fixed-income securities
with remaining maturities of less than 60 days at the time of purchase are
valued at amortized cost; and
{circle}for all other securities at fair value as determined in accordance
with procedures established by and under the general supervision of the
Trustees.
Prices for fixed-income securities furnished by a pricing service may be based
on a valuation matrix which incorporates both dealer-supplied valuations and
electronic data processing techniques. Such prices (other than prices of
mortgage-backed securities) are generally intended to be indicative of the bid
prices currently offered to institutional investors for the securities, except
that prices for corporate fixed-income and asset-backed securities traded in the
United States are generally intended to be indicative of the mean between such
bid prices and asked prices. The Trustees have approved the use of such pricing
services. A number of pricing services are available, and the Fund may use
various pricing services or discontinue the use of any pricing service.
Prices provided by independent pricing services may be determined without
relying exclusively on quoted prices and may consider institutional trading in
similar groups of securities, yield, quality, stability, risk, coupon rate,
maturity, type of issue, trading characteristics, and other market data or
factors. From time to time, when prices cannot be obtained from an independent
pricing service, securities may be valued based on quotes from broker-dealers or
other financial institutions that trade the securities.
Trading in foreign securities may be completed at times which vary from the
closing of the New York Stock Exchange (NYSE). In computing its NAV, the Fund
values foreign securities using the latest closing price on the exchange on
which they are traded immediately prior to the closing of the NYSE. Certain
foreign currency exchange rates are generally determined at the latest rate
prior to the closing of the NYSE. Foreign securities quoted in foreign
currencies are translated into U.S. dollars at current rates. Events that
affect these values and exchange rates may occur between the times at which they
are determined and the closing of the NYSE. If such events materially affect the
value of portfolio securities, these securities may be valued at their fair
value as determined in good faith by the Trustees, although the actual
calculation may be done by others.
NOTE 4. SHARES OF BENEFICIAL INTEREST
The Pro Forma Class A Shares and Class C Shares net asset value per share
assumes the issuance of 10,882,615 Class A Shares and 7,895,251 Class C Shares,
respectively, of the Predecessor Fund of FMDTBF in exchange for 11,870,797
Institutional Shares and 8,460,752 Select Shares of the Acquired Funds which
would have been issued at July 31, 2006 in connection with the proposed
reorganization.
NOTE 5. FEDERAL INCOME TAXES
Each fund has elected to be taxed as a "regulated investment company" under the
Internal Revenue Code. After the acquisition, the Predecessor Fund of FMDTBF
intends to continue to qualify as a regulated investment company, if such
qualification is in the best interests of its shareholders, by complying with
the Subchapter M provision of the Internal Revenue Code and to distribute to
shareholders each year substantially all of its income. Accordingly, no
provisions for federal income tax are necessary.
The identified cost of investments for the funds is substantially the same for
both financial accounting and federal income tax purposes. The tax cost of
investments will remain unchanged for the combined fund.
NOTE 6. PROFORMA ADJUSTMENTS
(a) Effective July 15, 2005, Federated Administrative Services (FAS), under the
Administrative Services Agreement, provides the Predecessor Fund of FMDTBF with
certain administrative personnel and services necessary to operate the Fund.
The fee paid to FAS is based on the average aggregate daily net assets of
certain Federated funds. 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. Under a similar plan, FAS provides The Acquired Funds with certain
administrative personnel and services necessary to operate the Fund. Prior to
July 15, 2005, a previous administrator provided administrative services to the
Predecessor Fund of FMDTBF. An adjustment to the combined administrative
personnel and services fee reflects the fee structure of the Predecessor Fund of
FMDTBF on Federated MDT Pro Forma Combined Fund's average daily net assets.
(b) Adjustment to reflect custodian fees resulting from the combining of four
portfolios into one.
(c) Adjustment to reflect transfer and dividend disbursing agent fees and
expenses resulting from the combining of four portfolios into one.
(d) Adjustment to reflect directors'/trustees' fees resulting from the
combining of four portfolios into one.
(e) Adjustment to reflect auditing fees resulting from the combining of four
portfolios into one.
(f) Adjustment to reflect legal fees resulting from the combining of four
portfolios into one.
(g) Adjustment to reflect portfolio accounting fees resulting from the
combining of four portfolios into one.
(h) Under a Distribution Plan (the "Plan") pursuant to Rule 12B-1 under the
Act, FMDTBF may incur distribution expenses of 0.25% and 0.75% of the daily net
assets of the Fund's Class A Shares and Class C Shares, respectively, to
compensate Federated Securities Corp. (FSC), the principal distributor. Prior
to the reorganization of the Fund on December 8, 2006, the Predecessor Fund of
FMDT BF incurred distribution expenses of 0.25% and 1.00% of the daily net
assets of the Fund's Class A Shares and Class C Shares, respectively. FSC may
voluntarily choose to waive any portion of its fee. Under a similar plan, the
Acquired Funds may incur distribution expenses up to 0.75% of the Select Shares
average daily net assets. Adjustment is to reflect expense structure of the
Predecessor Fund of FMDTBF on average daily net assets of Federated MDT Pro
Forma Combined Fund.
(i) Effective December 11, 2006, under the terms of a Shareholder Services
Agreement, FMDTBF may pay fees up to 0.25% of the average daily net assets of
Fund's Class A and Class C shares to financial intermediaries or to Federated
Shareholder Services Company (FSSC). Prior to the reorganization, the
Predecessor Fund of FMDTBFdid not incur a shareholder services fee. Under a
similar plan, the Acquired Funds may pay fees up to 0.25% of the average daily
net assets of Institutional Shares and Select Shares to financial intermediaries
or to FSSC. FSSC or these financial intermediaries may voluntarily choose to
waive any portion of their fee. Adjustment is to reflect expense structure of
the Predecessor Fund of FMDTBF on average daily net assets of Federated MDT Pro
Forma Combined Fund.
(j) Adjustment to reflect share registration costs resulting from the combining
of four portfolios into one.
(k) Adjustment to reflect share printing and postage resulting from the
combining of four portfolios into one.
(l) Adjustment to reflect share insurance premiums resulting from the combining
of four portfolios into one.
(m) Adjustment to reflect share miscellaneous expenses resulting from the
combining of four portfolios into one.
(n) Under the investment advisory contract, Federated MDTA LLC (the "Adviser")
is contractually obligated to waive, to the extent of its adviser fee, the
amount, if any, in order to limit the aggregate annual operating expenses
(excluding interest, taxes and brokerage commissions) for the Predecessor Fund
of FMDTBF's Class A Shares, Class C Shares and Institutional Shares to not more
than 1.50%, 2.50% and 1.25%, respectively, of average daily net assets. The
Adviser has agreed to keep these contractual limitations in place through
December 8, 2008. The Advisor may also voluntarily choose to waive a portion of
its fee and/or reimburse certain operating expenses of the Predecessor Fund of
FMDTBF. The Advisor can modify or terminate this voluntary waiver and/or
reimbursement at any time at its sole discretion. An adjustment to the combined
waiver of investment adviser fee reflects the fee structure of the Predecessor
Fund of FMDTBF on Federated MDT Pro Forma Combined Fund's average daily net
assets.
(o) Effective July 15, 2006, FAS contractually agreed to waive the portion of
its fee which it would otherwise be entitled to receive from the Predecessor
Fund of FMDTBF under the Agreement. The level of fees payable by the
Predecessor Fund of FMDTBF to FAS for the period will not exceed the level of
fees which the Predecessor Fund of FMDTBF would have paid during the period to
its pervious service provider under its previous administrative services
agreement. In addition, FAS may voluntarily choose to waive any portion of its
fee. FAS can modify or terminate its voluntary waiver at any time at its sole
discretion. An adjustment to the combined waiver of administrative personnel
and services fee reflects the fee structure of the Predecessor Fund of FMDTBF on
Federated MDT Pro Forma Combined Fund's average daily net assets.
(p) An adjustment to the combined waiver of distribution services fee reflects
the fee structure of FMDTBF, which does not waive distribution services fee.
(q) An adjustment to the combined waiver and/or reimbursement of shareholder
services fee reflects the fee structure of FMDTBF, which does not waive and/or
reimburse shareholder services fee.
(r) An adjustment to the combined reimbursement of other operating expenses
reflects the fee structure of FMDTBF, which does not reimburse other operating
expenses.
- 11 -
INTRODUCTION
The accompanying unaudited Pro Forma Combining Portfolios of Investments,
Statements of Assets and Liabilities and Statements of Operations (Pro Forma
Financial Statements) reflect the accounts of Federated Conservative Allocation
Fund (FCAF) and Federated MDT Balanced Fund (FMDTBF), for the period ended July
31, 2006. MDT Balanced Fund (the "Predecessor Fund") was reorganized into FMDTBF
as of the close of business on December 8, 2006. Prior to the reorganization,
FMDTBF had no investment operations. FMDTBF is the successor to the Predecessor
Fund. For the purposes of these Pro Forma Financial Statements, the financial
information covers the period from August 1, 2006 to January 31, 2007. These
statements have been derived from the books and records utilized in calculating
daily net asset values at January 31, 2007.
The Pro Forma Financial Statements give effect to the proposed exchange of
assets of FCAF for Class A Shares and Class C Shares of FMDTBF. Under generally
accepted accounting principles, FMDTBF will be the surviving entity for
accounting purposes with its historical cost of investment securities and
results of operations being carried forward.
The Pro Forma Financial Statements have been adjusted to reflect the anticipated
advisory fee arrangement for the surviving entity. Certain other operating
costs have also been adjusted to reflect anticipated expenses of the combined
entity. Other costs which may change as a result of the reorganization are
currently undeterminable.
- 12 -
FEDERATED CONSERVATIVE
ALLOCATION FUND
FEDERATED MDT BALANCED
FUND (1)
PRO FORMA COMBINING PORTFOLIO OF
INVESTMENTS
JANUARY 31, 2007
(UNAUDITED)
FEDERATED FEDERATED
CONSERVATIVE FEDERATED CONSERVATIVE FEDERATED MDT
MDT
ALLOCATION BALANCED PRO FORMA ALLOCATION BALANCED PRO FORMA
FUND FUND COMBINED FUND FUND COMBINED
SHARES OR PRINCIPAL VALUE
AMOUNT
COMMON STOCKS - 37.9%
AEROSPACE & DEFENSE - 0.2%
0 800 800 Lockheed Martin Corp. 0 $77,752 $77,752
0 6,400 6,400 Raytheon Co. 0 332,160 332,160
0 800 800 United Technologies Corp. 0 54,416 54,416
0 464,328 464,328
BIOTECHNOLOGY - 0.8%
0 1,500 1,500 Celgene Corp.* 0 108,615 108,615
0 14,700 14,700 Genentech, Inc.* 0 1,284,339 1,284,339
0 4,300 4,300 Medimmune, Inc.* 0 149,038 149,038
0 1,541,992 1,541,992
BUILDING PRODUCTS - 0.1%
0 3,200 3,200 American Standard Companies 0 158,048 158,048
CAPITAL MARKETS - 2.8%
0 600 600 Affiliated Managers Group* 0 66,840 66,840
0 4,700 4,700 Bear Stearns & Co., Inc. 0 774,795 774,795
0 900 900 Lehman Brothers Holdings, Inc. 0 74,016 74,016
0 17,900 17,900 Merrill Lynch & Co., Inc. 0 1,674,724 1,674,724
0 38,500 38,500 Morgan Stanley 0 3,187,415 3,187,415
0 5,777,790 5,777,790
CHEMICALS - 0.6%
0 500 500 Ashland, Inc. 0 34,775 34,775
0 26,300 26,300 Dow Chemical Co. 0 1,092,502 1,092,502
0 2,100 2,100 Nalco Holding Co.* 0 48,279 48,279
0 1,175,556 1,175,556
COMMERCIAL BANKS - 2.5%
0 300 300 City National Corp. 0 21,579 21,579
0 7,400 7,400 Comerica, Inc. 0 438,820 438,820
0 3,100 3,100 Fifth Third Bancorp 0 123,690 123,690
0 700 700 Huntington Bancshares, Inc. 0 16,296 16,296
0 62,500 62,500 J.P. Morgan Chase & Co. 0 3,183,125 3,183,125
0 11,157 11,157 KeyCorp 0 425,863 425,863
0 12,000 12,000 National City Corp. 0 454,200 454,200
0 3,600 3,600 SunTrust Banks, Inc. 0 299,160 299,160
0 2,300 2,300 UnionBanCal Corp. 0 148,626 148,626
0 5,111,359 5,111,359
COMMERCIAL SERVICES & SUPPLIES - 0.3%
0 500 500 Brinks Co. 0 31,075 31,075
0 900 900 Dun & Bradstreet Corp. 0 76,500 76,500
0 1,000 1,000 Equifax, Inc. 0 41,530 41,530
0 1,700 1,700 Miller Herman, Inc. 0 63,920 63,920
0 2,900 2,900 Pitney Bowes, Inc. 0 138,823 138,823
0 5,100 5,100 Robert Half International, Inc. 0 207,570 207,570
0 1,400 1,400 TeleTech Holdings, Inc.* 0 37,730 37,730
0 500 500 United Stationers, Inc.* 0 25,480 25,480
0 622,628 622,628
COMMUNICATIONS EQUIPMENT - 0.1%
0 1,700 1,700 Comverse Technology, Inc.* 0 32,895 32,895
0 800 800 F5 Networks, Inc.* 0 57,152 57,152
0 90,047 90,047
COMPUTERS & PERIPHERALS - 0.8%
0 15,200 15,200 Apple, Inc.* 0 1,303,096 1,303,096
0 9,400 9,400 Network Appliance, Inc.* 0 353,440 353,440
0 1,656,536 1,656,536
CONSTRUCTION MATERIALS 0.1%
0 600 600 Texas Industries, Inc. 0 44,052 44,052
0 1,800 1,800 Vulcan Materials Co. 0 183,312 183,312
0 227,364 227,364
CONSUMER FINANCE 0.1%
0 5,000 5,000 AmeriCredit Corp.* 0 135,700 135,700
0 2,200 2,200 First Marblehead Corp.* 0 119,680 119,680
0 255,380 255,380
CONTAINERS & PACKAGING - 0.1%
0 1,300 1,300 Crown Holdings, Inc.* 0 28,691 28,691
0 800 800 Sealed Air Corp. 0 52,720 52,720
0 1,600 1,600 Temple-Inland, Inc. 0 79,904 79,904
0 161,315 161,315
DIVERSIFIED CONSUMER SERVICES - 0.1%
0 800 800 ITT Educational Services, Inc.* 0 62,080 62,080
0 1,600 1,600 Weight Watchers International, Inc.* 0 86,448 86,448
0 148,528 148,528
DIVERSIFIED FINANCIAL SERVICES - 0.6%
0 13,300 13,300 CIT Group Inc. 0 784,168 784,168
0 300 300 Chicago Mercantile Exchange Holdings, Inc. 0 168,990 168,990
0 4,200 4,200 Moody's Corp. 0 300,552 300,552
0 1,253,710 1,253,710
DIVERSIFIED TELECOMMUNICATIONS SERVICES - 0.2%
0 7,000 7,000 Embarq Corp. 0 388,570 388,570
ELECTRIC UTILITIES - 0.3%
0 4,400 4,400 Allegheny Energy, Inc.* 0 204,688 204,688
0 2,900 2,900 Edison International 0 130,442 130,442
0 1,300 1,300 FirstEnergy Corp. 0 77,129 77,129
0 1,300 1,300 Portland General Electric Co. 0 33,982 33,982
0 4,700 4,700 Reliant Resources, Inc.* 0 69,936 69,936
0 516,177 516,177
ELECTRICAL EQUIPMENT - 0.3%
0 13,800 13,800 Honeywell International, Inc. 0 630,522 630,522
0 500 500 Roper Industries, Inc. 0 25,960 25,960
0 656,482 656,482
ELECTRONIC EQUIPMENT & INSTRUMENTS
0.3%
0 2,900 2,900 Amphenol Corp., Class A 0 196,388 196,388
0 5,400 5,400 Avnet, Inc.* 0 167,670 167,670
0 1,200 1,200 Daktronics, Inc. 0 41,484 41,484
0 4,500 4,500 Ingram Micor, Inc., Class A* 0 87,795 87,795
0 2,000 2,000 National Instruments Corp. 0 57,620 57,620
0 100 100 Tech Data Corp.* 0 3,714 3,714
0 554,671 554,671
ENERGY EQUIPMENT & SERVICES - 1.7%
0 3,300 3,300 Cameron International Corp.* 0 173,250 173,250
0 300 300 FMC Technologies, Inc.* 0 18,579 18,579
0 1,500 1,500 GlobalSanaFe Corp. 0 87,015 87,015
0 1,900 1,900 Oceaneering International, Inc.* 0 74,993 74,993
0 4,200 4,200 Patterson-UTI Energy, Inc. 0 101,430 101,430
0 500 500 SEACOR Holdings, Inc.* 0 50,615 50,615
0 39,900 39,900 Schlumberger Ltd. 0 2,533,251 2,533,251
0 6,000 6,000 Transocean Sedco Forex, Inc.* 0 464,220 464,220
0 3,503,353 3,503,353
FOOD & STAPLES - RETAILING - 0.2%
0 4,100 4,100 Costco Wholesale Corp. 0 230,338 230,338
0 1,800 1,800 Kroger Co. 0 46,080 46,080
0 1,100 1,100 Longs Drug Stores Corp. 0 47,300 47,300
0 323,718 323,718
FOOD PRODUCTS - 0.2%
0 5,700 5,700 Kellogg Co. 0 280,839 280,839
0 3,500 3,500 Kraft Foods, Inc. Class A 0 122,220 122,220
0 403,059 403,059
GAS UTILITIES - 0.0%
0 1,700 1,700 Energen Corp. 0 78,676 78,676
HEALTH CARE EQUIPMENT & SUPPLIES - 0.8%
0 1,600 1,600 Dentsply International, Inc. 0 49,344 49,344
0 1,700 1,700 Immucor, Inc.* 0 53,618 53,618
0 25,500 25,500 Medtronic, Inc. 0 1,362,975 1,362,975
0 600 600 Mentor Corp. 0 30,594 30,594
0 5,300 5,300 St. Jude Medical, Inc.* 0 226,628 226,628
0 1,723,159 1,723,159
HEALTH CARE PROVIDERS & SERVICES - 0.8%
0 8,800 8,800 Cardinal Health, Inc. 0 628,496 628,496
0 1,300 1,300 DaVita, Inc.* 0 70,980 70,980
0 900 900 Lincare Holdings, Inc.* 0 35,415 35,415
0 3,500 3,500 Medco Health Solutions, Inc.* 0 207,235 207,235
0 1,600 1,600 Psychiatric Solutions, Inc.* 0 62,304 62,304
0 6,800 6,800 WellPoint, Inc.* 0 532,984 532,984
0 1,537,414 1,537,414
HEALTH CARE TECHNOLOGY - 0.0%
0 2,900 2,900 IMS Health, Inc. 0 83,694 83,694
HOTELS RESTAURANTS & LEISURE 0.2%
0 700 700 LifeTime Fitness, Inc.* 0 37,940 37,940
0 400 400 Wynn Resorts Ltd.* 0 44,696 44,696
0 5,200 5,200 Yum! Brands, Inc. 0 312,052 312,052
0 394,688 394,688
HOUSEHOLD DURABLES 0.4%
0 2,500 2,500 Beazer Homes USA, Inc. 0 108,775 108,775
0 2,400 2,400 Centex Corp. 0 128,856 128,856
0 3,100 3,100 KB HOME 0 168,082 168,082
0 800 800 M.D.C. Holdings, Inc. 0 46,616 46,616
0 400 400 Mertiage Corp.* 0 17,780 17,780
0 8,800 8,800 Pulte Homes, Inc. 0 302,192 302,192
0 1,500 1,500 Ryland Group, Inc. 0 84,270 84,270
0 1,800 1,800 Standard-Pacific Corp. 0 49,392 49,392
0 905,963 905,963
HOUSEHOLD PRODUCTS - 1.9%
0 8,500 8,500 Kimberly-Clark Corp. 0 589,900 589,900
0 50,400 50,400 Proctor & Gamble Co. 0 3,269,448 3,269,448
0 3,859,348 3,859,348
INDEPENDENT POWER PRODUCERS - 0.0%
0 1,100 1,100 AES Corp.* 0 22,869 22,869
INDUSTRIAL CONGLOMERATES - 0.6%
0 14,000 14,000 3M Co. 0 1,040,200 1,040,200
0 3,600 3,600 McDermott International, Inc.* 0 185,904 185,904
0 500 500 Teleflex, Inc. 0 33,390 33,390
0 1,259,494 1,259,494
INSURANCE - 6.2%
0 25,950 25,950 Allstate Corp. 0 1,561,152 1,561,152
0 5,000 5,000 Ambac Financial Group, Inc. 0 440,500 440,500
0 4,050 4,050 American Financial Group, Inc. 0 143,046 143,046
0 47,800 47,800 American International Group, Inc. 0 3,271,910 3,271,910
0 4,700 4,700 Assurant, Inc. 0 261,226 261,226
0 6,600 6,600 Berkley, W.R. Corp. 0 218,394 218,394
0 2,700 2,700 CNA Financial Corp.* 0 109,755 109,755
0 14,600 14,600 Chubb Corp. 0 759,784 759,784
0 2,300 2,300 Commerce Group, Inc. 0 69,414 69,414
0 2,100 2,100 HCC Insurance Holdings, Inc. 0 65,583 65,583
0 1,600 1,600 Hanover Insurance Group, Inc.* 0 76,880 76,880
0 3,800 3,800 Hartford Financial Services Group, Inc. 0 360,658 360,658
0 11,300 11,300 Loews Corp. 0 491,098 491,098
0 5,200 5,200 MBIA, Inc. 0 373,516 373,516
0 30,600 30,600 Metlife, Inc. 0 1,900,872 1,900,872
0 1,900 1,900 Nationwide Financial Services, Inc. - Class A 0 103,835 103,835
0 1,400 1,400 Odyssey Re Holdings Corp. 0 55,230 55,230
0 1,600 1,600 Ohio Casualty Corp. 0 47,264 47,264
0 22,900 22,900 Progressive Corp., Ohio 0 531,051 531,051
0 2,000 2,000 Reinsurance Group of America, Inc. 0 116,300 116,300
0 4,200 4,200 Safeco Corp. 0 268,842 268,842
0 400 400 Safety Insurance Group, Inc. 0 19,536 19,536
0 1,000 1,000 StanCorp Financial Group, Inc. 0 47,850 47,850
0 26,200 26,200 The St. Paul Travelers Companies, Inc. 0 1,332,270 1,332,270
0 12,625,966 12,625,966
INTERNET & CATALOG RETAIL - 0.1%
0 2,500 2,500 Expedia, Inc.* 0 53,625 53,625
0 3,500 3,500 AC Interactive Corp.* 0 134,400 134,400
0 1,100 1,100 Nutri/System, Inc.* 0 48,455 48,455
0 236,480 236,480
INTERNET SOFTWARE & SERVICES - 0.1%
0 5,400 5,400 eBay, Inc.* 0 174,906 174,906
0 3,000 3,000 ValueClick, Inc.* 0 76,560 76,560
0 251,466 251,466
IT SERVICES - 0.4%
0 800 800 Alliance Data Systems Corp.* 0 54,344 54,344
0 3,700 3,700 Automatic Data Processing, Inc. 0 176,564 176,564
0 1,300 1,300 Ceridan Corp. - New* 0 38,961 38,961
0 1,000 1,000 Checkfree Corp.* 0 41,430 41,430
0 3,500 3,500 Cognizant Technology Solutions Corp.* 0 298,515 298,515
0 2,300 2,300 Computer Sciences Corp.* 0 120,658 120,658
0 2,300 2,300 Fiserv, Inc.* 0 120,911 120,911
0 851,383 851,383
LEISURE EQUIPMENT & PRODUCTS - 0.0%
0 1,200 1,200 Brunswick Corp. 0 40,932 40,932
LIFE SCIENCES TOOLS & SERVICES - 0.1%
0 1,700 1,700 Waters Corp.* 0 96,373 96,373
MACHINERY - 0.3%
0 1,200 1,200 Briggs & Stratton Corp. 0 35,568 35,568
0 3,100 3,100 Danaher Corp. 0 229,586 229,586
0 2,900 2,900 Deere & Co. 0 290,812 290,812
0 555,966 555,966
MEDIA - 1.8%
0 40,900 40,900 Comcast Corp., Class A* 0 1,812,688 1,812,688
0 5,400 5,400 Discovery Holding Co., Class A* 0 89,478 89,478
0 1,300 1,300 Lamar Advertising Co. 0 86,164 86,164
0 5,900 5,900 McGraw-Hill Cos., Inc. 0 395,772 395,772
0 2,900 2,900 Omnicom Group, Inc. 0 305,080 305,080
0 39,900 39,900 Time Warner, Inc. 0 872,613 872,613
0 4,800 4,800 Viacom, Inc., Class B - new* 0 195,216 195,216
0 3,757,011 3,757,011
METALS & MINING - 0.1%
0 4,500 4,500 Commercial Metals Corp. 0 121,995 121,995
0 900 900 Metal Management, Inc. 0 36,936 36,936
0 900 900 Quanex Corp. 0 35,271 35,271
0 2,100 2,100 Worthington Industries, Inc. 0 40,278 40,278
0 234,480 234,480
MULTI-UTILITIES - 0.1%
0 5,200 5,200 PG&E Corp. 0 242,736 242,736
0 700 700 SCANA Corp. 0 28,504 28,504
0 271,240 271,240
MULTILINE RETAIL - 0.3%
0 3,900 3,900 Sears Holdings Corp.* 0 688,935 688,935
OIL GAS & CONSUMABLE FUELS - 4.1%
0 27,700 27,700 Anadarko Petroleum Corp. 0 1,211,875 1,211,875
0 43,100 43,100 Chevron Corp. 0 3,141,128 3,141,128
0 15,200 15,200 Devon Energy Corp. 0 1,065,368 1,065,368
0 1,300 1,300 General Maritime Corp. * 0 47,437 47,437
0 15,500 15,500 Marathon Oil Corp. 0 1,400,270 1,400,270
0 2,100 2,100 OMI Corp. 0 46,326 46,326
0 3,900 3,900 Pioneer Natural Resources, Inc. 0 159,900 159,900
0 2,200 2,200 Pogo Producing Co. 0 109,010 109,010
0 3,200 3,200 Tesoro Petroleum Corp. 0 263,648 263,648
0 18,900 18,900 Valero Energy Corp. 0 1,025,892 1,025,892
0 8,470,854 8,470,854
PAPER & FOREST PRODUCTS - 0.1%
0 3,400 3,400 MeadWestvaco Corp. 0 102,476 102,476
PERSONAL PRODUCTS -0.0%
0 2,200 2,200 Avon Products, Inc. 0 75,658 75,658
PHARMACEUTICALS - 0.5%
0 10,600 10,600 Johnson & Johnson 0 708,080 708,080
0 16,400 16,400 Schering Plough Corp. 0 410,000 410,000
0 1,118,080 1,118,080
REAL ESTATE INVESTMENT TRUSTS - 4.3%
0 6,000 6,000 AMB Property Corp. 0 365,100 365,100
0 4,200 4,200 Alexandria Real Estate Equities, Inc. 0 455,112 455,112
0 9,650 9,650 Archstone-Smith Trust 0 609,977 609,977
0 4,100 4,100 Avalonbay Communities, Inc. 0 608,276 608,276
0 6,350 6,350 Boston Properties, Inc. 0 800,671 800,671
0 4,450 4,450 Developers Diversified Realty Corp. 0 298,684 298,684
0 9,900 9,900 Equity Residential Properties Trust 0 557,172 557,172
0 2,800 2,800 Federal Realty Invstment Trust 0 261,576 261,576
0 5,000 5,000 General Growth Properties, Inc. 0 307,600 307,600
0 9,900 9,900 Health Care Property Investors, Inc. 0 408,375 408,375
0 15,000 15,000 Host Hotels & Resorts, Inc. 0 397,050 397,050
0 6,100 6,100 Kimco Realty Corp. 0 302,560 302,560
0 7,700 7,700 ProLogis Trust 0 500,500 500,500
0 4,500 4,500 Public Storage, Inc. 0 489,420 489,420
0 5,300 5,300 SL Green Realty Corp. 0 776,874 776,874
0 7,000 7,000 Simon Property Group, Inc. 0 800,730 800,730
0 6,200 6,200 Taubman Centers, Inc. 0 361,274 361,274
0 4,850 4,850 Vornado Realty Trust 0 593,398 593,398
0 8,894,349 8,894,349
ROAD & RAIL - 0.6%
0 2,000 2,000 Burlington Northern Santa Fe 0 160,720 160,720
0 1,800 1,800 Con-way, Inc. 0 89,532 89,532
0 15,700 15,700 Norfolk Southern Corp. 0 779,505 779,505
0 2,200 2,200 Ryder Systems, Inc. 0 119,988 119,988
0 1,800 1,800 Werner Enterpirses, Inc. 0 34,218 34,218
0 1,183,963 1,183,963
SEMICONDUCTOR & SEMICONDUCTOR EQUIPMENT - 0.1%
0 2,300 2,300 Altera Corp.* 0 120,520 120,520
SOFTWARE - 0.2%
0 22,400 22,400 Oracle Corp.* 0 384,384 384,384
0 700 700 Quality Systems, Inc. 0 29,701 29,701
0 1,800 1,800 THQ, Inc.* 0 54,540 54,540
0 468,625 468,625
SPECIALTY RETAIL - 0.6%
0 700 700 AutoZone, Inc.* 0 87,941 87,941
0 3,100 3,100 CarMax, Inc.* 0 178,033 178,033
0 600 600 Children's Place Retail Stores, Inc.* 0 32,526 32,526
0 1,100 1,100 Dick's Sporting Goods, Inc.* 0 56,639 56,639
0 1,400 1,400 Guess?, Inc.* 0 100,954 100,954
0 800 800 Gymboree Corp.* 0 34,632 34,632
0 17,600 17,600 Home Depot, Inc. 0 717,024 717,024
0 800 800 J Crew Group, Inc.* 0 29,064 29,064
0 100 100 Zale Corp.* 0 2,752 2,752
0 1,239,565 1,239,565
TEXTILES, APPAREL & LUXURY GOODS - 0.3%
0 13,800 13,800 Coach, Inc.* 0 632,868 632,868
0 1,200 1,200 Crocs, Inc.* 0 60,408 60,408
0 693,276 693,276
THRIFTS & MORTGAGE FINANCE - 0.5%
0 1,200 1,200 Downey Financial Corp. 0 85,848 85,848
0 2,000 2,000 Federal Home Loan Mortgage Corp. 0 129,860 129,860
0 1,000 1,000 FirstFed Financial Corp.* 0 68,950 68,950
0 3,800 3,800 MGIC Investment Corp. 0 234,536 234,536
0 3,600 3,600 PMI Group, Inc. 0 172,152 172,152
0 3,700 3,700 Radian Group, Inc. 0 222,814 222,814
0 914,160 914,160
WIRELESS TELECOMMUNICATION SERVICES - 0.0%
0 400 400 U.S. Cellular Corp.* 0 28,840 28,840
TOTAL COMMON STOCKS (COST $68,470,848) 0 77,776,514 77,776,514
ASSET-BACKED SECURITIES - 0.6%
0 58,994 58,994 CS First Boston Mortgage Securities Corp. 0 58,460 58,460
2002-HE4, Class AF, 5.51%, 8/25/2032
0 648,723 648,723 Community Program Loan Trust 1987-A, Class 0 638,909 638,909
A4, 4.50%, 10/1/2018
0 452,714 452,714 MMCA Automobile Trust 2002-2, Class C, 5.55%, 0 451,692 451,692
3/15/2010
0 140,000 140,000 Morgan Stanley Capital I 2006-IQ12 A4, 0 137,539 137,539
5.319%, 12/15/2043
TOTAL ASSET-BACKED SECURITIES (IDENTIFIED 0 1,286,600 1,286,600
COST $1,297,142)
COLLATERALIZED MORTGAGE OBLIGATIONS - 0.4%
0 469,749 469,749 Bear Stearns Asset Backed Securities, Inc. 0 314,914 314,914
2005-AC6, Class 21PO, 0.00%, 9/25/2020
0 5,692 5,692 Bear Stearns Mortgage Securities, Inc. 1997- 0 5,592 5,592
6, Class 1A, 6.66%, 3/25/2031
0 16,838 16,838 Federal Home Loan Mortgage Corp. REMIC 1311 0 16,784 16,784
K, 7.00% 7/15/2022
0 33,518 33,518 Federal Home Loan Mortgage Corp. REMIC 1384 0 33,419 33,419
D, 7.00% 9/15/2022
0 39,298 39,298 Federal Home Loan Mortgage Corp. REMIC 1595 0 40,806 40,806
D, 7.00% 10/15/2013
0 75,000 75,000 Federal Home Loan Mortgage Corp. REMIC 2497 0 75,595 75,595
JH, 6.00% 9/15/2032
0 67,057 67,057 Federal Home Loan Mortgage Corp. REMIC 2676 0 66,830 66,830
JA, 4.00% 5/15/2016
0 82,752 82,752 Federal National Mortgage Association REMIC 0 91,131 91,131
1993-113 SB, 9.75%, 7/25/2023
0 16,017 16,017 Federal National Mortgage Association REMIC 0 16,653 16,653
2001-37 GA, 8.00%, 7/25/2016
0 20,980 20,980 Federal National Mortgage Association REMIC 0 19,423 19,423
2003-35 UC, 3.75%, 5/25/2033
0 20,173 20,173 Government National Mortgage Association 0 20,434 20,434
REMIC 1999-29 PB, 7.25%, 7/16/2028
0 61,195 61,195 Government National Mortgage Association 0 61,806 61,806
REMIC 2002-17 B, 6.00%, 3/20/2032
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS 0 763,387 763,387
(IDENTIFIED COST $810,587)
CORPORATE NOTES & BONDS - 6.4%
BASIC INDUSTRY - CHEMICALS - 0.0%
0 75,000 75,000 Albemarle Corp., Sr. Note, 5.10%, 2/1/2015 0 70,787 70,787
BASIC INDUSTRY - METALS & MINING - 0.2%
0 35,000 35,000 Alcoa, Inc., Note, 5.55%, 2/1/2017 0 34,865 34,865
0 100,000 100,000 BHP Finance (USA), Inc., Company Guarantee, 0 98,176 98,176
5.25%, 12/15/2015
0 150,000 150,000 Vale Overseas Limited, 6.875%, 11/21/2036 0 152,438 152,438
0 150,000 150,000 (1)(2) Xstrata Finance Canada L, Unsecd. 0 148,831 148,831
Note, 5.50%, 11/16/2011
0 434,310 434,310
CAPITAL GOODS - AEROSPACE & DEFENSE - 0.2%
0 125,000 125,000 Boeing Co., Note 5.125%, 2/15/2013 0 123,821 123,821
0 200,000 200,000 Raytheon Co., Unsecd. Note, 5.375%, 4/1/2013 0 199,311 199,311
0 323,132 323,132
CAPITAL GOODS - DIVERSIFIED MANUFACTURING - 0.1%
0 100,000 100,000 Emerson Electric Co., Unsecd. Note, 5.75%, 0 101,619 101,619
11/1/2011
CAPITAL GOODS - ENVIRONMENTAL - 0.1%
0 100,000 100,000 Waste Management, Inc., 7.375%, 8/1/2010 0 105,994 105,994
COMMUNICATIONS - MEDIA & CABLE - 0.1%
0 100,000 100,000 Comcast Corp., Sr. Note, 7.125%, 6/15/2013 0 108,102 108,102
0 75,000 75,000 Cox Communications, Inc., Unsecd. Note, 0 73,425 73,425
5.45%, 12/15/2014
0 181,527 181,527
COMMUNICATIONS - MEDIA NONCABLE - 0.1%
0 100,000 100,000 British Sky Broadcasting Group PLC, 8.20%, 0 106,113 106,113
7/15/2009
0 75,000 75,000 News America Holdings, Company Guarantee, 0 86,120 86,120
8.00%, 10/17/2016
0 75,000 75,000 News America Holdings, Sr. Deb., 9.25%, 0 87,556 87,556
2/1/2013
0 279,789 279,789
COMMUNICATIONS - TELECOM WIRELESS - 0.2%
0 150,000 150,000 AT&T Wireless Services, Sr. Note, 8.75%, 0 195,113 195,113
3/1/2031
0 100,000 100,000 Cingular Wirless LLC, Sr. Note, 6.50%, 0 104,657 104,657
12/15/2011
0 100,000 100,000 Sprint Capital Corp., Note, 8.375%, 3/15/2012 0 110,853 110,853
0 410,623 410,623
COMMUNICATIONS - TELECOM WIRELINES - 0.3%
0 400,000 400,000 GTE North, Inc., Deb., Series D, 6.90%, 0 409,847 409,847
11/1/2008
0 75,000 75,000 Telefonica SA, Company Guarantee, 7.045%, 0 81,052 81,052
6/20/2036
0 100,000 100,000 Telefonos de Mexico, Note, 4.50%, 11/19/2008 0 98,050 98,050
0 588,949 588,949
CONSUMER CYCLICAL - AUTOMOTIVE - 0.2%
0 75,000 75,000 DaimlerChrysler North America, Sr. Note, 0 73,208 73,208
4.875%, 6/15/2010
0 50,000 50,000 DaimlerChrysler North America Holding Corp., 0 51,329 51,329
Sr. Note, 6.50%, 11/15/2013
0 300,000 300,000 General Motors Acceptance, Note, 6.125%, 0 300,000 300,000
2/1/2007
0 424,537 424,537
CONSUMER CYCLICAL - ENTERTAINMENT - 0.1%
0 75,000 75,000 Disney Co., Note, 5.70%, 7/15/2011 0 76,131 76,131
0 100,000 100,000 Time Warner, Inc., 5.50%, 11/15/2011 0 99,804 99,804
0 175,935 175,935
CONSUMER CYCLICAL - LODGING - 0.1%
0 100,000 100,000 (1)(2) Wyndham Worldwide Corp., Sr. Unsecd. 0 98,533 98,533
Note, 6.00%, 12/1/2016
CONSUMER CYCLICAL - RETAILERS - 0.1%
0 125,000 125,000 Home Depot, Inc., 5.40%, 3/1/2016 0 120,917 120,917
0 100,000 100,000 Target Corp., 5.875%, 3/1/2012 0 102,518 102,518
0 223,435 223,435
CONSUMER NON-CYCLICAL - FOOD/BEVERAGE - 0.1%
0 100,000 100,000 Bottling Group LLC, Note 5.50%, 4/1/2016 0 99,850 99,850
0 40,000 40,000 General Mills, Inc., Note, 5.70%, 2/15/2017 0 39,966 39,966
0 75,000 75,000 Kraft Foods, Inc., Note, 5.25%, 10/1/2013 0 73,913 73,913
0 50,000 50,000 Kraft Foods, Inc., Note, 6.25%, 6/1/2012 0 51,746 51,746
0 265,475 265,475
CONSUMER NON-CYCLICAL - HEALTH CARE - 0.1%
0 100,000 100,000 Medtronic, Inc., Note, Series B, 4.375%, 0 97,138 97,138
9/15/2010
CONSUMER NON-CYCLICAL - PHARMACEUTICALS - 0.3%
0 75,000 75,000 Abbott Laboratories, Note, 5.375%, 5/15/2009 0 75,300 75,300
0 100,000 100,000 Genentech, Inc., Sr. Note, 4.75%, 7/15/2015 0 95,371 95,371
0 125,000 125,000 Lilly (Eli) & Co., Unsecd. Note, 6.57%, 0 134,551 134,551
1/1/2016
0 100,000 100,000 Pharmacia Corp., Sr. Deb., 6.50%, 12/1/2018 0 108,202 108,202
0 100,000 100,000 Wyeth, Unsecd. Note, 5.50%, 2/1/2014 0 100,060 100,060
0 513,484 513,484
CONSUMER NON-CYCLICAL - SUPERMARKETS - 0.1%
0 250,000 250,000 Safeway, Inc. Notes 4.800%, 07/16/2007 0 249,120 249,120
CONSUMER NON-CYCLICAL - TOBACCO - 0.0%
0 75,000 75,000 Altria Group, Inc., Note, 7.00%, 11/4/2013 0 81,642 81,642
ENERGY - INDEPENDENT - 0.1%
0 55,000 55,000 Anadarko Petroleum Corp., Sr. Note, 5.95%, 0 54,619 54,619
9/15/2016
0 50,000 50,000 Canadian Natural Resources, 4.90%, 12/1/2014 0 47,106 47,106
0 150,000 150,000 Pemex Project Funding Master, Company 0 166,995 166,995
Guarantee, 9.125%, 10/13/2010
0 268,720 268,720
ENERGY - INTEGRATED - 0.1%
0 75,000 75,000 Conoco Funding Co., 7.25%, 10/15/2031 0 87,594 87,594
0 75,000 75,000 ConocoPhillip Australia, 5.50%, 4/15/2013 0 75,374 75,374
0 100,000 100,000 Husky Oil Ltd., Sr. Deb., 7.55%, 11/15/2016 0 111,698 111,698
0 274,666 274,666
ENERGY - REFINING - 0.1%
0 100,000 100,000 Valero Energy Corp., 6.875%, 4/15/2012 0 105,703 105,703
0 50,000 50,000 Valero Energy Corp., 7.50%, 4/15/2032 0 56,955 56,955
0 75,000 75,000 Valero Energy Corp., Note, 4.75%, 4/1/2014 0 70,358 70,358
0 233,016 233,016
FINANCIAL INSTITUTIONS - BANKING - 1.1%
0 200,000 200,000 Bank of America Corp., Sr. Note, 5.375%, 0 199,437 199,437
6/15/2014
0 120,000 120,000 Capital One Capital IV, 6.745%, 2/17/2037 0 121,157 121,157
0 200,000 200,000 Citigroup, Inc., Note, 5.125%, 2/14/2011 0 199,021 199,021
0 100,000 100,000 Credit Suisse First Boston, Sr. Note, 5.50%, 0 100,898 100,898
8/16/2011
0 100,000 100,000 HSBC Finance Capital Trust, Note, 5.911%, 0 100,851 100,851
11/30/2035
0 200,000 200,000 HSBC Finance Corp., 4.75%, 4/15/2010 0 197,015 197,015
0 100,000 100,000 Household Finance Corp., Note, 7.00%, 0 107,417 107,417
5/15/2012
0 150,000 150,000 J.P. Morgan Chase & Co., 5.75%, 1/2/2013 0 152,735 152,735
0 100,000 100,000 Marshall & Ilsley Bank, Sr. Note, 4.40%, 0 97,444 97,444
3/15/2010
0 200,000 200,000 Northern Trust Corp., Sr. Note, 5.30%, 0 200,039 200,039
8/29/2011
0 100,000 100,000 PNC Funding Corp., Sub. Note, 7.50%, 0 105,310 105,310
11/1/2009
0 100,000 100,000 Popular North America, 5.65%, 4/15/2009 0 100,078 100,078
0 250,000 250,000 US BANK NA, Sub. Note, 4.95%, 10/30/2014 0 242,308 242,308
0 250,000 250,000 Wachovia Bank NA, 4.80%, 11/1/2014 0 238,601 238,601
0 100,000 100,000 Wells Fargo Bank NA, Sub. Noet, 6.45%, 0 104,116 104,116
2/1/2011
0 75,000 75,000 Zions Bancorp, Sub. Note, 5.50%, 11/16/2015 0 73,204 73,204
0 2,339,631 2,339,631
FINANCIAL INSTITUTIONS - BROKERAGE - 0.5%
0 100,000 100,000 Amvescap PLC, Sr. Note, 4.50%, 12/15/2009 0 97,471 97,471
0 100,000 100,000 Bear Stearns & Cos., Inc., Unsecd. Note, 0 96,046 96,046
3.25%, 3/25/2009
0 150,000 150,000 Goldman Sachs Group, Inc., Note, 5.25%, 0 148,556 148,556
10/15/2013
0 400,000 400,000 Merrill Lynch & Co., Inc., Sr. Unsub., Series 0 400,160 400,160
CORE, 5.908%, 1/31/2008
0 150,000 150,000 Merrill Lynch & Co., Inc., Unsub. Note, 0 149,715 149,715
5.45%, 7/15/2014
0 100,000 100,000 Morgan Stanley, Note, 4.00%, 1/15/2010 0 96,616 96,616
0 988,564 988,564
FINANCIAL INSTITUTIONS - FINANCE NONCAPTIVE - 0.7%
0 100,000 100,000 American Express Co., Global Sr. Note, 4.75%, 0 99,049 99,049
6/17/2009
0 100,000 100,000 American General Finance Corp., 4.00%, 0 95,029 95,029
3/15/2011
0 150,000 150,000 Berkshire Hathaway, Inc., Company Guarantee, 0 145,363 145,363
4.85%, 1/15/2015
0 364,000 364,000 General Electric Capital, Note, 4.875% 0 360,192 360,192
10/21/2010
0 100,000 100,000 General Electric Capital, Note, 4.875% 0 97,104 97,104
3/4/2015
0 200,000 200,000 (1)(2) ILFC E-Capital Trust I, 5.90%, 0 201,248 201,248
12/21/2065
0 100,000 100,000 International Lease Finance Corp., Note, 0 98,644 98,644
4.875%, 9/1/2010
0 75,000 75,000 SLM Corp. Note, 4.00%, 1/15/2010 0 72,147 72,147
0 300,000 300,000 SLM Corp. Note, Series A, 3.950%, 8/15/2008 0 293,321 293,321
0 1,462,097 1,462,097
FINANCIAL INSTITUTIONS - INSURANCE - HEALTH - 0.0%
0 75,000 75,000 Aetna US Healthcare, Sr. Note, 5.75%, 0 75,960 75,960
6/15/2011
FINANCIAL INSTITUTIONS - INSURANCE - LIFE - 0.1%
0 100,000 100,000 AXA-UAP, Sub. Note, 8.60%, 12/15/2030 0 129,156 129,156
FINANCIAL INSTITUTIONS - INSURANCE - P&C - 0.3%
0 100,000 100,000 St. Paul Travelers Co., Inc., Sr. Unsecd. 0 99,632 99,632
Note, 5.50%, 12/1/2015
0 500,000 500,000 (1)(2) ZFS Finance USA Trust I, Jr. Sub. 0 507,375 507,375
Note, 6.15%, 12/15/2065
0 607,007 607,007
FINANCIAL INSTITUTIONS - REITS - 0.0%
0 75,000 75,000 Health Care Property Investments, Inc., 0 75,488 75,488
5.95%, 9/15/2011
FOREIGN - LOCAL - GOVERNMENT - 0.1%
0 100,000 100,000 Ontario, Province of, Note, 4.50%, 2/3/2015 0 95,660 95,660
TECHNOLOGY - 0.1%
0 75,000 75,000 Cisco Systems, Inc., Sr. Note, 5.25%, 0 75,045 75,045
2/22/2011
0 100,000 100,000 Dell Computer Corp., Sr. Deb., 7.10%, 0 108,150 108,150
4/15/2028
0 100,000 100,000 Oracle Corp., Sr. Unsecd. Note, Series WI, 0 98,849 98,849
5.00%, 1/15/2011
0 282,044 282,044
TRANSPORTATION - AIRLINES - 0.1%
0 75,000 75,000 Southwest Airlines Co., 6.50%, 3/1/2012 0 77,870 77,870
0 50,000 50,000 Southwest Airlines Co., Deb., 7.375%, 0 54,324 54,324
3/1/2027
0 132,194 132,194
TRANSPORTATION - RAILROADS - 0.1%
0 75,000 75,000 Burlington Northern Santa Fe Corp., Sr. Note, 0 71,588 71,588
4.875%, 1/15/2015
0 100,000 100,000 Norfolk Southern Corp., Sr. Note, 6.75%, 0 104,746 104,746
2/15/2011
0 100,000 100,000 Union Pacific Corp., 4.875%, 1/15/2015 0 95,513 95,513
0 271,847 271,847
TRANSPORTATION - SERVICES - 0.1%
0 100,000 100,000 FedEx Corp., Note, 5.50%, 8/15/2009 0 100,486 100,486
UTILITY - ELECTRIC - 0.5%
0 100,000 100,000 Cleveland Electric Illum, Sr. Unsecd. Note, 0 95,955 95,955
5.95%, 12/15/2036
0 100,000 100,000 Consolidated Edison Col, Sr. Unsecd. Note, 0 100,282 100,282
Series 2006C, 5.50%, 9/15/2016
0 100,000 100,000 Exelon Generation Co., Sr. Note, 5.35%, 0 98,167 98,167
1/15/2015
0 100,000 100,000 First Energy Corp, Note, Series B, 6.45%, 0 104,176 104,176
11/15/2011
0 100,000 100,000 PSEG Power LLC, Company Guarantee, 7.75%, 0 108,535 108,535
4/15/2011
0 75,000 75,000 PSI Energy, Inc., Bond, 6.05%, 6/15/2016 0 77,202 77,202
0 100,000 100,000 Pacific Gas & Electric Co., Unsecd. Note, 0 95,519 95,519
4.20%, 3/1/2011
0 300,000 300,000 Wisconsin Power & Light Co., Note, 7.00%, 0 301,582 301,582
6/15/2007
0 981,418 981,418
UTILITY - NATURAL GAS DISTRIBUTOR - 0.0%
0 100,000 100,000 Atmos Energy Corp., Sr. Note, 4.00%, 0 96,448 96,448
10/15/2009
TOTAL CORPORATE NOTES & BONDS (IDENTIFIED 0 13,040,431 13,040,431
COST $13,191,085)
GOVERNMENT AGENCIES - 4.4%
0 4,000,000 4,000,000 Federal Home Loan Bank System, Bond, 5.375%, 0 4,048,648 4,048,648
8/19/2011
0 1,000,000 1,000,000 Federal Home Loan Mortgage Corp., 4.125%, 0 970,660 970,660
7/12/2010
0 1,000,000 1,000,000 Federal Home Loan Mortgage Corp., 5.25%, 0 1,007,235 1,007,235
7/18/2011
0 1,000,000 1,000,000 Federal Home Loan Mortgage Corp., 5.50%, 0 1,027,315 1,027,315
7/18/2016
0 2,000,000 2,000,000 Federal National Mortgage Association, Note, 0 2,005,974 2,005,974
5.25%, 1/15/2009
TOTAL GOVERNMENT AGENCIES (IDENTIFIED COST 0 9,059,832 9,059,832
$9,088,751)
MORTGAGE BACKED SECURITIES - 0.0%
0 28,977 28,977 Federal National Mortgage Association, Pool 0 29,662 29,662
408761 7.00%, 12/1/2012
0 12,635 12,635 Federal National Mortgage Association, Pool 0 13,130 13,130
512255, 7.50%, 9/1/2014
0 42,172 42,172 Federal National Mortgage Association, Pool 0 43,197 43,197
609554, 7.50%, 10/1/2016
TOTAL MORTGAGE-BACKED SECURITIES (IDENTIFIED 0 85,989 85,989
COST $86,490)
U.S. TREASURY - 3.0%
0 1,197,372 1,197,372 U.S. Treasury Inflation Protected Note, 0 1,209,912 1,209,912
2.500%, 7/15/2016
0 1,250,000 1,250,000 United States Treasury Bond, 4.500%, 0 1,170,233 1,170,233
2/15/2036
0 4,000,000 4,000,000 United States Treasury Note, 3.875%, 0 3,809,615 3,809,615
2/15/2013
TOTAL U.S. TREASURY (IDENTIFIED COST 0 6,189,760 6,189,760
$6,287,764)
EXCHANGE TRADED FUNDS - 5.1%
0 142,450 142,450 iShares MSCI EAFE Index Fund (Identified Cost 0 10,575,488 10,575,488
$8,320,096)
MUTUAL FUNDS - 40.2%
2,285,092 0 2,285,092 (4) Capital Appreciation Core Fund 32,474,447 0 32,474,447
39,017 42,893 81,910 (4) Emerging Markets Fixed Income Core Fund 817,868 899,113 1,716,981
745,226 0 745,226 (4) Federated Intermediate Corporate Bond 7,407,542 0 7,407,542
Fund
99,385 0 99,385 (4) Federated International Bond Fund, Class 1,039,568 0 1,039,568
A Shares
138,244 0 138,244 (4) Federated International Capital 1,654,776 0 1,654,776
Appreciation Fund, Class A Shares
1,340,269 807,927 2,148,196 (4) Federated Mortgage Core Portfolio 13,201,647 7,958,084 21,159,731
605,709 0 605,709 (4) Federated U.S. Government Bond Fund 6,632,509 0 6,632,509
616,663 0 616,663 (4) Federated U.S. Government Securities 6,672,291 0 6,672,291
Fund, 2-5 Years, Institutional Shares
268,468 270,466 538,934 (4) High Yield Bond Portfolio 1,852,430 1,866,216 3,718,646
TOTAL MUTUAL FUNDS (IDENTIFIED COST 71,753,078 10,723,413 82,476,491
$81,935,992)
REPURCHASE AGREEMENTS - 2.2%
$ $ $ Bank of America, NA, 5.29%, dated 1/31/2007, 643,000 0 643,000
643,000 - 643,000 maturing 2/1/2007
Mizuho Securities USA, Inc., 5.23%, dated 0 3,949,000 3,949,000
- 3,949,000 3,949,000 1/31/2007, maturing 2/1/2007
TOTAL REPURCHASE AGREEMENTS (AT COST) 643,000 3,949,000 4,592,000
TOTAL INVESTMENTS (IDENTIFIED COST 72,396,078 133,450,414 205,846,492
$194,080,755) - 100.2%
OTHER ASSETS AND LIABILITIES - (0.2)% (573,252) (456,722)
116,530
TOTAL NET ASSETS - 100% $ $132,877,162 $205,389,770
72,512,608
Note: The categories of investments are shown as a percentage of total net
assets at January 31, 2007.
