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. 30 ........... X
-- -
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
Amendment No. 25 ......................... 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:
X 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).
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:
filed the Notice required by that Rule on ; or
-- --------------
X intends to file the Notice required by that Rule on or about
December 15, 1996; 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 three portfolios:
(1) Federated Growth Strategies Fund consisting of three classes of shares,
(a) Class A Shares, (b) Class B Shares, and (c) Class C Shares; (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; and (3)
Federated Capital Appreciation 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 Federated Capital Appreciation
Fund. The portfolios are comprised of the following:
PART A. INFORMATION REQUIRED IN A PROSPECTUS.
Prospectus Heading
(Rule 404(c) Cross Reference)
Item 1. Cover Page...............(1-3) Cover Page.
Item 2. Synopsis.................(1-3) Summary of Fund Expenses.
Item 3. Condensed Financial
Information..............(1) Financial Highlights.
Item 4. General Description of
Registrant...............(1-3) Gemeral Information; (1-3)
Investment Information; (1-3) Investment
Objective; (1-3) Investment Policies; (1-
3) Investment Limitations; (1-3)
Performance Information; (1)Portfolio
Turnover.
Item 5. Management of the Fund...(1-3) Trust Information; (1-3) Management
of the Trust; (1-3) Distribution of
Shares; (1-3) Administration of the Fund;
(1(a),(b),(c)-3) Expenses of the Fund and
Class A Shares, Class B Shares, and Class
C Shares; (1-3) Brokerage Transactions.
Item 6. Capital Stock and Other
Securities...............(1-2) Account and Share Information; (1-
3) Shareholder Information; (1-3) Voting
Rights; (1-3) Tax Information; (1-3)
Federal Income Tax; (1-3) State and Local
Taxes; (1(a)) Other Classes of Shares.
Item 7. Purchase of Securities Being
Offered..................(1-3) Net Asset Value; (1-3) Investing in
the Fund; (1(a),(b),(c)-3) How to
Purchase Shares; (1(a))What Shares Cost;
(1(a),(b),(c)-3) Investing in Class A
Shares; (1(a),(b),(c)-3) Investing in
Class B Shares; (1(a),(b),(c)-3)
Investing in Class C Shares; (1-3)
Special Purchase Features; (1-3) Exchange
Privilege (1-3)
Item 8. Redemption or Repurchase.(1-3) How to Redeem Shares; (1-3) Special
Redemption Features; (1-3) Contingent
Deferred Sales Charge; (1-3) 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...............(1-3) Cover Page.
Item 11. Table of Contents........(1-3) Table of Contents.
Item 12. General Information and
History..................(1-3) General Information About the Fund;
(1-3) About Federated Investors; (1)
Massachusetts Partnership Law.
Item 13. Investment Objectives and
Policies.................(1-3) Investment Objective and Policies.
Item 14. Management of the Fund...(1-3) Federated Equity Funds Management.
Item 15. Control Persons and Principal
Holders of Securities....(1-3) Fund Ownership.
Item 16. Investment Advisory and Other
Services.................(1-3) Investment Advisory Services; (1)
Other Services (2-3) Administrative
Services; (2-3) Transfer Agent and
Dividend Disbursing Agent; (1-3)
Distribution Plan and Shareholder
Services Agreement.
Item 17. Brokerage Allocation.....(1-3) Brokerage Transactions.
Item 18. Capital Stock and Other
Securities...............Not applicable.
Item 19. Purchase, Redemption and
Pricing of Securities Being
Offered .................(1-3) Purchasing Shares; (1-3)
Determining Net Asset Value; (1-3)
Redeeming Shares; (1-3) Exchanging
Securities for Shares; (3) Current
Distributions.
Item 20. Tax Status...............(1-3) Tax Status.
Item 21. Underwriters.............Not applicable.
Item 22. Calculation of Performance
Data.....................(1-3) Total Return; (1-3) Yield; (1-3)
Performance Comparisons; (1-3) Appendix.
Item 23. Financial Statements.....(1) Incorporated by reference to the
Annual Report to Shareholders of
Federated Growth Strategies Fund dated
October 31, 1995, pursuant to Rule 411
under the Securities Act of 1933. (File
No.811-4017).
FEDERATED SMALL CAP STRATEGIES FUND
(A PORTFOLIO OF FEDERATED EQUITY FUNDS)
CLASS A SHARES
SEMI-ANNUAL REPORT AND SUPPLEMENT TO THE PROSPECTUS DATED NOVEMBER 1, 1995.
A. Please delete the "SUMMARY OF FUND EXPENSES" table on page 1 of the
prospectus and replace it with the following table:
SUMMARY OF FUND EXPENSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
CLASS A SHARES
SHAREHOLDER TRANSACTION EXPENSES
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 Fees (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)........................................................................... 0.64%
12b-1 Fees (3).............................................................................................. 0.00%
Total Other Expenses........................................................................................ 0.71%
Shareholder Services Fee..................................................................... 0.25%
Total Class A Operating Expenses (4)................................................................ 1.35%
</TABLE>
(1) Class A Shares purchased with the proceeds of a redemption of shares of an
unaffiliated investment company purchased and sold with a sales load and not
distributed by Federated Securities Corp. may be charged a contingent
deferred sales charge of 0.50 of 1.00% for redemptions made within one year
of purchase.
(2) The estimated management fee has been reduced to reflect the voluntary
waiver of a portion of the management fee. The adviser can terminate this
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 period 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 "Class A
Information".
(4) The total Class A Shares operating expenses are estimated to be 1.46% absent
the anticipated voluntary waiver of a portion of the management fee.
* Total Class A operating expenses are estimated based on average expenses
expected to be incurred during the period ending October 31, 1996. 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 THE CLASS A SHARES WILL BEAR,
EITHER DIRECTLY OR INDIRECTLY. FOR MORE COMPLETE DESCRIPTIONS OF 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.
<TABLE>
<CAPTION>
EXAMPLE 1 year 3 years
<S> <C> <C>
--------- ---------
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. ........................ $73 $95
You would pay the following expenses on the same investment, assuming no redemption............. $68 $95
</TABLE>
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 A SHARES' FISCAL YEAR ENDING
OCTOBER 31, 1996.
B. Please insert the following "FINANCIAL HIGHLIGHTS" table as page 2 of the
prospectus:
FEDERATED SMALL CAP STRATEGIES FUND
FINANCIAL HIGHLIGHTS--CLASS A SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
PERIOD ENDED
(UNAUDITED)
APRIL 30, 1996(A)
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
- -------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- -------------------------------------------------------------------------------------------
Net investment income 0.00
- -------------------------------------------------------------------------------------------
Net realized and unrealized gain on investments 4.07
- ------------------------------------------------------------------------------------------- -------
Total from investment operations 14.07
- ------------------------------------------------------------------------------------------- -------
LESS DISTRIBUTIONS
- -------------------------------------------------------------------------------------------
Distributions in excess of net investment income (0.02)
- ------------------------------------------------------------------------------------------- -------
NET ASSET VALUE, END OF PERIOD $ 14.05
- ------------------------------------------------------------------------------------------- -------
TOTAL RETURN (B) 40.74%
- -------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- -------------------------------------------------------------------------------------------
Expenses 1.34%*
- -------------------------------------------------------------------------------------------
Net investment income (0.02%)*
- -------------------------------------------------------------------------------------------
Expense waiver/reimbursement (c) 5.31%*
- -------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- -------------------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $6,101
- -------------------------------------------------------------------------------------------
Average commission rate paid $ .05
- -------------------------------------------------------------------------------------------
Portfolio turnover 57%
- -------------------------------------------------------------------------------------------
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from November 1, 1995 (date of initial
public investment) to April 30, 1996.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
C. Effective May 1, the dividend cycle for Federated Small Cap Strategies
Fund will be changed from quarterly to annually. Therefore no payment will
be made in June. The next regular dividend payment will be made this
December. Therefore, under the Section entitled "ACCOUNT AND SHARE
INFORMATION", please replace the first sentence under the sub-section
"DIVIDENDS" on page 20 with the following:
"Dividends are declared and paid annually to all shareholders invested in
the Fund on the record date."
D. Under the section entitled "ADMINISTRATION OF THE FUND", on page 24,
delete all references to "Federated Administrative Services" and replace
them with "Federated Services Company".
E. Please delete all references to "Federated Services Company" the former
name of the current transfer agent, and replace with "Federated
Shareholder Services Company", in the following sections of the
prospectus; PURCHASING SHARES BY CHECK, TELEPHONE INSTRUCTIONS, REDEEMING
SHARES BY MAIL, CERTIFICATES AND CONFIRMATIONS and TRANSFER AGENT AND
DIVIDEND DISBURSING AGENT, on pages 15, 16, 18, 20, and 24,
respectively.
F. Please delete the last sentence in the section entitled "MAKING AN
EXCHANGE" on page 16 and replace it with the following:
"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 Shareholder Services Company, 1099
Hingham Street, Rockland, Massachusetts 02370-3317."
G. Please insert the following financial statements beginning on page 28 of
the prospectus:
FEDERATED SMALL CAP STRATEGIES FUND
PORTFOLIO OF INVESTMENTS
APRIL 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ----------- -------------------------------------------------------------------------------------- -------------
<C> <S> <C>
COMMON STOCKS--91.3%
- ---------------------------------------------------------------------------------------------------
BASIC INDUSTRY--4.9%
--------------------------------------------------------------------------------------
1,500 Cambrex Corp. $ 64,500
--------------------------------------------------------------------------------------
1,600 Carpenter Technology Corp. 60,200
--------------------------------------------------------------------------------------
1,000 (a)Cytec Industries, Inc. 82,875
--------------------------------------------------------------------------------------
2,200 (a)Fibreboard Corp. 56,375
--------------------------------------------------------------------------------------
8,500 Spartech Corp. 86,062
--------------------------------------------------------------------------------------
1,650 Texas Industries, Inc. 105,600
--------------------------------------------------------------------------------------
4,500 Universal Stainless & Alloy 49,500
-------------------------------------------------------------------------------------- -------------
Total 505,112
-------------------------------------------------------------------------------------- -------------
CONSUMER DURABLES--5.6%
--------------------------------------------------------------------------------------
2,500 Anthony Industries, Inc. 71,250
--------------------------------------------------------------------------------------
1,200 Bush Industries, Inc., Class A 36,300
--------------------------------------------------------------------------------------
1,500 (a)Cannondale Corp. 33,375
--------------------------------------------------------------------------------------
5,800 Cavalier Homes, Inc. 112,375
--------------------------------------------------------------------------------------
1,200 (a)Champion Enterprises, Inc. 45,600
--------------------------------------------------------------------------------------
5,000 (a)Equity Marketing, Inc. 64,375
--------------------------------------------------------------------------------------
900 Harman International Industries, Inc. 42,525
--------------------------------------------------------------------------------------
4,400 Norwood Promotional Products 100,100
--------------------------------------------------------------------------------------
2,300 (a)Toll Brothers, Inc. 37,375
--------------------------------------------------------------------------------------
1,350 Wynns International, Inc. 36,619
-------------------------------------------------------------------------------------- -------------
Total 579,894
-------------------------------------------------------------------------------------- -------------
CONSUMER NON-DURABLES--1.7%
--------------------------------------------------------------------------------------
6,300 (a)Morningstar Group, Inc. 63,000
--------------------------------------------------------------------------------------
2,300 Mossimo, Inc. 87,400
--------------------------------------------------------------------------------------
1,500 (a)The Boston Beer Co., Inc., Class A 28,313
-------------------------------------------------------------------------------------- -------------
Total 178,713
-------------------------------------------------------------------------------------- -------------
</TABLE>
FEDERATED SMALL CAP STRATEGIES FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ----------- -------------------------------------------------------------------------------------- -------------
<C> <S> <C>
COMMON STOCKS--CONTINUED
- ---------------------------------------------------------------------------------------------------
ENERGY MINERALS--1.5%
--------------------------------------------------------------------------------------
3,000 (a)American Exploration Co. $ 37,125
--------------------------------------------------------------------------------------
2,400 Getty Petroleum Corp. 34,200
--------------------------------------------------------------------------------------
7,920 Mercury Air Group, Inc. 79,200
-------------------------------------------------------------------------------------- -------------
Total 150,525
-------------------------------------------------------------------------------------- -------------
FINANCE--19.5%
--------------------------------------------------------------------------------------
1,100 Alex Brown, Inc. 59,537
--------------------------------------------------------------------------------------
2,500 (a)Amerin Corp. 56,562
--------------------------------------------------------------------------------------
2,500 BHC Financial, Inc. 34,688
--------------------------------------------------------------------------------------
1,200 Banknorth Group, Inc. 42,000
--------------------------------------------------------------------------------------
3,000 CapMAC Holdings, Inc. 87,375
--------------------------------------------------------------------------------------
3,000 Capital Re Corp. 112,500
--------------------------------------------------------------------------------------
3,300 Donegal Group, Inc. 59,400
--------------------------------------------------------------------------------------
7,000 Electro Rent Corp. 174,125
--------------------------------------------------------------------------------------
8,700 Executive Risk, Inc. 269,700
--------------------------------------------------------------------------------------
2,800 (a)IPC Holdings Ltd. 54,950
--------------------------------------------------------------------------------------
3,100 (a)Markel Corp. 248,000
--------------------------------------------------------------------------------------
6,000 Oriental Bank & Trust 108,750
--------------------------------------------------------------------------------------
5,500 Penn-America Group, Inc. 73,562
--------------------------------------------------------------------------------------
1,300 Penncorp Financial Group, Inc. 39,812
--------------------------------------------------------------------------------------
1,900 Peoples Heritage Financial Group 39,662
--------------------------------------------------------------------------------------
2,000 Quick & Reilly Group, Inc. 61,000
--------------------------------------------------------------------------------------
1,800 Selective Insurance Group, Inc. 56,475
--------------------------------------------------------------------------------------
2,400 (a)Silicon Valley Bancshares 55,800
--------------------------------------------------------------------------------------
4,100 TCF Financial Corp. 145,037
--------------------------------------------------------------------------------------
4,700 (a)United Insurance Cos., Inc. 99,287
--------------------------------------------------------------------------------------
2,700 Vesta Insurance Group, Inc. 86,737
--------------------------------------------------------------------------------------
</TABLE>
FEDERATED SMALL CAP STRATEGIES FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ----------- -------------------------------------------------------------------------------------- -------------
<C> <S> <C>
COMMON STOCKS--CONTINUED
- ---------------------------------------------------------------------------------------------------
FINANCE--CONTINUED
--------------------------------------------------------------------------------------
1,800 Webster Financial Corp. Waterbury $ 49,950
-------------------------------------------------------------------------------------- -------------
Total 2,014,909
-------------------------------------------------------------------------------------- -------------
HEALTH CARE--11.3%
--------------------------------------------------------------------------------------
3,700 (a)Amrion, Inc. 57,350
--------------------------------------------------------------------------------------
1,800 (a)Assisted Living Concepts, Inc. 35,550
--------------------------------------------------------------------------------------
2,500 (a)Bio Rad Laboratories, Inc., Class A 116,250
--------------------------------------------------------------------------------------
2,000 (a)Geltex Pharmaceuticals, Inc. 47,000
--------------------------------------------------------------------------------------
1,700 (a)Health Management Systems, Inc. 43,775
--------------------------------------------------------------------------------------
3,400 (a)Heartport, Inc. 121,550
--------------------------------------------------------------------------------------
3,400 (a)KeraVision, Inc. 53,975
--------------------------------------------------------------------------------------
6,000 (a)OEC Medical Systems, Inc. 69,000
--------------------------------------------------------------------------------------
16,000 (a)PolyMedica Industries, Inc. 134,000
--------------------------------------------------------------------------------------
4,000 (a)Prime Medical Services 62,500
--------------------------------------------------------------------------------------
3,200 (a)Rotech Medical Corp. 132,800
--------------------------------------------------------------------------------------
1,000 (a)Sierra Health Services, Inc. 33,000
--------------------------------------------------------------------------------------
8,800 Synthetech, Inc. 66,000
--------------------------------------------------------------------------------------
1,200 (a)Universal Health Services, Inc., Class B 66,600
--------------------------------------------------------------------------------------
1,900 (a)Veterinary Centers of America 57,950
--------------------------------------------------------------------------------------
3,200 Vital Signs, Inc. 67,400
-------------------------------------------------------------------------------------- -------------
Total 1,164,700
-------------------------------------------------------------------------------------- -------------
PRODUCER MANUFACTURING--5.7%
--------------------------------------------------------------------------------------
2,400 AGCO Corp. 60,600
--------------------------------------------------------------------------------------
2,200 (a)Cable Design Technologies, Class A 72,600
--------------------------------------------------------------------------------------
2,500 Cascade Corp. 40,625
--------------------------------------------------------------------------------------
1,000 Gleason Corp. 39,375
--------------------------------------------------------------------------------------
3,200 (a)Intermet Corp. 47,200
--------------------------------------------------------------------------------------
1,700 JLG Industries, Inc. 92,650
--------------------------------------------------------------------------------------
</TABLE>
FEDERATED SMALL CAP STRATEGIES FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ----------- -------------------------------------------------------------------------------------- -------------
<C> <S> <C>
COMMON STOCKS--CONTINUED
- ---------------------------------------------------------------------------------------------------
PRODUCER MANUFACTURING--CONTINUED
--------------------------------------------------------------------------------------
1,300 (a)Mueller Industries, Inc. $ 52,325
--------------------------------------------------------------------------------------
1,000 NACCO Industries, Inc., Class A 63,125
--------------------------------------------------------------------------------------
1,800 Regal Beloit Corp. 34,875
--------------------------------------------------------------------------------------
3,000 Titan Wheel International, Inc. 48,375
--------------------------------------------------------------------------------------
1,350 Tredegar Industries, Inc. 37,463
-------------------------------------------------------------------------------------- -------------
Total 589,213
-------------------------------------------------------------------------------------- -------------
RETAIL TRADE--2.9%
--------------------------------------------------------------------------------------
5,000 (a)MSC Industrial Direct Co. 181,875
--------------------------------------------------------------------------------------
1,400 (a)Orchard Supply Hardware 37,275
--------------------------------------------------------------------------------------
4,400 Riser Foods, Inc., Class A 83,600
-------------------------------------------------------------------------------------- -------------
Total 302,750
-------------------------------------------------------------------------------------- -------------
SERVICES--10.9%
--------------------------------------------------------------------------------------
2,000 (a)American Buildings Co. 50,812
--------------------------------------------------------------------------------------
2,500 American List Corp. 77,812
--------------------------------------------------------------------------------------
2,800 (a)BARRA, Inc. 93,100
--------------------------------------------------------------------------------------
2,000 (a)Catalina Marketing Corp. 155,750
