1933 Act File No. 2-91090
1940 Act File No. 811-4017
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
Pre-Effective Amendment No.
Post-Effective Amendment No. 21 X
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
Amendment No. 17 X
FEDERATED EQUITY FUNDS
(formerly, Federated Growth Trust)
(Exact Name of Registrant as Specified in Charter)
Federated Investors Tower, Pittsburgh, Pennsylvania 15222-3779
(Address of Principal Executive Offices)
(412) 288-1900
(Registrant's Telephone Number)
John W. McGonigle, Esquire,
Federated Investors Tower,
Pittsburgh, Pennsylvania 15222-3779
(Name and Address of Agent for Service)
It is proposed that this filing will become effective:
immediately upon filing pursuant to paragraph (b)
on _______________ pursuant to paragraph (b)
60 days after filing pursuant to paragraph (a) (i)
on pursuant to paragraph (a) (i).
X 75 days after filing pursuant to paragraph (a)(ii)
on _________________ pursuant to paragraph (a)(ii) of Rule 485.
If appropriate, check the following box:
This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Registrant has filed with the Securities and Exchange Commission a declaration
pursuant to Rule 24f-2 under the Investment Company Act of 1940, and:
X filed the Notice required by that Rule on December 15, 1994; or
intends to file the Notice required by that Rule on or about ____________;
or
during the most recent fiscal year did not sell any securities pursuant to
Rule 24f-2 under the Investment Company Act of 1940, and, pursuant to
Rule 24f-2(b)(2), need not file the Notice.
Copy to:
Charles H. Morin, Esquire
Dickstein, Shapiro & Morin, L.L.P.
2101 L Street, N.W.
Washington, D.C. 20037
CROSS-REFERENCE SHEET
This amendment to the Registration Statement of Federated Equity
Funds (formerly, Federated Growth Trust), which is comprised of two
portfolios: (1) Federated Growth Strategies Fund; and (2) Federated
Small Cap Strategies Fund consisting of three classes of shares, (a)
Class A Shares, (b) Class B Shares, and (c) Class C Shares, relates only
to Federated Small Cap Strategies Fund and is comprised of the
following:
PART A. INFORMATION REQUIRED IN A PROSPECTUS.
Prospectus Heading
(Rule 404(c) Cross Reference)
Item 1. Cover Page (1,2a,2b,2c) Cover Page.
Item 2. Synopsis (1) Summary of Trust Expenses;
(2a,2b,2c) Summary of Fund
Expenses.
Item 3. Condensed Financial
Information (1) Financial Highlights.
Item 4. General Description of
Registrant (1) General Information;
(2a,2b,2c) Synopsis;
(2a,2b,2c) Liberty Family of
Funds; (2a,2b,2c) Federated
LifeTrack Program (Class A
Shares and Class C Shares);
(1,2a,2b,2c) Investment
Information; (1,2a,2b,2c)
Investment Objective;
(1,2a,2b,2c) Investment
Policies; (1,2a,2b,2c)
Investment Limitations;
(1,2a,2b,2c) Performance
Information; (2a,2b,2c) Equity
Investment Considerations.
Item 5. Management of the Fund (1,2a,2b,2c)Trust Information;
(1,2a,2b,2c) Management of the
Trust; (1) Distribution of
Trust Shares; (2a,2b,2c)
Distribution of Shares; (1)
Administration of the Trust;
(2a,2b,2c) Administration of
the Fund; (2a,2b,2c) Expenses
of the Fund and Class A, Class
B, and Class C Shares;
(1,2a,2b,2c) Brokerage
Transactions.
Item 6. Capital Stock and Other
Securities (1) Dividends; (1) Capital
Gains; (2a,2b,2c) Account and
Share Information;
(1,2a,2b,2c) Shareholder
Information; (1,2a,2b,2c)
Voting Rights; (1,2a,2b,2c)
Massachusetts Partnership Law;
(1,2a,2b,2c) Tax Information;
(1,2a,2b,2c) Federal Income
Tax; (1,2a,2b,2c) Pennsylvania
Corporate and Personal
Property Taxes.
Item 7. Purchase of Securities Being
Offered (1,2a,2b,2c) Net Asset Value;
(1) Investing in the Trust;
(2a,2b,2c) Investing in the
Fund; (1) Share Purchases; (1)
Minimum Investment Required;
(1) What Shares Cost;
(2a,2b,2c) How to Purchase
Shares; (2a,2b,2c) Investing
in Class A Shares; (2a,2b,2c)
Investing in Class B Shares;
(2a,2b,2c) Investing in Class
C Shares; (2a,2b,2c)
(1,2a,2b,2c) Subaccounting
Services; (1) Exchanging
Securities for Trust Shares;
(2a,2b,2c) Exchange Privilege;
(1) Certificates and
Confirmations; (1) Retirement
Plans; (2a,2b,2c) Special
Purchase Features.
Item 8. Redemption or Repurchase (1) Redeeming Shares;
(2a,2b,2c) How to Redeem
Shares; (1) Telephone
Redemption; (1) Written
Requests; (1) Accounts with
Low Balances; (2a,2b,2c)
Special Redemption Features;
(2a,2b,2c) Contingent Deferred
Sales Charge; (2a,2b,2c)
Elimination of Contingent
Deferred Sales Charge.
Item 9. Pending Legal Proceedings None.
PART B. INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION.
Item 10. Cover Page (1,2a,2b,2c) Cover Page.
Item 11. Table of Contents (1,2a,2b,2c) Table of
Contents.
Item 12. General Information and
History (1) General Information About
the Trust; (2a,2b,2c) General
Information About the Fund;
(1,2a,2b,2c) About Federated
Investors.
Item 13. Investment Objectives and
Policies (1,2a,2b,2c) Investment
Objective and Policies.
Item 14. Management of the Fund (1) Trust Management;
(2a,2b,2c) Federated Equity
Funds Management.
Item 15. Control Persons and Principal
Holders of Securities (1) Trust Ownership;
(2a,2b,2c) Fund Ownership.
Item 16. Investment Advisory and Other
Services (1,2a,2b,2c) Investment
Advisory Services;
(1,2a,2b,2c) Administrative
Services; (1,2a,2b,2c)
Transfer Agent and Dividend
Disbursing Agent; (2a,2b,2c)
Distribution Plan and
Shareholder Services
Agreement.
Item 17. Brokerage Allocation (1,2a,2b,2c) Brokerage
Transactions.
Item 18. Capital Stock and Other
Securities Not applicable.
Item 19. Purchase, Redemption and
Pricing of Securities Being
Offered (1,2a,2b,2c) Purchasing
Shares; (1,2a,2b,2c)
Determining Net Asset Value;
(1,2a,2b,2c) Redeeming Shares;
(1) Exchanging Securities for
Trust Shares; (2a,2b,2c)
Exchanging Securities for
Shares.
Item 20. Tax Status (1,2a,2b,2c) Tax Status.
Item 21. Underwriters Not applicable.
Item 22. Calculation of Performance
Data (1,2a,2b,2c) Total Return;
(1,2a,2b,2c) Yield;
(1,2a,2b,2c) Performance
Comparisons.
Item 23. Financial Statements (1) Included in Part B.
Federated Small Cap Strategies Fund
(A Portfolio of Federated Equity Funds)
(formerly, Federated Growth Trust)
Class A Shares
Class B Shares
Class C Shares
Combined Prospectus
The shares of Federated Small Cap Strategies Fund (the "Fund") represent
interests in a diversified portfolio of Federated Equity Funds (the "Trust"),
an open-end management investment company (a mutual fund). The investment
objective of the Fund is to provide capital appreciation. Any income received
from the portfolio is entirely incidental. The Fund pursues its investment
objective by investing primarily in a portfolio of common stocks of small and
medium sized companies.
The shares offered by this prospectus are not deposits or obligations of any
bank, are not endorsed or guaranteed by any bank, and are not insured by the
Federal Deposit Insurance Corporation, the Federal Reserve Board, or any other
government agency. Investment in these shares involves investment risks,
including the possible loss of principal.
This prospectus contains the information you should read and know before you
invest in the Fund. Keep this prospectus for future reference.
The Fund has also filed a Combined Statement of Additional Information dated
September __, 1995 with the Securities and Exchange Commission. The
information contained in the Combined Statement of Additional Information is
incorporated by reference into this prospectus. You may request a copy of the
Combined Statement of Additional Information, which is in paper form only, or
a paper copy of this prospectus, if you have received it electronically, free
of charge by calling 1-800-235-4669. To obtain other information or to make
inquiries about the Fund, contact your financial institution.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
Prospectus dated September __, 1995
Summary of Fund Expenses 1
Class A Shares 1
Summary of Fund Expenses 3
Class B Shares 3
Summary of Fund Expenses 5
Class C Shares 5
Synopsis 7
Liberty Family of Funds 8
Federated LifeTrack_ Program
(Class A Shares and Class C
Shares) 9
Investment Information 10
Investment Objective 10
Investment Policies 10
Equity Investment
Considerations 15
Investment Limitations 15
Net Asset Value 15
Investing in the Fund 16
How To Purchase Shares 16
Investing in Class A Shares 17
Subaccounting Services 18
Investing in Class B Shares 19
Investing in Class C Shares 20
Special Purchase Features 21
How To Redeem Shares 22
Special Redemption Features 24
Contingent Deferred Sales
Charge 24
Elimination of Contingent
Deferred Sales Charge 25
Account and Share Information26
Trust Information 27
Management of the Trust 27
Distribution of Shares 28
Administration of the Fund 29
Expenses of the Fund and
Class A, Class B and Class C
Shares 30
Brokerage Transactions 31
Shareholder Information 31
Voting Rights 31
Massachusetts Partnership Law31
Tax Information 31
Federal Income Tax 31
Pennsylvania Corporate and
Personal Property Taxes 32
Performance Information 32
Summary of Fund Expenses
FEDERATED SMALL CAP STRATEGIES FUND
Class A Shares
Shareholder Transaction Expenses
<TABLE>
<CAPTION>
<S> <C>
Maximum Sales Load Imposed on Purchases (as a percentage of offering price) 5.50%
Maximum Sales Load Imposed on Reinvested Dividends
(as a percentage of offering price) None
Contingent Deferred Sales Charge (as a percentage of original purchase
price or
redemption proceeds, as applicable) (1) 0.00%
Redemption Fee (as a percentage of amount redeemed, if applicable) None
Exchange Fee None
Annual Class A Shares Operating Expenses
(As a percentage of projected average net assets)*
Management Fee (after waiver) (2) ____%
12b-1 Fee (3) ____%
Total Other Expenses (after expense reimbursement) ____%
Shareholder Services Fee ____%
Total Class A Shares Operating Expenses (4) ____%
</TABLE>
(1)Class A Shares purchased with the proceeds of a redemption of shares
of an unaffiliated investment company purchased or redeemed with a
sales load and not distribtued by Federated Securities Corp. may be
charged a contingent deferred sales charge of 0.50 of 1.00% for
redemptions made within one full year of purchase. See "Contingent
Deferred Sales Charge."
(2)The estimated management fee has been reduced to reflect the
anticipated voluntary waiver of the management fee. The adviser can
terminate this anticipated voluntary waiver at any time at its sole
discretion. The maximum management fee is 0.75%.
(3)The Class A Shares has no present intention of paying or accruing the
12b-1 fee during the fiscal year ending October 31, 1996. If the
Class A Shares were paying or accruing the 12b-1 fee, the Class A
Shares would be able to pay up to 0.25% of its average daily net
assets for the 12b-1 fee. See "Fund Information."
(4)The Total Class A Shares Operating Expenses are estimated to be ___%
absent the anticipated voluntary waiver of the management fee and the
anticipated voluntary reimbursement of certain other operating
expenses.
*Total Class A Shares Operating Expenses are estimated based on average
expenses expected to be incurred during the period ending October 31,
1995. During the course of this period, expenses may be more or less
than the average amount shown.
The purpose of this table is to assist an investor in understanding
the various costs and expenses that a shareholder of Class A Shares will bear,
either directly or indirectly. For more complete descriptions of the various
costs and expenses, see "Investing in Class A Shares" and "Trust Information."
Wire-transferred redemptions of less than $5,000 may be subject to additional
fees.
EXAMPLE 1 year 3 years
You would pay the following expenses
on a $1,000
investment, assuming (1) 5% annual
return and
(2) redemption at the end of each time
period. $ __ $ __
You would pay the following expenses
on the same
investment, assuming no redemption $ __ $ __
The above example should not be considered a representation of past
or future expenses. Actual expenses may be greater or less than those shown.
This example is based on estimated data for Class A Shares' fiscal year ending
October 31, 1995.
Summary of Fund Expenses
FEDERATED SMALL CAP STRATEGIES FUND
Class B Shares
Shareholder Transaction Expenses
<TABLE>
<CAPTION>
<S> <C>
Maximum Sales Load Imposed on Purchases (as a percentage of offering price) None
Maximum Sales Load Imposed on Reinvested Dividends (as a percentage of
offering price) None
Contingent Deferred Sales Charge (as a percentage of original purchase
price or
redemption proceeds, as applicable) (1) 5.50%
Redemption Fee (as a percentage of amount redeemed, if applicable) None
Exchange Fee None
Annual Class B Shares Operating Expenses
(As a percentage of projected average net assets)*
Management Fee (after waiver) (2) ____%
12b-1 Fee ____%
Total Other Expenses (after expense reimbursement) ____%
Shareholder Services Fee ____%
Total Class B Shares Operating Expenses (3) (4) ____%
</TABLE>
(1)The contingent deferred sales charge is 5.50% in the first year
declining to 1.00% in the sixth year and 0.00% thereafter. (See
"Contingent Deferred Sales Charge.")
(2)The estimated management fee has been reduced to reflect the
anticipated voluntary waiver of the management fee. The adviser can
terminate this anticipated voluntary waiver at any time at its sole
discretion. The maximum management fee is 0.75%.
(3)Class B Shares convert to Class A Shares (which pay lower ongoing
expenses) approximately eight years after purchase.
(4)The Total Class B Shares Operating Expenses are estimated to be ____%
absent the anticipated voluntary waiver of the management fee and the
anticipated voluntary reimbursement of certain other operating
expenses.
*Total Class B Shares Operating Expenses are estimated based on average
expenses expected to be incurred during the period ending October 31,
1995. During the course of this period, expenses may be more or less
than the average amount shown.
The purpose of this table is to assist an investor in understanding
the various costs and expenses that a shareholder of Class B Shares will bear,
either directly or indirectly. For more complete descriptions of the various
costs and expenses, see "Investing in Class B Shares" and "Trust Information."
Wire-transferred redemptions of less than $5,000 may be subject to additional
fees.
Long-term shareholders may pay more than the economic equivalent of the
maximum front-end sales charges permitted under the rules of the National
Association of Securities Dealers, Inc.
EXAMPLE 1 year 3 years
You would pay the following expenses
on a $1,000
investment, assuming (1) 5% annual
return and
(2) redemption at the end of each time
period. $ __ $ ___
You would pay the following expenses
on the same
investment, assuming no redemption $ __ $ ___
The above example should not be considered a representation of past
or future expenses. Actual expenses may be greater or less than those shown.
This example is based on estimated data for the Class B Shares' fiscal year
ending October 31, 1995.
Summary of Fund Expenses
FEDERATED SMALL CAP STRATEGIES FUND
Class C Shares
Shareholder Transaction Expenses
<TABLE>
<CAPTION>
<S> <C>
Maximum Sales Load Imposed on Purchases (as a percentage of offering price) None
Maximum Sales Load Imposed on Reinvested Dividends (as a percentage of
offering price) None
Contingent Deferred Sales Charge (as a percentage of original purchase
price or
redemption proceeds, as applicable) (1) 1.00%
Redemption Fee (as a percentage of amount redeemed, if applicable) None
Exchange Fee None
Annual Class C Shares Operating Expenses
(As a percentage of projected average net assets)*
Management Fee (after waiver) (2) ____%
12b-1 Fee ____%
Total Other Expenses (after expense reimbursement) ____%
Shareholder Services Fee ____%
Total Class C Shares Operating Expenses (3) ____%
</TABLE>
(1)The contingent deferred sales charge assessed is 1.00% of the lesser
of the original purchase price or the net asset value of Shares
redeemed within one year of their purchase date. For a more complete
description, see "Contingent Deferred Sales Charge."
(2)The estimated management fee has been reduced to reflect the
anticipated voluntary waiver of the management fee. The adviser can
terminate this anticipated voluntary waiver at any time at its sole
discretion. The maximum management fee is 0.75%.
(2)The Total Class C Shares Operating Expenses are estimated to be ____%
absent the anticipated voluntary waiver of the management fee and the
anticipated voluntary reimbursement of certain other operating
expenses.
*Total Class C Shares Operating Expenses are estimated based on average
expenses expected to be incurred during the period ending October 31,
1995. During the course of this period, expenses may be more or less
than the average amount shown.
The purpose of this table is to assist an investor in understanding
the various costs and expenses that a shareholder of Class C Shares will bear,
either directly or indirectly. For more complete descriptions of the various
costs and expenses, see "Investing in Class C Shares" and "Trust Information."
Wire-transferred redemptions of less than $5,000 may be subject to additional
fees.
Long-term shareholders may pay more than the economic equivalent of the
maximum front-end sales charges permitted under the rules of the National
Association of Securities Dealers, Inc.
EXAMPLE 1 year 3 years
You would pay the following expenses
on a $1,000
investment, assuming (1) 5% annual
return and
(2) redemption at the end of each time
period. $ __ $ __
You would pay the following expenses
on the same
investment, assuming no redemption $ __ $ __
The above example should not be considered a representation of past
or future expenses. Actual expenses may be greater or less than those shown.
This example is based on estimated data for the Class C Shares' fiscal year
ending October 31, 1995.
Synopsis
The Trust was established as a Massachusetts business trust under a
Declaration of Trust dated April 17, 1984. The Trust's address is Federated
Investors Tower, Pittsburgh, Pennsylvania 15222-3779. The Declaration of Trust
permits the Trust to offer separate series of shares of beneficial interest
representing interests in separate portfolios of securities. As of the date of
this prospectus, the Board of Trustees (the "Trustees") has established three
classes of shares for the Fund, known as Class A Shares, Class B Shares, and
Class C Shares (individually and collectively as the context requires,
"Shares").
Shares of the Fund are designed for individuals and institutions seeking
capital appreciation by investing primarily in a portfolio of common stocks
of small and medium sized companies.
For information on how to purchase Shares of the Fund, please refer to "How to
Purchase Shares." The minimum initial investment for Class A Shares is $500.
The minimum initial investment for Class B Shares and Class C Shares is $1500.
However, the minimum initial investment for a retirement account in any class
is $50. Subsequent investments in any class must be in amounts of at least
$100, except for retirement plans which must be in amounts of at least $50.
In general, Class A Shares are sold at net asset value plus an applicable
sales load and are redeemed at net asset value. However, a contingent deferred
sales charge is imposed under certain circumstances. For a more complete
description, see "How to Redeem Shares."
Class B Shares are sold at net asset value and are redeemed at net asset
value. However, a contingent deferred sales charge is imposed on certain
Shares which are redeemed within six full years of purchase. See "How to
Redeem Shares."
Class C Shares are sold at net asset value. A contingent deferred sales charge
of 1.00% will be charged on assets redeemed within the first 12 months
following purchase. See "How to Redeem Shares."
In addition, the Fund also pays a shareholder services fee at an annual rate
not to exceed 0.25% of average daily net assets.
Additionally, information regarding the exchange privilege offered with
respect to the Fund and certain other funds for which affiliates of Federated
Investors serve as principal underwriter (the "Federated Funds") can be found
under "Exchange Privilege."
Federated Management is the investment adviser (the "Adviser") to the Fund and
receives compensation for its services. The Adviser's address is Federated
Investors Tower, Pittsburgh, Pennsylvania 15222-3779.
Investors should be aware of the following general observations. The Fund may
make certain investments and employ certain investment techniques that involve
risks, including entering into repurchase agreements, investing in when-issued
securities and put and call options, and lending portfolio securities. These
risks are described under "Investment Policies."
The Fund's current net asset value and offering price can be found in the
mutual funds section of local newspapers under "Federated Liberty Funds."
Liberty Family of Funds
This Fund is a member of a family of mutual funds, collectively known as the
Liberty Family of Funds. The other funds in the Liberty Family of Funds are:
o American Leaders Fund, Inc., providing growth of capital and income
through high-quality stocks;
o Capital Growth Fund, providing appreciation of capital primarily
through equity securities;
o Federated Bond Fund, providing current income through high-quality
corporate debt:
o Federated Growth Strategies Fund, providing appreciation of capital
primarily through equity securities of companies with prospects for
above-average growth in earnings and dividends, or of companies
where significant fundamental changes are taking place;
o Fund for U.S. Government Securities, Inc., providing current income
through long-term U.S. government securities;
o International Equity Fund, providing long-term capital growth and
income through international securities;
o International Income Fund, providing a high level of current income
consistent with prudent investment risk through high-quality debt
securities denominated primarily in foreign currencies;
o Liberty Equity Income Fund, Inc., providing above-average income
and capital appreciation through income producing equity
securities;
o Liberty High Income Bond Fund, Inc., providing high current income
through high-yielding, lower-rated corporate bonds;
o Liberty Municipal Securities Fund, Inc., providing a high level of
current income exempt from federal regular income tax through
municipal bonds;
o Liberty U.S. Government Money Market Trust, providing current
income consistent with stability of principal through high-quality
U.S. government securities;
o Liberty Utility Fund, Inc., providing current income and long-term
growth of income, primarily through electric, gas, and
communications utilities;
o Limited Term Fund, providing a high level of current income
consistent with minimum fluctuation in principal value through
investment grade securities;
o Limited Term Municipal Fund, providing a high level of current
income exempt from federal regular income tax consistent with the
preservation of principal, primarily limited to municipal
securities;
o Michigan Intermediate Municipal Trust, providing current income
exempt from federal regular income tax and the personal income
taxes imposed by the state of Michigan and Michigan municipalities,
primarily through Michigan municipal securities;
o Pennsylvania Municipal Income Fund, providing current income exempt
from federal regular income tax and the personal income taxes
imposed by the Commonwealth of Pennsylvania, primarily through
Pennsylvania municipal securities;
o Strategic Income Fund, providing a high level of current income,
primarily through domestic and foreign corporate debt obligations;
o Tax-Free Instruments Trust, providing current income consistent
with stability of principal and exempt from federal income tax,
through high-quality, short-term municipal securities; and
o World Utility Fund, providing total return primarily through
securities issued by domestic and foreign companies in the
utilities industries.
Prospectuses for these funds are available by writing to Federated Securities
Corp.
Each of the funds may also invest in certain other types of securities as
described in each fund's prospectus.
The Liberty Family of Funds provides flexibility and diversification for an
investor's long-term investment planning. It enables an investor to meet the
challenges of changing market conditions by offering convenient exchange
privileges which give access to various investment vehicles and by providing
the investment services of proven, professional investment advisers.
Shareholders of Class A Shares who have been designated as Liberty Life
Members are exempt from sales loads on future purchases in and exchanges
between the Class A Shares of any funds in the Liberty Family of Funds, as
long as they maintain a $500 balance in one of the Liberty Funds.
Federated LifeTrack_ Program (Class A Shares and Class C Shares)
The Fund is also a member of the Federated LifeTrack_ Program sold through
financial representatives. The Federated LifeTrack_ Program is an integrated
program of investment options, plan recordkeeping, and consultation services
for 401(k) and other participant-directed benefit and savings plans. Under the
Federated LifeTrack_ Program, employers or plan trustees may select a group of
investment options to be offered in a plan which also uses the Federated
LifeTrack_ Program for recordkeeping and administrative services. Additional
fees are charged to participating plans for these services. As part of the
Federated LifeTrack_ Program, exchanges may readily be made between investment
options selected by the employer or a plan trustee. For further information
about participating in the Federated LifeTrack_ Program, please contact an
investment professional or the Fund at the address referenced in the Synopsis
of this prospectus.
The other funds participating in the Federated LifeTrack_ Program are:
American Leaders Fund, Inc., Automated Cash Management Trust, Automated
Government Cash Reserves, Automated Government Money Trust, Automated
Treasury Cash Reserves, Capital Preservation Fund, Federated ARMs Fund,
Federated Bond Fund, Federated GNMA Trust, Federated Growth Strategies Fund,
Federated High Yield Trust, Federated Income Trust, Federated Managed
Aggressive Growth Fund, Federated Managed Growth and Income Fund, Federated
Managed Growth Fund, Federated Managed Income Fund, Federated Max Cap Fund,
Federated Mini Cap Fund, Federated Mid Cap Fund, Federated Short-Term Income
Fund, Federated Stock Trust, Federated U.S. Government Securities Fund 1-3
Years, Federated U.S. Government Securities Fund 2-5 Years, Fortress Utility
Fund, Inc., Fund for U.S. Government Securities, Inc., Intermediate Income
Fund, International Equity Fund, International Income Fund, Liberty Equity
Income Fund, Inc., Liberty High Income Bond Fund, Inc., Liberty Utility Fund,
Inc., and Stock and Bond Fund, Inc.
With respect to Class A Shares, no sales load is imposed on purchases made by
qualified retirement plans with over $l million invested in funds
participating in the Federated LifeTrack_ Program.
Investment Information
Investment Objective
The investment objective of the Fund is to provide capital appreciation. Any
income received from the portfolio is entirely incidental. The investment
objective cannot be changed without approval of shareholders. While there is
no assurance that the Fund will achieve its investment objective, it endeavors
to do so by following the investment policies described in this prospectus.
Investment Policies
The Fund pursues its investment objective by investing primarily in a
portfolio of common stocks of small and medium sized companies. Under normal
market conditions, the Fund will invest at least 65% of its total assets in
common stocks of small and medium sized companies (those having a market
capitalization of less than $1 billion at the time of purchase). Unless
indicated otherwise, the investment policies of the Fund may be changed by the
Trustees without the approval of shareholders. Shareholders will be notified
before any material changes in these policies become effective.
Acceptable Investments. The securities in which the Fund invests include, but
are not limited to:
o common stock of U.S. companies which are either listed on the New
York or American Stock Exchange or traded in over-the-counter
markets and are considered by the Adviser to have potential for
above-average appreciation;
o corporate securities and convertible securities;
o securities of foreign issuers;
o restricted and illiquid securities;
o securities of other investment companies; and
o securities issued or guaranteed by the U.S. government, its
agencies, or instrumentalities.
Corporate Securities. The Fund may invest in preferred stocks, convertible
securities, notes rated investment grade, i.e., Baa or better by Moody's
Investors Service, Inc. ("Moody's"), or BBB or better by Standard & Poor's
Ratings Group ("S&P") or Fitch Investors Service, Inc. ("Fitch") (or, if
unrated, are deemed to be of comparable quality by the Fund's investment
adviser), and warrants of these companies. Corporate fixed income securities
are subject to market and credit risks. In addition, the prices of fixed
income securities fluctuate inversely to the direction of interest rates. It
should be noted that securities receiving the lowest investment grade rating
are considered to have some speculative characteristics. Changes in economic
conditions or other circumstances are more likely to lead to weakened capacity
to make principal and interest payments than higher rated securities. In the
event that a security which had an eligible rating when purchased is
downgraded below Baa or BBB, the Adviser will promptly reassess whether
continued holding of the security is consistent with the Fund's objective.