* Non Income Producing
(1) 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 January 31, 2007
these restricted securities amounted to $955,987, which represents 0.3% of
combined total net assets.
(2) Denotes a restricted security that may be resold without restriction to
"qualified institutional buyers" as defined by 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. At January 31, 2007,
these liquid restricted securities amounted to $955,987, which represented
0.3% of combined total net assets.
(3) Pledged as collateral to ensure FMDTBF is able to satisfy the obligations
of its outstanding long futures contracts.
(4) All or a portion of this security will be sold as a result of the
reorganization.
At January 31, 2007, FMDTBF had the following outstanding futures contracts.
< NUMBER OF NOTIONAL EXPIRATION UNREALIZED
DESCRIPTION CONTRACTS VALUE DATE APPRECIATION
United States Treasury
Notes 10 Year Futures - long 13 $1,387,750 March 2007 $3,195
- 13 -
FEDERATED CONSERVATIVE ALLOCATION FUND
FEDERATED MDT BALANCED FUND (A)
PRO FORMA COMBINING STATEMENTS OF ASSETS & LIABILITIES
JANUARY 31, 2007 (UNAUDITED)
FEDERATED FEDERATED
CONSERVATIVE MDT
ALLOCATION BALANCED PRO FORMA PROFORMA
FUND FUND ADJUSTMENT COMBINED
ASSETS:
Investments in securities, at value $72,396,078 $133,450,414 $0 $205,846,492
Cash 55,099 0 55,557
458
Income receivable 490,275 0 645,853
155,578
Receivable for investments sold 0 1,951,046 0 1,951,046
Receivable for daily variation margin 0 5,078 0 5,078
Receivable for shares sold 490,141 0 503,757
13,616
Total assets 0 209,007,783
72,565,730 136,442,053
LIABILITIES:
Payable for investments purchased 0 3,227,423 0 3,227,423
Payable for shares redeemed 1,200 189,772 0 190,972
Payable for administrative personnel and services fee 0 58,585 0 58,585
Payable for Directors'/Trustees' fees 0 3,351 0 3,351
Payable for distribution services fees 0 6,465 0 6,465
Payable for shareholder services fees 0 17,189 0 17,189
Accrued expenses 51,922 62,106 0 114,028
Total liabilities 53,122 3,564,891 0 3,618,013
NET ASSETS $72,512,608 $132,877,162 $0 $205,389,770
NET ASSETS CONSIST OF:
Paid-in capital $66,266,447 $119,990,246 $0 186,256,693
Net unrealized appreciation of investments 11,169,995 0 16,713,408
5,543,413
Accumulated net realized gain (loss) on investments 1,361,224 0 1,924,263
563,039
Undistributed (distributions in excess of)
net investment income 0 495,406
139,709 355,697
Total Net Assets $72,512,608 $132,877,162 $0 $205,389,770
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS
PER SHARE
INSTITUTIONAL SHARES:
NET ASSETS $47,616,221 $81,798,718 $(47,616,221) (b) $81,798,718
SHARES OUTSTANDING 4,143,746 6,016,580 (4,143,746) (b) 6,016,580
NET ASSET VALUE PER SHARE $11.49 $13.60 $13.60
OFFERING PRICE PER SHARE $11.49 $13.60 $13.60
REDEMPTION PROCEEDS PER SHARE $11.49 $13.60 $13.60
CLASS A SHARES:
NET ASSETS $0 $39,521,221 $47,616,221 (b) $87,137,442
SHARES OUTSTANDING 0 2,912,633 3,508,933 (b) 6,421,566
NET ASSET VALUE PER SHARE $0.00 $13.57 $13.57
OFFERING PRICE PER SHARE* $0.00 $14.36 * $14.36 *
REDEMPTION PROCEEDS PER SHARE $0.00 $13.57 $13.57
CLASS C SHARES:
NET ASSETS $0 $11,557,128 $24,896,389 (b) $36,453,517
SHARES OUTSTANDING 0 857,794 1,848,284 (b) 2,706,078
NET ASSET VALUE PER SHARE $0.00 $13.47 $13.47
OFFERING PRICE PER SHARE $0.00 $13.61 ** $13.61 **
REDEMPTION PROCEEDS PER SHARE $0.00 $13.34 *** $13.34 ***
CLASS K SHARES:
NET ASSETS $0 $95 $0 $95
SHARES OUTSTANDING 0 7 0 7
NET ASSET VALUE PER SHARE $0.00 $13.60 $13.60
OFFERING PRICE PER SHARE $0.00 $13.60 $13.60
REDEMPTION PROCEEDS PER SHARE $0.00 $13.60 $13.60
SELECT SHARES:
NET ASSETS $24,896,389 $0 (24,896,389) (b) $0
SHARES OUTSTANDING 2,169,061 0 (2,169,061) (b) 0
NET ASSET VALUE PER SHARE $11.48 $0.00 $0.00
OFFERING PRICE PER SHARE $11.48 $0.00 $0.00
REDEMPTION PROCEEDS PER SHARE $11.48 $0.00 $0.00
Investments, at identified cost $71,797,141 $122,283,614 $0 $194,080,755
Investments in affiliated issuers $71,753,078 $10,723,413 $0 $82,476,491
*Computation of offering price per share 100/94.50 of net asset value.
** Computation of redemption price per share 100/99.00 of net asset
value.
*** Computation of redemption price per share 99.00/100 of net asset
value.
(a) MDT Balanced Fund was reorganized into Federated MDT Balanced Fund as of the close of business on December 8, 2006. Prior
to the reorganization, Federated MDT Balanced Fund had no investment operations. Federated MDT Balanced Fund is the successor
to the MDT Balanced Fund.
(b) Adjustment to reflect share balance as a result of the combination.
- 14 -
FEDERATED CONSERVATIVE ALLOCATION FUND
FEDERATED MDT BALANCED FUND*
PRO FORMA COMBINING STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JANUARY 31, 2007 (UNAUDITED)
FEDERATED FEDERATED
CONSERVATIVE MDT
ALLOCATION BALANCED PRO FORMA PRO FORMA
FUND FUND ADJUSTMENT COMBINED
INVESTMENT INCOME:
Dividends $1,145,981 $867,491 $0 $2,013,472
Interest 17,983 956,499 0 974,482
Investment income allocated from affiliated partnerships 330,296 7,971 0 338,267
TOTAL INVESTMENT INCOME: 1,494,260 1,831,961 0 3,326,221
EXPENSES:
Investment advisory fee 286,750 417,680 0 704,430
Administrative personnel and services fee 98,595 115,946 (98,595) (a) 115,946
Custodian fees 4,001 19,922 2,964 (b) 26,887
Transfer and dividend disbursing agent fees and expenses 46,144 112,388 10,140 (c) 168,672
Directors'/Trustees' fees 2,062 1,614 155 (d) 3,831
Auditing fees 12,714 10,082 (12,714) (e) 10,082
Legal fees 5,511 4,537 (5,007) (f) 5,041
Portfolio accounting fees 27,496 42,415 (24,501) (g) 45,410
Distribution services fee - Class A Shares 0 18,948 44,461 (h) 63,409
Distribution services fee - Class C Shares 0 34,989 124,774 (h) 159,763
Distribution services fee - Select Shares 101,026 0 (101,026) (h) 0
Shareholder services fee - Class A Shares 0 13,539 17,515 (i) 31,054
Shareholder services fee - Class C Shares 0 3,650 9,486 (i) 13,136
Shareholder services fee - Institutional Shares 47,060 0 (47,060) (i) 0
Shareholder services fee - Select Shares 37,321 0 (37,321) (i) 0
Share registration costs 14,641 30,724 (7,068) (j) 38,297
Printing and postage 13,612 18,702 (9,391) (k) 22,923
Insurance premiums 2,903 4,607 (3,124) (l) 4,386
Miscellaneous 2,734 2,439 (2,552) (m) 2,621
EXPENSES BEFORE ALLOCATION 702,570 852,182 (138,863) 1,415,889
Expenses allocated from partnerships 10,866 78 0 10,944
TOTAL EXPENSES 713,436 852,260 (138,863) 1,426,833
WAIVERS AND REIMBURSEMENTS--
Waiver/Reimbursement of investment adviser fee (50,829) (76,553) 127,382 (n) 0
Waiver of administrative personnel and services fee (17,261) (57,249) 30,157 (o) (44,353)
Waiver of distribution services fee - Select Shares (33,581) 0 33,581 (p) 0
Reimbursement of shareholder services fee - Institutional (37,023) 0 37,023 (q) 0
Shares
Reimbursement of transfer and dividend disbursing agent
fees and expenses 0 (8,286) 0 (r) (8,286)
Reimbursement of other operating expenses (13,133) 0 13,133 (n) 0
TOTAL WAIVERS AND REIMBURSEMENTS (151,827) (142,088) 241,276 (52,639)
NET EXPENSES 561,609 710,172 102,413 1,374,194
NET INVESTMENT INCOME $932,651 $1,121,789 ($102,413) $1,952,027
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments 308,985 1,869,675 0 2,178,660
Net realized gain allocated from partnerships 2,059,988 3,965 0 2,063,953
Realized gain distributions from affiliated investment 103,951 0 0 103,951
company shares
Net change in unrealized appreciation (depreciation) of 2,215,343 6,469,699 0 8,685,042
investments
Net realized and unrealized gain on investments 4,688,267 8,343,339 0 13,031,606
Change in net assets resulting from operations $5,620,918 $9,465,128 ($102,413) $14,983,633
* MDT Balanced Fund was reorganized into Federated MDT Balanced Fund as of the close of business on December 8, 2006. Prior to
the reorganization, Federated MDT Balanced Fund had no investment operations. Federated MDT Balanced Fund is the successor to MDT
Blanced Fund.
(See Notes to Pro Forma Financial Statements)
- 15 -
FEDERATED CONSERVATIVE ALLOCATION FUND
FEDERATED MDT BALANCED FUND
NOTES TO PRO FORMA FINANCIAL STATEMENTS
SIX MONTHS ENDED JANUARY 31, 2007 (UNAUDITED)
NOTE 1. DESCRIPTION OF THE FUND
FCAF, a series of Federated Managed Allocation Portfolios, is registered under
the Investment Company Act of 1940, as amended (the "Act), as an open-end
management investment company. The Fund consists of two classes of shares:
Institutional Shares and Select Shares.
FMDTBF, a series of Federated MDT Series, is registered under the Act as an
open-end, management investment company. MDT Balanced Fund (the "Predecessor
Fund") was reorganized into FMDTBF as of the close of business on December 8,
2006. Prior to the reorganization, FMDTBF had no investment operations. FMDTBF
is the successor to the Predecessor Fund. For the purposes of these Pro Forma
Financial Statements, the financial information covers the period from August 1,
2006 to January 31, 2007. FMDTBF consists of four classes of shares: Class A
Shares, Class C Shares, Class K Shares and Institutional Shares. Class K Shares
became effective December 11, 2006.
NOTE 2. BASIS OF COMBINATION
The accompanying unaudited Pro Forma Combining Portfolios of Investments,
Statements of Assets and Liabilities and Statements of Operations (Pro Forma
Financial Statements) reflect the accounts of FCAF and FMDTBF for the six months
ended January 31, 2007. These statements have been derived from the books and
records utilized in calculating daily net asset values at January 31, 2007.
The Pro Forma Financial Statements should be read in conjunction with the
historical financial statements of FCAF and FMDTBF which have been incorporated
by reference in the Statement of Additional Information. The Funds follow
generally accepted accounting principles in the United States of America
applicable to management investment companies which are disclosed in the
historical financial statements.
The Pro Forma Financial Statements give effect to the proposed exchange of
assets of FCAF for Class A Shares and Class C Shares of FMDTBF. Under generally
accepted accounting principles, FMDTBF will be the surviving entity for
accounting purposes with its historical cost of investment securities and
results of operations being carried forward.
The Pro Forma Financial Statements have been adjusted to reflect the investment
advisory fee arrangement for the surviving entity. Certain other operating
costs have also been adjusted to reflect anticipated expenses of the combined
entity. Other costs which may change as a result of the reorganization are
currently undeterminable.
For the six months ended January 31, 2007, FCAF and FMDTBF paid investment
advisory fees computed at the annual rate of 0.75% as a percentage of average
daily net assets.
All costs with respect to the reorganization will be borne by Federated
Investors, Inc. and its affiliates.
NOTE 3. PORTFOLIO VALUATION
Market values of each Fund's portfolio securities are determined as follows:
{circle}for equity securities, according to the last sale price or official
closing price reported in the market in which they are primarily traded
(either a national securities exchange or the over-the-counter market), if
available;
{circle}in the absence of recorded sales for equity securities, according to
the mean between the last closing bid and asked prices;
{circle}futures contracts and options are generally valued at market values
established by the exchanges on which they are traded at the close of
trading on such exchanges. Options traded in the over-the-counter market
are generally valued according to the mean between the last bid and the
last asked price for the option as provided by an investment dealer or
other financial institution that deals in the option. The Board of
Trustees (the "Trustees") may determine in good faith that another method
of valuing such investments is necessary to appraise their fair market
value;
{circle}prices for total return swaps are furnished by an independent pricing
service and are based upon a valuation model incorporating underlying
reference indexes, interest rates, yield curves and other market data or
factors. Prices for credit default swaps are furnished by an independent
pricing service and are based upon a valuation model incorporating default
probabilities, recovery rates and other market data or factors;
{circle}for mortgage-backed securities, based on the aggregate investment
value of the projected cash flows to be generated by the security, as
furnished by an independent pricing service;
{circle}for investments in other open-end regulated investment companies,
based on net asset value (NAV);
{circle}for other fixed-income securities, according to prices as furnished
by an independent pricing service, except that fixed-income securities
with remaining maturities of less than 60 days at the time of purchase are
valued at amortized cost; and
{circle}for all other securities at fair value as determined in accordance
with procedures established by and under the general supervision of the
Trustees.
Prices for fixed-income securities furnished by a pricing service may be based
on a valuation matrix which incorporates both dealer-supplied valuations and
electronic data processing techniques. Such prices (other than prices of
mortgage-backed securities) are generally intended to be indicative of the bid
prices currently offered to institutional investors for the securities, except
that prices for corporate fixed-income and asset-backed securities traded in the
United States are generally intended to be indicative of the mean between such
bid prices and asked prices. The Trustees have approved the use of such pricing
services. A number of pricing services are available, and the Fund may use
various pricing services or discontinue the use of any pricing service.
Prices provided by independent pricing services may be determined without
relying exclusively on quoted prices and may consider institutional trading in
similar groups of securities, yield, quality, stability, risk, coupon rate,
maturity, type of issue, trading characteristics, and other market data or
factors. From time to time, when prices cannot be obtained from an independent
pricing service, securities may be valued based on quotes from broker-dealers or
other financial institutions that trade the securities.
Trading in foreign securities may be completed at times which vary from the
closing of the New York Stock Exchange (NYSE). In computing its NAV, the Fund
values foreign securities using the latest closing price on the exchange on
which they are traded immediately prior to the closing of the NYSE. Certain
foreign currency exchange rates are generally determined at the latest rate
prior to the closing of the NYSE. Foreign securities quoted in foreign
currencies are translated into U.S. dollars at current rates. Events that
affect these values and exchange rates may occur between the times at which they
are determined and the closing of the NYSE. If such events materially affect
the value of portfolio securities, these securities may be valued at their fair
value as determined in good faith by the Trustees, although the actual
calculation may be done by others.
NOTE 4. SHARES OF BENEFICIAL INTEREST
The Pro Forma Class A Shares and Class C Shares net asset value per share
assumes the issuance of 3,508,933 Class A Shares and 1,848,284 Class C Shares,
respectively, of FMDTBF in exchange for 4,143,746 Institutional Shares and
2,169,061 Select Shares of FCAF which would have been issued at July 31, 2006 in
connection with the proposed reorganization.
NOTE 5. FEDERAL INCOME TAXES
Each fund has elected to be taxed as a "regulated investment company" under the
Internal Revenue Code. After the acquisition, FMDTBF intends to continue to
qualify as a regulated investment company, if such qualification is in the best
interests of its shareholders, by complying with the Subchapter M provision of
the Internal Revenue Code and to distribute to shareholders each year
substantially all of its income. Accordingly, no provisions for federal income
tax are necessary.
The identified cost of investments for the funds is substantially the same for
both financial accounting and federal income tax purposes. The tax cost of
investments will remain unchanged for the combined fund.
NOTE 6. PROFORMA ADJUSTMENTS
(a) Federated Administrative Services (FAS), under the Administrative Services
Agreement, provides FMDTBF with certain administrative personnel and services
necessary to operate the Fund. The fee paid to FAS is based on the average
aggregate daily net assets of certain Federated funds. 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. Under a similar plan, FAS provides
FCAF with certain administrative personnel and services necessary to operate the
Fund. An adjustment to the combined administrative personnel and services fee
reflects the fee structure of FMDTBF on Federated MDT Pro Forma Combined Fund's
average daily net assets.
(b) Adjustment to reflect custodian fees resulting from the combining of two
portfolios into one.
(c) Adjustment to reflect transfer and dividend disbursing agent fees and
expenses resulting from the combining of two portfolios into one.
(d) Adjustment to reflect directors'/trustees' fees resulting from the
combining of two portfolios into one.
(e) Adjustment to reflect auditing fees resulting from the combining of two
portfolios into one.
(f) Adjustment to reflect legal fees resulting from the combining of two
portfolios into one.
(g) Adjustment to reflect portfolio accounting fees resulting from the
combining of two portfolios into one.
(h) Under a Distribution Plan (the "Plan") pursuant to Rule 12B-1 under the
Act, FMDTBF may incur distribution expenses of 0.25% and 0.75% of the daily net
assets of the Fund's Class A Shares and Class C Shares, respectively, to
compensate Federated Securities Corp. (FSC), the principal distributor. Prior
to the reorganization of the Fund on December 8, 2006, the Predecessor Fund of
FMDTBF incurred distribution expenses of 0.25% and 1.00% of the daily net assets
of the Fund's Class A Shares and Class C Shares, respectively. FSC may
voluntarily choose to waive any portion of its fee. Under a similar plan, FCAF
may incur distribution expenses up to 0.75% of the Select Shares average daily
net assets. Adjustment is to reflect expense structure of FMDTBF on average
daily net assets of Federated MDT Pro Forma Combined Fund.
(i) Effective December 11, 2006, under the terms of a Shareholder Services
Agreement, FMDTBF may pay fees up to 0.25% of the average daily net assets of
Fund's Class A and Class C shares to financial intermediaries or to Federated
Shareholder Services Company (FSSC). Prior to the reorganization, the
Predecessor Fund of FMDTBF did not incur a shareholder services fee. Under a
similar plan, FCAF may pay fees up to 0.25% of the average daily net assets of
Institutional Shares and Select Shares to financial intermediaries or to FSSC.
FSSC or these financial intermediaries may voluntarily choose to waive any
portion of their fee. Adjustment is to reflect expense structure of FMDTBF on
average daily net assets of Federated MDT Pro Forma Combined Fund.
(j) Adjustment to reflect share registration costs resulting from the combining
of two portfolios into one.
(k) Adjustment to reflect share printing and postage resulting from the
combining of two portfolios into one.
(l) Adjustment to reflect share insurance premiums resulting from the combining
of two portfolios into one.
(m) Adjustment to reflect share miscellaneous expenses resulting from the
combining of two portfolios into one.
(n) Under the investment advisory contract, Federated MDTA LLC (the "Adviser")
is contractually obligated to waive, to the extent of its adviser fee, the
amount, if any, in order to limit the aggregate annual operating expenses
(excluding interest, taxes and brokerage commissions) for FMDTBF's Class A
Shares, Class C Shares and Institutional Shares to not more than 1.50%, 2.50%
and 1.25%, respectively, of average daily net assets. The Adviser has agreed to
keep these contractual limitations in place through December 8, 2008. The
Advisor may also voluntarily choose to waive a portion of its fee and/or
reimburse certain operating expenses of FMDTBF. The Advisor can modify or
terminate this voluntary waiver and/or reimbursement at any time at its sole
discretion. An adjustment to the combined waiver of investment adviser fee
reflects the fee structure of FMDTBF on Federated MDT Pro Forma Combined Fund's
average daily net assets.
(o) Effective July 15, 2006, FAS contractually agreed to waive the portion of
its fee which it would otherwise be entitled to receive from the Predecessor
Fund of FMDTBF under the Agreement. The level of fees payable by the Fund to
FAS for the period will not exceed the level of fees which the Predecessor Fund
of FMDTBF would have paid during the period to its pervious service provider
under its previous administrative services agreement. This contractual
commitment ended with the reorganization on December 8, 2006. In addition, FAS
may voluntarily choose to waive any portion of its fee. FAS can modify or
terminate its voluntary waiver at any time at its sole discretion. An
adjustment to the combined waiver of administrative personnel and services fee
reflects the fee structure of FMDTBF on Federated MDT Pro Forma Combined Fund's
average daily net assets.
(p) An adjustment to the combined waiver of distribution services fee reflects
the fee structure of FMDTBF, which does not waive distribution services fee.
(q) An adjustment to the combined waiver and/or reimbursement of shareholder
services fee reflects the fee structure of FMDTBF, which does not waive and/or
reimburse shareholder services fee.
(r) An adjustment to the combined reimbursement of other operating expenses
reflects the fee structure of FMDTBF, which does not reimburse other operating
expenses.
- 16 -
INTRODUCTION
The accompanying unaudited Pro Forma Combining Portfolios of Investments,
Statements of Assets and Liabilities and Statements of Operations (Pro Forma
Financial Statements) reflect the accounts of Federated Conservative Allocation
Fund (FCAF) and Federated MDT Balanced Fund (FMDTBF), for the period ended July
31, 2006. MDT Balanced Fund (the "Predecessor Fund") was reorganized into FMDTBF
as of the close of business on December 8, 2006. Prior to the reorganization,
FMDTBF had no investment operations. FMDTBF is the successor to the Predecessor
Fund. For the purposes of these Pro Forma Financial Statements, the financial
information covers the period from August 1, 2005 to July 31, 2006. These
statements have been derived from the books and records utilized in calculating
daily net asset values at July 31, 2006.
The Pro Forma Financial Statements give effect to the proposed exchange of
assets of FCAF for Class A Shares and Class C Shares of FMDTBF. Under generally
accepted accounting principles, FMDTBF will be the surviving entity for
accounting purposes with its historical cost of investment securities and
results of operations being carried forward.
The Pro Forma Financial Statements have been adjusted to reflect the anticipated
advisory fee arrangement for the surviving entity. Certain other operating
costs have also been adjusted to reflect anticipated expenses of the combined
entity. Other costs which may change as a result of the reorganization are
currently undeterminable.
- 17 -
FEDERATED CONSERVATIVE
ALLOCATION FUND
FEDERATED MDT BALANCED
FUND (1)
PRO FORMA COMBINING PORTFOLIO OF
INVESTMENTS
JULY 31, 2006
(UNAUDITED)
FEDERATED FEDERATED
CONSERVATIVE FEDERATED CONSERVATIVE FEDERATED
MDT MDT
ALLOCATION BALANCED PRO FORMA ALLOCATION BALANCED PRO FORMA
FUND FUND COMBINED FUND FUND COMBINED
SHARES OR PRINCIPAL VALUE
AMOUNT
COMMON STOCKS - 29.2%
AEROSPACE & DEFENSE - 0.2%
0 1,400 1,400 Honeywell International Inc. 0 $54,180 $54,180
0 5,100 5,100 Raytheon Company 0 229,857 229,857
0 1,100 1,100 Rockwell Collins, Inc. 0 58,707 58,707
0 342,744 342,744
BEVERAGES - 0.2%
0 6,900 6,900 Coca-Cola Co. 0 307,050 307,050
0 1,600 1,600 Hansen Natural Corp.* 0 73,584 73,584
0 380,634 380,634
BIOTECHNOLOGY - 0.9%
0 6,100 6,100 Celgene Corp.* 0 292,129 292,129
0 1,400 1,400 Cephalon, Inc.* 0 92,036 92,036
0 11,800 11,800 Genentech, Inc.* 0 953,676 953,676
0 1,337,841 1,337,841
BUILDING PRODUCTS - 0.0%
0 1,900 1,900 American Standard Companies 0 73,397 73,397
CAPITAL MARKETS - 2.3%
0 2,900 2,900 Bear Stearns & Co., Inc. 0 411,423 411,423
0 14,500 14,500 Lehman Brothers Holdings, Inc. 0 941,775 941,775
0 3,300 3,300 Merrill Lynch & Co., Inc. 0 240,306 240,306
0 29,600 29,600 Morgan Stanley 0 1,968,400 1,968,400
0 1,100 1,100 OptionsXpress Holdings, Inc. 0 28,798 28,798
0 3,590,702 3,590,702
CHEMICALS - 0.0%
0 300 300 Ashland, Inc. 0 19,953 19,953
0 500 500 FMC Corp. 0 30,845 30,845
0 700 700 OM Group, Inc.* 0 24,584 24,584
0 75,382 75,382
COMMERCIAL BANKS - 0.6%
0 5,600 5,600 Comerica Incorporated 0 327,880 327,880
0 700 700 Huntington Bancshares Incorporated 0 17,045 17,045
0 1,100 1,100 M & T Bank Corp. 0 134,112 134,112
0 7,700 7,700 National City Corporation 0 277,200 277,200
0 1,300 1,300 SunTrust Banks, Inc. 0 102,531 102,531
0 1,000 1,000 UnionBanCal Corporation 0 61,790 61,790
0 920,558 920,558
COMMERCIAL SERVICES & SUPPLIES - 0.3%
0 700 700 Corporate Executive Board Co. 0 65,800 65,800
0 700 700 Dun & Bradstreet Corp.* 0 46,704 46,704
0 1,200 1,200 Republic Services, Inc. 0 48,192 48,192
0 4,100 4,100 Robert Half International Inc. 0 132,676 132,676
0 7,200 7,200 Waste Management, Inc. 0 247,536 247,536
0 540,908 540,908
COMMUNICATIONS EQUIPMENT 0.9%
0 1,400 1,400 Comverse Technology, Inc.* 0 27,132 27,132
0 37,700 37,700 QUALCOMM Incorporated 0 1,329,302 1,329,302
0 1,356,434 1,356,434
CONSTRUCTION MATERIALS 0.1%
0 1,300 1,300 Martin Marietta Materials 0 104,676 104,676
CONSUMER FINANCE 0.2%
0 2,300 2,300 AmeriCredit Corp.* 0 56,557 56,557
0 600 600 CompuCredit Corp.* 0 19,602 19,602
0 1,200 1,200 First Marblehead Corp. 0 54,960 54,960
0 2,100 2,100 SLM Corporation 0 105,630 105,630
0 236,749 236,749
CONTAINERS & PACKAGING - 0.0%
0 800 800 Temple-Inland Inc. 0 34,032 34,032
DIVERSIFIED CONSUMER SERVICES - 0.1%
0 1,100 1,100 Apollo Group, Inc., Class A* 0 52,052 52,052
0 300 300 ITT Educational Services, Inc.* 0 20,226 20,226
0 700 700 Jackson Hewitt Tax Service, Inc. 0 23,891 23,891
0 96,169 96,169
DIVERSIFIED FINANCIAL SERVICES - 0.5%
0 12,500 12,500 CIT Group Inc. 0 573,875 573,875
0 200 200 Chicago Mercantile Exchange Holdings, Inc. 0 92,240 92,240
0 3,300 3,300 Moody's Corporation 0 181,104 181,104
0 847,219 847,219
ELECTRIC UTILITIES - 0.1%
0 2,900 2,900 Allegheny Energy, Inc.* 0 119,045 119,045
0 1,200 1,200 Edison International 0 49,656 49,656
0 168,701 168,701
ELECTRICAL EQUIPMENT - 0.1%
0 1,100 1,100 Rockwell Automation, Inc. 0 68,178 68,178
0 500 500 Roper Industries, Inc. 0 22,600 22,600
0 90,778 90,778
ELECTRONIC EQUIPMENT & INSTRUMENTS 0.1%
0 700 700 Amphenol Corp., Class A 0 39,256 39,256
0 2,500 2,500 Arrow Electronics, Inc.* 0 70,650 70,650
0 3,600 3,600 Ingram Micor, Inc., Class A* 0 63,468 63,468
0 400 400 Rogers Corp.* 0 22,800 22,800
0 196,174 196,174
ENERGY EQUIPMENT & SERVICES - 2.6%
0 8,500 8,500 Baker Hughes, Inc. 0 679,575 679,575
0 800 800 Cameron International Corp.* 0 40,328 40,328
0 1,500 1,500 Diamond Offshore Drilling, Inc. 0 118,395 118,395
0 1,400 1,400 FMC Technologies, Inc.* 0 88,228 88,228
0 2,200 2,200 Grant Prideco, Inc.* 0 100,122 100,122
0 14,700 14,700 Hess Corp. 0 777,630 777,630
0 3,600 3,600 National-Oilwell, Inc.* 0 241,344 241,344
0 900 900 Oceaneering International, Inc.* 0 39,348 39,348
0 29,100 29,100 Schlumberger Ltd. 0 1,945,335 1,945,335
0 800 800 Superior Energy Services, Inc.* 0 27,400 27,400
0 400 400 Veritas DGC, Inc.* 0 22,908 22,908
0 4,080,613 4,080,613
FOOD & STAPLES - RETAILING - 0.0%
0 900 900 Longs Drug Stores Corp. 0 37,008 37,008
FOOD PRODUCTS - 0.3%
0 1,000 1,000 Dean Foods Co.* 0 37,530 37,530
0 3,800 3,800 General Mills, Inc. 0 197,220 197,220
0 2,200 2,200 Hershey Foods Corp. 0 120,934 120,934
0 2,100 2,100 Kellogg Co. 0 101,157 101,157
0 456,841 456,841
HEALTH CARE EQUIPMENT & SUPPLIES - 0.3%
0 600 600 Hologic, Inc.* 0 26,946 26,946
0 200 200 IDEXX Laboratories, Inc.* 0 17,700 17,700
0 500 500 Intuitive Surgical, Inc.* 0 47,600 47,600
0 8,800 8,800 Medtronic, Inc. 0 444,576 444,576
0 536,822 536,822
HEALTH CARE PROVIDERS & SERVICES - 0.5%
0 800 800 CIGNA Corp. 0 73,000 73,000
0 4,100 4,100 Cardinal Health, Inc. 0 274,700 274,700
0 2,300 2,300 Caremark Rx, Inc. 0 121,440 121,440
0 600 600 Express Scripts, Inc., Class A* 0 46,218 46,218
0 400 400 LCA Vision, Inc. 0 17,260 17,260
0 1,900 1,900 Laboratory Corporation of America Holdings* 0 122,398 122,398
0 700 700 Lincare Holdings, Inc.* 0 24,367 24,367
0 900 900 Quest Diagnostic, Inc. 0 54,108 54,108
0 500 500 Universal Health Services, Inc., Class B 0 28,000 28,000
0 500 500 WellPoint, Inc.* 0 37,250 37,250
0 798,741 798,741
HEALTH CARE TECHNOLOGY - 0.1%
0 3,400 3,400 Emdeon Corp.* 0 40,902 40,902
0 1,500 1,500 IMS Health, Inc. 0 41,160 41,160
0 82,062 82,062
HOTELS RESTAURANTS & LEISURE 1.0%
0 4,000 4,000 International Game Technology 0 154,640 154,640
0 9,200 9,200 Las Vegas Sand Corp.* 0 570,676 570,676
0 20,100 20,100 Starbucks Corp.* 0 688,626 688,626
0 2,700 2,700 Yum! Brands, Inc. 0 121,500 121,500
0 1,535,442 1,535,442
HOUSEHOLD DURABLES 0.4%
0 2,400 2,400 Beazer Homes USA, Inc. 0 100,056 100,056
0 3,800 3,800 Centex Corporation 0 179,778 179,778
0 2,200 2,200 KB HOME 0 93,544 93,544
0 600 600 Meritage Corp.* 0 23,262 23,262
0 1,500 1,500 Pulte Homes, Inc. 0 42,750 42,750
0 1,100 1,100 The Ryland Group, Inc. 0 44,935 44,935
0 1,400 1,400 Standard-Pacific Corp. 0 31,262 31,262
0 1,100 1,100 Toll Brothers, Inc.* 0 28,127 28,127
0 1,100 1,100 WCI Communities, Inc.* 0 17,281 17,281
0 560,995 560,995
HOUSEHOLD PRODUCTS - 0.2%
0 5,000 5,000 Kimberly-Clark Corp. 0 305,250 305,250
INDEPENDENT POWER PRODUCERS - 0.0%
0 4,400 4,400 Reliant Resources, Inc.* 0 55,352 55,352
INDUSTRIAL CONGLOMERATES - 0.6%
0 30,700 30,700 General Electric Co. 0 1,003,583 1,003,583
INSURANCE - 4.7%
0 25,950 25,950 The Allstate Corporation 0 1,474,479 1,474,479
0 3,300 3,300 AMBAC Financial Group, Inc. 0 274,263 274,263
0 2,100 2,100 American Financial Group, Inc. 0 88,431 88,431
0 11,400 11,400 American International Group, Inc. 0 691,638 691,638
0 4,200 4,200 Assurant, Inc. 0 202,314 202,314
0 5,400 5,400 Berkley, W.R. Corp. 0 194,400 194,400
0 300 300 CNA Financial Corp.* 0 10,185 10,185
0 7,800 7,800 The Chubb Corporation 0 393,276 393,276
0 1,800 1,800 Commerce Group, Inc. 0 54,378 54,378
0 1,300 1,300 Hanover Insurance Group, Inc.* 0 60,164 60,164
0 9,100 9,100 Hartford Financial Services Group, Inc. 0 772,044 772,044
0 500 500 LandAmerica Financial Group, Inc. 0 31,915 31,915
0 4,000 4,000 MBIA Insurance Corp. 0 235,240 235,240
0 25,200 25,200 Metlife, Inc. 0 1,310,400 1,310,400
0 1,400 1,400 Nationwide Financial Services, Inc. - Class A 0 63,112 63,112
0 1,200 1,200 Philadelphia Consolidated Holding Corp.* 0 40,644 40,644
0 1,800 1,800 Protective Life Corporation 0 83,358 83,358
0 2,800 2,800 Radian Group, Inc. 0 172,284 172,284
0 1,600 1,600 Reinsurance Group of America, Incorporated 0 79,312 79,312
0 4,000 4,000 SAFECO Corporation 0 214,880 214,880
0 700 700 Selective Insurance Group, Inc. 0 35,700 35,700
0 900 900 StanCorp Financial Group, Inc. 0 38,781 38,781
0 16,900 16,900 The St. Paul Travelers Companies, Inc. 0 774,020 774,020
0 400 400 Torchmark Corporation 0 24,188 24,188
0 500 500 Unitrin, Inc. 0 20,000 20,000
0 7,339,406 7,339,406
INTERNET & CATALOG RETAIL - 0.0%
0 700 700 Priceline.com, Inc.* 0 18,816 18,816
IT SERVICES - 0.3%
0 2,500 2,500 Cognizant Technology Solutions Corp.* 0 163,725 163,725
0 1,600 1,600 Computer Sciences Corp.* 0 83,824 83,824
0 900 900 DST Systems, Inc.* 0 50,679 50,679
0 1,800 1,800 Fiserv, Inc.* 0 78,588 78,588
0 600 600 Global Payments, Inc. 0 25,524 25,524
0 402,340 402,340
LEISURE EQUIPMENT & PRODUCTS - 0.0%
0 1,500 1,500 Brunswick Corp. 0 44,355 44,355
MACHINERY - 0.5%
0 600 600 Bucyrus International, Inc. 0 29,226 29,226
0 1,500 1,500 Danaher Corp. 0 97,800 97,800
0 3,700 3,700 Deere & Company 0 268,509 268,509
0 800 800 Dover Corp. 0 37,712 37,712
0 800 800 Gardner Denver, Inc.* 0 27,720 27,720
0 1,000 1,000 Ingersoll-Rand Co., Class A 0 35,800 35,800
0 2,800 2,800 Joy Global, Inc. 0 105,056 105,056
0 700 700 SPX Corp. 0 38,255 38,255
0 2,300 2,300 Timken Co. 0 74,060 74,060
0 714,138 714,138
MARINE - 0.0%
0 700 700 American Commercial Lines, Inc.* 0 38,465 38,465
MEDIA - 1.3%
0 5,700 5,700 Clear Channel Communications, Inc. 0 165,015 165,015
0 13,900 13,900 Comcast Corp., Class A* 0 477,882 477,882
0 2,600 2,600 Discovery Holding Co., Class A* 0 34,632 34,632
0 4,600 4,600 McGraw-Hill Cos., Inc. 0 258,980 258,980
0 39,800 39,800 News Corp., Inc. 0 765,752 765,752
0 2,300 2,300 Omnicom Group, Inc. 0 203,573 203,573
0 9,500 9,500 Time Warner, Inc. 0 156,750 156,750
0 2,062,584 2,062,584
METALS & MINING - 0.3%
0 500 500 Commercial Metals Company 0 11,345 11,345
0 1,800 1,800 Phelps Doge Corp. 0 157,212 157,212
0 600 600 Schnitzer Steel Industries, Inc. - Class A 0 20,340 20,340
0 3,900 3,900 United States Steel Corporation 0 245,973 245,973
0 1,900 1,900 Worthington Industries, Inc. 0 38,798 38,798
0 473,668 473,668
MULTILINE RETAIL - 0.2%
0 4,700 4,700 Dollar Tree Stores, Inc.* 0 63,074 63,074
0 4,400 4,400 Target Corp. 0 202,048 202,048
0 265,122 265,122
MULTI-UTILITIES & UNREGULATED POWER - 0.1%
0 3,800 3,800 PG&E Corp. 0 158,384 158,384
OIL & GAS - 2.7%
0 22,500 22,500 Anadarko Petroleum Corporation 0 1,029,150 1,029,150
0 2,900 2,900 Apache Corporation 0 204,363 204,363
0 30,400 30,400 ChevronTexaco Corporation 0 1,999,712 1,999,712
0 10,000 10,000 Devon Energy Corp. 0 646,400 646,400
0 700 700 General Maritime Corp. 0 25,410 25,410
0 500 500 Marathon Oil Corp. 0 45,320 45,320
0 1,600 1,600 OMI Corporation 0 35,296 35,296
0 800 800 Overseas Shipholding Group, Inc. 0 51,512 51,512
0 2,000 2,000 Pogo Producing Company 0 88,540 88,540
0 600 600 Swift Energy Company* 0 28,800 28,800
0 1,400 1,400 Tesoro Petroleum Corp. 0 104,720 104,720
0 4,259,223 4,259,223
PAPER & FOREST PRODUCTS - 0.0%
0 2,900 2,900 Louisiana-Pacific Corporation 0 58,000 58,000
PHARMACEUTICALS - 0.2%
0 3,400 3,400 Forest Laboratories, Inc., Class A* 0 157,454 157,454
0 4,300 4,300 Schering Plough Corp. 0 87,892 87,892
0 245,346 245,346
REAL ESTATE INVESTMENT TRUSTS - 3.0%
0 3,000 3,000 Alexandria Real Estate Equities, Inc. 0 283,260 283,260
0 5,750 5,750 Archstone-Smith Trust 0 301,703 301,703
0 2,700 2,700 Avalonbay Communities, Inc. 0 315,684 315,684
0 3,650 3,650 Boston Properties, Inc. 0 358,430 358,430
0 4,950 4,950 Developers Diversified Realty Corporation 0 261,261 261,261
0 6,100 6,100 Equity Residential Properties Trust 0 283,711 283,711
0 6,100 6,100 General Growth Properties, Inc. 0 278,404 278,404
0 3,500 3,500 Health Care Property Investors, Inc. 0 95,970 95,970
0 2,800 2,800 Hospitality Properties Trust 0 121,996 121,996
0 7,200 7,200 Kimco Realty Corporation 0 282,528 282,528
0 4,100 4,100 Plum Creek Timber Company, Inc. 0 139,646 139,646
0 3,000 3,000 Post Properties, Inc. 0 144,030 144,030
0 6,400 6,400 ProLogis 0 354,240 354,240
0 3,000 3,000 Public Storage, Inc. 0 240,870 240,870
0 8,500 8,500 Reckson Associates Realty Corp. 0 378,505 378,505
0 3,000 3,000 Simon Property Group, Inc. 0 256,590 256,590
0 7,000 7,000 Tanger Factory Outlet Centers, Inc. 0 230,300 230,300
0 3,650 3,650 Vornado Realty Trust 0 381,607 381,607
0 4,708,735 4,708,735
ROAD & RAIL - 0.1%
0 400 400 AMERCO* 0 35,280 35,280
0 500 500 Arkansas Best Corporation 0 22,215 22,215
0 1,100 1,100 CSX Corp. 0 66,748 66,748
0 1,800 1,800 Swift Transportation Co., Inc.* 0 48,150 48,150
0 500 500 Union Pacific Corp. 0 42,500 42,500
0 214,893 214,893
SEMICONDUCTOR & SEMICONDUCTOR EQUIPMENT - 1.0%
0 6,500 6,500 Altera Corporation* 0 112,515 112,515
0 3,200 3,200 Analog Devices, Inc. 0 103,456 103,456
0 700 700 Atheros Communications, Inc.* 0 11,564 11,564
0 7,500 7,500 Linear Technology Corporation 0 242,625 242,625
0 12,400 12,400 Marvell Technology Group Ltd.* 0 230,020 230,020
0 7,500 7,500 Maxim Integrated Products, Inc.* 0 220,350 220,350
0 1,700 1,700 Novellus Systems, Inc.* 0 43,027 43,027
0 20,600 20,600 Texas Instruments, Inc. 0 613,468 613,468
0 1,577,025 1,577,025
SOFTWARE - 1.3%
0 1,500 1,500 Informatica Corp.* 0 20,955 20,955
0 80,100 80,100 Microsoft Corp. 0 1,924,803 1,924,803
0 2,400 2,400 Red Hat, Inc.* 0 56,832 56,832
0 2,002,590 2,002,590
SPECIALTY RETAIL - 0.2%
0 500 500 The Children's Place Retail Stores, Inc.* 0 27,910 27,910
0 10,600 10,600 The Gap, Inc. 0 183,910 183,910
0 1,100 1,100 Guess?, Inc.* 0 46,860 46,860
0 1,200 1,200 Pacific Sunwear of California* 0 20,016 20,016
0 1,050 1,050 Select Comfort Corporation* 0 21,158 21,158
0 800 800 Talbots, Inc. 0 16,504 16,504
0 700 700 Tiffany & Co. 0 22,113 22,113
0 800 800 Zale Corp.* 0 20,488 20,488
0 358,959 358,959
TEXTILES, APPAREL & LUXURY GOODS - 0.2%
0 8,100 8,100 Coach, Inc.* 0 232,551 232,551
0 600 600 Under Armour, Inc., Class A* 0 24,090 24,090
0 256,641 256,641
THRIFTS & MORTGAGE FINANCE - 0.3%
0 1,400 1,400 Corus Bankshares, Inc. 0 32,326 32,326
0 800 800 Downey Financial Corp. 0 53,080 53,080
0 800 800 FirstFed Financial Corp.* 0 45,160 45,160
0 1,800 1,800 Fremont General Corp. 0 31,950 31,950
0 3,100 3,100 MGIC Investment Corporation 0 176,421 176,421
0 2,900 2,900 The PMI Group, Inc. 0 123,134 123,134
0 462,071 462,071
TOBACCO - 0.2%
0 9,000 9,000 Loews Corp. 0 333,540 333,540
TRADING COMPANIES & DISTRIBUTORS - 0.0%
0 900 900 Applied Industrial Technologies, Inc. 0 20,988 20,988
0 1,000 1,000 WESCO International, Inc.* 0 58,250 58,250
0 79,238 79,238
TOTAL COMMON STOCKS (COST $42,392,816) 0 45,919,346 45,919,346
ADJUSTABLE RATE MORTGAGES - 0.1%
$0 $166,334 $166,334 Federal Home Loan Mortgage Corp. ARM 420173,
30 Year, 5.75%, 4/1/2030
(Identified Cost $168,791) 0 168,727 168,727
ASSET-BACKED SECURITIES - 2.0%
0 1,000,000 1,000,000 American Home Mortgage Investment Trust 2004- 0 968,937 968,937
3, Class 6A4, 5.01%, 10/25/2034
0 62,546 62,546 CS First Boston Mortgage Securities Corp. 0 62,088 62,088
2002-HE4, Class AF, 5.51%, 8/25/2032
0 698,711 698,711 Community Program Loan Trust 1987-A, Class A4, 0 684,879 684,879
4.50%, 10/1/2018
0 452,714 452,714 MMCA Automobile Trust 2002-2, Class C, 5.55%, 0 448,825 448,825
3/15/2010
0 500,000 500,000 Nissan Auto Receivables Owner Trust 2004-C, 0 500,607 500,607
Class A4, 5.408%, 3/15/2010
0 500,000 500,000 People's Choice Home Loan Securities Trust 0 481,865 481,865
2004-1, Class B1, 5.00%, 6/25/2034
TOTAL ASSET-BACKED SECURITIES (IDENTIFIED COST 0 3,147,201 3,147,201
$3,177,096)
COLLATERALIZED MORTGAGE OBLIGATIONS - 10.4%
0 438,578 438,578 Banc of America Commercial Mortgage 2000-2, 0 449,757 449,757
Class A1, 7.02%, 9/15/2032
0 85,338 85,338 Banc of America Funding Corp. 2003-1, Class 0 84,074 84,074
A1, 6.00%, 5/20/2033
0 482,690 482,690 Bear Stearns Asset Backed Securities, Inc. 0 361,143 361,143
2005-AC6, Class 21PO, 0.00%, 9/25/2020
0 6,315 6,315 Bear Stearns Mortgage Securities, Inc. 1997-6, 0 6,204 6,204
Class 1A, 6.66%, 3/25/2031
0 544,180 544,180 CS First Boston Mortgage Securities Corp. 0 397,972 397,972
2003-17, Class DB4, 5.38%, 6/25/2033
0 340,174 340,174 Chase Mortgage Finance Corp. 2003-S1, Class 0 330,916 330,916
1A1, 5.25%, 2/25/2018
0 1,000,000 1,000,000 Citicorp Mortgage Securities, Inc. 2003-11, 0 962,265 962,265
Class 1A4, 5.25%, 12/25/2033
0 200,000 200,000 Countrywide Alternative Loan Trust 2005-28CB, 0 187,983 187,983
Class 1A4, 5.50%, 8/25/2035
0 18,858 18,858 Federal Home Loan Mortgage Corp. REMIC 1311 K, 0 18,858 18,858
7.00% 7/15/2022
0 37,436 37,436 Federal Home Loan Mortgage Corp. REMIC 1384 D, 0 37,436 37,436
7.00% 9/15/2022
0 46,572 46,572 Federal Home Loan Mortgage Corp. REMIC 1595 D, 0 47,854 47,854
7.00% 10/15/2013
0 750,000 750,000 Federal Home Loan Mortgage Corp. REMIC 1686 0 731,411 731,411
PJ, 5.00% 2/15/2024
0 112,696 112,696 Federal Home Loan Mortgage Corp. REMIC 2003-79 0 106,335 106,335
NM, 4.00% 5/25/2022
0 115,361 115,361 Federal Home Loan Mortgage Corp. REMIC 2366 0 115,540 115,540
VG, 6.00% 6/15/2011
0 531,253 531,253 Federal Home Loan Mortgage Corp. REMIC 2410 0 530,785 530,785
OE, 6.38% 2/15/2032
0 75,000 75,000 Federal Home Loan Mortgage Corp. REMIC 2497 0 74,631 74,631
JH, 6.00% 9/15/2032
0 125,000 125,000 Federal Home Loan Mortgage Corp. REMIC 2626 0 123,164 123,164
NA, 5.00% 6/15/2023
0 573,891 573,891 Federal Home Loan Mortgage Corp. REMIC 2647 A, 0 507,093 507,093
3.25% 4/15/2032
0 237,327 237,327 Federal Home Loan Mortgage Corp. REMIC 2648 0 171,160 171,160
TS, 5.06% 7/15/2033
0 500,000 500,000 Federal Home Loan Mortgage Corp. REMIC 2663 0 494,227 494,227
LN, 4.50% 1/15/2022
0 150,000 150,000 Federal Home Loan Mortgage Corp. REMIC 2672 0 138,329 138,329
NB, 4.00% 5/15/2016
0 164,195 164,195 Federal Home Loan Mortgage Corp. REMIC 2676 0 163,204 163,204
JA, 4.00% 5/15/2016
0 153,084 153,084 Federal Home Loan Mortgage Corp. REMIC 2756 0 145,775 145,775
NA, 5.00% 2/15/2024
0 370,502 370,502 Federal National Mortgage Association REMIC 0 400,733 400,733
1990-28 X, 9.00%, 3/25/2020
0 119,105 119,105 Federal National Mortgage Association REMIC 0 124,089 124,089
1992-188 PZ, 7.50%, 10/25/2022
0 92,856 92,856 Federal National Mortgage Association REMIC 0 102,389 102,389
1993-113 SB, 9.75%, 7/25/2023
0 745,905 745,905 Federal National Mortgage Association REMIC 0 762,577 762,577
1997-81 PD, 6.35%, 12/18/2027
0 21,619 21,619 Federal National Mortgage Association REMIC 0 22,484 22,484
2001-37 GA, 8.00%, 7/25/2016
0 440,406 440,406 Federal National Mortgage Association REMIC 0 448,823 448,823
2002-1 HC, 6.50%, 2/25/2022
0 301,369 301,369 Federal National Mortgage Association REMIC 0 307,089 307,089
2002-22 G, 6.50%, 4/25/2032
0 325,033 325,033 Federal National Mortgage Association REMIC 0 299,839 299,839
2003-28 GA, 4.00%, 10/25/2032
0 150,000 150,000 Federal National Mortgage Association REMIC 0 141,896 141,896
2003-32 KC, 5.00%, 5/25/2018
0 23,137 23,137 Federal National Mortgage Association REMIC 0 21,077 21,077
2003-35 UC, 3.75%, 5/25/2033
0 922,562 922,562 Federal National Mortgage Association REMIC 0 827,810 827,810
2003-42 CA, 4.00%, 5/25/2033
0 417,682 417,682 Federal National Mortgage Association REMIC 0 370,840 370,840
2003-49 JE, 3.00%, 4/25/2033
0 318,623 318,623 Federal National Mortgage Association REMIC 0 289,962 289,962
2003-66 MB, 3.50%, 5/25/2023
0 867,706 867,706 Federal National Mortgage Association REMIC 0 798,525 798,525
2004-2 JA, 5.00%, 2/25/2024
0 188,881 188,881 Federal National Mortgage Association REMIC 0 200,319 200,319
G92-44 ZQ, 8.00%, 7/25/2022
0 279,535 279,535 Government National Mortgage Association REMIC 0 291,431 291,431
1996-10 PD, 7.50%, 6/20/2026
0 24,940 24,940 Government National Mortgage Association REMIC 0 25,428 25,428
1999-29 PB, 7.25%, 7/16/2028
0 68,035 68,035 Government National Mortgage Association REMIC 0 68,131 68,131
2002-17 B, 6.00%, 3/20/2032
0 497,046 497,046 Government National Mortgage Association REMIC 0 429,520 429,520
2003-67 ZA, 5.00%, 8/20/2033
0 194,465 194,465 Indymac Home Equity Loan Asset-Backed Trust 0 195,114 195,114
2004-C, Class 1A1, 5.70%, 3/25/2035
0 705,857 705,857 MASTR Asset Securitization Trust 2003-6, Class 0 684,406 684,406
9A1, 4.25%, 7/25/2033
0 335,807 335,807 Structured Asset Securities Corp. 2003-212A2, 0 319,330 319,330
Class 2A2, 5.25, 8/25/2033
0 472,422 472,422 Vendee Mortgage Trust 1994-3A, Class 1ZB, 0 482,605 482,605
6.50%, 9/15/2024
0 1,000,000 1,000,000 Washington Mutual 2003-AR9, Class 1A6, 4.05%, 0 970,908 970,908
9/25/2033
0 100,000 100,000 Washington Mutual Bank, 7.50%, 8/15/2006 0 100,064 100,064
0 656,492 656,492 Wells Fargo Mortgage backed Securities Trust 0 632,720 632,720
2004-8, Class A6, 5.00%, 8/25/2019
0 1,000,000 1,000,000 Wells Fargo Mortgage backed Securities Trust 0 929,129 929,129
2005-3, Class A14, 5.50%, 5/25/2035
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS 0 16,433,354 16,433,354
(IDENTIFIED COST $16,828,594)
CORPORATE NOTES & BONDS - 1.5%
COMMUNICATIONS - TELECOM WIRELESS - 0.3%
0 400,000 400,000 GTE North, Inc., Deb., Series D, 6.90%, 0 407,859 407,859
11/1/2008
CONSUMER CYCLICAL - AUTOMOTIVE - 0.2%
0 300,000 300,000 General Motors Acceptance Corporation Notes 0 298,346 298,346
6.125%, 02/01/2007
CONSUMER NON-CYCLICAL - SUPERMARKETS - 0.2%
0 250,000 250,000 Safeway, Inc. Notes 4.800%, 07/16/2007 0 248,071 248,071
FINANCIAL INSTITUTIONS - BANKING - 0.1%
0 200,000 200,000 CIT Group, Inc., Unsecd. Note, 2.875%, 0 199,207 199,207
9/29/2006
FINANCIAL INSTITUTIONS - BROKERAGE - 0.3%
0 400,000 400,000 Merrill Lynch & Co., Inc., Sr. Unsub., Series 0 399,480 399,480
CORE, 5.898%, 1/31/2008
FINANCIAL INSTITUTIONS - FINANCE NONCAPTIVE - 0.4%
0 380,000 380,000 International Lease Finance Corp., Note, 0 379,968 379,968
5.75%, 10/15/2006
0 300,000 300,000 SLM Corporation Notes 3.950%, 08/15/2008 0 290,996 290,996
0 670,964 670,964
TOTAL CORPORATE NOTES & BONDS (IDENTIFIED COST 0 2,223,927 2,223,927
$2,258,512)
GOVERNMENT AGENCIES - 3.2%
0 1,000,000 1,000,000 Federal Home Loan Bank System, Bond, 3.50%, 0 997,821 997,821
9/8/2006
0 1,000,000 1,000,000 Federal Home Loan Mortgage Corp., 5.25%, 0 999,656 999,656
7/18/2011
0 1,000,000 1,000,000 Federal Home Loan Mortgage Corp., Unsecd. 0 960,200 960,200
Note, 4.125%, 7/12/2010
0 2,000,000 2,000,000 Federal National Mortgage Association, Note, 0 2,002,384 2,002,384
5.25%, 1/15/2009
TOTAL GOVERNMENT AGENCIES (IDENTIFIED COST 0 4,960,061 4,960,061
$4,983,096)
MORTGAGE BACKED SECURITIES - 0.4%
0 252,500 252,500 Federal Home Loan Mortgage Corp., Pool E01538, 0 245,762 245,762
5.00%, 12/1/2018
0 31,714 31,714 Federal National Mortgage Association, Pool 0 32,433 32,433
408761 7.00%, 12/1/2012
0 13,263 13,263 Federal National Mortgage Association, Pool 0 13,664 13,664
512255, 7.50%, 9/1/2014
0 44,159 44,159 Federal National Mortgage Association, Pool 0 45,496 45,496
609554, 7.50%, 10/1/2016
0 363,324 363,324 Federal National Mortgage Association, Pool 0 348,121 348,121
754886, 4.50%, 9/1/2018
TOTAL MORTGAGE-BACKED SECURITIES (IDENTIFIED 0 685,476 685,476
COST $705,252)
EXCHANGE TRADED FUNDS - 2.3%
0 54,950 54,950 iShares MSCI EAFE Index Fund (Identified Cost 0 3,622,304 3,622,304
$1,945,943)
MUTUAL FUNDS - 50.0%
2,584,533 0 2,584,533 (2) Capital Appreciation Core Fund 32,236,389 0 32,236,389
1,736 0 1,736 (2) Emerging Markets Fixed Income Core Fund 33,535 0 33,535
867,589 0 867,589 (2) Federated Intermediate Corporate Bond Fund 8,519,722 0 8,519,722
150,921 0 150,921 (2) Federated International Bond Fund, Class A 1,639,005 0 1,639,005
Shares
246,116 0 246,116 (2) Federated International Capital 2,852,488 0 2,852,488
Appreciation Fund, Class A Shares
1,473,438 0 1,473,438 (2) Federated Mortgage Core Portfolio 14,351,283 0 14,351,283
648,672 0 648,672 (2) Federated U.S. Government Bond Fund 7,051,066 0 7,051,066
701,439 0 701,439 (2) Federated U.S. Government Securities Fund, 7,568,532 0 7,568,532
2-5 Years, Institutional Shares
328,871 0 328,871 (2) High Yield Bond Portfolio 2,183,702 0 2,183,702
0 2,288,104 2,288,104 SSgA Prime Money Market Fund (At Net Asset 0 2,288,104 2,288,104
Value)
TOTAL MUTUAL FUNDS (IDENTIFIED COST 76,435,722 2,288,104 78,723,826
$75,395,756)
REPURCHASE AGREEMENT - 0.7%
$ $ $ Bank of America N.A., 5.29%, dated 7/31/2006, 1,179,000 0 1,179,000
1,179,000 - 1,179,000 with a maturity of 8/1/2006 (at Amortized
Cost)
TOTAL INVESTMENTS (IDENTIFIED COST 77,614,722 79,448,500 157,063,222
$149,034,856) - 99.8%
OTHER ASSETS AND LIABILITIES - 0.2% 170,965 289,490
118,525
TOTAL NET ASSETS - 100% $77,733,247 $79,619,465 $157,352,712
Note: The categories of investments are shown as a percentage of total net
assets at July 31, 2006.