--------------------------------------------------------------------------------------
1,700 (a)Day Runner, Inc. 52,913
--------------------------------------------------------------------------------------
2,300 ](a)Devon Group, Inc. 72,450
--------------------------------------------------------------------------------------
2,000 Employee Solutions, Inc. 77,500
--------------------------------------------------------------------------------------
2,250 Granite Construction, Inc. 44,438
--------------------------------------------------------------------------------------
2,000 (a)Newpark Resources, Inc. 62,750
--------------------------------------------------------------------------------------
5,900 (a)Prepaid Legal Services, Inc. 114,313
--------------------------------------------------------------------------------------
4,000 (a)Pride Petroleum Services, Inc. 65,500
--------------------------------------------------------------------------------------
4,500 (a)Right Management Consultants 154,125
--------------------------------------------------------------------------------------
1,000 (a)Scientific Games Holdings Corp. 32,750
--------------------------------------------------------------------------------------
200 (a)Sykes Enterprises, Inc. 7,100
--------------------------------------------------------------------------------------
</TABLE>
FEDERATED SMALL CAP STRATEGIES FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ----------- -------------------------------------------------------------------------------------- -------------
<C> <S> <C>
COMMON STOCKS--CONTINUED
- ---------------------------------------------------------------------------------------------------
SERVICES--CONTINUED
--------------------------------------------------------------------------------------
2,000 (a)Volt Information Science, Inc. $ 59,500
-------------------------------------------------------------------------------------- -------------
Total 1,120,813
-------------------------------------------------------------------------------------- -------------
TECHNOLOGY--23.1%
--------------------------------------------------------------------------------------
3,000 (a)Advent Software, Inc. 79,500
--------------------------------------------------------------------------------------
5,000 (a)Axent Technologies, Inc. 90,000
--------------------------------------------------------------------------------------
4,000 (a)Black Box Corp. 80,000
--------------------------------------------------------------------------------------
1,500 (a)Boca Research, Inc. 32,250
--------------------------------------------------------------------------------------
4,000 (a)Burr Brown Corp. 77,000
--------------------------------------------------------------------------------------
1,000 CTS Corp. 41,750
--------------------------------------------------------------------------------------
1,800 Computer Data Systems, Inc. 31,950
--------------------------------------------------------------------------------------
6,100 (a)Digital Systems Int., Inc. 120,475
--------------------------------------------------------------------------------------
2,000 (a)Documentum, Inc. 92,000
--------------------------------------------------------------------------------------
2,600 (a)ESS Technology, Inc. 58,825
--------------------------------------------------------------------------------------
3,200 (a)Encad, Inc. 110,000
--------------------------------------------------------------------------------------
1,000 (a)Engineering Animation, Inc. 23,250
--------------------------------------------------------------------------------------
2,400 (a)First USA Paymentech, Inc. 104,400
--------------------------------------------------------------------------------------
2,500 (a)Forte Software, Inc. 154,375
--------------------------------------------------------------------------------------
800 HMC Software 29,800
--------------------------------------------------------------------------------------
6,100 II-VI, Inc. 91,500
--------------------------------------------------------------------------------------
500 (a)Indus Group, Inc. 10,625
--------------------------------------------------------------------------------------
3,500 (a)Intervoice, Inc. 98,000
--------------------------------------------------------------------------------------
2,500 (a)JDA Software Group, Inc. 51,250
--------------------------------------------------------------------------------------
2,300 National Data Corp. 81,075
--------------------------------------------------------------------------------------
1,900 (a)Network Equipment Technologies, Inc. 48,450
--------------------------------------------------------------------------------------
3,400 (a)Photronic Labs, Inc. 89,675
--------------------------------------------------------------------------------------
2,500 (a)Planning Sciences International PLC, ADR 60,313
--------------------------------------------------------------------------------------
1,500 (a)SCI Systems, Inc. 64,313
--------------------------------------------------------------------------------------
</TABLE>
FEDERATED SMALL CAP STRATEGIES FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ----------- -------------------------------------------------------------------------------------- -------------
<C> <S> <C>
COMMON STOCKS--CONTINUED
- ---------------------------------------------------------------------------------------------------
TECHNOLOGY--CONTINUED
--------------------------------------------------------------------------------------
3,000 (a)Sapient Corp. $ 158,250
--------------------------------------------------------------------------------------
1,000 (a)Sync Research, Inc. 19,750
--------------------------------------------------------------------------------------
2,600 Telxon Corp. 59,800
--------------------------------------------------------------------------------------
3,600 (a)Tollgrade Communications, Inc. 85,500
--------------------------------------------------------------------------------------
4,000 Trident International, Inc. 70,000
--------------------------------------------------------------------------------------
5,200 (a)Worldtalk Communications, Inc. 67,600
--------------------------------------------------------------------------------------
2,200 Wyle Labs 92,125
--------------------------------------------------------------------------------------
1,800 (a)Xylan Corp. 115,313
-------------------------------------------------------------------------------------- -------------
Total 2,389,114
-------------------------------------------------------------------------------------- -------------
TRANSPORTATION--2.4%
--------------------------------------------------------------------------------------
1,100 (a)Alaska Air Group, Inc. 27,913
--------------------------------------------------------------------------------------
800 Comair Holdings, Inc. 29,600
--------------------------------------------------------------------------------------
4,400 Expeditors International Washington, Inc. 130,900
--------------------------------------------------------------------------------------
5,700 (a)Frontier Airlines, Inc. 47,025
--------------------------------------------------------------------------------------
700 Werner Enterprises, Inc. 16,975
-------------------------------------------------------------------------------------- -------------
Total 252,413
-------------------------------------------------------------------------------------- -------------
UTILITIES--1.8%
--------------------------------------------------------------------------------------
3,300 Interstate Power Co. 101,063
--------------------------------------------------------------------------------------
2,200 Teppco Partners, L.P. 83,050
-------------------------------------------------------------------------------------- -------------
Total 184,113
-------------------------------------------------------------------------------------- -------------
TOTAL COMMON STOCKS (IDENTIFIED COST $7,786,626) 9,432,269
-------------------------------------------------------------------------------------- -------------
</TABLE>
FEDERATED SMALL CAP STRATEGIES FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ----------- -------------------------------------------------------------------------------------- -------------
(B) REPURCHASE AGREEMENT--7.5%
- ---------------------------------------------------------------------------------------------------
$ 780,000 BT Securities Corporation, 5.35%, dated 4/30/1996, due 5/1/1996
(AT AMORTIZED COST) $ 780,000
-------------------------------------------------------------------------------------- -------------
TOTAL INVESTMENTS (IDENTIFIED COST $8,566,626)(C) $ 10,212,269
-------------------------------------------------------------------------------------- -------------
</TABLE>
(a) Non-income producing security.
(b) The repurchase agreement is fully collateralized by U.S. government
obligations based on market prices at the date of the portfolio. The
investment in the repurchase agreement is through participation in a joint
account with other Federated Funds.
(c) The cost for federal income tax purposes amounts to $8,566,626. The net
unrealized appreciation on a federal tax basis amounts to $1,645,643, which
is comprised of $1,790,992 appreciation and $145,349 depreciation at April
30, 1996.
Note: The categories of investments are shown as a percentage of net assets
($10,332,083) at April 30, 1996.
The following acronyms are used throughout this portfolio:
ADR--American Depository Receipt
PLC--Public Limited Company
(See Notes which are an integral part of the Financial Statements)
FEDERATED SMALL CAP STRATEGIES FUND
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- ----------------------------------------------------------------------------------------------------
Total investments in securities, at value (identified and tax cost $8,566,626) $ 10,212,269
- ----------------------------------------------------------------------------------------------------
Cash 311
- ----------------------------------------------------------------------------------------------------
Income receivable 3,664
- ----------------------------------------------------------------------------------------------------
Receivable for shares sold 381,538
- ----------------------------------------------------------------------------------------------------
Prepaid expenses 42,309
- ---------------------------------------------------------------------------------------------------- ------------
Total assets 10,640,091
- ----------------------------------------------------------------------------------------------------
LIABILITIES:
- ----------------------------------------------------------------------------------------------------
Payable for investments purchased $ 278,445
- -----------------------------------------------------------------------------------------
Accrued expenses 29,563
- ----------------------------------------------------------------------------------------- ---------
Total liabilities 308,008
- ---------------------------------------------------------------------------------------------------- ------------
NET ASSETS for 735,436 shares outstanding $ 10,332,083
- ---------------------------------------------------------------------------------------------------- ------------
NET ASSETS CONSIST OF:
- ----------------------------------------------------------------------------------------------------
Paid in capital $ 8,043,480
- ----------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments 1,645,643
- ----------------------------------------------------------------------------------------------------
Accumulated net realized gain on investments 660,095
- ----------------------------------------------------------------------------------------------------
Distributions in excess of net investment income (17,135)
- ---------------------------------------------------------------------------------------------------- ------------
Total Net Assets $ 10,332,083
- ---------------------------------------------------------------------------------------------------- ------------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
- ----------------------------------------------------------------------------------------------------
CLASS A SHARES:
- ----------------------------------------------------------------------------------------------------
Net Asset Value Per Share ($6,101,033 / 434,100 shares outstanding) $14.05
- ---------------------------------------------------------------------------------------------------- ------------
Offering Price Per Share (100 / 94.50 of $14.05)* $14.87
- ---------------------------------------------------------------------------------------------------- ------------
Redemption Proceeds Per Share $14.05
- ---------------------------------------------------------------------------------------------------- ------------
CLASS B SHARES:
- ----------------------------------------------------------------------------------------------------
Net Asset Value Per Share ($3,631,606 / 258,619 shares outstanding) $14.04
- ---------------------------------------------------------------------------------------------------- ------------
Offering Price Per Share $14.04
- ---------------------------------------------------------------------------------------------------- ------------
Redemption Proceeds Per Share (94.50 / 100 of $14.04)** $13.27
- ---------------------------------------------------------------------------------------------------- ------------
CLASS C SHARES:
- ----------------------------------------------------------------------------------------------------
Net Asset Value Per Share ($599,444 / 42,717 shares outstanding) $14.03
- ---------------------------------------------------------------------------------------------------- ------------
Offering Price Per Share $14.03
- ---------------------------------------------------------------------------------------------------- ------------
Redemption Proceeds Per Share (99.00 / 100 of $14.03)** $13.89
- ---------------------------------------------------------------------------------------------------- ------------
</TABLE>
* See "How to Purchase Shares" in the Prospectus.
** See "Contingent Deferred Sales Charge" in the Prospectus.
(See Notes which are an integral part of the Financial Statements)
FEDERATED SMALL CAP STRATEGIES FUND
STATEMENT OF OPERATIONS
FOR THE PERIOD ENDED APRIL 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- -----------------------------------------------------------------------------------------------------
Dividends (net of foreign taxes withheld of $59) $ 22,190
- -----------------------------------------------------------------------------------------------------
Interest 18,733
- ----------------------------------------------------------------------------------------------------- -----------
Total income 40,923
- -----------------------------------------------------------------------------------------------------
EXPENSES:
- -----------------------------------------------------------------------------------------
Investment advisory fee $ 24,133
- -----------------------------------------------------------------------------------------
Administrative personnel and services fee 91,488
- -----------------------------------------------------------------------------------------
Custodian fees 12,123
- -----------------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 17,343
- -----------------------------------------------------------------------------------------
Legal fees 2,053
- -----------------------------------------------------------------------------------------
Portfolio accounting fees 34,583
- -----------------------------------------------------------------------------------------
Distribution services fee--Class B Shares 4,149
- -----------------------------------------------------------------------------------------
Distribution services fee--Class C Shares 553
- -----------------------------------------------------------------------------------------
Shareholder services fee--Class A Shares 6,477
- -----------------------------------------------------------------------------------------
Shareholder services fee--Class B Shares 1,383
- -----------------------------------------------------------------------------------------
Shareholder services fee--Class C Shares 184
- -----------------------------------------------------------------------------------------
Share registration costs 13,752
- -----------------------------------------------------------------------------------------
Printing and postage 5,282
- -----------------------------------------------------------------------------------------
Insurance premiums 2,776
- -----------------------------------------------------------------------------------------
Miscellaneous 600
- ----------------------------------------------------------------------------------------- ----------
Total expenses 216,879
- -----------------------------------------------------------------------------------------
WAIVERS AND REIMBURSEMENTS--
- -----------------------------------------------------------------------------
Waiver of investment advisory fee $ (24,133)
- -----------------------------------------------------------------------------
Reimbursement of other operating expenses (144,577)
- ----------------------------------------------------------------------------- ----------
Total waivers and reimbursements (168,710)
- ----------------------------------------------------------------------------------------- ----------
Net expenses 48,169
- ----------------------------------------------------------------------------------------------------- -----------
Net operating loss (7,246)
- ----------------------------------------------------------------------------------------------------- -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
- -----------------------------------------------------------------------------------------------------
Net realized gain on investments 660,095
- -----------------------------------------------------------------------------------------------------
Net change in unrealized appreciation of investments 1,645,643
- ----------------------------------------------------------------------------------------------------- -----------
Net realized and unrealized gain on investments 2,305,738
- ----------------------------------------------------------------------------------------------------- -----------
Change in net assets resulting from operations $ 2,298,492
- ----------------------------------------------------------------------------------------------------- -----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FEDERATED SMALL CAP STRATEGIES FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERIOD ENDED
(UNAUDITED)
APRIL 30, 1996*
<S> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ----------------------------------------------------------------------------------------------
OPERATIONS--
- ----------------------------------------------------------------------------------------------
Net operating loss $ (7,246)
- ----------------------------------------------------------------------------------------------
Net realized gain on investments
($660,095 net gain, as computed for federal tax purposes) 660,095
- ----------------------------------------------------------------------------------------------
Net change in unrealized appreciation 1,645,643
- ---------------------------------------------------------------------------------------------- ------------------
Change in net assets resulting from operations 2,298,492
- ---------------------------------------------------------------------------------------------- ------------------
NET EQUALIZATION CREDITS (DEBITS)-- (30)
- ---------------------------------------------------------------------------------------------- ------------------
DISTRIBUTIONS TO SHAREHOLDERS--
- ----------------------------------------------------------------------------------------------
Distributions in excess of net investment income:
- ----------------------------------------------------------------------------------------------
Class A Shares (9,859)
- ---------------------------------------------------------------------------------------------- ------------------
Change in net assets resulting from distributions to shareholders (9,859)
- ---------------------------------------------------------------------------------------------- ------------------
SHARE TRANSACTIONS--
- ----------------------------------------------------------------------------------------------
Proceeds from sale of shares 14,244,031
- ----------------------------------------------------------------------------------------------
Net asset value of shares issued to shareholders in payment of distributions declared 1,448
- ----------------------------------------------------------------------------------------------
Cost of shares redeemed (6,201,999)
- ---------------------------------------------------------------------------------------------- ------------------
Change in net assets resulting from share transactions 8,043,480
- ---------------------------------------------------------------------------------------------- ------------------
Change in net assets 10,332,083
- ----------------------------------------------------------------------------------------------
NET ASSETS:
- ----------------------------------------------------------------------------------------------
Beginning of period --
- ---------------------------------------------------------------------------------------------- ------------------
End of period $ 10,332,083
- ---------------------------------------------------------------------------------------------- ------------------
</TABLE>
*For the period from November 1, 1995 (date of initial public investment) to
April 30, 1996.
(See Notes which are an integral part of the Financial Statements)
FEDERATED SMALL CAP STRATEGIES FUND
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
(1) ORGANIZATION
Federated Equity Funds (the "Trust") is registered under the Investment Company
Act of 1940, as amended (the "Act"), as an open-end, management investment
company. The Trust consists of three portfolios. The financial statements
included herein are only those of Federated Small Cap Strategies Fund (the
"Fund"), a diversified portfolio. The financial statements of the other
portfolios are presented separately. The assets of each portfolio are
segregated, and a shareholder's interest is limited to the portfolio in which
shares are held. The objective of the fund is to provide capital appreciation.
The Fund offers three classes of shares: Class A Shares, Class B Shares, and
Class C Shares.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Trust in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS--Listed equity securities are valued at the last sale
price reported on a national securities exchange. Short-term securities are
valued at the prices provided by an independent pricing service. However,
short-term securities with remaining maturities of sixty days or less at
the time of purchase may be valued at amortized cost, which approximates
fair market value.
REPURCHASE AGREEMENTS--It is the policy of the Fund to require the
custodian bank to take possession, to have legally segregated in the
Federal Reserve Book Entry System, or to have segregated within the
custodian bank's vault, all securities held as collateral under repurchase
agreement transactions. Additionally, procedures have been established by
the Fund to monitor, on a daily basis, the market value of each repurchase
agreement's collateral to ensure that the value of collateral at least
equals the repurchase price to be paid under the repurchase agreement
transaction.
