FEDERATED STOCK TRUST
Supplement to Prospectus Dated December 31, 1998 (Reprinted January 29, 1999)
I. At a special meeting of shareholders to be held on November 17,
1999, shareholders of the above-named Trust will be asked to vote
on the changes described below. If approved by shareholders, these
changes will take effect on or after December 1, 1999.
Shareholders will be notified if any of these changes are not
approved at the special meeting or any adjournment thereof. Please
keep this supplement for your records.
Shareholders will be asked to consider the following proposals:
(1) To elect seven Trustees.
(2) To make changes to the Trust's fundamental investment
policies:
(a) To amend the Trust's fundamental investment policy
regarding diversification to read as follows:
"With respect to securities comprising 75% of the value of
its total assets, the Trust will not purchase securities
of any one issuer (other than cash; cash items; securities
issued or guaranteed by the government of the United
States or its agencies or instrumentalities and repurchase
agreements collateralized by such U.S. government
securities; and securities of other investment companies)
if, as a result, more than 5% of the value of its total
assets would be invested in the securities of that issuer,
or the Trust would own more than 10% of the outstanding
voting securities of that issuer."
(b) To amend the Trust's fundamental investment policy
regarding borrowing money and issuing senior securities to
read as follows:
"The Trust may borrow money, directly or indirectly, and
issue senior securities to the maximum extent permitted
under the 1940 Act."
(c) To amend the Trust's fundamental investment policy
regarding investments in real estate to read as follows:
"The Trust may not purchase or sell real estate, provided
that this restriction does not prevent the Trust from
investing in issuers which invest, deal, or otherwise
engage in transactions in real estate or interests
therein, or investing in securities that are secured by
real estate or interests therein. The Trust may exercise
its rights under agreements relating to such securities,
including the right to enforce security interests and to
hold real estate acquired by reason of such enforcement
until that real estate can be liquidated in an orderly
manner."
(d) To amend the Trust's fundamental investment policy
regarding investments in commodities to read as follows:
"The Trust may not purchase or sell physical commodities,
provided that the Trust may purchase securities of
companies that deal in commodities."
(e) To amend the Trust's fundamental investment policy
regarding underwriting securities to read as follows:
"The Trust may not underwrite the securities of other
issuers, except that the Trust may engage in transactions
involving the acquisition, disposition or resale of its
portfolio securities, under circumstances where it may be
considered to be an underwriter under the Securities Act
of 1933."
(f) To amend the Trust's fundamental investment policy
regarding lending by the Trust to read as follows:
"The Trust may not make loans, provided that this
restriction does not prevent the Trust from purchasing
debt obligations, entering into repurchase agreements,
lending its assets to broker/dealers or institutional
investors and investing in loans, including assignments
and participation interests."
(g) To amend the Trust's fundamental investment policy
regarding concentration of the Trust's investments in the
securities of companies in the same industry to read as
follows:
"The Trust will not make investments that will result in
the concentration of its investments in the securities of
issuers primarily engaged in the same industry. Government
securities, municipal securities and bank instruments will
not be deemed to constitute an industry."
(h) To amend, and to make non-fundamental, the Trust's
fundamental investment policy regarding buying securities
on margin to read as follows:
"The Trust will not purchase securities on margin,
provided that the Trust may obtain short-term credits
necessary for the clearance of purchases and sales of
securities, and further provided that the Trust may make
margin deposits in connection with its use of financial
options and futures, forward and spot currency contracts,
swap transactions and other financial contracts or
derivative instruments."
(i) To amend, and to make non-fundamental, the Trust's
fundamental investment policy regarding pledging assets to
read as follows:
"The Trust will not mortgage, pledge, or hypothecate any
of its assets, provided that this shall not apply to the
transfer of securities in connection with any permissible
borrowing or to collateral arrangements in connection with
permissible activities."
(j) To amend, and to make non-fundamental, the Trust's
fundamental investment policy regarding investing in
securities of other investment companies to read as
follows:
"The Trust may invest its assets in securities of other
investment companies, including the securities of
affiliated money market funds, as an efficient means of
carrying out its investment policies and managing its
uninvested cash."