* Non Income Producing
(1) MDT Balanced Fund was reorganized into Federated MDT Balanced Fund as of
the close of business on December 8, 2006. Prior to the reorganization,
Federated MDT Balanced Fund had no investment operations. Federated MDT
Balanced Fund is the successor to the MDT Balanced Fund.
(2) All or a portion of this security will be sold as a result of the
reorganization.
>
- 18 -
FEDERATED CONSERVATIVE ALLOCATION FUND
FEDERATED MDT BALANCED FUND (A)
PRO FORMA COMBINING STATEMENTS OF ASSETS & LIABILITIES
JULY 31, 2006 (UNAUDITED)
FEDERATED FEDERATED
CONSERVATIVE MDT
ALLOCATION BALANCED PRO FORMA PROFORMA
FUND FUND ADJUSTMENT COMBINED
ASSETS:
Investments in securities, at value $77,614,722 $79,448,500 $0 $157,063,222
Cash 26,063 0 26,661
598
Income receivable 194,901 0 377,949
183,048
Receivable for investments sold 0 3,925,155 0 3,925,155
Receivable for shares sold 103,837 0 106,580
2,743
Total assets 0 161,499,567
77,801,111 83,698,456
LIABILITIES:
Payable for investments purchased 0 3,953,075 0 3,953,075
Payable for shares redeemed 0 25,000 0 25,000
Payable for investment adviser fee 0 23,284 0 23,284
Payable for Directors'/Trustees' fees 69 10,178 0 10,247
Payable for distribution services fees 11,763 3,025 0 14,788
Payable for shareholder services fees 8,571 0 0 8,571
Accrued expenses 47,461 64,429 0 111,890
Total liabilities 67,864 4,078,991 0 4,146,855
NET ASSETS $77,733,247 $78,619,465 $0 $157,352,712
NET ASSETS CONSIST OF:
Paid-in capital $74,001,035 $68,844,460 $0 142,845,495
Net unrealized appreciation of investments 4,700,296 0 8,028,366
3,328,070
Accumulated net realized gain (loss) on investments 5,379,478 0 5,562,094
182,616
Undistributed net investment income 0 916,757
221,526 695,231
Total Net Assets $77,733,247 $79,619,465 $0 $157,352,712
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS
PER SHARE
INSTITUTIONAL SHARES:
NET ASSETS $49,602,897 ($49,602,897) (b) $73,747,134
$73,747,134
SHARES OUTSTANDING 4,453,677 5,573,783 (4,453,677) (b) 5,573,783
NET ASSET VALUE PER SHARE $11.14 $13.23 $13.23
OFFERING PRICE PER SHARE $11.14 $13.23 $13.23
REDEMPTION PROCEEDS PER SHARE $11.14 $13.23 $13.23
CLASS A SHARES:
NET ASSETS $0 $1,962,276 $49,602,897 (b) $51,565,173
SHARES OUTSTANDING 0 148,492 3,754,951 (b) 3,903,443
NET ASSET VALUE PER SHARE $0.00 $13.21 $13.21
OFFERING PRICE PER SHARE* $0.00 $13.98 * $13.98 *
REDEMPTION PROCEEDS PER SHARE $0.00 $13.21 $13.21
CLASS C SHARES:
NET ASSETS $0 $3,910,055 $28,130,350 (b) $32,040,405
SHARES OUTSTANDING 0 297,817 2,142,449 (b) 2,440,266
NET ASSET VALUE PER SHARE $0.00 $13.13 $13.13
OFFERING PRICE PER SHARE $0.00 $13.13 $13.13
REDEMPTION PROCEEDS PER SHARE $0.00 $13.00 ** $13.00 **
SELECT SHARES:
NET ASSETS $28,130,350 $0 $(28,130,350) (b) $0
SHARES OUTSTANDING 2,526,139 0 (2,526,139) (b) 0
NET ASSET VALUE PER SHARE $11.14 $0.00 $0.00
OFFERING PRICE PER SHARE $11.14 $0.00 $0.00
REDEMPTION PROCEEDS PER SHARE $11.14 $0.00 $0.00
Investments, at identified cost $74,286,652 $74,748,204 $0 $149,034,856
Investments in affiliated issuers $76,435,722 $0 $0 $76,435,722
*Computation of offering price per share 100/94.50 of net asset value.
** Computation of redemption price per share 100/99.00 of net asset
value.
(a) MDT Balanced Fund was reorganized into Federated MDT Balanced Fund as of the close of business on December 8, 2006. Prior
to the reorganization, Federated MDT Balanced Fund had no investment operations. Federated MDT Balanced Fund is the successor
to the MDT Balanced Fund.
(b) Adjustment to reflect share balance as a result of the combination.
- 19 -
FEDERATED CONSERVATIVE ALLOCATION FUND
FEDERATED MDT BALANCED FUND
PRO FORMA COMBINING STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED JULY 31, 2006 (UNAUDITED)
FEDERATED FEDERATED
CONSERVATIVE MDT
ALLOCATION BALANCED PRO FORMA PRO FORMA
FUND FUND ADJUSTMENT COMBINED
INVESTMENT INCOME:
Dividends $2,308,159 $838,271 $0 $3,146,430
Interest 39,040 1,469,679 0 1,508,719
Investment income allocated from affiliated partnerships 735,552 0 0 735,552
TOTAL INVESTMENT INCOME: 3,082,751 2,307,950 0 5,390,701
EXPENSES:
Investment advisory fee 648,825 562,720 0 1,211,545
Administrative personnel and services fee 190,040 97,506 (77,661) (a) 209,885
Custodian fees 5,910 32,807 23,798 (b) 62,515
Transfer and dividend disbursing agent fees and expenses 107,069 95,765 (55,882) (c) 146,952
Directors'/Trustees' fees 4,141 31,234 8,887 (d) 44,262
Auditing fees 31,081 23,086 (31,081) (e) 23,086
Legal fees 7,274 27,491 20,020 (f) 54,785
Portfolio accounting fees 55,122 93,403 (6,903) (g) 141,622
Distribution services fee - Class A Shares 0 934 138,216 (h) 139,150
Distribution services fee - Class C Shares 0 9,950 312,214 (h) 322,164
Distribution services fee - Select Shares 234,372 0 (234,372) (h) 0
Shareholder services fee - Institutional Shares 125,795 0 (125,795) (i) 0
Shareholder services fee - Select Shares 76,570 0 (76,570) (i) 0
Share registration costs 30,884 49,474 (27,884) (j) 52,474
Printing and postage 3,747 15,626 7,032 (k) 26,405
Insurance premiums 7,859 10,170 (4,536) (l) 13,493
Miscellaneous 4,369 4,248 (2,893) (m) 5,724
EXPENSES BEFORE ALLOCATION 1,533,058 1,054,414 (133,410) 2,454,062
Expenses allocated from partnerships 17,582 0 0 17,582
TOTAL EXPENSES 1,550,640 1,054,414 (133,410) 2,471,644
WAIVERS AND REIMBURSEMENTS--
(n) (5,006)
Waiver/Reimbursement of investment adviser fee (151,709) (102,760) 249,463
Waiver of administrative personnel and services fee (34,134) (6,109) 26,964 (o) (13,279)
Waiver of distribution services fee - Select Shares (78,063) 0 78,063 (p) 0
Waiver of shareholder services fee - Institutional Shares (69,109) 0 69,109 (q) 0
Reimbursement of shareholder services fee - Institutional (9,622) 0 9,622 (q) 0
Shares
Reimbursement of other operating expenses (42,260) 0 42,260 (r) 0
TOTAL WAIVERS AND REIMBURSEMENTS (384,897) (108,869) 475,481 (18,285)
NET EXPENSES 1,165,743 945,545 342,071 2,453,359
NET INVESTMENT INCOME $1,917,008 $1,362,405 ($342,071) $2,937,342
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments 9,666 6,686,253 0 6,695,919
Net realized gain allocated from partnerships 2,525,844 0 0 2,525,844
Realized gain distributions from affiliated investment 101,830 0 0 101,830
company shares
Net change in unrealized appreciation (depreciation) of (2,066,962) (3,917,876) 0 (5,984,838)
investments
Net realized and unrealized gain on investments 570,378 2,768,377 0 3,338,755
Change in net assets resulting from operations $2,487,386 $4,130,782 ($342,071) $6,276,097
* MDT Balanced Fund was reorganized into Federated MDT Balanced Fund as of the close of business on December 8, 2006. Prior to the
reorganization, Federated MDT Balanced Fund had no investment operations. Federated MDT Balanced Fund is the successor to MDT
Blanced Fund.
(See Notes to Pro Forma Financial Statements)
- 20 -
FEDERATED CONSERVATIVE ALLOCATION FUND
FEDERATED MDT BALANCED FUND
NOTES TO PRO FORMA FINANCIAL STATEMENTS
YEAR ENDED JULY 31, 2006 (UNAUDITED)
NOTE 1. DESCRIPTION OF THE FUND
FCAF, a series of Federated Managed Allocation Portfolios, is registered under
the Investment Company Act of 1940, as amended (the "Act), as an open-end
management investment company. The Fund consists of two classes of shares:
Institutional Shares and Select Shares.
FMDTBF, a series of Federated MDT Series, is registered under the Act as an
open-end, management investment company. MDT Balanced Fund (the "Predecessor
Fund") was reorganized into FMDTBF as of the close of business on December 8,
2006. Prior to the reorganization, FMDTBF had no investment operations. FMDTBF
is the successor to the Predecessor Fund. For the purposes of these Pro Forma
Financial Statements, the financial information covers the period from August 1,
2005 to July 31, 2006. FMDTBF consists of four classes of shares: Class A
Shares, Class C Shares, Class K Shares and Institutional Shares. Class K Shares
did not become effective until December 11, 2006.
NOTE 2. BASIS OF COMBINATION
The accompanying unaudited Pro Forma Combining Portfolios of Investments,
Statements of Assets and Liabilities and Statements of Operations (Pro Forma
Financial Statements) reflect the accounts of FCAF and the Predecessor Fund of
FMDTBF for the year ended July 31, 2006. These statements have been derived
from the books and records utilized in calculating daily net asset values at
July 31, 2006.
The Pro Forma Financial Statements should be read in conjunction with the
historical financial statements of FCAF and the Predecessor Fund of FMDTBF which
have been incorporated by reference in the Statement of Additional Information.
The Funds follow generally accepted accounting principles in the United States
of America applicable to management investment companies which are disclosed in
the historical financial statements.
The Pro Forma Financial Statements give effect to the proposed exchange of
assets of FCAF for Class A Shares and Class C Shares of the Predecessor Fund of
FMDTBF. Under generally accepted accounting principles, FMDTBF will be the
surviving entity for accounting purposes with its historical cost of investment
securities and results of operations being carried forward.
The Pro Forma Financial Statements have been adjusted to reflect the investment
advisory fee arrangement for the surviving entity. Certain other operating
costs have also been adjusted to reflect anticipated expenses of the combined
entity. Other costs which may change as a result of the reorganization are
currently undeterminable.
For the year ended July 31, 2006, FCAF and the Predecessor Fund of FMDTBF paid
investment advisory fees computed at the annual rate of 0.75% as a percentage of
average daily net assets.
All costs with respect to the reorganization will be borne by Federated
Investors, Inc. and its affiliates.
NOTE 3. PORTFOLIO VALUATION
Market values of each Fund's portfolio securities are determined as follows:
{circle}for equity securities, according to the last sale price or official
closing price reported in the market in which they are primarily traded
(either a national securities exchange or the over-the-counter market), if
available;
{circle}in the absence of recorded sales for equity securities, according to
the mean between the last closing bid and asked prices;
{circle}futures contracts and options are generally valued at market values
established by the exchanges on which they are traded at the close of
trading on such exchanges. Options traded in the over-the-counter market
are generally valued according to the mean between the last bid and the
last asked price for the option as provided by an investment dealer or
other financial institution that deals in the option. The Board of
Trustees (the "Trustees") may determine in good faith that another method
of valuing such investments is necessary to appraise their fair market
value;
{circle}prices for total return swaps are furnished by an independent pricing
service and are based upon a valuation model incorporating underlying
reference indexes, interest rates, yield curves and other market data or
factors. Prices for credit default swaps are furnished by an independent
pricing service and are based upon a valuation model incorporating default
probabilities, recovery rates and other market data or factors;
{circle}for mortgage-backed securities, based on the aggregate investment
value of the projected cash flows to be generated by the security, as
furnished by an independent pricing service;
{circle}for investments in other open-end regulated investment companies,
based on net asset value (NAV);
{circle}for other fixed-income securities, according to prices as furnished
by an independent pricing service, except that fixed-income securities
with remaining maturities of less than 60 days at the time of purchase are
valued at amortized cost; and
{circle}for all other securities at fair value as determined in accordance
with procedures established by and under the general supervision of the
Trustees.
Prices for fixed-income securities furnished by a pricing service may be based
on a valuation matrix which incorporates both dealer-supplied valuations and
electronic data processing techniques. Such prices (other than prices of
mortgage-backed securities) are generally intended to be indicative of the bid
prices currently offered to institutional investors for the securities, except
that prices for corporate fixed-income and asset-backed securities traded in the
United States are generally intended to be indicative of the mean between such
bid prices and asked prices. The Trustees have approved the use of such pricing
services. A number of pricing services are available, and the Fund may use
various pricing services or discontinue the use of any pricing service.
Prices provided by independent pricing services may be determined without
relying exclusively on quoted prices and may consider institutional trading in
similar groups of securities, yield, quality, stability, risk, coupon rate,
maturity, type of issue, trading characteristics, and other market data or
factors. From time to time, when prices cannot be obtained from an independent
pricing service, securities may be valued based on quotes from broker-dealers or
other financial institutions that trade the securities.
Trading in foreign securities may be completed at times which vary from the
closing of the New York Stock Exchange (NYSE). In computing its NAV, the Fund
values foreign securities using the latest closing price on the exchange on
which they are traded immediately prior to the closing of the NYSE. Certain
foreign currency exchange rates are generally determined at the latest rate
prior to the closing of the NYSE. Foreign securities quoted in foreign
currencies are translated into U.S. dollars at current rates. Events that
affect these values and exchange rates may occur between the times at which they
are determined and the closing of the NYSE. If such events materially affect
the value of portfolio securities, these securities may be valued at their fair
value as determined in good faith by the Trustees, although the actual
calculation may be done by others.
NOTE 4. SHARES OF BENEFICIAL INTEREST
The Pro Forma Class A Shares and Class C Shares net asset value per share
assumes the issuance of 3,754,951 Class A Shares and 2,142,449 Class C Shares,
respectively, of the Predecessor Fund of FMDTBF in exchange for 4,453,677
Institutional Shares and 2,526,139 Select Shares of FCAF which would have been
issued at July 31, 2006 in connection with the proposed reorganization.
NOTE 5. FEDERAL INCOME TAXES
Each fund has elected to be taxed as a "regulated investment company" under the
Internal Revenue Code. After the acquisition, the Predecessor Fund of FMDTBF
intends to continue to qualify as a regulated investment company, if such
qualification is in the best interests of its shareholders, by complying with
the Subchapter M provision of the Internal Revenue Code and to distribute to
shareholders each year substantially all of its income. Accordingly, no
provisions for federal income tax are necessary.
The identified cost of investments for the funds is substantially the same for
both financial accounting and federal income tax purposes. The tax cost of
investments will remain unchanged for the combined fund.
NOTE 6. PROFORMA ADJUSTMENTS
(a) Effective July 15, 2005, Federated Administrative Services (FAS), under the
Administrative Services Agreement, provides the Predecessor Fund of FMDTBF with
certain administrative personnel and services necessary to operate the Fund.
The fee paid to FAS is based on the average aggregate daily net assets of
certain Federated funds. 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. Under a similar plan, FAS provides FCAF with certain administrative
personnel and services necessary to operate the Fund. Prior to July 15, 2005, a
previous administrator provided administrative services to the Predecessor Fund
of FMDTBF. An adjustment to the combined administrative personnel and services
fee reflects the fee structure of the Predecessor Fund of FMDTBF on Federated
MDT Pro Forma Combined Fund's average daily net assets.
(b) Adjustment to reflect custodian fees resulting from the combining of two
portfolios into one.
(c) Adjustment to reflect transfer and dividend disbursing agent fees and
expenses resulting from the combining of two portfolios into one.
(d) Adjustment to reflect directors'/trustees' fees resulting from the
combining of two portfolios into one.
(e) Adjustment to reflect auditing fees resulting from the combining of two
portfolios into one.
(f) Adjustment to reflect legal fees resulting from the combining of two
portfolios into one.
(g) Adjustment to reflect portfolio accounting fees resulting from the
combining of two portfolios into one.
(h) Under a Distribution Plan (the "Plan") pursuant to Rule 12B-1 under the
Act, FMDTBF may incur distribution expenses of 0.25% and 0.75% of the daily net
assets of the Fund's Class A Shares and Class C Shares, respectively, to
compensate Federated Securities Corp. (FSC), the principal distributor. Prior
to the reorganization of the Fund on December 8, 2006, the Predecessor Fund of
FMDTBF incurred distribution expenses of 0.25% and 1.00% of the daily net assets
of the Fund's Class A Shares and Class C Shares, respectively. FSC may
voluntarily choose to waive any portion of its fee. Under a similar plan, FCAF
may incur distribution expenses up to 0.75% of the Select Shares average daily
net assets. Adjustment is to reflect expense structure of the Predecessor Fund
of FMDTBF on average daily net assets of Federated MDT Pro Forma Combined Fund.
(i) Effective December 11, 2006, under the terms of a Shareholder Services
Agreement, FMDTBF may pay fees up to 0.25% of the average daily net assets of
Fund's Class A and Class C shares to financial intermediaries or to Federated
Shareholder Services Company (FSSC). Prior to the reorganization, the
Predecessor Fund of FMDTBF did not incur a shareholder services fee. Under a
similar plan, FCAF may pay fees up to 0.25% of the average daily net assets of
Institutional Shares and Select Shares to financial intermediaries or to FSSC.
FSSC or these financial intermediaries may voluntarily choose to waive any
portion of their fee. Adjustment is to reflect expense structure of the
Predecessor Fund of FMDTBF on average daily net assets of Federated MDT Pro
Forma Combined Fund.
(j) Adjustment to reflect share registration costs resulting from the combining
of two portfolios into one.
(k) Adjustment to reflect share printing and postage resulting from the
combining of two portfolios into one.
(l) Adjustment to reflect share insurance premiums resulting from the combining
of two portfolios into one.
(m) Adjustment to reflect share miscellaneous expenses resulting from the
combining of two portfolios into one.
(n) Under the investment advisory contract, Federated MDTA LLC (the "Adviser")
is contractually obligated to waive, to the extent of its adviser fee, the
amount, if any, in order to limit the aggregate annual operating expenses
(excluding interest, taxes and brokerage commissions) for the Predecessor Fund
of FMDTBF's Class A Shares, Class C Shares and Institutional Shares to not more
than 1.50%, 2.50% and 1.25%, respectively, of average daily net assets. The
Adviser has agreed to keep these contractual limitations in place through
December 8, 2008. The Advisor may also voluntarily choose to waive a portion of
its fee and/or reimburse certain operating expenses of the the Predecessor Fund
of FMDTBF. The Advisor can modify or terminate this voluntary waiver and/or
reimbursement at any time at its sole discretion. An adjustment to the combined
waiver of investment adviser fee reflects the fee structure of the Predecessor
Fund of FMDTBF on Federated MDT Pro Forma Combined Fund's average daily net
assets.
(o) Effective July 15, 2006, FAS contractually agreed to waive the portion of
its fee which it would otherwise be entitled to receive from the Predecessor
Fund of FMDTBF under the Agreement. The level of fees payable by the
Predecessor Fund of FMDTBF to FAS for the period will not exceed the level of
fees which the Predecessor Fund of FMDTBF d would have paid during the period to
its pervious service provider under its previous administrative services
agreement. In addition, FAS may voluntarily choose to waive any portion of its
fee. FAS can modify or terminate its voluntary waiver at any time at its sole
discretion. An adjustment to the combined waiver of administrative personnel
and services fee reflects the fee structure of the Predecessor Fund of FMDTBF on
Federated MDT Pro Forma Combined Fund's average daily net assets.
(p) An adjustment to the combined waiver of distribution services fee reflects
the fee structure of the Predecessor Fund of FMDTBF, which does not waive
distribution services fee.
(q) An adjustment to the combined waiver and/or reimbursement of shareholder
services fee reflects the fee structure of the Predecessor Fund of FMDTBF, which
does not waive and/or reimburse shareholder services fee.
(r) An adjustment to the combined reimbursement of other operating expenses
reflects the fee structure of the Predecessor Fund of FMDTBF, which does not
reimburse other operating expenses.
- 21 -
The accompanying unaudited Pro Forma Combining Portfolios of Investments,
Statements of Assets and Liabilities and Statements of Operations (Pro Forma
Financial Statements) reflect the accounts of Federated Moderate Allocation Fund
(FMAF) and Federated MDT Balanced Fund (FMDTBF), for the period ended July 31,
2006. MDT Balanced Fund (the "Predecessor Fund") was reorganized into FMDTBF as
of the close of business on December 8, 2006. Prior to the reorganization,
FMDTBF had no investment operations. FMDTBF is the successor to the Predecessor
Fund. For the purposes of these Pro Forma Financial Statements, the financial
information covers the period from August 1, 2006 to January 31, 2007. These
statements have been derived from the books and records utilized in calculating
daily net asset values at January 31, 2007.
The Pro Forma Financial Statements give effect to the proposed exchange of
assets of each of FMAF for Class A Shares and Class C Shares of FMDTBF. Under
generally accepted accounting principles, FMDTBF will be the surviving entity
for accounting purposes with its historical cost of investment securities and
results of operations being carried forward.
The Pro Forma Financial Statements have been adjusted to reflect the anticipated
advisory fee arrangement for the surviving entity. Certain other operating
costs have also been adjusted to reflect anticipated expenses of the combined
entity. Other costs which may change as a result of the reorganization are
currently undeterminable.