The Fund will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed
by the Fund's adviser to be creditworthy pursuant to the guidelines and/or
standards reviewed or established by the Board of Trustees (the
"Trustees"). Risks may arise from the potential inability of counterparties
to honor the terms of the repurchase agreement. Accordingly, the Fund could
receive less than the repurchase price on the sale of collateral
securities.
INVESTMENT INCOME, EXPENSES, AND DISTRIBUTIONS--Interest income and
expenses are accrued daily. Bond premium and discount, if applicable, are
amortized as required by the
Internal Revenue Code, as amended (the "Code"). Dividend income and
distributions to shareholders are recorded on the ex-dividend date.
FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the
Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of its income. Accordingly, no
provisions for federal tax are necessary.
EQUALIZATION--The Fund follows the accounting practice known as
equalization. With equalization, a portion of the proceeds from sales and
costs of redemptions of fund shares (equivalent, on a per share basis, to
the amount of undistributed net investment income on the date of the
transaction) is credited or charged to undistributed net investment income.
As a result, undistributed net investment income per share is unaffected by
sales or redemptions of fund shares.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in
when-issued or delayed delivery transactions. The Fund records when-issued
securities on the trade date and maintains security positions such that
sufficient liquid assets will be available to make payment for the
securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
USE OF ESTIMATES--The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts of assets, liabilities,
expenses and revenues reported in the financial statements. Actual results
could differ from those estimated.
OTHER--Investment transactions are accounted for on the trade date.
(3) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value) for each
class of shares.
Transactions in shares were as follows:
<TABLE>
<CAPTION>
PERIOD ENDED
APRIL 30, 1996*
CLASS A SHARES SHARES AMOUNT
<S> <C> <C>
Shares sold 941,591 $ 10,235,032
- ---------------------------------------------------------------------------------------
Shares issued to shareholders in payment of distributions declared 126 1,448
- ---------------------------------------------------------------------------------------
Shares redeemed (507,617) (5,889,400)
- --------------------------------------------------------------------------------------- --------- -------------
Net change resulting from Class A share transactions 434,100 $ 4,347,080
- --------------------------------------------------------------------------------------- --------- -------------
</TABLE>
<TABLE>
<CAPTION>
PERIOD ENDED
APRIL 30, 1996*
CLASS B SHARES SHARES AMOUNT
<S> <C> <C>
Shares sold 284,564 $ 3,479,188
- ----------------------------------------------------------------------------------------
Shares issued to shareholders in payment of distributions declared 0 0
- ----------------------------------------------------------------------------------------
Shares redeemed (25,945) (310,770)
- ---------------------------------------------------------------------------------------- --------- ------------
Net change resulting from Class B share transactions 258,619 $ 3,168,418
- ---------------------------------------------------------------------------------------- --------- ------------
<CAPTION>
PERIOD ENDED
APRIL 30, 1996*
CLASS C SHARES SHARES AMOUNT
<S> <C> <C>
Shares sold 42,870 $ 529,811
- ---------------------------------------------------------------------------------------
Shares issued to shareholders in payment of distributions declared 0 0
- ---------------------------------------------------------------------------------------
Shares redeemed (153) (1,829)
- --------------------------------------------------------------------------------------- --------- -------------
Net change resulting from Class C share transactions 42,717 $ 527,982
- --------------------------------------------------------------------------------------- --------- -------------
Net change resulting from share transactions 735,436 8,043,480
- --------------------------------------------------------------------------------------- --------- -------------
</TABLE>
* For the period from November 1, 1995 (date of initial public investment) to
April 30, 1996.
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Federated Management, the Fund's investment adviser,
(the "Adviser"), receives for its services an annual investment advisory fee
equal to 0.75% of the Fund's average daily net assets.
The Adviser may voluntarily choose to waive any portion of its fee and reimburse
certain operating expenses of the Fund. The Adviser can modify or terminate this
voluntary waiver and reimbursement at any time at its sole discretion.
ADMINISTRATIVE FEE--Federated Services Company ("FServ"), under the
Administrative Services Agreement, provides the Fund with administrative
personnel and services. The fee paid to FServ is based on the level of average
aggregate daily net assets of all funds advised by subsidiaries of Federated
Investors for the period. The administrative fee received during the period of
the Administrative Services Agreement shall be at least $125,000 per portfolio
and $30,000 per each additional class of shares.
DISTRIBUTION SERVICES FEE--The Fund has adopted a Distribution Plan (the "Plan")
pursuant to Rule 12b-1 under the Act. Under the terms of the Plan, the Fund will
compensate Federated Securities Corp., the principal distributor, from the net
assets of the Fund to finance activities
intended to result in the sale of the Fund's Class B and Class C shares. The
Plan provides that the Fund may incur distribution expenses according to the
following schedule annually, to compensate Federated Securities Corp.
<TABLE>
<CAPTION>
SHARE CLASS NAME % OF AVG. DAILY NET ASSETS OF CLASS
<S> <C>
Class A 0.25%
Class B 0.75%
Class C 0.75%
</TABLE>
The distributor may voluntarily choose to waive any portion of its fee. The
distributor can modify or terminate this voluntary waiver at any time at its
sole discretion.
For the six months ended April 30, 1996, Class A did not incur a distrubtion
services fee.
SHAREHOLDER SERVICES FEE--Under the terms of a Shareholder Services Agreement
with Federated Shareholder Services, the Fund will pay Federated Shareholder
Services up to 0.25% of average daily net assets of each class of shares for the
period. The fee paid to Federated Shareholder Services is used to finance
certain services for shareholders and to maintain shareholder accounts.
Federated Shareholder Services may voluntarily choose to waive any portion of
its fee. Federated Shareholder Services can modify or terminate this voluntary
waiver at any time at its sole discretion.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT FEES--FServ, through its
subsidiary, Federated Shareholder Services Company serves as transfer and
dividend disbursing agent for the Fund. The fee paid to FServ is based on the
size, type, and number of accounts and transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES--Federated Services Company maintains the Fund's
accounting records for which it receives a fee. The fee is based on the level of
the Fund's average daily net assets for the period, plus out-of-pocket expenses.
ORGANIZATIONAL EXPENSES--Organizational expenses ($10,292) were initially borne
by Federated Securities Corp. The Trust has agreed to reimburse Federated
Securities Corp. for the organizational expenses during the five year period
following effective date. For the period ended April 30, 1996, the Trust paid
$57 pursuant to this agreement.
GENERAL--Certain of the Officers and Trustees of the Trust are Officers and
Directors or Trustees of the above companies.
(5) INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the
period ended
April 30, 1996, were as follows:
<TABLE>
<S> <C>
PURCHASES $ 10,780,232
- --------------------------------------------------------------------------------------------------- -------------
SALES $ 3,653,702
- --------------------------------------------------------------------------------------------------- -------------
</TABLE>
TRUSTEES OFFICERS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
John F. Donahue John F. Donahue
Thomas G. Bigley Chairman
John T. Conroy, Jr. Glen R. Johnson
William J. Copeland President
James E. Dowd J. Christopher Donahue
Lawrence D. Ellis, M.D. Executive Vice President
Edward L. Flaherty, Jr. Edward C. Gonzales
Peter E. Madden Executive Vice President
Gregor F. Meyer John W. McGonigle
John E. Murray, Jr. Executive Vice President and Secretary
Wesley W. Posvar Richard B. Fisher
Marjorie P. Smuts Vice President
David M. Taylor
Treasurer
S. Elliott Cohan
Assistant Secretary
</TABLE>
Mutual funds are not bank deposits or obligations, are not guaranteed
by any bank, and are not insured or guaranteed by the U.S. government,
the Federal Deposit Insurance Corporation, the Federal Reserve Board, or
any other government agency. Investment in mutual funds involves
investment risk, including possible loss of principal.
This report is authorized for distribution to prospective investors only when
preceded
or accompanied by the fund's prospectus which contains facts concerning their
objective and policies, management fees, expenses and other information.
FEDERATED
SMALL CAP
STRATEGIES
FUND
Class A Shares
Semi-Annual Report and
Supplement to Prospectus
dated November 1, 1995
[LOGO] FEDERATED INVESTORS
Since 1955
Federated Investors Tower
Pittsburgh, PA 15222-3779
Federated Securities Corp. is the distributor of the fund
and is a subsidiary of Federated Investors.
CUSIP# 314172404
FEDERATED SMALL CAP STRATEGIES FUND
(A PORTFOLIO OF FEDERATED EQUITY FUNDS)
CLASS A SHARES, CLASS B SHARES, AND CLASS C SHARES
SEMI-ANNUAL REPORT AND SUPPLEMENT TO THE PROSPECTUS DATED NOVEMBER 1, 1995.
A. Please delete the "Summary of Fund Expenses" tables for Class A, Class B,
and Class C Shares on pages 1-3 of the prospectus and replace it with the
following tables:
SUMMARY OF FUND EXPENSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
CLASS A SHARES
SHAREHOLDER TRANSACTION EXPENSES
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)........................................................................... 0.64%
12b-1 Fee (3)............................................................................................... 0.00%
Total Other Expenses........................................................................................ 0.71%
Shareholder Services Fee..................................................................... 0.25%
Total Class A Operating Expenses (4)................................................................ 1.35%
</TABLE>
(1) Class A Shares purchased with the proceeds of a redemption of shares of an
unaffiliated investment company purchased and sold with a sales load and not
distributed by Federated Securities Corp. may be charged a contingent
deferred sales charge of 0.50 of 1.00% for redemptions made within one year
of purchase.
(2) The estimated management fee has been reduced to reflect the voluntary
waiver of a portion 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 period 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 "Class A
Information".
(4) The total Class A Shares operating expenses are estimated to be 1.46% absent
the anticipated voluntary waiver of a portion of the management fee.
* Total Class A operating expenses are estimated based on average expenses
expected to be incurred during the period ending October 31, 1996. 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 THE 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.
<TABLE>
<CAPTION>
EXAMPLE 1 year 3 years
--------- ---------
<S> <C> <C>
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.......................... $73 $95
You would pay the following expenses on the same investment, assuming no redemption............. $68 $95
</TABLE>
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 A SHARES' FISCAL YEAR ENDING
OCTOBER 31, 1996.
SUMMARY OF FUND EXPENSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
CLASS B SHARES
SHAREHOLDER TRANSACTION EXPENSES
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)......................................................................... 0.64%
12b-1 Fee................................................................................................. 0.75%
Total Other Expenses...................................................................................... 0.71%
Shareholder Services Fee................................................................... 0.25%
Total Class B Operating Expenses (3)(4).......................................................... 2.10%
</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 a portion 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 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 2.21% absent
the anticipated voluntary waiver of a portion of the management fee.
* Total Class B operating expenses are estimated based on average expenses
expected to be incurred during the period ending October 31, 1996. 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 THE 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.
<TABLE>
<CAPTION>
EXAMPLE 1 year 3 years
--------- ---------
<S> <C> <C>
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......................... $78 $109
You would pay the following expenses on the same investment, assuming no redemption............ $21 $66
</TABLE>
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, 1996.
SUMMARY OF FUND EXPENSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
CLASS C SHARES
SHAREHOLDER TRANSACTION EXPENSES
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)......................................................................... 0.64%
12b-1 Fee................................................................................................. 0.75%
Total Other Expenses...................................................................................... 0.71%
Shareholder Services Fee................................................................... 0.25%
Total Class C Operating Expenses (3)............................................................. 2.10%
</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 "Redeeming
Class C Shares".
(2) The estimated management fee has been reduced to reflect the anticipated
voluntary waiver of a portion 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 total Class C Shares operating expenses are estimated to be 2.21% absent
the anticipated voluntary waiver of a portion of the management fee.
* Total Class C operating expenses are estimated based on average expenses
expected to be incurred during the period ending October 31, 1996. 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 THE 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.
<TABLE>
<CAPTION>
EXAMPLE 1 year 3 years
--------- ---------
<S> <C> <C>
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......................... $32 $66
You would pay the following expenses on the same investment, assuming no redemption............ $21 $66
</TABLE>
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, 1996.
B. Please insert the following "Financial Highlights" tables for Class A,
Class B, and Class C Shares immediately following the Summary of Fund
Expenses tables in the prospectus:
FEDERATED SMALL CAP STRATEGIES FUND
FINANCIAL HIGHLIGHTS--CLASS A SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
PERIOD ENDED
(UNAUDITED)
APRIL 30, 1996(A)
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
- -------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- -------------------------------------------------------------------------------------------
Net investment income 0.00
- -------------------------------------------------------------------------------------------
Net realized and unrealized gain on investments 4.07
- ------------------------------------------------------------------------------------------- -------
Total from investment operations 14.07
- ------------------------------------------------------------------------------------------- -------
LESS DISTRIBUTIONS
- -------------------------------------------------------------------------------------------
Distributions in excess of net investment income (0.02)
- ------------------------------------------------------------------------------------------- -------
NET ASSET VALUE, END OF PERIOD $ 14.05
- ------------------------------------------------------------------------------------------- -------
TOTAL RETURN (B) 40.74%
- -------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- -------------------------------------------------------------------------------------------
Expenses 1.34%*
- -------------------------------------------------------------------------------------------
Net investment income (0.02%)*
- -------------------------------------------------------------------------------------------
Expense waiver/reimbursement (c) 5.31%*
- -------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- -------------------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $ 6,101
- -------------------------------------------------------------------------------------------
Average commission rate paid $ .05
- -------------------------------------------------------------------------------------------
Portfolio turnover 57%
- -------------------------------------------------------------------------------------------
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from November 1, 1995 (date of initial
public investment) to April 30, 1996.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
FEDERATED SMALL CAP STRATEGIES FUND
FINANCIAL HIGHLIGHTS--CLASS B SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
PERIOD ENDED
(UNAUDITED)
APRIL 30, 1996(A)
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
- -------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- -------------------------------------------------------------------------------------------
Net investment income (0.02)
- -------------------------------------------------------------------------------------------
Net realized and unrealized gain on investments 4.06
- ------------------------------------------------------------------------------------------- -------
Total from investment operations 14.04
- ------------------------------------------------------------------------------------------- -------
LESS DISTRIBUTIONS
- -------------------------------------------------------------------------------------------
Distributions in excess of net investment income 0.00
- ------------------------------------------------------------------------------------------- -------
NET ASSET VALUE, END OF PERIOD $ 14.04
- ------------------------------------------------------------------------------------------- -------
TOTAL RETURN (B) 40.40%
- -------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- -------------------------------------------------------------------------------------------
Expenses 2.13%*
- -------------------------------------------------------------------------------------------
Net investment income (1.09%)*
- -------------------------------------------------------------------------------------------
Expense waiver/reimbursement (c) 5.00%*
- -------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- -------------------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $ 3,632
- -------------------------------------------------------------------------------------------
Average commission rate paid $ 0.05
- -------------------------------------------------------------------------------------------
Portfolio turnover 57%
- -------------------------------------------------------------------------------------------
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from November 1, 1995 (date of initial
public investment) to April 30, 1996.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
FEDERATED SMALL CAP STRATEGIES FUND
FINANCIAL HIGHLIGHTS--CLASS C SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
PERIOD ENDED
(UNAUDITED)
APRIL 30, 1996(A)
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
- -------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- -------------------------------------------------------------------------------------------
Net investment income (0.02)
- -------------------------------------------------------------------------------------------
Net realized and unrealized gain on investments 4.05
- ------------------------------------------------------------------------------------------- -------
Total from investment operations 14.03
- ------------------------------------------------------------------------------------------- -------
LESS DISTRIBUTIONS
- -------------------------------------------------------------------------------------------
Distributions in excess of net investment income 0.00
- ------------------------------------------------------------------------------------------- -------
NET ASSET VALUE, END OF PERIOD $ 14.03
- ------------------------------------------------------------------------------------------- -------
TOTAL RETURN (B) 40.30%
- -------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- -------------------------------------------------------------------------------------------
Expenses 2.13%*
- -------------------------------------------------------------------------------------------
Net investment income (1.13%)*
- -------------------------------------------------------------------------------------------
Expense waiver/reimbursement (c) 4.87%*
- -------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- -------------------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $ 599
- -------------------------------------------------------------------------------------------
Average commission rate paid $ 0.05
- -------------------------------------------------------------------------------------------
Portfolio turnover 57%
- -------------------------------------------------------------------------------------------
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from November 1, 1995 (date of initial
public investment) to April 30, 1996.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
C. Effective May 1, the dividend cycle for Federated Small Cap Strategies
Fund will be changed from quarterly to annually. Therefore no payment will
be made in June. The next regular dividend payment will be made this
December. Therefore, under the Section entitled "ACCOUNT AND SHARE
INFORMATION", please replace the first sentence under the sub-section
"DIVIDENDS" on page 26 with the following:
"Dividends are declared and paid annually to all shareholders invested in
the Fund on the record date."
D. Under the section entitled "Administration of the Fund", on page 30,
delete all references to "Federated Administrative Services" and replace
them with "Federated Services Company".
E. Please delete all references to "Federated Services Company" the former
name of the current transfer agent, and replace with "Federated
Shareholder Services Company", in the following sections of the
prospectus; PURCHASING SHARES BY CHECK, TELEPHONE INSTRUCTIONS, REDEEMING
SHARES BY MAIL, CERTIFICATES AND CONFIRMATIONS and TRANSFER AGENT AND
DIVIDEND DISBURSING AGENT, on pages 20, 22, 23, 26 and 30, respectively.
F. Please delete the last sentence in the section entitled "Making an
Exchange" on page 22 and replace it with the following:
"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 Shareholder Services Company, 1099
Hingham Street, Rockland, MA 02370-3317."