(k) To amend, and to make non-fundamental, the Trust's
fundamental investment policies regarding investing in
restricted securities and illiquid securities to read,
respectively, as follows:
"The Trust may invest in restricted securities. Restricted
securities are any securities in which the Trust may
invest pursuant to its investment objective and policies
but which are subject to restrictions on resale under
federal securities law. Under criteria established by the
Trustees, certain restricted securities are determined to
be liquid. To the extent that restricted securities are
not determined to be liquid, the Trust will limit their
purchase, together with other illiquid securities, to 15%
of its net assets."
"The Trust will not purchase securities for which there is
no readily available market, or enter into repurchase
agreements or purchase time deposits maturing in more than
seven days, if immediately after and as a result, the
value of such securities would exceed, in the aggregate,
15% of the Trust's net assets."
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(l) To amend, and to make non-fundamental, the Trust's
fundamental investment policies relating to investing in
money market instruments and entering into repurchase
agreements to read as follows:
"The Trust may invest in money market instruments, including
repurchase agreements."
(m) To amend, and to make non-fundamental, the Trust's
fundamental investment policy relating to engaging in
when-issued and delayed delivery transactions to read as
follows:
"The Trust may purchase and sell securities on a when-issued or
delayed delivery basis."
(n) To amend, and to make non-fundamental, the Trust's
fundamental investment policy regarding investing in
common stock and other securities to read as follows:
"Under normal market circumstances, the Trust will invest
at least 65% of its net assets in common stock of
high-quality companies."
(3) To eliminate certain fundamental investment policies of the Trust:
(a) To remove the Trust's fundamental investment policy
regarding selling securities short;
(b) To remove the Trust's fundamental investment policy
regarding investing in securities of new issuers;
(c) To remove the Trust's fundamental investment policy
regarding investing in issuers whose securities are owned
by officers and Trustees;
(d) To remove the Trust's fundamental investment policy
regarding investing for the purpose of exercising control
or management;
(e) To remove the Trust's fundamental investment policy
regarding dealing in puts and calls;
(f) To remove the Trust's fundamental investment policies
regarding engaging in short-term trading and portfolio
turnover;
(g) To remove the Trust's fundamental investment policies
describing the criteria and parameters for permissible
investments by the Trust; and
(h) To remove the Trust's fundamental investment policy on
investing in oil, gas and mineral exploration or
development programs.
(4) To approve amendments to, and a restatement of, the Trust's
Declaration of Trust:
(a) To require the approval of a majority of the outstanding
voting securities of the Trust in the event of the sale
and conveyance of the assets of the Trust to another
trust or corporation; and
(b) To permit the Board of Trustees to liquidate assets of
the Trust, or its series or classes, and distribute the
proceeds of such assets to the holders of such shares
representing such interests, without seeking shareholder
approval.
II. The following actions have been taken by the Board of Trustees with
regard to certain non-fundamental investment policies and limitations
of the Trust:
(1) Approved a revision to the Trust's non-fundamental investment
policy specifying that the Trust's investment adviser, in
managing the Trust and in determining the amount of the
Trust's assets to invest in a particular security, will limit
the Trust's exposure to the major sectors that comprise the
S&P 500 Index.
(2) Approved the adoption of the following non-fundamental
investment limitations pertaining to concentration by the
Trust:
"(a) utility companies will be divided according to their
services (for example, gas, gas transmission, electric and
telephone will be considered a separate industry); (b)
financial service companies will be classified according to
the end users of their services (for example, automobile
finance, bank finance and diversified finance will each be
considered a separate industry); and (c) asset-backed
securities will be classified according to the underlying
assets securing such securities. To conform to the current
view of the SEC staff that only domestic bank instruments may
be excluded from industry concentration limitations, as a
matter of non-fundamental policy, the Trust will not exclude
foreign bank instruments from industry concentration
limitation tests so long as the policy of the SEC remains in
effect. In addition, investments in bank instruments, and
investments in certain industrial development bonds funded by
activities in a single industry, will be deemed to constitute
investment in an industry, except when held for temporary
defensive purposes. The investment of more than 25% of the
value of the Trust's total assets in any one industry will
constitute `concentration.'"
(3) Approved the adoption of the following non-fundamental
investment limitation for the Trust when applying its
commodities restriction:
"As a matter of non-fundamental policy, for purposes of the
commodities policy, investments in transactions involving
futures contracts and options, forward currency contracts,
swap transactions and other financial contracts that settle by
payment of cash are not deemed to be investments in
commodities."
October 15, 1999
Federated Investors
Federated Securities Corp., Distributor
Federated Investors, Inc.
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Cusip 313900102
G02740-01