- 22 -
FEDERATED MODERATE
ALLOCATION FUND
FEDERATED MDT BALANCED
FUND (1)
PRO FORMA COMBINING PORTFOLIO OF
INVESTMENTS
JANUARY 31, 2007
(UNAUDITED)
FEDERATED FEDERATED FEDERATED FEDERATED
MODERATE MDT PRO FORMA MODERATE MDT BALANCED PRO FORMA
BALANCED
ALLOCATION FUND COMBINED ALLOCATION FUND COMBINED
FUND FUND
SHARES VALUE
COMMON STOCKS - 32.7%
AEROSPACE & DEFENSE - 0.2%
0 800 800 Lockheed Martin Corp. 0 $77,752 $77,752
0 6,400 6,400 Raytheon Co. 0 332,160 332,160
0 800 800 United Technologies Corp. 0 54,416 54,416
0 464,328 464,328
BIOTECHNOLOGY - 0.7%
0 1,500 1,500 Celgene Corp.* 0 108,615 108,615
0 14,700 14,700 Genentech, Inc.* 0 1,284,339 1,284,339
0 4,300 4,300 Medimmune, Inc.* 0 149,038 149,038
0 1,541,992 1,541,992
BUILDING PRODUCTS - 0.1%
0 3,200 3,200 American Standard Companies 0 158,048 158,048
CAPITAL MARKETS - 2.4%
0 600 600 Affiliated Managers Group* 0 66,840 66,840
0 4,700 4,700 Bear Stearns & Co., Inc. 0 774,795 774,795
0 900 900 Lehman Brothers Holdings, Inc. 0 74,016 74,016
0 17,900 17,900 Merrill Lynch & Co., Inc. 0 1,674,724 1,674,724
0 38,500 38,500 Morgan Stanley 0 3,187,415 3,187,415
0 5,777,790 5,777,790
CHEMICALS - 0.5%
0 500 500 Ashland, Inc. 0 34,775 34,775
0 26,300 26,300 Dow Chemical Co. 0 1,092,502 1,092,502
0 2,100 2,100 Nalco Holding Co.* 0 48,279 48,279
0 1,175,556 1,175,556
COMMERCIAL BANKS - 2.2%
0 300 300 City National Corp. 0 21,579 21,579
0 7,400 7,400 Comerica, Inc. 0 438,820 438,820
0 3,100 3,100 Fifth Third Bancorp 0 123,690 123,690
0 700 700 Huntington Bancshares, Inc. 0 16,296 16,296
0 62,500 62,500 J.P. Morgan Chase & Co. 0 3,183,125 3,183,125
0 11,157 11,157 KeyCorp 0 425,863 425,863
0 12,000 12,000 National City Corp. 0 454,200 454,200
0 3,600 3,600 SunTrust Banks, Inc. 0 299,160 299,160
0 2,300 2,300 UnionBanCal Corp. 0 148,626 148,626
0 5,111,359 5,111,359
COMMERCIAL SERVICES & SUPPLIES - 0.3%
0 500 500 Brinks Co. 0 31,075 31,075
0 900 900 Dun & Bradstreet Corp. 0 76,500 76,500
0 1,000 1,000 Equifax, Inc. 0 41,530 41,530
0 1,700 1,700 Miller Herman, Inc. 0 63,920 63,920
0 2,900 2,900 Pitney Bowes, Inc. 0 138,823 138,823
0 5,100 5,100 Robert Half International, Inc. 0 207,570 207,570
0 1,400 1,400 TeleTech Holdings, Inc.* 0 37,730 37,730
0 500 500 United Stationers, Inc.* 0 25,480 25,480
0 622,628 622,628
COMMUNICATIONS EQUIPMENT - 0.0%
0 1,700 1,700 Comverse Technology, Inc.* 0 32,895 32,895
0 800 800 F5 Networks, Inc.* 0 57,152 57,152
0 90,047 90,047
COMPUTER & PERIPHERALS - 0.7%
0 15,200 15,200 Apple, Inc.* 0 1,303,096 1,303,096
0 9,400 9,400 Network Appliance, Inc.* 0 353,440 353,440
0 1,656,536 1,656,536
CONSTRUCTION MATERIALS - 0.1%
0 600 600 Texas Industries, Inc. 0 44,052 44,052
0 1,800 1,800 Vulcan Materials Co. 0 183,312 183,312
0 227,364 227,364
CONSUMER FINANCE - 0.1%
0 5,000 5,000 AmeriCredit Corp.* 0 135,700 135,700
0 2,200 2,200 First Marblehead Corp.* 0 119,680 119,680
0 255,380 255,380
CONTAINERS & PACKAGING - 0.1%
0 1,300 1,300 Crown Holdings, Inc.* 0 28,691 28,691
0 800 800 Sealed Air Corp. 0 52,720 52,720
0 1,600 1,600 Temple-Inland, Inc. 0 79,904 79,904
0 161,315 161,315
DIVERSIFIED CONSUMER SERVICES - 0.1%
0 800 800 ITT Educational Services, Inc.* 0 62,080 62,080
0 1,600 1,600 Weight Watchers International, Inc.* 0 86,448 86,448
0 148,528 148,528
DIVERSIFIED FINANCIAL SERVICES - 0.5%
0 13,300 13,300 CIT Group Inc. 0 784,168 784,168
0 300 300 Chicago Mercantile Exchange Holdings, Inc. 0 168,990 168,990
0 4,200 4,200 Moody's Corp. 0 300,552 300,552
0 1,253,710 1,253,710
DIVERSIFIED TELECOMMUNICATIONS SERVICES - 0.2%
0 7,000 7,000 Embarq Corp. 0 388,570 388,570
ELECTRIC UTILITIES - 0.2%
0 4,400 4,400 Allegheny Energy, Inc.* 0 204,688 204,688
0 2,900 2,900 Edison International 0 130,442 130,442
0 1,300 1,300 FirstEnergy Corp. 0 77,129 77,129
0 1,300 1,300 Portland General Electric Co. 0 33,982 33,982
0 4,700 4,700 Reliant Resources, Inc.* 0 69,936 69,936
0 516,177 516,177
ELECTRICAL EQUIPMENT - 0.3%
0 13,800 13,800 Honeywell International, Inc. 0 630,522 630,522
0 500 500 Roper Industries, Inc. 0 25,960 25,960
0 656,482 656,482
ELECTRONIC EQUIPMENT & INSTRUMENTS - 0.2%
0 2,900 2,900 Amphenol Corp., Class A 0 196,388 196,388
0 5,400 5,400 Avnet, Inc.* 0 167,670 167,670
0 1,200 1,200 Daktronics, Inc. 0 41,484 41,484
0 4,500 4,500 Ingram Micor, Inc., Class A* 0 87,795 87,795
0 2,000 2,000 National Instruments Corp. 0 57,620 57,620
0 100 100 Tech Data Corp.* 0 3,714 3,714
0 554,671 554,671
ENERGY EQUIPMENT & SERVICES - 1.5%
0 3,300 3,300 Cameron International Corp.* 0 173,250 173,250
0 300 300 FMC Technologies, Inc.* 0 18,579 18,579
0 1,500 1,500 GlobalSanaFe Corp. 0 87,015 87,015
0 1,900 1,900 Oceaneering International, Inc.* 0 74,993 74,993
0 4,200 4,200 Patterson-UTI Energy, Inc. 0 101,430 101,430
0 500 500 SEACOR Holdings, Inc.* 0 50,615 50,615
0 39,900 39,900 Schlumberger Ltd. 0 2,533,251 2,533,251
0 6,000 6,000 Transocean Sedco Forex, Inc.* 0 464,220 464,220
0 3,503,353 3,503,353
FOOD & STAPLES RETAILING - 0.1%
0 4,100 4,100 Costco Wholesale Corp. 0 230,338 230,338
0 1,800 1,800 Kroger Co. 0 46,080 46,080
0 1,100 1,100 Longs Drug Stores Corp. 0 47,300 47,300
0 323,718 323,718
FOOD PRODUCTS - 0.2%
0 5,700 5,700 Kellogg Co. 0 280,839 280,839
0 3,500 3,500 Kraft Foods, Inc. Class A 0 122,220 122,220
0 403,059 403,059
GAS UTILITIES - 0.0%
0 1,700 1,700 Energen Corp. 0 78,676 78,676
HEALTH CARE EQUIPMENT & SUPPLIES - 0.7%
0 1,600 1,600 Dentsply International, Inc. 0 49,344 49,344
0 1,700 1,700 Immucor, Inc.* 0 53,618 53,618
0 25,500 25,500 Medtronic, Inc. 0 1,362,975 1,362,975
0 600 600 Mentor Corp. 0 30,594 30,594
0 5,300 5,300 St. Jude Medical, Inc.* 0 226,628 226,628
0 1,723,159 1,723,159
HEALTH CARE PROVIDERS & SERVICES - 0.6%
0 8,800 8,800 Cardinal Health, Inc. 0 628,496 628,496
0 1,300 1,300 DaVita, Inc.* 0 70,980 70,980
0 900 900 Lincare Holdings, Inc.* 0 35,415 35,415
0 3,500 3,500 Medco Health Solutions, Inc.* 0 207,235 207,235
0 1,600 1,600 Psychiatric Solutions, Inc.* 0 62,304 62,304
0 6,800 6,800 WellPoint, Inc.* 0 532,984 532,984
0 1,537,414 1,537,414
HEALTH CARE TECHNOLOGY - 0.0%
0 2,900 2,900 IMS Health, Inc. 0 83,694 83,694
HOTELS RESTAURANTS & LEISURE - 0.2%
0 700 700 LifeTime Fitness, Inc.* 0 37,940 37,940
0 400 400 Wynn Resorts Ltd.* 0 44,696 44,696
0 5,200 5,200 Yum! Brands, Inc. 0 312,052 312,052
0 394,688 394,688
HOUSEHOLD DURABLES - 0.4%
0 2,500 2,500 Beazer Homes USA, Inc. 0 108,775 108,775
0 2,400 2,400 Centex Corp. 0 128,856 128,856
0 3,100 3,100 KB HOME 0 168,082 168,082
0 800 800 M.D.C. Holdings, Inc. 0 46,616 46,616
0 400 400 Mertiage Corp.* 0 17,780 17,780
0 8,800 8,800 Pulte Homes, Inc. 0 302,192 302,192
0 1,500 1,500 Ryland Group, Inc. 0 84,270 84,270
0 1,800 1,800 Standard-Pacific Corp. 0 49,392 49,392
0 905,963 905,963
HOUSEHOLD PRODUCTS - 1.6%
0 8,500 8,500 Kimberly-Clark Corp. 0 589,900 589,900
0 50,400 50,400 Proctor & Gamble Co. 0 3,269,448 3,269,448
0 3,859,348 3,859,348
INDEPENDENT POWER PRODUCERS - 0.0%
0 1,100 1,100 AES Corp.* 0 22,869 22,869
INDUSTRIAL CONGLOMERATES - 0.5%
0 14,000 14,000 3M Co. 0 1,040,200 1,040,200
0 3,600 3,600 McDermott International, Inc.* 0 185,904 185,904
0 500 500 Teleflex, Inc. 0 33,390 33,390
0 1,259,494 1,259,494
INSURANCE - 5.3%
0 25,950 25,950 Allstate Corp. 0 1,561,152 1,561,152
0 5,000 5,000 Ambac Financial Group, Inc. 0 440,500 440,500
0 4,050 4,050 American Financial Group, Inc. 0 143,046 143,046
0 47,800 47,800 American International Group, Inc. 0 3,271,910 3,271,910
0 4,700 4,700 Assurant, Inc. 0 261,226 261,226
0 6,600 6,600 Berkley, W.R. Corp. 0 218,394 218,394
0 2,700 2,700 CNA Financial Corp.* 0 109,755 109,755
0 14,600 14,600 Chubb Corp. 0 759,784 759,784
0 2,300 2,300 Commerce Group, Inc. 0 69,414 69,414
0 2,100 2,100 HCC Insurance Holdings, Inc. 0 65,583 65,583
0 1,600 1,600 Hanover Insurance Group, Inc.* 0 76,880 76,880
0 3,800 3,800 Hartford Financial Services Group, Inc. 0 360,658 360,658
0 11,300 11,300 Loews Corp. 0 491,098 491,098
0 5,200 5,200 MBIA, Inc. 0 373,516 373,516
0 30,600 30,600 Metlife, Inc. 0 1,900,872 1,900,872
0 1,900 1,900 Nationwide Financial Services, Inc. - Class 0 103,835 103,835
A
0 1,400 1,400 Odyssey Re Holdings Corp. 0 55,230 55,230
0 1,600 1,600 Ohio Casualty Corp. 0 47,264 47,264
0 22,900 22,900 Progressive Corp., Ohio 0 531,051 531,051
0 2,000 2,000 Reinsurance Group of America, Inc. 0 116,300 116,300
0 4,200 4,200 Safeco Corp. 0 268,842 268,842
0 400 400 Safety Insurance Group, Inc. 0 19,536 19,536
0 1,000 1,000 StanCorp Financial Group, Inc. 0 47,850 47,850
0 26,200 26,200 The St. Paul Travelers Companies, Inc. 0 1,332,270 1,332,270
0 12,625,966 12,625,966
INTERNET & CATALOG RETAIL - 0.1%
0 2,500 2,500 Expedia, Inc.* 0 53,625 53,625
0 3,500 3,500 AC Interactive Corp.* 0 134,400 134,400
0 1,100 1,100 Nutri/System, Inc.* 0 48,455 48,455
0 236,480 236,480
INTERNET SOFTWARE & SERVIES - 0.1%
0 5,400 5,400 eBay, Inc.* 0 174,906 174,906
0 3,000 3,000 ValueClick, Inc.* 0 76,560 76,560
0 251,466 251,466
IT SERVICES - 0.4%
0 800 800 Alliance Data Systems Corp.* 0 54,344 54,344
0 3,700 3,700 Automatic Data Processing, Inc. 0 176,564 176,564
0 1,300 1,300 Ceridan Corp. - New* 0 38,961 38,961
0 1,000 1,000 Checkfree Corp.* 0 41,430 41,430
0 3,500 3,500 Cognizant Technology Solutions Corp.* 0 298,515 298,515
0 2,300 2,300 Computer Sciences Corp.* 0 120,658 120,658
0 2,300 2,300 Fiserv, Inc.* 0 120,911 120,911
0 851,383 851,383
LEISURE EQUIPMENT & PRODUCTS - 0.0%
0 1,200 1,200 Brunswick Corp. 0 40,932 40,932
LIFE SCIENCES TOOLS & SERVICES - 0.0%
0 1,700 1,700 Waters Corp.* 0 96,373 96,373
MACHINERY - 0.2%
0 1,200 1,200 Briggs & Stratton Corp. 0 35,568 35,568
0 3,100 3,100 Danaher Corp. 0 229,586 229,586
0 2,900 2,900 Deere & Co. 0 290,812 290,812
0 555,966 555,966
MEDIA - 1.6%
0 40,900 40,900 Comcast Corp., Class A* 0 1,812,688 1,812,688
0 5,400 5,400 Discovery Holding Co., Class A* 0 89,478 89,478
0 1,300 1,300 Lamar Advertising Co. 0 86,164 86,164
0 5,900 5,900 McGraw-Hill Cos., Inc. 0 395,772 395,772
0 2,900 2,900 Omnicom Group, Inc. 0 305,080 305,080
0 39,900 39,900 Time Warner, Inc. 0 872,613 872,613
0 4,800 4,800 Viacom, Inc., Class B - new* 0 195,216 195,216
0 3,757,011 3,757,011
METALS & MINING - 0.1%
0 4,500 4,500 Commercial Metals Corp. 0 121,995 121,995
0 900 900 Metal Management, Inc. 0 36,936 36,936
0 900 900 Quanex Corp. 0 35,271 35,271
0 2,100 2,100 Worthington Industries, Inc. 0 40,278 40,278
0 234,480 234,480
MULTI-UTILITIES - 0.1%
0 5,200 5,200 PG&E Corp. 0 242,736 242,736
0 700 700 SCANA Corp. 0 28,504 28,504
0 271,240 271,240
MULTILINE RETAIL - 0.3%
0 3,900 3,900 Sears Holdings Corp.* 0 688,935 688,935
OIL GAS & CONSUMABLE FUELS - 3.6%
0 27,700 27,700 Anadarko Petroleum Corp. 0 1,211,875 1,211,875
0 43,100 43,100 Chevron Corp. 0 3,141,128 3,141,128
0 15,200 15,200 Devon Energy Corp. 0 1,065,368 1,065,368
0 1,300 1,300 General Maritime Corp. * 0 47,437 47,437
0 15,500 15,500 Marathon Oil Corp. 0 1,400,270 1,400,270
0 2,100 2,100 OMI Corp. 0 46,326 46,326
0 3,900 3,900 Pioneer Natural Resources, Inc. 0 159,900 159,900
0 2,200 2,200 Pogo Producing Co. 0 109,010 109,010
0 3,200 3,200 Tesoro Petroleum Corp. 0 263,648 263,648
0 18,900 18,900 Valero Energy Corp. 0 1,025,892 1,025,892
0 8,470,854 8,470,854
PAPER & FOREST PRODUCTS - 0.0%
0 3,400 3,400 MeadWestvaco Corp. 0 102,476 102,476
PERSONAL PRODUCTS - 0.0%
0 2,200 2,200 Avon Products, Inc. 0 75,658 75,658
PHARMACEUTICALS - 0.5%
0 10,600 10,600 Johnson & Johnson 0 708,080 708,080
0 16,400 16,400 Schering Plough Corp. 0 410,000 410,000
0 1,118,080 1,118,080
REAL ESTATE INVESTMENT TRUSTS - 3.7%
0 6,000 6,000 AMB Property Corp. 0 365,100 365,100
0 4,200 4,200 Alexandria Real Estate Equities, Inc. 0 455,112 455,112
0 9,650 9,650 Archstone-Smith Trust 0 609,977 609,977
0 4,100 4,100 Avalonbay Communities, Inc. 0 608,276 608,276
0 6,350 6,350 Boston Properties, Inc. 0 800,671 800,671
0 4,450 4,450 Developers Diversified Realty Corp. 0 298,684 298,684
0 9,900 9,900 Equity Residential Properties Trust 0 557,172 557,172
0 2,800 2,800 Federal Realty Invstment Trust 0 261,576 261,576
0 5,000 5,000 General Growth Properties, Inc. 0 307,600 307,600
0 9,900 9,900 Health Care Property Investors, Inc. 0 408,375 408,375
0 15,000 15,000 Host Hotels & Resorts, Inc. 0 397,050 397,050
0 6,100 6,100 Kimco Realty Corp. 0 302,560 302,560
0 7,700 7,700 ProLogis Trust 0 500,500 500,500
0 4,500 4,500 Public Storage, Inc. 0 489,420 489,420
0 5,300 5,300 SL Green Realty Corp. 0 776,874 776,874
0 7,000 7,000 Simon Property Group, Inc. 0 800,730 800,730
0 6,200 6,200 Taubman Centers, Inc. 0 361,274 361,274
0 4,850 4,850 Vornado Realty Trust 0 593,398 593,398
0 8,894,349 8,894,349
ROAD & RAIL - 0.5%
0 2,000 2,000 Burlington Northern Santa Fe 0 160,720 160,720
0 1,800 1,800 Con-way, Inc. 0 89,532 89,532
0 15,700 15,700 Norfolk Southern Corp. 0 779,505 779,505
0 2,200 2,200 Ryder Systems, Inc. 0 119,988 119,988
0 1,800 1,800 Werner Enterpirses, Inc. 0 34,218 34,218
0 1,183,963 1,183,963
SEMICONDUCTOR & SEMICONDUCTOR EQUIPMENT - 0.1%
0 2,300 2,300 Altera Corp.* 0 120,520 120,520
SOFTWARE - 0.2%
0 22,400 22,400 Oracle Corp.* 0 384,384 384,384
0 700 700 Quality Systems, Inc. 0 29,701 29,701
0 1,800 1,800 THQ, Inc.* 0 54,540 54,540
0 468,625 468,625
SPECIALTY RETAIL - 0.5%
0 700 700 AutoZone, Inc.* 0 87,941 87,941
0 3,100 3,100 CarMax, Inc.* 0 178,033 178,033
0 600 600 Children's Place Retail Stores, Inc.* 0 32,526 32,526
0 1,100 1,100 Dick's Sporting Goods, Inc.* 0 56,639 56,639
0 1,400 1,400 Guess?, Inc.* 0 100,954 100,954
0 800 800 Gymboree Corp.* 0 34,632 34,632
0 17,600 17,600 Home Depot, Inc. 0 717,024 717,024
0 800 800 J Crew Group, Inc.* 0 29,064 29,064
0 100 100 Zale Corp.* 0 2,752 2,752
0 1,239,565 1,239,565
TEXTILES, APPAREL & LUXURY GOODS - 0.3 %
0 13,800 13,800 Coach, Inc.* 0 632,868 632,868
0 1,200 1,200 Crocs, Inc.* 0 60,408 60,408
0 693,276 693,276
THRIFS & MORTGAGE FINANCE - 0.4 %
0 1,200 1,200 Downey Financial Corp. 0 85,848 85,848
0 2,000 2,000 Federal Home Loan Mortgage Corp. 0 129,860 129,860
0 1,000 1,000 FirstFed Financial Corp.* 0 68,950 68,950
0 3,800 3,800 MGIC Investment Corp. 0 234,536 234,536
0 3,600 3,600 PMI Group, Inc. 0 172,152 172,152
0 3,700 3,700 Radian Group, Inc. 0 222,814 222,814
0 914,160 914,160
WIRELESS TELECOMMUNICATION SERVICES - 0.0%
0 400 400 U.S. Cellular Corp.* 0 28,840 28,840
TOTAL COMMON STOCKS (COST $68,470,848) 0 77,776,514 77,776,514
ASSET-BACKED SECURITIES - 0.6%
0 58,994 58,994 CS First Boston Mortgage Securities Corp. 0 58,460 58,460
2002-HE4, Class AF, 5.51%, 8/25/2032
0 648,723 648,723 Community Program Loan Trust 1987-A, Class 0 638,909 638,909
A4, 4.50%, 10/1/2018
0 452,714 452,714 MMCA Automobile Trust 2002-2, Class C, 0 451,692 451,692
5.55%, 3/15/2010
0 140,000 140,000 Morgan Stanley Capital I 2006-IQ12 A4, 0 137,539 137,539
5.319%, 12/15/2043
TOTAL ASSET-BACKED SECURITIES (IDENTIFIED 0 1,286,600 1,286,600
COST $1,297,142)
COLLATERALIZED MORTGAGE OBLIGATIONS - 0.3%
0 469,749 469,749 Bear Stearns Asset Backed Securities, Inc. 0 314,914 314,914
2005-AC6, Class 21PO, 0.00%, 9/25/2020
0 5,692 5,692 Bear Stearns Mortgage Securities, Inc. 0 5,592 5,592
1997-6, Class 1A, 6.66%, 3/25/2031
0 16,838 16,838 Federal Home Loan Mortgage Corp. REMIC 1311 0 16,784 16,784
K, 7.00% 7/15/2022
0 33,518 33,518 Federal Home Loan Mortgage Corp. REMIC 1384 0 33,419 33,419
D, 7.00% 9/15/2022
0 39,298 39,298 Federal Home Loan Mortgage Corp. REMIC 1595 0 40,806 40,806
D, 7.00% 10/15/2013
0 75,000 75,000 Federal Home Loan Mortgage Corp. REMIC 2497 0 75,595 75,595
JH, 6.00% 9/15/2032
0 67,057 67,057 Federal Home Loan Mortgage Corp. REMIC 2676 0 66,830 66,830
JA, 4.00% 5/15/2016
0 82,752 82,752 Federal National Mortgage Association REMIC 0 91,131 91,131
1993-113 SB, 9.75%, 7/25/2023
0 16,017 16,017 Federal National Mortgage Association REMIC 0 16,653 16,653
2001-37 GA, 8.00%, 7/25/2016
0 20,980 20,980 Federal National Mortgage Association REMIC 0 19,423 19,423
2003-35 UC, 3.75%, 5/25/2033
0 20,173 20,173 Government National Mortgage Association 0 20,434 20,434
REMIC 1999-29 PB, 7.25%, 7/16/2028
0 61,195 61,195 Government National Mortgage Association 0 61,806 61,806
REMIC 2002-17 B, 6.00%, 3/20/2032
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS 0 763,387 763,387
(IDENTIFIED COST $810,587)
CORPORATE BONDS - 5.5%
BASIC INDUSTRY - CHEMICALS - 0.0%
0 75,000 75,000 Albemarle Corp., Sr. Note, 5.10%, 2/1/2015 0 70,787 70,787
BASIC INDUSTRY - METALS & MINING - 0.2%
0 35,000 35,000 Alcoa, Inc., Note, 5.55%, 2/1/2017 0 34,865 34,865
0 100,000 100,000 BHP Finance (USA), Inc., Company Guarantee, 0 98,176 98,176
5.25%, 12/15/2015
0 150,000 150,000 Vale Overseas Limited, 6.875%, 11/21/2036 0 152,438 152,438
0 150,000 150,000 (1)(2) Xstrata Finance Canada L, Unsecd. 0 148,831 148,831
Note, 5.50%, 11/16/2011
0 434,310 434,310
CAPITAL GOODS - AEROSPACE & DEFENSE - 0.1%
0 125,000 125,000 Boeing Co., Note 5.125%, 2/15/2013 0 123,821 123,821
0 200,000 200,000 Raytheon Co., Unsecd. Note, 5.375%, 0 199,311 199,311
4/1/2013
0 323,132 323,132
CAPITAL GOODS -
DIVERSIFIED MANUFACTURING - 0.1%
0 100,000 100,000 Emerson Electric Co., Unsecd. Note, 5.75%, 0 101,619 101,619
11/1/2011
CAPITAL GOODS - ENVIRONMENTAL - 0.1%
0 100,000 100,000 Waste Management, Inc., 7.375%, 8/1/2010 0 105,994 105,994
COMMUNICATIONS - MEDIA & CABLE - 0.1%
0 100,000 100,000 Comcast Corp., Sr. Note, 7.125%, 6/15/2013 0 108,102 108,102
0 75,000 75,000 Cox Communications, Inc., Unsecd. Note, 0 73,425 73,425
5.45%, 12/15/2014
0 181,527 181,527
COMMUNICATIONS - MEDIA NONCABLE - 0.1%
0 100,000 100,000 British Sky Broadcasting Group PLC, 8.20%, 0 106,113 106,113
7/15/2009
0 75,000 75,000 News America Holdings, Company Guarantee, 0 86,120 86,120
8.00%, 10/17/2016
0 75,000 75,000 News America Holdings, Sr. Deb., 9.25%, 0 87,556 87,556
2/1/2013
0 279,789 279,789
COMMUNICATIONS - TELECOM WIRELESS - 0.2%
0 150,000 150,000 AT&T Wireless Services, Sr. Note, 8.75%, 0 195,113 195,113
3/1/2031
0 100,000 100,000 Cingular Wirless LLC, Sr. Note, 6.50%, 0 104,657 104,657
12/15/2011
0 100,000 100,000 Sprint Capital Corp., Note, 8.375%, 0 110,853 110,853
3/15/2012
0 410,623 410,623
COMMUNICATIONS - TELECOM WIRELINES - 0.3%
0 400,000 400,000 GTE North, Inc., Deb., Series D, 6.90%, 0 409,847 409,847
11/1/2008
0 75,000 75,000 Telefonica SA, Company Guarantee, 7.045%, 0 81,052 81,052
6/20/2036
0 100,000 100,000 Telefonos de Mexico, Note, 4.50%, 0 98,050 98,050
11/19/2008
0 588,949 588,949
CONSUMER CYCLICAL - AUTOMOTIVE - 0.2%
0 75,000 75,000 DaimlerChrysler North America, Sr. Note, 0 73,208 73,208
4.875%, 6/15/2010
0 50,000 50,000 DaimlerChrysler North America Holding 0 51,329 51,329
Corp., Sr. Note, 6.50%, 11/15/2013
0 300,000 300,000 General Motors Acceptance, Note, 6.125%, 0 300,000 300,000
2/1/2007
0 424,537 424,537
CONSUMER CYCLICAL - ENTERTAINMENT - 0.1%
0 75,000 75,000 Disney Co., Note, 5.70%, 7/15/2011 0 76,131 76,131
0 100,000 100,000 Time Warner, Inc., 5.50%, 11/15/2011 0 99,804 99,804
0 175,935 175,935
CONSUMER CYCLICAL - LODGING - 0.1%
0 100,000 100,000 (1)(2) Wyndham Worldwide Corp., Sr. Unsecd. 0 98,533 98,533
Note, 6.00%, 12/1/2016
CONSUMER CYCLICAL - RETAILERS - 0.1%
0 125,000 125,000 Home Depot, Inc., 5.40%, 3/1/2016 0 120,917 120,917
0 100,000 100,000 Target Corp., 5.875%, 3/1/2012 0 102,518 102,518
0 223,435 223,435
CONSUMER NON-CYCLICAL - FOOD/BEVERAGE - 0.1%
0 100,000 100,000 Bottling Group LLC, Note 5.50%, 4/1/2016 0 99,850 99,850
0 40,000 40,000 General Mills, Inc., Note, 5.70%, 2/15/2017 0 39,966 39,966
0 75,000 75,000 Kraft Foods, Inc., Note, 5.25%, 10/1/2013 0 73,913 73,913
0 50,000 50,000 Kraft Foods, Inc., Note, 6.25%, 6/1/2012 0 51,746 51,746
0 265,475 265,475
CONSUMER NON-CYCLICAL - HEALTH CARE - 0.0%
0 100,000 100,000 Medtronic, Inc., Note, Series B, 4.375%, 0 97,138 97,138
9/15/2010
CONSUMER NON-CYCLICAL - PHARMACEUTICALS - 0.2%
0 75,000 75,000 Abbott Laboratories, Note, 5.375%, 0 75,300 75,300
5/15/2009
0 100,000 100,000 Genentech, Inc., Sr. Note, 4.75%, 7/15/2015 0 95,371 95,371
0 125,000 125,000 Lilly (Eli) & Co., Unsecd. Note, 6.57%, 0 134,551 134,551
1/1/2016
0 100,000 100,000 Pharmacia Corp., Sr. Deb., 6.50%, 12/1/2018 0 108,202 108,202
0 100,000 100,000 Wyeth, Unsecd. Note, 5.50%, 2/1/2014 0 100,060 100,060
0 513,484 513,484
CONSUMER NON-CYCLICAL - SUPERMARKETS - 0.1%
0 250,000 250,000 Safeway, Inc. Notes 4.800%, 07/16/2007 0 249,120 249,120
CONSUMER NON-CYCLICAL - TOBACCO - 0.0%
0 75,000 75,000 Altria Group, Inc., Note, 7.00%, 11/4/2013 0 81,642 81,642
ENERGY - INDEPENDENT - 0.1%
0 55,000 55,000 Anadarko Petroleum Corp., Sr. Note, 5.95%, 0 54,619 54,619
9/15/2016
0 50,000 50,000 Canadian Natural Resources, 4.90%, 0 47,106 47,106
12/1/2014
0 150,000 150,000 Pemex Project Funding Master, Company 0 166,995 166,995
Guarantee, 9.125%, 10/13/2010
0 268,720 268,720
ENERGY - INTEGRATED - 0.1%
0 75,000 75,000 Conoco Funding Co., 7.25%, 10/15/2031 0 87,594 87,594
0 75,000 75,000 ConocoPhillip Australia, 5.50%, 4/15/2013 0 75,374 75,374
0 100,000 100,000 Husky Oil Ltd., Sr. Deb., 7.55%, 11/15/2016 0 111,698 111,698
0 274,666 274,666
ENERGY - REFINING - 0.1%
0 100,000 100,000 Valero Energy Corp., 6.875%, 4/15/2012 0 105,703 105,703
0 50,000 50,000 Valero Energy Corp., 7.50%, 4/15/2032 0 56,955 56,955
0 75,000 75,000 Valero Energy Corp., Note, 4.75%, 4/1/2014 0 70,358 70,358
0 233,016 233,016
FINANCIAL INSTITUTIONS - BANKING - 1.0%
0 200,000 200,000 Bank of America Corp., Sr. Note, 5.375%, 0 199,437 199,437
6/15/2014
0 120,000 120,000 Capital One Capital IV, 6.745%, 2/17/2037 0 121,157 121,157
0 200,000 200,000 Citigroup, Inc., Note, 5.125%, 2/14/2011 0 199,021 199,021
0 100,000 100,000 Credit Suisse First Boston, Sr. Note, 0 100,898 100,898
5.50%, 8/16/2011
0 100,000 100,000 HSBC Finance Capital Trust, Note, 5.911%, 0 100,851 100,851
11/30/2035
0 200,000 200,000 HSBC Finance Corp., 4.75%, 4/15/2010 0 197,015 197,015
0 100,000 100,000 Household Finance Corp., Note, 7.00%, 0 107,417 107,417
5/15/2012
0 150,000 150,000 J.P. Morgan Chase & Co., 5.75%, 1/2/2013 0 152,735 152,735
0 100,000 100,000 Marshall & Ilsley Bank, Sr. Note, 4.40%, 0 97,444 97,444
3/15/2010
0 200,000 200,000 Northern Trust Corp., Sr. Note, 5.30%, 0 200,039 200,039
8/29/2011
0 100,000 100,000 PNC Funding Corp., Sub. Note, 7.50%, 0 105,310 105,310
11/1/2009
0 100,000 100,000 Popular North America, 5.65%, 4/15/2009 0 100,078 100,078
0 250,000 250,000 US BANK NA, Sub. Note, 4.95%, 10/30/2014 0 242,308 242,308
0 250,000 250,000 Wachovia Bank NA, 4.80%, 11/1/2014 0 238,601 238,601
0 100,000 100,000 Wells Fargo Bank NA, Sub. Noet, 6.45%, 0 104,116 104,116
2/1/2011
0 75,000 75,000 Zions Bancorp, Sub. Note, 5.50%, 11/16/2015 0 73,204 73,204
0 2,339,631 2,339,631
FINANCIAL INSTITUTIONS - BROKERAGE - 0.4%
0 100,000 100,000 Amvescap PLC, Sr. Note, 4.50%, 12/15/2009 0 97,471 97,471
0 100,000 100,000 Bear Stearns & Cos., Inc., Unsecd. Note, 0 96,046 96,046
3.25%, 3/25/2009
0 150,000 150,000 Goldman Sachs Group, Inc., Note, 5.25%, 0 148,556 148,556
10/15/2013
0 400,000 400,000 Merrill Lynch & Co., Inc., Sr. Unsub., 0 400,160 400,160
Series CORE, 5.908%, 1/31/2008
0 150,000 150,000 Merrill Lynch & Co., Inc., Unsub. Note, 0 149,715 149,715
5.45%, 7/15/2014
0 100,000 100,000 Morgan Stanley, Note, 4.00%, 1/15/2010 0 96,616 96,616
0 988,564 988,564
FINANCIAL INSTITUTIONS - FINANCE NONCAPTIVE - 0.6%
0 100,000 100,000 American Express Co., Global Sr. Note, 0 99,049 99,049
4.75%, 6/17/2009
0 100,000 100,000 American General Finance Corp., 4.00%, 0 95,029 95,029
3/15/2011
0 150,000 150,000 Berkshire Hathaway, Inc., Company 0 145,363 145,363
Guarantee, 4.85%, 1/15/2015
0 364,000 364,000 General Electric Capital, Note, 4.875% 0 360,192 360,192
10/21/2010
0 100,000 100,000 General Electric Capital, Note, 4.875% 0 97,104 97,104
3/4/2015
0 200,000 200,000 (1)(2) ILFC E-Capital Trust I, 5.90%, 0 201,248 201,248
12/21/2065
0 100,000 100,000 International Lease Finance Corp., Note, 0 98,644 98,644
4.875%, 9/1/2010
0 75,000 75,000 SLM Corp. Note, 4.00%, 1/15/2010 0 72,147 72,147
0 300,000 300,000 SLM Corp. Note, Series A, 3.950%, 0 293,321 293,321
8/15/2008
0 1,462,097 1,462,097
FINANCIAL INSTITUTIONS - INSURANCE - HEALTH - 0.0%
0 75,000 75,000 Aetna US Healthcare, Sr. Note, 5.75%, 0 75,960 75,960
6/15/2011
FINANCIAL INSTITUTIONS - INSURANCE - LIFE - 0.1%
0 100,000 100,000 AXA-UAP, Sub. Note, 8.60%, 12/15/2030 0 129,156 129,156
FINANCIAL INSTITUTIONS - INSURANCE - P&C - 0.3%
0 100,000 100,000 St. Paul Travelers Co., Inc., Sr. Unsecd. 0 99,632 99,632
Note, 5.50%, 12/1/2015
0 500,000 500,000 (1)(2) ZFS Finance USA Trust I, Jr. Sub. 0 507,375 507,375
Note, 6.15%, 12/15/2065
0 607,007 607,007
FINANCIAL INSTITUTIONS - REITS - 0.0%
0 75,000 75,000 Health Care Property Investments, Inc., 0 75,488 75,488
5.95%, 9/15/2011
FOREIGN-LOCAL GOVERNMENT - 0.0%
0 100,000 100,000 Ontario, Province of, Note, 4.50%, 2/3/2015 0 95,660 95,660
TECHNOLOGY - 0.1%
0 75,000 75,000 Cisco Systems, Inc., Sr. Note, 5.25%, 0 75,045 75,045
2/22/2011
0 100,000 100,000 Dell Computer Corp., Sr. Deb., 7.10%, 0 108,150 108,150
4/15/2028
0 100,000 100,000 Oracle Corp., Sr. Unsecd. Note, Series WI, 0 98,849 98,849
5.00%, 1/15/2011
0 282,044 282,044
TRANSPORTATION - AIRLINES - 0.1%
0 75,000 75,000 Southwest Airlines Co., 6.50%, 3/1/2012 0 77,870 77,870
0 50,000 50,000 Southwest Airlines Co., Deb., 7.375%, 0 54,324 54,324
3/1/2027
0 132,194 132,194
TRANSPORTATION - RAILROADS - 0.1%
0 75,000 75,000 Burlington Northern Santa Fe Corp., Sr. 0 71,588 71,588
Note, 4.875%, 1/15/2015
0 100,000 100,000 Norfolk Southern Corp., Sr. Note, 6.75%, 0 104,746 104,746
2/15/2011
0 100,000 100,000 Union Pacific Corp., 4.875%, 1/15/2015 0 95,513 95,513
0 271,847 271,847
TRANSPORTATION - SERVICES
- 0.0%
0 100,000 100,000 FedEx Corp., Note, 5.50%, 8/15/2009 0 100,486 100,486
UTILITY - ELECTRIC - 0.4%
0 100,000 100,000 Cleveland Electric Illum, Sr. Unsecd. Note, 0 95,955 95,955
5.95%, 12/15/2036
0 100,000 100,000 Consolidated Edison Col, Sr. Unsecd. Note, 0 100,282 100,282
Series 2006C, 5.50%, 9/15/2016
0 100,000 100,000 Exelon Generation Co., Sr. Note, 5.35%, 0 98,167 98,167
1/15/2015
0 100,000 100,000 First Energy Corp, Note, Series B, 6.45%, 0 104,176 104,176
11/15/2011
0 100,000 100,000 PSEG Power LLC, Company Guarantee, 7.75%, 0 108,535 108,535
4/15/2011
0 75,000 75,000 PSI Energy, Inc., Bond, 6.05%, 6/15/2016 0 77,202 77,202
0 100,000 100,000 Pacific Gas & Electric Co., Unsecd. Note, 0 95,519 95,519
4.20%, 3/1/2011
0 300,000 300,000 Wisconsin Power & Light Co., Note, 7.00%, 0 301,582 301,582
6/15/2007
0 981,418 981,418
UTILITY - NATURAL GAS DISTRIBUTOR - 0.0%
0 100,000 100,000 Atmos Energy Corp., Sr. Note, 4.00%, 0 96,448 96,448
10/15/2009
TOTAL CORPORATE NOTES & BONDS (IDENTIFIED 0 13,040,431 13,040,431
COST $13,191,085)
GOVERNMENT AGENCIES - 3.8%
0 4,000,000 4,000,000 Federal Home Loan Bank System, Bond, 0 4,048,648 4,048,648
5.375%, 8/19/2011
0 1,000,000 1,000,000 Federal Home Loan Mortgage Corp., 4.125%, 0 970,660 970,660
7/12/2010
0 1,000,000 1,000,000 Federal Home Loan Mortgage Corp., 5.25%, 0 1,007,235 1,007,235
7/18/2011
0 1,000,000 1,000,000 Federal Home Loan Mortgage Corp., 5.50%, 0 1,027,315 1,027,315
7/18/2016
0 2,000,000 2,000,000 Federal National Mortgage Association, 0 2,005,974 2,005,974
Note, 5.25%, 1/15/2009
TOTAL GOVERNMENT AGENCIES (IDENTIFIED COST 0 9,059,832 9,059,832
$9,088,751)
MORTGAGE-BACKED SECURITIES - 0.0%
0 28,977 28,977 Federal National Mortgage Association, Pool 0 29,662 29,662
408761 7.00%, 12/1/2012
0 12,635 12,635 Federal National Mortgage Association, Pool 0 13,130 13,130
512255, 7.50%, 9/1/2014
0 42,172 42,172 Federal National Mortgage Association, Pool 0 43,197 43,197
609554, 7.50%, 10/1/2016
TOTAL MORTGAGE-BACKED SECURITIES 0 85,989 85,989
(IDENTIFIED COST $86,490)
U.S. TREASURY - 2.6%
0 1,197,372 1,197,372 U.S. Treasury Inflation Protected Note, 0 1,209,912 1,209,912
2.500%, 7/15/2016
0 1,250,000 1,250,000 United States Treasury Bond, 4.500%, 0 1,170,233 1,170,233
2/15/2036
0 4,000,000 4,000,000 United States Treasury Note, 3.875%, 0 3,809,615 3,809,615
2/15/2013
TOTAL U.S. TREASURY (IDENTIFIED COST 0 6,189,760 6,189,760
$6,287,764)
EXCHANGE TRADED FUNDS - 4.5%
0 142,450 142,450 iShares MSCI EAFE Index Fund (Identified 0 10,575,488 10,575,488
Cost $8,320,096)
MUTUAL FUND - 48.1%
4,707,718 0 4,707,718 (4) Capital Appreciation Core Fund 66,903,463 0 66,903,463
34,511 42,893 77,404 (4) Emerging Markets Fixed Income Core Fund 723,416 899,113 1,622,529
661,081 0 661,081 (4) Federated Intermediate Corporate Bond 6,571,140 0 6,571,140
Fund
88,188 0 88,188 (4) Federated International Bond Fund, 922,444 0 922,444
Class A Shares
293,816 0 293,816 (4) Federated International Capital 3,516,980 0 3,516,980
Appreciation Fund, Class A Shares
1,188,879 807,927 1,996,806 (4) Federated Mortgage Core Portfolio 11,710,458 7,958,084 19,668,542
536,940 0 536,940 (4) Federated U.S. Government Bond Fund 5,879,495 0 5,879,495
547,317 0 547,317 (4) Federated U.S. Government Securities 5,921,973 0 5,921,973
Fund, 2-5 Years, Institutional Shares
238,307 270,466 508,773 (4) High Yield Bond Portfolio 1,644,317 1,866,216 3,510,533
TOTAL MUTUAL FUNDS (IDENTIFIED COST 103,793,686 10,723,413 114,517,099
$113,170,699)
REPURCHASE AGREEMENT - 2.1%
$ $ $ Bank of America, NA, 5.29%, dated 1,121,000 0 1,121,000
1,121,000 - 1,121,000 1/31/2007, maturing 2/1/2007
Mizuho Securities USA, Inc., 5.23%, dated 0 3,949,000 3,949,000
- 3,949,000 3,949,000 1/31/2007, maturing 2/1/2007
TOTAL REPURCHASE AGREEMENTS (AT COST) 1,121,000 3,949,000 5,070,000
TOTAL INVESTMENTS (IDENTIFIED COST 104,914,686 133,450,414 238,365,100
$225,793,462) - 100.2%
OTHER ASSETS AND LIABILITIES - (0.2)% (573,252) (482,583)
90,669
TOTAL NET ASSETS - 100% $ $132,877,162 $237,882,517
105,005,355
Note: The categories of investments are shown as a percentage of total net
assets at July 31, 2006.
* Non Income Producing
(1) 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 January 31, 2007,
these restricted securities amounted to $955,987, which represents 0.3% of
combined total net assets.
(2) Denotes a restricted security that may be resold without restriction to
"qualified institutional buyers" as defined by 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. At January 31, 2007,
these liquid restricted securities amounted to $955,987, which represented
0.3% of combined total net assets.
(3) Pledged as collateral to ensure FMDTBF is able to satisfy the obligations
of its outstanding long futures contracts.
(4) All or a portion of this security will be sold as a result of the
reorganization.
At January 31, 2007, FMDTBF had the following outstanding futures contracts:
Number of Notional Expiration Unrealized
Description Contracts Value Date Appreciation
United States Treasury Notes 13 $1,387,750 March 2007 $3,195
10 Year Futures - Long
- 23 -
FEDERATED MODERATE ALLOCATION FUND
FEDERATED MDT BALANCED FUND (1)
PRO FORMA COMBINING STATEMENTS OF ASSETS &
LIABILITIES
JANUARY 31, 2007 (UNAUDITED)
FEDERATED FEDERATED
MODERATE MDT
ALLOCATION BALANCED PRO FORMA PROFORMA
FUND FUND ADJUSTMENT COMBINED
ASSETS:
Investments in securities, at value $104,914,686 $133,450,414 $0 $238,365,100
Cash 416 55,099 0 55,515
Income receivable 138,009 490,275 0 628,284
Receivable for investments sold 0 1,951,046 0 1,951,046
Receivable for daily variation margin 0 5,078 0 5,078
Receivable for shares sold 23,709 490,141 0 513,850
Total assets 0 241,518,873
105,076,820 136,442,053
LIABILITIES:
Payable for investments purchased 0 3,227,423 0 3,227,423
Payable for shares redeemed 0 189,772 0 189,772
Payable for administrative personnel and services fee 0 58,585 0 58,585
Payable for Directors'/Trustees' fees 0 3,351 0 3,351
Payable for distribution services fees 0 6,465 0 6,465
Payable for shareholder services fees 0 17,189 0 17,189
Accrued expenses 71,465 62,106 0 133,571
Total liabilities 71,465 3,564,891 0 3,636,356
NET ASSETS $105,005,355 $132,877,162 $0 $237,8882,517
NET ASSETS CONSIST OF:
Paid-in capital $91,847,684 $119,990,246 $0 211,837,930
Net unrealized appreciation of investments 11,128,889 11,169,995 0 22,298,884
Accumulated net realized gain (loss) on investments 1,884,860 1,361,224 0 3,246,084
Undistributed (distributions in excess of) net
investment income 143,922 355,697 0 499,619
Total Net Assets $105,005,355 $132,877,162 $0 $237,882,517
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION
PROCEEDS PER SHARE
INSTITUTIONAL SHARES:
NET ASSETS $ 64,279,748 $81,798,718 (b) $81,798,718
$(64,279,748)
SHARES OUTSTANDING 4,905,077 6,016,580 (b) 6,016,580
(4,905,077)
NET ASSET VALUE PER SHARE $13.10 $13.60 $13.60
OFFERING PRICE PER SHARE $13.10 $13.60 $13.60
REDEMPTION PROCEEDS PER SHARE $13.10 $13.60 $13.60
CLASS A SHARES:
NET ASSETS $- $39,521,221 $64,279,748 (b) $103,800,969
SHARES OUTSTANDING 0 2,912,633 (b) 7,649,534
4,736,901
NET ASSET VALUE PER SHARE $0.00 $13.57 $13.57
OFFERING PRICE PER SHARE* $0.00 $14.36 * $14.36 *
REDEMPTION PROCEEDS PER SHARE $0.00 $13.57 $13.57
CLASS C SHARES:
NET ASSETS $- $11,557,128 $40,725,609 (b) $52,282,737
SHARES OUTSTANDING 0 857,794 (b) 3,881,225
3,023,431
NET ASSET VALUE PER SHARE $0.00 $13.47 $13.47
OFFERING PRICE PER SHARE $0.00 $13.61 ** $13.61 **
REDEMPTION PROCEEDS PER SHARE $0.00 $13.34 *** $13.34 ***
CLASS K SHARES:
NET ASSETS $- $95 $- $95
SHARES OUTSTANDING 0 7 7
-
NET ASSET VALUE PER SHARE $0.00 $13.60 $13.60
OFFERING PRICE PER SHARE $0.00 $13.60 $13.60
REDEMPTION PROCEEDS PER SHARE $0.00 $13.60 $13.60
SELECT SHARES:
NET ASSETS $ $ (b) $
40,725,609 - (40,725,609) -
SHARES OUTSTANDING 3,111,836 0 (b) 0
(3,111,836)
NET ASSET VALUE PER SHARE $13.09 $0.00 $0.00
OFFERING PRICE PER SHARE $13.09 $0.00 $0.00
REDEMPTION PROCEEDS PER SHARE $13.09 $0.00 $0.00
Investments, at identified cost $103,509,848 $122,283,614 $0 $225,793,462
Investments in affiliated issuers $103,793,686 $10,723,413 $0 $114,517,099
*Computation of offering price per share 100/94.50 of net asset value.
**Computation of redemption price per share 100/99 of net asset value.
***Computation of redemption price per share 100/99 of net asset value.
(a) MDT Balanced Fund was reorganized into Federated MDT Balanced Fund as of the close of business on December 8, 2006. Prior to
the reorganization, Federated MDT Balanced Fund had no investment operations.
Federated MDT Balanced Fund is the successor to MDT Balanced Fund.
(b) Adjustment to reflect share balance as a result of the combination.
- 24 -
FEDERATED MODERATE ALLOCATION FUND
FEDERATED MDT BALANCED FUND (1)
PRO FORMA COMBINING STATEMENTS OF OPERATIONS
SIX MONTHS ENDED JANUARY 31, 2007 (UNAUDITED)
FEDERATED FEDERATED
MODERATE MDT
ALLOCATION BALANCED PRO FORMA PROFORMA
FUND FUND ADJUSTMENT COMBINED
INVESTMENT INCOME:
Dividends $1,109,048 $867,491 $0 $1,976,539
Interest 38,224 956,499 0 994,723
Investment income allocated from affiliated partnerships 638,767 7,971 0 646,738
TOTAL INVESTMENT INCOME: 1,786,039 1,831,961 0 3,618,000
EXPENSES:
Investment advisory fee 404,625 417,680 0 822,305
Administrative personnel and services fee 100,835 115,946 (129,916) (a) 86,865
Custodian fees 4,259 19,922 3,865 (b) 28,046
Transfer and dividend disbursing agent fees and expenses 66,202 112,388 5,117 (c) 183,707
Directors'/Trustees' fees 2,215 1,614 2 (d) 3,831
Audit fees 13,864 10,082 (13,864) (e) 10,082
Legal fees 5,376 4,537 (4,872) (f) 5,041
Portfolio accounting fees 27,406 42,415 (19,975) (g) 49,846
Distribution services fee - Class A Shares 0 18,948 57,969 (h) 76,917
Distribution services fee - Class C Shares 0 34,989 200,778 (h) 235,767
Distribution services fee - Select Shares 162,371 0 (162,371) (h) 0
Shareholder services fee- Class A Shares 0 13,539 22,836 (i) 36,375
Shareholder services fee- Class C Shares 0 3,650 15,264 (i) 18,914
Shareholder services fee- Institutional Shares 74,658 0 (74,658) (i) 0
Shareholder services fee- Select Shares 59,637 0 (59,637) (i) 0
Share registration costs 14,417 30,724 (4,471) (j) 40,670
Printing and postage 17,683 18,702 (11,341) (k) 25,044
Insurance premiums 2,958 4,607 (3,028) (l) 4,537
Miscellaneous 3,843 2,439 (3,409) (m) 2,873
EXPENSES BEFORE ALLOCATION 960,349 852,182 (181,709) 1,630,822
Expenses allocated from partnership 21,858 78 0 21,936
TOTAL EXPENSES 982,207 852,260 (181,709) 1,652,758
WAIVERS AND REIMBURSEMENTS--
Waiver/Reimbursement of investment adviser fee (n) 0
(57,128) (76,553) 133,681
Waiver of administrative personnel and services fee (17,104) (57,249) 71,063 (o) (3,290)
Waiver of distribution services fee - Select Shares (54,034) 0 54,034 (p) 0
Reimbursement of shareholder services fee - Institutional Shares (61,121) 0 61,121 (q) 0
Reimbursement of transfer and dividend disbursing agent 0 (8,286) 0 (8,286)
Reimbursement of other operating expenses (18,280) 0 18,280 (r) 0
TOTAL WAIVERS AND REIMBURSEMENTS (207,667) (142,088) 338,179 (11,576)
NET EXPENSES 774,540 710,172 156,470 1,641,182
NET INVESTMENT INCOME $1,011,499 $1,121,789 ($156,470) $1,976,818
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments 1,906,188 1,869,675 0 3,775,863
Net realized allocated from partnerships 6,625,630 3,965 0 6,629,595
Realized gain distributions from affiliated investment company shares 219,231 0 0 219,231
Net change in unrealized appreciation (depreciation) of investments 3,664,863 6,469,699 0 10,134,562
Net realized and unrealized gain on investments 12,415,912 8,343,339 0 20,759,251
Change in net assets resulting from operations $13,427,411 $9,465,128 ($156,470) $22,736,069
* MDT Balanced Fund was reorganized into Federated MDT Balanced Fund as
of the close of business on December 8, 2006. Prior to the
reorganization, Federated MDT Balanced Fund had no investment
operations. Federated MDT Balanced Fund is the successor to MDT
Balanced Fund.
(See Notes to Pro Forma Financial Statements)
- 25 -
FEDERATED MODERATE ALLOCATION FUND
FEDERATED MDT BALANCED FUND
NOTES TO PRO FORMA FINANCIAL STATEMENTS
SIX MONTHS ENDED JANUARY 31, 2007 (UNAUDITED)
NOTE 1. DESCRIPTION OF THE FUND
FMAF, a series of Federated Managed Allocation Portfolios, is registered under
the Investment Company Act of 1940, as amended (the "Act), as an open-end
management investment company. The Fund consists of two classes of shares:
Institutional Shares and Select Shares.
FMDTBF, a series of Federated MDT Series, is registered under the Act as an
open-end, management investment company. MDT Balanced Fund (the "Predecessor
Fund") was reorganized into FMDTBF as of the close of business on December 8,
2006. Prior to the reorganization, FMDTBF had no investment operations. FMDTBF
is the successor to the Predecessor Fund. For the purposes of these Pro Forma
Financial Statements, the financial information covers the period from August 1,
2006 to January 31, 2007. FMDTBF consists of four classes of shares: Class A
Shares, Class C Shares, Class K Shares and Institutional Shares. Class K Shares
became effective December 11, 2006.
NOTE 2. BASIS OF COMBINATION
The accompanying unaudited Pro Forma Combining Portfolios of Investments,
Statements of Assets and Liabilities and Statements of Operations (Pro Forma
Financial Statements) reflect the accounts of FMAF and FMDTBF for the six months
ended January 31, 2007. These statements have been derived from the books and
records utilized in calculating daily net asset values at January 31, 2007.
The Pro Forma Financial Statements should be read in conjunction with the
historical financial statements of FMAF and FMDTBF which have been incorporated
by reference in the Statement of Additional Information. The Funds follow
generally accepted accounting principles in the United States of America
applicable to management investment companies which are disclosed in the
historical financial statements.
The Pro Forma Financial Statements give effect to the proposed exchange of
assets of FMAF for Class A Shares and Class C Shares of FMDTBF. Under generally
accepted accounting principles, FMDTBF will be the surviving entity for
accounting purposes with its historical cost of investment securities and
results of operations being carried forward.
The Pro Forma Financial Statements have been adjusted to reflect the investment
advisory fee arrangement for the surviving entity. Certain other operating
costs have also been adjusted to reflect anticipated expenses of the combined
entity. Other costs which may change as a result of the reorganization are
currently undeterminable.
For the six months ended January 31, 2007, FMAF and FMDTBF paid investment
advisory fees computed at the annual rate of 0.75% as a percentage of average
daily net assets.
All costs with respect to the reorganization will be borne by Federated
Investors, Inc. and its affiliates.
NOTE 3. PORTFOLIO VALUATION
Market values of each Fund's portfolio securities are determined as follows:
{circle}for equity securities, according to the last sale price or official
closing price reported in the market in which they are primarily traded
(either a national securities exchange or the over-the-counter market), if
available;
{circle}in the absence of recorded sales for equity securities, according to
the mean between the last closing bid and asked prices;
{circle}futures contracts and options are generally valued at market values
established by the exchanges on which they are traded at the close of
trading on such exchanges. Options traded in the over-the-counter market
are generally valued according to the mean between the last bid and the
last asked price for the option as provided by an investment dealer or
other financial institution that deals in the option. The Board of
Trustees (the "Trustees") may determine in good faith that another method
of valuing such investments is necessary to appraise their fair market
value;
{circle}prices for total return swaps are furnished by an independent pricing
service and are based upon a valuation model incorporating underlying
reference indexes, interest rates, yield curves and other market data or
factors. Prices for credit default swaps are furnished by an independent
pricing service and are based upon a valuation model incorporating default
probabilities, recovery rates and other market data or factors;
{circle}for mortgage-backed securities, based on the aggregate investment
value of the projected cash flows to be generated by the security, as
furnished by an independent pricing service;
{circle}for investments in other open-end regulated investment companies,
based on net asset value (NAV);
{circle}for other fixed-income securities, according to prices as furnished
by an independent pricing service, except that fixed-income securities
with remaining maturities of less than 60 days at the time of purchase are
valued at amortized cost; and
{circle}for all other securities at fair value as determined in accordance
with procedures established by and under the general supervision of the
Trustees.
Prices for fixed-income securities furnished by a pricing service may be based
on a valuation matrix which incorporates both dealer-supplied valuations and
electronic data processing techniques. Such prices (other than prices of
mortgage-backed securities) are generally intended to be indicative of the bid
prices currently offered to institutional investors for the securities, except
that prices for corporate fixed-income and asset-backed securities traded in the
United States are generally intended to be indicative of the mean between such
bid prices and asked prices. The Trustees have approved the use of such pricing
services. A number of pricing services are available, and the Fund may use
various pricing services or discontinue the use of any pricing service.
Prices provided by independent pricing services may be determined without
relying exclusively on quoted prices and may consider institutional trading in
similar groups of securities, yield, quality, stability, risk, coupon rate,
maturity, type of issue, trading characteristics, and other market data or
factors. From time to time, when prices cannot be obtained from an independent
pricing service, securities may be valued based on quotes from broker-dealers or
other financial institutions that trade the securities.
Trading in foreign securities may be completed at times which vary from the
closing of the New York Stock Exchange (NYSE). In computing its NAV, the Fund
values foreign securities using the latest closing price on the exchange on
which they are traded immediately prior to the closing of the NYSE. Certain
foreign currency exchange rates are generally determined at the latest rate
prior to the closing of the NYSE. Foreign securities quoted in foreign
currencies are translated into U.S. dollars at current rates. Events that
affect these values and exchange rates may occur between the times at which they
are determined and the closing of the NYSE. If such events materially affect
the value of portfolio securities, these securities may be valued at their fair
value as determined in good faith by the Trustees, although the actual
calculation may be done by others.
NOTE 4. SHARES OF BENEFICIAL INTEREST
The Pro Forma Class A Shares and Class C Shares net asset value per share
assumes the issuance of 4,736,901 Class A Shares and 3,023,431 Class C Shares,
respectively, of FMDTBF in exchange for 4,905,077 Institutional Shares and
3,111,836 Select Shares of FMAF which would have been issued at July 31, 2006 in
connection with the proposed reorganization.
NOTE 5. FEDERAL INCOME TAXES
Each fund has elected to be taxed as a "regulated investment company" under the
Internal Revenue Code. After the acquisition, FMDTBF intends to continue to
qualify as a regulated investment company, if such qualification is in the best
interests of its shareholders, by complying with the Subchapter M provision of
the Internal Revenue Code and to distribute to shareholders each year
substantially all of its income. Accordingly, no provisions for federal income
tax are necessary.
The identified cost of investments for the funds is substantially the same for
both financial accounting and federal income tax purposes. The tax cost of
investments will remain unchanged for the combined fund.
NOTE 6. PROFORMA ADJUSTMENTS
(a) Federated Administrative Services (FAS), under the Administrative Services
Agreement, provides FMDTBF with certain administrative personnel and services
necessary to operate the Fund. The fee paid to FAS is based on the average
aggregate daily net assets of certain Federated funds. 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. Under a similar plan, FAS provides
FMAF with certain administrative personnel and services necessary to operate the
Fund. An adjustment to the combined administrative personnel and services fee
reflects the fee structure of FMDTBF on Federated MDT Pro Forma Combined Fund's
average daily net assets.
(b) Adjustment to reflect custodian fees resulting from the combining of two
portfolios into one.
(c) Adjustment to reflect transfer and dividend disbursing agent fees and
expenses resulting from the combining of two portfolios into one.