G. Please insert the following financial statements beginning on page 34 of
the prospectus:
FEDERATED SMALL CAP STRATEGIES FUND
PORTFOLIO OF INVESTMENTS
APRIL 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ----------- -------------------------------------------------------------------------------------- -------------
<C> <S> <C>
COMMON STOCKS--91.3%
- ---------------------------------------------------------------------------------------------------
BASIC INDUSTRY--4.9%
--------------------------------------------------------------------------------------
1,500 Cambrex Corp. $ 64,500
--------------------------------------------------------------------------------------
1,600 Carpenter Technology Corp. 60,200
--------------------------------------------------------------------------------------
1,000 (a)Cytec Industries, Inc. 82,875
--------------------------------------------------------------------------------------
2,200 (a)Fibreboard Corp. 56,375
--------------------------------------------------------------------------------------
8,500 Spartech Corp. 86,062
--------------------------------------------------------------------------------------
1,650 Texas Industries, Inc. 105,600
--------------------------------------------------------------------------------------
4,500 Universal Stainless & Alloy 49,500
-------------------------------------------------------------------------------------- -------------
Total 505,112
-------------------------------------------------------------------------------------- -------------
CONSUMER DURABLES--5.6%
--------------------------------------------------------------------------------------
2,500 Anthony Industries, Inc. 71,250
--------------------------------------------------------------------------------------
1,200 Bush Industries, Inc., Class A 36,300
--------------------------------------------------------------------------------------
1,500 (a)Cannondale Corp. 33,375
--------------------------------------------------------------------------------------
5,800 Cavalier Homes, Inc. 112,375
--------------------------------------------------------------------------------------
1,200 (a)Champion Enterprises, Inc. 45,600
--------------------------------------------------------------------------------------
5,000 (a)Equity Marketing, Inc. 64,375
--------------------------------------------------------------------------------------
900 Harman International Industries, Inc. 42,525
--------------------------------------------------------------------------------------
4,400 Norwood Promotional Products 100,100
--------------------------------------------------------------------------------------
2,300 (a)Toll Brothers, Inc. 37,375
--------------------------------------------------------------------------------------
1,350 Wynns International, Inc. 36,619
-------------------------------------------------------------------------------------- -------------
Total 579,894
-------------------------------------------------------------------------------------- -------------
CONSUMER NON-DURABLES--1.7%
--------------------------------------------------------------------------------------
6,300 (a)Morningstar Group, Inc. 63,000
--------------------------------------------------------------------------------------
2,300 Mossimo, Inc. 87,400
--------------------------------------------------------------------------------------
1,500 (a)The Boston Beer Co., Inc., Class A 28,313
-------------------------------------------------------------------------------------- -------------
Total 178,713
-------------------------------------------------------------------------------------- -------------
</TABLE>
FEDERATED SMALL CAP STRATEGIES FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ----------- -------------------------------------------------------------------------------------- -------------
<C> <S> <C>
COMMON STOCKS--CONTINUED
- ---------------------------------------------------------------------------------------------------
ENERGY MINERALS--1.5%
--------------------------------------------------------------------------------------
3,000 (a)American Exploration Co. $ 37,125
--------------------------------------------------------------------------------------
2,400 Getty Petroleum Corp. 34,200
--------------------------------------------------------------------------------------
7,920 Mercury Air Group, Inc. 79,200
-------------------------------------------------------------------------------------- -------------
Total 150,525
-------------------------------------------------------------------------------------- -------------
FINANCE--19.5%
--------------------------------------------------------------------------------------
1,100 Alex Brown, Inc. 59,537
--------------------------------------------------------------------------------------
2,500 (a)Amerin Corp. 56,562
--------------------------------------------------------------------------------------
2,500 BHC Financial, Inc. 34,688
--------------------------------------------------------------------------------------
1,200 Banknorth Group, Inc. 42,000
--------------------------------------------------------------------------------------
3,000 CapMAC Holdings, Inc. 87,375
--------------------------------------------------------------------------------------
3,000 Capital Re Corp. 112,500
--------------------------------------------------------------------------------------
3,300 Donegal Group, Inc. 59,400
--------------------------------------------------------------------------------------
7,000 Electro Rent Corp. 174,125
--------------------------------------------------------------------------------------
8,700 Executive Risk, Inc. 269,700
--------------------------------------------------------------------------------------
2,800 (a)IPC Holdings Ltd. 54,950
--------------------------------------------------------------------------------------
3,100 (a)Markel Corp. 248,000
--------------------------------------------------------------------------------------
6,000 Oriental Bank & Trust 108,750
--------------------------------------------------------------------------------------
5,500 Penn-America Group, Inc. 73,562
--------------------------------------------------------------------------------------
1,300 Penncorp Financial Group, Inc. 39,812
--------------------------------------------------------------------------------------
1,900 Peoples Heritage Financial Group 39,662
--------------------------------------------------------------------------------------
2,000 Quick & Reilly Group, Inc. 61,000
--------------------------------------------------------------------------------------
1,800 Selective Insurance Group, Inc. 56,475
--------------------------------------------------------------------------------------
2,400 (a)Silicon Valley Bancshares 55,800
--------------------------------------------------------------------------------------
4,100 TCF Financial Corp. 145,037
--------------------------------------------------------------------------------------
4,700 (a)United Insurance Cos., Inc. 99,287
--------------------------------------------------------------------------------------
2,700 Vesta Insurance Group, Inc. 86,737
--------------------------------------------------------------------------------------
</TABLE>
FEDERATED SMALL CAP STRATEGIES FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ----------- -------------------------------------------------------------------------------------- -------------
<C> <S> <C>
COMMON STOCKS--CONTINUED
- ---------------------------------------------------------------------------------------------------
FINANCE--CONTINUED
--------------------------------------------------------------------------------------
1,800 Webster Financial Corp. Waterbury $ 49,950
-------------------------------------------------------------------------------------- -------------
Total 2,014,909
-------------------------------------------------------------------------------------- -------------
HEALTH CARE--11.3%
--------------------------------------------------------------------------------------
3,700 (a)Amrion, Inc. 57,350
--------------------------------------------------------------------------------------
1,800 (a)Assisted Living Concepts, Inc. 35,550
--------------------------------------------------------------------------------------
2,500 (a)Bio Rad Laboratories, Inc., Class A 116,250
--------------------------------------------------------------------------------------
2,000 (a)Geltex Pharmaceuticals, Inc. 47,000
--------------------------------------------------------------------------------------
1,700 (a)Health Management Systems, Inc. 43,775
--------------------------------------------------------------------------------------
3,400 (a)Heartport, Inc. 121,550
--------------------------------------------------------------------------------------
3,400 (a)KeraVision, Inc. 53,975
--------------------------------------------------------------------------------------
6,000 (a)OEC Medical Systems, Inc. 69,000
--------------------------------------------------------------------------------------
16,000 (a)PolyMedica Industries, Inc. 134,000
--------------------------------------------------------------------------------------
4,000 (a)Prime Medical Services 62,500
--------------------------------------------------------------------------------------
3,200 (a)Rotech Medical Corp. 132,800
--------------------------------------------------------------------------------------
1,000 (a)Sierra Health Services, Inc. 33,000
--------------------------------------------------------------------------------------
8,800 Synthetech, Inc. 66,000
--------------------------------------------------------------------------------------
1,200 (a)Universal Health Services, Inc., Class B 66,600
--------------------------------------------------------------------------------------
1,900 (a)Veterinary Centers of America 57,950
--------------------------------------------------------------------------------------
3,200 Vital Signs, Inc. 67,400
-------------------------------------------------------------------------------------- -------------
Total 1,164,700
-------------------------------------------------------------------------------------- -------------
PRODUCER MANUFACTURING--5.7%
--------------------------------------------------------------------------------------
2,400 AGCO Corp. 60,600
--------------------------------------------------------------------------------------
2,200 (a)Cable Design Technologies, Class A 72,600
--------------------------------------------------------------------------------------
2,500 Cascade Corp. 40,625
--------------------------------------------------------------------------------------
1,000 Gleason Corp. 39,375
--------------------------------------------------------------------------------------
3,200 (a)Intermet Corp. 47,200
--------------------------------------------------------------------------------------
1,700 JLG Industries, Inc. 92,650
--------------------------------------------------------------------------------------
</TABLE>
FEDERATED SMALL CAP STRATEGIES FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ----------- -------------------------------------------------------------------------------------- -------------
<C> <S> <C>
COMMON STOCKS--CONTINUED
- ---------------------------------------------------------------------------------------------------
PRODUCER MANUFACTURING--CONTINUED
--------------------------------------------------------------------------------------
1,300 (a)Mueller Industries, Inc. $ 52,325
--------------------------------------------------------------------------------------
1,000 NACCO Industries, Inc., Class A 63,125
--------------------------------------------------------------------------------------
1,800 Regal Beloit Corp. 34,875
--------------------------------------------------------------------------------------
3,000 Titan Wheel International, Inc. 48,375
--------------------------------------------------------------------------------------
1,350 Tredegar Industries, Inc. 37,463
-------------------------------------------------------------------------------------- -------------
Total 589,213
-------------------------------------------------------------------------------------- -------------
RETAIL TRADE--2.9%
--------------------------------------------------------------------------------------
5,000 (a)MSC Industrial Direct Co. 181,875
--------------------------------------------------------------------------------------
1,400 (a)Orchard Supply Hardware 37,275
--------------------------------------------------------------------------------------
4,400 Riser Foods, Inc., Class A 83,600
-------------------------------------------------------------------------------------- -------------
Total 302,750
-------------------------------------------------------------------------------------- -------------
SERVICES--10.9%
--------------------------------------------------------------------------------------
2,000 (a)American Buildings Co. 50,812
--------------------------------------------------------------------------------------
2,500 American List Corp. 77,812
--------------------------------------------------------------------------------------
2,800 (a)BARRA, Inc. 93,100
--------------------------------------------------------------------------------------
2,000 (a)Catalina Marketing Corp. 155,750
--------------------------------------------------------------------------------------
1,700 (a)Day Runner, Inc. 52,913
--------------------------------------------------------------------------------------
2,300 ](a)Devon Group, Inc. 72,450
--------------------------------------------------------------------------------------
2,000 Employee Solutions, Inc. 77,500
--------------------------------------------------------------------------------------
2,250 Granite Construction, Inc. 44,438
--------------------------------------------------------------------------------------
2,000 (a)Newpark Resources, Inc. 62,750
--------------------------------------------------------------------------------------
5,900 (a)Prepaid Legal Services, Inc. 114,313
--------------------------------------------------------------------------------------
4,000 (a)Pride Petroleum Services, Inc. 65,500
--------------------------------------------------------------------------------------
4,500 (a)Right Management Consultants 154,125
--------------------------------------------------------------------------------------
1,000 (a)Scientific Games Holdings Corp. 32,750
--------------------------------------------------------------------------------------
200 (a)Sykes Enterprises, Inc. 7,100
--------------------------------------------------------------------------------------
</TABLE>
FEDERATED SMALL CAP STRATEGIES FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ----------- -------------------------------------------------------------------------------------- -------------
<C> <S> <C>
COMMON STOCKS--CONTINUED
- ---------------------------------------------------------------------------------------------------
SERVICES--CONTINUED
--------------------------------------------------------------------------------------
2,000 (a)Volt Information Science, Inc. $ 59,500
-------------------------------------------------------------------------------------- -------------
Total 1,120,813
-------------------------------------------------------------------------------------- -------------
TECHNOLOGY--23.1%
--------------------------------------------------------------------------------------
3,000 (a)Advent Software, Inc. 79,500
--------------------------------------------------------------------------------------
5,000 (a)Axent Technologies, Inc. 90,000
--------------------------------------------------------------------------------------
4,000 (a)Black Box Corp. 80,000
--------------------------------------------------------------------------------------
1,500 (a)Boca Research, Inc. 32,250
--------------------------------------------------------------------------------------
4,000 (a)Burr Brown Corp. 77,000
--------------------------------------------------------------------------------------
1,000 CTS Corp. 41,750
--------------------------------------------------------------------------------------
1,800 Computer Data Systems, Inc. 31,950
--------------------------------------------------------------------------------------
6,100 (a)Digital Systems Int., Inc. 120,475
--------------------------------------------------------------------------------------
2,000 (a)Documentum, Inc. 92,000
--------------------------------------------------------------------------------------
2,600 (a)ESS Technology, Inc. 58,825
--------------------------------------------------------------------------------------
3,200 (a)Encad, Inc. 110,000
--------------------------------------------------------------------------------------
1,000 (a)Engineering Animation, Inc. 23,250
--------------------------------------------------------------------------------------
2,400 (a)First USA Paymentech, Inc. 104,400
--------------------------------------------------------------------------------------
2,500 (a)Forte Software, Inc. 154,375
--------------------------------------------------------------------------------------
800 HMC Software 29,800
--------------------------------------------------------------------------------------
6,100 II-VI, Inc. 91,500
--------------------------------------------------------------------------------------
500 (a)Indus Group, Inc. 10,625
--------------------------------------------------------------------------------------
3,500 (a)Intervoice, Inc. 98,000
--------------------------------------------------------------------------------------
2,500 (a)JDA Software Group, Inc. 51,250
--------------------------------------------------------------------------------------
2,300 National Data Corp. 81,075
--------------------------------------------------------------------------------------
1,900 (a)Network Equipment Technologies, Inc. 48,450
--------------------------------------------------------------------------------------
3,400 (a)Photronic Labs, Inc. 89,675
--------------------------------------------------------------------------------------
2,500 (a)Planning Sciences International PLC, ADR 60,313
--------------------------------------------------------------------------------------
1,500 (a)SCI Systems, Inc. 64,313
--------------------------------------------------------------------------------------
</TABLE>
FEDERATED SMALL CAP STRATEGIES FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ----------- -------------------------------------------------------------------------------------- -------------
<C> <S> <C>
COMMON STOCKS--CONTINUED
- ---------------------------------------------------------------------------------------------------
TECHNOLOGY--CONTINUED
--------------------------------------------------------------------------------------
3,000 (a)Sapient Corp. $ 158,250
--------------------------------------------------------------------------------------
1,000 (a)Sync Research, Inc. 19,750
--------------------------------------------------------------------------------------
2,600 Telxon Corp. 59,800
--------------------------------------------------------------------------------------
3,600 (a)Tollgrade Communications, Inc. 85,500
--------------------------------------------------------------------------------------
4,000 Trident International, Inc. 70,000
--------------------------------------------------------------------------------------
5,200 (a)Worldtalk Communications, Inc. 67,600
--------------------------------------------------------------------------------------
2,200 Wyle Labs 92,125
--------------------------------------------------------------------------------------
1,800 (a)Xylan Corp. 115,313
-------------------------------------------------------------------------------------- -------------
Total 2,389,114
-------------------------------------------------------------------------------------- -------------
TRANSPORTATION--2.4%
--------------------------------------------------------------------------------------
1,100 (a)Alaska Air Group, Inc. 27,913
--------------------------------------------------------------------------------------
800 Comair Holdings, Inc. 29,600
--------------------------------------------------------------------------------------
4,400 Expeditors International Washington, Inc. 130,900
--------------------------------------------------------------------------------------
5,700 (a)Frontier Airlines, Inc. 47,025
--------------------------------------------------------------------------------------
700 Werner Enterprises, Inc. 16,975
-------------------------------------------------------------------------------------- -------------
Total 252,413
-------------------------------------------------------------------------------------- -------------
UTILITIES--1.8%
--------------------------------------------------------------------------------------
3,300 Interstate Power Co. 101,063
--------------------------------------------------------------------------------------
2,200 Teppco Partners, L.P. 83,050
-------------------------------------------------------------------------------------- -------------
Total 184,113
-------------------------------------------------------------------------------------- -------------
TOTAL COMMON STOCKS (IDENTIFIED COST $7,786,626) 9,432,269
-------------------------------------------------------------------------------------- -------------
</TABLE>
FEDERATED SMALL CAP STRATEGIES FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ----------- -------------------------------------------------------------------------------------- -------------
(B) REPURCHASE AGREEMENT--7.5%
- ---------------------------------------------------------------------------------------------------
$ 780,000 BT Securities Corporation, 5.35%, dated 4/30/1996, due 5/1/1996
(AT AMORTIZED COST) $ 780,000
-------------------------------------------------------------------------------------- -------------
TOTAL INVESTMENTS (IDENTIFIED COST $8,566,626)(C) $ 10,212,269
-------------------------------------------------------------------------------------- -------------
</TABLE>
(a) Non-income producing security.
(b) The repurchase agreement is fully collateralized by U.S. government
obligations based on market prices at the date of the portfolio. The
investment in the repurchase agreement is through participation in a joint
account with other Federated Funds.
(c) The cost for federal income tax purposes amounts to $8,566,626. The net
unrealized appreciation on a federal tax basis amounts to $1,645,643, which
is comprised of $1,790,992 appreciation and $145,349 depreciation at April
30, 1996.
Note: The categories of investments are shown as a percentage of net assets
($10,332,083) at April 30, 1996.