Convertible Securities. Convertible securities are fixed income securities
which may be exchanged or converted into a predetermined number of the
issuer's underlying common stock at the option of the holder during a
specified time period. Convertible securities may take the form of
convertible preferred stock, convertible bonds or debentures, units consisting
of "usable" bonds and warrants, or a combination of the features of several of
these securities. The investment characteristics of each convertible security
vary widely, which allows convertible securities to be employed for different
investment objectives.
Convertible bonds and convertible preferred stocks are fixed income securities
that generally retain the investment characteristics of fixed income
securities until they have been converted, but also react to movements in the
underlying equity securities. The holder is entitled to receive the fixed
income of a bond or the dividend preference of a preferred stock until the
holder elects to exercise the conversion privilege. Usable bonds are
corporate bonds that can be used, in whole or in part, customarily at full
face value, in lieu of cash to purchase the issuer's common stock. When owned
as part of a unit along with warrants, which are options to buy the common
stock, they function as convertible bonds, except that the warrants generally
will expire before the bond's maturity. Convertible securities are senior to
equity securities and, therefore, have a claim to assets of the corporation
prior to the holders of common stock in the case of liquidation. However,
convertible securities are generally subordinated to similar nonconvertible
securities of the same company. The interest income and dividends from
convertible bonds and preferred stocks provide a stable stream of income with
generally higher yields than common stocks, but lower than nonconvertible
securities of similar quality. The Fund will exchange or convert the
convertible securities held in its portfolio into shares of the underlying
common stock in instances in which, in the Adviser's opinion, the investment
characteristics of the underlying common shares will assist the Fund in
achieving its investment objectives. Otherwise, the Fund will hold or trade
the convertible securities. In selecting convertible securities for the Fund,
the Adviser evaluates the investment characteristics of the convertible
security as a fixed income instrument, and the investment potential of the
underlying equity security for capital appreciation. In evaluating these
matters with respect to a particular convertible security, the Adviser
considers numerous factors, including the economic and political outlook, the
value of the security relative to other investment alternatives, trends in the
determinants of the issuer's profits, and the issuer's management capability
and practices.
Securities of Foreign Issuers. The Fund may invest in the securities of
foreign issuers which are freely traded on United States securities exchanges
or in the over-the-counter market in the form of depositary receipts
("American Depositary Receipts" or "ADRs"). In addition, the Fund may invest
in other securities of foreign issuers. There may be certain risks associated
with investing in foreign securities. These include risks of adverse
political and economic developments (including possible governmental seizure
or nationalization of assets), the possible imposition of exchange controls or
other governmental restrictions, less uniformity in accounting and reporting
requirements, and the possibility that there will be less information on such
securities and their issuers available to the public. In addition, there are
restrictions on foreign investments in other jurisdictions and there tends to
be difficulty in obtaining judgments from abroad and affecting repatriation of
capital invested abroad. Delays could occur in settlement of foreign
transactions, which could adversely affect shareholder equity. Foreign
securities may be subject to foreign taxes, which reduce yield, and may be
less marketable than comparable United States securities. As a matter of
practice, the Fund will not invest in the securities of a foreign issuer if
any risk identified above appears to the Adviser to be substantial. The Fund
will not invest more than 20% of its assets in foreign securities.
Put and Call Options. The Fund may purchase put options on its portfolio
securities. A put option gives the Fund, in return for a premium, the right
to sell the underlying security to the writer (seller) at a specified price
during the term of the option. These options will be used as a hedge to
attempt to protect securities which the Fund holds against decreases in value.
The Fund may also write covered call options on all or any portion of its
portfolio to generate income. As a writer of a call option, the Fund has the
obligation upon exercise of the option during the option period to deliver the
underlying security upon payment of the exercise price. The Fund will write
call options on securities either held in its portfolio, or which it has the
right to obtain without payment of further consideration, or for which it has
segregated cash or U.S. government securities in the amount of any additional
consideration.
The Fund may purchase and write over-the-counter options on portfolio
securities in negotiated transactions with the buyers or writers of the
options when options on the portfolio securities held by the Fund are not
traded on an exchange. The Fund purchases and writes options only with
investment dealers and other financial institutions (such as commercial banks
or savings and loan associations) deemed creditworthy by the investment
adviser.
Over-the-counter options are two-party contracts with price and terms
negotiated between buyer and seller. In contrast, exchange-traded options are
third-party contracts with standardized strike prices and expiration dates and
are purchased from a clearing corporation. Exchange-traded options have a
continuous liquid market while over-the-counter options may not. The Fund
will not buy call options or write put options, other than to close out open
option positions, without further notification to shareholders.
Futures and Options on Futures. The Fund may purchase and sell futures
contracts to hedge against the effects of changes in the value of portfolio
securities due to anticipated changes in interest rates and market conditions.
Futures contracts call for the delivery of particular instruments at a certain
time in the future. The seller of the contract agrees to make delivery of the
type of instrument called for in the contract, and the buyer agrees to take
delivery of the instrument at the specified future time.
Stock index futures contracts are based on indexes that reflect the market
value of common stock of the firms included in the indexes. An index futures
contract is an agreement pursuant to which two parties agree to take or make
delivery of an amount of cash equal to the differences between the value of
the index at the close of the last trading day of the contract and the price
at which the index contract was originally written.
The Fund may also write call options and purchase put options on futures
contracts as a hedge to attempt to protect its portfolio securities against
decreases in value. When the Fund writes a call option on a futures contract,
it is undertaking the obligation of selling a futures contract at a fixed
price at any time during a specified period if the option is exercised.
Conversely, as purchaser of a put option on a futures contract, the Fund is
entitled (but not obligated) to sell a futures contract at the fixed price
during the life of the option.
The Fund may also write put options and purchase call options on futures
contracts as a hedge against rising purchase prices of portfolio securities.
The Fund will use these transactions to attempt to protect its ability to
purchase portfolio securities in the future at price levels existing at the
time it enters into the transactions. When the Fund writes a put option on a
futures contract, it is undertaking to buy a particular futures contract at a
fixed price at any time during a specified period if the option is exercised.
As a purchaser of a call option on a futures contract, the Fund is entitled
(but not obligated) to purchase a futures contract at a fixed price at any
time during the life of the option.
The Fund may not purchase or sell futures contracts or related options if
immediately thereafter the sum of the amount of margin deposits on the Fund's
existing futures positions and premiums paid for related options would exceed
5% of the market value of the Fund's total assets. When the Fund purchases
futures contracts, an amount of cash and cash equivalents, equal to the
underlying commodity value of the futures contracts (less any related margin
deposits), will be deposited in a segregated account with the custodian (or
the broker, if legally permitted) to collateralize the position and thereby
insure that the use of such futures contracts are unleveraged. When the Fund
sells futures contracts, it will either own or have the right to receive the
underlying future or security, or will make deposits to collateralize the
position as discussed above.
Risks. When the Fund uses financial futures and options on futures as hedging
devices, there is a risk that the prices of the securities subject to the
futures contracts may not correlate perfectly with the prices of the
securities in the Fund's portfolio. This may cause the futures contract and
any related options to react differently than the portfolio securities to
market changes. In addition, the Adviser could be incorrect in its
expectations about the direction or extent of market factors such as stock
price movements. In these events, the Fund may lose money on the futures
contract or option.
It is not certain that a secondary market for positions in futures contracts
or for options will exist at all times. Although the Adviser will consider
liquidity before entering into these transactions, there is no assurance that
a liquid secondary market on an exchange or otherwise will exist for any
particular futures contract or option at any particular time. The Fund's
ability to establish and close out futures and options positions depends on
this secondary market.
Restricted and Illiquid Securities. The Fund may invest in restricted
securities. Restricted securities are any securities in which the Fund may
otherwise invest pursuant to its investment objective and policies, but which
are subject to restrictions on resale under federal securities law. However,
the Fund will limit investments in illiquid securities, including certain
restricted securities not determined by the Trustees to be liquid, non-
negotiable time deposits, over-the-counter options, and repurchase agreements
providing for settlement in more than seven days after notice, to 15% of its
net assets.
When-Issued and Delayed Delivery Transactions. The Fund may purchase
securities on a when-issued or delayed delivery basis. These transactions are
arrangements in which the Fund purchases securities with payment and delivery
scheduled for a future time. The seller's failure to complete these
transactions may cause the Fund to miss a price or yield considered to be
advantageous. Settlement dates may be a month or more after entering into
these transactions and the market values of the securities purchased may vary
from purchase prices. Accordingly, the Fund may pay more or less than the
market value of the securities on the settlement date.
The Fund may dispose of a commitment prior to settlement if the Adviser deems
it appropriate to do so. In addition, the Fund may enter into transactions to
sell its purchase commitments to third parties at current market values and
simultaneously acquire other commitments to purchase similar securities at
later dates. The Fund may realize short-term profits or losses upon the sale
of such commitments.
Money Market Instruments. For temporary defensive purposes (up to 100% of
total assets) and to maintain liquidity (up to 35% of total assets), the Fund
may invest in U.S. and foreign short-term money market instruments, including:
o commercial paper rated A-1 or A-2 by S&P, Prime-1 or Prime-2 by
Moody's, or F-1 or F-2 by Fitch, and Europaper (dollar-denominated
commercial paper issued outside the United States) rated A-1, A-2,
Prime-1, or Prime-2;
o instruments of domestic and foreign banks and savings and loans
(such as certificates of deposit, demand and time deposits, savings
shares, and bankers' acceptances) if they have capital, surplus,
and undivided profits of over $100,000,000, or if the principal
amount of the instrument is insured by the Bank Insurance Fund,
which is administered by the Federal Deposit Insurance Corporation
("FDIC"), or the Savings Association Insurance Fund, which is also
administered by the FDIC. These instruments may include Eurodollar
Certificates of Deposit ("ECDs"), Yankee Certificates of Deposit
("Yankee CDs"), and Eurodollar Time Deposits ("ETDs");
o obligations of the U.S. government or its agencies or
instrumentalities;
o repurchase agreements;
o securities of other investment companies; and
o other short-term instruments which are not rated but are determined
by the investment adviser to be of comparable quality to the other
obligations in which the Fund may invest.
Repurchase Agreements. Repurchase agreements are arrangements in which banks,
broker/dealers, and other recognized financial institutions sell U.S.
government securities or other securities to the Fund and agree at the time of
sale to repurchase them at a mutually agreed upon time and price. To the
extent that the original seller does not repurchase the securities from the
Fund, the Fund could receive less than the repurchase price on any sale of
such securities.
Investing in Securities of Other Investment Companies. The Fund may invest in
the securities of other investment companies, but it will not own more than 3%
of the total outstanding voting stock of any investment company, invest more
than 5% of its total assets in any one investment company, or invest more than
10% of its total assets in investment companies in general. The Fund will
invest in other investment companies primarily for the purpose of investing
short-term cash which has not yet been invested in other portfolio
instruments. It should be noted that investment companies incur certain
expenses such as management fees and, therefore, any investment by the Fund in
shares of another investment company would be subject to such duplicate
expenses. The investment adviser will waive its investment advisory fee on
assets invested in securities of open-end investment companies.
Lending of Portfolio Securities. In order to generate additional income, the
Fund may lend portfolio securities on a short-term or a long-term basis, to
broker/dealers, banks, or other institutional borrowers of securities. The
Fund will only enter into loan arrangements with broker/dealers, banks, or
other institutions which the Adviser has determined are creditworthy under
guidelines established by the Trustees and will receive collateral equal to at
least 100% of the value of the securities loaned at all times.
There is the risk that when lending portfolio securities, the securities may
not be available to the Fund on a timely basis and the Fund may, therefore,
lose the opportunity to sell the securities at a desirable price. In
addition, in the event that a borrower of securities would file for bankruptcy
or become insolvent, disposition of the securities may be delayed pending
court action.
Equity Investment Considerations
As with other mutual funds that invest primarily in equity securities, the
Fund is subject to market risks. That is, the possibility exists that common
stocks will decline over short or even extended periods of time, and the
United States equity market tends to be cyclical, experiencing both periods
when stock prices generally increase and periods when stock prices generally
decrease. However, because the Fund invests primarily in small capitalization
stocks, there are some additional risk factors associated with investments in
the Fund. In particular, stocks in the small capitalization sector of the
United States equity market have historically been more volatile in price than
larger capitalization stocks, such as those included in the Standard & Poor's
500 Composite Stock Price Index ("Standard & Poor's 500 Index"). This is
because, among other things, small companies have less certain growth
prospects than larger companies; have a lower degree of liquidity in the
equity market; and tend to have a greater sensitivity to changing economic
conditions. Further, in addition to exhibiting greater volatility, the stocks
of small companies may, to some degree, fluctuate independently of the stocks
of large companies. That is, the stocks of small companies may decline in
price as the prices of large company stocks rise or vice versa. Therefore,
investors should expect that the Fund will be more volatile than, and may
fluctuate independently of, broad stock market indices such as the Standard &
Poor's 500 Index.
Investment Limitations
The Fund will not:
o borrow money directly or through reverse repurchase agreements
(arrangements in which the Fund sells a portfolio instrument for a
percentage of its cash value with an agreement to buy it back on a
set date) or pledge securities except, under certain circumstances,
the Fund may borrow up to one-third of the value of its total
assets and pledge its assets to secure such borrowings; or
o with respect to 75% of its total assets, invest more than 5% of the
value of its total assets in securities of any one issuer (other
than cash, cash items, or securities issued or guaranteed by the
U.S. government and its agencies or instrumentalities, and
repurchase agreements collateralized by such securities) or acquire
more than 10% of the outstanding voting securities of any one
issuer.
The above investment limitations cannot be changed without shareholder
approval.
Net Asset Value
The Fund's net asset value per Share fluctuates. The net asset value for
Shares is determined by adding the interest of each class of Shares in the
market value of all securities and other assets of the Fund, subtracting the
interest of each class of Shares in the liabilities of the Fund and those
attributable to each class of Shares, and dividing the remainder by the total
number of each class of Shares outstanding. The net asset value for each class
of Shares may differ due to the variance in daily net income realized by each
class. Such variance will reflect only accrued net income to which the
shareholders of a particular class are entitled.
The net asset value of each class of Shares of the Fund is determined as of
the close of trading (normally 4:00 p.m., Eastern time) on the New York Stock
Exchange each day the New York Stock Exchange is open, except on: (i) days on
which there are not sufficient changes in the value of the Fund's portfolio
securities that its net asset value might be materially affected; (ii) days
during which no Shares are tendered for redemption and no orders to purchase
Shares are received; or (iii) the following holidays: New Year's Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day, and Christmas Day.
Investing in the Fund
The Fund offers investors three classes of Shares that carry sales loads and
contingent deferred sales charges in different forms and amounts and which
bear different levels of expenses.
CLASS A SHARES
An investor who purchases Class A Shares pays a maximum sales load of 5.50% at
the time of purchase. Certain purchases of Class A Shares are not subject to
a sales load. See "Investing in Class A Shares." As a result, Class A Shares
are not subject to any charges when they are redeemed (except for special
programs offered under "Purchases with Proceeds From Redemptions of
Unaffiliated Investment Companies."). Certain purchases of Class A Shares
qualify for reduced sales loads. See "Reducing or Eliminating the Sales
Load." Class A Shares have no conversion feature.
CLASS B SHARES
Class B Shares are sold without an initial sales load, but are subject to a
contingent deferred sales charge of up to 5.50% if redeemed within six full
years following purchase. Class B Shares also bear a higher 12b-1 fee than
Class A Shares. Class B Shares will automatically convert into Class A
Shares, based on relative net asset value, on or around the fifteenth of the
month eight full years after the purchase date. Class B Shares provide an
investor the benefit of putting all of the investor's dollars to work from the
time the investment is made, but (until conversion) will have a higher expense
ratio and pay lower dividends than Class A Shares due to the higher 12b-1 fee.
CLASS C SHARES
Class C Shares are sold without an initial sales load, but are subject to a
1.00% contingent deferred sales charge on assets redeemed within the first 12
months following purchase. Class C Shares provide an investor the benefit of
putting all of the investor's dollars to work from the time the investment is
made, but will have a higher expense ratio and pay lower dividends than Class
A Shares due to the higher 12b-1 fee. Class C Shares have no conversion
feature.
How To Purchase Shares
Shares of the Fund are sold on days on which the New York Stock Exchange is
open. Shares of the Fund may be purchased as described below, either through
a financial institution (such as a bank or broker/dealer which has a sales
agreement with the distributor) or by wire or by check directly to the Fund,
with a minimum initial investment of $500 for Class A Shares and $1,500 for
Class B Shares and Class C Shares. Additional investments can be made for as
little as $100. The minimum initial and subsequent investment for retirement
plans is only $50. (Financial institutions may impose different minimum
investment requirements on their customers.)
In connection with any sale, Federated Securities Corp. may from time to time
offer certain items of nominal value to any shareholder or investor. The Fund
reserves the right to reject any purchase request. An account must be
established at a financial institution or by completing, signing, and
returning the new account form available from the Fund before Shares can be
purchased.
Investing in Class A Shares
Class A Shares are sold at their net asset value next determined after an
order is received, plus a sales load as follows:
Sales Load as Sales Load as
Dealer Concession as
Amount of a Percentage of a Percentage of
a Percentage of
Transaction Offering Price Net Amount Invested
Public Offering Price
Less than $50,000 5.50% 5.82% 5.00%
$50,000 but less than $100,000 4.50% 4.71%
4.00%
$100,000 but less than $250,000 3.75% 3.90%
3.25%
$250,000 but less than $500,000 2.50% 2.56%
2.25%
$500,000 but less than $1 million 2.00% 2.04% 1.80%
$1 million or greater 0.00% 0.00% 0.25%*
*See sub-section entitled "Dealer Concession."
No sales load is imposed for Class A Shares purchased through bank trust
departments, investment advisers registered under the Investment Advisers Act
of 1940, as amended, or retirement plans where the third party administrator
has entered into certain arrangements with Federated Securities Corp. or its
affiliates, or to shareholders designated as Liberty Life Members. However,
investors who purchase Shares through a trust department, investment adviser,
or retirement plan may be charged an additional service fee by the
institution. Additionally, no sales load is imposed for Class A Shares
purchased through "wrap accounts" or similar programs, under which clients pay
a fee or fees for services.
No sales load is imposed on purchases made by retirement plans with over $1
million invested in funds available through the Federated LifeTrack_ Program.
Dealer Concession. For sales of Class A Shares, a dealer will normally
receive up to 90% of the applicable sales load. Any portion of the sales load
which is not paid to a dealer will be retained by the distributor. However,
the distributor may offer to pay dealers up to 100% of the sales load retained
by it. Such payments may take the form of cash or promotional incentives,
such as reimbursement of certain expenses of qualified employees and their
spouses to attend informational meetings about the Fund or other special
events at recreational-type facilities, or items of material value. In some
instances, these incentives will be made available only to dealers whose
employees have sold or may sell a significant amount of Shares. On purchases
of $1 million or more, the investor pays no sales load; however, the
distributor will make twelve monthly payments to the dealer totaling 0.25% of
the public offering price over the first year following the purchase. Such
payments are based on the original purchase price of Shares outstanding at
each month end.
The sales load for Shares sold other than through registered broker/dealers
will be retained by Federated Securities Corp. Federated Securities Corp. may
pay fees to banks out of the sales load in exchange for sales and/or
administrative services performed on behalf of the bank's customers in
connection with the initiation of customer accounts and purchases of Shares.
Effective as of the date of this prospectus, and until further notice, the
entire amount of the applicable sales load will be reallowed to dealers. In
addition, the distributor will pay dealers additional bonus payments in an
amount equal to 0.50 of 1.00% of the public offering price of Shares sold.
Subaccounting Services
Institutions are encouraged to open single master accounts. However, certain
institutions may wish to use the transfer agent's subaccounting system to
minimize their internal recordkeeping requirements. The transfer agent
charges a fee based on the level of subaccounting services rendered.
Institutions holding Shares in a fiduciary, agency, custodial, or similar
capacity may charge or pass through subaccounting fees as part of or in
addition to normal trust or agency account fees. They may also charge fees
for other services provided which may be related to the ownership of Shares.
This prospectus should, therefore, be read together with any agreement between
the customer and the institution with regard to the services provided, the
fees charged for those services, and any restrictions and limitations imposed.
Reducing or Eliminating the Sales Load
The sales load can be reduced or eliminated on the purchase of Class A Shares
through:
o quantity discounts and accumulated purchases;
o concurrent purchases;
o signing a 13-month letter of intent;
o using the reinvestment privilege; or
o purchases with proceeds from redemptions of unaffiliated investment company
shares.
Quantity Discounts and Accumulated Purchases. As shown in the table above,
larger purchases reduce the sales load paid. The Fund will combine purchases
of Class A Shares made on the same day by the investor, the investor's spouse,
and the investor's children under age 21 when it calculates the sales load.
In addition, the sales load, if applicable, is reduced for purchases made at
one time by a trustee or fiduciary for a single trust estate or a single
fiduciary account.
If an additional purchase of Class A Shares is made, the Fund will consider
the previous purchases still invested in the Fund. For example, if a
shareholder already owns Class A Shares having a current value at the public
offering price of $30,000 and he purchases $20,000 more at the current public
offering price, the sales load on the additional purchase according to the
schedule now in effect would be 4.50%, not 5.50%.
To receive the sales load reduction, Federated Securities Corp. must be
notified by the shareholder in writing or by his financial institution at the
time the purchase is made that Class A Shares are already owned or that
purchases are being combined. The Fund will reduce the sales load after it
confirms the purchases.
Concurrent Purchases. For purposes of qualifying for a sales load reduction,
a shareholder has the privilege of combining concurrent purchases of two or
more funds in the Liberty Family of Funds, the purchase price of which
includes a sales load. For example, if a shareholder concurrently invested
$30,000 in one of the other funds in the Liberty Family of Funds with a sales
load, and $20,000 in this Fund, the sales load would be reduced.
To receive this sales load reduction, Federated Securities Corp. must be
notified by the shareholder in writing or by his financial institution at the
time the concurrent purchases are made. The Fund will reduce the sales load
after it confirms the purchases.
Letter of Intent. If a shareholder intends to purchase at least $50,000 of
shares of the funds in the Liberty Family of Funds (excluding money market
funds) over the next 13 months, the sales load may be reduced by signing a
letter of intent to that effect. This letter of intent includes a provision
for a sales load adjustment depending on the amount actually purchased within
the 13-month period and a provision for the custodian to hold up to 5.50% of
the total amount intended to be purchased in escrow (in Shares) until such
purchase is completed.
The Shares held in escrow in the shareholder's account will be released upon
fulfillment of the letter of intent or the end of the 13-month period,
whichever comes first. If the amount specified in the letter of intent is not
purchased, an appropriate number of escrowed Shares may be redeemed in order
to realize the difference in the sales load.
While this letter of intent will not obligate the shareholder to purchase
Shares, each purchase during the period will be at the sales load applicable
to the total amount intended to be purchased. At the time a letter of intent
is established, current balances in accounts in any Class A Shares of any fund
in the Liberty Family of Funds, excluding money market accounts, will be
aggregated to provide a purchase credit towards fulfillment of the letter of
intent. Prior trade prices will not be adjusted.
Reinvestment Privilege. If Class A Shares in the Fund have been redeemed, the
shareholder has the privilege, within 120 days, to reinvest the redemption
proceeds at the next-determined net asset value without any sales load.
Federated Securities Corp. must be notified by the shareholder in writing or
by his financial institution of the reinvestment in order to eliminate a sales
load. If the shareholder redeems his Class A Shares in the Fund, there may be
tax consequences.
Purchases with Proceeds from Redemptions of Unaffiliated Investment Companies.
Investors may purchase Class A Shares at net asset value, without a sales
load, with the proceeds from the redemption of shares of an unaffiliated
investment company that were purchased or sold with a sales load or commission
and were not distributed by Federated Securities Corp. The purchase must be
made within 60 days of the redemption, and Federated Securities Corp. must be
notified by the investor in writing, or by his financial institution, at the
time the purchase is made. From time to time, the Fund may offer dealers a
payment of .50 of 1.00% for Shares purchased under this program. If Shares
are purchased in this manner, fund purchases will be subject to a contingent
deferred sales charge for one year from the date of purchase. Shareholders
will be notified prior to the implementation of any special offering as
described above.
Investing in Class B Shares
Class B Shares are sold at their net asset value next determined after an
order is received. While Class B Shares are sold without an initial sales
load, under certain circumstances described under "Contingent Deferred Sales
Charge - Class B Shares," a contingent deferred sales charge may be applied by
the distributor at the time Class B Shares are redeemed.
Conversion of Class B Shares. Class B Shares will automatically convert into
Class A Shares on or around the fifteenth of the month eight full years after
the purchase date, except as noted below, and will no longer be subject to a
distribution services fee (see "Distribution of Shares"). Such conversion will
be on the basis of the relative net asset values per share, without the
imposition of any sales load, fee or other charge. Class B Shares acquired by
exchange from Class B Shares of another fund in the Liberty Family of Funds
will convert into Class A Shares based on the time of the initial purchase.
For purposes of conversion to Class A Shares, Shares purchased through the
reinvestment of dividends and distributions paid on Class B Shares will be
considered to be held in a separate sub-account. Each time any Class B Shares
in the shareholder's account (other than those in the sub-account) convert to
Class A Shares, an equal pro rata portion of the Class B Shares in the sub-
account will also convert to Class A Shares. The conversion of Class B Shares
to Class A Shares is subject to the continuing availability of a ruling from
the Internal Revenue Service or an opinion of counsel that such conversions
will not constitute taxable events for federal tax purposes. There can be no
assurance that such ruling or opinion will be available, and the conversion of
Class B Shares to Class A Shares will not occur if such ruling or opinion is
not available. In such event, Class B Shares would continue to be subject to
higher expenses than Class A Shares for an indefinite period.
Orders for $250,000 or more of Class B Shares will automatically be invested
in Class A Shares.
Investing in Class C Shares
Class C Shares are sold at net asset value next determined after an order is
received. A contingent deferred sales charge of 1.00% will be charged on
assets redeemed within the first full 12 months following purchase. For a
complete description of this charge see "Contingent Deferred Sales Charge -
Class C Shares."
PURCHASING SHARES THROUGH A FINANCIAL INSTITUTION. An investor may call his
financial institution (such as a bank or an investment dealer) to place an
order to purchase Shares. Orders placed through a financial institution are
considered received when the Fund is notified of the purchase order or when
payment is converted into federal funds. Purchase orders through a registered
broker/dealer must be received by the broker before 4:00 p.m. (Eastern time)
and must be transmitted by the broker to the Fund before 5:00 p.m. (Eastern
time) in order for Shares to be purchased at that day's price. Purchase orders
through other financial institutions must be received by the financial
institution and transmitted to the Fund before 4:00 p.m. (Eastern time) in
order for Shares to be purchased at that day's price. It is the financial
institution's responsibility to transmit orders promptly. Financial
institutions may charge additional fees for their services.