(d) Adjustment to reflect directors'/trustees' fees resulting from the
combining of two portfolios into one.
(e) Adjustment to reflect auditing fees resulting from the combining of two
portfolios into one.
(f) Adjustment to reflect legal fees resulting from the combining of two
portfolios into one.
(g) Adjustment to reflect portfolio accounting fees resulting from the
combining of two portfolios into one.
(h) Under a Distribution Plan (the "Plan") pursuant to Rule 12B-1 under the
Act, FMDTBF may incur distribution expenses of 0.25% and 0.75% of the daily net
assets of the Fund's Class A Shares and Class C Shares, respectively, to
compensate Federated Securities Corp. (FSC), the principal distributor. Prior
to the reorganization of the Fund on December 8, 2006, the Predecessor Fund of
FMDTBF incurred distribution expenses of 0.25% and 1.00% of the daily net assets
of the Fund's Class A Shares and Class C Shares, respectively. FSC may
voluntarily choose to waive any portion of its fee. Under a similar plan, FMAF
may incur distribution expenses up to 0.75% of the Select Shares average daily
net assets. Adjustment is to reflect expense structure of FMDTBF on average
daily net assets of Federated MDT Pro Forma Combined Fund.
(i) Effective December 11, 2006, under the terms of a Shareholder Services
Agreement, FMDTBF may pay fees up to 0.25% of the average daily net assets of
Fund's Class A and Class C shares to financial intermediaries or to Federated
Shareholder Services Company (FSSC). Prior to the reorganization, the
Predecessor Fund of FMDTBF did not incur a shareholder services fee. Under a
similar plan, FMAF may pay fees up to 0.25% of the average daily net assets of
Institutional Shares and Select Shares to financial intermediaries or to FSSC.
FSSC or these financial intermediaries may voluntarily choose to waive any
portion of their fee. Adjustment is to reflect expense structure of FMDTBF on
average daily net assets of Federated MDT Pro Forma Combined Fund.
(j) Adjustment to reflect share registration costs resulting from the combining
of two portfolios into one.
(k) Adjustment to reflect share printing and postage resulting from the
combining of two portfolios into one.
(l) Adjustment to reflect share insurance premiums resulting from the combining
of two portfolios into one.
(m) Adjustment to reflect share miscellaneous expenses resulting from the
combining of two portfolios into one.
(n) Under the investment advisory contract, Federated MDTA LLC (the "Adviser")
is contractually obligated to waive, to the extent of its adviser fee, the
amount, if any, in order to limit the aggregate annual operating expenses
(excluding interest, taxes and brokerage commissions) for FMDTBF's Class A
Shares, Class C Shares and Institutional Shares to not more than 1.50%, 2.50%
and 1.25%, respectively, of average daily net assets. The Adviser has agreed to
keep these contractual limitations in place through December 8, 2008. The
Advisor may also voluntarily choose to waive a portion of its fee and/or
reimburse certain operating expenses of FMDTBF. The Advisor can modify or
terminate this voluntary waiver and/or reimbursement at any time at its sole
discretion. An adjustment to the combined waiver of investment adviser fee
reflects the fee structure of FMDTBF on Federated MDT Pro Forma Combined Fund's
average daily net assets.
(o) Effective July 15, 2006, FAS contractually agreed to waive the portion of
its fee which it would otherwise be entitled to receive from FMDTBF under the
Agreement. The level of fees payable by FMDTBF to FAS for the period will not
exceed the level of fees which FMDTBF would have paid during the period to its
pervious service provider under its previous administrative services agreement.
This contractual commitment ended with the reorganization on December 8, 2006.
In addition, FAS may voluntarily choose to waive any portion of its fee. FAS can
modify or terminate its voluntary waiver at any time at its sole discretion. An
adjustment to the combined waiver of administrative personnel and services fee
reflects the fee structure of FMDTBF on Federated MDT Pro Forma Combined Fund's
average daily net assets.
(p) An adjustment to the combined waiver of distribution services fee reflects
the fee structure of FMDTBF, which does not waive distribution services fee.
(q) An adjustment to the combined waiver and/or reimbursement of shareholder
services fee reflects the fee structure of FMDTBF, which does not waive and/or
reimburse shareholder services fee.
(r) An adjustment to the combined reimbursement of other operating expenses
reflects the fee structure of FMDTBF, which does not reimburse other operating
expenses.
- 26 -
INTRODUCTION
The accompanying unaudited Pro Forma Combining Portfolios of Investments,
Statements of Assets and Liabilities and Statements of Operations (Pro Forma
Financial Statements) reflect the accounts of Federated Moderate Allocation Fund
(FMAF) and Federated MDT Balanced Fund (FMDTBF), for the period ended July 31,
2006. MDT Balanced Fund (the "Predecessor Fund") was reorganized into FMDTBF as
of the close of business on December 8, 2006. Prior to the reorganization,
FMDTBF had no investment operations. FMDTBF is the successor to the Predecessor
Fund. For the purposes of these Pro Forma Financial Statements, the financial
information covers the period from August 1, 2005 to July 31, 2006. These
statements have been derived from the books and records utilized in calculating
daily net asset values at July 31, 2006.
The Pro Forma Financial Statements give effect to the proposed exchange of
assets of FMAF for Class A Shares and Class C Shares of FMDTBF. Under generally
accepted accounting principles, FMDTBF will be the surviving entity for
accounting purposes with its historical cost of investment securities and
results of operations being carried forward.
The Pro Forma Financial Statements have been adjusted to reflect the anticipated
advisory fee arrangement for the surviving entity. Certain other operating
costs have also been adjusted to reflect anticipated expenses of the combined
entity. Other costs which may change as a result of the reorganization are
currently undeterminable.
- 27 -
FEDERATED MODERATE
ALLOCATION FUND
FEDERATED MDT
BALANCED FUND (1)
PRO FORMA COMBINING PORTFOLIO
OF INVESTMENTS
JULY 31, 2006
(UNAUDITED)
FEDERATED FEDERATED FEDERATED FEDERATED
MODERATE MDT PRO MODERATE MDT PRO FORMA
BALANCED FORMA BALANCED
ALLOCATION FUND COMBINED ALLOCATION FUND COMBINED
FUND FUND
SHARES VALUE
COMMON STOCKS -
24.7%
AEROSPACE & DEFENSE - 0.2%
0 1,400 1,400 Honeywell International Inc. 0 $54,180 $54,180
0 5,100 5,100 Raytheon Company 0 229,857 229,857
0 1,100 1,100 Rockwell Collins, Inc. 0 58,707 58,707
0 342,744 342,744
BEVERAGES - 0.2%
0 6,900 6,900 Coca-Cola Co. 0 307,050 307,050
0 1,600 1,600 Hansen Natural Corp.* 0 73,584 73,584
0 380,634 380,634
BIOTECHNOLOGY - 0.7%
0 6,100 6,100 Celgene Corp.* 0 292,129 292,129
0 1,400 1,400 Cephalon, Inc.* 0 92,036 92,036
0 11,800 11,800 Genentech, Inc.* 0 953,676 953,676
0 1,337,841 1,337,841
BUILDING PRODUCTS - 0.0%
0 1,900 1,900 American Standard Companies 0 73,397 73,397
CAPITAL MARKETS - 1.9%
0 2,900 2,900 Bear Stearns & Co., Inc. 0 411,423 411,423
0 14,500 14,500 Lehman Brothers Holdings, Inc. 0 941,775 941,775
0 3,300 3,300 Merrill Lynch & Co., Inc. 0 240,306 240,306
0 29,600 29,600 Morgan Stanley 0 1,968,400 1,968,400
0 1,100 1,100 OptionsXpress Holdings, Inc. 0 28,798 28,798
0 3,590,702 3,590,702
CHEMICALS - 0.0%
0 300 300 Ashland, Inc. 0 19,953 19,953
0 500 500 FMC Corp. 0 30,845 30,845
0 700 700 OM Group, Inc.* 0 24,584 24,584
0 75,382 75,382
COMMERCIAL BANKS - 0.5%
0 5,600 5,600 Comerica Incorporated 0 327,880 327,880
0 700 700 Huntington Bancshares Incorporated 0 17,045 17,045
0 1,100 1,100 M & T Bank Corp. 0 134,112 134,112
0 7,700 7,700 National City Corporation 0 277,200 277,200
0 1,300 1,300 SunTrust Banks, Inc. 0 102,531 102,531
0 1,000 1,000 UnionBanCal Corporation 0 61,790 61,790
0 920,558 920,558
COMMERCIAL SERVICES & SUPPLIES - 0.3%
0 700 700 Corporate Executive Board Co. 0 65,800 65,800
0 700 700 Dun & Bradstreet Corp.* 0 46,704 46,704
0 1,200 1,200 Republic Services, Inc. 0 48,192 48,192
0 4,100 4,100 Robert Half International Inc. 0 132,676 132,676
0 7,200 7,200 Waste Management, Inc. 0 247,536 247,536
0 540,908 540,908
COMMUNICATIONS EQUIPMENT - 0.7%
0 1,400 1,400 Comverse Technology, Inc.* 0 27,132 27,132
0 37,700 37,700 QUALCOMM Incorporated 0 1,329,302 1,329,302
0 1,356,434 1,356,434
CONSTRUCTION MATERIALS - 0.1%
0 1,300 1,300 Martin Marietta Materials 0 104,676 104,676
CONSUMER FINANCE - 0.1%
0 2,300 2,300 AmeriCredit Corp.* 0 56,557 56,557
0 600 600 CompuCredit Corp.* 0 19,602 19,602
0 1,200 1,200 First Marblehead Corp. 0 54,960 54,960
0 2,100 2,100 SLM Corporation 0 105,630 105,630
0 236,749 236,749
CONTAINERS & PACKAGING - 0.0%
0 800 800 Temple-Inland Inc. 0 34,032 34,032
DIVERSIFIED CONSUMER SERVICES - 0.1%
0 1,100 1,100 Apollo Group, Inc., Class A* 0 52,052 52,052
0 300 300 ITT Educational Services, Inc.* 0 20,226 20,226
0 700 700 Jackson Hewitt Tax Service, Inc. 0 23,891 23,891
0 96,169 96,169
DIVERSIFIED FINANCIAL SERVICES - 0.5%
0 12,500 12,500 CIT Group Inc. 0 573,875 573,875
0 200 200 Chicago Mercantile Exchange Holdings, Inc. 0 92,240 92,240
0 3,300 3,300 Moody's Corporation 0 181,104 181,104
0 847,219 847,219
ELECTRIC UTILITIES - 0.1%
0 2,900 2,900 Allegheny Energy, Inc.* 0 119,045 119,045
0 1,200 1,200 Edison International 0 49,656 49,656
0 168,701 168,701
ELECTRICAL EQUIPMENT - 0.1%
0 1,100 1,100 Rockwell Automation, Inc. 0 68,178 68,178
0 500 500 Roper Industries, Inc. 0 22,600 22,600
0 90,778 90,778
ELECTRONIC EQUIPMENT & INSTRUMENTS - 0.1%
0 700 700 Amphenol Corp., Class A 0 39,256 39,256
0 2,500 2,500 Arrow Electronics, Inc.* 0 70,650 70,650
0 3,600 3,600 Ingram Micor, Inc., Class A* 0 63,468 63,468
0 400 400 Rogers Corp.* 0 22,800 22,800
0 196,174 196,174
ENERGY EQUIPMENT & SERVICES - 2.2%
0 8,500 8,500 Baker Hughes, Inc. 0 679,575 679,575
0 800 800 Cameron International Corp.* 0 40,328 40,328
0 1,500 1,500 Diamond Offshore Drilling, Inc. 0 118,395 118,395
0 1,400 1,400 FMC Technologies, Inc.* 0 88,228 88,228
0 2,200 2,200 Grant Prideco, Inc.* 0 100,122 100,122
0 14,700 14,700 Hess Corp. 0 777,630 777,630
0 3,600 3,600 National-Oilwell, Inc.* 0 241,344 241,344
0 900 900 Oceaneering International, Inc.* 0 39,348 39,348
0 29,100 29,100 Schlumberger Ltd. 0 1,945,335 1,945,335
0 800 800 Superior Energy Services, Inc.* 0 27,400 27,400
0 400 400 Veritas DGC, Inc.* 0 22,908 22,908
0 4,080,613 4,080,613
FOOD & STAPLES RETAILING - 0.0%
0 900 900 Longs Drug Stores Corp. 0 37,008 37,008
FOOD PRODUCTS - 0.3%
0 1,000 1,000 Dean Foods Co.* 0 37,530 37,530
0 3,800 3,800 General Mills, Inc. 0 197,220 197,220
0 2,200 2,200 Hershey Foods Corp. 0 120,934 120,934
0 2,100 2,100 Kellogg Co. 0 101,157 101,157
0 456,841 456,841
HEALTH CARE EQUIPMENT & SUPPLIES - 0.3%
0 600 600 Hologic, Inc.* 0 26,946 26,946
0 200 200 IDEXX Laboratories, Inc.* 0 17,700 17,700
0 500 500 Intuitive Surgical, Inc.* 0 47,600 47,600
0 8,800 8,800 Medtronic, Inc. 0 444,576 444,576
0 536,822 536,822
HEALTH CARE PROVIDERS & SERVICES - 0.4%
0 800 800 CIGNA Corp. 0 73,000 73,000
0 4,100 4,100 Cardinal Health, Inc. 0 274,700 274,700
0 2,300 2,300 Caremark Rx, Inc. 0 121,440 121,440
0 600 600 Express Scripts, Inc., Class A* 0 46,218 46,218
0 400 400 LCA Vision, Inc. 0 17,260 17,260
0 1,900 1,900 Laboratory Corporation of America Holdings* 0 122,398 122,398
0 700 700 Lincare Holdings, Inc.* 0 24,367 24,367
0 900 900 Quest Diagnostic, Inc. 0 54,108 54,108
0 500 500 Universal Health Services, Inc., Class B 0 28,000 28,000
0 500 500 WellPoint, Inc.* 0 37,250 37,250
0 798,741 798,741
HEALTH CARE TECHNOLOGY - 0.0%
0 3,400 3,400 Emdeon Corp.* 0 40,902 40,902
0 1,500 1,500 IMS Health, Inc. 0 41,160 41,160
0 82,062 82,062
HOTELS RESTAURANTS & LEISURE - 0.8%
0 4,000 4,000 International Game Technology 0 154,640 154,640
0 9,200 9,200 Las Vegas Sand Corp.* 0 570,676 570,676
0 20,100 20,100 Starbucks Corp.* 0 688,626 688,626
0 2,700 2,700 Yum! Brands, Inc. 0 121,500 121,500
0 1,535,442 1,535,442
HOUSEHOLD DURABLES - 0.3%
0 2,400 2,400 Beazer Homes USA, Inc. 0 100,056 100,056
0 3,800 3,800 Centex Corporation 0 179,778 179,778
0 2,200 2,200 KB HOME 0 93,544 93,544
0 600 600 Meritage Corp.* 0 23,262 23,262
0 1,500 1,500 Pulte Homes, Inc. 0 42,750 42,750
0 1,100 1,100 The Ryland Group, Inc. 0 44,935 44,935
0 1,400 1,400 Standard-Pacific Corp. 0 31,262 31,262
0 1,100 1,100 Toll Brothers, Inc.* 0 28,127 28,127
0 1,100 1,100 WCI Communities, Inc.* 0 17,281 17,281
0 560,995 560,995
HOUSEHOLD PRODUCTS - 0.2%
0 5,000 5,000 Kimberly-Clark Corp. 0 305,250 305,250
INDEPENDENT POWER PRODUCERS - 0.0%
0 4,400 4,400 Reliant Resources, Inc.* 0 55,352 55,352
INDUSTRIAL CONGLOMERATES - 0.5%
0 30,700 30,700 General Electric Co. 0 1,003,583 1,003,583
INSURANCE - 3.9%
0 25,950 25,950 The Allstate Corporation 0 1,474,479 1,474,479
0 3,300 3,300 AMBAC Financial Group, Inc. 0 274,263 274,263
0 2,100 2,100 American Financial Group, Inc. 0 88,431 88,431
0 11,400 11,400 American International Group, Inc. 0 691,638 691,638
0 4,200 4,200 Assurant, Inc. 0 202,314 202,314
0 5,400 5,400 Berkley, W.R. Corp. 0 194,400 194,400
0 300 300 CNA Financial Corp.* 0 10,185 10,185
0 7,800 7,800 The Chubb Corporation 0 393,276 393,276
0 1,800 1,800 Commerce Group, Inc. 0 54,378 54,378
0 1,300 1,300 Hanover Insurance Group, Inc.* 0 60,164 60,164
0 9,100 9,100 Hartford Financial Services Group, Inc. 0 772,044 772,044
0 500 500 LandAmerica Financial Group, Inc. 0 31,915 31,915
0 4,000 4,000 MBIA Insurance Corp. 0 235,240 235,240
0 25,200 25,200 Metlife, Inc. 0 1,310,400 1,310,400
0 1,400 1,400 Nationwide Financial Services, Inc. - Class A 0 63,112 63,112
0 1,200 1,200 Philadelphia Consolidated Holding Corp.* 0 40,644 40,644
0 1,800 1,800 Protective Life Corporation 0 83,358 83,358
0 2,800 2,800 Radian Group, Inc. 0 172,284 172,284
0 1,600 1,600 Reinsurance Group of America, Incorporated 0 79,312 79,312
0 4,000 4,000 SAFECO Corporation 0 214,880 214,880
0 700 700 Selective Insurance Group, Inc. 0 35,700 35,700
0 900 900 StanCorp Financial Group, Inc. 0 38,781 38,781
0 16,900 16,900 The St. Paul Travelers Companies, Inc. 0 774,020 774,020
0 400 400 Torchmark Corporation 0 24,188 24,188
0 500 500 Unitrin, Inc. 0 20,000 20,000
0 7,339,406 7,339,406
INTERNET & CATALOG RETAIL - 0.0%
0 700 700 Priceline.com, Inc.* 0 18,816 18,816
IT SERVICES - 0.2%
0 2,500 2,500 Cognizant Technology Solutions Corp.* 0 163,725 163,725
0 1,600 1,600 Computer Sciences Corp.* 0 83,824 83,824
0 900 900 DST Systems, Inc.* 0 50,679 50,679
0 1,800 1,800 Fiserv, Inc.* 0 78,588 78,588
0 600 600 Global Payments, Inc. 0 25,524 25,524
0 402,340 402,340
LEISURE EQUIPMENT & PRODUCTS - 0.0%
0 1,500 1,500 Brunswick Corp. 0 44,355 44,355
MACHINERY - 0.4%
0 600 600 Bucyrus International, Inc. 0 29,226 29,226
0 1,500 1,500 Danaher Corp. 0 97,800 97,800
0 3,700 3,700 Deere & Company 0 268,509 268,509
0 800 800 Dover Corp. 0 37,712 37,712
0 800 800 Gardner Denver, Inc.* 0 27,720 27,720
0 1,000 1,000 Ingersoll-Rand Co., Class A 0 35,800 35,800
0 2,800 2,800 Joy Global, Inc. 0 105,056 105,056
0 700 700 SPX Corp. 0 38,255 38,255
0 2,300 2,300 Timken Co. 0 74,060 74,060
0 714,138 714,138
MARINE - 0.0%
0 700 700 American Commercial Lines, Inc.* 0 38,465 38,465
MEDIA - 1.1%
0 5,700 5,700 Clear Channel Communications, Inc. 0 165,015 165,015
0 13,900 13,900 Comcast Corp., Class A* 0 477,882 477,882
0 2,600 2,600 Discovery Holding Co., Class A* 0 34,632 34,632
0 4,600 4,600 McGraw-Hill Cos., Inc. 0 258,980 258,980
0 39,800 39,800 News Corp., Inc. 0 765,752 765,752
0 2,300 2,300 Omnicom Group, Inc. 0 203,573 203,573
0 9,500 9,500 Time Warner, Inc. 0 156,750 156,750
0 2,062,584 2,062,584
METALS & MINING - 0.3%
0 500 500 Commercial Metals Company 0 11,345 11,345
0 1,800 1,800 Phelps Doge Corp. 0 157,212 157,212
0 600 600 Schnitzer Steel Industries, Inc. - Class A 0 20,340 20,340
0 3,900 3,900 United States Steel Corporation 0 245,973 245,973
0 1,900 1,900 Worthington Industries, Inc. 0 38,798 38,798
0 473,668 473,668
MULTILINE RETAIL - 0.2%
0 4,700 4,700 Dollar Tree Stores, Inc.* 0 63,074 63,074
0 4,400 4,400 Target Corp. 0 202,048 202,048
0 265,122 265,122
MULTI-UTILITIES & UNREGULATED POWER - 0.1%
0 3,800 3,800 PG&E Corp. 0 158,384 158,384
OIL & GAS - 2.3%
0 22,500 22,500 Anadarko Petroleum Corporation 0 1,029,150 1,029,150
0 2,900 2,900 Apache Corporation 0 204,363 204,363
0 30,400 30,400 ChevronTexaco Corporation 0 1,999,712 1,999,712
0 10,000 10,000 Devon Energy Corp. 0 646,400 646,400
0 700 700 General Maritime Corp. 0 25,410 25,410
0 500 500 Marathon Oil Corp. 0 45,320 45,320
0 1,600 1,600 OMI Corporation 0 35,296 35,296
0 800 800 Overseas Shipholding Group, Inc. 0 51,512 51,512
0 2,000 2,000 Pogo Producing Company 0 88,540 88,540
0 600 600 Swift Energy Company* 0 28,800 28,800
0 1,400 1,400 Tesoro Petroleum Corp. 0 104,720 104,720
0 4,259,223 4,259,223
PAPER & FOREST PRODUCTS - 0.0%
0 2,900 2,900 Louisiana-Pacific Corporation 0 58,000 58,000
PHARMACEUTICALS - 0.1%
0 3,400 3,400 Forest Laboratories, Inc., Class A* 0 157,454 157,454
0 4,300 4,300 Schering Plough Corp. 0 87,892 87,892
0 245,346 245,346
REAL ESTATE INVESTMENT TRUSTS - 2.5%
0 3,000 3,000 Alexandria Real Estate Equities, Inc. 0 283,260 283,260
0 5,750 5,750 Archstone-Smith Trust 0 301,703 301,703
0 2,700 2,700 Avalonbay Communities, Inc. 0 315,684 315,684
0 3,650 3,650 Boston Properties, Inc. 0 358,430 358,430
0 4,950 4,950 Developers Diversified Realty Corporation 0 261,261 261,261
0 6,100 6,100 Equity Residential Properties Trust 0 283,711 283,711
0 6,100 6,100 General Growth Properties, Inc. 0 278,404 278,404
0 3,500 3,500 Health Care Property Investors, Inc. 0 95,970 95,970
0 2,800 2,800 Hospitality Properties Trust 0 121,996 121,996
0 7,200 7,200 Kimco Realty Corporation 0 282,528 282,528
0 4,100 4,100 Plum Creek Timber Company, Inc. 0 139,646 139,646
0 3,000 3,000 Post Properties, Inc. 0 144,030 144,030
0 6,400 6,400 ProLogis 0 354,240 354,240
0 3,000 3,000 Public Storage, Inc. 0 240,870 240,870
0 8,500 8,500 Reckson Associates Realty Corp. 0 378,505 378,505
0 3,000 3,000 Simon Property Group, Inc. 0 256,590 256,590
0 7,000 7,000 Tanger Factory Outlet Centers, Inc. 0 230,300 230,300
0 3,650 3,650 Vornado Realty Trust 0 381,607 381,607
0 4,708,735 4,708,735
ROAD & RAIL - 0.1%
0 400 400 AMERCO* 0 35,280 35,280
0 500 500 Arkansas Best Corporation 0 22,215 22,215
0 1,100 1,100 CSX Corp. 0 66,748 66,748
0 1,800 1,800 Swift Transportation Co., Inc.* 0 48,150 48,150
0 500 500 Union Pacific Corp. 0 42,500 42,500
0 214,893 214,893
SEMICONDUCTOR & SEMICONDUCTOR EQUIPMENT - 0.9%
0 6,500 6,500 Altera Corporation* 0 112,515 112,515
0 3,200 3,200 Analog Devices, Inc. 0 103,456 103,456
0 700 700 Atheros Communications, Inc.* 0 11,564 11,564
0 7,500 7,500 Linear Technology Corporation 0 242,625 242,625
0 12,400 12,400 Marvell Technology Group Ltd.* 0 230,020 230,020
0 7,500 7,500 Maxim Integrated Products, Inc.* 0 220,350 220,350
0 1,700 1,700 Novellus Systems, Inc.* 0 43,027 43,027
0 20,600 20,600 Texas Instruments, Inc. 0 613,468 613,468
0 1,577,025 1,577,025
SOFTWARE - 1.1%
0 1,500 1,500 Informatica Corp.* 0 20,955 20,955
0 80,100 80,100 Microsoft Corp. 0 1,924,803 1,924,803
0 2,400 2,400 Red Hat, Inc.* 0 56,832 56,832
0 2,002,590 2,002,590
SPECIALTY RETAIL - 0.2%
0 500 500 The Children's Place Retail Stores, Inc.* 0 27,910 27,910
0 10,600 10,600 The Gap, Inc. 0 183,910 183,910
0 1,100 1,100 Guess?, Inc.* 0 46,860 46,860
0 1,200 1,200 Pacific Sunwear of California* 0 20,016 20,016
0 1,050 1,050 Select Comfort Corporation* 0 21,158 21,158
0 800 800 Talbots, Inc. 0 16,504 16,504
0 700 700 Tiffany & Co. 0 22,113 22,113
0 800 800 Zale Corp.* 0 20,488 20,488
0 358,959 358,959
TEXTILES, APPAREL & LUXURY GOODS - 0.2 %
0 8,100 8,100 Coach, Inc.* 0 232,551 232,551
0 600 600 Under Armour, Inc., Class A* 0 24,090 24,090
0 256,641 256,641
THRIFS & MORTGAGE FINANCE - 0.3 %
0 1,400 1,400 Corus Bankshares, Inc. 0 32,326 32,326
0 800 800 Downey Financial Corp. 0 53,080 53,080
0 800 800 FirstFed Financial Corp.* 0 45,160 45,160
0 1,800 1,800 Fremont General Corp. 0 31,950 31,950
0 3,100 3,100 MGIC Investment Corporation 0 176,421 176,421
0 2,900 2,900 The PMI Group, Inc. 0 123,134 123,134
0 462,071 462,071
TOBACCO - 0.2%
0 9,000 9,000 Loews Corp. 0 333,540 333,540
TRADING COMPANIES & DISTRIBUTORS - 0.0%
0 900 900 Applied Industrial Technologies, Inc. 0 20,988 20,988
0 1,000 1,000 WESCO International, Inc.* 0 58,250 58,250
0 79,238 79,238
TOTAL COMMON STOCKS (COST $42,392,816) 0 45,919,346 45,919,346
ADJUSTABLE RATE MORTGAGES - 0.1%
$0 $166,334 $166,334 Federal Home Loan Mortgage Corp. ARM 420173, 30
Year, 5.75%, 4/1/2030
(Identified Cost $168,791) 0 168,727 168,727
ASSET-BACKED SECURITIES - 1.7%
0 1,000,000 1,000,000 American Home Mortgage Investment Trust 2004-3, 0 968,937 968,937
Class 6A4, 5.01%, 10/25/2034
0 62,546 62,546 CS First Boston Mortgage Securities Corp. 2002-HE4, 0 62,088 62,088
Class AF, 5.51%, 8/25/2032
0 698,711 698,711 Community Program Loan Trust 1987-A, Class A4, 0 684,879 684,879
4.50%, 10/1/2018
0 452,714 452,714 MMCA Automobile Trust 2002-2, Class C, 5.55%, 0 448,825 448,825
3/15/2010
0 500,000 500,000 Nissan Auto Receivables Owner Trust 2004-C, Class 0 500,607 500,607
A4, 5.408%, 3/15/2010
0 500,000 500,000 People's Choice Home Loan Securities Trust 2004-1, 0 481,865 481,865
Class B1, 5.00%, 6/25/2034
TOTAL ASSET-BACKED SECURITIES (IDENTIFIED COST 0 3,147,201 3,147,201
$3,177,096)
COLLATERALIZED MORTGAGE OBLIGATIONS - 8.8%
0 438,578 438,578 Banc of America Commercial Mortgage 2000-2, Class 0 449,757 449,757
A1, 7.02%, 9/15/2032
0 85,338 85,338 Banc of America Funding Corp. 2003-1, Class A1, 0 84,074 84,074
6.00%, 5/20/2033
0 482,690 482,690 Bear Stearns Asset Backed Securities, Inc. 2005-AC6, 0 361,143 361,143
Class 21PO, 0.00%, 9/25/2020
0 6,315 6,315 Bear Stearns Mortgage Securities, Inc. 1997-6, Class 0 6,204 6,204
1A, 6.66%, 3/25/2031
0 544,180 544,180 CS First Boston Mortgage Securities Corp. 2003-17, 0 397,972 397,972
Class DB4, 5.38%, 6/25/2033
0 340,174 340,174 Chase Mortgage Finance Corp. 2003-S1, Class 1A1, 0 330,916 330,916
5.25%, 2/25/2018
0 1,000,000 1,000,000 Citicorp Mortgage Securities, Inc. 2003-11, Class 0 962,265 962,265
1A4, 5.25%, 12/25/2033
0 200,000 200,000 Countrywide Alternative Loan Trust 2005-28CB, Class 0 187,983 187,983
1A4, 5.50%, 8/25/2035
0 18,858 18,858 Federal Home Loan Mortgage Corp. REMIC 1311 K, 7.00% 0 18,858 18,858
7/15/2022
0 37,436 37,436 Federal Home Loan Mortgage Corp. REMIC 1384 D, 7.00% 0 37,436 37,436
9/15/2022
0 46,572 46,572 Federal Home Loan Mortgage Corp. REMIC 1595 D, 7.00% 0 47,854 47,854
10/15/2013
0 750,000 750,000 Federal Home Loan Mortgage Corp. REMIC 1686 PJ, 0 731,411 731,411
5.00% 2/15/2024
0 112,696 112,696 Federal Home Loan Mortgage Corp. REMIC 2003-79 NM, 0 106,335 106,335
4.00% 5/25/2022
0 115,361 115,361 Federal Home Loan Mortgage Corp. REMIC 2366 VG, 0 115,540 115,540
6.00% 6/15/2011
0 531,253 531,253 Federal Home Loan Mortgage Corp. REMIC 2410 OE, 0 530,785 530,785
6.38% 2/15/2032
0 75,000 75,000 Federal Home Loan Mortgage Corp. REMIC 2497 JH, 0 74,631 74,631
6.00% 9/15/2032
0 125,000 125,000 Federal Home Loan Mortgage Corp. REMIC 2626 NA, 0 123,164 123,164
5.00% 6/15/2023
0 573,891 573,891 Federal Home Loan Mortgage Corp. REMIC 2647 A, 3.25% 0 507,093 507,093
4/15/2032
0 237,327 237,327 Federal Home Loan Mortgage Corp. REMIC 2648 TS, 0 171,160 171,160
5.06% 7/15/2033
0 500,000 500,000 Federal Home Loan Mortgage Corp. REMIC 2663 LN, 0 494,227 494,227
4.50% 1/15/2022
0 150,000 150,000 Federal Home Loan Mortgage Corp. REMIC 2672 NB, 0 138,329 138,329
4.00% 5/15/2016
0 164,195 164,195 Federal Home Loan Mortgage Corp. REMIC 2676 JA, 0 163,204 163,204
4.00% 5/15/2016
0 153,084 153,084 Federal Home Loan Mortgage Corp. REMIC 2756 NA, 0 145,775 145,775
5.00% 2/15/2024
0 370,502 370,502 Federal National Mortgage Association REMIC 1990-28 0 400,733 400,733
X, 9.00%, 3/25/2020
0 119,105 119,105 Federal National Mortgage Association REMIC 1992-188 0 124,089 124,089
PZ, 7.50%, 10/25/2022
0 92,856 92,856 Federal National Mortgage Association REMIC 1993-113 0 102,389 102,389
SB, 9.75%, 7/25/2023
0 745,905 745,905 Federal National Mortgage Association REMIC 1997-81 0 762,577 762,577
PD, 6.35%, 12/18/2027
0 21,619 21,619 Federal National Mortgage Association REMIC 2001-37 0 22,484 22,484
GA, 8.00%, 7/25/2016
0 440,406 440,406 Federal National Mortgage Association REMIC 2002-1 0 448,823 448,823
HC, 6.50%, 2/25/2022
0 301,369 301,369 Federal National Mortgage Association REMIC 2002-22 0 307,089 307,089
G, 6.50%, 4/25/2032
0 325,033 325,033 Federal National Mortgage Association REMIC 2003-28 0 299,839 299,839
GA, 4.00%, 10/25/2032
0 150,000 150,000 Federal National Mortgage Association REMIC 2003-32 0 141,896 141,896
KC, 5.00%, 5/25/2018
0 23,137 23,137 Federal National Mortgage Association REMIC 2003-35 0 21,077 21,077
UC, 3.75%, 5/25/2033
0 922,562 922,562 Federal National Mortgage Association REMIC 2003-42 0 827,810 827,810
CA, 4.00%, 5/25/2033
0 417,682 417,682 Federal National Mortgage Association REMIC 2003-49 0 370,840 370,840
JE, 3.00%, 4/25/2033
0 318,623 318,623 Federal National Mortgage Association REMIC 2003-66 0 289,962 289,962
MB, 3.50%, 5/25/2023
0 867,706 867,706 Federal National Mortgage Association REMIC 2004-2 0 798,525 798,525
JA, 5.00%, 2/25/2024
0 188,881 188,881 Federal National Mortgage Association REMIC G92-44 0 200,319 200,319
ZQ, 8.00%, 7/25/2022
0 279,535 279,535 Government National Mortgage Association REMIC 1996- 0 291,431 291,431
10 PD, 7.50%, 6/20/2026
0 24,940 24,940 Government National Mortgage Association REMIC 1999- 0 25,428 25,428
29 PB, 7.25%, 7/16/2028
0 68,035 68,035 Government National Mortgage Association REMIC 2002- 0 68,131 68,131
17 B, 6.00%, 3/20/2032
0 497,046 497,046 Government National Mortgage Association REMIC 2003- 0 429,520 429,520
67 ZA, 5.00%, 8/20/2033
0 194,465 194,465 Indymac Home Equity Loan Asset-Backed Trust 2004-C, 0 195,114 195,114
Class 1A1, 5.70%, 3/25/2035
0 705,857 705,857 MASTR Asset Securitization Trust 2003-6, Class 9A1, 0 684,406 684,406
4.25%, 7/25/2033
0 335,807 335,807 Structured Asset Securities Corp. 2003-212A2, Class 0 319,330 319,330
2A2, 5.25, 8/25/2033
0 472,422 472,422 Vendee Mortgage Trust 1994-3A, Class 1ZB, 6.50%, 0 482,605 482,605
9/15/2024
0 1,000,000 1,000,000 Washington Mutual 2003-AR9, Class 1A6, 4.05%, 0 970,908 970,908
9/25/2033
0 100,000 100,000 Washington Mutual Bank, 7.50%, 8/15/2006 0 100,064 100,064
0 656,492 656,492 Wells Fargo Mortgage backed Securities Trust 2004-8, 0 632,720 632,720
Class A6, 5.00%, 8/25/2019
0 1,000,000 1,000,000 Wells Fargo Mortgage backed Securities Trust 2005-3, 0 929,129 929,129
Class A14, 5.50%, 5/25/2035
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS 0 16,433,354 16,433,354
(IDENTIFIED COST $16,828,594)
CORPORATE NOTES & BONDS - 1.2%
COMMUNICATIONS - TELECOM WIRELESS - 0.2%
0 400,000 400,000 GTE North, Inc., Deb., Series D, 6.90%, 11/1/2008 0 407,859 407,859
CONSUMER CYCLICAL - AUTOMOTIVE - 0.2%
0 300,000 300,000 General Motors Acceptance Corporation Notes 6.125%, 0 298,346 298,346
02/01/2007
CONSUMER NON-CYCLICAL - SUPERMARKETS - 0.1%
0 250,000 250,000 Safeway, Inc. Notes 4.800%, 07/16/2007 0 248,071 248,071
FINANCIAL INSTITUTIONS - BANKING - 0.1%
0 200,000 200,000 CIT Group, Inc., Unsecd. Note, 2.875%, 9/29/2006 0 199,207 199,207
FINANCIAL INSTITUTIONS - BROKERAGE - 0.2%
0 400,000 400,000 Merrill Lynch & Co., Inc., Sr. Unsub., Series CORE, 0 399,480 399,480
5.898%, 1/31/2008
FINANCIAL INSTITUTIONS - FINANCE NONCAPTIVE - 0.4%
0 380,000 380,000 International Lease Finance Corp., Note, 5.75%, 0 379,968 379,968
10/15/2006
0 300,000 300,000 SLM Corporation Notes 3.950%, 08/15/2008 0 290,996 290,996
0 670,964 670,964
TOTAL CORPORATE NOTES & BONDS (IDENTIFIED COST 0 2,223,927 2,223,927
$2,258,512)
GOVERNMENT AGENCIES - 2.7%
0 1,000,000 1,000,000 Federal Home Loan Bank System, Bond, 3.50%, 9/8/2006 0 997,821 997,821
0 1,000,000 1,000,000 Federal Home Loan Mortgage Corp., 5.25%, 7/18/2011 0 999,656 999,656
0 1,000,000 1,000,000 Federal Home Loan Mortgage Corp., Unsecd. Note, 0 960,200 960,200
4.125%, 7/12/2010
0 2,000,000 2,000,000 Federal National Mortgage Association, Note, 5.25%, 0 2,002,384 2,002,384
1/15/2009
TOTAL GOVERNMENT AGENCIES (IDENTIFIED COST 0 4,960,061 4,960,061
$4,983,096)
MORTGAGE-BACKED SECURITIES - 0.4%
0 252,500 252,500 Federal Home Loan Mortgage Corp., Pool E01538, 0 245,762 245,762
5.00%, 12/1/2018
0 31,714 31,714 Federal National Mortgage Association, Pool 408761 0 32,433 32,433
7.00%, 12/1/2012
0 13,263 13,263 Federal National Mortgage Association, Pool 512255, 0 13,664 13,664
7.50%, 9/1/2014
0 44,159 44,159 Federal National Mortgage Association, Pool 609554, 0 45,496 45,496
7.50%, 10/1/2016
0 363,324 363,324 Federal National Mortgage Association, Pool 754886, 0 348,121 348,121
4.50%, 9/1/2018
TOTAL MORTGAGE-BACKED SECURITIES (IDENTIFIED COST 0 685,476 685,476
$705,252)
EXCHANGE TRADED FUNDS - 1.9%
0 54,950 54,950 iShares MSCI EAFE Index Fund (Identified Cost 0 3,622,304 3,622,304
$1,945,943)
MUTUAL FUND - 57.0%
5,083,710 0 5,083,710 (2) Capital Appreciation Core Fund 63,408,270 0 63,408,270
1,570 0 1,570 (2) Emerging Markets Fixed Income Core Fund 30,314 0 30,314
730,120 0 730,120 (2) Federated Intermediate Corporate Bond Fund 7,169,778 0 7,169,778
126,967 0 126,967 (2) Federated International Bond Fund, Class A 1,378,864 0 1,378,864
Shares
484,563 0 484,563 (2) Federated International Capital Appreciation 5,616,089 0 5,616,089
Fund, Class A Shares
1,239,957 0 1,239,957 (2) Federated Mortgage Core Portfolio 12,077,176 0 12,077,176
545,753 0 545,753 (2) Federated U.S. Government Bond Fund 5,932,335 0 5,932,335
590,324 0 590,324 (2) Federated U.S. Government Securities Fund, 2-5 6,369,597 0 6,369,597
Years, Institutional Shares
276,686 0 276,686 (2) High Yield Bond Portfolio 1,837,196 0 1,837,196
0 2,288,104 2,288,104 SSgA Prime Money Market Fund (At Net Asset Value) 0 2,288,104 2,288,104
TOTAL MUTUAL FUNDS (IDENTIFIED COST $98,643,697) 103,819,619 2,288,104 106,107,723
REPURCHASE AGREEMENT - 1.4%
$ $ $ Bank of America N.A., 5.29%, dated 7/31/2006, with a 2,627,000 0 2,627,000
2,627,000 - 2,627,000 maturity of 8/1/2006 (at Amortized Cost)
TOTAL INVESTMENTS (IDENTIFIED COST $173,730,797) - 106,446,619 79,448,500 185,895,119
99.9%
OTHER ASSETS AND LIABILITIES - 0.1% 170,965 245,516
74,551
TOTAL NET ASSETS - 100% $ $79,619,465 $186,140,635
106,521,170
Note: The categories of investments are shown as a percentage of total net
assets at July 31, 2006.
* Non Income Producing
(1) MDT Balanced Fund was reorganized into Federated MDT Balanced Fund as of
the close of business on December 8, 2006. Prior to the reorganization,
Federated MDT Balanced Fund had no investment operations.
(2) All or a portion of this security will be sold as a result of the
reorganization.
- 28 -
FEDERATED MODERATE ALLOCATION FUND
FEDERATED MDT BALANCED FUND (1)
PRO FORMA COMBINING STATEMENTS OF ASSETS & LIABILITIES
JULY 31, 2006 (UNAUDITED)
FEDERATED FEDERATED
MODERATE MDT
ALLOCATION BALANCED PRO FORMA PROFORMA
FUND FUND ADJUSTMENT COMBINED
ASSETS:
Investments in securities, at value $106,446,619 $79,448,500 $0 $185,895,119
Cash 835 26,063 0 26,898
Income receivable 157,576 194,901 0 352,477
Receivable for investments sold 0 3,925,155 0 3,925,155
Receivable for shares sold 3,011 103,837 0 106,848
Total assets 0 190,306,497
106,608,041 83,698,456
LIABILITIES:
Payable for investments purchased 0 3,953,075 0 3,953,075
Payable for shares redeemed 0 25,000 0 25,000
Payable for investment adviser fee 0 23,284 0 23,284
Payable for Directors'/Trustees' fees 70 10,178 0 10,248
Payable for distribution services fees 18,260 3,025 0 21,285
Payable for shareholder services fees 13,585 0 0 13,585
Accrued expenses 54,956 64,429 0 119,385
Total liabilities 86,871 4,078,991 0 4,165,862
NET ASSETS $106,521,170 $79,619,465 $0 $186,140,635
NET ASSETS CONSIST OF:
Paid-in capital $99,135,745 $68,844,460 $0 167,980,205
Net unrealized appreciation of investments 7,464,026 4,700,296 0 12,164,322
Accumulated net realized gain (loss) on investments (354,537) 5,379,478 0 5,024,941
Undistributed net investment income 0 971,167
275,936 695,231
Total Net Assets $106,521,170 $79,619,465 $0 $186,140,635
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION
PROCEEDS PER SHARE
INSTITUTIONAL SHARES:
NET ASSETS $62,930,696 $73,747,134 (b) $73,747,134
$(62,930,696)
SHARES OUTSTANDING 5,066,798 5,573,783 (b) 5,573,783
(5,066,798)
NET ASSET VALUE PER SHARE $12.42 $13.23 $13.23
OFFERING PRICE PER SHARE $12.42 $13.23 $13.23
REDEMPTION PROCEEDS PER SHARE $12.42 $13.23 $13.23
CLASS A SHARES:
NET ASSETS $- $1,962,276 $62,930,696 (b) $64,892,972
SHARES OUTSTANDING 0 148,492 (b) 4,912,360
4,763,868
NET ASSET VALUE PER SHARE $0.00 $13.21 $13.21
OFFERING PRICE PER SHARE* $0.00 $13.98 * $13.98 *
REDEMPTION PROCEEDS PER SHARE $0.00 $13.21 $13.21
CLASS C SHARES:
NET ASSETS $- $3,910,055 $43,590,474 (b) $47,500,529
SHARES OUTSTANDING 0 297,817 (b) 3,617,731
3,319,914
NET ASSET VALUE PER SHARE $0.00 $13.13 $13.13
OFFERING PRICE PER SHARE $0.00 $13.13 $13.13
REDEMPTION PROCEEDS PER SHARE $0.00 $13.00 ** $13.00 **
SELECT SHARES:
NET ASSETS $43,590,474 $- (b) $-
(43,590,474)
SHARES OUTSTANDING 3,514,267 0 (b) 0
(3,514,267)
NET ASSET VALUE PER SHARE $12.40 $0.00 $0.00
OFFERING PRICE PER SHARE $12.40 $0.00 $0.00
REDEMPTION PROCEEDS PER SHARE $12.40 $0.00 $0.00
Investments, at identified cost $98,982,593 $74,748,204 $0 $173,730,797
Investments in affiliated issuers $103,819,619 $0 $0 $103,819,619
*Computation of offering price per share 100/94.50 of net asset value.
**Computation of redemption price per share 100/99 of net asset value.
(a) MDT Balanced Fund was reorganized into Federated MDT Balanced Fund as of
the close of business on December 8, 2006. Prior to the reorganization,
Federated MDT Balanced Fund had no investment operations. Federated MDT
Balanced Fund is the successor to MDT Balanced Fund.
(b) Adjustment to reflect share balance as a result of the combination.
- 29 -
FEDERATED MODERATE ALLOCATION FUND
FEDERATED MDT BALANCED FUND (1)
PRO FORMA COMBINING STATEMENTS OF OPERATIONS
YEAR ENDED JULY 31, 2006 (UNAUDITED)
FEDERATED FEDERATED
MODERATE MDT
ALLOCATION BALANCED PRO FORMA PROFORMA
FUND FUND ADJUSTMENT COMBINED
INVESTMENT INCOME:
Dividends $2,001,680 $838,271 $0 $2,839,951
Interest 72,044 1,469,679 0 1,541,723
Investment income allocated from affiliated partnerships 1,395,942 0 0 1,395,942
TOTAL INVESTMENT INCOME: 3,469,666 2,307,950 0 5,777,616
EXPENSES:
Investment advisory fee 893,261 562,720 0 1,455,981
Administrative personnel and services fee 190,128 97,506 (35,237) (a) 252,397
Custodian fees 7,461 32,807 27,544 (b) 67,812
Transfer and dividend disbursing agent fees and expenses 133,315 95,765 (69,608) (c) 159,472
Directors'/Trustees' fees 4,752 31,234 11,938 (d) 47,924
Audit fees 31,083 23,086 (31,083) (e) 23,086
Legal fees 7,188 27,491 24,762 (f) 59,441
Portfolio accounting fees 55,293 93,403 4,714 (g) 153,410
Distribution services fee - Class A Shares 0 934 177,794 (h) 178,728
Distribution services fee - Class C Shares 0 9,950 479,756 (h) 489,706
Distribution services fee - Select Shares 360,002 0 (360,002) (h) 0
Shareholder services fee- Institutional Shares 164,022 0 (164,022) (i) 0
Shareholder services fee- Select Shares 119,288 0 (119,288) (i) 0
Share registration costs 31,099 49,474 (27,099) (j) 53,474
Printing and postage 3,600 15,626 9,672 (k) 28,898
Insurance premiums 8,169 10,170 (3,737) (l) 14,602
Miscellaneous 5,630 4,248 (3,683) (m) 6,195
EXPENSES BEFORE ALLOCATION 2,014,291 1,054,414 (77,579) 2,991,126
Expenses allocated from partnership 34,286 0 0 34,286
TOTAL EXPENSES 2,048,577 1,054,414 (77,579) 3,025,412
WAIVERS AND REIMBURSEMENTS--
Waiver/Reimbursement of investment adviser fee (n) (3,670)
(181,363) (102,760) 280,453
Waiver of administrative personnel and services fee (33,809) (6,109) 39,918 (o) 0
Waiver of distribution services fee - Select Shares (119,957) 0 119,957 (p) 0
Waiver of shareholder services fee - Institutional Shares (89,595) 0 89,595 (q) 0
Reimbursement of shareholder services fee - Institutional Shares (11,850) 0 11,850 (q) 0
Reimbursement of other operating expenses (58,561) 0 58,561 (r) 0
TOTAL WAIVERS AND REIMBURSEMENTS (495,135) (108,869) 600,334 (3,670)
NET EXPENSES 1,553,442 945,545 522,755 3,021,742
NET INVESTMENT INCOME $1,916,224 $1,362,405 ($522,755) $2,755,874
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments 77,419 6,686,253 0 6,763,672
Net realized allocated from partnerships 2,536,099 0 0 2,536,099
Realized gain distributions from affiliated investment company shares 205,965 0 0 205,965
Net change in unrealized appreciation (depreciation) of investments (3,679,158) (3,917,876) 0 (7,597,034)
Net realized and unrealized gain on investments (859,675) 2,768,377 0 1,908,702
Change in net assets resulting from operations $1,056,549 $4,130,782 ($522,755) $4,664,576
* MDT Balanced Fund was reorganized into Federated MDT Balanced Fund as of
the close of business on December 8, 2006. Prior to the reorganization,
Federated MDT Balanced Fund had no investment operations. Federated MDT
Balanced Fund is the successor to MDT Balanced Fund.