The following acronyms are used throughout this portfolio:
ADR--American Depository Receipt
PLC--Public Limited Company
(See Notes which are an integral part of the Financial Statements)
FEDERATED SMALL CAP STRATEGIES FUND
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- ----------------------------------------------------------------------------------------------------
Total investments in securities, at value (identified and tax cost $8,566,626) $ 10,212,269
- ----------------------------------------------------------------------------------------------------
Cash 311
- ----------------------------------------------------------------------------------------------------
Income receivable 3,664
- ----------------------------------------------------------------------------------------------------
Receivable for shares sold 381,538
- ----------------------------------------------------------------------------------------------------
Prepaid expenses 42,309
- ---------------------------------------------------------------------------------------------------- ------------
Total assets 10,640,091
- ----------------------------------------------------------------------------------------------------
LIABILITIES:
- ----------------------------------------------------------------------------------------------------
Payable for investments purchased $ 278,445
- -----------------------------------------------------------------------------------------
Accrued expenses 29,563
- ----------------------------------------------------------------------------------------- ---------
Total liabilities 308,008
- ---------------------------------------------------------------------------------------------------- ------------
NET ASSETS for 735,436 shares outstanding $ 10,332,083
- ---------------------------------------------------------------------------------------------------- ------------
NET ASSETS CONSIST OF:
- ----------------------------------------------------------------------------------------------------
Paid in capital $ 8,043,480
- ----------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments 1,645,643
- ----------------------------------------------------------------------------------------------------
Accumulated net realized gain on investments 660,095
- ----------------------------------------------------------------------------------------------------
Distributions in excess of net investment income (17,135)
- ---------------------------------------------------------------------------------------------------- ------------
Total Net Assets $ 10,332,083
- ---------------------------------------------------------------------------------------------------- ------------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
- ----------------------------------------------------------------------------------------------------
CLASS A SHARES:
- ----------------------------------------------------------------------------------------------------
Net Asset Value Per Share ($6,101,033 / 434,100 shares outstanding) $14.05
- ---------------------------------------------------------------------------------------------------- ------------
Offering Price Per Share (100 / 94.50 of $14.05)* $14.87
- ---------------------------------------------------------------------------------------------------- ------------
Redemption Proceeds Per Share $14.05
- ---------------------------------------------------------------------------------------------------- ------------
CLASS B SHARES:
- ----------------------------------------------------------------------------------------------------
Net Asset Value Per Share ($3,631,606 / 258,619 shares outstanding) $14.04
- ---------------------------------------------------------------------------------------------------- ------------
Offering Price Per Share $14.04
- ---------------------------------------------------------------------------------------------------- ------------
Redemption Proceeds Per Share (94.50 / 100 of $14.04)** $13.27
- ---------------------------------------------------------------------------------------------------- ------------
CLASS C SHARES:
- ----------------------------------------------------------------------------------------------------
Net Asset Value Per Share ($599,444 / 42,717 shares outstanding) $14.03
- ---------------------------------------------------------------------------------------------------- ------------
Offering Price Per Share $14.03
- ---------------------------------------------------------------------------------------------------- ------------
Redemption Proceeds Per Share (99.00 / 100 of $14.03)** $13.89
- ---------------------------------------------------------------------------------------------------- ------------
</TABLE>
* See "How to Purchase Shares" in the Prospectus.
** See "Contingent Deferred Sales Charge" in the Prospectus.
(See Notes which are an integral part of the Financial Statements)
FEDERATED SMALL CAP STRATEGIES FUND
STATEMENT OF OPERATIONS
FOR THE PERIOD ENDED APRIL 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- -----------------------------------------------------------------------------------------------------
Dividends (net of foreign taxes withheld of $59) $ 22,190
- -----------------------------------------------------------------------------------------------------
Interest 18,733
- ----------------------------------------------------------------------------------------------------- -----------
Total income 40,923
- -----------------------------------------------------------------------------------------------------
EXPENSES:
- -----------------------------------------------------------------------------------------
Investment advisory fee $ 24,133
- -----------------------------------------------------------------------------------------
Administrative personnel and services fee 91,488
- -----------------------------------------------------------------------------------------
Custodian fees 12,123
- -----------------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 17,343
- -----------------------------------------------------------------------------------------
Legal fees 2,053
- -----------------------------------------------------------------------------------------
Portfolio accounting fees 34,583
- -----------------------------------------------------------------------------------------
Distribution services fee--Class B Shares 4,149
- -----------------------------------------------------------------------------------------
Distribution services fee--Class C Shares 553
- -----------------------------------------------------------------------------------------
Shareholder services fee--Class A Shares 6,477
- -----------------------------------------------------------------------------------------
Shareholder services fee--Class B Shares 1,383
- -----------------------------------------------------------------------------------------
Shareholder services fee--Class C Shares 184
- -----------------------------------------------------------------------------------------
Share registration costs 13,752
- -----------------------------------------------------------------------------------------
Printing and postage 5,282
- -----------------------------------------------------------------------------------------
Insurance premiums 2,776
- -----------------------------------------------------------------------------------------
Miscellaneous 600
- ----------------------------------------------------------------------------------------- ----------
Total expenses 216,879
- -----------------------------------------------------------------------------------------
WAIVERS AND REIMBURSEMENTS--
- -----------------------------------------------------------------------------
Waiver of investment advisory fee $ (24,133)
- -----------------------------------------------------------------------------
Reimbursement of other operating expenses (144,577)
- ----------------------------------------------------------------------------- ----------
Total waivers and reimbursements (168,710)
- ----------------------------------------------------------------------------------------- ----------
Net expenses 48,169
- ----------------------------------------------------------------------------------------------------- -----------
Net operating loss (7,246)
- ----------------------------------------------------------------------------------------------------- -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
- -----------------------------------------------------------------------------------------------------
Net realized gain on investments 660,095
- -----------------------------------------------------------------------------------------------------
Net change in unrealized appreciation of investments 1,645,643
- ----------------------------------------------------------------------------------------------------- -----------
Net realized and unrealized gain on investments 2,305,738
- ----------------------------------------------------------------------------------------------------- -----------
Change in net assets resulting from operations $ 2,298,492
- ----------------------------------------------------------------------------------------------------- -----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FEDERATED SMALL CAP STRATEGIES FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERIOD ENDED
(UNAUDITED)
APRIL 30, 1996*
<S> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ----------------------------------------------------------------------------------------------
OPERATIONS--
- ----------------------------------------------------------------------------------------------
Net operating loss $ (7,246)
- ----------------------------------------------------------------------------------------------
Net realized gain on investments
($660,095 net gain, as computed for federal tax purposes) 660,095
- ----------------------------------------------------------------------------------------------
Net change in unrealized appreciation 1,645,643
- ---------------------------------------------------------------------------------------------- ------------------
Change in net assets resulting from operations 2,298,492
- ---------------------------------------------------------------------------------------------- ------------------
NET EQUALIZATION CREDITS (DEBITS)-- (30)
- ---------------------------------------------------------------------------------------------- ------------------
DISTRIBUTIONS TO SHAREHOLDERS--
- ----------------------------------------------------------------------------------------------
Distributions in excess of net investment income:
- ----------------------------------------------------------------------------------------------
Class A Shares (9,859)
- ---------------------------------------------------------------------------------------------- ------------------
Change in net assets resulting from distributions to shareholders (9,859)
- ---------------------------------------------------------------------------------------------- ------------------
SHARE TRANSACTIONS--
- ----------------------------------------------------------------------------------------------
Proceeds from sale of shares 14,244,031
- ----------------------------------------------------------------------------------------------
Net asset value of shares issued to shareholders in payment of distributions declared 1,448
- ----------------------------------------------------------------------------------------------
Cost of shares redeemed (6,201,999)
- ---------------------------------------------------------------------------------------------- ------------------
Change in net assets resulting from share transactions 8,043,480
- ---------------------------------------------------------------------------------------------- ------------------
Change in net assets 10,332,083
- ----------------------------------------------------------------------------------------------
NET ASSETS:
- ----------------------------------------------------------------------------------------------
Beginning of period --
- ---------------------------------------------------------------------------------------------- ------------------
End of period $ 10,332,083
- ---------------------------------------------------------------------------------------------- ------------------
</TABLE>
*For the period from November 1, 1995 (date of initial public investment) to
April 30, 1996.
(See Notes which are an integral part of the Financial Statements)
FEDERATED SMALL CAP STRATEGIES FUND
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
(1) ORGANIZATION
Federated Equity Funds (the "Trust") is registered under the Investment Company
Act of 1940, as amended (the "Act"), as an open-end, management investment
company. The Trust consists of three portfolios. The financial statements
included herein are only those of Federated Small Cap Strategies Fund (the
"Fund"), a diversified portfolio. The financial statements of the other
portfolios are presented separately. The assets of each portfolio are
segregated, and a shareholder's interest is limited to the portfolio in which
shares are held. The objective of the fund is to provide capital appreciation.
The Fund offers three classes of shares: Class A Shares, Class B Shares, and
Class C Shares.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Trust in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS--Listed equity securities are valued at the last sale
price reported on a national securities exchange. Short-term securities are
valued at the prices provided by an independent pricing service. However,
short-term securities with remaining maturities of sixty days or less at
the time of purchase may be valued at amortized cost, which approximates
fair market value.
REPURCHASE AGREEMENTS--It is the policy of the Fund to require the
custodian bank to take possession, to have legally segregated in the
Federal Reserve Book Entry System, or to have segregated within the
custodian bank's vault, all securities held as collateral under repurchase
agreement transactions. Additionally, procedures have been established by
the Fund to monitor, on a daily basis, the market value of each repurchase
agreement's collateral to ensure that the value of collateral at least
equals the repurchase price to be paid under the repurchase agreement
transaction.
The Fund will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed
by the Fund's adviser to be creditworthy pursuant to the guidelines and/or
standards reviewed or established by the Board of Trustees (the
"Trustees"). Risks may arise from the potential inability of counterparties
to honor the terms of the repurchase agreement. Accordingly, the Fund could
receive less than the repurchase price on the sale of collateral
securities.
INVESTMENT INCOME, EXPENSES, AND DISTRIBUTIONS--Interest income and
expenses are accrued daily. Bond premium and discount, if applicable, are
amortized as required by the
Internal Revenue Code, as amended (the "Code"). Dividend income and
distributions to shareholders are recorded on the ex-dividend date.
FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the
Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of its income. Accordingly, no
provisions for federal tax are necessary.
EQUALIZATION--The Fund follows the accounting practice known as
equalization. With equalization, a portion of the proceeds from sales and
costs of redemptions of fund shares (equivalent, on a per share basis, to
the amount of undistributed net investment income on the date of the
transaction) is credited or charged to undistributed net investment income.
As a result, undistributed net investment income per share is unaffected by
sales or redemptions of fund shares.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in
when-issued or delayed delivery transactions. The Fund records when-issued
securities on the trade date and maintains security positions such that
sufficient liquid assets will be available to make payment for the
securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
USE OF ESTIMATES--The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts of assets, liabilities,
expenses and revenues reported in the financial statements. Actual results
could differ from those estimated.
OTHER--Investment transactions are accounted for on the trade date.
(3) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value) for each
class of shares.
Transactions in shares were as follows:
<TABLE>
<CAPTION>
PERIOD ENDED
APRIL 30, 1996*
CLASS A SHARES SHARES AMOUNT
<S> <C> <C>
Shares sold 941,591 $ 10,235,032
- ---------------------------------------------------------------------------------------
Shares issued to shareholders in payment of distributions declared 126 1,448
- ---------------------------------------------------------------------------------------
Shares redeemed (507,617) (5,889,400)
- --------------------------------------------------------------------------------------- --------- -------------
Net change resulting from Class A share transactions 434,100 $ 4,347,080
- --------------------------------------------------------------------------------------- --------- -------------
</TABLE>
<TABLE>
<CAPTION>
PERIOD ENDED
APRIL 30, 1996*
CLASS B SHARES SHARES AMOUNT
<S> <C> <C>
Shares sold 284,564 $ 3,479,188
- ----------------------------------------------------------------------------------------
Shares issued to shareholders in payment of distributions declared 0 0
- ----------------------------------------------------------------------------------------
Shares redeemed (25,945) (310,770)
- ---------------------------------------------------------------------------------------- --------- ------------
Net change resulting from Class B share transactions 258,619 $ 3,168,418
- ---------------------------------------------------------------------------------------- --------- ------------
<CAPTION>
PERIOD ENDED
APRIL 30, 1996*
CLASS C SHARES SHARES AMOUNT
<S> <C> <C>
Shares sold 42,870 $ 529,811
- ---------------------------------------------------------------------------------------
Shares issued to shareholders in payment of distributions declared 0 0
- ---------------------------------------------------------------------------------------
Shares redeemed (153) (1,829)
- --------------------------------------------------------------------------------------- --------- -------------
Net change resulting from Class C share transactions 42,717 $ 527,982
- --------------------------------------------------------------------------------------- --------- -------------
Net change resulting from share transactions 735,436 8,043,480
- --------------------------------------------------------------------------------------- --------- -------------
</TABLE>
* For the period from November 1, 1995 (date of initial public investment) to
April 30, 1996.
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Federated Management, the Fund's investment adviser,
(the "Adviser"), receives for its services an annual investment advisory fee
equal to 0.75% of the Fund's average daily net assets.
The Adviser may voluntarily choose to waive any portion of its fee and reimburse
certain operating expenses of the Fund. The Adviser can modify or terminate this
voluntary waiver and reimbursement at any time at its sole discretion.
ADMINISTRATIVE FEE--Federated Services Company ("FServ"), under the
Administrative Services Agreement, provides the Fund with administrative
personnel and services. The fee paid to FServ is based on the level of average
aggregate daily net assets of all funds advised by subsidiaries of Federated
Investors for the period. The administrative fee received during the period of
the Administrative Services Agreement shall be at least $125,000 per portfolio
and $30,000 per each additional class of shares.
DISTRIBUTION SERVICES FEE--The Fund has adopted a Distribution Plan (the "Plan")
pursuant to Rule 12b-1 under the Act. Under the terms of the Plan, the Fund will
compensate Federated Securities Corp., the principal distributor, from the net
assets of the Fund to finance activities
intended to result in the sale of the Fund's Class B and Class C shares. The
Plan provides that the Fund may incur distribution expenses according to the
following schedule annually, to compensate Federated Securities Corp.
<TABLE>
<CAPTION>
SHARE CLASS NAME % OF AVG. DAILY NET ASSETS OF CLASS
<S> <C>
Class A 0.25%
Class B 0.75%
Class C 0.75%
</TABLE>
The distributor may voluntarily choose to waive any portion of its fee. The
distributor can modify or terminate this voluntary waiver at any time at its
sole discretion.
For the six months ended April 30, 1996, Class A did not incur a distribution
services fee.
SHAREHOLDER SERVICES FEE--Under the terms of a Shareholder Services Agreement
with Federated Shareholder Services, the Fund will pay Federated Shareholder
Services up to 0.25% of average daily net assets of each class of shares for the
period. The fee paid to Federated Shareholder Services is used to finance
certain services for shareholders and to maintain shareholder accounts.
Federated Shareholder Services may voluntarily choose to waive any portion of
its fee. Federated Shareholder Services can modify or terminate this voluntary
waiver at any time at its sole discretion.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT FEES--FServ, through its
subsidiary, Federated Shareholder Services Company serves as transfer and
dividend disbursing agent for the Fund. The fee paid to FServ is based on the
size, type, and number of accounts and transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES--Federated Services Company maintains the Fund's
accounting records for which it receives a fee. The fee is based on the level of
the Fund's average daily net assets for the period, plus out-of-pocket expenses.
ORGANIZATIONAL EXPENSES--Organizational expenses ($10,292) were initially borne
by Federated Securities Corp. The Trust has agreed to reimburse Federated
Securities Corp. for the organizational expenses during the five year period
following effective date. For the period ended April 30, 1996, the Trust paid
$57 pursuant to this agreement.
GENERAL--Certain of the Officers and Trustees of the Trust are Officers and
Directors or Trustees of the above companies.
(5) INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the
period ended
April 30, 1996, were as follows:
<TABLE>
<S> <C>
PURCHASES $ 10,780,232
- --------------------------------------------------------------------------------------------------- -------------
SALES $ 3,653,702
- --------------------------------------------------------------------------------------------------- -------------
</TABLE>
TRUSTEES OFFICERS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
John F. Donahue John F. Donahue
Thomas G. Bigley Chairman
John T. Conroy, Jr. Glen R. Johnson
William J. Copeland President
James E. Dowd J. Christopher Donahue
Lawrence D. Ellis, M.D. Executive Vice President
Edward L. Flaherty, Jr. Edward C. Gonzales
Peter E. Madden Executive Vice President
Gregor F. Meyer John W. McGonigle
John E. Murray, Jr. Executive Vice President and Secretary
Wesley W. Posvar Richard B. Fisher
Marjorie P. Smuts Vice President
David M. Taylor
Treasurer
S. Elliott Cohan
Assistant Secretary
</TABLE>
Mutual funds are not bank deposits or obligations, are not guaranteed by any
bank, and are not
insured or guaranteed by the U.S. government, the Federal Deposit Insurance
Corporation, the
Federal Reserve Board, or any other government agency. Investment in mutual
funds involves
investment risk, including possible loss of principal.
This report is authorized for distribution to prospective investors only when
preceded
or accompanied by the Funds' prospectus which contains facts concerning their
objective and policies, management fees, expenses and other information.
FEDERATED
SMALL CAP
STRATEGIES
FUND
Combined
Semi-Annual Report and
Supplement to Prospectus
Dated November 1, 1995
[LOGO] FEDERATED INVESTORS
Since 1955
Federated Investors Tower
Pittsburgh, PA 15222-3779
Federated Securities Corp. is the distributor of the fund
and is a subsidiary of Federated Investors.
CUSIP# 314172404
CUSIP# 314172503
CUSIP# 314172602
G01658-01 (5/96)
FEDERATED SMALL CAP STRATEGIES FUND
(A Portfolio of Federated Equity Funds)
Class A Shares, Class B Shares, and Class C Shares
SUPPLEMENT TO STATEMENT OF ADDITIONAL INFORMATION DATED NOVEMBER 1, 1995.
A. Please insert the following two sentences to the end of the section
entitled "PORTFOLIO TURNOVER" on page 4 of the Statement of Additional
Information:
"For the period from November 1, 1995 to April 30, 1996, the Fund's
portfolio turnover rate was 56.6%. The portfolio turnover rate is
representative of only 6 months of activity."
B. Please replace the last sentence in the section entitled "PORTFOLIO
TURNOVER" on page 4 with the following:
"It is not anticipated that the portfolio trading engaged in by the
Fund will result in its annual rate of portfolio turnover exceeding
200%."
C. Please note the following changes to the FEDERATED EQUITY FUNDS
MANAGEMENT Officers and Trustees list on pages 7 through 11 of the
Statement of Additional Information:
All affiliations with FEDERATED ADMINISTRATIVE SERVICES and the former
transfer agent will be deleted and replace by affiliations with
FEDERATED SERVICES COMPANY, the service company parent.