The financial institution which maintains investor accounts in Class B Shares
or Class C Shares with the Fund must do so on a fully disclosed basis unless
it accounts for share ownership periods used in calculating the contingent
deferred sales charge (see "Contingent Deferred Sales Charge"). In addition,
advance payments made to financial institutions may be subject to reclaim by
the distributor for accounts transferred to financial institutions which do
not maintain investor accounts on a fully disclosed basis and do not account
for share ownership periods.
PURCHASING SHARES BY WIRE. Once an account has been established, Shares may
be purchased by wire by calling the Fund. All information needed will be
taken over the telephone, and the order is considered received immediately.
Payment for purchases which are subject to a sales load must be received
within three business days following the order. Payment for purchases on
which no sales load is imposed must be received before 3:00 p.m. (Eastern
time) on the next business day following the order. Federal funds should be
wired as follows: State Street Bank and Trust Company, Boston, Massachusetts;
Attn: EDGEWIRE; For Credit to: (Fund Name) (Fund Class); (Fund Number);
Account Number; Trade Date and Order Number; Group Number or Dealer Number;
Nominee or Institution Name; and ABA Number 011000028. Shares cannot be
purchased by wire on holidays when wire transfers are restricted.
PURCHASING SHARES BY CHECK. Once an account has been established, Shares may
be purchased by sending a check made payable to the name of the Fund
(designate class of Shares and account number) to: Federated Services Company,
P.O. Box 8600, Boston, Massachusetts 02266-8600. Orders by mail are
considered received when payment by check is converted into federal funds
(normally the business day after the check is received).
Special Purchase Features
SYSTEMATIC INVESTMENT PROGRAM. Once a Fund account has been opened,
shareholders may add to their investment on a regular basis in a minimum
amount of $100. Under this program, funds may be automatically withdrawn
periodically from the shareholder's checking account at an Automated Clearing
House ("ACH") member and invested in the Fund at the net asset value next
determined after an order is received by the Fund, plus the sales load, if
applicable. Shareholders should contact their financial institution or the
Fund to participate in this program.
RETIREMENT PLANS. Fund Shares can be purchased as an investment for
retirement plans or IRA accounts. For further details, contact the Fund and
consult a tax adviser.
Exchange Privilege
Class A Shares. Class A shareholders may exchange all or some of their Shares
for Class A Shares of other funds in the Liberty Family of Funds at net asset
value. Neither the Fund nor any of the funds in the Liberty Family of Funds
imposes any additional fees on exchanges. Participants in a retirement plan
under the Federated LifeTrack_ Program may exchange all or some of their
Shares for Class A Shares of other funds offered under the plan at net asset
value.
Class B Shares. Class B shareholders may exchange all or some of their Shares
for Class B Shares of other funds in the Liberty Family of Funds. (Not all
funds in the Liberty Family of Funds currently offer Class B Shares. Contact
your financial institution regarding the availability of other Class B Shares
in the Liberty Family of Funds.) Exchanges are made at net asset value
without being assessed a contingent deferred sales charge on the exchanged
Shares. To the extent that a shareholder exchanges Shares for Class B Shares
in other funds in the Liberty Family of Funds, the time for which the
exchanged-for Shares are to be held will be added to the time for which
exchanged-from Shares were held for purposes of satisfying the applicable
holding period. For more information, see "Contingent Deferred Sales Charge."
Class C Shares. Class C shareholders may exchange all or some of their Shares
for Class C Shares in other funds in the Liberty Family of Funds at net asset
value without a contingent deferred sales charge. (Not all funds in the
Liberty Family of Funds currently offer Class C Shares. Contact your
financial institution regarding the availability of other Class C Shares in
the Liberty Family of Funds.) Participants in a retirement plan under the
Program may exchange some or all of their Shares for Class C Shares of other
funds offered under their plan at net asset value without a contingent
deferred sales charge. To the extent that a shareholder exchanges Shares for
Class C Shares in other funds in the Liberty Family of Funds, the time for
which the exchanged-for Shares are to be held will be added to the time for
which exchanged-from Shares were held for purposes of satisfying the
applicable holding period. For more information, see "Contingent Deferred
Sales Charge."
REQUIREMENTS FOR EXCHANGE
Shareholders using this privilege must exchange Shares having a net asset
value equal to the minimum investment requirements of the fund into which the
exchange is being made. Before the exchange, the shareholder must receive a
prospectus of the fund for which the exchange is being made.
This privilege is available to shareholders resident in any state in which the
Shares being acquired may be sold. Upon receipt of proper instructions and
required supporting documents, Shares submitted for exchange are redeemed and
proceeds invested in the same class of Shares of the other fund. The exchange
privilege may be modified or terminated at any time. Shareholders will be
notified of the modification or termination of the exchange privilege.
Further information on the exchange privilege and prospectuses for the Liberty
Family of Funds are available by contacting the Fund.
TAX CONSEQUENCES
An exercise of the exchange privilege is treated as a sale for federal income
tax purposes. Depending upon the circumstances, a capital gain or loss may be
realized.
MAKING AN EXCHANGE
Instructions for exchanges for the Liberty Family of Funds may be given in
writing or by telephone. Written instructions may require a signature
guarantee. Shareholders of the Fund may have difficulty in making exchanges
by telephone through brokers and other financial institutions during times of
drastic economic or market changes. If a shareholder cannot contact his
broker or financial institution by telephone, it is recommended that an
exchange request be made in writing and sent by overnight mail to Federated
Services Company, 500 Victory Road - 2nd Floor, Quincy, Massachusetts 02171.
Instructions for exchanges for retirement plans participating in the Federated
LifeTrack_ Program should be given to the plan administrator.
Telephone Instructions. Telephone instructions made by the investor may be
carried out only if a telephone authorization form completed by the investor
is on file with the Fund. If the instructions are given by a broker, a
telephone authorization form completed by the broker must be on file with the
Fund. If reasonable procedures are not followed by the Fund, it may be liable
for losses due to unauthorized or fraudulent telephone instructions. Shares
may be exchanged between two funds by telephone only if the two funds have
identical shareholder registrations.
Any Shares held in certificate form cannot be exchanged by telephone but must
be forwarded to Federated Services Company, P.O. Box 8600, Boston,
Massachusetts 02266-8600 and deposited to the shareholder's account before
being exchanged. Telephone exchange instructions are recorded and will be
binding upon the shareholder. Such instructions will be processed as of 4:00
p.m. (Eastern time) and must be received by the Fund before that time for
Shares to be exchanged the same day. Shareholders exchanging into a fund will
begin receiving dividends the following business day. This privilege may be
modified or terminated at any time.
How To Redeem Shares
Shares are redeemed at their net asset value, less any applicable contingent
deferred sales charge, next determined after the Fund receives the redemption
request. Redemptions will be made on days on which the Fund computes its net
asset value. Redemption requests must be received in proper form and can be
made as described below. Redemptions of Shares held through retirement plans
participating in the Federated LifeTrack_ Program will be governed by the
requirements of the respective plans.
REDEEMING SHARES THROUGH A FINANCIAL INSTITUTION. Shares of the Fund may be
redeemed by calling your financial institution to request the redemption.
Shares will be redeemed at the net asset value, less any applicable contingent
deferred sales charge next determined after the Fund receives the redemption
request from the financial institution. Redemption requests through a
registered broker/dealer must be received by the broker before 4:00 p.m.
(Eastern time) and must be transmitted by the broker to the Fund before 5:00
p.m. (Eastern time) in order for Shares to be redeemed at that day's net asset
value. Redemption requests through other financial institutions (such as
banks) must be received by the financial institution and transmitted to the
Fund before 4:00 p.m. (Eastern time) in order for Shares to be redeemed at
that day's net asset value. The financial institution is responsible for
promptly submitting redemption requests and providing proper written
redemption instructions. Customary fees and commissions may be charged by the
financial institution for this service.
REDEEMING SHARES BY TELEPHONE. Shares may be redeemed in any amount by
calling the Fund provided the Fund has a properly completed authorization
form. These forms can be obtained from Federated Securities Corp. Proceeds
will be mailed in the form of a check, to the shareholder's address of record
or by wire transfer to the shareholder's account at a domestic commercial bank
that is a member of the Federal Reserve System. The minimum amount for a wire
transfer is $1,000. Proceeds from redeemed Shares purchased by check or
through ACH will not be wired until that method of payment has cleared.
Telephone instructions will be recorded. If reasonable procedures are not
followed by the Fund, it may be liable for losses due to unauthorized or
fraudulent telephone instructions. In the event of drastic economic or market
changes, a shareholder may experience difficulty in redeeming by telephone.
If this occurs, "Redeeming Shares By Mail" should be considered. If at any
time the Fund shall determine it necessary to terminate or modify the
telephone redemption privilege, shareholders would be promptly notified.
REDEEMING SHARES BY MAIL. Shares may be redeemed in any amount by mailing a
written request to: Federated Services Company, Fund Name, Fund Class, P.O.
Box 8600, Boston, Massachusetts 02266-8600.
The written request should state: Fund Name and the Class designation; the
account name as registered with the Fund; the account number; and the number
of Shares to be redeemed or the dollar amount requested. All owners of the
account must sign the request exactly as the Shares are registered. It is
recommended that any share certificates be sent by registered or certified
mail with the written request.
If you are requesting a redemption of any amount to be sent to an address
other than that on record with the Fund, or a redemption payable to a third
party, then all signatures appearing on the written request must be guaranteed
by a bank which is a member of the Federal Deposit Insurance Corporation, a
trust company, a member firm of a domestic stock exchange, or any other
"eligible guarantor institution," as defined by the Securities and Exchange
Act of 1934, as amended. The Fund does not accept signatures guaranteed by a
notary public.
The Fund and its transfer agent have adopted standards for accepting signature
guarantees from the above institutions. The Fund may elect in the future to
limit eligible signature guarantors to institutions that are members of a
signature guarantee program. The Fund and its transfer agent reserve the right
to amend these standards at any time without notice.
Normally, a check for the proceeds is mailed within one business day, but in
no event more than seven days, after receipt of a proper written redemption
request.
Special Redemption Features
SYSTEMATIC WITHDRAWAL PROGRAM. Shareholders who desire to receive payments of
a predetermined amount not less than $100 may take advantage of the Systematic
Withdrawal Program. Under this program, Shares are redeemed to provide for
periodic withdrawal payments in an amount directed by the shareholder.
Depending upon the amount of the withdrawal payments, the amount of dividends
paid and capital gains distributions with respect to Shares, and the
fluctuation of the net asset value of Shares redeemed under this program,
redemptions may reduce, and eventually deplete, the shareholder's investment
in the Fund. For this reason, payments under this program should not be
considered as yield or income on the shareholder's investment in the Fund. To
be eligible to participate in this program, a shareholder must have an account
value of at least $10,000. A shareholder may apply for participation in this
program through his financial institution. Due to the fact that Class A
Shares are sold with a sales load, it is not advisable for shareholders to
continue to purchase Class A Shares while participating in this program. A
contingent deferred sales charge may be imposed on Class B Shares and Class C
Shares.
Contingent Deferred Sales Charge
Shareholders may be subject to a contingent deferred sales charge upon
redemption of their Shares under the following circumstances:
CLASS A SHARES
Class A Shares purchased under a periodic special offering with the proceeds
of a redemption of Shares of an unaffiliated investment company purchased or
redeemed with a sales load and not distributed by Federated Securities Corp.
may be charged a contingent deferred sales charge of .50 of 1.00% for
redemptions made within one full year of purchase. Any applicable contingent
deferred sales charge will be imposed on the lesser of the net asset value of
the redeemed Shares at the time of purchase or the net asset value of the
redeemed Shares at the time of redemption.
CLASS B SHARES
Shareholders redeeming Class B Shares from their Fund accounts within six full
years of the purchase date of those Shares will be charged a contingent
deferred sales charge by the Fund's distributor. Any applicable contingent
deferred sales charge will be imposed on the lesser of the net asset value of
the redeemed Shares at the time of purchase or the net asset value of the
redeemed Shares at the time of redemption in accordance with the following
schedule:
Year of Redemption Contingent Deferred
After Purchase Sales Charge
First.........................................................................
........ 5.50%
Second........................................................................
.... 4.75%
Third.........................................................................
...... 4%
Fourth........................................................................
..... 3%
Fifth.........................................................................
........ 2%
Sixth.........................................................................
....... 1%
Seventh and thereafter................................................. 0%
CLASS C SHARES
Shareholders redeeming Class C Shares from their Fund accounts within one full
year of the purchase date of those Shares will be charged a contingent
deferred sales charge by the Fund's distributor of 1.00%. Any applicable
contingent deferred sales charge will be imposed on the lesser of the net
asset value of the redeemed Shares at the time of purchase or the net asset
value of the redeemed Shares at the time of redemption. No contingent deferred
sales charge will be charged for redemptions of Class C Shares from the
Federated LifeTrack_ Program.
CLASS A SHARES, CLASS B SHARES, AND CLASS C SHARES
The contingent deferred sales charge will be deducted from the redemption
proceeds otherwise payable to the shareholder and will be retained by the
distributor. The contingent deferred sales charge will not be imposed with
respect to: (1) Shares acquired through the reinvestment of dividends or
distributions of long-term capital gains; and (2) Shares held for more than
six full years from the date of purchase with respect to Class B Shares and
one full year from the date of purchase with respect to Class C Shares and
applicable Class A Shares. Redemptions will be processed in a manner intended
to maximize the amount of redemption which will not be subject to a contingent
deferred sales charge. In computing the amount of the applicable contingent
deferred sales charge, redemptions are deemed to have occurred in the
following order: (1) Shares acquired through the reinvestment of dividends and
long-term capital gains; (2) Shares held for more than six full years from the
date of purchase with respect to Class B Shares and one full year from the
date of purchase with respect to Class C Shares and applicable Class A Shares;
(3) Shares held for fewer than six years with respect to Class B Shares and
one full year from the date of purchase with respect to Class C Shares and
applicable Class A Shares on a first-in, first-out basis. A contingent
deferred sales charge is not assessed in connection with an exchange of Fund
Shares for Shares of other funds in the Liberty Family of Funds in the same
class (see "Exchange Privilege"). Any contingent deferred sales charge imposed
at the time the exchanged-for Shares are redeemed is calculated as if the
shareholder had held the Shares from the date on which he became a shareholder
of the exchanged-from Shares. Moreover, the contingent deferred sales charge
will be eliminated with respect to certain redemptions (see "Elimination of
Contingent Deferred Sales Charge").
Elimination of Contingent Deferred Sales Charge
A contingent deferred sales charge will not be charged in connection with
exchanges of Shares for Class A Shares in other Liberty Family Funds or
Federated LifeTrack_ Program funds or redemptions from the Federated
LifeTrack_ Program.
The contingent deferred sales charge will be eliminated with respect to the
following redemptions: (1) redemptions following the death or disability,
as defined in Section 72(m)(7) of the Internal Revenue Code of 1986, as
amended, of a shareholder; (2) redemptions representing minimum required
distributions from an Individual Retirement Account or other retirement plan
to a shareholder who has attained the age of 70-1/2; and (3) involuntary
redemptions by the Fund of Shares in shareholder accounts that do not comply
with the minimum balance requirements. No contingent deferred sales charge
will be imposed on redemptions of Shares held by Trustees, employees and sales
representatives of the Fund, the distributor, or affiliates of the Fund or
distributor; employees of any financial institution that sells Shares of the
Fund pursuant to a sales agreement with the distributor; and spouses and
children under the age of 21 of the aforementioned persons. Finally, no
contingent deferred sales charge will be imposed on the redemption of Shares
originally purchased through a bank trust department, an investment adviser
registered under the Investment Advisers Act of 1940, as amended, or
retirement plans where the third party administrator has entered into certain
arrangements with Federated Securities Corp. or its affiliates, or any other
financial institution, to the extent that no payments were advanced for
purchases made through such entities. The Trustees reserve the right to
discontinue elimination of the contingent deferred sales charge. Shareholders
will be notified of such elimination. Any Shares purchased prior to the
termination of such waiver would have the contingent deferred sales charge
eliminated as provided in the Fund's prospectus at the time of the purchase of
the Shares. If a shareholder making a redemption qualifies for an elimination
of the contingent deferred sales charge, the shareholder must notify Federated
Securities Corp. or the transfer agent in writing that he is entitled to such
elimination.
Account and Share Information
CERTIFICATES AND CONFIRMATIONS
As transfer agent for the Fund, Federated Services Company maintains a share
account for each shareholder. Share certificates are not issued unless
requested in writing to Federated Services Company.
Detailed confirmations of each purchase and redemption are sent to each
shareholder. Monthly confirmations are sent to report dividends paid during
that month.
DIVIDENDS
Dividends are declared and paid quarterly to all shareholders invested in the
Fund on the record date. Dividends and distributions are automatically
reinvested in additional Shares of the Fund on payment dates at the ex-
dividend date net asset value without a sales load, unless shareholders
request cash payments on the new account form or by contacting the transfer
agent. All shareholders on the record date are entitled to the dividend. If
Shares are redeemed or exchanged prior to the record date or purchased after
the record date, those Shares are not entitled to that quarter's dividend.
CAPITAL GAINS
Net long-term capital gains realized by the Fund, if any, will be distributed
at least once every twelve months.
ACCOUNTS WITH LOW BALANCES
Due to the high cost of maintaining accounts with low balances, the Fund may
redeem Shares in any account, except retirement plans, and pay the proceeds to
the shareholder if the account balance falls below the Class A Share required
minimum value of $500 or the required minimum value of $1,500 for Class B
Shares and Class C Shares. This requirement does not apply, however, if the
balance falls below the required minimum value because of changes in the net
asset value of the respective Share Class. Before Shares are redeemed to close
an account, the shareholder is notified in writing and allowed 30 days to
purchase additional Shares to meet the minimum requirement.
Trust Information
Management of the Trust
Board of Trustees. The Trust is managed by a Board of Trustees. The Trustees
are responsible for managing the Trust's business affairs and for exercising
all the Trust's powers except those reserved for the shareholders. An
Executive Committee of the Board of Trustees handles the Board's
responsibilities between meetings of the Board.
Investment Adviser. Investment decisions for the Fund are made by Federated
Management, the Fund's investment adviser, subject to direction by the
Trustees. The Adviser continually conducts investment research and supervision
for the Fund and is responsible for the purchase or sale of portfolio
instruments, for which it receives an annual fee from the Fund.
Advisory Fees. The Adviser receives an annual investment advisory fee equal
to 0.75 of 1% of the Fund's average daily net assets. Under the investment
advisory contract, which provides for the voluntary waiver of the advisory fee
by the Adviser, the Adviser may voluntarily waive some or all of its fee.
This does not include reimbursement to the Fund of any expenses incurred by
shareholders who use the transfer agent's subaccounting facilities. The
Adviser can terminate this voluntary waiver at any time in its sole
discretion. The Adviser has also undertaken to reimburse the Fund for
operating expenses in excess of limitations established by certain states.
Adviser's Background. Federated Management, a Delaware business
trust organized on April 11, 1989, is a registered investment adviser
under the Investment Advisers Act of 1940. It is a subsidiary of
Federated Investors. All of the Class A (voting) Shares of Federated
Investors are owned by a trust, the Trustees of which are John F.
Donahue, Chairman and Trustee of Federated Investors, Mr. Donahue's
wife, and Mr. Donahue's son, J. Christopher Donahue, who is President
and Trustee of Federated Investors.
Federated Management and other subsidiaries of Federated Investors
serve as investment advisers to a number of investment companies and
private accounts. Certain other subsidiaries also provide
administrative services to a number of investment companies. With
over $72 billion invested across more than 260 funds under management
and/or administration by its subsidiaries, as of December 31, 1994,
Federated Investors is one of the largest mutual fund investment
managers in the United States. With more than 1,750 employees,
Federated continues to be led by the management who founded the
company in 1955. Federated funds are presently at work in and
through 4,000 financial institutions nationwide. More than 100,000
investment professionals have selected Federated funds for their
clients.
(PORTFOLIO MANAGER BIOGRAPHY TO COME)
Both the Trust and the Adviser have adopted strict codes of ethics governing the
conduct of all employees who manage the Fund and its portfolio securities.
These codes recognize that such persons owe a fiduciary duty to the Fund's
shareholders and must place the interests of shareholders ahead of the
employees' own interest. Among other things, the codes: require preclearance
and periodic reporting of personal securities transactions; prohibit personal
transactions in securities being purchased or sold, or being considered for
purchase or sale, by the Fund; prohibit purchasing securities in initial public
offerings; and prohibit taking profits on securities held for less than sixty
days. Violations of the codes are subject to review by the Board of Trustees,
and could result in severe penalties.
Distribution of Shares
Federated Securities Corp. is the principal distributor for Shares of the
Fund. Federated Securities Corp. is located at Federated Investors Tower,
Pittsburgh, Pennsylvania 15222-3779. It is a Pennsylvania corporation
organized on November 14, 1969, and is the principal distributor for a number
of investment companies. Federated Securities Corp. is a subsidiary of
Federated Investors.
The distributor may offer to pay financial institutions an amount equal to 1%
of the net asset value of Class C Shares purchased by their clients or
customers at the time of purchase (except for participants in the Federated
LifeTrack_ Program). These payments will be made directly by the distributor
from its assets, and will not be made from assets of the Fund. Financial
institutions may elect to waive the initial payment described above; such
waiver will result in the waiver by the Fund of the otherwise applicable
contingent deferred sales charge.
The distributor will pay dealers an amount equal to 5.5% of the net asset
value of Class B Shares purchased by their clients or customers. These
payments will be made directly by the distributor from its assets, and will
not be made from the assets of the Fund. Dealers may voluntarily waive
receipt of all or any portion of these payments. The distributor may pay a
portion of the distribution fee discussed below to financial institutions that
waive all or any portion of the advance payments.
Distribution Plan and Shareholder Services. Under a distribution plan adopted
in accordance with Investment Company Act Rule 12b-1 (the "Distribution
Plan"), the distributor may be paid a fee in an amount computed at an annual
rate of up to .25% for Class A Shares and up to .75% for Class B Shares and
Class C Shares of the average daily net assets of each class of Shares to
finance any activity which is principally intended to result in the sale of
Shares subject to the Distribution Plan. The Fund does not currently make
payments to the distributor or charge a fee under the Distribution Plan for
Class A Shares, and shareholders of Class A Shares will be notified if the
Fund intends to charge a fee under the Distribution Plan. For Class A Shares
and Class C Shares, the distributor may select financial institutions such as
banks, fiduciaries, custodians for public funds, investment advisers, and
broker/dealers to provide sales services or distribution-related support
services as agents for their clients or customers. With respect to Class B
Shares, because distribution fees to be paid by the Fund to the distributor
may not exceed an annual rate of .75% of each class of Shares' average daily
net assets, it will take the distributor a number of years to recoup the
expenses it has incurred for its sales services and distribution-related
support services pursuant to the Plan.
The Distribution Plan is a compensation type plan. As such, the Fund makes no
payments to the distributor except as described above. Therefore, the Fund
does not pay for unreimbursed expenses of the distributor, including amounts
expended by the distributor in excess of amounts received by it from the Fund,
interest, carrying or other financing charges in connection with excess
amounts expended, or the distributor's overhead expenses. However, the
distributor may be able to recover such amounts or may earn a profit from
future payments made by Shares under the Plan.
In addition, the Fund has entered into a Shareholder Services Agreement with
Federated Shareholder Services, a subsidiary of Federated Investors, under
which the Fund may make payments up to 0.25 of 1% of the average daily net
asset value of Class A Shares, Class B Shares, and Class C Shares to obtain
certain personal services for shareholders and for the maintenance of
shareholder accounts ("Shareholder Services"). Under the Shareholder Services
Agreement, Federated Shareholder Services will either perform shareholder
services directly or will select financial institutions to perform shareholder
services. Financial institutions will receive fees based upon Shares owned by
their clients or customers. The schedules of such fees and the basis upon
which such fees will be paid will be determined from time to time by the Fund
and Federated Shareholder Services.
In addition to payments made pursuant to the Distribution Plan and Shareholder
Services Agreement, Federated Securities Corp. and Federated Shareholder
Services, from their own assets, may pay financial institutions supplemental
fees for the performance of sales services, distribution-related support
services, or shareholder services.
The Glass-Steagall Act prohibits a depository institution (such as a
commercial bank or savings and loan association) from being an underwriter or
distributor of most securities. In the event the Glass-Steagall Act is deemed
to prohibit depository institutions from acting in the capacities described
above or should Congress relax current restrictions on depository
institutions, the Trustees will consider appropriate changes in the services.
State securities laws governing the ability of depository institutions to act
as underwriters or distributors of securities may differ from interpretations
given to the Glass-Steagall Act and, therefore, banks and financial
institutions may be required to register as dealers pursuant to state laws.
Other Payments to Financial Institutions. Federated Securities Corp. will pay
financial institutions, at the time of purchase of Class A Shares, an amount
equal to .50 of 1% of the net asset value of Class A Shares purchased by their
clients or customers under the Federated LifeTrack_ Program or by certain
qualified plans as approved by Federated Securities Corp. (Such payments are
subject to a reclaim from the financial institution should the assets leave
the program within 12 months after purchase.)
Furthermore, with respect to Class A Shares, Class B Shares, and Class C
Shares, the distributor may offer to pay a fee from its own assets to
financial institutions as financial assistance for providing substantial
marketing and sales support. The support may include sponsoring sales,
educational and training seminars for their employees, providing sales
literature, and engineering computer software programs that emphasize the
attributes of the Fund. Such assistance will be predicated upon the amount of
Shares the financial institution sells or may sell, and/or upon the type and
nature of sales or marketing support furnished by the financial institution.
Any payments made by the distributor may be reimbursed by the Fund's
investment adviser or its affiliates.
Administration of the Fund
Administrative Services. Federated Administrative Services, a subsidiary of
Federated Investors, provides administrative personnel and services (including
certain legal and financial reporting services) necessary to operate the Fund.
Federated Administrative Services provides these at an annual rate which
relates to the average aggregate daily net assets of all Federated Funds as
specified below:
Average Aggregate Daily Net Assets
Maximum Administrative Fee of the Federated Funds
0.15 of 1% on the first $250 million
0.125 of 1% on the next $250 million
0.10 of 1% on the next $250 million
0.075 of 1% on assets in excess of $750 million
The administrative fee received during any fiscal year shall be at least
$125,000 per portfolio and $30,000 per each additional class of Shares.
Federated Administrative Services may choose voluntarily to waive a portion of
its fee.
Custodian. State Street Bank and Trust Company, P.O. Box 8600, Boston,
Massachusetts 02266-8600, is custodian for the securities and cash of the
Fund.
Transfer Agent and Dividend Disbursing Agent. Federated Services Company,
P.O. Box 8600, Boston, Massachusetts 02266-8600, is transfer agent for the
Shares of the Fund, and dividend disbursing agent for the Fund.
Independent Auditors. The independent auditors for the Fund are Ernst & Young
LLP, One Oxford Centre, Pittsburgh, Pennsylvania 15219.
Expenses of the Fund and Class A, Class B and Class C Shares
Holders of Class A, Class B, and Class C Shares pay their allocable portion of
Trust and Fund expenses.