(See Notes to Pro Forma Financial Statements)
- 30 -
FEDERATED MODERATE ALLOCATION FUND
FEDERATED MDT BALANCED FUND
NOTES TO PRO FORMA FINANCIAL STATEMENTS
YEAR ENDED JULY 31, 2006 (UNAUDITED)
NOTE 1. DESCRIPTION OF THE FUND
FMAF, a series of Federated Managed Allocation Portfolios, is registered under
the Investment Company Act of 1940, as amended (the "Act), as an open-end
management investment company. The Fund consists of two classes of shares:
Institutional Shares and Select Shares.
FMDTBF, a series of Federated MDT Series, is registered under the Act as an
open-end, management investment company. MDT Balanced Fund (the "Predecessor
Fund") was reorganized into FMDTBF as of the close of business on December 8,
2006. Prior to the reorganization, FMDTBF had no investment operations. FMDTBF
is the successor to the Predecessor Fund. For the purposes of these Pro Forma
Financial Statements, the financial information covers the period from August 1,
2005 to July 31, 2006. FMDTBF consists of four classes of shares: Class A
Shares, Class C Shares, Class K Shares and Institutional Shares. Class K Shares
did not become effective until December 11, 2006.
NOTE 2. BASIS OF COMBINATION
The accompanying unaudited Pro Forma Combining Portfolios of Investments,
Statements of Assets and Liabilities and Statements of Operations (Pro Forma
Financial Statements) reflect the accounts of FMAF and the Predecessor Fund of
FMDTBF for the year ended July 31, 2006. These statements have been derived
from the books and records utilized in calculating daily net asset values at
July 31, 2006.
The Pro Forma Financial Statements should be read in conjunction with the
historical financial statements of FMAF and the Predecessor Fund of FMDTBF which
have been incorporated by reference in the Statement of Additional Information.
The Funds follow generally accepted accounting principles in the United States
of America applicable to management investment companies which are disclosed in
the historical financial statements.
The Pro Forma Financial Statements give effect to the proposed exchange of
assets of FMAF for Class A Shares and Class C Shares of the Predecessor Fund of
FMDTBF. Under generally accepted accounting principles, the Predecessor Fund of
FMDTBF will be the surviving entity for accounting purposes with its historical
cost of investment securities and results of operations being carried forward.
The Pro Forma Financial Statements have been adjusted to reflect the investment
advisory fee arrangement for the surviving entity. Certain other operating
costs have also been adjusted to reflect anticipated expenses of the combined
entity. Other costs which may change as a result of the reorganization are
currently undeterminable.
For the year ended July 31, 2006, FMAF and the Predecessor Fund of FMDTBF paid
investment advisory fees computed at the annual rate of 0.75% as a percentage of
average daily net assets.
All costs with respect to the reorganization will be borne by Federated
Investors, Inc. and its affiliates.
NOTE 3. PORTFOLIO VALUATION
Market values of each Fund's portfolio securities are determined as follows:
{circle}for equity securities, according to the last sale price or official
closing price reported in the market in which they are primarily traded
(either a national securities exchange or the over-the-counter market), if
available;
{circle}in the absence of recorded sales for equity securities, according to
the mean between the last closing bid and asked prices;
{circle}futures contracts and options are generally valued at market values
established by the exchanges on which they are traded at the close of
trading on such exchanges. Options traded in the over-the-counter market
are generally valued according to the mean between the last bid and the
last asked price for the option as provided by an investment dealer or
other financial institution that deals in the option. The Board of
Trustees (the "Trustees") may determine in good faith that another method
of valuing such investments is necessary to appraise their fair market
value;
{circle}prices for total return swaps are furnished by an independent pricing
service and are based upon a valuation model incorporating underlying
reference indexes, interest rates, yield curves and other market data or
factors. Prices for credit default swaps are furnished by an independent
pricing service and are based upon a valuation model incorporating default
probabilities, recovery rates and other market data or factors;
{circle}for mortgage-backed securities, based on the aggregate investment
value of the projected cash flows to be generated by the security, as
furnished by an independent pricing service;
{circle}for investments in other open-end regulated investment companies,
based on net asset value (NAV);
{circle}for other fixed-income securities, according to prices as furnished
by an independent pricing service, except that fixed-income securities
with remaining maturities of less than 60 days at the time of purchase are
valued at amortized cost; and
{circle}for all other securities at fair value as determined in accordance
with procedures established by and under the general supervision of the
Trustees.
Prices for fixed-income securities furnished by a pricing service may be based
on a valuation matrix which incorporates both dealer-supplied valuations and
electronic data processing techniques. Such prices (other than prices of
mortgage-backed securities) are generally intended to be indicative of the bid
prices currently offered to institutional investors for the securities, except
that prices for corporate fixed-income and asset-backed securities traded in the
United States are generally intended to be indicative of the mean between such
bid prices and asked prices. The Trustees have approved the use of such pricing
services. A number of pricing services are available, and the Fund may use
various pricing services or discontinue the use of any pricing service.
Prices provided by independent pricing services may be determined without
relying exclusively on quoted prices and may consider institutional trading in
similar groups of securities, yield, quality, stability, risk, coupon rate,
maturity, type of issue, trading characteristics, and other market data or
factors. From time to time, when prices cannot be obtained from an independent
pricing service, securities may be valued based on quotes from broker-dealers or
other financial institutions that trade the securities.
Trading in foreign securities may be completed at times which vary from the
closing of the New York Stock Exchange (NYSE). In computing its NAV, the Fund
values foreign securities using the latest closing price on the exchange on
which they are traded immediately prior to the closing of the NYSE. Certain
foreign currency exchange rates are generally determined at the latest rate
prior to the closing of the NYSE. Foreign securities quoted in foreign
currencies are translated into U.S. dollars at current rates. Events that
affect these values and exchange rates may occur between the times at which they
are determined and the closing of the NYSE. If such events materially affect
the value of portfolio securities, these securities may be valued at their fair
value as determined in good faith by the Trustees, although the actual
calculation may be done by others.
NOTE 4. SHARES OF BENEFICIAL INTEREST
The Pro Forma Class A Shares and Class C Shares net asset value per share
assumes the issuance of 4,763,868 Class A Shares and 3,319,914 Class C Shares,
respectively, of FMDTBF in exchange for 5,066,798 Institutional Shares and
3,514,267 Select Shares of FMAF which would have been issued at July 31, 2006 in
connection with the proposed reorganization.
NOTE 5. FEDERAL INCOME TAXES
Each fund has elected to be taxed as a "regulated investment company" under the
Internal Revenue Code. After the acquisition, the Predecessor Fund of FMDTBF
intends to continue to qualify as a regulated investment company, if such
qualification is in the best interests of its shareholders, by complying with
the Subchapter M provision of the Internal Revenue Code and to distribute to
shareholders each year substantially all of its income. Accordingly, no
provisions for federal income tax are necessary.
The identified cost of investments for the funds is substantially the same for
both financial accounting and federal income tax purposes. The tax cost of
investments will remain unchanged for the combined fund.
NOTE 6. PROFORMA ADJUSTMENTS
(a) Effective July 15, 2005, Federated Administrative Services (FAS), under the
Administrative Services Agreement, provides the Predecessor Fund of FMDTBF with
certain administrative personnel and services necessary to operate the Fund.
The fee paid to FAS is based on the average aggregate daily net assets of
certain Federated funds. 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. Under a similar plan, FAS provides FMAF with certain administrative
personnel and services necessary to operate the Fund. Prior to July 15, 2005, a
previous administrator provided administrative services to FMDTBF. An
adjustment to the combined administrative personnel and services fee reflects
the fee structure of the Predecessor Fund of FMDTBF on Federated MDT Pro Forma
Combined Fund's average daily net assets.
(b) Adjustment to reflect custodian fees resulting from the combining of two
portfolios into one.
(c) Adjustment to reflect transfer and dividend disbursing agent fees and
expenses resulting from the combining of two portfolios into one.
(d) Adjustment to reflect directors'/trustees' fees resulting from the
combining of two portfolios into one.
(e) Adjustment to reflect auditing fees resulting from the combining of two
portfolios into one.
(f) Adjustment to reflect legal fees resulting from the combining of two
portfolios into one.
(g) Adjustment to reflect portfolio accounting fees resulting from the
combining of two portfolios into one.
(h) Under a Distribution Plan (the "Plan") pursuant to Rule 12B-1 under the
Act, FMDTBF may incur distribution expenses of 0.25% and 0.75% of the daily net
assets of the Fund's Class A Shares and Class C Shares, respectively, to
compensate Federated Securities Corp. (FSC), the principal distributor. Prior
to the reorganization of the Fund on December 8, 2006, the Predecessor Fund of
FMDTBF incurred distribution expenses of 0.25% and 1.00% of the daily net assets
of the Fund's Class A Shares and Class C Shares, respectively. FSC may
voluntarily choose to waive any portion of its fee. Under a similar plan, FMAF
may incur distribution expenses up to 0.75% of the Select Shares average daily
net assets. Adjustment is to reflect expense structure of the Predecessor Fund
of FMDTBF on average daily net assets of Federated MDT Pro Forma Combined Fund.
(i) Effective December 11, 2006, under the terms of a Shareholder Services
Agreement, FMDTBF may pay fees up to 0.25% of the average daily net assets of
Fund's Class A and Class C shares to financial intermediaries or to Federated
Shareholder Services Company (FSSC). Prior to the reorganization, the
Predecessor Fund of FMDTBF did not incur a shareholder services fee. Under a
similar plan, FMAF may pay fees up to 0.25% of the average daily net assets of
Institutional Shares and Select Shares to financial intermediaries or to FSSC.
FSSC or these financial intermediaries may voluntarily choose to waive any
portion of their fee. Adjustment is to reflect expense structure of the
Predecessor Fund of FMDTBF on average daily net assets of Federated MDT Pro
Forma Combined Fund.
(j) Adjustment to reflect share registration costs resulting from the combining
of two portfolios into one.
(k) Adjustment to reflect share printing and postage resulting from the
combining of two portfolios into one.
(l) Adjustment to reflect share insurance premiums resulting from the combining
of two portfolios into one.
(m) Adjustment to reflect share miscellaneous expenses resulting from the
combining of two portfolios into one.
(n) Under the investment advisory contract, Federated MDTA LLC (the "Adviser")
is contractually obligated to waive, to the extent of its adviser fee, the
amount, if any, in order to limit the aggregate annual operating expenses
(excluding interest, taxes and brokerage commissions) for the Predecessor Fund
of FMDTBF's Class A Shares, Class C Shares and Institutional Shares to not more
than 1.50%, 2.50% and 1.25%, respectively, of average daily net assets. The
Adviser has agreed to keep these contractual limitations in place through
December 8, 2008. The Advisor may also voluntarily choose to waive a portion of
its fee and/or reimburse certain operating expenses of the Predecessor Fund of
FMDTBF. The Advisor can modify or terminate this voluntary waiver and/or
reimbursement at any time at its sole discretion. An adjustment to the combined
waiver of investment adviser fee reflects the fee structure of the Predecessor
Fund of FMDTBF on Federated MDT Pro Forma Combined Fund's average daily net
assets.
(o) Effective July 15, 2006, FAS contractually agreed to waive the portion of
its fee which it would otherwise be entitled to receive from the Predecessor
Fund of FMDTBF under the Agreement. The level of fees payable by the
Predecessor Fund of FMDTBF to FAS for the period will not exceed the level of
fees which the Predecessor Fund of FMDTBF would have paid during the period to
its pervious service provider under its previous administrative services
agreement. In addition, FAS may voluntarily choose to waive any portion of its
fee. FAS can modify or terminate its voluntary waiver at any time at its sole
discretion. An adjustment to the combined waiver of administrative personnel
and services fee reflects the fee structure of FMDTBF on Federated MDT Pro Forma
Combined Fund's average daily net assets.
(p) An adjustment to the combined waiver of distribution services fee reflects
the fee structure of the Predecessor Fund of FMDTBF, which does not waive
distribution services fee.
(q) An adjustment to the combined waiver and/or reimbursement of shareholder
services fee reflects the fee structure of the Predecessor Fund of FMDTBF, which
does not waive and/or reimburse shareholder services fee.
(r) An adjustment to the combined reimbursement of other operating expenses
reflects the fee structure of the Predecessor Fund of FMDTBF, which does not
reimburse other operating expenses.
- 31 -
INTRODUCTION
The accompanying unaudited Pro Forma Combining Portfolios of Investments,
Statements of Assets and Liabilities and Statements of Operations (Pro Forma
Financial Statements) reflect the accounts of Federated Growth Allocation Fund
(FGAF) and Federated MDT Balanced Fund (FMDTBF), for the period ended July 31,
2006. MDT Balanced Fund (the "Predecessor Fund") was reorganized into FMDTBF as
of the close of business on December 8, 2006. Prior to the reorganization,
FMDTBF had no investment operations. FMDTBF is the successor to the Predecessor
Fund. For the purposes of these Pro Forma Financial Statements, the financial
information covers the period from August 1, 2006 to January 31, 2007. These
statements have been derived from the books and records utilized in calculating
daily net asset values at January 31, 2007.
The Pro Forma Financial Statements give effect to the proposed exchange of
assets of each of FGAF for Class A Shares and Class C Shares of FMDTBF. Under
generally accepted accounting principles, FMDTBF will be the surviving entity
for accounting purposes with its historical cost of investment securities and
results of operations being carried forward.
The Pro Forma Financial Statements have been adjusted to reflect the anticipated
advisory fee arrangement for the surviving entity. Certain other operating
costs have also been adjusted to reflect anticipated expenses of the combined
entity. Other costs which may change as a result of the reorganization are
currently undeterminable.
- 32 -
FEDERATED GROWTH ALLOCATION FUND
FEDERATED MDT BALANCED FUND
PRO FORMA COMBINING PORTFOLIO OF INVESTMENTS
JANUARY 31, 2007 (UNAUDITED)
FEDERATED FEDERATED FEDERATED FEDERATED
GROWTH MDT GROWTH MDT
ALLOCATION BALANCED PRO FORMA ALLOCATION BALANCED PRO FORMA
FUND FUND COMBINED FUND FUND COMBINED
SHARES OR PRINCIPAL AMOUNT VALUE
COMMON STOCKS - 40.4%
AEROSPACE & DEFENSE - 0.2%
0 800 800 Lockheed Martin Corp. 0 $77,752 $77,752
0 6,400 6,400 Raytheon Co. 0 332,160 332,160
0 800 800 United Technologies Corp. 0 54,416 54,416
0 464,328 464,328
BIOTECHNOLOGY - 0.8%
0 1,500 1,500 Celgene Corp.* 0 108,615 108,615
0 14,700 14,700 Genentech, Inc.* 0 1,284,339 1,284,339
0 4,300 4,300 Medimmune, Inc.* 0 149,038 149,038
0 1,541,992 1,541,992
BUILDING PRODUCTS - 0.1%
0 3,200 3,200 American Standard 0 158,048 158,048
Companies
CAPITAL MARKETS - 3.0%
0 600 600 Affiliated Managers Group* 0 66,840 66,840
0 4,700 4,700 Bear Stearns & Co., Inc. 0 774,795 774,795
0 900 900 Lehman Brothers Holdings, 0 74,016 74,016
Inc.
0 17,900 17,900 Merrill Lynch & Co., Inc. 0 1,674,724 1,674,724
0 38,500 38,500 Morgan Stanley 0 3,187,415 3,187,415
0 5,777,790 5,777,790
CHEMICALS - 0.6%
0 500 500 Ashland, Inc. 0 34,775 34,775
0 26,300 26,300 Dow Chemical Co. 0 1,092,502 1,092,502
0 2,100 2,100 Nalco Holding Co.* 0 48,279 48,279
0 1,175,556 1,175,556
COMMERCIAL BANKS - 2.7%
0 300 300 City National Corp. 0 21,579 21,579
0 7,400 7,400 Comerica, Inc. 0 438,820 438,820
0 3,100 3,100 Fifth Third Bancorp 0 123,690 123,690
0 700 700 Huntington Bancshares, 0 16,296 16,296
Inc.
0 62,500 62,500 J.P. Morgan Chase & Co. 0 3,183,125 3,183,125
0 11,157 11,157 KeyCorp 0 425,863 425,863
0 12,000 12,000 National City Corp. 0 454,200 454,200
0 3,600 3,600 SunTrust Banks, Inc. 0 299,160 299,160
0 2,300 2,300 UnionBanCal Corp. 0 148,626 148,626
0 5,111,359 5,111,359
COMMERCIAL SERVICES & SUPPLIES - 0.3%
0 500 500 Brinks Co. 0 31,075 31,075
0 900 900 Dun & Bradstreet Corp. 0 76,500 76,500
0 1,000 1,000 Equifax, Inc. 0 41,530 41,530
0 1,700 1,700 Miller Herman, Inc. 0 63,920 63,920
0 2,900 2,900 Pitney Bowes, Inc. 0 138,823 138,823
0 5,100 5,100 Robert Half International, 0 207,570 207,570
Inc.
0 1,400 1,400 TeleTech Holdings, Inc.* 0 37,730 37,730
0 500 500 United Stationers, Inc.* 0 25,480 25,480
0 622,628 622,628
COMMUNICATIONS EQUIPMENT - 0.0%
0 1,700 1,700 Comverse Technology, Inc.* 0 32,895 32,895
0 800 800 F5 Networks, Inc.* 0 57,152 57,152
0 90,047 90,047
COMPUTERS & PERIPHERALS - 0.9%
0 15,200 15,200 Apple, Inc.* 0 1,303,096 1,303,096
0 9,400 9,400 Network Appliance, Inc.* 0 353,440 353,440
0 1,656,536 1,656,536
CONSTRUCTION MATERIALS - 0.1%
0 600 600 Texas Industries, Inc. 0 44,052 44,052
0 1,800 1,800 Vulcan Materials Co. 0 183,312 183,312
0 227,364 227,364
CONSUMER FINANCE - 0.1%
0 5,000 5,000 AmeriCredit Corp.* 0 135,700 135,700
0 2,200 2,200 First Marblehead Corp.* 0 119,680 119,680
0 255,380 255,380
CONTAINERS & PACKAGING - 0.1%
0 1,300 1,300 Crown Holdings, Inc.* 0 28,691 28,691
0 800 800 Sealed Air Corp. 0 52,720 52,720
0 1,600 1,600 Temple-Inland, Inc. 0 79,904 79,904
0 161,315 161,315
DIVERSIFIED CONSUMER SERVICES - 0.1%
0 800 800 ITT Educational Services, 0 62,080 62,080
Inc.*
0 1,600 1,600 Weight Watchers 0 86,448 86,448
International, Inc.*
0 148,528 148,528
DIVERSIFIED FINANCIAL SERVICES - 0.7%
0 13,300 13,300 CIT Group Inc. 0 784,168 784,168
0 300 300 Chicago Mercantile 0 168,990 168,990
Exchange Holdings, Inc.
0 4,200 4,200 Moody's Corp. 0 300,552 300,552
0 1,253,710 1,253,710
DIVERSIFIED TELECOMMUNICATIONS SERVICES - 0.2%
0 7,000 7,000 Embarq Corp. 0 388,570 388,570
ELECTRIC UTILITIES - 0.3%
0 4,400 4,400 Allegheny Energy, Inc.* 0 204,688 204,688
0 2,900 2,900 Edison International 0 130,442 130,442
0 1,300 1,300 FirstEnergy Corp. 0 77,129 77,129
0 1,300 1,300 Portland General Electric 0 33,982 33,982
Co.
0 4,700 4,700 Reliant Resources, Inc.* 0 69,936 69,936
0 516,177 516,177
ELECTRICAL EQUIPMENT - 0.3%
0 13,800 13,800 Honeywell International, 0 630,522 630,522
Inc.
0 500 500 Roper Industries, Inc. 0 25,960 25,960
0 656,482 656,482
ELECTRONIC EQUIPMENT & INSTRUMENTS - 0.3%
0 2,900 2,900 Amphenol Corp., Class A 0 196,388 196,388
0 5,400 5,400 Avnet, Inc.* 0 167,670 167,670
0 1,200 1,200 Daktronics, Inc. 0 41,484 41,484
0 4,500 4,500 Ingram Micor, Inc., Class 0 87,795 87,795
A*
0 2,000 2,000 National Instruments Corp. 0 57,620 57,620
0 100 100 Tech Data Corp.* 0 3,714 3,714
0 554,671 554,671
ENERGY EQUIPMENT & SERVICES - 1.8%
0 3,300 3,300 Cameron International 0 173,250 173,250
Corp.*
0 300 300 FMC Technologies, Inc.* 0 18,579 18,579
0 1,500 1,500 GlobalSanaFe Corp. 0 87,015 87,015
0 1,900 1,900 Oceaneering International, 0 74,993 74,993
Inc.*
0 4,200 4,200 Patterson-UTI Energy, Inc. 0 101,430 101,430
0 500 500 SEACOR Holdings, Inc.* 0 50,615 50,615
0 39,900 39,900 Schlumberger Ltd. 0 2,533,251 2,533,251
0 6,000 6,000 Transocean Sedco Forex, 0 464,220 464,220
Inc.*
0 3,503,353 3,503,353
FOOD & STAPLES - RETAILING - 0.2%
0 4,100 4,100 Costco Wholesale Corp. 0 230,338 230,338
0 1,800 1,800 Kroger Co. 0 46,080 46,080
0 1,100 1,100 Longs Drug Stores Corp. 0 47,300 47,300
0 323,718 323,718
FOOD PRODUCTS - 0.2%
0 5,700 5,700 Kellogg Co. 0 280,839 280,839
0 3,500 3,500 Kraft Foods, Inc. Class A 0 122,220 122,220
0 403,059 403,059
GAS UTILITIES - 0.0%
0 1,700 1,700 Energen Corp. 0 78,676 78,676
HEALTH CARE EQUIPMENT & SUPPLIES - 0.9%
0 1,600 1,600 Dentsply International, 0 49,344 49,344
Inc.
0 1,700 1,700 Immucor, Inc.* 0 53,618 53,618
0 25,500 25,500 Medtronic, Inc. 0 1,362,975 1,362,975
0 600 600 Mentor Corp. 0 30,594 30,594
0 5,300 5,300 St. Jude Medical, Inc.* 0 226,628 226,628
0 1,723,159 1,723,159
HEALTH CARE PROVIDERS & SERVICES - 0.8%
0 8,800 8,800 Cardinal Health, Inc. 0 628,496 628,496
0 1,300 1,300 DaVita, Inc.* 0 70,980 70,980
0 900 900 Lincare Holdings, Inc.* 0 35,415 35,415
0 3,500 3,500 Medco Health Solutions, 0 207,235 207,235
Inc.*
0 1,600 1,600 Psychiatric Solutions, 0 62,304 62,304
Inc.*
0 6,800 6,800 WellPoint, Inc.* 0 532,984 532,984
0 1,537,414 1,537,414
HEALTH CARE TECHNOLOGY - 0.0%
0 2,900 2,900 IMS Health, Inc. 0 83,694 83,694
HOTELS RESTAURANTS & LEISURE - 0.2%
0 700 700 LifeTime Fitness, Inc.* 0 37,940 37,940
0 400 400 Wynn Resorts Ltd.* 0 44,696 44,696
0 5,200 5,200 Yum! Brands, Inc. 0 312,052 312,052
0 394,688 394,688
HOUSEHOLD DURABLES - 0.5%
0 2,500 2,500 Beazer Homes USA, Inc. 0 108,775 108,775
0 2,400 2,400 Centex Corp. 0 128,856 128,856
0 3,100 3,100 KB HOME 0 168,082 168,082
0 800 800 M.D.C. Holdings, Inc. 0 46,616 46,616
0 400 400 Mertiage Corp.* 0 17,780 17,780
0 8,800 8,800 Pulte Homes, Inc. 0 302,192 302,192
0 1,500 1,500 Ryland Group, Inc. 0 84,270 84,270
0 1,800 1,800 Standard-Pacific Corp. 0 49,392 49,392
0 905,963 905,963
HOUSEHOLD PRODUCTS - 2.0%
0 8,500 8,500 Kimberly-Clark Corp. 0 589,900 589,900
0 50,400 50,400 Proctor & Gamble Co. 0 3,269,448 3,269,448
0 3,859,348 3,859,348
INDEPENDENT POWER PRODUCERS - 0.0%
0 1,100 1,100 AES Corp.* 0 22,869 22,869
INDUSTRIAL CONGLOMERATES - 0.7%
0 14,000 14,000 3M Co. 0 1,040,200 1,040,200
0 3,600 3,600 McDermott International, 0 185,904 185,904
Inc.*
0 500 500 Teleflex, Inc. 0 33,390 33,390
0 1,259,494 1,259,494
INSURANCE - 6.6%
0 25,950 25,950 Allstate Corp. 0 1,561,152 1,561,152
0 5,000 5,000 Ambac Financial Group, 0 440,500 440,500
Inc.
0 4,050 4,050 American Financial Group, 0 143,046 143,046
Inc.
0 47,800 47,800 American International 0 3,271,910 3,271,910
Group, Inc.
0 4,700 4,700 Assurant, Inc. 0 261,226 261,226
0 6,600 6,600 Berkley, W.R. Corp. 0 218,394 218,394
0 2,700 2,700 CNA Financial Corp.* 0 109,755 109,755
0 14,600 14,600 Chubb Corp. 0 759,784 759,784
0 2,300 2,300 Commerce Group, Inc. 0 69,414 69,414
0 2,100 2,100 HCC Insurance Holdings, 0 65,583 65,583
Inc.
0 1,600 1,600 Hanover Insurance Group, 0 76,880 76,880
Inc.*
0 3,800 3,800 Hartford Financial 0 360,658 360,658
Services Group, Inc.
0 11,300 11,300 Loews Corp. 0 491,098 491,098
0 5,200 5,200 MBIA, Inc. 0 373,516 373,516
0 30,600 30,600 Metlife, Inc. 0 1,900,872 1,900,872
0 1,900 1,900 Nationwide Financial 0 103,835 103,835
Services, Inc. - Class A
0 1,400 1,400 Odyssey Re Holdings Corp. 0 55,230 55,230
0 1,600 1,600 Ohio Casualty Corp. 0 47,264 47,264
0 22,900 22,900 Progressive Corp., Ohio 0 531,051 531,051
0 2,000 2,000 Reinsurance Group of 0 116,300 116,300
America, Inc.
0 4,200 4,200 Safeco Corp. 0 268,842 268,842
0 400 400 Safety Insurance Group, 0 19,536 19,536
Inc.
0 1,000 1,000 StanCorp Financial Group, 0 47,850 47,850
Inc.
0 26,200 26,200 The St. Paul Travelers 0 1,332,270 1,332,270
Companies, Inc.
0 12,625,966 12,625,966
INTERNET & CATALOG RETAIL - 0.1%
0 2,500 2,500 Expedia, Inc.* 0 53,625 53,625
0 3,500 3,500 AC Interactive Corp.* 0 134,400 134,400
0 1,100 1,100 Nutri/System, Inc.* 0 48,455 48,455
0 236,480 236,480
INTERNET SOFTWARE & SERVICES - 0.1%
0 5,400 5,400 eBay, Inc.* 0 174,906 174,906
0 3,000 3,000 ValueClick, Inc.* 0 76,560 76,560
0 251,466 251,466
IT SERVICES - 0.4%
0 800 800 Alliance Data Systems 0 54,344 54,344
Corp.*
0 3,700 3,700 Automatic Data Processing, 0 176,564 176,564
Inc.
0 1,300 1,300 Ceridan Corp. - New* 0 38,961 38,961
0 1,000 1,000 Checkfree Corp.* 0 41,430 41,430
0 3,500 3,500 Cognizant Technology 0 298,515 298,515
Solutions Corp.*
0 2,300 2,300 Computer Sciences Corp.* 0 120,658 120,658
0 2,300 2,300 Fiserv, Inc.* 0 120,911 120,911
0 851,383 851,383
LEISURE EQUIPMENT & PRODUCTS - 0.0%
0 1,200 1,200 Brunswick Corp. 0 40,932 40,932
LIFE SCIENCES TOOLS & SERVICES - 0.1%
0 1,700 1,700 Waters Corp.* 0 96,373 96,373
MACHINERY - 0.3%
0 1,200 1,200 Briggs & Stratton Corp. 0 35,568 35,568
0 3,100 3,100 Danaher Corp. 0 229,586 229,586
0 2,900 2,900 Deere & Co. 0 290,812 290,812
0 555,966 555,966
MEDIA - 2.0%
0 40,900 40,900 Comcast Corp., Class A* 0 1,812,688 1,812,688
0 5,400 5,400 Discovery Holding Co., 0 89,478 89,478
Class A*
0 1,300 1,300 Lamar Advertising Co. 0 86,164 86,164
0 5,900 5,900 McGraw-Hill Cos., Inc. 0 395,772 395,772
0 2,900 2,900 Omnicom Group, Inc. 0 305,080 305,080
0 39,900 39,900 Time Warner, Inc. 0 872,613 872,613
0 4,800 4,800 Viacom, Inc., Class B - 0 195,216 195,216
new*
0 3,757,011 3,757,011
METALS & MINING - 0.1%
0 4,500 4,500 Commercial Metals Corp. 0 121,995 121,995
0 900 900 Metal Management, Inc. 0 36,936 36,936
0 900 900 Quanex Corp. 0 35,271 35,271
0 2,100 2,100 Worthington Industries, 0 40,278 40,278
Inc.
0 234,480 234,480
MULTI-UTILITIES - 0.1%
0 5,200 5,200 PG&E Corp. 0 242,736 242,736
0 700 700 SCANA Corp. 0 28,504 28,504
0 271,240 271,240
MULTILINE RETAIL - 0.4%
0 3,900 3,900 Sears Holdings Corp.* 0 688,935 688,935
OIL GAS & CONSUMABLE FUELS - 4.4%
0 27,700 27,700 Anadarko Petroleum Corp. 0 1,211,875 1,211,875
0 43,100 43,100 Chevron Corp. 0 3,141,128 3,141,128
0 15,200 15,200 Devon Energy Corp. 0 1,065,368 1,065,368
0 1,300 1,300 General Maritime Corp. * 0 47,437 47,437
0 15,500 15,500 Marathon Oil Corp. 0 1,400,270 1,400,270
0 2,100 2,100 OMI Corp. 0 46,326 46,326
0 3,900 3,900 Pioneer Natural Resources, 0 159,900 159,900
Inc.
0 2,200 2,200 Pogo Producing Co. 0 109,010 109,010
0 3,200 3,200 Tesoro Petroleum Corp. 0 263,648 263,648
0 18,900 18,900 Valero Energy Corp. 0 1,025,892 1,025,892
0 8,470,854 8,470,854
PAPER & FOREST PRODUCTS - 0.1%
0 3,400 3,400 MeadWestvaco Corp. 0 102,476 102,476
PERSONAL PRODUCTS - 0.0%
0 2,200 2,200 Avon Products, Inc. 0 75,658 75,658
PHARMACEUTICALS- 0.6%
0 10,600 10,600 Johnson & Johnson 0 708,080 708,080
0 16,400 16,400 Schering Plough Corp. 0 410,000 410,000
0 1,118,080 1,118,080
REAL ESTATE INVESTMENT TRUSTS - 4.6%
0 6,000 6,000 AMB Property Corp. 0 365,100 365,100
0 4,200 4,200 Alexandria Real Estate 0 455,112 455,112
Equities, Inc.
0 9,650 9,650 Archstone-Smith Trust 0 609,977 609,977
0 4,100 4,100 Avalonbay Communities, 0 608,276 608,276
Inc.
0 6,350 6,350 Boston Properties, Inc. 0 800,671 800,671
0 4,450 4,450 Developers Diversified 0 298,684 298,684
Realty Corp.
0 9,900 9,900 Equity Residential 0 557,172 557,172
Properties Trust
0 2,800 2,800 Federal Realty Invstment 0 261,576 261,576
Trust
0 5,000 5,000 General Growth Properties, 0 307,600 307,600
Inc.
0 9,900 9,900 Health Care Property 0 408,375 408,375
Investors, Inc.
0 15,000 15,000 Host Hotels & Resorts, 0 397,050 397,050
Inc.
0 6,100 6,100 Kimco Realty Corp. 0 302,560 302,560
0 7,700 7,700 ProLogis Trust 0 500,500 500,500
0 4,500 4,500 Public Storage, Inc. 0 489,420 489,420
0 5,300 5,300 SL Green Realty Corp. 0 776,874 776,874
0 7,000 7,000 Simon Property Group, Inc. 0 800,730 800,730
0 6,200 6,200 Taubman Centers, Inc. 0 361,274 361,274
0 4,850 4,850 Vornado Realty Trust 0 593,398 593,398
0 8,894,349 8,894,349
ROAD & RAIL - 0.6%
0 2,000 2,000 Burlington Northern Santa 0 160,720 160,720
Fe
0 1,800 1,800 Con-way, Inc. 0 89,532 89,532
0 15,700 15,700 Norfolk Southern Corp. 0 779,505 779,505
0 2,200 2,200 Ryder Systems, Inc. 0 119,988 119,988
0 1,800 1,800 Werner Enterpirses, Inc. 0 34,218 34,218
0 1,183,963 1,183,963
SEMICONDUCTOR & SEMICONDUCTOR EQUIPMENT - 0.1%
0 2,300 2,300 Altera Corp.* 0 120,520 120,520
SOFTWARE - 0.2%
0 22,400 22,400 Oracle Corp.* 0 384,384 384,384
0 700 700 Quality Systems, Inc. 0 29,701 29,701
0 1,800 1,800 THQ, Inc.* 0 54,540 54,540
0 468,625 468,625
SPECIALTY RETAIL - 0.6%
0 700 700 AutoZone, Inc.* 0 87,941 87,941
0 3,100 3,100 CarMax, Inc.* 0 178,033 178,033
0 600 600 Children's Place Retail 0 32,526 32,526
Stores, Inc.*
0 1,100 1,100 Dick's Sporting Goods, 0 56,639 56,639
Inc.*
0 1,400 1,400 Guess?, Inc.* 0 100,954 100,954
0 800 800 Gymboree Corp.* 0 34,632 34,632
0 17,600 17,600 Home Depot, Inc. 0 717,024 717,024
0 800 800 J Crew Group, Inc.* 0 29,064 29,064
0 100 100 Zale Corp.* 0 2,752 2,752
0 1,239,565 1,239,565
TEXTILES, APPAREL & LUXURY GOODS - 0.4%
0 13,800 13,800 Coach, Inc.* 0 632,868 632,868
0 1,200 1,200 Crocs, Inc.* 0 60,408 60,408
0 693,276 693,276
THRIFTS & MORTGAGE FINANCE - 0.5%
0 1,200 1,200 Downey Financial Corp. 0 85,848 85,848
0 2,000 2,000 Federal Home Loan Mortgage 0 129,860 129,860
Corp.
0 1,000 1,000 FirstFed Financial Corp.* 0 68,950 68,950
0 3,800 3,800 MGIC Investment Corp. 0 234,536 234,536
0 3,600 3,600 PMI Group, Inc. 0 172,152 172,152
0 3,700 3,700 Radian Group, Inc. 0 222,814 222,814
0 914,160 914,160
WIRELESS TELECOMMUNICATION SERVICES - 0.0%
0 400 400 U.S. Cellular Corp.* 0 28,840 28,840
TOTAL COMMON STOCKS (COST 0 77,776,514 77,776,514
$68,470,848)
ASSET-BACKED SECURITIES- 0.7%
0 58,994 58,994 CS First Boston Mortgage 0 58,460 58,460
Securities Corp. 2002-HE4,
Class AF, 5.51%, 8/25/2032
0 648,723 648,723 Community Program Loan 0 638,909 638,909
Trust 1987-A, Class A4,
4.50%, 10/1/2018
0 452,714 452,714 MMCA Automobile Trust 0 451,692 451,692
2002-2, Class C, 5.55%,
3/15/2010
0 140,000 140,000 Morgan Stanley Capital I 0 137,539 137,539
2006-IQ12 A4, 5.319%,
12/15/2043
TOTAL ASSET-BACKED 0 1,286,600 1,286,600
SECURITIES (IDENTIFIED
COST $1,297,142)
COLLATERALIZED MORTGAGE OBLIGATIONS- 0.4%
0 469,749 469,749 Bear Stearns Asset Backed 0 314,914 314,914
Securities, Inc. 2005-AC6,
Class 21PO, 0.00%,
9/25/2020
0 5,692 5,692 Bear Stearns Mortgage 0 5,592 5,592
Securities, Inc. 1997-6,
Class 1A, 6.66%, 3/25/2031
0 16,838 16,838 Federal Home Loan Mortgage 0 16,784 16,784
Corp. REMIC 1311 K, 7.00%
7/15/2022
0 33,518 33,518 Federal Home Loan Mortgage 0 33,419 33,419
Corp. REMIC 1384 D, 7.00%
9/15/2022
0 39,298 39,298 Federal Home Loan Mortgage 0 40,806 40,806
Corp. REMIC 1595 D, 7.00%
10/15/2013
0 750,000 750,000 Federal Home Loan Mortgage 0 75,595 75,595
Corp. REMIC 2497 JH, 6.00%
9/15/2032
0 67,057 67,057 Federal Home Loan Mortgage 0 66,830 66,830
Corp. REMIC 2676 JA, 4.00%
5/15/2016
0 82,752 82,752 Federal National Mortgage 0 91,131 91,131
Association REMIC 1993-113
SB, 9.75%, 7/25/2023
0 16,017 16,017 Federal National Mortgage 0 16,653 16,653
Association REMIC 2001-37
GA, 8.00%, 7/25/2016
0 20,980 20,980 Federal National Mortgage 0 19,423 19,423
Association REMIC 2003-35
UC, 3.75%, 5/25/2033
0 20,173 20,173 Government National 0 20,434 20,434
Mortgage Association REMIC
1999-29 PB, 7.25%,
7/16/2028
0 61,195 61,195 Government National 0 61,806 61,806
Mortgage Association REMIC
2002-17 B, 6.00%,
3/20/2032
TOTAL COLLATERALIZED 0 763,387 763,387
MORTGAGE OBLIGATIONS
(IDENTIFIED COST $810,587)
CORPORATE NOTES & BONDS - 6.8%
BASIC INDUSTRY - CHEMICALS - 0.0%
0 75,000 75,000 Albemarle Corp., Sr. Note, 0 70,787 70,787
5.10%, 2/1/2015
BASIC INDUSTRY - METALS & MINING - 0.2%
0 35,000 35,000 Alcoa, Inc., Note, 5.55%, 0 34,865 34,865
2/1/2017
0 100,000 100,000 BHP Finance (USA), Inc., 0 98,176 98,176
Company Guarantee, 5.25%,
12/15/2015
0 150,000 150,000 Vale Overseas Limited, 0 152,438 152,438
6.875%, 11/21/2036
0 150,000 150,000 (1)(2) Xstrata Finance 0 148,831 148,831
Canada L, Unsecd. Note,
5.50%, 11/16/2011
0 434,310 434,310
CAPITAL GOODS - AEROSPACE & DEFENSE - 0.2%
0 125,000 125,000 Boeing Co., Note 5.125%, 0 123,821 123,821
2/15/2013
0 200,000 200,000 Raytheon Co., Unsecd. 0 199,311 199,311
Note, 5.375%, 4/1/2013
0 323,132 323,132
CAPITAL GOODS - DIVERSIFIED MANUFACTURING - 0.1%
0 100,000 100,000 Emerson Electric Co., 0 101,619 101,619
Unsecd. Note, 5.75%,
11/1/2011
CAPITAL GOODS - ENVIRONMENTAL - 0.1%
0 100,000 100,000 Waste Management, Inc., 0 105,994 105,994
7.375%, 8/1/2010
COMMUNICATIONS - MEDIA & CABLE - 0.1%
0 100,000 100,000 Comcast Corp., Sr. Note, 0 108,102 108,102
7.125%, 6/15/2013
0 75,000 75,000 Cox Communications, Inc., 0 73,425 73,425
Unsecd. Note, 5.45%,
12/15/2014
0 181,527 181,527
COMMUNICATIONS - MEDIA NONCABLE - 0.2%
0 100,000 100,000 British Sky Broadcasting 0 106,113 106,113
Group PLC, 8.20%,
7/15/2009
0 75,000 75,000 News America Holdings, 0 86,120 86,120
Company Guarantee, 8.00%,
10/17/2016
0 75,000 75,000 News America Holdings, Sr. 0 87,556 87,556
Deb., 9.25%, 2/1/2013
0 279,789 279,789
COMMUNICATIONS - TELECOM WIRELESS - 0.2%
0 150,000 150,000 AT&T Wireless Services, 0 195,113 195,113
Sr. Note, 8.75%, 3/1/2031
0 100,000 100,000 Cingular Wirless LLC, Sr. 0 104,657 104,657
Note, 6.50%, 12/15/2011
0 100,000 100,000 Sprint Capital Corp., 0 110,853 110,853
Note, 8.375%, 3/15/2012
0 410,623 410,623
COMMUNICATIONS - TELECOM WIRELINES - 0.3%
0 400,000 400,000 GTE North, Inc., Deb., 0 409,847 409,847
Series D, 6.90%, 11/1/2008
0 75,000 75,000 Telefonica SA, Company 0 81,052 81,052
Guarantee, 7.045%,
6/20/2036
0 100,000 100,000 Telefonos de Mexico, Note, 0 98,050 98,050
4.50%, 11/19/2008
0 588,949 588,949
CONSUMER CYCLICAL - AUTOMOTIVE - 0.2%
0 75,000 75,000 DaimlerChrysler North 0 73,208 73,208
America, Sr. Note, 4.875%,
6/15/2010
0 50,000 50,000 DaimlerChrysler North 0 51,329 51,329
America Holding Corp., Sr.