D. Please insert the following information as a second paragraph under
the section entitled "FUND OWNERSHIP" on page 11 of the Statement of
Additional Information:
"As of May 6, 1996, the following shareholders of record owned 5% or
more of the outstanding Class A Shares of the Fund: Citpad & Co.,
owned 105,260.9390 shares (20.62%), Stephens, Inc., owned 36,594.7920
shares (7.17%) and Dickey & Co., owned 35,737.4970 shares (7.00%). No
shareholders of record owned 5% or more of the outstanding Class B
Shares of the Fund. The following shareholders of record owned 5% or
more of the outstanding Class C Shares of the Fund: Merrill Lynch
Pierce Fenner & Smith (as record owner holding shares for its clients)
owned 34,481.0000 shares (74.92%) of Class C Shares of the Fund."
E. Please insert the following sub-section immediately after the sub-
section entitled "ADVISER TO THE FUND" under the main section entitled
"INVESTMENT ADVISORY SERVICES" on page 13 of the Statement of
Additional Information:
"ADVISORY FEES
For its advisory services, Federated Management receives an annual
investment advisory fee as described in the prospectus.
From the Fund's start of business date, November 1, 1995, to April
30,1996, the Fund's adviser earned $24,133, of which $24,133 was
voluntarily waived. For funds with classes, the advisory fee is
allocated pro rata based on the net assets for each class of shares."
F. Please replace the section entitled "ADMINISTRATIVE SERVICES" and
"TRANSFER AGENT AND DIVIDEND DISPURSING AGENT" with the new title
"OTHER SERVICES" on page 13 of the Statement of Additional Information
and insert the following:
"OTHER SERVICES
FUND ADMINISTRATION
Federated Services Company, a subsidiary of Federated Investors,
provides administrative personnel and services to the Fund for a fee
as described in the prospectus. From September 13, 1995 (the Fund's
inception), to March 1, 1996, Federated Administrative Services served
as the Fund's Administrator. The Administrator and former
Administrator are subsidiaries of Federated Investors. For purposes
of this Statement of Additional Information, Federated Services
Company and Federated Administrative Services, may hereinafter
collectively be referred to as the "Administrators." From the Fund's
start of business date, November 1, 1995, to April 30, 1996, the Fund
incurred costs for administrative services of $91,488. 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 Services
Company.
CUSTODIAN AND PORTFOLIO ACCOUNTANT
State Street Bank and Trust Company, Boston, Massachusetts, is
custodian for the securities and cash of the Fund. Federated Services
Company, Pittsburgh, Pennsylvania, provides certain accounting and
recordkeeping services with respect to the Fund's portfolio
investments. 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.
TRANSFER AGENT
Federated Services Company, through its registered transfer agent,
Federated Shareholder Services Company, maintains all necessary
shareholder records and receives a fee based on the size, type and
number of accounts and transactions made by shareholders.
INDEPENDENT AUDITORS
The independent auditors for the Fund are Ernst & Young LLP, One
Oxford Center, Pittsburgh, Pennsylvania 15219."
G. Please insert the following information as a final paragraph under the
sub-section entitled "DISTRIBUTION PLAN AND SHAREHOLDER SERVICES
AGREEMENT" on page 14 of the Statement of Additional Information:
"From the Fund's effective date, November 1, 1995, to April 30,1996,
the Fund paid $4,702 pursuant to the Fund's Rule 12b-1 plan, none
of which was waived. For the same period, the Fund paid $8,044 in
shareholders service fees, none of which was waived.
H. Please insert the following information as a final paragraph under the
section entitled "TOTAL RETURN" on page 16 of the Statement of
Additional Information:
"The Funds cumulative total return for Class A Shares, Class B Shares,
and Class C Shares from November 1, 1995 (the Fund's start of
business) to April 30, 1996, was 40.74%., 40.40%, and 40.30%,
respectively. Cumulative total return reflects the Fund's total
performance over a specified period of time. The Fund's total return
is reflective of only 6 months of fund activity since the Fund's date
of initial public investment."
I. Please insert the following information as a final paragraph under the
section entitled "YIELD" on page 16 of the Statement of Additional
Information:
"The Fund's yield for Class A Shares, Class B Shares, and Class C
Shares of the Fund, was 0% for the thirty-day period ended April 30,
1996."
May 31 , 1996
FEDERATED SECURITIES CORP.
Distributor
A subsidiary of FEDERATED INVESTORS
Federated Investors Tower
PITTSBURGH, PA 15222-3779
CUSIP# 314172404
CUSIP# 314172503
CUSIP# 314172602
FEDERATED CAPITAL APPRECIATION FUND
(A PORTFOLIO OF FEDERATED EQUITY FUNDS)
CLASS A SHARES
SEMI-ANNUAL REPORT AND SUPPLEMENT TO THE PROSPECTUS DATED DECEMBER 21, 1995.
A. Please delete the "Summary of Fund Expenses" table for Class A Shares on page
1 of the prospectus and replace it with the following table:
SUMMARY OF FUND EXPENSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
CLASS A SHARES
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge Imposed on Purchases (as a percentage of offering price)......... 5.50%
Maximum Sales Charge 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 OPERATING EXPENSES
(As a percentage of projected average net assets)*
Management Fee (after waiver)(2)...................................................... 0.45%
12b-1 Fee(3).......................................................................... 0.00%
Total Other Expenses.................................................................. 0.70%
Shareholder Services Fee.......................................................... 0.25%
Total Operating Expenses(4).................................................. 1.15%
</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 charge and
not distributed by Federated Securities Corp. may be charged a contingent
deferred sales charge of 0.50 of 1% for redemptions made within one year of
purchase. See "Contingent Deferred Sales Charge."
(2) The estimated management fee has been reduced to reflect the anticipated
voluntary waiver of a portion of the management fee. The adviser can terminate
this 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, 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 operating expenses are estimated to be 1.45% absent the
anticipated voluntary waiver of a portion of the management fee.
* Total Class A Operating Expenses in the table above are estimated based on
average expenses expected to be incurred during the period ending October 31,
1996. 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 "Fund Information".
Wire-transferred redemptions of less than $5,000 may be subject to additional
fees.
<TABLE>
<CAPTION>
EXAMPLE 1 year 3 years
- -------------------------------------------------------------------------------- ------- --------
<S> <C> <C>
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............... $71 $ 90
You would pay the following expenses on the same investment, assuming no
redemption.................................................................... $66 $ 90
</TABLE>
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, 1996.
B. Please insert the following "Financial Highlights" table for Class A Shares
immediately following the Summary of Fund Expenses tables in the prospectus:
FEDERATED CAPITAL APPRECIATION FUND
FINANCIAL HIGHLIGHTS-CLASS A SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
PERIOD
ENDED
(UNAUDITED) YEAR ENDED DECEMBER 31, (A)
APRIL 30, --------------------------------------------------------------------------------------
1996 (B) 1995 1994 1993 1992 1991 1990 1989 1988 1987
----------- ------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING
OF PERIOD $ 87.58 $68.84 $71.39 $65.83 $61.65 $50.56 $54.93 $50.03 $46.19 $48.39
- -----------------------------
INCOME FROM INVESTMENT
OPERATIONS
- -----------------------------
Net investment income 0.11 1.05 1.18 1.13 1.36 1.16 1.46 1.37 1.31 1.29
- -----------------------------
Net realized and unrealized
gain (loss) on investments 9.30 24.39 (1.39) 6.30 5.57 12.62 (3.86) 7.34 5.08 (0.45)
- ----------------------------- ------- ----- ----- ----- ----- ----- ----- ----- ----- -----
Total from investment
operations 9.41 25.44 (0.21) 7.43 6.93 13.78 (2.40) 8.71 6.39 0.84
- ----------------------------- ------- ----- ----- ----- ----- ----- ----- ----- ----- -----
LESS DISTRIBUTIONS
- -----------------------------
Distributions from net
investment income (0.08) (1.09) (1.14) (1.16) (1.38) (1.15) (1.51) (1.32) (1.29) (1.30)
- -----------------------------
Distributions from net
realized gain on
investments -- (5.61) (1.20) (0.71) (1.37) (1.54) (0.46) (2.49) (1.26) (1.74)
- ----------------------------- ------- ----- ----- ----- ----- ----- ----- ----- ----- -----
Total distributions (0.08) (6.70) (2.34) (1.87) (2.75) (2.69) (1.97) (3.81) (2.55) (3.04)
- ----------------------------- ------- ----- ----- ----- ----- ----- ----- ----- ----- -----
NET ASSET VALUE, END OF
PERIOD $ 96.91 $87.58 $68.84 $71.39 $65.83 $61.65 $50.56 $54.93 $50.03 $46.19
- ----------------------------- ------- ----- ----- ----- ----- ----- ----- ----- ----- -----
TOTAL RETURN (C) 10.75% 37.17% (0.30%) 11.31% 11.38% 27.42% (4.43%) 17.58% 13.97% 0.88%
- -----------------------------
RATIOS TO AVERAGE NET ASSETS
- -----------------------------
Expenses 1.18%* 1.08% 1.15% 1.15% 1.11% 1.12% 1.07% 1.13% 1.08% 0.92%*
- -----------------------------
Net investment income 0.35%* 1.29% 1.63% 1.59% 2.13% 1.97% 2.76% 2.45% 2.61% 2.29%*
- -----------------------------
Expense waiver/
reimbursement (d) 0.32%* 0.15% -- -- -- -- -- -- -- --
- -----------------------------
SUPPLEMENTAL DATA
- -----------------------------
Net assets, end of period
(000 omitted) $107,197 $98,200 $81,377 $88,949 $91,551 $90,503 $79,114 $95,422 $89,228 $89,371
- -----------------------------
Average commission rate
paid $0.05 -- -- -- -- -- -- -- -- --
- -----------------------------
Portfolio turnover 13% 81% 23% 26% 47% 54% 61% 41% 36% 39%
- -----------------------------
</TABLE>
* Computed on an annualized basis.
(a) Amounts presented prior to January 1, 1996 represent results of operations
for Federated Exchange Fund, Ltd.
(b) Reflects operations for the period from January 1, 1996 (the Fund's start of
business) to April 30, 1996.
(c) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(d) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
C. Under the Section entitled "Investment Policies", please replace the third
sentence under the sub-section entitled "Put and Call Options" on page 8 with
the following:
"The Fund may also write call options on all or any portion of its portfolio to
seek to generate income for the Fund."
D. Under the section entitled "Administration of the Fund", on page 25, delete
all references to "Federated Administrative Services" and replace them with
"Federated Services Company."
E. Please delete all references to "Federated Services Company" the former name
of the current transfer agent, and replace with "Federated Shareholder
Services Company," in the following sections of the prospectus; PURCHASING
SHARES BY CHECK, TELEPHONE INSTRUCTIONS, REDEEMING SHARES BY MAIL,
CERTIFICATES AND CONFIRMATIONS and TRANSFER AGENT AND DIVIDEND DISBURSING
AGENT, on pages 16, 18, 19, 21 and 25, respectively.
F. Please delete the last sentence in the section entitled "Making an Exchange"
on page 17 and replace it with the following:
"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 Shareholder Services Company, 1099 Hingham
Street, Rockland, MA 02370-3317."
G. Please insert the following financial statements beginning on page 33 of the
prospectus:
FEDERATED CAPITAL APPRECIATION FUND
PORTFOLIO OF INVESTMENTS
APRIL 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- --------- ------------------------------------------------------------------ ------------
<C> <C> <S> <C>
COMMON STOCKS--100.2%
- -----------------------------------------------------------------------------------
BASIC INDUSTRY--2.3%
------------------------------------------------------------------
59,000 Millipore Corp. $ 2,470,625
------------------------------------------------------------------ ------------
CONSUMER DURABLES--4.3%
------------------------------------------------------------------
34,500 Eastman Kodak Co. 2,639,250
------------------------------------------------------------------
80,500 Mattel, Inc. 2,093,000
------------------------------------------------------------------ ------------
Total 4,732,250
------------------------------------------------------------------ ------------
CONSUMER NON-DURABLES--11.6%
------------------------------------------------------------------
29,900 Avon Products, Inc. 2,657,362
------------------------------------------------------------------
72,000 IBP, Inc. 1,926,000
------------------------------------------------------------------
31,600 International Flavors & Fragrances, Inc. 1,552,350
------------------------------------------------------------------
35,000 Nike, Inc., Class B 3,062,500
------------------------------------------------------------------
37,600 Philip Morris Cos., Inc. 3,388,700
------------------------------------------------------------------ ------------
Total 12,586,912
------------------------------------------------------------------ ------------
ENERGY MINERALS--2.5%
------------------------------------------------------------------
46,900 Chevron Corp. 2,720,200
------------------------------------------------------------------ ------------
FINANCE--22.8%
------------------------------------------------------------------
173,500 (a) Acceptance Insurance Cos., Inc. 2,710,937
------------------------------------------------------------------
28,000 Allstate Corp. 1,088,500
------------------------------------------------------------------
25,000 American Express Co. 1,212,500
------------------------------------------------------------------
23,600 Chase Manhattan Corp. 1,625,450
------------------------------------------------------------------
31,097 Citicorp 2,448,889
------------------------------------------------------------------
23,145 Dean Witter, Discover & Co. 1,261,403
------------------------------------------------------------------
100,000 Executive Risk, Inc. 3,100,000
------------------------------------------------------------------
110,000 Leucadia National Corp. 2,860,000
------------------------------------------------------------------
42,500 Mellon Bank Corp. 2,284,375
------------------------------------------------------------------
15,000 NationsBank Corp. 1,196,250
------------------------------------------------------------------
</TABLE>
FEDERATED CAPITAL APPRECIATION FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- --------- ------------------------------------------------------------------ ------------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- -----------------------------------------------------------------------------------
FINANCE--CONTINUED
------------------------------------------------------------------
78,000 Pioneer Group, Inc. $ 2,086,500
------------------------------------------------------------------
14,500 Providian Corp. 668,813
------------------------------------------------------------------
36,266 Travelers Group, Inc. 2,230,359
------------------------------------------------------------------ ------------
Total 24,773,976
------------------------------------------------------------------ ------------
HEALTH CARE--7.5%
------------------------------------------------------------------
6,900 (a) Agouron Pharmaceuticals, Inc. 279,450
------------------------------------------------------------------
37,000 Becton, Dickinson & Co. 2,983,125
------------------------------------------------------------------
33,400 Bristol-Myers Squibb Co. 2,747,150
------------------------------------------------------------------
55,000 (a) Scherer (R.P.) Corp. 2,172,500
------------------------------------------------------------------ ------------
Total 8,182,225
------------------------------------------------------------------ ------------
PRODUCER MANUFACTURING--5.6%
------------------------------------------------------------------
100,000 (a) Oak Industries, Inc. 2,700,000
------------------------------------------------------------------
50,000 Philips Electronics N.V., ADR 1,793,750
------------------------------------------------------------------
19,000 Textron, Inc. 1,629,250
------------------------------------------------------------------ ------------
Total 6,123,000
------------------------------------------------------------------ ------------
RETAIL TRADE--2.2%
------------------------------------------------------------------
48,350 Sears, Roebuck & Co. 2,411,456
------------------------------------------------------------------ ------------
SERVICES--5.8%
------------------------------------------------------------------
16,000 Gannett Co., Inc. 1,094,000
------------------------------------------------------------------
50,000 Interpublic Group Cos., Inc. 2,337,500
------------------------------------------------------------------
63,300 Reynolds & Reynolds Co., Class A 2,927,625
------------------------------------------------------------------ ------------
Total 6,359,125
------------------------------------------------------------------ ------------
TECHNOLOGY--27.9%
------------------------------------------------------------------
50,000 (a) Ceridian Corp. 2,387,500
------------------------------------------------------------------
50,000 (a) Compuware Corp. 1,425,000
------------------------------------------------------------------
45,000 (a) DST Systems, Inc. 1,653,750
------------------------------------------------------------------
200,000 (a) Data General Corp. 3,075,000
------------------------------------------------------------------
</TABLE>
FEDERATED CAPITAL APPRECIATION FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- --------- ------------------------------------------------------------------ ------------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- -----------------------------------------------------------------------------------
TECHNOLOGY--CONTINUED
------------------------------------------------------------------
50,000 ECI Telecommunications, Ltd. $ 1,306,250
------------------------------------------------------------------
103,500 Gandalf Technologies, Inc. 1,837,125
------------------------------------------------------------------
50,000 General Motors Corp., Class E 2,818,750
------------------------------------------------------------------
18,800 Hewlett-Packard Co. 1,990,450
------------------------------------------------------------------
75,000 (a) Intervoice, Inc. 2,100,000
------------------------------------------------------------------
40,200 Lockheed Martin Corp. 3,241,125
------------------------------------------------------------------
75,000 Lucent Technologies, Inc. 2,634,375
------------------------------------------------------------------
23,000 (a) Microsoft Corp. 2,607,625
------------------------------------------------------------------
25,000 (a) Sheldahl, Inc. 559,375
------------------------------------------------------------------
24,200 (a) Solectron Corp. 1,076,900
------------------------------------------------------------------
25,000 (a) Systeme, Anwendungen, Produkte in der Datevnerarbeitung, ADR 1,100,000
------------------------------------------------------------------
20,000 (a) Vanstar Corp. 272,500
------------------------------------------------------------------
5,000 (a) Wind River Systems, Inc. 195,000
------------------------------------------------------------------ ------------
Total 30,280,725
------------------------------------------------------------------ ------------
TRANSPORTATION--3.2%
------------------------------------------------------------------
50,000 Kansas City Southern Industries, Inc. 2,425,000
------------------------------------------------------------------
14,200 (a) Southern Pacific Railway Co. 355,000
------------------------------------------------------------------
10,400 Union Pacific Corp. 708,500
------------------------------------------------------------------ ------------
Total 3,488,500
------------------------------------------------------------------ ------------
UTILITIES--4.5%
------------------------------------------------------------------
60,000 (a) Columbia Gas System, Inc. 2,917,500
------------------------------------------------------------------
49,000 Enron Corp. 1,972,250
------------------------------------------------------------------ ------------
Total 4,889,750
------------------------------------------------------------------ ------------
TOTAL COMMON STOCKS (IDENTIFIED COST $77,220,861) 109,018,744
------------------------------------------------------------------ ------------
</TABLE>
FEDERATED CAPITAL APPRECIATION FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ---------- ----------------------------------------------------------------- ------------
<C> <C> <S> <C>
(B) REPURCHASE AGREEMENT--2.5%
- -----------------------------------------------------------------------------------
$2,695,000 BT Securities Corporation, 5.35%, dated 4/30/1996, due 5/1/1996
(at amortized cost) $ 2,695,000
----------------------------------------------------------------- ------------
TOTAL INVESTMENTS (IDENTIFIED COST $79,915,861)(C) $111,713,744
----------------------------------------------------------------- ------------
</TABLE>
(a) Non-income producing security.