The Trust expenses for which holders of Class A, Class B, and Class C Shares
pay their allocable portion include, but are not limited to: the cost of
organizing the Trust and continuing its existence; registering the Trust with
federal and state securities authorities; Trustees' fees; auditors' fees; the
cost of meetings of Trustees; legal fees of the Trust; association membership
dues; and such non-recurring and extraordinary items as may arise from time to
time.
The Fund expenses for which holders of Class A, Class B, and Class C Shares
pay their allocable portion include, but are not limited to: registering the
Fund and shares of the Fund; investment advisory services; taxes and
commissions; custodian fees; insurance premiums; auditors' fees; and such non-
recurring and extraordinary items as may arise from time to time.
At present, the only expenses which are allocated specifically to Class A,
Class B, and Class C Shares as classes are expenses under the Trust's
Distribution Plan and fees for Shareholder Services. However, the Trustees
reserve the right to allocate certain other expenses to holders of Class A,
Class B and Class C Shares as they deem appropriate ("Class Expenses"). In
any case, Class Expenses would be limited to: distribution fees; transfer
agent fees as identified by the transfer agent as attributable to holders of
Class A, Class B, and Class C Shares; fees for Shareholder Services; printing
and postage expenses related to preparing and distributing materials such as
shareholder reports, prospectuses and proxies to current shareholders;
registration fees paid to the Securities and Exchange Commission and to state
securities commissions; expenses related to administrative personnel and
services as required to support holders of Class A, Class B, and Class C
Shares; legal fees relating solely to Class A, Class B, or Class C Shares; and
Trustees' fees incurred as a result of issues related solely to Class A, Class
B, or Class C Shares.
Brokerage Transactions
When selecting brokers and dealers to handle the purchase and sale of
portfolio instruments, the Adviser looks for prompt execution of the order at
a favorable price. In working with dealers, the Adviser will generally utilize
those who are recognized dealers in specific portfolio instruments, except
when a better price and execution of the order can be obtained elsewhere. In
selecting among firms believed to meet these criteria, the Adviser may give
consideration to those firms which have sold or are selling Shares of the Fund
and other funds distributed by Federated Securities Corp. The Adviser makes
decisions on portfolio transactions and selects brokers and dealers subject to
review by the Trustees.
Shareholder Information
Voting Rights
Each share of the Fund gives the shareholder one vote in Trustee elections and
other matters submitted to shareholders for vote. All Shares of each Fund or
class in the Trust have equal voting rights, except that in matters affecting
only a particular Fund or class, only Shares of that Fund or class are
entitled to vote.
As a Massachusetts business trust, the Trust is not required to hold annual
shareholder meetings. Shareholder approval will be sought only for certain
changes in the Trust's or the Fund's operation and for the election of
Trustees under certain circumstances.
Trustees may be removed by the Trustees or by shareholders at a special
meeting. A special meeting of shareholders shall be called by the Trustees
upon the written request of shareholders owning at least 10% of the Trust's
outstanding shares of all series entitled to vote.
Massachusetts Partnership Law
Under certain circumstances, shareholders may be held personally liable as
partners under Massachusetts law for obligations of the Trust. To protect its
shareholders, the Trust has filed legal documents with Massachusetts that
expressly disclaim the liability of its shareholders for acts or obligations
of the Trust. These documents require notice of this disclaimer to be given
in each agreement, obligation, or instrument the Trust or its Trustees enter
into or sign.
In the unlikely event a shareholder is held personally liable for the Trust's
obligations, the Trust is required to use its property to protect or
compensate the shareholder. On request, the Trust will defend any claim made
and pay any judgment against a shareholder for any act or obligation of the
Trust. Therefore, financial loss resulting from liability as a shareholder
will occur only if the Trust itself cannot meet its obligations to indemnify
shareholders and pay judgments against them.
Tax Information
Federal Income Tax
The Fund will pay no federal income tax because it expects to meet
requirements of the Internal Revenue Code, as amended, applicable to regulated
investment companies and to receive the special tax treatment afforded to such
companies.
The Fund will be treated as a single, separate entity for federal income tax
purposes so that income (including capital gains) and losses realized by the
Trust's other portfolios will not be combined for tax purposes with those
realized by the Fund.
Unless otherwise exempt, shareholders are required to pay federal income tax
on any dividends and other distributions, including capital gains
distributions, received. This applies whether dividends and distributions are
received in cash or as additional Shares. Distributions representing long-term
capital gains, if any, will be taxable to shareholders as long-term capital
gains no matter how long the shareholders have held the Shares. No federal
income tax is due on any dividends earned in an IRA or qualified retirement
plan until distributed.
Pennsylvania Corporate and Personal Property Taxes
In the opinion of Houston, Houston & Donnelly, counsel to the Trust:
o the Trust is not subject to Pennsylvania corporate or personal
property taxes; and
o Trust shares may be subject to personal property taxes imposed
by counties, municipalities, and school districts in Pennsylvania
to the extent that the portfolio securities in the Trust would be
subject to such taxes if owned directly by residents of those
jurisdictions.
Shareholders are urged to consult their own tax advisers regarding the status
of their accounts under state and local tax laws.
Performance Information
From time to time, the Fund advertises its total return and yield for each
class of Shares.
Total return represents the change, over a specific period of time, in the
value of an investment in each class of Shares after reinvesting all income
and capital gains distributions. It is calculated by dividing that change by
the initial investment and is expressed as a percentage.
The yield of each class of Shares is calculated by dividing the net investment
income per share (as defined by the Securities and Exchange Commission) earned
by each class of Shares over a thirty-day period by the maximum offering price
per share of each class on the last day of the period. This number is then
annualized using semi-annual compounding. The yield does not necessarily
reflect income actually earned by each class of Shares and, therefore, may not
correlate to the dividends or other distributions paid to shareholders.
The performance information reflects the effect of non-recurring charges, such
as the maximum sales load or contingent deferred sales charges, which, if
excluded, would increase the total return and yield.
Total return and yield will be calculated separately for Class A Shares, Class
B Shares, and Class C Shares. Because Class B Shares and Class C Shares are
subject to higher Rule 12b-1 fees, and Shareholder Services fees, the yield
for Class A Shares, for the same period, may exceed that of Class B Shares and
Class C Shares.
Because Class A Shares and Class B Shares are subject to a sales load and
contingent deferred sales charge, respectively, the total return for Class C
Shares for the same period may exceed that of Class A Shares and Class B
Shares. Depending on the dollar amount invested, and the time period for which
any particular class of Shares is held, the total return for any particular
class may exceed that of another.
From time to time, advertisements for Class A Shares, Class B Shares, and
Class C Shares of the Fund may refer to ratings, rankings, and other
information in certain financial publications and/or compare the performance
of Class A Shares, Class B Shares, and Class C Shares to certain indices.
Federated Small Cap Strategies Fund
(A Portfolio of Federated Equity Funds)
(formerly, Federated Growth Trust)
Class A Shares
Class B Shares
Class C Shares
Combined Prospectus
An Open-End, Diversified
Management Investment Company
September __, 1995
FEDERATED SECURITIES CORP.
Distributor
A subsidiary of Federated Investors
Federated Investors Tower
Pittsburgh, PA 15222-3779
CUSIP #s
#######X (date)
Federated Small Cap Strategies Fund
(A Portfolio of Federated Equity Funds)
(formerly, Federated Growth Trust)
Class A Shares
Class B Shares
Class C Shares
Combined Statement of Additional Information
This Combined Statement of Additional Information should be read with
the combined prospectus for Federated Small Cap Strategies Fund (the
"Fund") dated September __, 1995. This Statement is not a prospectus
itself. To receive a copy of the prospectus, write or call the Fund.
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
Statement dated September __, 1995
FEDERATED SECURITIES CORP.
Distributor
A subsidiary of Federated Investors
General Information About the
Fund 1
Investment Objective and
Policies 1
Corporate Debt Securities 1
Warrants 1
Restricted and Illiquid
Securities 1
Futures and Options Transactions 1
Futures Contracts 2
"Margin" in Futures Transactions 2
Put Options on Financial Futures
Contracts 2
Stock Index Options 3
Call Options on Financial and
Stock Index Futures Contracts 3
Purchasing Put and Call Options
on Portfolio Securities 3
Writing Covered Put and Call
Options on Portfolio Securities 3
Over-the-Counter Options 4
When-Issued and Delayed Delivery
Transactions 4
Lending of Portfolio Securities 4
Repurchase Agreements 4
Reverse Repurchase Agreements 4
Portfolio Turnover 4
Investment Limitations 4
Federated Equity Funds
Management 7
Fund Ownership 11
Trustees Compensation 11
Trustee Liability 12
Investment Advisory Services 12
Adviser to the Fund 12
Advisory Fees 12
Other Related Services 12
Administrative Services 12
Transfer Agent and Dividend
Disbursing Agent 12
Brokerage Transactions 13
Purchasing Shares 13
Distribution Plan and
Shareholder Services Agreement 13
Conversion to Federal Funds 13
Purchases by Sales
Representatives, Trustees, and
Employees of the Fund 13
Determining Net Asset Value 14
Determining Market Value of
Securities 14
Redeeming Shares 14
Redemption in Kind 14
Exchanging Securities for Shares 14
Tax Consequences 15
Tax Status 15
The Fund's Tax Status 15
Shareholders' Tax Status 15
Total Return 15
Yield 15
Performance Comparisons 16
About Federated Investors 17
Mutual Fund Market 17
Institutional 18
Trust Organizations 18
Broker/Dealers and Bank
Broker/Dealer Subsidiaries 18
Appendix 19
General Information About the Fund
The Fund is a portfolio of Federated Equity Funds (the "Trust"). The Trust
was established as a Massachusetts business trust under a Declaration of Trust
dated April 17, 1984. Shares of the Fund are offered in three classes known
as Class A Shares, Class B Shares, and Class C Shares (individually and
collectively referred to as "Shares" as the context may require). This
Combined Statement of Additional Information relates to all three classes of
Shares.
Investment Objective and Policies
The investment objective of the Fund is to provide capital appreciation. Any
income realized from the portfolio is entirely incidental. The Fund pursues
its investment objective by investing primarily in a portfolio of common
stocks of small and medium sized companies. The investment objective cannot
be changed without approval of shareholders.
Corporate Debt Securities
Corporate debt securities may bear fixed, fixed and contingent, or variable
rates of interest. They may involve equity features such as conversion or
exchange rights, warrants for the acquisition of common stock of the same or a
different issuer, participations based on revenues, sales, or profits, or the
purchase of common stock in a unit transaction (where corporate debt
securities and common stock are offered as a unit).
Warrants
The Fund may invest in warrants. Warrants are basically options to purchase
common stock at a specific price (usually at a premium above the market value
of the optioned common stock at issuance) valid for a specific period of time.
Warrants may have a life ranging from less than a year to twenty years or may
be perpetual. However, most warrants have expiration dates after which they
are worthless. In addition, if the market price of the common stock does not
exceed the warrant's exercise price during the life of the warrant, the
warrant will expire as worthless. Warrants have no voting rights, pay no
dividends, and have no rights with respect to the assets of the corporation
issuing them. The percentage increase or decrease in the market price of the
warrant may tend to be greater than the percentage increase or decrease in the
market price of the optioned common stock.
Restricted and Illiquid Securities
The ability of the Baord of Trustees (the "Trustees") to determine the
liquidity of certain restricted securities is permitted under a Securities and
Exchange Commission ("SEC") staff position set forth in the adopting release
for Rule 144A under the Securities Act of 1933 (the "Rule"). The Rule is a
non-exclusive safe-harbor for certain secondary market transactions involving
registration for resales of otherwise restricted securities to qualified
institutional buyers. The Rule was expected to further enhance the liquidity
of the secondary market for securities eligible for resale under the Rule.
The Fund believes that the staff of the SEC has left the question of
determining the liquidity of all restricted securities to the Trustees. The
Trustees may consider the following criteria in determining the liquidity of
certain restricted securities:
o the frequency of trades and quotes for the security;
o the number of dealers willing to purchase or sell the security and
the number of other potential buyers;
o dealer undertakings to make a market in the security; and
o the nature of the security and the nature of the marketplace
trades.
The Fund may invest in commercial paper issued in reliance on the exemption
from registration afforded by Section 4(2) of the Securities Act of 1933 and
treats such commercial paper as liquid. Section 4(2) commercial paper is
restricted as to disposition under federal securities law and is generally
sold to institutional investors, such as the Fund, who agree that they are
purchasing the paper for investment purposes and not with a view to public
distribution. Any resale by the purchaser must be in an exempt transaction.
Section 4(2) commercial paper is normally resold to other institutional
investors like the Fund through or with the assistance of the issuer or
investment dealers who make a market in Section 4(2) commercial paper, thus
providing liquidity.
Futures and Options Transactions
As a means of reducing fluctuations in the net asset value of shares of the
Fund, the Fund may attempt to hedge all or a portion of its portfolio by
buying and selling financial futures contracts, buying put and call options on
portfolio securities and put options on financial futures contracts, and
writing call options on futures contracts. The Fund may also write covered
call options on its portfolio securities and covered put options to attempt to
increase its current income. The Fund will maintain its positions in
securities, option rights, and segregated cash subject to puts and calls until
the options are exercised, closed, or have expired. An option position on
financial futures contracts may be closed out over-the-counter or on a
nationally recognized exchange which provides a secondary market for options
of the same series.
Futures Contracts
The Fund may purchase and sell financial futures contracts to hedge against
the effects of changes in the value of portfolio securities due to anticipated
changes in interest rates and market conditions without necessarily buying or
selling the securities. The Fund also may purchase and sell stock index
futures to hedge against changes in prices. The Fund will not engage in
futures transactions for speculative purposes.
A futures contract is a firm commitment by two parties: the seller who agrees
to make delivery of the specific type of security called for in the contract
("going short") and the buyer who agrees to take delivery of the security
("going long") at a certain time in the future. For example, in the fixed
income securities market, prices move inversely to interest rates. A rise in
rates means a drop in price. Conversely, a drop in rates means a rise in
price. In order to hedge its holdings of fixed income securities against a
rise in market interest rates, the Fund could enter into contracts to deliver
securities at a predetermined price (i.e., "go short") to protect itself
against the possibility that the prices of its fixed income securities may
decline during the Fund's anticipated holding period. The Fund would "go long"
(agree to purchase securities in the future at a predetermined price) to hedge
against a decline in market interest rates.
Stock index futures contracts are based on indices that reflect the market
value of common stock of the firms included in the indices. An index futures
contract is an agreement pursuant to which two parties agree to take or make
delivery of an amount of cash equal to the differences between the value of
the index at the close of the last trading day of the contract and the price
at which the index contract was originally written.
"Margin" in Futures Transactions
Unlike the purchase or sale of a security, the Fund does not pay or receive
money upon the purchase or sale of a futures contract. Rather, the Fund is
required to deposit an amount of "initial margin" in cash or U.S. Treasury
bills with its custodian (or the broker, if legally permitted). The nature of
initial margin in futures transactions is different from that of margin in
securities transactions in that initial margin in futures transactions does
not involve the borrowing of funds by the Fund to finance the transactions.
Initial margin is in the nature of a performance bond or good faith deposit on
the contract which is returned to the Fund upon termination of the futures
contract, assuming all contractual obligations have been satisfied.
A futures contract held by the Fund is valued daily at the official settlement
price of the exchange on which it is traded. Each day the Fund pays or
receives cash, called "variation margin," equal to the daily change in value
of the futures contract. This process is known as "marking to market."
Variation margin does not represent a borrowing or loan by the Fund but is
instead settlement between the Fund and the broker of the amount one would owe
the other if the futures contract expired. In computing its daily net asset
value, the Fund will mark to market its open futures positions.
The Fund is also required to deposit and maintain margin when it writes call
options on futures contracts.
Put Options on Financial Futures Contracts
The Fund may purchase listed put options on financial futures contracts to
protect portfolio securities against decreases in value resulting from market
factors, such as an anticipated increase in interest rates. Unlike entering
directly into a futures contract, which requires the purchaser to buy a
financial instrument on a set date at a specified price, the purchase of a put
option on a futures contract entitles (but does not obligate) its purchaser to
decide on or before a future date whether to assume a short position at the
specified price.
Generally, if the hedged portfolio securities decrease in value during the
term of an option, the related futures contracts will also decrease in value
and the option will increase in value. In such an event, the Fund will
normally close out its option by selling an identical option. If the hedge is
successful, the proceeds received by the Fund upon the sale of the second
option will be large enough to offset both the premium paid by the Fund for
the original option plus the decrease in value of the hedged securities.
Alternatively, the Fund may exercise its put option to close out the position.
To do so, it would simultaneously enter into a futures contract of the type
underlying the option (for a price less than the strike price of the option)
and exercise the option. The Fund would then deliver the futures contract in
return for payment of the strike price. If the Fund neither closes out nor
exercises an option, the option will expire on the date provided in the option
contract, and only the premium paid for the contract will be lost.
Stock Index Options
The Fund may purchase put options on stock indices listed on national
securities exchanges or traded in the over-the-counter market. A stock index
fluctuates with changes in the market values of the stocks included in the
index.
The effectiveness of purchasing stock index options will depend upon the
extent to which price movements in the Fund's portfolio correlate with price
movements of the stock index selected. Because the value of an index option
depends upon movements in the level of the index rather than the price of a
particular stock, whether the Fund will realize a gain or loss from the
purchase of options on an index depends upon movements in the level of stock
prices in the stock market generally or, in the case of certain indices, in an
industry or market segment, rather than movements in the price of a particular
stock. Accordingly, successful use by the Fund of options on stock indices
will be subject to the ability of the Adviser to predict correctly movements
in the directions of the stock market generally or of a particular industry.
This requires different skills and techniques than predicting changes in the
price of individual stocks.
Call Options on Financial and Stock Index Futures Contracts
In addition to purchasing put options on futures, the Fund may write listed
and over-the-counter call options on financial and stock index futures
contracts (including cash-settled stock index options) to hedge its portfolio
against an increase in market interest rates or a decrease in stock prices.
When the Fund writes a call option on a futures contract, it is undertaking
the obligation of assuming a short futures position (selling a futures
contract) at the fixed strike price at any time during the life of the option
if the option is exercised. As stock prices fall or market interest rates
rise, causing the prices of futures to go down, the Fund's obligation under a
call option on a future (to sell a futures contract) costs less to fulfill,
causing the value of the Fund's call option position to increase.
In other words, as the underlying futures price goes down below the strike
price, the buyer of the option has no reason to exercise the call, so that the
Fund keeps the premium received for the option. This premium can substantially
offset the drop in value of the Fund's portfolio securities.
Prior to the expiration of a call written by the Fund, or exercise of it by
the buyer, the Fund may close out the option by buying an identical option. If
the hedge is successful, the cost of the second option will be less than the
premium received by the Fund for the initial option. The net premium income of
the Fund will then substantially offset the decrease in value of the hedged
securities.
The Fund will not maintain open positions in futures contracts it has sold or
call options it has written on futures contracts if, in the aggregate, the
value of the open positions (marked to market) exceeds the current market
value of its securities portfolio plus or minus the unrealized gain or loss on
those open positions, adjusted for the correlation of volatility between the
hedged securities and the futures contracts. If this limitation is exceeded at
any time, the Fund will take prompt action to close out a sufficient number of
open contracts to bring its open futures and options positions within this
limitation.
Purchasing Put and Call Options on Portfolio Securities
The Fund may purchase put and call options on portfolio securities to protect
against price movements in particular securities in its portfolio. A put
option gives the Fund, in return for a premium, the right to sell the
underlying security to the writer (seller) at a specified price during the
term of the option. A call option gives the Fund, in return for a premium, the
right to buy the underlying securities from the seller.
Writing Covered Put and Call Options on Portfolio Securities
The Fund may also write covered put and call options to generate income and
thereby protect against price movements in particular securities in the Fund's
portfolio. As the writer of a call option, the Fund has the obligation upon
exercise of the option during the option period to deliver the underlying
security upon payment of the exercise price. As the writer of a put option,
the Fund has the obligation to purchase a security from the purchaser of the
option upon the exercise of the option.
The Fund may only write call options either on securities held in its
portfolio or on securities which it has the right to obtain without payment of
further consideration (or has segregated cash in the amount of any additional
consideration). In the case of put options, the Fund will segregate cash or
U.S. Treasury obligations with a value equal to or greater than the exercise
price of the underlying securities.
Over-the-Counter Options
The Fund may purchase and write over-the-counter options on portfolio
securities in negotiated transactions with the buyers or writers of the
options when options on the portfolio securities held by the Fund are not
traded on an exchange.
When-Issued and Delayed Delivery Transactions
These transactions are made to secure what is considered to be an advantageous
price or yield for the Fund. No fees or other expenses, other than normal
transaction costs, are incurred. However, liquid assets of the Fund
sufficient to make payment for the securities to be purchased are segregated
on the Fund's records at the trade date. These assets are marked to market
daily and are maintained until the transaction has been settled. The Fund
does not intend to engage in when-issued and delayed delivery transactions to
an extent that would cause the segregation of more than 20% of the total value
of its assets.
Lending of Portfolio Securities
The collateral received when the Fund lends portfolio securities must be
valued daily and, should the market value of the loaned securities increase,
the borrower must furnish additional collateral to the Fund. During the time
portfolio securities are on loan, the borrower pays the Fund any dividends or
interest paid on such securities. Loans are subject to termination at the
option of the Fund or the borrower. The Fund may pay reasonable administrative
and custodial fees in connection with a loan and may pay a negotiated portion
of the interest earned on the cash or equivalent collateral to the borrower or
placing broker. The Fund does not have the right to vote securities on loan,
but would terminate the loan and regain the right to vote if that were
considered important with respect to the investment.
Repurchase Agreements
The Fund or its custodian will take possession of the securities subject to
repurchase agreements, and these securities will be marked to market daily. In
the event that such a defaulting seller filed for bankruptcy or became
insolvent, disposition of such securities by the Fund might be delayed pending
court action. The Fund believes that under the regular procedures normally in
effect for custody of the Fund's portfolio securities subject to repurchase
agreements, a court of competent jurisdiction would rule in favor of the Fund
and allow retention or disposition of such securities. The Fund will only
enter into repurchase agreements with banks and other recognized financial
institutions, such as broker/dealers, which are found by the Fund's investment
adviser to be creditworthy pursuant to guidelines established by the Trustees.
Reverse Repurchase Agreements
The Fund may also enter into reverse repurchase agreements. This transaction
is similar to borrowing cash. In a reverse repurchase agreement, the Fund
transfers possession of a portfolio instrument to another person, such as a
financial institution, broker, or dealer, in return for a percentage of the
instrument's market value in cash, and agrees that on a stipulated date in the
future the Fund will repurchase the portfolio instrument by remitting the
original consideration plus interest at an agreed upon rate. The use of
reverse repurchase agreements may enable the Fund to avoid selling portfolio
instruments at a time when a sale may be deemed to be disadvantageous, but the
ability to enter into reverse repurchase agreements does not ensure that the
Fund will be able to avoid selling portfolio instruments at a disadvantageous
time.
When effecting reverse repurchase agreements, liquid assets of the Fund, in a
dollar amount sufficient to make payment for the obligations to be purchased,
are segregated at the trade date. These securities are marked to market daily
and are maintained until the transaction is settled.
Portfolio Turnover
The Fund will not attempt to set or meet a portfolio turnover rate since any
turnover would be incidental to transactions undertaken in an attempt to
achieve the Fund's investment objective. It is not anticipated that the
portfolio trading engaged in by the Fund will result in its annual rate of
portfolio turnover exceeding 100%.
Investment Limitations
Selling Short and Buying on Margin
The Fund will not sell any securities short or purchase any securities
on margin, other than in connection with buying stock index futures
contracts, put options on stock index futures, put options on financial
futures and portfolio securities, and writing covered call options, but
may obtain such short-term credits as are necessary for the clearance of
purchases and sales of portfolio securities. The deposit or payment by
the Fund of initial or variation margin in connection with financial
futures contracts or related options transactions is not considered the
purchase of a security on margin.
Issuing Senior Securities and Borrowing Money
The Fund will not issue senior securities, except that the Fund may
borrow money directly or through reverse repurchase agreements in
amounts up to one-third of the value of its total assets, including the
amount borrowed. The Fund will not borrow money or engage in reverse
repurchase agreements for investment leverage, but rather as a
temporary, extraordinary, or emergency measure or to facilitate
management of the portfolio by enabling the Fund to meet redemption
requests when the liquidation of portfolio securities is deemed to be
inconvenient or disadvantageous. The Fund will not purchase any
securities while any borrowings in excess of 5% of its total assets are
outstanding.
Pledging Assets
The Fund will not mortgage, pledge, or hypothecate any assets except to
secure permitted borrowings. For purposes of this limitation, the
following will not be deemed to be pledges of the Fund's assets: margin
deposits for the purchase and sale of financial futures contracts and
related options, and segregation or collateral arrangements made in
connection with options activities or the purchase of securities on a
when-issued basis.
Concentration of Investments
The Fund will not invest 25% or more of the value of its total assets in
any one industry, except that the Fund may invest 25% or more of the
value of its total assets in securities issued or guaranteed by the U.S.
government, its agencies or instrumentalities, and repurchase agreements
collateralized by such securities.
Investing in Commodities
The Fund will not purchase or sell commodities, commodity contracts, or
commodity futures contracts. However, the Fund may purchase put options
on stock index futures, put options on financial futures, stock index
futures contracts, and put options on portfolio securities, and may
write covered call options.
Investing in Real Estate
The Fund will not buy or sell real estate, including limited partnership
interests, although it may invest in the securities of companies whose
business involves the purchase or sale of real estate or in securities
which are secured by real estate or interests in real estate.
Lending Cash or Securities
The Fund will not lend any of its assets, except portfolio securities.
This shall not prevent the Fund from purchasing or holding U.S.
government obligations, money market instruments, variable rate demand
notes, bonds, debentures, notes, certificates of indebtedness, or other
debt securities, entering into repurchase agreements, or engaging in
other transactions where permitted by the Fund's investment objective,
policies, and limitations or the Trust's Declaration of Trust.
Underwriting
The Fund will not underwrite any issue of securities, except as it may
be deemed to be an underwriter under the Securities Act of 1933 in
connection with the sale of securities in accordance with its investment
objective, policies, and limitations.
Diversification of Investments
With respect to securities comprising 75% of the value of its total
assets, the Fund will not purchase securities issued by any one issuer
(other than cash, cash items, or securities issued or guaranteed by the
U.S. government, its agencies or instrumentalities, and repurchase
agreements collateralized by such securities) if, as a result, more than
5% of the value of its total assets would be invested in the securities
of that issuer, and will not acquire more than 10% of the outstanding
voting securities of any one issuer.
The above investment limitations cannot be changed without shareholder
approval. The following limitations, however, may be changed by the Trustees
without shareholder approval. Shareholders will be notified before any
material changes in these limitations become effective.
Investing in Securities of Other Investment Companies
The Fund will limit its investment in other investment companies to no
more than 3% of the total outstanding voting stock of any investment
company, invest no more than 5% of its total assets in any one
investment company, and invest no more than 10% of its total assets in
investment companies in general. The Fund will purchase securities of
investment companies only in open-market transactions involving only
customary broker's commissions. However, these limitations are not
applicable if the securities are acquired in a merger, consolidation, or
acquisition of assets.