Note, 6.50%, 11/15/2013
0 300,000 300,000 General Motors Acceptance, 0 300,000 300,000
Note, 6.125%, 2/1/2007
0 424,537 424,537
CONSUMER CYCLICAL - ENTERTAINMENT - 0.1%
0 75,000 75,000 Disney Co., Note, 5.70%, 0 76,131 76,131
7/15/2011
0 100,000 100,000 Time Warner, Inc., 5.50%, 0 99,804 99,804
11/15/2011
0 175,935 175,935
CONSUMER CYCLICAL - LODGING - 0.1%
0 100,000 100,000 (1)(2) Wyndham Worldwide 0 98,533 98,533
Corp., Sr. Unsecd. Note,
6.00%, 12/1/2016
CONSUMER CYCLICAL - RETAILERS - 0.1%
0 125,000 125,000 Home Depot, Inc., 5.40%, 0 120,917 120,917
3/1/2016
0 100,000 100,000 Target Corp., 5.875%, 0 102,518 102,518
3/1/2012
0 223,435 223,435
CONSUMER NON-CYCLICAL - FOOD/BEVERAGE - 0.1%
0 100,000 100,000 Bottling Group LLC, Note 0 99,850 99,850
5.50%, 4/1/2016
0 40,000 40,000 General Mills, Inc., Note, 0 39,966 39,966
5.70%, 2/15/2017
0 75,000 75,000 Kraft Foods, Inc., Note, 0 73,913 73,913
5.25%, 10/1/2013
0 50,000 50,000 Kraft Foods, Inc., Note, 0 51,746 51,746
6.25%, 6/1/2012
0 265,475 265,475
CONSUMER NON-CYCLICAL - HEALTH CARE - 0.1%
0 100,000 100,000 Medtronic, Inc., Note, 0 97,138 97,138
Series B, 4.375%,
9/15/2010
CONSUMER NON-CYCLICAL - PHARMACEUTICALS - 0.3%
0 75,000 75,000 Abbott Laboratories, Note, 0 75,300 75,300
5.375%, 5/15/2009
0 100,000 100,000 Genentech, Inc., Sr. Note, 0 95,371 95,371
4.75%, 7/15/2015
0 125,000 125,000 Lilly (Eli) & Co., Unsecd. 0 134,551 134,551
Note, 6.57%, 1/1/2016
0 100,000 100,000 Pharmacia Corp., Sr. Deb., 0 108,202 108,202
6.50%, 12/1/2018
0 100,000 100,000 Wyeth, Unsecd. Note, 0 100,060 100,060
5.50%, 2/1/2014
0 513,484 513,484
CONSUMER NON- CYCLICAL - SUPERMARKETS - 0.1%
0 250,000 250,000 Safeway, Inc. Notes 0 249,120 249,120
4.800%, 07/16/2007
CONSUMER NON-CYCLICAL - TOBACCO - 0.0%
0 75,000 75,000 Altria Group, Inc., Note, 0 81,642 81,642
7.00%, 11/4/2013
ENERGY - INDEPENDENT - 0.1%
0 55,000 55,000 Anadarko Petroleum Corp., 0 54,619 54,619
Sr. Note, 5.95%, 9/15/2016
0 50,000 50,000 Canadian Natural 0 47,106 47,106
Resources, 4.90%,
12/1/2014
0 150,000 150,000 Pemex Project Funding 0 166,995 166,995
Master, Company Guarantee,
9.125%, 10/13/2010
0 268,720 268,720
ENERGY - INTEGRATED - 0.1%
0 75,000 75,000 Conoco Funding Co., 7.25%, 0 87,594 87,594
10/15/2031
0 75,000 75,000 ConocoPhillip Australia, 0 75,374 75,374
5.50%, 4/15/2013
0 100,000 100,000 Husky Oil Ltd., Sr. Deb., 0 111,698 111,698
7.55%, 11/15/2016
0 274,666 274,666
ENERGY - REFINING - 0.1%
0 100,000 100,000 Valero Energy Corp., 0 105,703 105,703
6.875%, 4/15/2012
0 50,000 50,000 Valero Energy Corp., 0 56,955 56,955
7.50%, 4/15/2032
0 75,000 75,000 Valero Energy Corp., Note, 0 70,358 70,358
4.75%, 4/1/2014
0 233,016 233,016
FINANCIAL INSTITUTIONS - BANKING - 1.2%
0 200,000 200,000 Bank of America Corp., Sr. 0 199,437 199,437
Note, 5.375%, 6/15/2014
0 120,000 120,000 Capital One Capital IV, 0 121,157 121,157
6.745%, 2/17/2037
0 200,000 200,000 Citigroup, Inc., Note, 0 199,021 199,021
5.125%, 2/14/2011
0 100,000 100,000 Credit Suisse First 0 100,898 100,898
Boston, Sr. Note, 5.50%,
8/16/2011
0 100,000 100,000 HSBC Finance Capital 0 100,851 100,851
Trust, Note, 5.911%,
11/30/2035
0 200,000 200,000 HSBC Finance Corp., 4.75%, 0 197,015 197,015
4/15/2010
0 100,000 100,000 Household Finance Corp., 0 107,417 107,417
Note, 7.00%, 5/15/2012
0 150,000 150,000 J.P. Morgan Chase & Co., 0 152,735 152,735
5.75%, 1/2/2013
0 100,000 100,000 Marshall & Ilsley Bank, 0 97,444 97,444
Sr. Note, 4.40%, 3/15/2010
0 200,000 200,000 Northern Trust Corp., Sr. 0 200,039 200,039
Note, 5.30%, 8/29/2011
0 100,000 100,000 PNC Funding Corp., Sub. 0 105,310 105,310
Note, 7.50%, 11/1/2009
0 100,000 100,000 Popular North America, 0 100,078 100,078
5.65%, 4/15/2009
0 250,000 250,000 US BANK NA, Sub. Note, 0 242,308 242,308
4.95%, 10/30/2014
0 250,000 250,000 Wachovia Bank NA, 4.80%, 0 238,601 238,601
11/1/2014
0 100,000 100,000 Wells Fargo Bank NA, Sub. 0 104,116 104,116
Noet, 6.45%, 2/1/2011
0 75,000 75,000 Zions Bancorp, Sub. Note, 0 73,204 73,204
5.50%, 11/16/2015
0 2,339,631 2,339,631
FINANCIAL INSTITUTIONS - BROKERAGE - 0.5%
0 100,000 100,000 Amvescap PLC, Sr. Note, 0 97,471 97,471
4.50%, 12/15/2009
0 100,000 100,000 Bear Stearns & Cos., Inc., 0 96,046 96,046
Unsecd. Note, 3.25%,
3/25/2009
0 150,000 150,000 Goldman Sachs Group, Inc., 0 148,556 148,556
Note, 5.25%, 10/15/2013
0 400,000 400,000 Merrill Lynch & Co., Inc., 0 400,160 400,160
Sr. Unsub., Series CORE,
5.908%, 1/31/2008
0 150,000 150,000 Merrill Lynch & Co., Inc., 0 149,715 149,715
Unsub. Note, 5.45%,
7/15/2014
0 100,000 100,000 Morgan Stanley, Note, 0 96,616 96,616
4.00%, 1/15/2010
0 988,564 988,564
FINANCIAL INSTITUTIONS - FINANCE NONCAPTIVE- 0.8%
0 100,000 100,000 American Express Co., 0 99,049 99,049
Global Sr. Note, 4.75%,
6/17/2009
0 100,000 100,000 American General Finance 0 95,029 95,029
Corp., 4.00%, 3/15/2011
0 150,000 150,000 Berkshire Hathaway, Inc., 0 145,363 145,363
Company Guarantee, 4.85%,
1/15/2015
0 364,000 364,000 General Electric Capital, 0 360,192 360,192
Note, 4.875% 10/21/2010
0 100,000 100,000 General Electric Capital, 0 97,104 97,104
Note, 4.875% 3/4/2015
0 200,000 200,000 (1)(2) ILFC E-Capital 0 201,248 201,248
Trust I, 5.90%, 12/21/2065
0 100,000 100,000 International Lease 0 98,644 98,644
Finance Corp., Note,
4.875%, 9/1/2010
0 75,000 75,000 SLM Corp. Note, 4.00%, 0 72,147 72,147
1/15/2010
0 300,000 300,000 SLM Corp. Note, Series A, 0 293,321 293,321
3.950%, 8/15/2008
0 1,462,097 1,462,097
FINANCIAL INSTITUTIONS - INSURANCE - HEALTH- 0.0%
0 75,000 75,000 Aetna US Healthcare, Sr. 0 75,960 75,960
Note, 5.75%, 6/15/2011
FINANCIAL INSTITUTIONS - INSURANCE - LIFE- 0.1%
0 100,000 100,000 AXA-UAP, Sub. Note, 8.60%, 0 129,156 129,156
12/15/2030
FINANCIAL INSTITUTIONS - INSURANCE - P&C - 0.3%
0 100,000 100,000 St. Paul Travelers Co., 0 99,632 99,632
Inc., Sr. Unsecd. Note,
5.50%, 12/1/2015
0 500,000 500,000 (1)(2) ZFS Finance USA 0 507,375 507,375
Trust I, Jr. Sub. Note,
6.15%, 12/15/2065
0 607,007 607,007
FINANCIAL INSTITUTIONS - REITS- 0.0%
0 75,000 75,000 Health Care Property 0 75,488 75,488
Investments, Inc., 5.95%,
9/15/2011
FOREIGN-LOCAL- GOVERNMENT - 0.1%
0 100,000 100,000 Ontario, Province of, 0 95,660 95,660
Note, 4.50%, 2/3/2015
TECHNOLOGY - 0.1%
0 75,000 75,000 Cisco Systems, Inc., Sr. 0 75,045 75,045
Note, 5.25%, 2/22/2011
0 100,000 100,000 Dell Computer Corp., Sr. 0 108,150 108,150
Deb., 7.10%, 4/15/2028
0 100,000 100,000 Oracle Corp., Sr. Unsecd. 0 98,849 98,849
Note, Series WI, 5.00%,
1/15/2011
0 282,044 282,044
TRANSPORTATION - AIRLINES - 0.1%
0 75,000 75,000 Southwest Airlines Co., 0 77,870 77,870
6.50%, 3/1/2012
0 50,000 50,000 Southwest Airlines Co., 0 54,324 54,324
Deb., 7.375%, 3/1/2027
0 132,194 132,194
TRANSPORTATION - RAILROADS - 0.1%
0 75,000 75,000 Burlington Northern Santa 0 71,588 71,588
Fe Corp., Sr. Note,
4.875%, 1/15/2015
0 100,000 100,000 Norfolk Southern Corp., 0 104,746 104,746
Sr. Note, 6.75%, 2/15/2011
0 100,000 100,000 Union Pacific Corp., 0 95,513 95,513
4.875%, 1/15/2015
0 271,847 271,847
TRANSPORTATION - SERVICES - 0.1%
0 100,000 100,000 FedEx Corp., Note, 5.50%, 0 100,486 100,486
8/15/2009
UTILITY - ELECTRIC - 0.5%
0 100,000 100,000 Cleveland Electric Illum, 0 95,955 95,955
Sr. Unsecd. Note, 5.95%,
12/15/2036
0 100,000 100,000 Consolidated Edison Col, 0 100,282 100,282
Sr. Unsecd. Note, Series
2006C, 5.50%, 9/15/2016
0 100,000 100,000 Exelon Generation Co., Sr. 0 98,167 98,167
Note, 5.35%, 1/15/2015
0 100,000 100,000 First Energy Corp, Note, 0 104,176 104,176
Series B, 6.45%,
11/15/2011
0 100,000 100,000 PSEG Power LLC, Company 0 108,535 108,535
Guarantee, 7.75%,
4/15/2011
0 75,000 75,000 PSI Energy, Inc., Bond, 0 77,202 77,202
6.05%, 6/15/2016
0 100,000 100,000 Pacific Gas & Electric 0 95,519 95,519
Co., Unsecd. Note, 4.20%,
3/1/2011
0 300,000 300,000 Wisconsin Power & Light 0 301,582 301,582
Co., Note, 7.00%,
6/15/2007
0 981,418 981,418
UTILITY - NATURAL GAS DISTRIBUTOR - 0.1%
0 100,000 100,000 Atmos Energy Corp., Sr. 0 96,448 96,448
Note, 4.00%, 10/15/2009
TOTAL CORPORATE NOTES & 0 13,040,431 13,040,431
BONDS (IDENTIFIED COST
$13,191,085)
GOVERNMENT AGENCIES- 4.7%
0 4,000,000 4,000,000 Federal Home Loan Bank 0 4,048,648 4,048,648
System, Bond, 5.375%,
8/19/2011
0 1,000,000 1,000,000 Federal Home Loan Mortgage 0 970,660 970,660
Corp., 4.125%, 7/12/2010
0 1,000,000 1,000,000 Federal Home Loan Mortgage 0 1,007,235 1,007,235
Corp., 5.25%, 7/18/2011
0 1,000,000 1,000,000 Federal Home Loan Mortgage 0 1,027,315 1,027,315
Corp., 5.50%, 7/18/2016
0 2,000,000 2,000,000 Federal National Mortgage 0 2,005,974 2,005,974
Association, Note, 5.25%,
1/15/2009
TOTAL GOVERNMENT AGENCIES 0 9,059,832 9,059,832
(IDENTIFIED COST
$9,088,751)
MORTGAGE-BACKED SECURITIES- 0.0%
0 28,977 28,977 Federal National Mortgage 0 29,662 29,662
Association, Pool 408761
7.00%, 12/1/2012
0 12,635 12,635 Federal National Mortgage 0 13,130 13,130
Association, Pool 512255,
7.50%, 9/1/2014
0 42,172 42,172 Federal National Mortgage 0 43,197 43,197
Association, Pool 609554,
7.50%, 10/1/2016
TOTAL MORTGAGE-BACKED 0 85,989 85,989
SECURITIES (IDENTIFIED
COST $86,490)
U.S. TREASURY - 3.2%
0 1,197,372 1,197,372 U.S. Treasury Inflation 0 1,209,912 1,209,912
Protected Note, 2.500%,
7/15/2016
0 1,250,000 1,250,000 United States Treasury 0 1,170,233 1,170,233
Bond, 4.500%, 2/15/2036
0 4,000,000 4,000,000 United States Treasury 0 3,809,615 3,809,615
Note, 3.875%, 2/15/2013
TOTAL U.S. TREASURY 0 6,189,760 6,189,760
(IDENTIFIED COST
$6,287,764)
EXCHANGE TRADED FUNDS - 5.5%
0 142,450 142,450 iShares MSCI EAFE Index 0 10,575,488 10,575,488
Fund (Identified Cost
$8,320,096)
MUTUAL FUND - 36.3%
3,501,915 0 3,501,915 (4) Capital Appreciation 49,766,297 0 49,766,297
Core Fund
7,170 42,893 50,063 (4) Emerging Markets Fixed 150,294 899,113 1,049,407
Income Core Fund
136,795 0 136,795 (4) Federated Intermediate 1,359,738 0 1,359,738
Corporate Bond Fund
18,214 0 18,214 (4) Federated 190,518 0 190,518
International Bond Fund,
Class A Shares
219,197 0 219,197 (4) Federated 2,623,793 0 2,623,793
International Capital
Appreciation Fund, Class A
Shares
245,895 807,927 1,053,822 (4) Federated Mortgage 2,422,063 7,958,084 10,380,147
Core Portfolio
111,037 0 111,037 (4) Federated U.S. 1,215,856 0 1,215,856
Government Bond Fund
113,208 0 113,208 (4) Federated U.S. 1,224,908 0 1,224,908
Government Securities
Fund, 2-5 Years,
Institutional Shares
49,234 270,466 319,700 (4) High Yield Bond 339,714 1,866,216 2,205,930
Portfolio
TOTAL MUTUAL FUNDS 59,293,181 10,723,413 70,016,594
(IDENTIFIED COST
$69,134,186)
REPURCHASE AGREEMENTS - 2.3%
$502,000 $- $502,000 Bank of America, NA, 502,000 0 502,000
5.29%, dated 1/31/2007,
maturing 2/1/2007
- $3,949,000 $3,949,000 Mizuho Securities USA, 0 3,949,000 3,949,000
Inc., 5.23%, dated
1/31/2007, maturing
2/1/2007
TOTAL REPURCHASE 502,000 3,949,000 4,451,000
AGREEMENTS (AT COST)
TOTAL INVESTMENTS 59,795,181 133,450,414 193,245,595
(IDENTIFIED COST
$181,137,949) - 100.3%
OTHER ASSETS AND (573,252) (603,008)
LIABILITIES - (0.3)% (29,756)
TOTAL NET ASSETS - 100% $ $132,877,162 $192,642,587
59,765,425
Note: The categories of investments are shown as a percentage of total net
assets at January 31, 2007.
* Non Income Producing
(1) 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 January 31, 2007,
these restricted securities amounted to $955,987, which represents 0.3% of
combined total net assets.
(2) Denotes a restricted security that may be resold without restriction to
"qualified institutional buyers" as defined by 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. At January 31, 2007,
these liquid restricted securities amounted to $955,987, which represented
0.3% of combined total net assets.
(3) Pledged as collateral to ensure FMDTBF is able to satisfy the obligations
of its outstanding long futures contracts.
(4) All or a portion of this security will be sold as a result of the
reorganization.
At January 31, 2007, FMDTBF had the following outstanding futures
contracts:
Number of Notional Expiration Unrealized
Description Contracts Value Date Appreciation
United States
Treasury Notes 10 13 $1,387,750 March 2007 $3,195
Year Futures - Long
- 33 -
FEDERATED GROWTH ALLOCATION FUND
FEDERATED MDT BALANCED FUND (A)
PRO FORMA COMBINING STATEMENTS OF ASSETS &
LIABILITIES
JANUARY 31, 2007 (UNAUDITED)
FEDERATED FEDERATED MDT
GROWTH
ALLOCATION BALANCED PRO FORMA PRO FORMA
FUND FUND ADJUSTMENT COMBINED
ASSETS:
Investments in securities, at value $59,795,181 $133,450,414 $0 $193,245,595
Cash 719 55,099 0 55,818
Income receivable 28,589 490,275 0 518,864
Receivable for investments sold 0 1,951,046 0 1,951,046
Receivable for daily variation margin 0 5,078 0 5,078
Receivable for shares sold 22,652 490,141 0 512,793
Total assets 0 196,289,194
59,847,141 136,442,053
LIABILITIES:
Payable for investments purchased 0 3,227,423 0 3,227,423
Payable for shares redeemed 0 189,772 0 189,772
Payable for administrative personnel and 0 58,585 0 58,585
services fee
Payable for Directors'/Trustees' fees 239 3,351 0 3,590
Payable for distribution services fees 12,482 6,465 0 18,947
Payable for shareholder services fees 11,035 17,189 0 28,224
Accrued expenses 57,960 62,106 0 120,066
Total liabilities 81,716 3,564,891 0 3,646,607
NET ASSETS $59,765,425 $132,877,162 $0 $192,642,587
NET ASSETS CONSIST OF:
Paid-in capital $53,761,838 $119,990,246 $0 173,752,084
Net unrealized appreciation of investments 8,054,184 11,169,995 0 19,224,179
Accumulated net realized gain (loss) on (2,023,939) 1,361,224 0 (662,715)
investments
Undistributed (distributions in excess of) 0 329,039
net investment income (26,658) 355,697
Total Net Assets $59,765,425 $132,877,162 $0 $192,642,587
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER
SHARE
INSTITUTIONAL SHARES:
NET ASSETS $31,569,657 $81,798,718 (b) $81,798,718
$(31,569,657)
SHARES OUTSTANDING 2,139,756 6,016,580 (b) 6,016,580
(2,139,756)
NET ASSET VALUE PER SHARE $14.75 $13.60 $13.60
OFFERING PRICE PER SHARE $14.75 $13.60 $13.60
REDEMPTION PROCEEDS PER SHARE $14.75 $13.60 $13.60
CLASS A SHARES:
NET ASSETS $ - $39,521,221 $31,569,657 (b) $71,090,878
SHARES OUTSTANDING 0 2,912,633 (b) 5,239,063
2,326,430
NET ASSET VALUE PER SHARE $0.00 $13.57 $13.57
OFFERING PRICE PER SHARE* $0.00 $14.36 * $14.36 *
REDEMPTION PROCEEDS PER SHARE $0.00 $13.57 $13.57
CLASS C SHARES:
NET ASSETS $ - $11,557,128 $28,195,767 (b) $39,752,895
SHARES OUTSTANDING 0 857,794 (b) 2,951,021
2,093,227
NET ASSET VALUE PER SHARE $0.00 $13.47 $13.47
OFFERING PRICE PER SHARE $0.00 $13.61 ** $13.61 **
REDEMPTION PROCEEDS PER SHARE $0.00 $13.34 *** $13.34 ***
CLASS K SHARES:
NET ASSETS $ - $95 $ - $ 95
SHARES OUTSTANDING 0 7 7
-
NET ASSET VALUE PER SHARE $0.00 $13.60 $13.60
OFFERING PRICE PER SHARE $0.00 $13.60 $13.60
REDEMPTION PROCEEDS PER SHARE $0.00 $13.60 $13.60
SELECT SHARES:
NET ASSETS $28,195,767 $ - (b) $ -
$(28,195,767)
SHARES OUTSTANDING 1,926,908 0 (b) 0
(1,926,908)
NET ASSET VALUE PER SHARE $14.63 $0.00 $0.00
OFFERING PRICE PER SHARE $14.63 $0.00 $0.00
REDEMPTION PROCEEDS PER SHARE $14.63 $0.00 $0.00
Investments, at identified cost $58,854,335 $122,283,614 $0 $181,137,949
Investments in affiliated issuers $59,293,181 $10,723,413 $0 $70,016,594
*Computation of offering price per share 100/94.50 of net asset value.
**Computation of offering price per share 100/99 of net asset value.
**Computation of redemption price per share 99/100 of net asset value.
(a) MDT Balanced Fund was reorganized into Federated MDT Balanced Fund as of the close of business on December 8, 2006. Prior
to the reorganization, Federated MDT Balanced Fund had no investment operations. Federated MDT Balanced Fund is the successor to
MDT Balanced Fund.
(b) Adjustment to reflect share balance as a result of the combination.
- 34 -
FEDERATED GROWTH ALLOCATION FUND
FEDERATED MDT BALANCED FUND
PRO FORMA COMBINING STATEMENTS OF OPERATIONS
SIX MONTHS ENDED JANUARY 31, 2007 (UNAUDITED)
FEDERATED FEDERATED
GROWTH MDT
ALLOCATION BALANCED PRO FORMA PRO FORMA
FUND FUND ADJUSTMENT COMBINED
INVESTMENT INCOME:
Dividends $340,315 $867,491 $0 $1,207,806
Interest 39,893 956,499 0 996,392
Investment income allocated from affiliated 483,785 7,971 0 491,756
partnerships
TOTAL INVESTMENT INCOME: 863,993 1,831,961 0 2,695,954
EXPENSES:
Investment advisory fee 238,398 417,680 0 656,078
Administrative personnel and services fee 96,277 115,946 (96,277) (a) 115,946
Custodian fees 3,534 19,922 3,398 (b) 26,854
Transfer and dividend disbursing agent fees and 66,589 112,388 8,123 (c) 187,100
expenses
Directors'/Trustees' fees 2,015 1,614 202 (d) 3,831
Auditing fees 4,474 10,082 (4,474) (e) 10,082
Legal fees 5,404 4,537 (4,900) (f) 5,041
Portfolio accounting fees 27,270 42,415 (24,537) (g) 45,148
Distribution services fee - Class A Shares 0 18,948 29,219 (h) 48,167
Distribution services fee - Class C Shares 0 34,989 143,839 (h) 178,828
Distribution services fee - Select Shares 116,219 0 (116,219) (h) 0
Shareholder services fee - Class A Shares 0 13,539 11,510 (i) 25,049
Shareholder services fee - Class C Shares 0 3,650 10,935 (i) 14,585
Shareholder services fee - Institutional Shares 32,508 0 (32,508) (i) 0
Shareholder services fee - Select Shares 42,382 0 (42,382) (i) 0
Share registration costs 13,996 30,724 (6,563) (j) 38,157
Printing and postage 19,639 18,702 (12,483) (k) 25,858
Insurance premiums 2,906 4,607 (3,127) (l) 4,386
Miscellaneous 2,454 2,439 (2,272) (m) 2,621
EXPENSES BEFORE ALLOCATION 674,065 852,182 (138,516) 1,387,731
Expenses allocated from partnerships 16,838 78 0 16,916
TOTAL EXPENSES 690,903 852,260 (138,516) 1,404,647
WAIVERS AND REIMBURSEMENTS--
Waiver/Reimbursement of investment adviser fee (n) (52,688)
(26,539) (76,553) 50,404
Waiver of administrative personnel and services (17,327) (57,249) 25,302 (o) (49,274)
fee
Waiver of distribution services fee - Select (38,716) 0 38,716 (p) 0
Shares
Reimbursement of shareholder services fee - (25,301) 0 25,301 (q) 0
Institutional Shares
Reimbursement of transfer and dividend 0 (8,286) 0 (8,286)
disbursing agent fees and expenses
Reimbursement of other operating expenses (8,582) 0 8,582 (r) 0
TOTAL WAIVERS AND REIMBURSEMENTS (116,465) (142,088) 148,305 (110,248)
NET EXPENSES 574,438 710,172 9,789 1,294,399
NET INVESTMENT INCOME $289,555 $1,121,789 ($9,789) $1,401,555
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments 729,875 1,869,675 0 2,599,550
Net realized gain allocated from partnerships 3,248,999 3,965 0 3,252,964
Realized gain distributions from affiliated 170,449 0 0 170,449
investment company shares
Net change in unrealized appreciation 2,498,194 6,469,699 0 8,967,893
(depreciation) of investments
Net realized and unrealized gain on 6,647,517 8,343,339 0 14,990,856
investments
Change in net assets resulting from $6,937,072 $9,465,128 ($9,789) $16,392,411
operations
* MDT Balanced Fund was reorganized into Federated MDT Balanced Fund as of the close of business on December 8, 2006. Prior to
the reorganization, Federated MDT Balanced Fund had no investment operations. Federated MDT Balanced Fund is the successor to MDT
Balanced Fund.
(See Notes to Pro Forma Financial Statements)
- 35 -
FEDERATED GROWTH ALLOCATION FUND
FEDERATED MDT BALANCED FUND
NOTES TO PRO FORMA FINANCIAL STATEMENTS
SIX MONTHS ENDED JANUARY 31, 2007 (UNAUDITED)
NOTE 1. DESCRIPTION OF THE FUND
FGAF, a series of Federated Managed Allocation Portfolios, is registered under
the Investment Company Act of 1940, as amended (the "Act), as an open-end
management investment company. The Fund consists of two classes of shares:
Institutional Shares and Select Shares.
FMDTBF, a series of Federated MDT Series, is registered under the Act as an
open-end, management investment company. MDT Balanced Fund (the "Predecessor
Fund") was reorganized into FMDTBF as of the close of business on December 8,
2006. Prior to the reorganization, FMDTBF had no investment operations. FMDTBF
is the successor to the Predecessor Fund. For the purposes of these Pro Forma
Financial Statements, the financial information covers the period from August 1,
2006 to January 31, 2007. FMDTBF consists of four classes of shares: Class A
Shares, Class C Shares, Class K Shares and Institutional Shares. Class K Shares
became effective December 11, 2006.
NOTE 2. BASIS OF COMBINATION
The accompanying unaudited Pro Forma Combining Portfolios of Investments,
Statements of Assets and Liabilities and Statements of Operations (Pro Forma
Financial Statements) reflect the accounts of FGAF and FMDTBF for the six months
ended January 31, 2007. These statements have been derived from the books and
records utilized in calculating daily net asset values at January 31, 2007.
The Pro Forma Financial Statements should be read in conjunction with the
historical financial statements of FGAF and FMDTBF which have been incorporated
by reference in the Statement of Additional Information. The Funds follow
generally accepted accounting principles in the United States of America
applicable to management investment companies which are disclosed in the
historical financial statements.
The Pro Forma Financial Statements give effect to the proposed exchange of
assets of FGAF for Class A Shares and Class C Shares of FMDTBF. Under generally
accepted accounting principles, FMDTBF will be the surviving entity for
accounting purposes with its historical cost of investment securities and
results of operations being carried forward.
The Pro Forma Financial Statements have been adjusted to reflect the investment
advisory fee arrangement for the surviving entity. Certain other operating
costs have also been adjusted to reflect anticipated expenses of the combined
entity. Other costs which may change as a result of the reorganization are
currently undeterminable.
For the six months ended January 31, 2007, FGAF and FMDTBF paid investment
advisory fees computed at the annual rate of 0.75% as a percentage of average
daily net assets.
All costs with respect to the reorganization will be borne by Federated
Investors, Inc. and its affiliates.
NOTE 3. PORTFOLIO VALUATION
Market values of each Fund's portfolio securities are determined as follows:
{circle}for equity securities, according to the last sale price or official
closing price reported in the market in which they are primarily traded
(either a national securities exchange or the over-the-counter market), if
available;
{circle}in the absence of recorded sales for equity securities, according to
the mean between the last closing bid and asked prices;
{circle}futures contracts and options are generally valued at market values
established by the exchanges on which they are traded at the close of
trading on such exchanges. Options traded in the over-the-counter market
are generally valued according to the mean between the last bid and the
last asked price for the option as provided by an investment dealer or
other financial institution that deals in the option. The Board of
Trustees (the "Trustees") may determine in good faith that another method
of valuing such investments is necessary to appraise their fair market
value;
{circle}prices for total return swaps are furnished by an independent pricing
service and are based upon a valuation model incorporating underlying
reference indexes, interest rates, yield curves and other market data or
factors. Prices for credit default swaps are furnished by an independent
pricing service and are based upon a valuation model incorporating default
probabilities, recovery rates and other market data or factors;
{circle}for mortgage-backed securities, based on the aggregate investment
value of the projected cash flows to be generated by the security, as
furnished by an independent pricing service;
{circle}for investments in other open-end regulated investment companies,
based on net asset value (NAV);
{circle}for other fixed-income securities, according to prices as furnished
by an independent pricing service, except that fixed-income securities
with remaining maturities of less than 60 days at the time of purchase are
valued at amortized cost; and
{circle}for all other securities at fair value as determined in accordance
with procedures established by and under the general supervision of the
Trustees.
Prices for fixed-income securities furnished by a pricing service may be based
on a valuation matrix which incorporates both dealer-supplied valuations and
electronic data processing techniques. Such prices (other than prices of
mortgage-backed securities) are generally intended to be indicative of the bid
prices currently offered to institutional investors for the securities, except
that prices for corporate fixed-income and asset-backed securities traded in the
United States are generally intended to be indicative of the mean between such
bid prices and asked prices. The Trustees have approved the use of such pricing
services. A number of pricing services are available, and the Fund may use
various pricing services or discontinue the use of any pricing service.
Prices provided by independent pricing services may be determined without
relying exclusively on quoted prices and may consider institutional trading in
similar groups of securities, yield, quality, stability, risk, coupon rate,
maturity, type of issue, trading characteristics, and other market data or
factors. From time to time, when prices cannot be obtained from an independent
pricing service, securities may be valued based on quotes from broker-dealers or
other financial institutions that trade the securities.
Trading in foreign securities may be completed at times which vary from the
closing of the New York Stock Exchange (NYSE). In computing its NAV, the Fund
values foreign securities using the latest closing price on the exchange on
which they are traded immediately prior to the closing of the NYSE. Certain
foreign currency exchange rates are generally determined at the latest rate
prior to the closing of the NYSE. Foreign securities quoted in foreign
currencies are translated into U.S. dollars at current rates. Events that
affect these values and exchange rates may occur between the times at which they
are determined and the closing of the NYSE. If such events materially affect
the value of portfolio securities, these securities may be valued at their fair
value as determined in good faith by the Trustees, although the actual
calculation may be done by others.
NOTE 4. SHARES OF BENEFICIAL INTEREST
The Pro Forma Class A Shares and Class C Shares net asset value per share
assumes the issuance of 2,326,430 Class A Shares and 2,093,227 Class C Shares,
respectively, of FMDTBF in exchange for 2,139,756 Institutional Shares and
1,926,908 Select Shares of FGAF which would have been issued at July 31, 2006 in
connection with the proposed reorganization.
NOTE 5. FEDERAL INCOME TAXES
Each fund has elected to be taxed as a "regulated investment company" under the
Internal Revenue Code. After the acquisition, FMDTBF intends to continue to
qualify as a regulated investment company, if such qualification is in the best
interests of its shareholders, by complying with the Subchapter M provision of
the Internal Revenue Code and to distribute to shareholders each year
substantially all of its income. Accordingly, no provisions for federal income
tax are necessary.
The identified cost of investments for the funds is substantially the same for
both financial accounting and federal income tax purposes. The tax cost of
investments will remain unchanged for the combined fund.
NOTE 6. PROFORMA ADJUSTMENTS
(a) Federated Administrative Services (FAS), under the Administrative Services
Agreement, provides FMDTBF with certain administrative personnel and services
necessary to operate the Fund. The fee paid to FAS is based on the average
aggregate daily net assets of certain Federated funds. 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. Under a similar plan, FAS provides
FGAF with certain administrative personnel and services necessary to operate the
Fund. An adjustment to the combined administrative personnel and services fee
reflects the fee structure of FMDTBF on Federated MDT Pro Forma Combined Fund's
average daily net assets.
(b) Adjustment to reflect custodian fees resulting from the combining of two
portfolios into one.
(c) Adjustment to reflect transfer and dividend disbursing agent fees and
expenses resulting from the combining of two portfolios into one.
(d) Adjustment to reflect directors'/trustees' fees resulting from the
combining of two portfolios into one.
(e) Adjustment to reflect auditing fees resulting from the combining of two
portfolios into one.
(f) Adjustment to reflect legal fees resulting from the combining of two
portfolios into one.
(g) Adjustment to reflect portfolio accounting fees resulting from the
combining of two portfolios into one.
(h) Under a Distribution Plan (the "Plan") pursuant to Rule 12B-1 under the
Act, FMDTBF may incur distribution expenses of 0.25% and 0.75% of the daily net
assets of the Fund's Class A Shares and Class C Shares, respectively, to
compensate Federated Securities Corp. (FSC), the principal distributor. Prior
to the reorganization of the Fund on December 8, 2006, the Predecessor Fund
incurred distribution expenses of 0.25% and 1.00% of the daily net assets of the
Fund's Class A Shares and Class C Shares, respectively. FSC may voluntarily
choose to waive any portion of its fee. Under a similar plan, FGAF may incur
distribution expenses up to 0.75% of the Select Shares average daily net assets.
Adjustment is to reflect expense structure of FMDTBF on average daily net assets
of Federated MDT Pro Forma Combined Fund.
(i) Effective December 11, 2006, under the terms of a Shareholder Services
Agreement, FMDTBF may pay fees up to 0.25% of the average daily net assets of
Fund's Class A and Class C shares to financial intermediaries or to Federated
Shareholder Services Company (FSSC). Prior to the reorganization, the
Predecessor Fund did not incur a shareholder services fee. Under a similar
plan, FGAF may pay fees up to 0.25% of the average daily net assets of
Institutional Shares and Select Shares to financial intermediaries or to FSSC.
FSSC or these financial intermediaries may voluntarily choose to waive any
portion of their fee. Adjustment is to reflect expense structure of FMDTBF on
average daily net assets of Federated MDT Pro Forma Combined Fund.
(j) Adjustment to reflect share registration costs resulting from the combining
of two portfolios into one.
(k) Adjustment to reflect share printing and postage resulting from the
combining of two portfolios into one.
(l) Adjustment to reflect share insurance premiums resulting from the combining
of two portfolios into one.
(m) Adjustment to reflect share miscellaneous expenses resulting from the
combining of two portfolios into one.
(n) Under the investment advisory contract, Federated MDTA LLC (the "Adviser")
is contractually obligated to waive, to the extent of its adviser fee, the
amount, if any, in order to limit the aggregate annual operating expenses
(excluding interest, taxes and brokerage commissions) for FMDTBF's Class A
Shares, Class C Shares and Institutional Shares to not more than 1.50%, 2.50%
and 1.25%, respectively, of average daily net assets. The Adviser has agreed to
keep these contractual limitations in place through December 8, 2008. The
Advisor may also voluntarily choose to waive a portion of its fee and/or
reimburse certain operating expenses of FMDTBF. The Advisor can modify or
terminate this voluntary waiver and/or reimbursement at any time at its sole
discretion. An adjustment to the combined waiver of investment adviser fee
reflects the fee structure of FMDTBF on Federated MDT Pro Forma Combined Fund's
average daily net assets.
(o) Effective July 15, 2006, FAS contractually agreed to waive the portion of
its fee which it would otherwise be entitled to receive from FMDTBF under the
Agreement. The level of fees payable by FMDTBF to FAS for the period will not
exceed the level of fees which FMDTBF would have paid during the period to its
pervious service provider under its previous administrative services agreement.
This contractual commitment ended with the reorganization on December 8, 2006.
In addition, FAS may voluntarily choose to waive any portion of its fee. FAS
can modify or terminate its voluntary waiver at any time at its sole discretion.
An adjustment to the combined waiver of administrative personnel and services
fee reflects the fee structure of FMDTBF on Federated MDT Pro Forma Combined
Fund's average daily net assets.
(p) An adjustment to the combined waiver of distribution services fee reflects
the fee structure of FMDTBF, which does not waive distribution services fee.
(q) An adjustment to the combined waiver and/or reimbursement of shareholder
services fee reflects the fee structure of FMDTBF, which does not waive and/or
reimburse shareholder services fee.
(r) An adjustment to the combined reimbursement of other operating expenses
reflects the fee structure of FMDTBF, which does not reimburse other operating
expenses
- 36 -
INTRODUCTION
The accompanying unaudited Pro Forma Combining Portfolios of Investments,
Statements of Assets and Liabilities and Statements of Operations (Pro Forma
Financial Statements) reflect the accounts of Federated Growth Allocation Fund
(FGAF) and Federated MDT Balanced Fund (FMDTBF), for the period ended July 31,
2006. MDT Balanced Fund (the "Predecessor Fund") was reorganized into FMDTBF as
of the close of business on December 8, 2008. Prior to the reorganization,
FMDTBF had no investment operations. FMDTBF is the successor to the Predecessor
Fund. For the purposes of these Pro Forma Financial Statements, the financial
information covers the period from August 1, 2005 to July 31, 2006. These
statements have been derived from the books and records utilized in calculating
daily net asset values at July 31, 2006.
The Pro Forma Financial Statements give effect to the proposed exchange of
assets of FGAF for Class A Shares and Class C Shares of FMDTBF. Under generally
accepted accounting principles, FMDTBF will be the surviving entity for
accounting purposes with its historical cost of investment securities and
results of operations being carried forward.
The Pro Forma Financial Statements have been adjusted to reflect the anticipated
advisory fee arrangement for the surviving entity. Certain other operating
costs have also been adjusted to reflect anticipated expenses of the combined
entity. Other costs which may change as a result of the reorganization are
currently undeterminable.
- 37 -
FEDERATED GROWTH
ALLOCATION FUND
FEDERATED MDT
BALANCED FUND (1)
PRO FORMA COMBINING PORTFOLIO
OF INVESTMENTS
JULY 31, 2006
(UNAUDITED)
FEDERATED FEDERATED FEDERATED FEDERATED
GROWTH MDT PRO GROWTH MDT PRO FORMA
BALANCED FORMA BALANCED
ALLOCATION FUND COMBINED ALLOCATION FUND COMBINED
FUND FUND
SHARES VALUE
COMMON STOCKS - 32.2%
AEROSPACE & DEFENSE - 0.2%
0 1,400 1,400 Honeywell International Inc. 0 $54,180 $54,180
0 5,100 5,100 Raytheon Company 0 229,857 229,857
0 1,100 1,100 Rockwell Collins, Inc. 0 58,707 58,707
0 342,744 342,744
BEVERAGES - 0.3%
0 6,900 6,900 Coca-Cola Co. 0 307,050 307,050
0 1,600 1,600 Hansen Natural Corp.* 0 73,584 73,584
0 380,634 380,634
BIOTECHNOLOGY - 0.9%
0 6,100 6,100 Celgene Corp.* 0 292,129 292,129
0 1,400 1,400 Cephalon, Inc.* 0 92,036 92,036
0 11,800 11,800 Genentech, Inc.* 0 953,676 953,676
0 1,337,841 1,337,841
BUILDING PRODUCTS - 0.1%
0 1,900 1,900 American Standard Companies 0 73,397 73,397
CAPITAL MARKETS - 2.5%
0 2,900 2,900 Bear Stearns & Co., Inc. 0 411,423 411,423
0 14,500 14,500 Lehman Brothers Holdings, Inc. 0 941,775 941,775
0 3,300 3,300 Merrill Lynch & Co., Inc. 0 240,306 240,306
0 29,600 29,600 Morgan Stanley 0 1,968,400 1,968,400
0 1,100 1,100 OptionsXpress Holdings, Inc. 0 28,798 28,798
0 3,590,702 3,590,702
CHEMICALS - 0.1%
0 300 300 Ashland, Inc. 0 19,953 19,953
0 500 500 FMC Corp. 0 30,845 30,845
0 700 700 OM Group, Inc.* 0 24,584 24,584
0 75,382 75,382
COMMERCIAL BANKS - 0.6%
0 5,600 5,600 Comerica Incorporated 0 327,880 327,880
0 700 700 Huntington Bancshares Incorporated 0 17,045 17,045
0 1,100 1,100 M & T Bank Corp. 0 134,112 134,112
0 7,700 7,700 National City Corporation 0 277,200 277,200
0 1,300 1,300 SunTrust Banks, Inc. 0 102,531 102,531
0 1,000 1,000 UnionBanCal Corporation 0 61,790 61,790
0 920,558 920,558
COMMERCIAL SERVICES & SUPPLIES - 0.4%
0 700 700 Corporate Executive Board Co. 0 65,800 65,800
0 700 700 Dun & Bradstreet Corp.* 0 46,704 46,704
0 1,200 1,200 Republic Services, Inc. 0 48,192 48,192
0 4,100 4,100 Robert Half International Inc. 0 132,676 132,676
0 7,200 7,200 Waste Management, Inc. 0 247,536 247,536
0 540,908 540,908
COMMUNICATIONS EQUIPMENT - 0.9%
0 1,400 1,400 Comverse Technology, Inc.* 0 27,132 27,132
0 37,700 37,700 QUALCOMM Incorporated 0 1,329,302 1,329,302
0 1,356,434 1,356,434
CONSTRUCTION MATERIALS - 0.1%
0 1,300 1,300 Martin Marietta Materials 0 104,676 104,676
CONSUMER FINANCE - 0.2%
0 2,300 2,300 AmeriCredit Corp.* 0 56,557 56,557
0 600 600 CompuCredit Corp.* 0 19,602 19,602
0 1,200 1,200 First Marblehead Corp. 0 54,960 54,960
0 2,100 2,100 SLM Corporation 0 105,630 105,630
0 236,749 236,749
CONTAINERS & PACKAGING - 0.0%
0 800 800 Temple-Inland Inc. 0 34,032 34,032
DIVERSIFIED CONSUMER SERVICES - 0.1%
0 1,100 1,100 Apollo Group, Inc., Class A* 0 52,052 52,052
0 300 300 ITT Educational Services, Inc.* 0 20,226 20,226
0 700 700 Jackson Hewitt Tax Service, Inc. 0 23,891 23,891
0 96,169 96,169
DIVERSIFIED FINANCIAL SERVICES - 0.6%
0 12,500 12,500 CIT Group Inc. 0 573,875 573,875
0 200 200 Chicago Mercantile Exchange Holdings, Inc. 0 92,240 92,240
0 3,300 3,300 Moody's Corporation 0 181,104 181,104
0 847,219 847,219
ELECTRIC UTILITIES - 0.1%
0 2,900 2,900 Allegheny Energy, Inc.* 0 119,045 119,045
0 1,200 1,200 Edison International 0 49,656 49,656
0 168,701 168,701
ELECTRICAL EQUIPMENT - 0.1%
0 1,100 1,100 Rockwell Automation, Inc. 0 68,178 68,178
0 500 500 Roper Industries, Inc. 0 22,600 22,600
0 90,778 90,778
ELECTRONIC EQUIPMENT & INSTRUMENTS - 0.1%
0 700 700 Amphenol Corp., Class A 0 39,256 39,256
0 2,500 2,500 Arrow Electronics, Inc.* 0 70,650 70,650
0 3,600 3,600 Ingram Micor, Inc., Class A* 0 63,468 63,468
0 400 400 Rogers Corp.* 0 22,800 22,800
0 196,174 196,174
ENERGY EQUIPMENT & SERVICES - 2.9%
0 8,500 8,500 Baker Hughes, Inc. 0 679,575 679,575
0 800 800 Cameron International Corp.* 0 40,328 40,328
0 1,500 1,500 Diamond Offshore Drilling, Inc. 0 118,395 118,395
0 1,400 1,400 FMC Technologies, Inc.* 0 88,228 88,228
0 2,200 2,200 Grant Prideco, Inc.* 0 100,122 100,122
0 14,700 14,700 Hess Corp. 0 777,630 777,630
0 3,600 3,600 National-Oilwell, Inc.* 0 241,344 241,344
0 900 900 Oceaneering International, Inc.* 0 39,348 39,348
0 29,100 29,100 Schlumberger Ltd. 0 1,945,335 1,945,335
0 800 800 Superior Energy Services, Inc.* 0 27,400 27,400
0 400 400 Veritas DGC, Inc.* 0 22,908 22,908
0 4,080,613 4,080,613
FOOD & STAPLES RETAILING - 0.0%
0 900 900 Longs Drug Stores Corp. 0 37,008 37,008
FOOD PRODUCTS - 0.3%
0 1,000 1,000 Dean Foods Co.* 0 37,530 37,530
0 3,800 3,800 General Mills, Inc. 0 197,220 197,220
0 2,200 2,200 Hershey Foods Corp. 0 120,934 120,934
0 2,100 2,100 Kellogg Co. 0 101,157 101,157
0 456,841 456,841
HEALTH CARE EQUIPMENT & SUPPLIES - 0.4%
0 600 600 Hologic, Inc.* 0 26,946 26,946
0 200 200 IDEXX Laboratories, Inc.* 0 17,700 17,700
0 500 500 Intuitive Surgical, Inc.* 0 47,600 47,600
0 8,800 8,800 Medtronic, Inc. 0 444,576 444,576
0 536,822 536,822
HEALTH CARE PROVIDERS & SERVICES - 0.6%
0 800 800 CIGNA Corp. 0 73,000 73,000
0 4,100 4,100 Cardinal Health, Inc. 0 274,700 274,700
0 2,300 2,300 Caremark Rx, Inc. 0 121,440 121,440
0 600 600 Express Scripts, Inc., Class A* 0 46,218 46,218
0 400 400 LCA Vision, Inc. 0 17,260 17,260
0 1,900 1,900 Laboratory Corporation of America Holdings* 0 122,398 122,398
0 700 700 Lincare Holdings, Inc.* 0 24,367 24,367
0 900 900 Quest Diagnostic, Inc. 0 54,108 54,108
0 500 500 Universal Health Services, Inc., Class B 0 28,000 28,000
0 500 500 WellPoint, Inc.* 0 37,250 37,250
0 798,741 798,741
HEALTH CARE TECHNOLOGY - 0.1%
0 3,400 3,400 Emdeon Corp.* 0 40,902 40,902
0 1,500 1,500 IMS Health, Inc. 0 41,160 41,160
0 82,062 82,062
HOTELS RESTAURANTS & LEISURE - 1.1%
0 4,000 4,000 International Game Technology 0 154,640 154,640
0 9,200 9,200 Las Vegas Sand Corp.* 0 570,676 570,676
0 20,100 20,100 Starbucks Corp.* 0 688,626 688,626
0 2,700 2,700 Yum! Brands, Inc. 0 121,500 121,500
0 1,535,442 1,535,442
HOUSEHOLD DURABLES - 0.4%
0 2,400 2,400 Beazer Homes USA, Inc. 0 100,056 100,056
0 3,800 3,800 Centex Corporation 0 179,778 179,778
0 2,200 2,200 KB HOME 0 93,544 93,544
0 600 600 Meritage Corp.* 0 23,262 23,262
0 1,500 1,500 Pulte Homes, Inc. 0 42,750 42,750
0 1,100 1,100 The Ryland Group, Inc. 0 44,935 44,935
0 1,400 1,400 Standard-Pacific Corp. 0 31,262 31,262
0 1,100 1,100 Toll Brothers, Inc.* 0 28,127 28,127
0 1,100 1,100 WCI Communities, Inc.* 0 17,281 17,281
0 560,995 560,995
HOUSEHOLD PRODUCTS - 0.2%
0 5,000 5,000 Kimberly-Clark Corp. 0 305,250 305,250
INDEPENDENT POWER PRODUCERS - 0.0%
0 4,400 4,400 Reliant Resources, Inc.* 0 55,352 55,352
INDUSTRIAL CONGLOMERATES - 0.7%
0 30,700 30,700 General Electric Co. 0 1,003,583 1,003,583
INSURANCE - 5.1%
0 25,950 25,950 The Allstate Corporation 0 1,474,479 1,474,479
0 3,300 3,300 AMBAC Financial Group, Inc. 0 274,263 274,263
0 2,100 2,100 American Financial Group, Inc. 0 88,431 88,431
0 11,400 11,400 American International Group, Inc. 0 691,638 691,638
0 4,200 4,200 Assurant, Inc. 0 202,314 202,314
0 5,400 5,400 Berkley, W.R. Corp. 0 194,400 194,400
0 300 300 CNA Financial Corp.* 0 10,185 10,185
0 7,800 7,800 The Chubb Corporation 0 393,276 393,276
0 1,800 1,800 Commerce Group, Inc. 0 54,378 54,378
0 1,300 1,300 Hanover Insurance Group, Inc.* 0 60,164 60,164
0 9,100 9,100 Hartford Financial Services Group, Inc. 0 772,044 772,044
0 500 500 LandAmerica Financial Group, Inc. 0 31,915 31,915
0 4,000 4,000 MBIA Insurance Corp. 0 235,240 235,240
0 25,200 25,200 Metlife, Inc. 0 1,310,400 1,310,400
0 1,400 1,400 Nationwide Financial Services, Inc. - Class A 0 63,112 63,112
0 1,200 1,200 Philadelphia Consolidated Holding Corp.* 0 40,644 40,644
0 1,800 1,800 Protective Life Corporation 0 83,358 83,358
0 2,800 2,800 Radian Group, Inc. 0 172,284 172,284
0 1,600 1,600 Reinsurance Group of America, Incorporated 0 79,312 79,312
0 4,000 4,000 SAFECO Corporation 0 214,880 214,880
0 700 700 Selective Insurance Group, Inc. 0 35,700 35,700
0 900 900 StanCorp Financial Group, Inc. 0 38,781 38,781
0 16,900 16,900 The St. Paul Travelers Companies, Inc. 0 774,020 774,020
0 400 400 Torchmark Corporation 0 24,188 24,188
0 500 500 Unitrin, Inc. 0 20,000 20,000
0 7,339,406 7,339,406
INTERNET & CATALOG RETAIL - 0.0%
0 700 700 Priceline.com, Inc.* 0 18,816 18,816
IT SERVICES - 0.3%
0 2,500 2,500 Cognizant Technology Solutions Corp.* 0 163,725 163,725
0 1,600 1,600 Computer Sciences Corp.* 0 83,824 83,824
0 900 900 DST Systems, Inc.* 0 50,679 50,679
0 1,800 1,800 Fiserv, Inc.* 0 78,588 78,588
0 600 600 Global Payments, Inc. 0 25,524 25,524
0 402,340 402,340
LEISURE EQUIPMENT & PRODUCTS - 0.0%
0 1,500 1,500 Brunswick Corp. 0 44,355 44,355
MACHINERY - 0.5%
0 600 600 Bucyrus International, Inc. 0 29,226 29,226
0 1,500 1,500 Danaher Corp. 0 97,800 97,800
0 3,700 3,700 Deere & Company 0 268,509 268,509
0 800 800 Dover Corp. 0 37,712 37,712
0 800 800 Gardner Denver, Inc.* 0 27,720 27,720
0 1,000 1,000 Ingersoll-Rand Co., Class A 0 35,800 35,800
0 2,800 2,800 Joy Global, Inc. 0 105,056 105,056
0 700 700 SPX Corp. 0 38,255 38,255
0 2,300 2,300 Timken Co. 0 74,060 74,060
0 714,138 714,138
MARINE - 0.0%
0 700 700 American Commercial Lines, Inc.* 0 38,465 38,465
MEDIA - 1.4%
0 5,700 5,700 Clear Channel Communications, Inc. 0 165,015 165,015
0 13,900 13,900 Comcast Corp., Class A* 0 477,882 477,882
0 2,600 2,600 Discovery Holding Co., Class A* 0 34,632 34,632
0 4,600 4,600 McGraw-Hill Cos., Inc. 0 258,980 258,980
0 39,800 39,800 News Corp., Inc. 0 765,752 765,752
0 2,300 2,300 Omnicom Group, Inc. 0 203,573 203,573
0 9,500 9,500 Time Warner, Inc. 0 156,750 156,750
0 2,062,584 2,062,584
METALS & MINING - 0.3%
0 500 500 Commercial Metals Company 0 11,345 11,345
0 1,800 1,800 Phelps Doge Corp. 0 157,212 157,212
0 600 600 Schnitzer Steel Industries, Inc. - Class A 0 20,340 20,340
0 3,900 3,900 United States Steel Corporation 0 245,973 245,973
0 1,900 1,900 Worthington Industries, Inc. 0 38,798 38,798
0 473,668 473,668
MULTILINE RETAIL - 0.2%
0 4,700 4,700 Dollar Tree Stores, Inc.* 0 63,074 63,074
0 4,400 4,400 Target Corp. 0 202,048 202,048
0 265,122 265,122
MULTI-UTILITIES & UNREGULATED POWER - 0.1%
0 3,800 3,800 PG&E Corp. 0 158,384 158,384
OIL & GAS - 3.0%
0 22,500 22,500 Anadarko Petroleum Corporation 0 1,029,150 1,029,150
0 2,900 2,900 Apache Corporation 0 204,363 204,363
0 30,400 30,400 ChevronTexaco Corporation 0 1,999,712 1,999,712
0 10,000 10,000 Devon Energy Corp. 0 646,400 646,400
0 700 700 General Maritime Corp. 0 25,410 25,410