(b) The repurchase agreement is fully collateralized by U.S. government and/or
agency obligations based on market prices at the date of the portfolio. The
investment in the repurchase agreement is through participation in a joint
account with other Federated funds.
(c) The cost of investments for federal tax purposes amounts to $79,915,861. The
net unrealized appreciation of investments on a federal tax basis amounts to
$31,797,883 which is comprised of $33,080,279 appreciation and $1,282,396
depreciation at April 30, 1996.
Note: The categories of investments are shown as a percentage of net assets
($108,745,314) at April 30, 1996.
The following acronym is used throughout this portfolio:
<TABLE>
<S> <C>
ADR -- American Depository Receipt
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FEDERATED CAPITAL APPRECIATION FUND
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- -----------------------------------------------------------------------------------------------
Total investments in securities, at value (identified and tax cost $79,915,861) $111,713,744
- -----------------------------------------------------------------------------------------------
Income receivable 70,569
- -----------------------------------------------------------------------------------------------
Receivable for investments sold 380,625
- -----------------------------------------------------------------------------------------------
Receivable for shares sold 59,822
- ----------------------------------------------------------------------------------------------- -----------
Total assets 112,224,760
- -----------------------------------------------------------------------------------------------
LIABILITIES:
- -----------------------------------------------------------------------------------------------
Payable for investments purchased $3,198,945
- ----------------------------------------------------------------------------------
Payable to Bank 169,478
- ----------------------------------------------------------------------------------
Accrued expenses 111,023
- ---------------------------------------------------------------------------------- ---------
Total liabilities 3,479,446
- ----------------------------------------------------------------------------------------------- -----------
NET ASSETS for 1,122,131 shares outstanding $108,745,314
- ----------------------------------------------------------------------------------------------- -----------
NET ASSETS CONSIST OF:
- -----------------------------------------------------------------------------------------------
Paid in capital $ 74,319,475
- -----------------------------------------------------------------------------------------------
Net unrealized appreciation of investments 31,797,883
- -----------------------------------------------------------------------------------------------
Accumulated net realized gain on investments 2,594,112
- -----------------------------------------------------------------------------------------------
Undistributed net investment income 33,844
- ----------------------------------------------------------------------------------------------- -----------
Total Net Assets $108,745,314
- ----------------------------------------------------------------------------------------------- -----------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
- -----------------------------------------------------------------------------------------------
CLASS A SHARES:
- -----------------------------------------------------------------------------------------------
Net Asset Value Per Share ($107,197,162 / 1,106,150 shares outstanding) $96.91
- ----------------------------------------------------------------------------------------------- -----------
Offering Price Per Share (100/94.50 of $96.91)* $102.55
- ----------------------------------------------------------------------------------------------- -----------
Redemption Proceeds Per Share $96.91
- ----------------------------------------------------------------------------------------------- -----------
CLASS B SHARES:
- -----------------------------------------------------------------------------------------------
Net Asset Value Per Share ($1,526,163 / 15,754 shares outstanding) $96.87
- ----------------------------------------------------------------------------------------------- -----------
Offering Price Per Share $96.87
- ----------------------------------------------------------------------------------------------- -----------
Redemption Proceeds Per Share (94.50/100 of $96.87)** $91.54
- ----------------------------------------------------------------------------------------------- -----------
CLASS C SHARES:
- -----------------------------------------------------------------------------------------------
Net Asset Value Per Share ($21,989 / 227 shares outstanding) $96.87
- ----------------------------------------------------------------------------------------------- -----------
Offering Price Per Share $96.87
- ----------------------------------------------------------------------------------------------- -----------
Redemption Proceeds Per Share (99.00/100 of $96.87)** $95.90
- ----------------------------------------------------------------------------------------------- -----------
</TABLE>
* See "Investing in Class A Shares," "Investing in Class B Shares" and
"Investing in Class C Shares" in the Prospectuses.
** See "Contingent Deferred Sales Charge" in the Prospectus.
(See Notes which are an integral part of the Financial Statements)
FEDERATED CAPITAL APPRECIATION FUND
STATEMENT OF OPERATIONS
PERIOD ENDED APRIL 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- -------------------------------------------------------------------------------------
Dividends $ 483,912
- -------------------------------------------------------------------------------------
Interest 37,643
- ------------------------------------------------------------------------------------- -----------
Total income 521,555
- -------------------------------------------------------------------------------------
EXPENSES:
- -------------------------------------------------------------------------------------
Investment advisory fee $ 256,275
- -------------------------------------------------------------------------
Administrative personnel and services fee 61,160
- -------------------------------------------------------------------------
Custodian fees 7,680
- -------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 15,634
- -------------------------------------------------------------------------
Directors'/Trustees' fees 4,283
- -------------------------------------------------------------------------
Auditing fees 5,929
- -------------------------------------------------------------------------
Legal fees 3,993
- -------------------------------------------------------------------------
Portfolio accounting fees 23,529
- -------------------------------------------------------------------------
Distribution services fee--Class B Shares 1,262
- -------------------------------------------------------------------------
Distribution services fee--Class C Shares 22
- -------------------------------------------------------------------------
Shareholder services fee--Class A Shares 84,997
- -------------------------------------------------------------------------
Shareholder services fee--Class B Shares 421
- -------------------------------------------------------------------------
Shareholder services fee--Class C Shares 7
- -------------------------------------------------------------------------
Share registration costs 31,944
- -------------------------------------------------------------------------
Printing and postage 10,908
- -------------------------------------------------------------------------
Insurance premiums 2,783
- -------------------------------------------------------------------------
Miscellaneous 3,993
- ------------------------------------------------------------------------- ---------
Total expenses 514,820
- -------------------------------------------------------------------------
Waivers--
- -------------------------------------------------------------------------
Waiver of investment advisory fee (110,371)
- ------------------------------------------------------------------------- ---------
Net expenses 404,449
- ------------------------------------------------------------------------------------- -----------
Net investment income 117,106
- ------------------------------------------------------------------------------------- -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
- -------------------------------------------------------------------------------------
Net realized gain on investments 2,594,112
- -------------------------------------------------------------------------------------
Net change in unrealized appreciation of investments 7,816,619
- ------------------------------------------------------------------------------------- -----------
Net realized and unrealized gain on investments 10,410,731
- ------------------------------------------------------------------------------------- -----------
Change in net assets resulting from operations $10,527,837
- ------------------------------------------------------------------------------------- -----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FEDERATED CAPITAL APPRECIATION FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERIOD ENDED
(UNAUDITED) YEAR ENDED
APRIL 30, 1996(A) DECEMBER 31, 1995(A)
----------------- --------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ------------------------------------------------------------
OPERATIONS--
- ------------------------------------------------------------
Net investment income $ 117,106 $ 1,188,048
- ------------------------------------------------------------
Net realized gain (loss) on investments ($2,594,112 net gain
and $16,693,345 net gain, respectively, as computed for
federal tax purposes) 2,594,112 18,575,112
- ------------------------------------------------------------
Net change in unrealized appreciation (depreciation) 7,816,619 9,195,528
- ------------------------------------------------------------ -------------- ---------------
Change in net assets resulting from operations 10,527,837 28,958,688
- ------------------------------------------------------------ -------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS--
- ------------------------------------------------------------
Distributions from net investment income
- ------------------------------------------------------------
Class A Shares (88,613) (1,235,954)
- ------------------------------------------------------------
Distributions in excess of net investment income
- ------------------------------------------------------------
Class B Shares (98) --
- ------------------------------------------------------------
Distributions from net realized gains
- ------------------------------------------------------------
Class A Shares -- (6,164,051)
- ------------------------------------------------------------ -------------- ---------------
Change in net assets resulting from distributions to
shareholders (88,711) (7,400,005)
- ------------------------------------------------------------ -------------- ---------------
SHARE TRANSACTIONS(B)--
- ------------------------------------------------------------
Proceeds from sale of shares 2,271,048 --
- ------------------------------------------------------------
Net asset value of shares issued to shareholders in payment
of distributions declared 18,327 2,209,356
- ------------------------------------------------------------
Cost of shares redeemed (2,183,445) (6,944,798)
- ------------------------------------------------------------ -------------- ---------------
Change in net assets resulting from share transactions 105,930 (4,735,442)
- ------------------------------------------------------------ -------------- ---------------
Change in net assets 10,545,056 16,823,241
- ------------------------------------------------------------
NET ASSETS:
- ------------------------------------------------------------
Beginning of period 98,200,258 81,377,017
- ------------------------------------------------------------ -------------- ---------------
End of period (including undistributed net investment income
of $33,844 and $5,448, respectively) $ 108,745,314 $ 98,200,258
- ------------------------------------------------------------ -------------- ---------------
</TABLE>
(a) See the Organizational Note in the Notes to the Financial Statements.
(b) Includes transactions in shares of partnership interest for Federated
Exchange Fund, Ltd. through December 31, 1995.
(See Notes which are an integral part of the Financial Statements)
FEDERATED CAPITAL APPRECIATION FUND
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
(1) ORGANIZATION
Federated Equity Funds (the "Trust") is registered under the Investment Company
Act of 1940, as amended (the "Act") as an open-end, management investment
company. The Trust consists of three portfolios. The financial statements
included herein are only those of Federated Capital Appreciation Fund (the
"Fund"), a diversified portfolio. The financial statements of the other
portfolios are presented separately. The assets of each portfolio are segregated
and a shareholder's interest is limited to the portfolio in which shares are
held. The investment objective of the Fund is to provide capital appreciation.
The Fund offers three classes of shares: Class A Shares, Class B Shares, and
Class C Shares.
Pursuant to the terms of a merger agreement dated October 10, 1995, shareholders
of Federated Exchange Fund, Ltd. agreed to acquire shares of the Fund, effective
January 2, 1996. As part of the transaction, 1,121,204 Class A shares of the
Fund were issued in exchange for all the assets of Federated Exchange Fund,
Ltd., which amounted to $98,200,258. The shares issued as a result of this
transaction represented substantially all of the Fund's outstanding shares as of
the transaction date. Due to this, and due to the similarities in investment
objectives and policies between the Fund and Federated Exchange Fund, Ltd., the
historical performance of Federated Exchange Fund, Ltd. prior to January 2,
1996, has been incorporated into the Fund's financial statements.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS--Listed equity securities are valued at the last sale
price reported on a national securities exchange. Short-term securities are
valued at the prices provided by an independent pricing service. However,
short-term securities with remaining maturities of sixty days or less at
the time of purchase may be valued at amortized cost, which approximates
fair market value.
REPURCHASE AGREEMENTS--It is the policy of the Fund to require the
custodian bank to take possession, to have legally segregated in the
Federal Reserve Book Entry System, or to have segregated within the
custodian bank's vault, all securities held as collateral under repurchase
agreement transactions. Additionally, procedures have been established by
the Fund to monitor, on a daily basis, the market value of each repurchase
agreement's collateral to ensure that the value of collateral at least
equals the repurchase price to be paid under the repurchase agreement
transaction.
FEDERATED CAPITAL APPRECIATION FUND
- --------------------------------------------------------------------------------
The Fund will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed
by the Fund's adviser to be creditworthy pursuant to the guidelines and/or
standards reviewed or established by the Board of Trustees (the
"Trustees"). Risks may arise from the potential inability of counterparties
to honor the terms of the repurchase agreement. Accordingly, the Fund could
receive less than the repurchase price on the sale of collateral
securities.
INVESTMENT INCOME, EXPENSES, AND DISTRIBUTIONS--Interest income and
expenses are accrued daily. Bond premium and discount, if applicable, are
amortized as required by the Internal Revenue Code, as amended (the
"Code"). Dividend income and distributions to shareholders are recorded on
the ex-dividend date.
FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the
Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of its income. Accordingly, no
provisions for federal tax are necessary.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in
when-issued or delayed delivery transactions. The Fund records when-issued
securities on the trade date and maintains security positions such that
sufficient liquid assets will be available to make payment for the
securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
USE OF ESTIMATES--The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts of assets, liabilities,
expenses and revenues reported in the financial statements. Actual results
could differ from those estimated.
OTHER--Investment transactions are accounted for on the trade date.
(3) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value) for each
class of shares.
FEDERATED CAPITAL APPRECIATION FUND
- --------------------------------------------------------------------------------
Transactions in shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED
PERIOD ENDED DECEMBER 31, 1995(B)
APRIL 30, 1996
---------------------- ----------------------
CLASS A SHARES SHARES AMOUNT SHARES AMOUNT
- --------------------------------------------------------- ------- ----------- ------- -----------
<S> <C> <C> <C> <C>
Shares sold 7,780 $ 729,188 -- $ --
- ---------------------------------------------------------
Shares issued to shareholders in payment of distributions
declared 194 18,232 25,468 2,209,356
- ---------------------------------------------------------
Shares redeemed (23,028) (2,143,320) (86,324) (6,944,798)
- --------------------------------------------------------- ------- ----------- ------- -----------
Net change resulting from Class A share transactions (15,054) $(1,395,900) (60,856) $(4,735,442)
- --------------------------------------------------------- ------- ----------- ------- -----------
</TABLE>
<TABLE>
<CAPTION>
PERIOD ENDED
APRIL 30, 1996(A)
----------------------
CLASS B SHARES SHARES AMOUNT
- --------------------------------------------------------- ------- -----------
<S> <C> <C> <C> <C>
Shares sold 16,172 $ 1,520,260
- ---------------------------------------------------------
Shares issued to shareholders in payment of distributions
declared 1 95
- ---------------------------------------------------------
Shares redeemed (419) (40,125)
- --------------------------------------------------------- ------- -----------
Net change resulting from Class B share transactions 15,754 $ 1,480,230
- --------------------------------------------------------- ------- -----------
</TABLE>
<TABLE>
<CAPTION>
PERIOD ENDED
APRIL 30, 1996(A)
----------------------
CLASS C SHARES SHARES AMOUNT
- --------------------------------------------------------- ------- -----------
<S> <C> <C> <C> <C>
Shares sold 227 $ 21,600
- ---------------------------------------------------------
Shares issued to shareholders in payment of distributions
declared -- --
- ---------------------------------------------------------
Shares redeemed -- --
- --------------------------------------------------------- ------- -----------
Net change resulting from Class C share transactions 227 $ 21,600
- --------------------------------------------------------- ------- -----------
Net change resulting from share transactions 927 $ 105,930
- --------------------------------------------------------- ------- -----------
</TABLE>
(a) For the period ended January 4, 1996 (date of initial public offering) to
April 30, 1996.
(b) Includes transactions in shares of partnership interest for Federated
Exchange Fund, Ltd. through December 31, 1995.
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Federated Management, the Fund's investment adviser,
(the "Adviser"), receives for its services an annual investment advisory fee
equal to 0.75% of the Fund's average daily
FEDERATED CAPITAL APPRECIATION FUND
- --------------------------------------------------------------------------------
net assets.The Adviser may voluntarily choose to waive any portion of its fee.
The Adviser can modify or terminate this voluntary waiver at any time at its
sole discretion.
ADMINISTRATIVE FEE--Federated Services Company ("FServ"), under the
Administrative Services Agreement, provides the Fund with administrative
personnel and services. The fee paid to FServ is based on the level of average
aggregate daily net assets of all funds advised by subsidiaries of Federated
Investors for the period. The administrative fee received during the period of
the Administrative Services Agreement shall be at least $125,000 per portfolio
and $30,000 per each additional class of shares.
DISTRIBUTION SERVICES FEE--The Fund has adopted a Distribution Plan (the "Plan")
pursuant to Rule 12b-1 under the Act. Under the terms of the Plan, the Fund will
compensate Federated Securities Corp.("FSC"), the principal distributor, from
the net assets of the Fund to finance activities intended to result in the sale
of the Fund's Class A Shares, Class B Shares and Class C Shares. The Plan
provides that the Fund may incur distribution expenses according to the
following schedule annually, to compensate FSC.
<TABLE>
<CAPTION>
% OF AVG. DAILY NET
SHARE CLASS NAME ASSETS OF CLASS
-------------------------------- --------------------------------
<S> <C>
Class A Shares 0.25%
Class B Shares 0.75%
Class C Shares 0.75%
</TABLE>
SHAREHOLDER SERVICES FEE--Under the terms of a Shareholder Services Agreement
with Federated Shareholder Services ("FSS"), the Fund will pay FSS up to 0.25%
of average daily net assets of the Fund for the period. The fee paid to FSS is
used to finance certain services for shareholders and to maintain shareholder
accounts.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT FEES--FServ, through its
subsidiary, Federated Shareholder Services Company serves as transfer and
dividend disbursing agent for the Fund. The fee paid to FServ is based on the
size, type, and number of accounts and transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES--FServ maintains the Fund's accounting records for
which it receives a fee. The fee is based on the level of the Fund's average
daily net assets for the period, plus out-of-pocket expenses.