Investing in Illiquid Securities
The Fund will not invest more than 15% of the value of its net assets in
illiquid securities, including repurchase agreements providing for
settlement in more than seven days after notice, non-negotiable fixed
time deposits with maturities over seven days, over-the-counter options,
and certain restricted securities not determined by the Trustees to be
liquid.
Investing in New Issuers
The Fund will not invest more than 5% of the value of its total assets
in securities of issuers with records of less than three years of
continuous operations, including the operation of any predecessor.
Investing in Issuers Whose Securities are Owned by Officers and Trustees
of the Trust
The Fund will not purchase or retain the securities of any issuer if the
officers and Trustees of the Trust or the Fund's investment adviser,
owning individually more than 1/2 of 1% of the issuer's securities,
together own more than 5% of the issuer's securities.
Investing in Restricted Securities
The Fund will not invest more than 5% of the value of its total assets
in securities subject to restrictions on resale under the Securities Act
of 1933, except for commercial paper issued under Section 4(2) of the
Securities Act of 1933 and certain other restricted securities which
meet the criteria for liquidity as established by the Trustees.
Investing in Minerals
The Fund will not purchase interests in oil, gas, or other mineral
exploration or development programs or leases, although it may invest in
the securities of issuers which invest in or sponsor such programs.
Purchasing Securities to Exercise Control
The Fund will not purchase securities of a company for the purpose of
exercising control or management.
Investing in Options
The Fund will not purchase put or call options on securities or futures
contracts, if more than 5% of the value of the Fund's total assets would
be invested in premiums on open option positions.
Writing Covered Call Options
The Fund will not write call options on securities unless the securities
are held in the Fund's portfolio or unless the Fund is entitled to them
in deliverable form without further payment or after segregating cash in
the amount of any further payment.
Investing in Warrants
The Fund will not invest more than 5% of the value of its net assets in
warrants. No more than 2% of this 5% may be warrants which are not
listed on the New York or American Stock Exchange. For purposes of this
investment restriction, warrants acquired by the Fund in units with or
attached to securities may be deemed to be without value.
For purposes of its policies and limitations, the Fund considers certificates
of deposit and demand and time deposits issued by a U.S. branch of a domestic
bank or savings and loan having capital, surplus, and undivided profits in
excess of $100,000,000 at the time of investment to be "cash items."
Except with respect to borrowing money, if a percentage limitation is adhered
to at the time of investment, a later increase or decrease in percentage
resulting from any change in value or net assets will not result in a
violation of such restriction.
The Fund has no present intent to borrow money, pledge securities, or invest
in reverse repurchase agreements in excess of 5% of the value of its total
assets in the coming fiscal year.
To comply with registration requirements in certain states, the Fund (1) will
limit the aggregate value of the assets underlying covered call options or put
options written by the Fund to not more than 25% of its net assets, (2) will
limit the premiums paid for options purchased by the Fund to 5% of its net
assets, and (3) will limit the margin deposits on futures contracts entered
into by the Fund to 5% of its net assets. (If state requirements change,
these restrictions may be revised without shareholder notification.)
Federated Equity Funds Management
Officers and Trustees are listed with their addresses, birthdates, present
positions with Federated Equity Funds, and principal occupations.
John F. Donahue@*
Federated Investors Tower
Pittsburgh, Pennsylvania
Birthdate: July 28, 1924
Chairman and Trustee
Chairman and Trustee, Federated Investors, Federated Advisers, Federated
Management, and Federated Research; Chairman and Director, Federated Research
Corp.; Chairman, Passport Research, Ltd.; Director, AEtna Life and Casualty
Company; Chief Executive Officer and Director, Trustee, or Managing General
Partner of the Funds. Mr. Donahue is the father of J. Christopher Donahue,
Vice President of the Trust.
John T. Conroy, Jr.
Wood/IPC Commercial Department
John R. Wood and Associates, Inc., Realtors
3255 Tamiami Trail North
Naples, Florida
Birthdate: June 23, 1937
Trustee
President, Investment Properties Corporation; Senior Vice-President, John R.
Wood and Associates, Inc., Realtors; President, Northgate Village Development
Corporation; Partner or Trustee in private real estate ventures in Southwest
Florida; Director, Trustee, or Managing General Partner of the Funds;
formerly, President, Naples Property Management, Inc.
William J. Copeland
One PNC Plaza - 23rd Floor
Pittsburgh, Pennsylvania
Birthdate: July 4, 1918
Trustee
Director and Member of the Executive Committee, Michael Baker, Inc.; Director,
Trustee, or Managing General Partner of the Funds; formerly, Vice Chairman and
Director, PNC Bank, N.A., and PNC Bank Corp. and Director, Ryan Homes, Inc.
James E. Dowd
571 Hayward Mill Road
Concord, Pennsylvania
Birthdate: May 18, 1922
Trustee
Attorney-at-law; Director, The Emerging Germany Fund, Inc.; Director, Trustee,
or Managing General Partner of the Funds.
Lawrence D. Ellis, M.D.*
3471 Fifth Avenue, Suite 1111
Pittsburgh, Pennsylvania
Birthdate: October 11, 1932
Trustee
Professor of Medicine and Member, Board of Trustees, University of Pittsburgh;
Medical Director, University of Pittsburgh Medical Center - Downtown; Member,
Board of Directors, University of Pittsburgh Medical Center; formerly,
Hematologist, Oncologist, and Internist, Presbyterian and Montefiore
Hospitals; Director, Trustee, or Managing General Partner of the Funds.
Edward L. Flaherty, Jr.@
Henny, Kochuba, Meyer and Flaherty
Two Gateway Center - Suite 674
Pittsburgh, Pennsylvania
Birthdate: June 18, 1924
Trustee
Attorney-at-law; Shareholder, Henny, Kochuba, Meyer and Flaherty; Director,
Eat'N Park Restaurants, Inc., and Statewide Settlement Agency, Inc.; Director,
Trustee, or Managing General Partner of the Funds; formerly, Counsel, Horizon
Financial, F.A., Western Region.
Peter E. Madden
70 Westcliff Road
Westin, Massachusetts
Birthdate: March 16, 1942
Trustee
Consultant; State Representative, Commonwealth of Massachusetts; Director,
Trustee, or Managing General Partner of the Funds; formerly, President, State
Street Bank and Trust Company and State Street Boston Corporation.
Gregor F. Meyer
Henny, Kochuba, Meyer and Flaherty
Two Gateway Center - Suite 674
Pittsburgh, Pennsylvania
Birthdate: October 6, 1926
Trustee
Financi
Financial, F.A.
John E. Murray, Jr., J.D., S.J.D.
President, Duquesne University
Pittsburgh, Pennsylvania
Birthdate: December 20, 1932
Trustee
President, Law Professor, Duquesne University; Consulting Partner, Mollica,
Murray and Hogue; Director, Trustee or Managing General Partner of the Funds.
Wesley W. Posvar
1202 Cathedral of Learning
University of Pittsburgh
Pittsburgh, Pennsylvania
Birthdate: September 14, 1925
Trustee
Professor, International Politics and Management Consultant; Trustee, Carnegie
Endowment for International Peace, RAND Corporation, Online Computer Library
Center, Inc., and U.S. Space Foundation; Chairman, Czecho Management Center;
Director, Trustee, or Managing General Partner of the Funds; President
Emeritus, University of Pittsburgh; founding Chairman, National Advisory
Council for Environmental Policy and Technology and Federal Emergency
Management Advisory Board.
Marjorie P. Smuts
4905 Bayard Street
Pittsburgh, Pennsylvania
Birthdate: July 21, 1935
Trustee
Public relations/marketing consultant; Director, Trustee, or Managing General
Partner of the Funds.
Glen R. Johnson
Federated Investors Tower
Pittsburgh, Pennsylvania
Birthdate: May 2, 1929
President
Trustee, Federated Investors; President and/or Trustee of some of the Funds;
staff member, Federated Securities Corp. and Federated Administrative
Services.
J. Christopher Donahue
Federated Investors Tower
Pittsburgh, Pennsylvania
Birthdate: April 11, 1949
Vice President
Presi
President or Vice President of the Funds; Director, Trustee, or Managing
General Partner of some of the Funds. Mr. Donahue is the son of John F.
Donahue, Chairman and Trustee of the Trust.
Richard B. Fisher
Federated Investors Tower
Pittsburgh, Pennsylvania
Birthdate: May 17, 1923
Vice President
Executive Vice President and Trustee, Federated Investors; Director, Federated
Research Corp.; Chairman and Director, Federated Securities Corp.; President
or Vice President of some of the Funds; Director or Trustee of some of the
Funds.
Edward C. Gonzales
Federated Investors Tower
Pittsburgh, Pennsylvania
Birthdate: October 22, 1930
Vice President and Treasurer
Vice President, Treasurer, and Trustee, Federated Investors; Vice President
and Treasurer, Federated Advisers, Federated Management, Federated Research,
Federated Research Corp., and Passport Research, Ltd.; Executive Vice
President, Treasurer, and Director, Federated Securities Corp.; Trustee,
Federated Services Company and Federated Shareholder Services; Chairman,
Treasurer, and Trustee, Federated Administrative Services; Trustee or Director
of some of the Funds; Vice President and Treasurer of the Funds.
John W. McGonigle
Federated Investors Tower
Pittsburgh, Pennsylvania
Birthdate: October 26, 1938
Vice President and Secretary
Vice President, Secretary, General Counsel, and Trustee, Federated Investors;
Vice President, Secretary, and Trustee, Federated Advisers, Federated
Management, and Federated Research; Vice President and Secretary, Federated
Research Corp. and Passport Research, Ltd.; Trustee, Federated Services
Company; Executive Vice President, Secretary, and Trustee, Federated
Administrative Services; Secretary and Trustee, Federated Shareholder
Services; Executive Vice President and Director, Federated Securities Corp.;
Vice President and Secretary of the Funds.
* This Trustee is deemed to be an "interested person" as defined in the
Investment Company Act of 1940, as amended.
@ Member of the Executive Committee. The Executive Committee of the Board of
Trustees handles the responsibilities of the Board of Trustees between
meetings of the Board.
As used in the table above, "The Funds" and "Funds" mean the following
investment companies: American Leaders Fund, Inc.; Annuity Management Series;
Arrow Funds; Automated Cash Management Trust; Automated Government Money
Trust; California Municipal Cash Trust; Cash Trust Series II; Cash Trust
Series, Inc.; DG Investor Series; Edward D. Jones & Co. Daily Passport Cash
Trust; Federated ARMs Fund; Federated Exchange Fund, Ltd.; Federated GNMA
Trust; Federated Government Trust; Federated Growth Trust; Federated High
Yield Trust; Federated Income Securities Trust; Federated Income Trust;
Federated Index Trust; Federated Institutional Trust; Federated Master Trust;
Federated Municipal Trust; Federated Short-Term Municipal Trust; Federated
Short-Term U.S. Government Trust; Federated Stock Trust; Federated Tax-Free
Trust; Federated Total Return Series, Inc.; Federated U.S. Government Bond
Fund; Federated U.S. Government Securities Fund: 1-3 Years; Federated U.S,
Government Secuities Fund: 3-5 Years; First Priority Funds; Fixed Income
Securities, Inc.; Fortress Adjustable Rate U.S. Government Fund, Inc.;
Fortress Municipal Income Fund, Inc.; Fortress Utility Fund, Inc.; Fund for
U.S. Government Securities, Inc.; Government Income Securities, Inc.; High
Yield Cash Trust;; Insurance Management Series; Intermediate Municipal Trust;
International Series, Inc.; Investment Series Funds, Inc.; Investment Series
Trust; Liberty Equity Income Fund, Inc.; Liberty High Income Bond Fund, Inc.;
Liberty Municipal Securities Fund, Inc.; Liberty U.S. Government Money Market
Trust; Liberty Term Trust, Inc. - 1999; Liberty Utility Fund, Inc.; Liquid
Cash Trust; Managed Series Trust; Money Market Management, Inc.; Money Market
Obligations Trust; Money Market Trust; Municipal Securities Income Trust;
Newpoint Funds; New York Municipal Cash Trust; 111 Corcoran Funds; Peachtree
Funds; The Planters Funds; RIMCO Monument Funds; The Shawmut Funds; Star
Funds; The Starburst Funds; The Starburst Funds II; Stock and Bond Fund, Inc.;
Sunburst Funds; Targeted Duration Trust; Tax-Free Instruments Trust; Trademark
Funds; Trust for Financial Institutions; Trust For Government Cash Reserves;
Trust for Short-Term U.S. Government Securities; Trust for U.S. Treasury
Obligations; The Virtus Funds; and World Investment Series, Inc.
Fund Ownership
Officers and Trustees own less than 1% of the Fund's outstanding Shares.
Trustees Compensation
AGGREGATE
NAME , COMPENSATION
POSITION WITH FROM TOTAL COMPENSATION PAID
TRUST TRUST* FROM FUND COMPLEX +
John F. Donahue $ 0 $0 for the Trust and
Chairman and Trustee 68 other investment companies
in the Fund Complex
John T. Conroy, Jr. $ 1,566 $117,202 for the Trust and
Trustee 64 other investment companies
in the Fund Complex
William J. Copeland $ 1,566 $117,202 for the Trust and
Trustee 64 other investment companies
in the Fund Complex
James E. Dowd $ 1,566 $117,202 for the Trust and
Trustee 64 other investment companies in
the Fund Complex
Lawrence D. Ellis, M.D. $ 1,419 $106,460 for the Trust and
Trustee 64 other investment companies
in the Fund Complex
Edward L. Flaherty, Jr. $ 1,566 $117,202 for the Trust and
Trustee 64 other investment companies in
the Fund Complex
Peter E. Madden $ 1,419 $90,563 for the Trust and
Trustee 64 other investment companies
in the Fund Complex
Gregor F. Meyer $ 1,419 $106,460 for the Trust and
Trustee 64 other investment companies
in the Fund Complex
John E. Murray, Jr. $ 0 $0 for the Trust and
Trustee 69 other investment companies
in the Fund Complex
Wesley W. Posvar $ 1,419 $106,460 for the Trust and
Trustee 64 other investment companies
in the Fund Complex
Marjorie P. Smuts $ 1,419 $106,460 for the Trust and
Trustee 64 other investment companies
in the Fund Complex
*Information is furnished for the fiscal year ended October 31, 1994.
+The information is provided for the last calendar year.
Trustee Liability
The Trust's Declaration of Trust provides that the Trustees will not be liable
for errors of judgment or mistakes of fact or law. However, they are not
protected against any liability to which they would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of their office.
Investment Advisory Services
Adviser to the Fund
The Fund's investment adviser is Federated Management (the "Adviser"). It is a
subsidiary of Federated Investors. All the voting securities of Federated
Investors are owned by a trust, the trustees of which are John F. Donahue, his
wife, and his son, J. Christopher Donahue.
The Adviser shall not be liable to the Trust, the Fund, or any shareholder of
the Fund for any losses that may be sustained in the purchase, holding, or
sale of any security or for anything done or omitted by it, except acts or
omissions involving willful misfeasance, bad faith, gross negligence, or
reckless disregard of the duties imposed upon it by its contract with the
Trust.
Advisory Fees
For its advisory services, Federated Management receives an annual investment
advisory fee as described in the prospectus.
State Expense Limitations
The Adviser has undertaken to comply with the expense limitations
established by certain states for investment companies whose shares are
registered for sale in those states. If the Fund's normal operating
expenses (including the investment advisory fee, but not including
brokerage commissions, interest, taxes, and extraordinary expenses)
exceed 2-1/2% per year of the first $30 million of average net assets,
2% per year of the next $70 million of average net assets, and 1-1/2%
per year of the remaining average net assets, the Adviser will reimburse
the Fund for its expenses over the limitation.
If the Fund's monthly projected operating expenses exceed this
limitation, the investment advisory fee paid will be reduced by the
amount of the excess, subject to an annual adjustment. If the expense
limitation is exceeded, the amount to be reimbursed by the Adviser will
be limited, in any single fiscal year, by the amount of the investment
advisory fee.
This arrangement is not part of the advisory contract and may be amended
or rescinded in the future.
Other Related Services
Affiliates of the Adviser may, from time to time, provide certain electronic
equipment and software to institutional customers in order to facilitate the
purchase of shares of funds offered by Federated Securities Corp.
Administrative Services
Federated Administrative Services, a subsidiary of Federated Investors,
provides administrative personnel and services to the Fund for a fee described
in the prospectus. Dr. Henry J. Gailliot, an officer of Federated Management,
the Adviser to the Fund, holds approximately 20%, of the outstanding common
stock and serves as a director of Commercial Data Services, Inc., a company
which provides computer processing services to Federated Administrative
Services.
Transfer Agent and Dividend Disbursing Agent
Federated Services Company serves as transfer agent and dividend disbursing
agent for the Fund. The fee paid to the transfer agent is based upon the
size, type, and number of accounts and transactions made by shareholders.
Federated Services Company also maintains the Fund's accounting records. The
fee paid for this service is based upon the level of the Fund's average net
assets for the period plus out-of-pocket expenses.
Brokerage Transactions
The Adviser may select brokers and dealers who offer brokerage and research
services. These services may be furnished directly to the Fund or to the
Adviser and may include:
o advice as to the advisability of investing in securities;
o security analysis and reports;
o economic studies;
o industry studies;
o receipt of quotations for portfolio evaluations; and
o similar services.
The Adviser and its affiliates exercise reasonable business judgment in
selecting brokers who offer brokerage and research services to execute
securities transactions. They determine in good faith that commissions charged
by such persons are reasonable in relation to the value of the brokerage and
research services provided.
Research services provided by brokers may be used by the Adviser or by
affiliates of Federated Investors in advising other accounts. To the extent
that receipt of these services may supplant services for which the Adviser or
its affiliates might otherwise have paid, it would tend to reduce their
expenses.
Purchasing Shares
Except under certain circumstances described in the prospectus, Shares are
sold at their net asset value (plus a sales load on Class A Shares only) on
days the New York Stock Exchange is open for business. The procedure for
purchasing Shares is explained in the prospectus under "How To Purchase
Shares."
Distribution Plan and Shareholder Services Agreement
These arrangements permit the payment of fees to financial institutions, the
distributor, and Federated Shareholder Services as appropriate, to stimulate
distribution activities and to cause services to be provided to shareholders
by a representative who has knowledge of the shareholder's particular
circumstances and goals. These activities and services may include, but are
not limited to, marketing efforts; providing office space, equipment,
telephone facilities, and various clerical, supervisory, computer, and other
personnel as necessary or beneficial to establish and maintain shareholder
accounts and records; processing purchase and redemption transactions and
automatic investments of client account cash balances; answering routine
client inquiries; and assisting clients in changing dividend options, account
designations, and addresses.
By adopting the Distribution Plan, the Trustees expect that the Class A
Shares, Class B Shares and Class C Shares of the Fund will be able to achieve
a more predictable flow of cash for investment purposes and to meet
redemptions. This will facilitate more efficient portfolio management and
assist the Fund in pursuing its investment objectives. By identifying
potential investors whose needs are served by the Fund's objectives, and
properly servicing these accounts, it may be possible to curb sharp
fluctuations in rates of redemptions and sales.
Other benefits, which may be realized under either arrangement, may include:
(1) providing personal services to shareholders; (2) investing shareholder
assets with a minimum of delay and administrative detail; and (3) enhancing
shareholder recordkeeping systems; and (4) responding promptly to
shareholders' requests and inquiries concerning their accounts.
Conversion to Federal Funds
It is the Fund's policy to be as fully invested as possible so that maximum
interest may be earned. To this end, all payments from shareholders must be in
federal funds or be converted into federal funds before shareholders begin to
earn dividends. Federated Services Company acts as the shareholder's agent in
depositing checks and converting them to federal funds.
Purchases by Sales Representatives, Trustees, and Employees of the Fund
Trustees, employees, and sales representatives of the Fund, Federated
Management, and Federated Securities Corp. or their affiliates, or any
investment dealer who has a sales agreement with Federated Securities Corp.
and their spouses and children under 21, may buy Class A Shares at net asset
value without a sales load. Shares may also be sold without a sales load to
trusts or pension or profit-sharing plans for these people.
These sales are made with the purchaser's written assurance that the purchase
is for investment purposes and that the securities will not be resold except
through redemption by the Fund.
Determining Net Asset Value
Net asset value generally changes each day. The days on which net asset value
is calculated by the Fund are described in the prospectus.
Determining Market Value of Securities
Market values of the Fund's portfolio securities, other than options, are
determined as follows:
o according to the last sale price on a national securities exchange,
if available;
o in the absence of recorded sales for equity securities, according
to the mean between the last closing bid and asked prices and for
bonds and other fixed income securities as determined by an
independent pricing service;
o for unlisted equity securities, the latest bid prices; or
o for short-term obligations, according to the mean between bid and
asked prices as furnished by an independent pricing service or at
fair value as determined in good faith by the Board of Trustees.
Options are valued at the market values established by the exchanges at the
close of option trading unless the Trustees determine in good faith that
another method of valuing option positions is necessary.
Redeeming Shares
The Fund redeems Shares at the next computed net asset value, less any
applicable contingent deferred sales charge, after the Fund receives the
redemption request. Redemption procedures are explained in the combined
prospectus under "How To Redeem Shares." Although the transfer agent does not
charge for telephone redemptions, it reserves the right to charge a fee for
the cost of wire-transferred redemptions of less than $5,000.
Class B Shares redeemed within one to six years of purchase and Class C Shares
and applicable Class A Shares redeemed within one year of purchase may be
subject to a contingent deferred sales charge. The amount of the contingent
deferred sales charge is based upon the amount of the administrative fee paid
at the time of purchase by the distributor to the financial institution for
services rendered, and the length of time the investor remains a shareholder
in the Fund. Should financial institutions elect to receive an amount less
than the administrative fee that is stated in the prospectus for servicing a
particular shareholder, the contingent deferred sales charge and/or holding
period for that particular shareholder will be reduced accordingly.
Redemption in Kind
The Trust has elected to be governed by Rule 18f-1 of the Investment Company
Act of 1940, under which the Fund is obligated to redeem Shares for any one
shareholder in cash only up to the lesser of $250,000 or 1% of the respective
class's net asset value during any 90-day period.
Any redemption beyond this amount will also be in cash unless the Trustees
determine that payments should be in kind. In such a case, the Fund will pay
all or a portion of the remainder of the redemption in portfolio instruments,
valued in the same way as the Fund determines net asset value. The portfolio
instruments will be selected in a manner that the Trustees deem fair and
equitable.
Redemption in kind is not as liquid as a cash redemption. If redemption is
made in kind, shareholders receiving their securities and selling them before
their maturity could receive less than the redemption value of their
securities and could incur certain transaction costs.
Exchanging Securities for Shares
Investors may exchange securities they already own for Shares, or they may
exchange a combination of securities and cash for Shares. An investor should
forward the securities in negotiable form with an authorized letter of
transmittal to Federated Securities Corp. The Fund will notify the investor of
its acceptance and valuation of the securities within five business days of
their receipt by State Street Bank.
The Fund values securities in the same manner as the Fund values its assets.
The basis of the exchange will depend upon the net asset value of Shares on
the day the securities are valued. One Share of the Fund will be issued for
each equivalent amount of securities accepted.
Any interest earned on the securities prior to the exchange will be considered
in valuing the securities. All interest, dividends, subscription, or other
rights attached to the securities become the property of the Fund, along with
the securities.
Tax Consequences
Exercise of this exchange privilege is treated as a sale for federal income
tax purposes. Depending upon the cost basis of the securities exchanged for
Shares, a gain or loss may be realized by the investor.
Tax Status
The Fund's Tax Status
The Fund will pay no federal income tax because it expects to meet the
requirements of Subchapter M of the Internal Revenue Code, as amended,
applicable to regulated investment companies and to receive the special tax
treatment afforded to such companies. To qualify for this treatment, the Fund
must, among other requirements:
o derive at least 90% of its gross income from dividends, interest,
and gains from the sale of securities;
o derive less than 30% of its gross income from the sale of
securities held less than three months;
o invest in securities within certain statutory limits; and
o distribute to its shareholders at least 90% of its net income
earned during the year.
Shareholders' Tax Status
Shareholders are subject to federal income tax on dividends and capital gains
received as cash or additional Shares. No portion of any income dividend paid
by the Fund is eligible for the dividends received deduction available to
corporations. These dividends, and any short-term capital gains, are taxable
as ordinary income.
Capital Gains
Shareholders will pay federal tax at capital gains rates on long-term
capital gains distributed to them regardless of how long they have held
the Fund Shares.
Total Return
The average annual total return for each class of Shares of the Fund is the
average compounded rate of return for a given period that would equate a
$1,000 initial investment to the ending redeemable value of that investment.
The ending redeemable value is computed by multiplying the number of Shares
owned at the end of the period by the net asset value per share at the end of
the period. The number of Shares owned at the end of the period is based on
the number of Shares purchased at the beginning of the period with $1,000,
less any applicable sales load adjusted over the period by any additional
Shares, assuming the monthly reinvestment of all dividends and distributions.
Any applicable contingent deferred sales charge is deducted from the ending
value of the investment based on the lesser of the original purchase price or
the net asset value of Shares redeemed.
Yield
The yield for each class of Shares of the Fund is determined by dividing the
net investment income per share (as defined by the Securities and Exchange
Commission) earned by any class of Shares over a thirty-day period by the
maximum offering price per share of the respective class on the last day of
the period. This value is annualized using semi-annual compounding. This means
that the amount of income generated during the thirty-day period is assumed to
be generated each month over a 12-month period and is reinvested every six
months. The yield does not necessarily reflect income actually earned by the
Fund because of certain adjustments required by the Securities and Exchange
Commission and, therefore, may not correlate to the dividends or other
distributions paid to the shareholders.
To the extent that financial institutions and broker/dealers charge fees in
connection with services provided in conjunction with an investment in any
class of Shares, the performance will be reduced for those shareholders paying
those fees.
Performance Comparisons
The performance of each of the classes of Shares depends upon such variables
as:
o portfolio quality;
o average portfolio maturity;
o type of instruments in which the portfolio is invested;
o changes in interest rates and market value of portfolio securities;
o changes in the Fund's or any class of Shares' expenses; and
o various other factors.
The Fund's performance fluctuates on a daily basis largely because net
earnings and offering price per share fluctuate daily. Both net earnings and
offering price per share are factors in the computation of yield and total
return.
Investors may use financial publications and/or indices to obtain a more
complete view of the Fund's performance. When comparing performance, investors
should consider all relevant factors such as the composition of any index
used, prevailing market conditions, portfolio compositions of other funds, and
methods used to value portfolio securities and compute offering price. The
financial publications and/or indices which the Fund uses in advertising may
include:
o Russell 2000 Small Stock Index is a broadly diversified index
consisting of approximately 2,000 small capitalization common
stocks that can be used to compare to the total returns of funds
whose portfolios are invested primarily in small capitalization
common stocks.
o Standard & Poor's Daily Stock Price Index of 500 Common Stocks (S&P
500), a composite index of common stocks in industry,
transportation, and financial and public utility companies, can be
used to compare to the total returns of funds whose portfolios are
invested primarily in common stocks. In addition, the S & P 500
assumes reinvestments of all dividends paid by stocks listed on its
index. Taxes due on any of these distributions are not included,
nor are brokerage or other fees calculated in the Standard & Poor's
figures.
o Standard & Poor's 600 Small Capitalization Index S&P Small Cap 600
is an unmanaged index of 600 small capitalization common stocks
with a market capitalization generally ranging between $80 million
and $600 million. The index, monitored by Standard & Poor's
Corporation, is cited as an indicator of small capitalization stock
performance.
o Lipper Analytical Services, Inc., ranks funds in various fund
categories by making comparative calculations using total return.