0 500 500 Marathon Oil Corp. 0 45,320 45,320
0 1,600 1,600 OMI Corporation 0 35,296 35,296
0 800 800 Overseas Shipholding Group, Inc. 0 51,512 51,512
0 2,000 2,000 Pogo Producing Company 0 88,540 88,540
0 600 600 Swift Energy Company* 0 28,800 28,800
0 1,400 1,400 Tesoro Petroleum Corp. 0 104,720 104,720
0 4,259,223 4,259,223
PAPER & FOREST PRODUCTS - 0.2%
0 2,900 2,900 Louisiana-Pacific Corporation 0 58,000 58,000
PHARMACEUTICALS - 0.2%
0 3,400 3,400 Forest Laboratories, Inc., Class A* 0 157,454 157,454
0 4,300 4,300 Schering Plough Corp. 0 87,892 87,892
0 245,346 245,346
REAL ESTATE INVESTMENT TRUSTS - 3.3%
0 3,000 3,000 Alexandria Real Estate Equities, Inc. 0 283,260 283,260
0 5,750 5,750 Archstone-Smith Trust 0 301,703 301,703
0 2,700 2,700 Avalonbay Communities, Inc. 0 315,684 315,684
0 3,650 3,650 Boston Properties, Inc. 0 358,430 358,430
0 4,950 4,950 Developers Diversified Realty Corporation 0 261,261 261,261
0 6,100 6,100 Equity Residential Properties Trust 0 283,711 283,711
0 6,100 6,100 General Growth Properties, Inc. 0 278,404 278,404
0 3,500 3,500 Health Care Property Investors, Inc. 0 95,970 95,970
0 2,800 2,800 Hospitality Properties Trust 0 121,996 121,996
0 7,200 7,200 Kimco Realty Corporation 0 282,528 282,528
0 4,100 4,100 Plum Creek Timber Company, Inc. 0 139,646 139,646
0 3,000 3,000 Post Properties, Inc. 0 144,030 144,030
0 6,400 6,400 ProLogis 0 354,240 354,240
0 3,000 3,000 Public Storage, Inc. 0 240,870 240,870
0 8,500 8,500 Reckson Associates Realty Corp. 0 378,505 378,505
0 3,000 3,000 Simon Property Group, Inc. 0 256,590 256,590
0 7,000 7,000 Tanger Factory Outlet Centers, Inc. 0 230,300 230,300
0 3,650 3,650 Vornado Realty Trust 0 381,607 381,607
0 4,708,735 4,708,735
ROAD & RAIL - 0.2%
0 400 400 AMERCO* 0 35,280 35,280
0 500 500 Arkansas Best Corporation 0 22,215 22,215
0 1,100 1,100 CSX Corp. 0 66,748 66,748
0 1,800 1,800 Swift Transportation Co., Inc.* 0 48,150 48,150
0 500 500 Union Pacific Corp. 0 42,500 42,500
0 214,893 214,893
SEMICONDUCTOR & SEMICONDUCTOR EQUIPMENT - 1.1%
0 6,500 6,500 Altera Corporation* 0 112,515 112,515
0 3,200 3,200 Analog Devices, Inc. 0 103,456 103,456
0 700 700 Atheros Communications, Inc.* 0 11,564 11,564
0 7,500 7,500 Linear Technology Corporation 0 242,625 242,625
0 12,400 12,400 Marvell Technology Group Ltd.* 0 230,020 230,020
0 7,500 7,500 Maxim Integrated Products, Inc.* 0 220,350 220,350
0 1,700 1,700 Novellus Systems, Inc.* 0 43,027 43,027
0 20,600 20,600 Texas Instruments, Inc. 0 613,468 613,468
0 1,577,025 1,577,025
SOFTWARE - 1.4%
0 1,500 1,500 Informatica Corp.* 0 20,955 20,955
0 80,100 80,100 Microsoft Corp. 0 1,924,803 1,924,803
0 2,400 2,400 Red Hat, Inc.* 0 56,832 56,832
0 2,002,590 2,002,590
SPECIALTY RETAIL - 0.3%
0 500 500 The Children's Place Retail Stores, Inc.* 0 27,910 27,910
0 10,600 10,600 The Gap, Inc. 0 183,910 183,910
0 1,100 1,100 Guess?, Inc.* 0 46,860 46,860
0 1,200 1,200 Pacific Sunwear of California* 0 20,016 20,016
0 1,050 1,050 Select Comfort Corporation* 0 21,158 21,158
0 800 800 Talbots, Inc. 0 16,504 16,504
0 700 700 Tiffany & Co. 0 22,113 22,113
0 800 800 Zale Corp.* 0 20,488 20,488
0 358,959 358,959
TEXTILES, APPAREL & LUXURY GOODS - 0.2 %
0 8,100 8,100 Coach, Inc.* 0 232,551 232,551
0 600 600 Under Armour, Inc., Class A* 0 24,090 24,090
0 256,641 256,641
THRIFS & MORTGAGE FINANCE - 0.3 %
0 1,400 1,400 Corus Bankshares, Inc. 0 32,326 32,326
0 800 800 Downey Financial Corp. 0 53,080 53,080
0 800 800 FirstFed Financial Corp.* 0 45,160 45,160
0 1,800 1,800 Fremont General Corp. 0 31,950 31,950
0 3,100 3,100 MGIC Investment Corporation 0 176,421 176,421
0 2,900 2,900 The PMI Group, Inc. 0 123,134 123,134
0 462,071 462,071
TOBACCO - 0.2%
0 9,000 9,000 Loews Corp. 0 333,540 333,540
TRADING COMPANIES & DISTRIBUTORS - 0.1%
0 900 900 Applied Industrial Technologies, Inc. 0 20,988 20,988
0 1,000 1,000 WESCO International, Inc.* 0 58,250 58,250
0 79,238 79,238
TOTAL COMMON STOCKS (COST $42,392,816) 0 45,919,346 45,919,346
ADJUSTABLE RATE MORTGAGES - 0.1%
$0 $166,334 $166,334 Federal Home Loan Mortgage Corp. ARM 420173, 30
Year, 5.75%, 4/1/2030
(Identified Cost $168,791) 0 168,727 168,727
ASSET-BACKED SECURITIES - 2.2%
0 1,000,000 1,000,000 American Home Mortgage Investment Trust 2004-3, 0 968,937 968,937
Class 6A4, 5.01%, 10/25/2034
0 62,546 62,546 CS First Boston Mortgage Securities Corp. 2002-HE4, 0 62,088 62,088
Class AF, 5.51%, 8/25/2032
0 698,711 698,711 Community Program Loan Trust 1987-A, Class A4, 0 684,879 684,879
4.50%, 10/1/2018
0 452,714 452,714 MMCA Automobile Trust 2002-2, Class C, 5.55%, 0 448,825 448,825
3/15/2010
0 500,000 500,000 Nissan Auto Receivables Owner Trust 2004-C, Class 0 500,607 500,607
A4, 5.408%, 3/15/2010
0 500,000 500,000 People's Choice Home Loan Securities Trust 2004-1, 0 481,865 481,865
Class B1, 5.00%, 6/25/2034
TOTAL ASSET-BACKED SECURITIES (IDENTIFIED COST 0 3,147,201 3,147,201
$3,177,096)
COLLATERALIZED MORTGAGE OBLIGATIONS - 11.4%
0 438,578 438,578 Banc of America Commercial Mortgage 2000-2, Class 0 449,757 449,757
A1, 7.02%, 9/15/2032
0 85,338 85,338 Banc of America Funding Corp. 2003-1, Class A1, 0 84,074 84,074
6.00%, 5/20/2033
0 482,690 482,690 Bear Stearns Asset Backed Securities, Inc. 2005-AC6, 0 361,143 361,143
Class 21PO, 0.00%, 9/25/2020
0 6,315 6,315 Bear Stearns Mortgage Securities, Inc. 1997-6, Class 0 6,204 6,204
1A, 6.66%, 3/25/2031
0 544,180 544,180 CS First Boston Mortgage Securities Corp. 2003-17, 0 397,972 397,972
Class DB4, 5.38%, 6/25/2033
0 340,174 340,174 Chase Mortgage Finance Corp. 2003-S1, Class 1A1, 0 330,916 330,916
5.25%, 2/25/2018
0 1,000,000 1,000,000 Citicorp Mortgage Securities, Inc. 2003-11, Class 0 962,265 962,265
1A4, 5.25%, 12/25/2033
0 200,000 200,000 Countrywide Alternative Loan Trust 2005-28CB, Class 0 187,983 187,983
1A4, 5.50%, 8/25/2035
0 18,858 18,858 Federal Home Loan Mortgage Corp. REMIC 1311 K, 7.00% 0 18,858 18,858
7/15/2022
0 37,436 37,436 Federal Home Loan Mortgage Corp. REMIC 1384 D, 7.00% 0 37,436 37,436
9/15/2022
0 46,572 46,572 Federal Home Loan Mortgage Corp. REMIC 1595 D, 7.00% 0 47,854 47,854
10/15/2013
0 750,000 750,000 Federal Home Loan Mortgage Corp. REMIC 1686 PJ, 0 731,411 731,411
5.00% 2/15/2024
0 112,696 112,696 Federal Home Loan Mortgage Corp. REMIC 2003-79 NM, 0 106,335 106,335
4.00% 5/25/2022
0 115,361 115,361 Federal Home Loan Mortgage Corp. REMIC 2366 VG, 0 115,540 115,540
6.00% 6/15/2011
0 531,253 531,253 Federal Home Loan Mortgage Corp. REMIC 2410 OE, 0 530,785 530,785
6.38% 2/15/2032
0 75,000 75,000 Federal Home Loan Mortgage Corp. REMIC 2497 JH, 0 74,631 74,631
6.00% 9/15/2032
0 125,000 125,000 Federal Home Loan Mortgage Corp. REMIC 2626 NA, 0 123,164 123,164
5.00% 6/15/2023
0 573,891 573,891 Federal Home Loan Mortgage Corp. REMIC 2647 A, 3.25% 0 507,093 507,093
4/15/2032
0 237,327 237,327 Federal Home Loan Mortgage Corp. REMIC 2648 TS, 0 171,160 171,160
5.06% 7/15/2033
0 500,000 500,000 Federal Home Loan Mortgage Corp. REMIC 2663 LN, 0 494,227 494,227
4.50% 1/15/2022
0 150,000 150,000 Federal Home Loan Mortgage Corp. REMIC 2672 NB, 0 138,329 138,329
4.00% 5/15/2016
0 164,195 164,195 Federal Home Loan Mortgage Corp. REMIC 2676 JA, 0 163,204 163,204
4.00% 5/15/2016
0 153,084 153,084 Federal Home Loan Mortgage Corp. REMIC 2756 NA, 0 145,775 145,775
5.00% 2/15/2024
0 370,502 370,502 Federal National Mortgage Association REMIC 1990-28 0 400,733 400,733
X, 9.00%, 3/25/2020
0 119,105 119,105 Federal National Mortgage Association REMIC 1992-188 0 124,089 124,089
PZ, 7.50%, 10/25/2022
0 92,856 92,856 Federal National Mortgage Association REMIC 1993-113 0 102,389 102,389
SB, 9.75%, 7/25/2023
0 745,905 745,905 Federal National Mortgage Association REMIC 1997-81 0 762,577 762,577
PD, 6.35%, 12/18/2027
0 21,619 21,619 Federal National Mortgage Association REMIC 2001-37 0 22,484 22,484
GA, 8.00%, 7/25/2016
0 440,406 440,406 Federal National Mortgage Association REMIC 2002-1 0 448,823 448,823
HC, 6.50%, 2/25/2022
0 301,369 301,369 Federal National Mortgage Association REMIC 2002-22 0 307,089 307,089
G, 6.50%, 4/25/2032
0 325,033 325,033 Federal National Mortgage Association REMIC 2003-28 0 299,839 299,839
GA, 4.00%, 10/25/2032
0 150,000 150,000 Federal National Mortgage Association REMIC 2003-32 0 141,896 141,896
KC, 5.00%, 5/25/2018
0 23,137 23,137 Federal National Mortgage Association REMIC 2003-35 0 21,077 21,077
UC, 3.75%, 5/25/2033
0 922,562 922,562 Federal National Mortgage Association REMIC 2003-42 0 827,810 827,810
CA, 4.00%, 5/25/2033
0 417,682 417,682 Federal National Mortgage Association REMIC 2003-49 0 370,840 370,840
JE, 3.00%, 4/25/2033
0 318,623 318,623 Federal National Mortgage Association REMIC 2003-66 0 289,962 289,962
MB, 3.50%, 5/25/2023
0 867,706 867,706 Federal National Mortgage Association REMIC 2004-2 0 798,525 798,525
JA, 5.00%, 2/25/2024
0 188,881 188,881 Federal National Mortgage Association REMIC G92-44 0 200,319 200,319
ZQ, 8.00%, 7/25/2022
0 279,535 279,535 Government National Mortgage Association REMIC 1996- 0 291,431 291,431
10 PD, 7.50%, 6/20/2026
0 24,940 24,940 Government National Mortgage Association REMIC 1999- 0 25,428 25,428
29 PB, 7.25%, 7/16/2028
0 68,035 68,035 Government National Mortgage Association REMIC 2002- 0 68,131 68,131
17 B, 6.00%, 3/20/2032
0 497,046 497,046 Government National Mortgage Association REMIC 2003- 0 429,520 429,520
67 ZA, 5.00%, 8/20/2033
0 194,465 194,465 Indymac Home Equity Loan Asset-Backed Trust 2004-C, 0 195,114 195,114
Class 1A1, 5.70%, 3/25/2035
0 705,857 705,857 MASTR Asset Securitization Trust 2003-6, Class 9A1, 0 684,406 684,406
4.25%, 7/25/2033
0 335,807 335,807 Structured Asset Securities Corp. 2003-212A2, Class 0 319,330 319,330
2A2, 5.25, 8/25/2033
0 472,422 472,422 Vendee Mortgage Trust 1994-3A, Class 1ZB, 6.50%, 0 482,605 482,605
9/15/2024
0 1,000,000 1,000,000 Washington Mutual 2003-AR9, Class 1A6, 4.05%, 0 970,908 970,908
9/25/2033
0 100,000 100,000 Washington Mutual Bank, 7.50%, 8/15/2006 0 100,064 100,064
0 656,492 656,492 Wells Fargo Mortgage backed Securities Trust 2004-8, 0 632,720 632,720
Class A6, 5.00%, 8/25/2019
0 1,000,000 1,000,000 Wells Fargo Mortgage backed Securities Trust 2005-3, 0 929,129 929,129
Class A14, 5.50%, 5/25/2035
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS 0 16,433,354 16,433,354
(IDENTIFIED COST $16,828,594)
CORPORATE NOTES & BONDS - 1.6%
COMMUNICATIONS - TELECOM WIRELESS - 0.3%
0 400,000 400,000 GTE North, Inc., Deb., Series D, 6.90%, 11/1/2008 0 407,859 407,859
CONSUMER CYCLICAL - AUTOMOTIVE - 0.2%
0 300,000 300,000 General Motors Acceptance Corporation Notes 6.125%, 0 298,346 298,346
02/01/2007
CONSUMER NON-CYCLICAL - SUPERMARKETS - 0.2%
0 250,000 250,000 Safeway, Inc. Notes 4.800%, 07/16/2007 0 248,071 248,071
FINANCIAL INSTITUTIONS - BANKING - 0.1%
0 200,000 200,000 CIT Group, Inc., Unsecd. Note, 2.875%, 9/29/2006 0 199,207 199,207
FINANCIAL INSTITUTIONS - BROKERAGE - 0.3%
0 400,000 400,000 Merrill Lynch & Co., Inc., Sr. Unsub., Series CORE, 0 399,480 399,480
5.898%, 1/31/2008
FINANCIAL INSTITUTIONS - FINANCE NONCAPTIVE - 0.5%
0 380,000 380,000 International Lease Finance Corp., Note, 5.75%, 0 379,968 379,968
10/15/2006
0 300,000 300,000 SLM Corporation Notes 3.950%, 08/15/2008 0 290,996 290,996
0 670,964 670,964
TOTAL CORPORATE NOTES & BONDS (IDENTIFIED COST 0 2,223,927 2,223,927
$2,258,512)
GOVERNMENT AGENCIES - 3.5%
0 1,000,000 1,000,000 Federal Home Loan Bank System, Bond, 3.50%, 9/8/2006 0 997,821 997,821
0 1,000,000 1,000,000 Federal Home Loan Mortgage Corp., 5.25%, 7/18/2011 0 999,656 999,656
0 1,000,000 1,000,000 Federal Home Loan Mortgage Corp., Unsecd. Note, 0 960,200 960,200
4.125%, 7/12/2010
0 2,000,000 2,000,000 Federal National Mortgage Association, Note, 5.25%, 0 2,002,384 2,002,384
1/15/2009
TOTAL GOVERNMENT AGENCIES (IDENTIFIED COST 0 4,960,061 4,960,061
$4,983,096)
MORTGAGE-BACKED SECURITIES - 0.5%
0 252,500 252,500 Federal Home Loan Mortgage Corp., Pool E01538, 0 245,762 245,762
5.00%, 12/1/2018
0 31,714 31,714 Federal National Mortgage Association, Pool 408761 0 32,433 32,433
7.00%, 12/1/2012
0 13,263 13,263 Federal National Mortgage Association, Pool 512255, 0 13,664 13,664
7.50%, 9/1/2014
0 44,159 44,159 Federal National Mortgage Association, Pool 609554, 0 45,496 45,496
7.50%, 10/1/2016
0 363,324 363,324 Federal National Mortgage Association, Pool 754886, 0 348,121 348,121
4.50%, 9/1/2018
TOTAL MORTGAGE-BACKED SECURITIES (IDENTIFIED COST 0 685,476 685,476
$705,252)
EXCHANGE TRADED FUNDS 2.5%
0 54,950 54,950 iShares MSCI EAFE Index Fund (Identified Cost 0 3,622,304 3,622,304
$1,945,943)
MUTUAL FUND - 44.8%
4,032,209 0 4,032,209 (2) Capital Appreciation Core Fund 50,292,121 0 50,292,121
278 0 278 (2) Emerging Markets Fixed Income Core Fund 5,365 0 5,365
145,489 0 145,489 (2) Federated Intermediate Corporate Bond Fund 1,428,702 0 1,428,702
25,277 0 25,277 (2) Federated International Bond Fund, Class A 274,506 0 274,506
Shares
385,586 0 385,586 (2) Federated International Capital Appreciation 4,468,941 0 4,468,941
Fund, Class A Shares
246,940 0 246,940 (2) Federated Mortgage Core Portfolio 2,405,194 0 2,405,194
108,671 0 108,671 (2) Federated U.S. Government Bond Fund 1,181,253 0 1,181,253
117,646 0 117,646 (2) Federated U.S. Government Securities Fund, 2-5 1,269,399 0 1,269,399
Years, Institutional Shares
55,104 0 55,104 (2) High Yield Bond Portfolio 365,890 0 365,890
0 2,288,104 2,288,104 SSgA Prime Money Market Fund (At Net Asset Value) 0 2,288,104 2,288,104
TOTAL MUTUAL FUNDS (IDENTIFIED COST $227,886,730) 61,691,371 2,288,104 63,979,475
REPURCHASE AGREEMENT - 1.1%
$ $ $ Bank of America N.A., 5.29%, dated 7/31/2006, with a 1,575,000 0 1,575,000
1,575,000 - 1,575,000 maturity of 8/1/2006 (at Amortized Cost)
TOTAL INVESTMENTS (IDENTIFIED COST $66,524,353) - 63,266,371 79,448,500 142,714,871
99.9%
OTHER ASSETS AND LIABILITIES - 0.1% 170,965 74,160
(96,805)
TOTAL NET ASSETS - 100% $63,169,566 $79,619,465 $142,789,031
Note: The categories of investments are shown as a percentage of total net
assets at July 31, 2006.
* Non Income Producing
(1) MDT Balanced Fund was reorganized into Federated MDT Balanced Fund as of
the close of business on December 8, 2006. Prior to the reorganization,
Federated MDT Balanced Fund had no investment operations.
(2) All or a portion of this security will be sold as a result of the
reorganization.
- 38 -
FEDERATED GROWTH ALLOCATION FUND
FEDERATED MDT BALANCED FUND (1)
PRO FORMA COMBINING STATEMENTS OF ASSETS & LIABILITIES
JULY 31, 2006 (UNAUDITED)
FEDERATED FEDERATED
GROWTH MDT
ALLOCATION BALANCED PRO FORMA PROFORMA
FUND FUND ADJUSTMENT COMBINED
ASSETS:
Investments in securities, at value $63,266,371 $79,448,500 $0 $142,714,871
Cash 361 26,063 0 26,424
Income receivable 33,685 194,901 0 228,586
Receivable for investments sold 1,980 3,925,155 0 3,927,135
Receivable for shares sold 0 103,837 0 103,837
Total assets 0 147,000,853
63,302,397 83,698,456
LIABILITIES:
Payable for investments purchased 0 3,953,075 0 3,953,075
Payable for shares redeemed 18,492 25,000 0 43,492
Payable for investment adviser fee 0 23,284 0 23,284
Payable for Directors'/Trustees' fees 69 10,178 0 10,247
Payable for distribution services fees 13,369 3,025 0 16,394
Payable for shareholder services fees 9,679 0 0 9,679
Accrued expenses 91,222 64,429 0 155,651
Total liabilities 132,831 4,078,991 0 4,211,822
NET ASSETS $63,169,566 $79,619,465 $0 $142,789,031
NET ASSETS CONSIST OF:
Paid-in capital $63,750,578 $68,844,460 $0 132,595,038
Net unrealized appreciation of investments 5,555,990 4,700,296 0 10,256,286
Accumulated net realized gain (loss) on investments (6,172,721) 5,379,478 0 (793,243)
Undistributed net investment income 0 730,950
35,719 695,231
Total Net Assets $63,169,566 $79,619,465 $0 $142,789,031
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS
PER SHARE
INSTITUTIONAL SHARES:
NET ASSETS $31,225,742 $73,747,134 (b) $73,747,134
$(31,225,742)
SHARES OUTSTANDING 2,350,322 5,573,783 (b) 5,573,783
(2,350,322)
NET ASSET VALUE PER SHARE $13.29 $13.23 $13.23
OFFERING PRICE PER SHARE $13.29 $13.23 $13.23
REDEMPTION PROCEEDS PER SHARE $13.29 $13.23 $13.23
CLASS A SHARES:
NET ASSETS $- $1,962,276 $31,225,742 (b) $33,188,018
SHARES OUTSTANDING 0 148,492 (b) 2,512,288
2,363,796
NET ASSET VALUE PER SHARE $0.00 $13.21 $13.21
OFFERING PRICE PER SHARE* $0.00 $13.98 * $13.98 *
REDEMPTION PROCEEDS PER SHARE $0.00 $13.21 $13.21
CLASS C SHARES:
NET ASSETS $ - $3,910,055 $31,943,824 (b) $35,853,879
SHARES OUTSTANDING 0 297,817 (b) 2,730,705
2,432,888
NET ASSET VALUE PER SHARE $0.00 $13.13 $13.13
OFFERING PRICE PER SHARE $0.00 $13.13 $13.13
REDEMPTION PROCEEDS PER SHARE $0.00 $13.00 ** $13.00 **
SELECT SHARES:
NET ASSETS $31,943,824 $- (b) $-
$(31,943,824)
SHARES OUTSTANDING 2,420,346 0 (b) 0
(2,420,346)
NET ASSET VALUE PER SHARE $13.20 $0.00 $0.00
OFFERING PRICE PER SHARE $13.20 $0.00 $0.00
REDEMPTION PROCEEDS PER SHARE $13.20 $0.00 $0.00
Investments, at identified cost $57,710,381 $74,748,204 $0 $132,458,585
Investments in affiliated issuers $61,691,371 $0 $0 $61,691,371
*Computation of offering price per share 100/94.50 of net asset value.
**Computation of redemption price per share 100/99 of net asset value.
(a) MDT Balanced Fund was reorganized into Federated MDT Balanced Fund as of the close of business on December 8, 2006. Prior to
the reorganization, Federated MDT Balanced Fund had no investment operations.
Federated MDT Balanced Fund is the successor to MDT Balanced Fund.
(b) Adjustment to reflect share balance as a result of the combination.
- 39 -
FEDERATED GROWTH ALLOCATION FUND
FEDERATED MDT BALANCED FUND (1)
PRO FORMA COMBINING STATEMENTS OF OPERATIONS
YEAR ENDED JULY 31, 2006 (UNAUDITED)
FEDERATED FEDERATED
GROWTH MDT
ALLOCATION BALANCED PRO FORMA PROFORMA
FUND FUND ADJUSTMENT COMBINED
INVESTMENT INCOME:
Dividends $471,448 $838,271 $0 $1,309,719
Interest 71,431 1,469,679 0 1,541,110
Investment income allocated from affiliated partnerships 1,066,222 0 0 1,066,222
TOTAL INVESTMENT INCOME: 1,609,101 2,307,950 0 3,917,051
EXPENSES:
Investment advisory fee 532,690 562,720 0 1,095,410
Administrative personnel and services fee 190,011 97,506 (97,604) (a) 189,913
Custodian fees 5,905 32,807 20,889 (b) 59,601
Transfer and dividend disbursing agent fees and expenses 153,132 95,765 (108,680) (c) 140,217
Directors'/Trustees' fees 4,323 31,234 6,692 (d) 42,249
Audit fees 41,711 23,086 (41,711) (e) 23,086
Legal fees 7,175 27,491 17,557 (f) 52,223
Portfolio accounting fees 55,169 93,403 (13,434) (g) 135,138
Distribution services fee - Class A Shares 0 934 91,187 (h) 92,121
Distribution services fee - Class C Shares 0 9,950 345,532 (h) 355,482
Distribution services fee - Select Shares 259,137 0 (259,137) (h) 0
Shareholder services fee- Institutional Shares 86,327 0 (86,327) (i) 0
Shareholder services fee- Select Shares 86,725 0 (86,725) (i) 0
Share registration costs 30,081 49,474 (27,581) (j) 51,974
Printing and postage 10,299 15,626 (740) (k) 25,185
Insurance premiums 7,851 10,170 (5,138) (l) 12,883
Miscellaneous 2,580 4,248 (1,363) (m) 5,465
EXPENSES BEFORE ALLOCATION 1,473,116 1,054,414 (246,583) 2,280,947
Expenses allocated from partnership 26,635 0 0 26,635
TOTAL EXPENSES 1,499,751 1,054,414 (246,583) 2,307,582
WAIVERS AND REIMBURSEMENTS--
Waiver/Reimbursement of investment adviser fee (n) (5,944)
(90,198) (102,760) 187,014
Waiver of administrative personnel and services fee (34,289) (6,109) 30,972 (o) (9,426)
Waiver of distribution services fee - Select Shares (86,379) 0 86,379 (p) 0
Waiver of shareholder services fee - Institutional Shares (47,241) 0 47,241 (q) 0
Reimbursement of shareholder services fee - Institutional Shares (5,648) 0 5,648 (q) 0
Reimbursement of other operating expenses (33,639) 0 33,639 (r) 0
TOTAL WAIVERS AND REIMBURSEMENTS (297,394) (108,869) 390,893 (15,370)
NET EXPENSES 1,202,357 945,545 144,310 2,292,212
NET INVESTMENT INCOME $406,744 $1,362,405 ($144,310) $1,624,839
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments 1,223,916 6,686,253 0 7,910,169
Net realized allocated from partnerships 3,873,306 0 3,873,306
Realized gain distributions from affiliated investment company shares 153,459 0 0 153,459
Net change in unrealized appreciation (depreciation) of investments (2,331,011) (3,917,876) 0
(6,248,887)
Net realized and unrealized gain on investments 2,919,670 2,768,377 0 5,688,047
Change in net assets resulting from operations $3,326,414 $4,130,782 ($144,310) $7,312,886
* MDT Balanced Fund was reorganized into Federated MDT Balanced Fund as of
the close of business on December 8, 2006. Prior to the reorganization,
Federated MDT Balanced Fund had no investment operations. Federated MDT
Balanced Fund is the successor to MDT Balanced Fund.
(See Notes to Pro Forma Financial Statements)
- 40 -
FEDERATED GROWTH ALLOCATION FUND
FEDERATED MDT BALANCED FUND
NOTES TO PRO FORMA FINANCIAL STATEMENTS
YEAR ENDED JULY 31, 2006 (UNAUDITED)
NOTE 1. DESCRIPTION OF THE FUND
FGAF, a series of Federated Managed Allocation Portfolios, is registered under
the Investment Company Act of 1940, as amended (the "Act), as an open-end
management investment company. The Fund consists of two classes of shares:
Institutional Shares and Select Shares.
FMDTBF, a series of Federated MDT Series, is registered under the Act as an
open-end, management investment company. MDT Balanced Fund (the "Predecessor
Fund") was reorganized into FMDTBF as of the close of business on December 8,
2006. Prior to the reorganization, FMDTBF had no investment operations. FMDTBF
is the successor to the Predecessor Fund. For the purposes of these Pro Forma
Financial Statements, the financial information covers the period from August 1,
2005 to July 31, 2006. FMDTBF consists of four classes of shares: Class A
Shares, Class C Shares, Class K Shares and Institutional Shares. Class K Shares
did not become effective until December 11, 2006.
NOTE 2. BASIS OF COMBINATION
The accompanying unaudited Pro Forma Combining Portfolios of Investments,
Statements of Assets and Liabilities and Statements of Operations (Pro Forma
Financial Statements) reflect the accounts of FGAF and the Predecessor Fund of
FMDTBF for the year ended July 31, 2006. These statements have been derived
from the books and records utilized in calculating daily net asset values at
July 31, 2006.
The Pro Forma Financial Statements should be read in conjunction with the
historical financial statements of FGAF and the Predecessor Fund of FMDTBF which
have been incorporated by reference in the Statement of Additional Information.
The Funds follow generally accepted accounting principles in the United States
of America applicable to management investment companies which are disclosed in
the historical financial statements.
The Pro Forma Financial Statements give effect to the proposed exchange of
assets of FGAF for Class A Shares and Class C Shares of the Predecessor Fund of
FMDTBF. Under generally accepted accounting principles, the Predecessor Fund of
FMDTBF will be the surviving entity for accounting purposes with its historical
cost of investment securities and results of operations being carried forward.
The Pro Forma Financial Statements have been adjusted to reflect the investment
advisory fee arrangement for the surviving entity. Certain other operating
costs have also been adjusted to reflect anticipated expenses of the combined
entity. Other costs which may change as a result of the reorganization are
currently undeterminable.
For the year ended July 31, 2006, FGAF and the Predecessor Fund of FMDTBF paid
investment advisory fees computed at the annual rate of 0.75% as a percentage of
average daily net assets.
All costs with respect to the reorganization will be borne by Federated
Investors, Inc. and its affiliates.
NOTE 3. PORTFOLIO VALUATION
Market values of each Fund's portfolio securities are determined as follows:
{circle}for equity securities, according to the last sale price or official
closing price reported in the market in which they are primarily traded
(either a national securities exchange or the over-the-counter market), if
available;
{circle}in the absence of recorded sales for equity securities, according to
the mean between the last closing bid and asked prices;
{circle}futures contracts and options are generally valued at market values
established by the exchanges on which they are traded at the close of
trading on such exchanges. Options traded in the over-the-counter market
are generally valued according to the mean between the last bid and the
last asked price for the option as provided by an investment dealer or
other financial institution that deals in the option. The Board of
Trustees (the "Trustees") may determine in good faith that another method
of valuing such investments is necessary to appraise their fair market
value;
{circle}prices for total return swaps are furnished by an independent pricing
service and are based upon a valuation model incorporating underlying
reference indexes, interest rates, yield curves and other market data or
factors. Prices for credit default swaps are furnished by an independent
pricing service and are based upon a valuation model incorporating default
probabilities, recovery rates and other market data or factors;
{circle}for mortgage-backed securities, based on the aggregate investment
value of the projected cash flows to be generated by the security, as
furnished by an independent pricing service;
{circle}for investments in other open-end regulated investment companies,
based on net asset value (NAV);
{circle}for other fixed-income securities, according to prices as furnished
by an independent pricing service, except that fixed-income securities
with remaining maturities of less than 60 days at the time of purchase are
valued at amortized cost; and
{circle}for all other securities at fair value as determined in accordance
with procedures established by and under the general supervision of the
Trustees.
Prices for fixed-income securities furnished by a pricing service may be based
on a valuation matrix which incorporates both dealer-supplied valuations and
electronic data processing techniques. Such prices (other than prices of
mortgage-backed securities) are generally intended to be indicative of the bid
prices currently offered to institutional investors for the securities, except
that prices for corporate fixed-income and asset-backed securities traded in the
United States are generally intended to be indicative of the mean between such
bid prices and asked prices. The Trustees have approved the use of such pricing
services. A number of pricing services are available, and the Fund may use
various pricing services or discontinue the use of any pricing service.
Prices provided by independent pricing services may be determined without
relying exclusively on quoted prices and may consider institutional trading in
similar groups of securities, yield, quality, stability, risk, coupon rate,
maturity, type of issue, trading characteristics, and other market data or
factors. From time to time, when prices cannot be obtained from an independent
pricing service, securities may be valued based on quotes from broker-dealers or
other financial institutions that trade the securities.
Trading in foreign securities may be completed at times which vary from the
closing of the New York Stock Exchange (NYSE). In computing its NAV, the Fund
values foreign securities using the latest closing price on the exchange on
which they are traded immediately prior to the closing of the NYSE. Certain
foreign currency exchange rates are generally determined at the latest rate
prior to the closing of the NYSE. Foreign securities quoted in foreign
currencies are translated into U.S. dollars at current rates. Events that
affect these values and exchange rates may occur between the times at which they
are determined and the closing of the NYSE. If such events materially affect
the value of portfolio securities, these securities may be valued at their fair
value as determined in good faith by the Trustees, although the actual
calculation may be done by others.
NOTE 4. SHARES OF BENEFICIAL INTEREST
The Pro Forma Class A Shares and Class C Shares net asset value per share
assumes the issuance of 2,363,796 Class A Shares and 2,432,888 Class C Shares,
respectively, of the Predecessor Fund of FMDTBF in exchange for 2,350,322
Institutional Shares and 2,420,346 Select Shares of FGAF which would have been
issued at July 31, 2006 in connection with the proposed reorganization.
NOTE 5. FEDERAL INCOME TAXES
Each fund has elected to be taxed as a "regulated investment company" under the
Internal Revenue Code. After the acquisition, the Predecessor Fund of FMDTBF
intends to continue to qualify as a regulated investment company, if such
qualification is in the best interests of its shareholders, by complying with
the Subchapter M provision of the Internal Revenue Code and to distribute to
shareholders each year substantially all of its income. Accordingly, no
provisions for federal income tax are necessary.
The identified cost of investments for the funds is substantially the same for
both financial accounting and federal income tax purposes. The tax cost of
investments will remain unchanged for the combined fund.
NOTE 6. PROFORMA ADJUSTMENTS
(a) Effective July 15, 2005, Federated Administrative Services (FAS), under the
Administrative Services Agreement, provides the Predecessor Fund of FMDTBF with
certain administrative personnel and services necessary to operate the Fund.
The fee paid to FAS is based on the average aggregate daily net assets of
certain Federated funds. 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. Under a similar plan, FAS provides FGAF with certain administrative
personnel and services necessary to operate the Fund. Prior to July 15, 2005, a
previous administrator provided administrative services to the Predecessor Fund
of FMDTBF. An adjustment to the combined administrative personnel and services
fee reflects the fee structure of the Predecessor Fund of FMDTBF on Federated
MDT Pro Forma Combined Fund's average daily net assets.
(b) Adjustment to reflect custodian fees resulting from the combining of two
portfolios into one.
(c) Adjustment to reflect transfer and dividend disbursing agent fees and
expenses resulting from the combining of two portfolios into one.
(d) Adjustment to reflect directors'/trustees' fees resulting from the
combining of two portfolios into one.
(e) Adjustment to reflect auditing fees resulting from the combining of two
portfolios into one.
(f) Adjustment to reflect legal fees resulting from the combining of two
portfolios into one.
(g) Adjustment to reflect portfolio accounting fees resulting from the
combining of two portfolios into one.
(h) Under a Distribution Plan (the "Plan") pursuant to Rule 12B-1 under the
Act, FMDTBF may incur distribution expenses of 0.25% and 0.75% of the daily net
assets of the Fund's Class A Shares and Class C Shares, respectively, to
compensate Federated Securities Corp. (FSC), the principal distributor. Prior
to the reorganization of the Fund on December 8, 2006, the Predecessor Fund of
FMDTBF incurred distribution expenses of 0.25% and 1.00% of the daily net assets
of the Fund's Class A Shares and Class C Shares, respectively. FSC may
voluntarily choose to waive any portion of its fee. Under a similar plan, FGAF
may incur distribution expenses up to 0.75% of the Select Shares average daily
net assets. Adjustment is to reflect expense structure of the Predecessor Fund
of FMDTBF on average daily net assets of Federated MDT Pro Forma Combined Fund.
(i) Effective December 11, 2006, under the terms of a Shareholder Services
Agreement, FMDTBF may pay fees up to 0.25% of the average daily net assets of
Fund's Class A and Class C shares to financial intermediaries or to Federated
Shareholder Services Company (FSSC). Prior to the reorganization, the
Predecessor Fund of FMDTBF did not incur a shareholder services fee. Under a
similar plan, FGAF may pay fees up to 0.25% of the average daily net assets of
Institutional Shares and Select Shares to financial intermediaries or to FSSC.
FSSC or these financial intermediaries may voluntarily choose to waive any
portion of their fee. Adjustment is to reflect expense structure of the
Predecessor Fund of FMDTBF on average daily net assets of Federated MDT Pro
Forma Combined Fund.
(j) Adjustment to reflect share registration costs resulting from the combining
of two portfolios into one.
(k) Adjustment to reflect share printing and postage resulting from the
combining of two portfolios into one.
(l) Adjustment to reflect share insurance premiums resulting from the combining
of two portfolios into one.
(m) Adjustment to reflect share miscellaneous expenses resulting from the
combining of two portfolios into one.
(n) Under the investment advisory contract, Federated MDTA LLC (the "Adviser")
is contractually obligated to waive, to the extent of its adviser fee, the
amount, if any, in order to limit the aggregate annual operating expenses
(excluding interest, taxes and brokerage commissions) for the Predecessor Fund
of FMDTBF's Class A Shares, Class C Shares and Institutional Shares to not more
than 1.50%, 2.50% and 1.25%, respectively, of average daily net assets. The
Adviser has agreed to keep these contractual limitations in place through
December 8, 2008. The Advisor may also voluntarily choose to waive a portion of
its fee and/or reimburse certain operating expenses of the Predecessor Fund of
FMDTBF. The Advisor can modify or terminate this voluntary waiver and/or
reimbursement at any time at its sole discretion. An adjustment to the combined
waiver of investment adviser fee reflects the fee structure of the Predecessor
Fund of FMDTBF on Federated MDT Pro Forma Combined Fund's average daily net
assets.
(o) Effective July 15, 2006, FAS contractually agreed to waive the portion of
its fee which it would otherwise be entitled to receive from the Predecessor
Fund of FMDTBF under the Agreement. The level of fees payable by the
Predecessor Fund of FMDTBF to FAS for the period will not exceed the level of
fees which the Predecessor Fund of FMDTBF would have paid during the period to
its pervious service provider under its previous administrative services
agreement. In addition, FAS may voluntarily choose to waive any portion of its
fee. FAS can modify or terminate its voluntary waiver at any time at its sole
discretion. An adjustment to the combined waiver of administrative personnel
and services fee reflects the fee structure of the Predecessor Fund of FMDTBF on
Federated MDT Pro Forma Combined Fund's average daily net assets.
(p) An adjustment to the combined waiver of distribution services fee reflects
the fee structure of the Predecessor Fund of FMDTBF on Federated MDT Pro Forma
Combined Fund's average daily net assets.
(q) An adjustment to the combined waiver and/or reimbursement of shareholder
services fee reflects the fee structure of the Predecessor Fund of FMDTBF on
Federated MDT Pro Forma Combined Fund's average daily net assets.
(r) An adjustment to the combined reimbursement of other operating expenses
reflects the fee structure of the Predecessor Fund of FMDTBF on Federated MDT
Pro Forma Combined Fund's average daily net assets.
- 41 -
FEDERATED CONSERVATIVE ALLOCATION FUND
FEDERATED MODERATE ALLOCATION FUND
FEDERATED GROWTH ALLOCATION FUND
PORTFOLIOS OF FEDERATED MANAGED ALLOCATION PORTFOLIOS
INVESTMENT ADVISER
Federated Equity Management Company of Pennsylvania
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
SUB-ADVISER
Federated Investment Management Company
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
DISTRIBUTOR
Federated Securities Corp.
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
CUSTODIAN, TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
State Street Bank and Trust Company
P.O. Box 8600
Boston, MA 02266-8600
- 42 -
PART C. OTHER INFORMATION.
Item 15 Indemnification:
The Trust hereby agrees to indemnify each person who at any time serves
as a Trustee or officer of the Trust (each such person being an
"indemnitee") against any liabilities and expenses, including amounts
paid in satisfaction of judgments, in compromise or as fines and
penalties, and counsel fees incurred by such indemnitee in connection
with the defense or disposition of any action, suit or other proceeding,
whether civil or criminal, before any court or administrative or
investigative body in which he may be or may have been involved as a
party or otherwise or with which he may be or may have been threatened,
by virtue of his being or having been a Trustee or officer of the Trust
or his serving or having served as a trustee, director, officer, partner,
or fiduciary of another trust, corporation, partnership, joint venture,
or other enterprise at the request of the Trust, provided, however, that
no indemnitee shall be indemnified hereunder against any liability to any
person or any expense of such indemnitee arising by reason of (i) willful
misfeasance, (ii) bad faith, (iii) gross negligence, or (iv) reckless
disregard of the duties involved in the conduct of his position (the
conduct referred to in such clauses (i) through (iv) being sometimes
referred to herein as "disabling conduct").
Item 16. Exhibits:
1.1 Conformed copy of Amended and Restated Declaration of Trust of the
Registrant; (1)
1.2 Conformed copies of Amendment No. 1 of the Amendment and Restated
Declaration of Trust of the Registrant; (5)
1.3 Conformed copy of Amendment No. 2 of the Amended and Restated Declaration
of Trust of the Registrant; (+)
2. Copy of Amended and Restated By-Laws of the Registrant; (1)
3. Not Applicable
4. Forms of Agreement and Plans of Reorganization are filed herewith as
Exhibit A to the Proxy Statement/Prospectus
5.1 Not Applicable
6.1 Form of Investment Advisory Contract of the Registrant (Federated Mid Cap
Growth Strategies Fund); (2)
6.2 Conformed copy of Investment Advisory Contract; (4)
6.3 Conformed copies of Investment Advisory Contract on behalf of the
Registrant which includes Exhibit A-H; (5)
7.1 Conformed copy of Distributor's Contract of the Registrant; (3)
7.2 Conformed copies of the Distributor's Contract of the Registrant with
Exhibit A through D; (5)
7.3 Conformed copies of the Distributor's Contract Class B Shares of the
Registrant; (3)
8. Not Applicable
9.1 Conformed Copy of the Custodian Agreement of the Registrant; (3)
9.2 Conformed copy of Custodian Fee Schedule; (3)
9.3 Conformed copy of Custodian Fee Schedule; (5)
10.1 Conformed Copy of Distribution Plan of the Registrant; (3)
10.2 Conformed Copy of Distribution Plan of the Registrant with Exhibits A
through D attached; (5)
10.3 Conformed Copy of Distribution Plan of the Registrant for Class B Shares;
(5)
11.1 Conformed Copy of Opinion and Consent of Counsel as to legality of Shares
being issued; (+)
12. Form of Opinion regarding tax consequences of Reorganization; (to be
filed by amendment)
13.1 The Registrant hereby incorporates by reference the conformed copy of
the Agreement for Administrative Services, with Exhibit 1 and Amendments
1 and 2 attached, between Federated Administrative Services and the
Registrant from Item 23(h)(iv) of the Federated Total Return Series,
Inc. Registration Statement on Form N-1A, filed with the Commission on
November 29, 2004. (File Nos. 33-50773 and 811-7115)
13.2 Conformed copy of Agreement for Administrative Services between
Registrant and Federated Administrative Services with Exhibit 1 and
Amendments 1 through 4 attached; (5)
13.3 The Registrant hereby incorporates the conformed copy of Transfer
Agency and Service Agreement between the Federated Funds and State Street
Bank and Trust Company from Item 23(h)(viii)of the Federated Total Return
Government Bond Fund Registration Statement on Form N-1A, filed with the
Commission on April 28, 2006 (File Nos. 33-60411 and 811-07309);
13.4 Conformed copy of Transfer Agency and Service Agreement between
Registrant and State Street Bank and Trust Company including First
Amendment and Schedule A; (5)
13.5 The Registrant hereby incorporates by reference the conformed copy of
Amendment No. 3 to the Agreement for Administrative Services between
Federated Administrative Services Company and the Registrant dated June
1, 2005, from Item 23 (h) (ii) of the Cash Trust Series, Inc.
Registration Statement on Form N-1A, filed with the Commission on July
27, 2005. (File Nos. 33-29838 and 811-5843);
13.6 Conformed copy of Financial Administration and Accounting Services
Agreement between Registrant and State Street Bank and Trust Company; (5)
13.7 Conformed copy of Amended and Restated Services Agreement between
Registrant and Federated Shareholder Services Company; (5)
13.8 Conformed copy of Principal Shareholder Servicer's Agreement between
Registrant and Federated Securities Corp.; (5)
13.9 Conformed copy of Shareholder Services Agreement between Registrant and
Federated Shareholder Services Company; (5)
14.1 Conformed copy of Consent of Independent Auditors for Federated MDT
Series (+)
14.2 Conformed copy of Consent of Independent Auditors for Federated Managed
Allocation Portfolios (+)
15. Not Applicable
16.1 Conformed copy of Unanimous Consent of Trustees for Power of Attorney (+)
16.2 Conformed copy of Power of Attorney of the Registrant(+)
17.1 Form of Proxy (+)
17.2 Form of Ballot (+)
+ Exhibit is being filed electronically with registration statement;
indicate by footnote
1. Response is incorporated by reference to Registrant's Initial
Registration Statement on Form N-1A filed May 25, 2006. (File Nos.
333-134468 and 811-21904).
2. Response is incorporated by reference to Registrant's Pre-effective
Amendment #1 to its Initial Registration Statement on Form N-1A
filed July 27, 2006. (File Nos. 333-134468 and 811-21904)
3. Response is incorporated by reference to Registrant's Pre-effective
Amendment #2 to its Initial Registration Statement on Form N-1A
filed August 8, 2006. (File Nos. 333-134468 and 811-21904)
4. Response is incorporated by reference to Registrant's Post-
effective Amendment #1 to its Initial Registration Statement on
Form N-1A filed November 29, 2006. (File Nos. 333-134468 and 811-
21904)
5. Response is incorporated by reference to Registrant's Post-
Effective Amendment #3 to its Initial Registration Statement of
Form N-1A filed March 28, 2007. (File Nos. 333-134468 and 811-21904
Item 17. Undertakings
(1) The undersigned Registrant agrees that prior to any public
reoffering of the securities registered through the use of a prospectus which is
a part of this Registration Statement by any person or party who is deemed to be
an underwriter within the meaning of Rule 145(c) of the Securities Act of 1933,
the reoffering prospectus will contain the information called for by the
applicable registration form for reofferings by persons who may be deemed
underwriters, in addition to the information called for by the other items of
the applicable form.
(2) The undersigned Registrant agrees that every prospectus that is
filed under paragraph (1) above will be filed as a part of an amendment to the
Registration Statement and will not be used until the amendment is effective,
and that, in determining any liability under the Securities Act of 1933, each
post-effective amendment shall be deemed to be a new Registration Statement for
the securities offered therein, and the offering of the securities at that time
shall be deemed to be the initial bona fide offering of them.
(3) The undersigned Registrant agrees to file by Post-Effective
Amendment the opinion of counsel regarding the tax consequences of the proposed
reorganization required by Item 16(12) of Form N-14 within a reasonable time
after receipt of such opinion.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant, FEDERATED MDT SERIES, has duly caused its Registration Statement
on Form N-14 to be signed on its behalf by the undersigned, thereto duly
authorized, in the City of Pittsburgh and Commonwealth of Pennsylvania, on the
20th day of July, 2007.
FEDERATED MDT SERIES
By: /s/ Todd P. Zerega
Todd P. Zerega, Assistant Secretary
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to its Registration Statement has been signed below by the following person in
the capacity and on the date indicated:
NAME TITLE DATE
By: /s/ Todd P. Zerega Attorney In Fact July 20, 2007
Todd P. Zerega For the Persons
ASSISTANT SECRETARY Listed Below
NAME TITLE
John F. Donahue* Trustee
J. Christopher Donahue* President and Trustee
(Principal Executive Officer)
Richard A. Novak* Treasurer
(Principal Financial Officer)
Thomas G. Bigley* Trustee
John T. Conroy, Jr.* Trustee
Nicholas P. Constantakis* Trustee
John F. Cunningham* Trustee
Lawrence D. Ellis, M.D.* Trustee
Peter E. Madden* Trustee
Charles F. Mansfield, Jr.* Trustee
John E. Murray, Jr., J.D., S.J.D.* Trustee
Thomas M. O'Neil* Trustee
Marjorie P. Smuts* Trustee
John S. Walsh* Trustee
James F. Will* Trustee
* By Power of Attorney