Total return assumes the reinvestment of all capital gains
distributions and income dividends and takes into account any
change in net asset value over a specified period of time. From
time to time, the Fund will quote its Lipper ranking in the "small
company growth funds" category in advertising and sales literature.
o Lipper Small Company Growth Fund Average is an average of the total
returns for 312 growth funds tracked by Lipper Analytical Services,
Inc., an independent mutual fund rating service.
o Lipper Small Company Growth Fund Index is an average of the net
asset-valuated total returns for the top 30 small company growth
funds tracked by Lipper Analytical Services, Inc., an independent
mutual fund rating service.
o Morningstar, Inc. , an independent rating service, is the publisher
of the bi-weekly Mutual Fund Values. Mutual Fund Values rates more
than 1,000 NASDAQ-listed mutual funds of all types, according to
their risk-adjusted returns. The maximum rating is five stars, and
ratings are effective for two weeks.
o Wilshire 5000 Equity Index consists of nearly 5,000 common equity
securities, covering all stocks in the U.S. for which daily pricing
is available, and can be used to compare to the total returns of
funds whose portfolios are invested primarily in common stocks.
o Strategic Insight Small Company Growth Funds Index consists of
mutual funds that invest primarily in companies below $750 million
in total market capitalization.
o Value Line Composite Index consists of approximately 1,700 common
equity securities. It is based on a geometric average of relative
price changes of the component stocks and does not include income.
o Value Line Mutual Fund Survey, published by Value Line Publishing,
Inc., analyzes price, yield, risk, and total return for equity and
fixed income mutual funds. The highest rating is One, and ratings
are effective for two weeks.
o Mutual Fund Source Book, published by Morningstar, Inc., analyzes
price, yield, risk, and total return for equity and fixed income
funds.
o Financial publications: The Wall Street Journal, Business Week,
Changing Times, Financial World, Forbes, Fortune, and Money
Magazines, among others--provide performance statistics over
specified time periods.
o CDA Mutual Fund Report, published by CDA Investment Technologies,
Inc., analyzes price, current yield, risk, total return, and
average rate of return (average annual compounded growth rate) over
specified time periods for the mutual fund industry.
o Strategic Insight Mutual Fund Research and Consulting, ranks funds
in various fund categories by making comparative calculations using
total return. Total return assumes the reinvestment of all capital
gains distributions and income dividends and takes into account any
change in net asset value over a specified period of time. From
time to time, the Fund will quote its Strategic Insight ranking in
the "small company growth funds" category in advertising and sales
literature.
Advertisements and other sales literature for any class of Shares may quote
total returns which are calculated on non-standardized base periods. These
total returns also represent the historic change in the value of an investment
in any class of Shares based on quarterly reinvestment of dividends over a
specified period of time.
From time to time as it deems appropriate, the Fund may advertise the
performance of any class of Shares using charts, graphs, and descriptions,
compared to federally insured bank products including certificates of deposit
and time deposits and to money market funds using the Lipper Analytical
Services money market instruments average. In addition, advertising and sales
literature for the Fund may use charts and graphs to illustrate the principles
of dollar-cost averaging and may disclose the amount of dividends paid by the
Fund over certain periods of time.
Advertisements may quote performance information which does not reflect the
effect of the sales load on Class A Shares.
About Federated Investors
Federated is dedicated to meeting investor needs which is reflected in its
investment decision making structured, straightforward, and consistent. This
has resulted in a history of competitive performance with a range of
competitive investment products that have gained the confidence of thousands
of clients and their customers.
The company's disciplined security selection process is firmly rooted in sound
methodologies backed by fundamental and technical research. Investment
decisions are made and executed by teams of portfolio managers, analysts, and
traders dedicated to specific market sectors.
In the equity sector, Federated has more than 25 years' experience. As of
December 31, 1994, Federated managed 15 equity funds totaling approximately $4
billion in assets across growth, value, equity income, international, index
and sector (i.e. utility) styles. Federated's value-oriented management style
combines quantitative and qualitative analysis and features a structured,
computer-assisted composite modeling system that was developed in the 1970s.
J. Thomas Madden, Executive Vice President, oversees Federated's equity and
high yield corporate bond management while William D. Dawson, Executive Vice
President, oversees Federated's domestic fixed income management. Henry A.
Frantzen, Executive Vice President, oversees the management of Federated's
international portfolios.
Mutual Fund Market
Twenty-seven percent of American households are pursuing their financial goals
through mutual funds. These investors, as well as businesses and institutions,
have entrusted over $2 trillion to the more than 5,500 funds available.*
Federated Investors, through its subsidiaries, distributes mutual funds for a
variety of investment applications. Specific markets include:
_____________
*source: Investment Company Institute
Institutional
Federated meets the needs of more than 4,000 institutional clients nationwide
by managing and servicing separate accounts and mutual funds for a variety of
applications, including defined benefit and defined contribution programs,
cash management, and asset/liability management. Institutional clients
include corporations, pension funds, tax-exempt entities,
foundations/endowments, insurance companies, and investment and financial
advisors. The marketing effort to these institutional clients is headed by
John B. Fisher, President, Institutional Sales Division.
Trust Organizations
Other institutional clients include close relationships with more than 1,500
banks and trust organizations. Virtually all of the trust divisions of the
top 100 bank holding companies use Federated funds in their clients'
portfolios. The marketing effort to trust clients is headed by Mark R.
Gensheimer, Executive Vice President, Bank Marketing & Sales.
Broker/Dealers and Bank Broker/Dealer Subsidiaries
Federated mutual funds are available to consumers through major brokerage
firms nationwide--including 200 New York Stock Exchange firms--supported by
more wholesalers than any other mutual fund distributor. The marketing effort
to these firms is headed by James F. Getz, President, Broker/Dealer Division.
Appendix
Standard and Poor's Ratings Group Bond Ratings
AAA--Debt rated AAA has the highest rating assigned by Standard & Poor's
Ratings Group. Capacity to pay interest and repay principal is extremely
strong.
AA--Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the higher rated issues only in small degree.
A--Debt rated A has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.
BBB--Debt rated BBB is regarded as having an adequate capacity to pay interest
and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.
Moody's Investors Service, Inc. Bond Ratings
Aaa--Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edged". Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized
are most unlikely to impair the fundamentally strong position of such issues.
Aa--Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group, they comprise what are generally known
as high grade bonds. They are rated lower than the best bonds because margins
of protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be other elements
present which make the long-term risks appear somewhat larger than in Aaa
securities.
A--Bonds which are rated A possess many favorable investment attributes and
are to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate but elements may be
present which suggest a susceptibility to impairment sometime in the future.
Baa--Bonds which are rated Baa are considered as medium grade obligations,
(i.e., they are neither highly protected nor poorly secured). Interest
payments and principal security appear adequate for the present but certain
protective elements may be lacking or may be characteristically unreliable
over any great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.
Fitch Investors Service, Inc. Long-Term Debt Ratings
AAA--Bonds considered to be investment grade and of the highest credit
quality. The obligor has an exceptionally strong ability to pay interest and
repay principal, which is unlikely to be affected by reasonably foreseeable
events.
AA--Bonds considered to be investment grade and of very high credit quality.
The obligor's ability to pay interest and repay principal is very strong,
although not quite as strong as bonds rated AAA. Because bonds rated in the
AAA and AA categories are not significantly vulnerable to foreseeable future
developments, short-term debt of these issuers is generally rated F-1+.
A--Bonds considered to be investment grade and of high credit quality. The
obligor's ability to pay interest and repay principal is considered to be
strong, but may be more vulnerable to adverse changes in economic conditions
and circumstances than bonds with higher ratings.
BBB--Bonds considered to be investment grade and of satisfactory credit
quality. The obligor's ability to pay interest and repay principal is
considered to be adequate. Adverse changes in economic conditions and
circumstances, however, are more likely to have adverse impact on these bonds,
and therefore, impair timely payment. The likelihood that the ratings of
these bonds will fall below investment grade is higher than for bonds with
higher ratings.
Moody's Investors Service, Inc. Commercial Paper Ratings
Prime-1--Issuers rated Prime-1 (or related supporting institutions) have a
superior capacity for repayment of short-term promissory obligations. Prime-1
repayment capacity will normally be evidenced by the following
characteristics:
- - Leading market positions in well established industries.
- - High rates of return on funds employed.
- - Conservative capitalization structure with moderate reliance on debt and
ample asset protection.
- - Broad margins in earning coverage of fixed financial charges and high
internal cash generation.
- - Well established access to a range of financial markets and assured sources
of alternate liquidity.
Prime-2--Issuers rated Prime-2 (or related supporting institutions) have a
strong capacity for repayment of short-term promissory obligations. This will
normally be evidenced by many of the characteristics cited above but to a
lesser degree. Earnings trends and coverage ratios, while sound, will be more
subject to variation. Capitalization characteristics, while still appropriate,
may be more affected by external conditions. Ample alternate liquidity is
maintained.
Standard and Poor's Ratings Group Commercial Paper Ratings
A-1--This designation indicates that the degree of safety regarding timely
payment is strong. Those issues determined to possess extremely strong safety
characteristics are denoted with a plus sign (+) designation.
A-2--Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high as for
issues designated A-1.
Fitch Investors Service, Inc. Commercial Paper Rating Definitions
FITCH-1--(Highest Grade) Commercial paper assigned this rating is regarded as
having the strongest degree of assurance for timely payment.
FITCH-2--(Very Good Grade) Issues assigned this rating reflect an assurance of
timely payment only slightly less in degree than the strongest issues.
Cusip
Cusip
Cusip
Product Code
PART C. OTHER INFORMATION.
Item 24. Financial Statements and Exhibits:
(a) Financial Statements (Filed in Part A - Federated
Growth Strategies Fund)
(b) Exhibits:
(1) Conformed copy of Declaration of Trust of the
Registrant (1.);
(2) Copy of By-Laws of the Registrant as amended (1.);
(i) Copy of Amendment No. 2 to By-Laws effective
February 2, 1987 (3.);
(ii) Copy of Amendment No. 3 to By-Laws effective
August 25, 1988 (5.);
(3) Not applicable;
(4) (i) Copy of Specimen Certificate for Shares of
Beneficial Interest of the Registrant
(Federated Small Cap Strategies Fund); +
(5) Conformed copy of Investment Advisory Contract of the
Registrant (6.);
(i) Conformed copy of Exhibit to Investment Advisory
Contract of the Registrant to add
Federated Small Cap Strategies Fund to
the present Investment Advisory Contract;
(to be filed by amendment)
(6) Conformed copy of Distributor's Contract of the
Registrant (6.);
(i) Conformed copy of Exhibit to Distributor's
Contract of the Registrant to add
Federated Small Cap Strategies Fund to
the present Distributor's Contract; (to
be filed by amendment)
(ii) Plan Trustee/Mutual Funds Service Agreement; +
(iii) Mutual Funds Sales and Service Agreement; +
(iv) Mutual Funds Service Agreement; +
(7) Not applicable;
(8) Conformed Copy of the Custodian Agreement of the
Registrant (8.);
1. Response is incorporated by reference to Registrant's Pre-
Effective Amendment No. 1 on Form N-1A filed July 9, 1984. (File
Nos. 2-91090 and 811-4017)
3. Response is incorporated by reference to Registrant's Post-
Effective Amendment No. 5 on Form N-1A filed July 21, 1987. (File
Nos. 2-91090 and 811-4017)
5. Response is incorporated by reference to Registrant's Post-
Effective Amendment No. 10 on Form N-1A filed December 31, 1988.
(File Nos. 2-91090 and 811-4017)
6. Response is incorporated by reference to Registrant's Post-
Effective Amendment No. 11 on Form N-1A filed October 23, 1989.
(File Nos. 2-91090 and 811-4017)
7. Response is incorporated by reference to Registrant's Post-
Effective Amendment No. 16 on Form N-1A filed December 23, 1991.
(File Nos. 2-91090 and 811-4017)
8. Response is incorporated by reference to Registrant's Post-
Effective Amendment No. 20 on Form N-1A filed December 29, 1994.
(File Nos. 2-91090 and 811-4017)
+ All exhibits have been filed electronically.
(9) (i) Conformed copy of Shareholder Services Agreement
of the Registrant (8.);
(ii) Conformed copy of Administrative Services
Agreement of the Registrant (8.);
(iii) Conformed Copy of Agreement for Fund Accounting,
Shareholder Recordkeeping, and Custody
Services Procurement (8.);
(10) Conformed copy of the Opinion and Consent of Counsel
regarding legality of shares being registered
(8.);
(11) Not applicable;
(12) Not applicable;
(13) Conformed copy of Initial Capital Understanding (2.);
(14) Not applicable;
(15) (i) Conformed Copy of Distribution Plan; (to be filed
by amendment)
(ii) Plan Trustee/Mutual Funds Service Agreement; See
Item 24(b)(6)(ii)
(iii) Mutual Funds Sales and Service Agreement; See
Item 24(b)(6)(iii)
(iv) Mutual Funds Service Agreement; See Item
24(b)(6)(iv)
(16) Copy of Schedule for Computation of Fund Performance
Data (8.);
(17) Not applicable;
(18) Multiple Class Plan; (to be filed by amendment)
(19) Conformed copy of Power of Attorney; +
Item 25. Persons Controlled by or Under Common Control with
Registrant:
None
Item 26. Number of Holders of Securities:
Number of Record Holders
Title of Class as of June 2, 1995
Shares of Beneficial Interest
(no par value)
Federated Growth Strategies Fund 10,580
Federated Small Company Growth Fund
Class A Shares (not effective)
Class B Shares (not effective)
Class C Shares (not effective)
Item 27. Indemnification: (1.)
1. Response is incorporated by reference to Registrant's Pre-
Effective Amendment No. 1 on Form N-1A filed July 9, 1984. (File
Nos. 2-91090 and 811-4017)
8. Response is incorporated by reference to Registrant's Post-
Effective Amendment No. 20 on Form N-1A filed December 29, 1994.
(File Nos. 2-91090 and 811-4017)
+ All exhibits have been filed electronically.
Item 28. Business and Other Connections of Investment Adviser:
For a description of the other business of the investment
adviser, see the section entitled "Trust Information -
Management of the Trust" in Part A. The affiliations with
the Registrant of four of the Trustees and one of the
Officers of the investment adviser are included in Part B of
this Registration Statement under "Federated Equity Funds
Management - Officers and Trustees." The remaining Trustee
of the investment adviser, his position with the investment
adviser, and, in parentheses, his principal occupation is:
Mark D. Olson (Partner, Wilson, Halbrook & Bayard), 107 West
Market Street, Georgetown, Delaware 19947.
The remaining Officers of the investment adviser are:
William D. Dawson, Henry A. Frantzen, J. Thomas Madden, and
Mark L. Mallon, Executive Vice Presidents; Henry J.
Gailliot, Senior Vice President-Economist; Peter R.
Anderson, and J. Alan Minteer, Senior Vice Presidents; J.
Scott Albrecht, Randall A. Bauer, David A. Briggs, Jonathan
C. Conley, Deborah A. Cunningham, Michael P. Donnelly, Mark
E. Durbiano, Kathleen M. Foody-Malus, Thomas M. Franks,
Edward C. Gonzales, Jeff A. Kozemchak, Marian R. Marinack,
John W. McGonigle, Susan M. Nason, Mary Jo Ochson. Robert J.
Ostrowski, Frederick L. Plautz, Jr., Charles A. Ritter,
James D. Roberge, Sandra L. Weber, and Christopher H. Wiles,
Vice Presidents; Edward C. Gonzales, Treasurer; and John W.
McGonigle, Secretary. The business address of each of the
Officers of the investment adviser is Federated Investors
Tower, Pittsburgh, Pennsylvania 15222-3779. These
individuals are also officers of a majority of the
investment advisers to the Funds listed in Part B of this
Registration Statement.
Item 29. Principal Underwriters:
(a) Federated Securities Corp., the Distributor for shares of
the Registrant, also acts as principal underwriter for
the following open-end investment companies: Alexander
Hamilton Funds; American Leaders Fund, Inc.; Annuity
Management Series; Arrow Funds; Automated Cash
Management Trust; Automated Government Money Trust;
BayFunds; The Biltmore Funds; The Biltmore Municipal
Funds; California Municipal Cash Trust; Cash Trust
Series, Inc.; Cash Trust Series II; DG Investor Series;
Edward D. Jones & Co. Daily Passport Cash Trust;
Federated ARMs Fund; Federated Exchange Fund, Ltd.;
Federated GNMA Trust; Federated Government Trust;
Federated Growth Trust; Federated High Yield Trust;
Federated Income Securities Trust; Federated Income
Trust; Federated Index Trust; Federated Institutional
Trust; Federated Master Trust; Federated Municipal
Trust; Federated Short-Term Municipal Trust; Federated
Short-Term U.S. Government Trust; Federated Stock
Trust; Federated Tax-Free Trust; Federated Total Return
Series, Inc.; Federated U.S. Government Bond Fund;
Federated U.S. Government Securities Fund: 1-3 Years;
Federated U.S. Government Securities Fund: 3-5
Years;First Priority Funds; First Union Funds; Fixed
Income Securities, Inc.; Fortress Adjustable Rate U.S.
Government Fund, Inc.; Fortress Municipal Income Fund,
Inc.; Fortress Utility Fund, Inc.; Fountain Square
Funds; Fund for U.S. Government Securities, Inc.;
Government Income Securities, Inc.; High Yield Cash
Trust; Independence One Mutual Funds; Insurance
Management Series; Intermediate Municipal Trust;
International Series Inc.; Investment Series Funds,
Inc.; Investment Series Trust; Liberty Equity Income
Fund, Inc.; Liberty High Income Bond Fund, Inc.;
Liberty Municipal Securities Fund, Inc.; Liberty U.S.
Government Money Market Trust; Liberty Utility Fund,
Inc.; Liquid Cash Trust; Managed Series Trust; Marshall
Funds, Inc.; Money Market Management, Inc.; Money
Market Obligations Trust; Money Market Trust; The
Monitor Funds; Municipal Securities Income Trust;
Newpoint Funds; New York Municipal Cash Trust; 111
Corcoran Funds; Peachtree Funds; The Planters Funds;
RIMCO Monument Funds; The Shawmut Funds; SouthTrust
Vulcan Funds; Star Funds; The Starburst Funds; The
Starburst Funds II; Stock and Bond Fund, Inc.; Sunburst
Funds; Targeted Duration Trust; Tax-Free Instruments
Trust; Tower Mutual Funds; Trademark Funds; Trust for
Financial Institutions; Trust for Government Cash
Reserves; Trust for Short-Term U.S. Government
Securities; Trust for U.S. Treasury Obligations; The
Virtus Funds; Vision Fiduciary Funds, Inc.; Vision
Group of Funds, Inc.; and World Investment Series, Inc.
Federated Securities Corp. also acts as principal
underwriter for the following closed-end investment
company: Liberty Term Trust, Inc.- 1999.
(b)
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Underwriter With Registrant
Richard B. Fisher Director, Chairman, Chief Vice President
Federated Investors Tower Executive Officer, Chief
Pittsburgh, PA 15222-3779 Operating Officer, and
Asst. Treasurer, Federated
Securities Corp.
Edward C. Gonzales Director, Executive Vice Executive Vice
Federated Investors Tower President, and Treasurer, President
Pittsburgh, PA 15222-3779 Federated Securities
Corp.
John W. McGonigle Director, Executive Vice Executive Vice
Federated Investors Tower President, and Assistant President and
Pittsburgh, PA 15222-3779 Secretary, Federated Secretary
Securities Corp.
John B. Fisher President-Institutional Sales, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
James F. Getz President-Broker/Dealer, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Mark R. Gensheimer Executive Vice President of --
Federated Investors Tower Bank/Trust
Pittsburgh, PA 15222-3779 Federated Securities Corp.
Mark W. Bloss Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Theodore Fadool, Jr. Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Bryant R. Fisher Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Christopher T. Fives Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
James S. Hamilton Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
James M. Heaton Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Underwriter With Registrant
H. Joseph Kennedy Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Keith Nixon Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Solon A. Person, IV Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Timothy C. Pillion Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Thomas E. Territ Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
John B. Bohnet Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard W. Boyd Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Jane E. Broeren-Lambesis Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Mary J. Combs Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
R. Edmond Connell, Jr. Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Kevin J. Crenny Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Daniel T. Culbertson Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Laura M. Deger Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Underwriter With Registrant
Jill Ehrenfeld Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Joseph L. Epstein Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Mark D. Fisher Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Michael D. Fitzgerald Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Joseph D. Gibbons Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
David C. Glabicki Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Craig S. Gonzales Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard C. Gonzales Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Scott A. Hutton Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
William J. Kerns Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
William E. Kugler Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Dennis M. Laffey Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Stephen A. LaVersa Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Underwriter With Registrant
Francis J. Matten, Jr. Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Mark J. Miehl Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard C. Mihm Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
J. Michael Miller Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
R. Jeffrey Niss Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Michael P. O'Brien Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Robert D. Oehlschlager Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Robert F. Phillips Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Eugene B. Reed Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Paul V. Riordan Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Charles A. Robison Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
John C. Shelar, Jr. Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
David W. Spears Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Underwriter With Registrant
Jeffrey A. Stewart Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Jamie M. Teschner Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
William C. Tustin Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Paul A. Uhlman Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard B. Watts Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Michael P. Wolff Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Philip C. Hetzel Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Charlene H. Jennings Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Ernest L. Linane Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
S. Elliott Cohan Secretary, Assistant
Federated Investors Tower Federated Securities Corp. Secretary
Pittsburgh, PA 15222-3779
Item 30. Location of Accounts and Records:
All accounts and records required to be maintained by Section 31(a) of
the Investment Company Act of 1940 and Rules 31a-1 through 31a-3
promulgated thereunder are maintained at one of the following locations:
Registrant Federated Investors Tower
Federated Services Company Pittsburgh, PA 15222-3779
("Transfer Agent and Dividend
Disbursing Agent)
Federated Administrative Services
("Administrator")
Federated Management
("Adviser")
State Street Bank and Trust Company P.O. Box 8600
("Custodian") Boston, MA 02266-8600
Item 31. Management Services: Not applicable.
Item 32. Undertakings:
Registrant hereby undertakes to comply with the provisions
of Section 16(c) of the 1940 Act with respect to the removal
of Trustees and the calling of special shareholder meetings
by shareholders.
Registrant hereby undertakes to furnish each person to whom
a prospectus is delivered with a copy of the Registrant's
latest annual report to shareholders, upon request and
without charge.
Registrant hereby undertakes to file a post-effective
amendment on behalf of Federated Small Cap Strategies Fund,
using financial statements for Federated Small Cap
Strategies Fund, which need not be certified, within four to
six months from the effective date of this Post-Effective
Amendment No. 21.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant, FEDERATED EQUITY FUNDS
(formerly, Federated Growth Trust), has duly caused this Amendment to
its Registration Statement to be signed on its behalf by the
undersigned, thereto duly authorized, in the City of Pittsburgh and
Commonwealth of Pennsylvania, on the 30th day of June, 1995.
FEDERATED EQUITY FUNDS
(formerly, Federated Growth Trust)
BY: /s/ Robert C. Rosselot
Robert C. Rosselot, Assistant Secretary
Attorney in Fact for John F. Donahue
June 30, 1995
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/ Robert C. Rosselot
Robert C. Rosselot Attorney In Fact June 30, 1995
ASSISTANT SECRETARY For the Persons
Listed Below
NAME TITLE
John F. Donahue* Chairman and Trustee
(Chief Executive Officer)
Glen R. Johnson* President
Edward C. Gonzales* Executive Vice President
David M. Taylor* Treasurer (Principal Financial
and Accounting Officer)
John T. Conroy, Jr.* Trustee
William J. Copeland* Trustee
James E. Dowd* Trustee
Lawrence D. Ellis, M.D.* Trustee
Edward L. Flaherty, Jr.* Trustee
Peter E. Madden* Trustee
Gregor F. Meyer* Trustee
John E. Murray, Jr.o Trustee
Wesley W. Posvar* Trustee
Marjorie P. Smuts* Trustee
* By Power of Attorney
Exhibit 4 (i) under Form N-1A
Exhibit 3(c) under Item 601/Reg. S-K
Federated Equity Funds
Federated Small Cap Strategies Fund
(Class A Shares)
Number Shares
_____ _____
Account No. Alpha Code Organized Under the See Reverse Side For
Laws of the Certain Definitions
Commonwealth of
Massachusetts
THIS IS TO CERTIFY THAT is the owner of
CUSIP (to be applied for)
Fully Paid and Non-Assessable Shares of Beneficial Interest of the Federated
Small Cap Strategies Fund (Class A Shares) Portfolio of the Federated Equity
Funds hereafter called the "Trust," transferable on the books of the Trust by
the owner, in person or by duly authorized attorney, upon surrender of this
Certificate properly endorsed.
The shares represented hereby are issued and shall be held subject to
the provisions of the Declaration of Trust and By-Laws of the Trust, and all
amendments thereto, to all of which the holder by acceptance hereof assents.
This Certificate is not valid unless countersigned by the Transfer
Agent.
IN WITNESS WHEREOF, the Trust has caused this Certificate to be signed
in its name by its proper officers and to be sealed with its Seal.
Dated: Federated Equity Funds
Corporate Seal
(1984)
Massachusetts
/s/ Edward C. Gonzales /s/ John F. Donahue
Vice President and Treasurer Chairman
Countersigned:
Federated Services Company
(Pittsburgh) Transfer Agent
By:
Authorized Signature
The following abbreviations, when used in the inscription on the face of this
Certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT-...Custodian...
TEN ENT - as tenants by the entirety (Cust) (Minor)
JT TEN - as joint tenants with right of under Uniform Gifts to Minors
survivorship and not as tenants Act.............................
in common (State)
Additional abbreviations may also be used though not in the above list.
For value received__________ hereby sell, assign, and transfer unto
Please insert social security or other
identifying number of assignee
______________________________________
_____________________________________________________________________________
(Please print or typewrite name and address, including zip code, of assignee)
_____________________________________________________________________________
_____________________________________________________________________________
______________________________________________________________________ shares
of the beneficial interest represented by the within Certificate, and do
hereby irrevocably constitute and appoint
_____________________________________________________________________Attorney
to transfer the said shares on the books of the within named Trust with full
power of substitution in the premises.
Dated______________________
NOTICE:______________________________
The signature to this assignment must
correspond with the name as written upon
the face of the certificate in every
particular, without alteration or
enlargement or any change whatever.
All persons dealing with Federated Equity Funds, a Massachusetts business
trust, must look solely to the Trust property for the enforcement of any claim
against the Trust, as the Trustees, officers, agents or shareholders of the
Trust assume no personal liability whatsoever for obligations entered into on
behalf of the Trust.
THIS SPACE MUST NOT BE COVERED IN ANY WAY
DOCUMENT DESCRIPTION - SPECIMEN STOCK CERTIFICATE
Page One
A. The Certificate is outlined by an (color) one-half inch border.
B. The number in the upper left-hand corner and the number of shares in
the upper right-hand corner are outlined by octagonal boxes.
C. The cusip number in the middle right-hand area of the page is boxed.
D. The Massachusetts corporate seal appears in the bottom middle of the
page.
Page Two
The social security or other identifying number of the assignee appears
in a box in the top-third upper-left area of the page.
Federated Equity Funds
Federated Small Cap Strategies Fund
(Class B Shares)
Number Shares
_____ _____
Account No. Alpha Code Organized Under the See Reverse Side For
Laws of the Certain Definitions
Commonwealth of
Massachusetts
THIS IS TO CERTIFY THAT is the owner of
CUSIP (to be applied for)
Fully Paid and Non-Assessable Shares of Beneficial Interest of the Federated
Small Cap Strategies Fund (Class B Shares) Portfolio of the Federated Equity
Funds hereafter called the "Trust," transferable on the books of the Trust by
the owner, in person or by duly authorized attorney, upon surrender of this
Certificate properly endorsed.
The shares represented hereby are issued and shall be held subject to
the provisions of the Declaration of Trust and By-Laws of the Trust, and all
amendments thereto, to all of which the holder by acceptance hereof assents.
This Certificate is not valid unless countersigned by the Transfer
Agent.
IN WITNESS WHEREOF, the Trust has caused this Certificate to be signed
in its name by its proper officers and to be sealed with its Seal.
Dated: Federated Equity Funds
Corporate Seal
(1984)
Massachusetts
/s/ Edward C. Gonzales /s/ John F. Donahue
Vice President and Treasurer Chairman
Countersigned:
Federated Services Company
(Pittsburgh) Transfer Agent
By:
Authorized Signature
The following abbreviations, when used in the inscription on the face of this
Certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT-...Custodian...
TEN ENT - as tenants by the entirety (Cust) (Minor)
JT TEN - as joint tenants with right of under Uniform Gifts to Minors
survivorship and not as tenants Act.............................
in common (State)
Additional abbreviations may also be used though not in the above list.
For value received__________ hereby sell, assign, and transfer unto
Please insert social security or other
identifying number of assignee
______________________________________
_____________________________________________________________________________
(Please print or typewrite name and address, including zip code, of assignee)
_____________________________________________________________________________
_____________________________________________________________________________
______________________________________________________________________ shares
of the beneficial interest represented by the within Certificate, and do
hereby irrevocably constitute and appoint
_____________________________________________________________________Attorney
to transfer the said shares on the books of the within named Trust with full
power of substitution in the premises.
Dated______________________
NOTICE:______________________________
The signature to this assignment must
correspond with the name as written upon
the face of the certificate in every
particular, without alteration or
enlargement or any change whatever.
All persons dealing with Federated Equity Funds, a Massachusetts business
trust, must look solely to the Trust property for the enforcement of any claim
against the Trust, as the Trustees, officers, agents or shareholders of the
Trust assume no personal liability whatsoever for obligations entered into on
behalf of the Trust.
THIS SPACE MUST NOT BE COVERED IN ANY WAY
DOCUMENT DESCRIPTION - SPECIMEN STOCK CERTIFICATE
Page One
A. The Certificate is outlined by an (color) one-half inch border.
B. The number in the upper left-hand corner and the number of shares in
the upper right-hand corner are outlined by octagonal boxes.
C. The cusip number in the middle right-hand area of the page is boxed.
D. The Massachusetts corporate seal appears in the bottom middle of the
page.
Page Two
The social security or other identifying number of the assignee appears
in a box in the top-third upper-left area of the page.
Federated Equity Funds
Federated Small Cap Strategies Fund
(Class C Shares)
Number Shares
_____ _____
Account No. Alpha Code Organized Under the See Reverse Side For
Laws of the Certain Definitions
Commonwealth of
Massachusetts
THIS IS TO CERTIFY THAT is the owner of
CUSIP (to be applied for)
Fully Paid and Non-Assessable Shares of Beneficial Interest of the Federated
Small Cap Strategies Fund (Class C Shares) Portfolio of the Federated Equity
Funds hereafter called the "Trust," transferable on the books of the Trust by
the owner, in person or by duly authorized attorney, upon surrender of this
Certificate properly endorsed.
The shares represented hereby are issued and shall be held subject to
the provisions of the Declaration of Trust and By-Laws of the Trust, and all
amendments thereto, to all of which the holder by acceptance hereof assents.
This Certificate is not valid unless countersigned by the Transfer
Agent.
IN WITNESS WHEREOF, the Trust has caused this Certificate to be signed
in its name by its proper officers and to be sealed with its Seal.
Dated: Federated Equity Funds
Corporate Seal
(1984)
Massachusetts
/s/ Edward C. Gonzales /s/ John F. Donahue
Vice President and Treasurer Chairman
Countersigned:
Federated Services Company
(Pittsburgh) Transfer Agent
By:
Authorized Signature
The following abbreviations, when used in the inscription on the face of this
Certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT-...Custodian...
TEN ENT - as tenants by the entirety (Cust) (Minor)
JT TEN - as joint tenants with right of under Uniform Gifts to Minors
survivorship and not as tenants Act.............................
in common (State)
Additional abbreviations may also be used though not in the above list.
For value received__________ hereby sell, assign, and transfer unto
Please insert social security or other
identifying number of assignee
______________________________________
_____________________________________________________________________________
(Please print or typewrite name and address, including zip code, of assignee)
_____________________________________________________________________________
_____________________________________________________________________________
______________________________________________________________________ shares
of the beneficial interest represented by the within Certificate, and do
hereby irrevocably constitute and appoint
_____________________________________________________________________Attorney
to transfer the said shares on the books of the within named Trust with full
power of substitution in the premises.
Dated______________________
NOTICE:______________________________
The signature to this assignment must
correspond with the name as written upon
the face of the certificate in every
particular, without alteration or
enlargement or any change whatever.
All persons dealing with Federated Equity Funds, a Massachusetts business
trust, must look solely to the Trust property for the enforcement of any claim
against the Trust, as the Trustees, officers, agents or shareholders of the
Trust assume no personal liability whatsoever for obligations entered into on
behalf of the Trust.
THIS SPACE MUST NOT BE COVERED IN ANY WAY
DOCUMENT DESCRIPTION - SPECIMEN STOCK CERTIFICATE
Page One
A. The Certificate is outlined by an (color) one-half inch border.
B. The number in the upper left-hand corner and the number of shares in
the upper right-hand corner are outlined by octagonal boxes.
C. The cusip number in the middle right-hand area of the page is boxed.
D. The Massachusetts corporate seal appears in the bottom middle of the
page.
Page Two
The social security or other identifying number of the assignee appears
in a box in the top-third upper-left area of the page.
Exhibit 6(ii) under Form N-1A
Exhibit 1 under Item 601/Reg. S-K
PLAN TRUSTEE / MUTUAL FUNDS SERVICE AGREEMENT
This Agreement is entered into among the financial institution executing
this Agreement ("Plan Trustee"), Federated Securities Corp. ("FSC"), and
Federated Shareholder Services ("FSS"), with respect to those investment
companies listed in Exhibit A hereto (referred to individually as the "Fund"
and collectively as the "Funds") for whose shares of beneficial interest or
capital stock ("Shares") FSC serves as Distributor and for whom FSS provides
or coordinates shareholder services.
WHEREAS, Plan Trustee is a trustee for various employee pension benefit
plans (the "Plans");
WHEREAS, FSS provides shareholder services for shareholders of the Funds
in part by retaining financial institutions (such as the Plan Trustee) to
perform those shareholder services and FSC provides distribution services for
the Funds in part by retaining financial institutions (such as the Plan
Trustee) to perform distribution-related support services ("trust services");
WHEREAS, FSS and FSC have determined that services usually provided by
trustees of employee benefit plans such as the Plan Trustee are substantially
equivalent to shareholder services and that the compensation of the Plan
Trustee for those services would contribute to the distribution and sale of
Fund shares to employee benefit plans; and
WHEREAS, Plan Trustee desires to provide such services for compensation
received from FSS and FSC;
NOW, THEREFORE, the parties agree as follows:
1. FSS and FSC hereby appoint the Plan Trustee to provide trust
services to the Plans pursuant to the terms and condition of this agreement.
The Plan Trustee agrees to provide trust services which, in its best judgment,
are necessary or desirable for its customers who are investors in the Funds.
The Plan Trustee further agrees to provide FSS and FSC, upon request, a
written description of the trust services which Plan Trustee is providing
hereunder.
2. During the term of this Agreement, FSS and FSC will pay the Plan
Trustee fees as set forth in a written schedule delivered to the Plan Trustee
pursuant to this Agreement. The fee schedule for the Plan Trustee may be
changed by FSS or FSC sending a new fee schedule or written notice to the Plan
Trustee pursuant to Paragraph 9 of this Agreement. To enable the Funds to
comply with an applicable exemptive order, the Plan Trustee represents that
the fees received pursuant to this Agreement will be disclosed to its
customers, will be authorized by its customers (directly or by operation of
applicable law), and will not result in an excessive fee to the Plan Trustee.
3. The Plan Trustee hereby warrants that:
(a) it has been authorized to exercise trust powers in the state
in which the Plan Trustee is located by the appropriate
regulatory authority and, as to each of its Plans, the Plan
Trustee has or will obtain the proper authority to act on
behalf of such Plans;
(b) each Plan on whose behalf the Plan Trustee is acting or will
act is either (i) a trust which is tax-exempt under Sections
401 and 501 of the Internal Revenue Code or (ii) a
government retirement plan as described under Section
401(a)(24) of the Internal Revenue Code;
(c) the governing document of each Plan on whose behalf the Plan
Trustee is acting or will act includes or will be amended to
include a provision which authorizes investment in the Funds
(or, generally, in investment company shares) and which
provides that expenses of the Plan may be paid from the
assets of the Plan; and
(d) the Plan Trustee is functioning as a "non-discretionary
fiduciary" with regard to the Plan's investments in the
Funds, and the plan's sponsor or other appropriate
independent fiduciary of the Plan has reviewed and approved
the investment of Plan assets in the Funds and the
compensation of the Plan Trustee as contemplated under this
Agreement.
The Plan Trustee agrees to notify FSS and FSC immediately of any action
by or communication from the Internal Revenue Service, the sponsor of a Plan,
the Department of Labor, or any other party which in any way affects the
continuing accuracy of any warranty or representation set forth in this
Agreement. Such communications or actions specifically may include, without
limitation, any communication or action with regard to the tax qualified
status of any Plan, any amendment to or alteration in the governing document
of any Plan, and any other communication or action which affects the ability
of any Plan to invest in or continue to hold shares of the Funds. The Plan
Trustee acknowledges that upon the breach of any of the foregoing warranties,
the Plan Trustee may be liable to FSS, FSC, and the Funds for any direct and
consequential damages resulting from such a breach of this Agreement.
4. Unless such action would cause the Plan Trustee to violate its
fiduciary obligations under the terms of the Plan or under the provisions of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), the
Plan Trustee agrees not to solicit or cause to be solicited directly, or
indirectly at any time in the future, any proxies from the shareholders of a
Fund in opposition to proxies solicited by management of the Fund, unless a
court of competent jurisdiction shall have determined that the conduct of a
majority of the Board of Trustees or Directors of the Fund constitutes willful
misfeasance, bad faith, gross negligence, or reckless disregard of their
duties. This paragraph 4 will survive the term of this Agreement.
5. This Agreement shall continue in effect for one year from the date
of its execution, and thereafter for successive periods of one year if the
form of this Agreement is approved at least annually by the Board of each
Fund, including a majority of the members of the Board of the Fund who are not
interested persons of the Fund and have no direct or indirect financial
interest in the operation of the Fund's Plan or in any related documents to
the Plan ("Disinterested Board Members") cast in person at a meeting called
for that purpose.
6. Notwithstanding paragraph 5, this Agreement may be terminated as
follows:
(a) at any time with regard to a particular Fund or class of
shares of a Fund, without the payment of any penalty, by the vote of
a majority of the Disinterested Board Members of the Fund or by a
vote of a majority of the outstanding voting securities of the class
of shares of the Fund as defined in the Investment Company Act of
1940 on not more than sixty (60) days' written notice to the parties
to this Agreement;
(b) automatically in the event of the Agreement's assignment
as defined in the Investment Company Act of 1940, upon the
termination of the "Distributor's Contract" between the Fund and FSC,
upon termination of the "Shareholder Services Agreement" between the
Fund and FSS, or upon the termination of the Distribution Plan to
which this Agreement is related; and
(c) by either party to the Agreement without cause by giving
the other party at least sixty (60) days' written notice of its
intention to terminate.
7. The Plan Trustee agrees to obtain any taxpayer identification
number certification from its Plans required under Section 3406 of the
Internal Revenue Code, and any applicable Treasury regulations, and to provide
FSS with timely written notice of any failure to obtain such taxpayer
identification number certification in order to enable the implementation of
any required backup withholding.
8. The execution and delivery of this Agreement have been authorized
by the Trustees of FSS and signed by an authorized officer of FSS, acting as
such, and neither such authorization by such Trustees nor such execution and
delivery by such officer shall be deemed to have been made by any of them
individually or to impose any liability on any of them personally, and the
obligations of this Agreement are not binding upon any of the Trustees or
shareholders of FSS, but bind only the trust property of FSS as provided in
the Declaration of Trust of FSS.
9. Notices of any kind to be given hereunder shall be in writing
(including facsimile communication) and shall be duly given if delivered to
Plan Trustee at the address set forth below and if delivered to FSS or FSC at
Federated Investors Tower, Pittsburgh, PA 15222-3779, Attention: President.
10. This Agreement constitutes the entire agreement between the
parties hereto and supersedes any prior agreement with respect to the subject
hereof whether oral or written. If any provision of this Agreement shall be
held or made invalid by a court or regulatory agency decision, statute, rule
or otherwise, the remainder of this Agreement shall not be affected thereby.
Subject to the provisions of Sections 5 and 6, hereof, this Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and shall be governed by Pennsylvania law; provided,
however, that nothing herein shall be construed in a manner inconsistent with
the Investment Company Act of 1940 or any rule or regulation promulgated by
the Securities and Exchange Commission thereunder.
11. This Agreement may be executed by different parties on separate
counterparts, each of which, when so executed and delivered, shall be an
original, and all such counterparts shall together constitute one and the same
instrument.
12. This Agreement shall not be assigned by any party without the
prior written consent of FSS and FSC in the case of assignment by Plan
Trustee, or of Plan Trustee in the case of assignment by FSS or FSC, except
that any party may assign to a successor all of or a substantial portion of
its business to a party controlling, controlled by, or under common control
with such party.
13. This Agreement may be amended by FSS or FSC from time to time by
the following procedure. FSS or FSC will mail a copy of the amendment to the
Plan Trustee's address, as shown below. If the Plan Trustee does not object
to the amendment within thirty (30) days after its receipt, the amendment will
become part of the Agreement. The Plan Trustee's objection must be in writing
and be received by FSS or FSC within such thirty days. Amendments to Exhibit
A may be made by FSS or FSC at any time by written or electronic notice to the
Institution. FSS and FSC anticipate that a revised Exhibit A, reflecting all
changes in effect at the time of transmission, will be sent to the Institution
annually during the term of this Agreement.
14. The Plan Trustee acknowledges and agrees that FSS has entered into
this Agreement solely in the capacity of agent for the Funds and administrator
of the Plan. The Plan Trustee agrees not to claim that FSS is liable for any
responsibilities or amounts due by the Funds hereunder.
FEDERATED SHAREHOLDER SERVICES
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
By: /s/ John W. McGonigle
President
FEDERATED SECURITIES CORP.
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
By: /s/ Richard B. Fisher
Chairman
[Plan Trustee]
Address
City State Zip Code
Dated: By:
Authorized Signature
Title
Print Name of Authorized Signature
Exhibit 6(iii) under Form N-1A
Exhibit 1 under Item 601/Reg. S-K
MUTUAL FUNDS
SALES AND SERVICE
AGREEMENT
This Agreement is entered into among the financial institution executing
this Agreement ("Financial Institution"), Federated Securities Corp. ("FSC"),
and Federated Shareholder Services ("FSS"), with respect to those investment
companies listed in Exhibit A hereto (referred to individually as the "Fund"
and collectively as the "Funds") for whose shares of beneficial interest or
capital stock ("Shares") FSC serves as Distributor and for whom FSS provides
or coordinates shareholder services.
A. Financial Institution.
1. Status of Financial Institution as "Bank" or Registered Broker-
Dealer.
Financial Institution represents and warrants to FSC and FSS:
(a)(i) that it is a broker or dealer as defined in Section
3(a)(4) or 3(a)(5) of the Securities Exchange Act of 1934
("Exchange Act"); that it is registered with the Securities
and Exchange Commission pursuant to Section 15 of the
Exchange Act; that it is a member of the National
Association of Securities Dealers, Inc.; that its customers'
accounts are insured by the Securities Investors Protection
Corporation ("SIPC"); and that, during the term of this
Agreement, it will abide by all of the rules and regulations
of the NASD including, without limitation, the NASD Rules of
Fair Practice. Financial Institution agrees to notify FSC
immediately in the event of (1) the termination of its
coverage by the SIPC; (2) its expulsion or suspension from
the NASD, or (3) its being found to have violated any
applicable federal or state law, rule or regulation arising
out of its activities as a broker-dealer or in connection
with this Agreement, or which may otherwise affect in any
material way its ability to act in accordance with the terms
of this Agreement. Financial Institution's expulsion from
the NASD will automatically terminate this Agreement
immediately without notice. Suspension of Financial
Institution from the NASD for violation of any applicable
federal or state law, rule or regulation will terminate this
Agreement effective immediately upon FSC's written notice of
termination to Financial Institution; or
(a)(ii) that it is a "bank," as that term is defined in
Section 3(a)(6) of the Exchange Act and that, during the
term of this Agreement, it will abide by the rules and
regulations of those state and federal banking authorities
with appropriate jurisdiction over the Financial
Institution, especially those regulations dealing with the
activities of the Institution as described under this
Agreement. Financial Institution agrees to notify FSC or
FSS immediately of any action by or communication from state
or federal banking authorities, state securities
authorities, the Securities and Exchange Commission, or any
other party which may affect its status as a bank, or which
may otherwise affect in any material way its ability to act
in accordance with the terms of this Agreement. Any action
or decision of any of the foregoing regulatory authorities
or any court of appropriate jurisdiction which affects
Financial Institution's ability to act in accordance with
the terms of this agreement, including the loss of its
exemption from registration as a broker or dealer, will
terminate this Agreement effective upon FSC's written notice
of termination to Financial Institution; and
(b) that Financial Institution is registered with the
appropriate securities authorities in all states in which
its activities make such registration necessary.
2. Financial Institution Acts as Agent for its Customers.
The parties agree that in each transaction in the Shares of any Fund and
with regard to any services rendered pursuant to this Agreement: (a) Financial
Institution is acting as agent for the customer; (b) each transaction is
initiated solely upon the order of the customer; (c) as between Financial
Institution and its customer, the customer will have full beneficial ownership
of all Shares of the Funds; (d) each transaction shall be for the account of
the customer and not for Financial Institution's account; and (e) each
transaction shall be without recourse to Financial Institution provided that
Financial Institution acts in accordance with the terms of this Agreement.
Financial Institution shall not have any authority in any transaction to act
as FSC's agent or as agent for the Funds.
B. Sales of Fund Shares.
3. Execution of Orders for Purchase and Redemption of Shares.
(a) All orders for the purchase of any Shares shall be executed at the then-
current public offering price per share (i.e., the net asset value per
share plus the applicable initial sales load, if any) and all orders for
the redemption of any Shares shall be executed at the net asset value per
share, in each case as described in the prospectus of the Fund. Any
applicable redemption fee or deferred sales charge will be deducted by the
Fund prior to the transmission of the redemption proceeds to Financial
Institution or its customer. FSC and the Funds reserve the right to
reject any purchase request in their sole discretion . If required by
law, each transaction shall be confirmed in writing on a fully disclosed
basis and, if confirmed by FSC, a copy of each confirmation shall be sent
simultaneously to Financial Institution if Financial Institution so
requests.
(b) The procedures relating to all orders will be subject to the terms of
the prospectus of each Fund and FSC's written instructions to Financial
Institution from time to time.
(c) Payments for Shares shall be made as specified in the applicable Fund
prospectus. If payment for any purchase order is not received in
accordance with the terms of the applicable Fund prospectus, FSC reserves
the right, without notice, to cancel the sale and to hold Financial
Institution responsible for any loss sustained as a result thereof.
4. Initial Sales Loads Payable to Financial Institution.
(a) On each order accepted by FSC, in exchange for the performance of sales
and/or distribution services, Financial Institution will be entitled to
receive the applicable percentage of the initial sales load, if any, as
established by FSC from the amount paid by Financial Institution's
customer . The initial sales loads for any Fund shall be those set forth
in its prospectus. The portion of the initial sales load payable to
Financial Institution may be changed at any time at FSC's sole discretion
upon written notice to Financial Institution.
(b) Transactions may be settled by Financial Institution: (1) by payment of
the full purchase price less an amount equal to Financial Institution's
applicable percentage of the initial sales load, or (2) by payment of the
full purchase price, in which case Financial Institution shall receive,
not less frequently than monthly, the aggregate fees due it on orders
received and settled.
(c) It shall be the obligation of the Financial Institution either: (i) to
provide FSC with all necessary information regarding the application of
the appropriate initial sales load to each transaction, or (ii) to assess
the appropriate initial sales load for each transaction and to forward the
public offering price, net of the amount of the initial sales load to be
reallocated to the Financial Institution, to the appropriate Fund.
Neither the Fund nor FSC shall have any responsibility to correct the
payment or assessment of an incorrect initial sales load due to the
failure of the Financial Institution to fulfill the foregoing obligation.
5. Advance Commissions Payable to Financial Institution.
Upon the purchase of certain Shares, as described in the applicable
prospectuses, FSC will pay Financial Institution an advance commission as set
forth on Exhibit A (or, if more recently published, the Fund's current
prospectus). This amount is not to be considered an initial sales load and
should not be deducted from the public offering price of the Shares which
shall be forwarded to the Fund. Generally, a contingent deferred sales charge
("CDSC") will be assessed upon the redemption of Shares with regard to which
an advance commission is paid by FSC; in the event that Financial Institution
notifies FSC in writing that Financial Institution elects to waive such
advance commission, and if the Fund's prospectus permits such a waiver, the
CDSC will not be charged upon the redemption of the relevant Shares. To
receive advance commission from FSC on Shares that are subject to a CDSC,
Financial Institution must open investor accounts with the Fund on a fully-
disclosed basis or be able to account for share ownership periods used in
calculating the CDSC. Furthermore, should the custody (or record ownership)
of the shares of the investor account(s) be transferred during the applicable
CDSC holding period (as described in the Fund prospectus) to a financial
institution which does not maintain investor accounts on a fully disclosed
basis and does not account for share ownership periods, the Financial
Institution agrees to reimburse FSC prior to such transfer for advance
commissions paid to it by FSC.
C. Distribution Services.
6. Agreement to Provide Distribution Services.
(a) With regard to those Funds which pay asset-based sales charges
(pursuant to Distribution Plans adopted under Investment Company Act Rule
12b-1), as noted on Exhibit A hereto (or, if more recently published, the
Fund's current prospectus), FSC hereby appoints Financial Institution to
render or cause to be rendered distribution and sales services to the
Funds and their shareholders.
(b) The services to be provided under this Paragraph (a) may include, but
are not limited to, the following:
(i) reviewing the activity in Fund accounts;
(ii) providing training and supervision of its personnel;
(iii) maintaining and distributing current copies of prospectuses and
shareholder reports;
(iv) advertising the availability of its services and products;
(v) providing assistance and review in designing materials to send to
customers and potential customers and developing methods of making
such materials accessible to customers and potential customers; and
(vi) responding to customers' and potential customers' questions about the
Funds.
7. Asset-Based Sales Loads Payable to Financial Institution.
During the term of this Agreement, FSC will pay Financial Institution
asset-based sales charges (also known as "Rule 12b-1 Fees") for each Fund as
set forth in Exhibit A to this Agreement (or, if more recently published, the
Fund's current prospectus). For the payment period in which this Agreement
becomes effective or terminates, there shall be an appropriate proration of
the fee on the basis of the number of days that this Agreement is in effect
during the quarter.
D. Shareholder Services.
8. Agreement to Provide Shareholder and Account Maintenance Services.
With regard to those Funds which pay a Shareholder Services Fee to
Financial Institutions, as noted on Exhibit A hereto (or, if more recently
published, the Fund's current prospectus), Financial Institution agrees to
render or cause to be rendered personal services to shareholders of the Funds
and/or the maintenance of accounts of shareholders of the Funds ("Shareholder
Services"). Financial Institution agrees to provide Shareholder Services
which, in its best judgment, are necessary or desirable for its customers who
are investors in the Funds. Financial Institution further agrees to provide
FSS, upon request, a written description of the Shareholder Services which
Financial Institution is providing hereunder.
9. Shareholder Service Fees Payable to Financial Institution.
During the term of this Agreement, FSS will pay Financial Institution
Shareholder Service Fees as set forth in Exhibit A to this Agreement (or, if
more recently published, the Fund's current prospectus). For the payment
period in which this Agreement becomes effective or terminates, there shall be
an appropriate proration of the fee on the basis of the number of days that
this Agreement is in effect during the quarter.
E. Supplemental Payments.
10. Supplemental Payments to Financial Institution.
During the term of this Agreement, FSC, FSS, or their affiliates will
make Supplemental Payments to Financial Institution as set forth in Exhibit A
to this Agreement (or, if more recently published, the Fund's current
prospectus) as additional compensation for services described in Paragraphs 6
or 8, above; such payments will be made from the assets of FSC, FSS, or their
affiliates, and not from assets of the Funds nor from fees payable under
applicable Distribution (Rule 12b-1) Plans or Shareholder Services Agreement.
For the payment period in which this Agreement becomes effective or
terminates, there shall be an appropriate proration of the payments on the
basis of the number of days that this Agreement is in effect during the
quarter.
F. Miscellaneous.
11. Delivery of Prospectuses to Customers.
Financial Institution will deliver or cause to be delivered to each
customer, at or prior to the time of any purchase of Shares, a copy of the
current prospectus of the Fund and, upon request by a customer or shareholder,
a copy of the Fund's current Statement of Additional Information. Financial
Institution shall not make any representations concerning any Shares other
than those contained in the prospectus or Statement of Additional Information
of the Fund or in any promotional materials or sales literature furnished to
Financial Institution by FSC or the Fund.
12. ERISA Assets.
(a) Financial Institution understands that the Department of Labor views
ERISA as prohibiting fiduciaries of discretionary ERISA assets from
receiving administrative service fees or other compensation from funds in
which the fiduciary's discretionary ERISA assets are invested. To date,
the Department of Labor has not issued any exemptive order or advisory
opinion that would exempt fiduciaries from this interpretation. Without
specific authorization from the Department of Labor, fiduciaries should
carefully avoid investing discretionary assets in any fund pursuant to an
arrangement where the fiduciary is to be compensated by the fund for such
investment. Receipt of such compensation could violate ERISA provisions
against fiduciary self-dealing and conflict of interest and could subject
the fiduciary to substantial penalties.
(b) Financial Institution will not perform or provide any duties which
would cause it to be a fiduciary under Section 4975 of the Internal
Revenue Code, as amended. For purposes of that Section, Financial
Institution understands that any person who exercises any discretionary
authority or discretionary control with respect to any individual
retirement account or its assets, or who renders investment advice for a
fee, or has any authority or responsibility to do so, or has any
discretionary authority or discretionary responsibility in the
administration of such an account, is a fiduciary.
13. Indemnification.
(a) Financial Institution shall indemnify and hold harmless FSC, FSS, each
Fund, the transfer agents of the Funds, and their respective subsidiaries,
affiliates, officers, directors, agents and employees from all direct or
indirect liabilities, losses or costs (including attorneys fees) arising
from, related to or otherwise connected with: (1) any breach by Financial
Institution of any provision of this Agreement; or (2) any actions or
omissions of FSC, FSS, any Fund, the transfer agents of the Funds, and
their subsidiaries, affiliates, officers, directors, agents and employees
in reliance upon any oral, written or computer or electronically
transmitted instructions believed to be genuine and to have been given by
or on behalf of Financial Institution.
(b) FSC shall indemnify and hold harmless Financial Institution and its
subsidiaries, affiliates, officers, directors, agents and employees from
and against any and all direct or indirect liabilities, losses or costs
(including attorneys fees) arising from, related to or otherwise connected
with: (1) any breach by FSC of any provision of this Agreement; or (2) any
alleged untrue statement of a material fact contained in any Fund's
Registration Statement or Prospectus, or as a result of or based upon any
alleged omission to state a material fact required to be stated therein or
necessary to make the statements contained therein not misleading.
(c) FSS shall indemnify and hold harmless Financial Institution and its
subsidiaries, affiliates, officers, directors, agents and employees from
and against any and all direct or indirect liabilities, losses or costs
(including attorneys fees) arising from, related to or otherwise connected
with any breach by FSS of any provision of this Agreement.
(d) The agreement of the parties in this Paragraph to indemnify each other
is conditioned upon the party entitled to indemnification (Indemnified
Party) giving notice to the party required to provide indemnification
(Indemnifying Party) promptly after the summons or other first legal
process for any claim as to which indemnity may be sought is served on the
Indemnified Party. The Indemnified Party shall permit the Indemnifying
Party to assume the defense of any such claim or any litigation resulting
from it, provided that counsel for the Indemnifying Party who shall
conduct the defense of such claim or litigation shall be approved by the
Indemnified Party (which approval shall not unreasonably be withheld), and
that the Indemnified Party may participate in such defense at its expense.
The failure of the Indemnified Party to give notice as provided in this
subparagraph (c) shall not relieve the Indemnifying Party from any
liability other than its indemnity obligation under this Paragraph. No
Indemnifying Party, in the defense of any such claim or litigation, shall,
without the consent of the Indemnified Party, consent to entry of any
judgment or enter into any settlement that does not include as an
unconditional term the giving by the claimant or plaintiff to the
Indemnified Party of a release from all liability in respect to such claim
or litigation.
(e) The provisions of this Paragraph 13 shall survive the termination of
this Agreement.
14. Customer Names Proprietary to Financial Institution.
(a) The names of Financial Institution's customers are and shall remain
Financial Institution's sole property and shall not be used by FSC, FSS,
or their affiliates for any purpose except the performance of their
respective duties and responsibilities under this Agreement and except for
servicing and informational mailings relating to the Funds.
Notwithstanding the foregoing, this Paragraph 14 shall not prohibit FSC,
FSS, or any of their affiliates from utilizing the names of Financial
Institution's customers for any purpose if the names are obtained in any
manner other than from Financial Institution pursuant to this Agreement.
(b) Neither party shall use the name of the other party in any manner
without the other party's written consent, except as required by any
applicable federal or state law, rule or regulation, and except pursuant
to any mutually agreed upon promotional programs.
(c) The provisions of this Paragraph 14 shall survive the termination of
this Agreement.
15. Security Against Unauthorized Use of Funds' Recordkeeping Systems.
Financial Institution agrees to provide such security as is necessary to
prevent any unauthorized use of the Funds' recordkeeping system, accessed via
any computer hardware or software provided to Financial Institution by FSC or
FSS.
16. Solicitation of Proxies.
Financial Institution agrees not to solicit or cause to be solicited
directly, or indirectly, at any time in the future, any proxies from the
shareholders of any or all of the Funds in opposition to proxies solicited by
management of the Fund or Funds, unless a court of competent jurisdiction
shall have determined that the conduct of a majority of the Board of Directors
or Trustees of the Fund or Funds constitutes willful misfeasance, bad faith,
gross negligence or reckless disregard of their duties. This Paragraph 16
will survive the term of this Agreement.
17. Certification of Customers' Taxpayer Identification Numbers.
Financial Institution agrees to obtain any taxpayer identification number
certification from its customers required under Section 3406 of the Internal
Revenue Code, and any applicable Treasury regulations, and to provide FSC,
FSS, or their respective designee with timely written notice of any failure to
obtain such taxpayer identification number certification in order to enable
the implementation of any required backup withholding.
18. Notices.
Except as otherwise specifically provided in this Agreement, all notices
required or permitted to be given pursuant to this Agreement shall be given in
writing and delivered by personal delivery or by postage prepaid, registered
or certified United States first class mail, return receipt requested,
overnight courier services, or by facsimile or similar electronic means of
delivery (with a confirming copy by mail as provided herein). Unless
otherwise notified in writing, all notices to FSC or FSS shall be given or
sent to FSC or FSS at their offices located at Federated Investors Tower,
Pittsburgh, Pennsylvania 15222-3779, and all notices to Financial Institution
shall be given or sent to it at its address shown below.
19. Termination and Amendment.
(a) This Agreement shall become effective in this form as of the date set
forth below or as of the first date thereafter upon which Financial
Institution executes any transaction, performs any service, or receives
any payment pursuant hereto. This Agreement supersedes any prior sales,
distribution, shareholder service, or administrative service agreements
between the parties.
(b) With respect to each Fund, this Agreement shall continue in effect for
one year from the date of its execution, and thereafter for successive
periods of one year if the form of this Agreement is approved at least
annually by the Directors or Trustees of the Fund, including a majority of
the members of the Board of Directors or Trustees of the Fund who are not
interested persons of the Fund and have no direct or indirect financial
interest in the operation of the Fund's Distribution Plan or in any
related documents to such Plan ("Independent Directors or Trustees") cast
in person at a meeting called for that purpose.
(c) This Agreement, including Exhibit A hereto, may be amended by FSC
and/or FSS from time to time by the following procedure. FSC or FSS will
mail a copy of the amendment to Financial Institution's address, as shown
below. If Financial Institution does not object to the amendment within
thirty (30) days after its receipt, the amendment will become part of the
Agreement. Financial Institution's objection must be in writing and be
received by FSC or FSS within such thirty days.
(d) Notwithstanding subparagraph 19(b) and in addition to subparagraph
1(a), this Agreement may be terminated as follows:
(i) at any time, without the payment of any penalty, by the vote of a
majority of the Independent Directors or Trustees of the Fund or by a
vote of a majority of the outstanding voting securities of the Fund as
defined in the Investment Company Act of 1940 on not more than sixty
(60) days' written notice to the parties to this Agreement;
(ii)automatically in the event of the Agreement's assignment as defined in
the Investment Company Act of 1940, upon the termination of the
"Distributor's Contract" between the Fund and FSC, upon termination of
the "Shareholder Services Agreement" between the Fund and FSS, or upon
the termination of the Distribution Plan to which this Agreement is
related; and
(iii) by any party to the Agreement without cause by giving the other
party at least sixty (60) days' written notice of its intention to
terminate.
(e) The termination of this Agreement with respect to any one Fund will not
cause the Agreement's termination with respect to any other Fund.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.]
20. Governing Law.
This Agreement shall be construed in accordance with the laws of the
Commonwealth of Pennsylvania.
FEDERATED SECURITIES CORP.
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
By: /s/ Richard B. Fisher Date: July 1, 1995
Richard B. Fisher, Chairman
FEDERATED SHAREHOLDER SERVICES
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
By: /s/ John W. McGonigle Date: July 1, 1995
John W. McGonigle, President
_______________________________________
Financial Institution Name
(Please Print or Type)
_______________________________________
Address
_______________________________________
City State Zip Code
By:______________________________
Authorized Signature
_______________________________________
Title
_______________________________________
Print Name or Type Name
Dated:_____________________
Exhibit 6(iv) under Form N-1A
Exhibit 1 under Item 601/Reg. S-K
MUTUAL FUNDS SERVICE AGREEMENT
This Agreement is entered into among the financial institution or
service provider executing this Agreement (the "Institution"), Federated
Securities Corp. ("FSC"), and Federated Shareholder Services ("FSS"), with
respect to those investment companies listed in Exhibit A hereto (referred to
individually as the "Fund" and collectively as the "Funds") for whose shares
of beneficial interest or capital stock ("Shares") FSC serves as Distributor
and for whom FSS provides or coordinates shareholder services.
WHEREAS, the Institution provides agency, investment advisory,
fiduciary, administrative, or other services for its clients, customers, or
affiliates;
WHEREAS, FSS provides shareholder services for the shareholders of the
Funds in part by retaining financial institutions (such as the Institution) to
perform those shareholder services and FSC provides distribution services for
the Funds in part by retaining financial institutions (such as the
Institution) to perform distribution or support services;
WHEREAS, FSS and FSC have determined that services usually provided by
the Institution are substantially equivalent to shareholder services and that
the compensation of the Institution for those services could reasonably be
expected to contribute to the distribution and sale of Fund shares to clients,
customers, or affiliates of the Institution; and
WHEREAS, the Institution is willing to provide shareholder services for
shareholders of the Funds or distribution or support services for the funds as
consideration for compensation received from FSS and FSC;
NOW, THEREFORE, the parties agree as follows:
1. Agreement to Provide Services.
FSS hereby appoints the Institution to render or cause to be rendered
personal services to shareholders of the Funds and/or the maintenance of
accounts of shareholders of the Funds ("Shareholder Services"); and FSC hereby
appoints the Institution to render or cause to be rendered (i) distribution
and sales services to the Funds and their shareholders ("Sales Services"), or
(ii) services which, in the opinion of FSC, contribute to the distribution of
shares of Funds which have adopted Distribution Plans pursuant to Rule 12b-1
of the Investment Company Act of 1940 ("Support Services,"); Provided,
however, the Institution, FSS, and FSC all acknowledge that it is not the
intent of the parties to this Agreement that the Institution be compensated
for distribution-related services in connection with the investment of assets
over which the Institution, acting as a fiduciary, exercises investment
discretion.
Sales Services may include, but are not limited to, (a) selling and
compensating personnel for the sale of Shares; (b) reviewing the activity in
Fund accounts; (c) providing training and supervision of its personnel; (d)
maintaining and distributing current copies of prospectuses and shareholder
reports; (e) advertising the availability of its services and products; (f)
providing assistance and review in designing materials to send to customers
and potential customers and developing methods of making such materials
accessible to customers and potential customers; and (g) responding to
customers' and potential customers' questions about the Funds. Distribution-
related Support Services may include, but are not limited to, the following
functions: (a) account openings; (b) account closings; (c) enter purchase
transaction; (d) enter redemption transactions; (e) account maintenance; (f)
interest posting; (g) prospectus and shareholder reports; (h) advertisement of
the Institution's services; (i) customer lists; (j) design services; and
(k) consultation services.
The Institution agrees to provide Shareholder Services, Sales Services,
and/or Support Services which, in its best judgment, are necessary or
desirable for its customers who are investors in the Funds. The Institution
further agrees to provide FSS and FSC, upon request, a written description of
the Shareholder Services, Sales Services, and Support Services which the
Institution is providing hereunder.
2. Service Fees Payable to the Institution.
During the term of this Agreement, FSS and FSC will pay the
Institution fees as set forth in a written schedule delivered to the
Institution pursuant to this Agreement. The fee schedule for the
Institution may be changed by FSS or FSC sending a new fee schedule or
written notice to the Institution pursuant to Paragraph 10 of this
Agreement. Payments by FSS for Shareholder Services under this
Agreement may be derived from payments received by FSS from the Funds
under their Shareholder Services Agreement or from FSS's own assets;
payments by FSC for Sales Services or Support Services under this
Agreement may be derived from payments received by FSC from the Funds
under Distribution (Rule 12b-1) Plans or from FSC's own assets. FSS or
FSC may make supplemental payments to the Institution as set forth in
Exhibit A to this Agreement as additional compensation for Shareholder
Services, Sales Services, or Support Services; such supplemental
payments will be made from the assets of FSC, FSS, or their affiliates,
and not from the assets of the Funds nor from payments received by FSC
or FSS under any applicable Distribution (Rule 12b-1) Plan or
Shareholder Service Agreement.
3. Status of the Institution.
The Institution hereby represents and warrants:
(a)(i) that it is a broker or dealer as defined in Section 3(a)(4) or
3(a)(5) of the Securities Exchange Act of 1934 ("Exchange Act");
that it is registered with the Securities and Exchange Commission
pursuant to Section 15 of the Exchange Act; that it is a member of
the National Association of Securities Dealers, Inc.; and that,
during the term of this Agreement, it will abide by all of the
rules and regulations of the NASD including, without limitation,
the NASD Rules of Fair Practice. The Institution agrees to notify
FSC immediately in the event of (1) its expulsion or suspension
from the NASD, or (2) its being found to have violated any
applicable federal or state law, rule or regulation arising out of
its activities as a broker-dealer or in connection with this
Agreement, or which may otherwise affect in any material way its
ability to act in accordance with the terms of this Agreement. The
Institution's expulsion from the NASD will automatically terminate
this Agreement immediately without notice. Suspension of the
Institution from the NASD for violation of any applicable federal
or state law, rule or regulation will terminate this Agreement
effective immediately upon FSC's written notice of termination to
the Institution; or
(a)(ii)that it is a "bank," as that term is defined in Section 3(a)(6) of
the Exchange Act and that, during the term of this Agreement, it
will abide by the rules and regulations of those state and federal
banking authorities with appropriate jurisdiction over the
Institution, especially those regulations dealing with the
activities of the Institution as described under this Agreement.
The Institution agrees to notify FSC or FSS immediately of any
action by or communication from state or federal banking
authorities, state securities authorities, the Securities and
Exchange Commission, or any other party which may affect its status
as a bank, or which may otherwise affect in any material way its
ability to act in accordance with the terms of this Agreement. Any
action or decision of any of the foregoing regulatory authorities
or any court of appropriate jurisdiction which affects the
Institution's ability to act in accordance with the terms of this
agreement, including the loss of its exemption from registration as
a broker or dealer, will terminate this Agreement effective upon
FSC's written notice of termination to the Institution; or
(a)(iii) that its activities and business, including the services
which are rendered under this Agreement, do not require the
Institution to register as a broker or a dealer with the Securities
and Exchange Commission. The Institution agrees to notify FSC or
FSS immediately of any action by or communication from state
securities authorities, the Securities and Exchange Commission, or
any other party which action or communication may in any material
way affect its ability to act in accordance with the terms of this
Agreement. Any action or decision of any of the foregoing
regulatory authorities or any court of appropriate jurisdiction
which affects the Institution's ability to act in accordance with
the terms of this agreement, including the loss of its exemption
from registration as a broker or dealer, will terminate this
Agreement effective upon FSC's written notice of termination to the
Institution; and
(b) that the Institution is registered with the appropriate securities
authorities in all states in which its activities make such
registration necessary.
4. The Institution Acts as Agent for its Customers.
The parties agree that in each transaction in the Shares of any Fund and
with regard to any services rendered pursuant to this Agreement: (a) the
Institution is acting in the capacity of agent or fiduciary on behalf of the
customer; (b) each transaction over which the Institution does not exercise
investment discretion is initiated solely upon the order of the customer; (c)
as between the Institution and its customer, the customer will have full
beneficial ownership of all Shares of the Funds; (d) each transaction shall be
for the account of the customer and not for the Institution's account; and (e)
each transaction shall be without recourse to the Institution provided that
the Institution acts in accordance with the terms of this Agreement. The
Institution shall not have any authority in any transaction to act as FSC's
agent or as agent for the Funds.
5. Solicitation of Proxies.
Unless such action would cause the Institution to violate its fiduciary
or other similar obligations to its customers, the Institution agrees not to
solicit or cause to be solicited directly, or indirectly at any time in the
future, any proxies from the shareholders of a Fund in opposition to proxies
solicited by management of the Fund, unless a court of competent jurisdiction
shall have determined that the conduct of a majority of the Board of Trustees
or Directors of the Fund constitutes willful misfeasance, bad faith, gross
negligence, or reckless disregard of their duties. This paragraph 5 will
survive the term of this Agreement.
6. Delivery of Prospectuses to Customers.
In circumstances where the Institution does not have investment
discretion over the customer's account, the Institution will deliver or cause
to be delivered to each customer, at or prior to the time of any purchase of
Shares, a copy of the current prospectus of the Fund and, upon request by a
customer or shareholder, a copy of the Fund's current Statement of Additional
Information. The Institution shall not make any representations concerning
any Shares other than those contained in the prospectus or Statement of
Additional Information of the Fund or in any promotional materials or sales
literature furnished to the Institution by FSC or the Fund.
7. ERISA and Discretionary Assets.
(a)(i) The Institution understands that the Department of Labor views
ERISA as prohibiting fiduciaries of discretionary ERISA assets from
receiving administrative service fees or other compensation from
funds in which the fiduciary's discretionary ERISA assets are
invested. To date, the Department of Labor has not issued any
exemptive order or advisory opinion that would exempt fiduciaries
from this interpretation. Without specific authorization from the
Department of Labor, fiduciaries should carefully avoid investing
discretionary assets in any fund pursuant to an arrangement where
the fiduciary is to be compensated by the fund for such investment.
Receipt of such compensation could violate ERISA provisions against
fiduciary self-dealing and conflict of interest and could subject
the fiduciary to substantial penalties.
(ii) The Institution will not perform or provide any duties which would
cause it to be a fiduciary under Section 4975 of the Internal
Revenue Code, as amended. For purposes of that Section, the
Institution understands that any person who exercises any
discretionary authority or discretionary control with respect to
any individual retirement account or assets of an employee benefit
plan, or who renders investment advice to such an account or plan
for a fee, or has any authority or responsibility to do so, or has
any discretionary authority or discretionary responsibility in the
administration of such an account or plan, is a fiduciary.
(b) The Institution understands that the common law of trusts in
several states prohibits fiduciaries from receiving distribution-
related compensation from funds in which the fiduciary's
discretionary trust assets are invested. Without specific
authorization in the underlying trust documents or applicable
statutes, fiduciaries should carefully avoid investing
discretionary trust assets in any fund pursuant to an arrangement
where the fiduciary is to be compensated for distribution-related
services by the fund or FSC with respect to such investment.
8. Customer Names Proprietary to the Institution.
(a) The names of the Institution's customers are and shall remain the
Institution's sole property and shall not be used by FSC, FSS, or their
affiliates for any purpose except the performance of their respective
duties and responsibilities under this Agreement and except for servicing
and informational mailings relating to the Funds. Notwithstanding the
foregoing, this Paragraph 8 shall not prohibit FSC, FSS, or any of their
affiliates from utilizing the names of the Institution's customers for any
purpose if the names are obtained in any manner other than from the
Institution pursuant to this Agreement.
(b) Neither party shall use the name of the other party in any manner
without the other party's written consent, except as required by any
applicable federal or state law, rule or regulation, and except pursuant
to any mutually agreed upon promotional programs.
(c) The provisions of this Paragraph 8 shall survive the termination of
this Agreement.
9. Security Against Unauthorized Use of Funds' Recordkeeping Systems.
The Institution agrees to provide such security as is necessary to
prevent any unauthorized use of the Funds' recordkeeping system, accessed via
any computer hardware or software provided to the Institution by FSC or FSS.
10. Termination and Amendment.
(a) This Agreement shall become effective in this form as of the date set
forth below or as of the first date thereafter upon which the Institution
executes any transaction, performs any service, or receives any payment
pursuant hereto. This Agreement supersedes any prior sales, distribution,
shareholder service, or administrative service agreements between the
parties.
(b) With respect to each Fund, this Agreement shall continue in effect for
one year from the date of its execution, and thereafter for successive
periods of one year if the form of this Agreement is approved at least
annually by the Directors or Trustees of the Fund, including a majority of
the members of the Board of Directors or Trustees of the Fund who are not
interested persons of the Fund and have no direct or indirect financial
interest in the operation of the Fund's Distribution Plan or in any
related documents to such Plan ("Independent Directors or Trustees") cast
in person at a meeting called for that purpose.
(c) This Agreement, including Exhibit A hereto, may be amended by FSC
and/or FSS from time to time by the following procedure. FSC or FSS will
mail a copy of the amendment to the Institution's address, as shown below.
If the Institution does not object to the amendment within thirty (30)
days after its receipt, the amendment will become part of the Agreement.
The Institution's objection must be in writing and be received by FSC or
FSS within such thirty days.
(d) Notwithstanding subparagraph 10(b) and in addition to subparagraph
3(a), this Agreement may be terminated as follows:
(i) at any time, without the payment of any penalty, by the vote of a
majority of the Independent Directors or Trustees of the Fund or by a
vote of a majority of the outstanding voting securities of the Fund
as defined in the Investment Company Act of 1940 on not more than
sixty (60) days' written notice to the parties to this Agreement;
(ii) automatically in the event of the Agreement's assignment as defined
in the Investment Company Act of 1940, upon the termination of the
"Distributor's Contract" between the Fund and FSC, upon termination
of the "Shareholder Service Agreement" between the Fund and FSS, or
upon the termination of the Distribution Plan to which this Agreement
is related; and
(iii) by any party to the Agreement without cause by giving the other party
at least sixty (60) days' written notice of its intention to
terminate.
(e) The termination of this Agreement with respect to any one Fund will not
cause the Agreement's termination with respect to any other Fund.
11. Certification of Customers' Taxpayer Identification Numbers.
The Institution agrees to obtain any taxpayer identification number
certification from its customers required under Section 3406 of the Internal
Revenue Code, and any applicable Treasury regulations, and to provide FSC,
FSS, or their respective designee with timely written notice of any failure to
obtain such taxpayer identification number certification in order to enable
the implementation of any required backup withholding.
12. Miscellaneous.
(a) This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement with respect to the subject
hereof whether oral or written. If any provision of this Agreement shall
be held or made invalid by a court or regulatory agency decision, statute,
rule or otherwise, the remainder of this Agreement shall not be affected
thereby. Subject to the provisions of Section 10, hereof, this Agreement
shall be binding upon and shall inure to the benefit of the parties hereto
and their respective successors and shall be governed by Pennsylvania law;
provided, however, that nothing herein shall be construed in a manner
inconsistent with the Investment Company Act of 1940 or any rule or
regulation promulgated by the Securities and Exchange Commission
thereunder.
(b) This Agreement may be executed by different parties on separate
counterparts, each of which, when so executed and delivered, shall be an
original, and all such counterparts shall together constitute one and the
same instrument.
(c) Except as otherwise specifically provided in this Agreement, all
notices required or permitted to be given pursuant to this Agreement shall
be given in writing and delivered by personal delivery or by postage
prepaid, registered or certified United States first class mail, return
receipt requested, overnight courier services, or by facsimile or similar
electronic means of delivery (with a confirming copy by mail as provided
herein). Unless otherwise notified in writing, all notices to FSC or FSS
shall be given or sent to FSC or FSS at their offices located at Federated
Investors Tower, Pittsburgh, Pennsylvania 15222-3779, and all notices to
the Institution shall be given or sent to it at its address shown below.
FEDERATED SHAREHOLDER SERVICES
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
By: /s/ John W. McGonigle
John W. McGonigle, President
FEDERATED SECURITIES CORP.
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
By: /s/ Richard B. Fisher
Richard B. Fisher, Chairman
[Institution]
Address
City State Zip Code
Dated: By:
Authorized Signature
Title
Print Name of Authorized Signature
Exhibit 19 under Form N-1A
Exhibit 24 under Item 601/Reg. S-K
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and
appoints the Secretary and Assistant Secretary of FEDERATED EQUITY FUNDS and
the Assistant General Counsel of Federated Investors, and each of them, their
true and lawful attorneys-in-fact and agents, with full power of substitution
and resubstitution for them and in their names, place and stead, in any and
all capacities, to sign any and all documents to be filed with the Securities
and Exchange Commission pursuant to the Securities Act of 1933, the Securities
Exchange Act of 1934 and the Investment Company Act of 1940, by means of the
EDGAR; and to file the same, with all exhibits thereto and other documents in
connection therewith, with the Securities and Exchange Commission, granting
unto said attorney-in-fact and agents, and each of them, full power and
authority to sign and perform each and every act and thing requisite and
necessary to be done in connection therewith, as fully to all intents and
purposes as each of them might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agents, or any of them, or their
or his substitute or substitutes, may lawfully do or cause to be done by
virtue thereof.
SIGNATURES TITLE DATE
/s/ John F. Donahue Chairman and Trustee June 30, 1995
John F. Donahue (Chief Executive Officer)
/s/ Glen R. Johnson President June 30, 1995
Glen R. Johnson
/s/ Edward C. Gonzales Executive Vice President June 30, 1995
Edward C. Gonzales
/s/ David M. Taylor Treasurer June 30, 1995
David M. Taylor (Principal Financial and
Accounting Officer)
/s/ John T. Conroy, Jr. Trustee June 30, 1995
John T. Conroy, Jr.
/s/ William J. Copeland Trustee June 30, 1995
William J. Copeland
SIGNATURES TITLE DATE
/s/ James E. Dowd Trustee June 30, 1995
James E. Dowd
/s/ Lawrence D. Ellis, M.D. Trustee June 30, 1995
Lawrence D. Ellis, M.D.
/s/ Edward L. Flaherty, Jr. Trustee June 30, 1995
Edward L. Flaherty, Jr.
/s/ Peter E. Madden Trustee June 30, 1995
Peter E. Madden
/s/ Gregor F. Meyer Trustee June 30, 1995
Gregor F. Meyer
/s/ John E. Murray, Jr. Trustee June 30, 1995
John E. Murray, Jr.
/s/ Wesley W. Posvar Trustee June 30, 1995
Wesley W. Posvar
/s/ Marjorie P. Smuts Trustee June 30, 1995
Marjorie P. Smuts
Sworn to and subscribed before me this 30th day of June , 1995
(SEAL)
/s/ Marie M. Hamm____________________________________________
Notary Public
Notarial Seal
Marie M. Hamm, Notary Public
Plum Boro, Allegheny County
My Commission Expires September 16, 1996
Member, Pennsylvania Association of Notaries