GENERAL--Certain of the Officers and Trustees of the Trust are Officers and
Directors or Trustees of the above companies.
FEDERATED CAPITAL APPRECIATION FUND
- --------------------------------------------------------------------------------
(5) INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the
period ended April 30, 1996, were as follows:
<TABLE>
<S> <C>
- -------------------------------------------------------------------------------
PURCHASES $13,248,556
- ------------------------------------------------------------------------------- -----------
SALES $16,950,673
- ------------------------------------------------------------------------------- -----------
</TABLE>
<TABLE>
<S> <C>
TRUSTEES OFFICERS
- ---------------------------------------------------------------------------------------------
John F. Donahue John F. Donahue
Thomas G. Bigley Chairman
John T. Conroy, Jr. Glen R. Johnson
William J. Copeland President
James E. Dowd J. Christopher Donahue
Lawrence D. Ellis, M.D. Executive Vice President
Edward L. Flaherty, Jr. Edward C. Gonzales
Peter E. Madden Executive Vice President
Gregor F. Meyer John W. McGonigle
John E. Murray, Jr. Executive Vice President and Secretary
Wesley W. Posvar Richard B. Fisher
Marjorie P. Smuts Vice President
David M. Taylor
Treasurer
S. Elliott Cohan
Assistant Secretary
</TABLE>
Mutual Funds are not bank deposits or obligations, are not guaranteed by any
bank, and are not insured or guaranteed by the U.S. government, the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other
government agency. Investment in mutual funds involves investment risk,
including possible loss of principal.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the Funds' prospectus which contains facts concerning
their objective and policies, management fees, expenses and other information.
LOGO
FEDERATED SECURITIES CORP.
- --------------------------------------------------------------------------------
Distributor
A Subsidiary of Federated Investors
Federated Investors Tower
Pittsburgh, PA 15222-3779
CUSIP# 314172701
G01649-02 (5/96)
FEDERATED CAPITAL APPRECIATION FUND
(A PORTFOLIO OF FEDERATED EQUITY FUNDS)
CLASS A SHARES, CLASS B SHARES, AND CLASS C SHARES
SEMI-ANNUAL REPORT AND SUPPLEMENT TO THE PROSPECTUS DATED DECEMBER 21, 1995.
A. Please delete the "Summary of Fund Expenses" tables for Class A, Class B, and
Class C Shares on pages 1-3 of the prospectus and replace them with the
following table:
SUMMARY OF FUND EXPENSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
CLASS A SHARES
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge Imposed on Purchases (as a percentage of offering price)......... 5.50%
Maximum Sales Charge 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 OPERATING EXPENSES
(As a percentage of projected average net assets)*
Management Fee (after waiver)(2)...................................................... 0.45%
12b-1 Fee(3).......................................................................... 0.00%
Total Other Expenses.................................................................. 0.70%
Shareholder Services Fee.......................................................... 0.25%
Total Operating Expenses(4).................................................. 1.15%
</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 charge and
not distributed by Federated Securities Corp. may be charged a contingent
deferred sales charge of 0.50 of 1% for redemptions made within one year of
purchase. See "Contingent Deferred Sales Charge."
(2) The estimated management fee has been reduced to reflect the anticipated
voluntary waiver of a portion of the management fee. The adviser can terminate
this 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, 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 operating expenses are estimated to be 1.45% absent the
anticipated voluntary waiver of a portion of the management fee.
* Total Class A Operating Expenses in the table above are estimated based on
average expenses expected to be incurred during the period ending October 31,
1996. 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 "Fund Information".
Wire-transferred redemptions of less than $5,000 may be subject to additional
fees.
<TABLE>
<CAPTION>
EXAMPLE 1 year 3 years
- -------------------------------------------------------------------------------- ------- --------
<S> <C> <C>
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............... $71 $ 90
You would pay the following expenses on the same investment, assuming no
redemption.................................................................... $66 $ 90
</TABLE>
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, 1996.
SUMMARY OF FUND EXPENSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
CLASS B SHARES
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge Imposed on Purchases (as a percentage of offering price)......... None
Maximum Sales Charge 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)...................................................... 0.45%
12b-1 Fee............................................................................. 0.75%
Total Other Expenses.................................................................. 0.70%
Shareholder Services Fee.......................................................... 0.25%
Total Operating Expenses(3)(4)............................................... 1.90%
</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 a portion of the management fee. The adviser can terminate
this 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 operating expenses are estimated to be 2.20% absent the
anticipated voluntary waiver of a portion of the management fee.
* Total Class B Shares Operating Expenses in the table above are estimated based
on average expenses expected to be incurred during the period ending October 31,
1996. 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 "Fund 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.
<TABLE>
<CAPTION>
EXAMPLE 1 year 3 years
- -------------------------------------------------------------------------------- ------- --------
<S> <C> <C>
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............... $76 $104
You would pay the following expenses on the same investment, assuming no
redemption.................................................................... $19 $ 60
</TABLE>
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 B SHARES' FISCAL YEAR ENDING
OCTOBER 31, 1996.
SUMMARY OF FUND EXPENSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
CLASS C SHARES
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge Imposed on Purchases (as a percentage of offering price)......... None
Maximum Sales Charge 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 OPERATING EXPENSES
(As a percentage of projected average net assets)*
Management Fee (after waiver)(2)...................................................... 0.45%
12b-1 Fee............................................................................. 0.75%
Total Other Expenses.................................................................. 0.70%
Shareholder Services Fee.......................................................... 0.25%
Total Operating Expenses(3).................................................. 1.90%
</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 a portion of the management fee. The adviser can terminate
this voluntary waiver at any time at its sole discretion. The maximum management
fee is 0.75%.
(3) The total operating expenses are estimated to be 2.20% absent the
anticipated voluntary waiver of a portion of the management fee.
* Total Class C Operating Expenses in the table above are estimated based on
average expenses expected to be incurred during the period ending October 31,
1996. 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 "Fund 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.
<TABLE>
<CAPTION>
EXAMPLE 1 year 3 years
- -------------------------------------------------------------------------------- ------- --------
<S> <C> <C>
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........ $30 $ 60
You would pay the following expenses on the same investment, assuming no
redemption.................................................................... $19 $ 60
</TABLE>
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 C SHARES' FISCAL YEAR ENDING
OCTOBER 31, 1996.
B. Please insert the following "Financial Highlights" tables for Class A, Class
B, and Class C Shares immediately following the Summary of Fund Expenses
tables in the prospectus:
FEDERATED CAPITAL APPRECIATION FUND
FINANCIAL HIGHLIGHTS-CLASS A SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
PERIOD ENDED
(UNAUDITED) YEAR ENDED DECEMBER 31, (A)
APRIL 30, --------------------------------------------------------------------------------------
1996 (B) 1995 1994 1993 1992 1991 1990 1989 1988 1987
------------- ------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING
OF PERIOD $ 87.58 $68.84 $71.39 $65.83 $61.65 $50.56 $54.93 $50.03 $46.19 $48.39
- ---------------------------
INCOME FROM INVESTMENT
OPERATIONS
- ---------------------------
Net investment income 0.11 1.05 1.18 1.13 1.36 1.16 1.46 1.37 1.31 1.29
- ---------------------------
Net realized and
unrealized gain (loss) on
investments 9.30 24.39 (1.39) 6.30 5.57 12.62 (3.86) 7.34 5.08 (0.45)
- --------------------------- -------- ----- ----- ----- ----- ----- ----- ----- ----- -----
Total from investment
operations 9.41 25.44 (0.21) 7.43 6.93 13.78 (2.40) 8.71 6.39 0.84
- --------------------------- -------- ----- ----- ----- ----- ----- ----- ----- ----- -----
LESS DISTRIBUTIONS
- ---------------------------
Distributions from net
investment income (0.08) (1.09) (1.14) (1.16) (1.38) (1.15) (1.51) (1.32) (1.29) (1.30)
- ---------------------------
Distributions from net
realized gain on
investments -- (5.61) (1.20) (0.71) (1.37) (1.54) (0.46) (2.49) (1.26) (1.74)
- --------------------------- -------- ----- ----- ----- ----- ----- ----- ----- ----- -----
Total distributions (0.08) (6.70) (2.34) (1.87) (2.75) (2.69) (1.97) (3.81) (2.55) (3.04)
- --------------------------- -------- ----- ----- ----- ----- ----- ----- ----- ----- -----
NET ASSET VALUE, END OF
PERIOD $ 96.91 $87.58 $68.84 $71.39 $65.83 $61.65 $50.56 $54.93 $50.03 $46.19
- --------------------------- -------- ----- ----- ----- ----- ----- ----- ----- ----- -----
TOTAL RETURN (C) 10.75% 37.17% (0.30%) 11.31% 11.38% 27.42% (4.43%) 17.58% 13.97% 0.88%
- ---------------------------
RATIOS TO AVERAGE NET
ASSETS
- ---------------------------
Expenses 1.18%* 1.08% 1.15% 1.15% 1.11% 1.12% 1.07% 1.13% 1.08% 0.92%*
- ---------------------------
Net investment income 0.35%* 1.29% 1.63% 1.59% 2.13% 1.97% 2.76% 2.45% 2.61% 2.29%*
- ---------------------------
Expense waiver/
reimbursement (d) 0.32%* 0.15% -- -- -- -- -- -- -- --
- ---------------------------
SUPPLEMENTAL DATA
- ---------------------------
Net assets, end of period
(000 omitted) $107,197 $98,200 $81,377 $88,949 $91,551 $90,503 $79,114 $95,422 $89,228 $89,371
- ---------------------------
Average commission rate
paid $0.05 -- -- -- -- -- -- -- -- --
- ---------------------------
Portfolio turnover 13% 81% 23% 26% 47% 54% 61% 41% 36% 39%
- ---------------------------
</TABLE>
* Computed on an annualized basis.
(a) Amounts presented prior to January 1, 1996 represent results of operations
for Federated Exchange Fund, Ltd.
(b) Reflects operations for the period from January 1, 1996 (the Fund's start of
business) to April 30, 1996.
(c) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(d) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
FEDERATED CAPITAL APPRECIATION FUND
FINANCIAL HIGHLIGHTS-CLASS B SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
PERIOD ENDED
(UNAUDITED)
APRIL 30, 1996 (A)
------------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $88.22
- -------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- -------------------------------------------------------------------------
Net investment income (0.04)
- -------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments 8.70
- ------------------------------------------------------------------------- -------
Total from investment operations 8.66
- ------------------------------------------------------------------------- -------
LESS DISTRIBUTIONS
- -------------------------------------------------------------------------
Distributions in excess of net investment income (0.01)
- ------------------------------------------------------------------------- -------
NET ASSET VALUE, END OF PERIOD $96.87
- ------------------------------------------------------------------------- -------
TOTAL RETURN (B) 9.82%
- -------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- -------------------------------------------------------------------------
Expenses 2.00%*
- -------------------------------------------------------------------------
Net investment income (0.42%)*
- -------------------------------------------------------------------------
Expense waiver/reimbursement (c) 0.29%*
- -------------------------------------------------------------------------
SUPPLEMENTAL DATA
- -------------------------------------------------------------------------
Net assets, end of period (000 omitted) $1,526
- -------------------------------------------------------------------------
Average commission rate paid $ 0.05
- -------------------------------------------------------------------------
Portfolio turnover 13%
- -------------------------------------------------------------------------
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from January 4, 1996 (date of initial
public offering) to April 30, 1996.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
FEDERATED CAPITAL APPRECIATION FUND
FINANCIAL HIGHLIGHTS-CLASS C SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
PERIOD ENDED
(UNAUDITED)
APRIL 30, 1996 (A)
------------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $88.22
- -------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- -------------------------------------------------------------------------
Net investment income (0.02)
- -------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments 8.64
- ------------------------------------------------------------------------- -------
Total from investment operations 8.62
- ------------------------------------------------------------------------- -------
NET ASSET VALUE, END OF PERIOD $96.84
- ------------------------------------------------------------------------- -------
TOTAL RETURN (B) 9.81%
- -------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- -------------------------------------------------------------------------
Expenses 1.95%*
- -------------------------------------------------------------------------
Net investment income (0.24%)*
- -------------------------------------------------------------------------
Expense waiver/reimbursement (c) 0.29%*
- -------------------------------------------------------------------------
SUPPLEMENTAL DATA
- -------------------------------------------------------------------------
Net assets, end of period (000 omitted) $ 22
- -------------------------------------------------------------------------
Average commission rate paid $ 0.05
- -------------------------------------------------------------------------
Portfolio turnover 13%
- -------------------------------------------------------------------------
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from January 4, 1996 (date of initial
public offering) to April 30, 1996.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
C. Under the Section entitled "Investment Policies", please replace the third
sentence under the sub-section entitled "Put and Call Options" on page 10
with the following:
"The Fund may also write call options on all or any portion of its portfolio to
seek to generate income for the Fund."
D. Under the section entitled "Administration of the Fund", on page 30, delete
all references to "Federated Administrative Services" and replace them with
"Federated Services Company."
E. Please delete all references to "Federated Services Company" the former name
of the current transfer agent, and replace with "Federated Shareholder
Services Company", in the following sections of the prospectus; PURCHASING
SHARES BY CHECK, TELEPHONE INSTRUCTIONS, REDEEMING SHARES BY MAIL,
CERTIFICATES AND CONFIRMATIONS and TRANSFER AGENT AND DIVIDEND DISBURSING
AGENT, on pages 20, 22, 23, 26 and 30, respectively.
F. Please delete the last sentence in the section entitled "Making an Exchange"
on page 22 and replace it with the following:
"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 Shareholder Services Company, 1099 Hingham
Street, Rockland, MA 02370-3317."
G. Please insert the following financial statements beginning on page 37 of the
prospectus:
FEDERATED CAPITAL APPRECIATION FUND
PORTFOLIO OF INVESTMENTS
APRIL 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- --------- ------------------------------------------------------------------ ------------
<C> <C> <S> <C>
COMMON STOCKS--100.2%
- -----------------------------------------------------------------------------------
BASIC INDUSTRY--2.3%
------------------------------------------------------------------
59,000 Millipore Corp. $ 2,470,625
------------------------------------------------------------------ ------------
CONSUMER DURABLES--4.3%
------------------------------------------------------------------
34,500 Eastman Kodak Co. 2,639,250
------------------------------------------------------------------
80,500 Mattel, Inc. 2,093,000
------------------------------------------------------------------ ------------
Total 4,732,250
------------------------------------------------------------------ ------------
CONSUMER NON-DURABLES--11.6%
------------------------------------------------------------------
29,900 Avon Products, Inc. 2,657,362
------------------------------------------------------------------
72,000 IBP, Inc. 1,926,000
------------------------------------------------------------------
31,600 International Flavors & Fragrances, Inc. 1,552,350
------------------------------------------------------------------
35,000 Nike, Inc., Class B 3,062,500
------------------------------------------------------------------
37,600 Philip Morris Cos., Inc. 3,388,700
------------------------------------------------------------------ ------------
Total 12,586,912
------------------------------------------------------------------ ------------
ENERGY MINERALS--2.5%
------------------------------------------------------------------
46,900 Chevron Corp. 2,720,200
------------------------------------------------------------------ ------------
FINANCE--22.8%
------------------------------------------------------------------
173,500 (a) Acceptance Insurance Cos., Inc. 2,710,937
------------------------------------------------------------------
28,000 Allstate Corp. 1,088,500
------------------------------------------------------------------
25,000 American Express Co. 1,212,500
------------------------------------------------------------------
23,600 Chase Manhattan Corp. 1,625,450
------------------------------------------------------------------
31,097 Citicorp 2,448,889
------------------------------------------------------------------
23,145 Dean Witter, Discover & Co. 1,261,403
------------------------------------------------------------------
100,000 Executive Risk, Inc. 3,100,000
------------------------------------------------------------------
110,000 Leucadia National Corp. 2,860,000
------------------------------------------------------------------
42,500 Mellon Bank Corp. 2,284,375
------------------------------------------------------------------
15,000 NationsBank Corp. 1,196,250
------------------------------------------------------------------
</TABLE>
FEDERATED CAPITAL APPRECIATION FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- --------- ------------------------------------------------------------------ ------------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- -----------------------------------------------------------------------------------
FINANCE--CONTINUED
------------------------------------------------------------------
78,000 Pioneer Group, Inc. $ 2,086,500
------------------------------------------------------------------
14,500 Providian Corp. 668,813
------------------------------------------------------------------
36,266 Travelers Group, Inc. 2,230,359
------------------------------------------------------------------ ------------
Total 24,773,976
------------------------------------------------------------------ ------------
HEALTH CARE--7.5%
------------------------------------------------------------------
6,900 (a) Agouron Pharmaceuticals, Inc. 279,450
------------------------------------------------------------------
37,000 Becton, Dickinson & Co. 2,983,125
------------------------------------------------------------------
33,400 Bristol-Myers Squibb Co. 2,747,150
------------------------------------------------------------------
55,000 (a) Scherer (R.P.) Corp. 2,172,500
------------------------------------------------------------------ ------------
Total 8,182,225
------------------------------------------------------------------ ------------
PRODUCER MANUFACTURING--5.6%
------------------------------------------------------------------
100,000 (a) Oak Industries, Inc. 2,700,000
------------------------------------------------------------------
50,000 Philips Electronics N.V., ADR 1,793,750
------------------------------------------------------------------
19,000 Textron, Inc. 1,629,250
------------------------------------------------------------------ ------------
Total 6,123,000
------------------------------------------------------------------ ------------
RETAIL TRADE--2.2%
------------------------------------------------------------------
48,350 Sears, Roebuck & Co. 2,411,456
------------------------------------------------------------------ ------------
SERVICES--5.8%
------------------------------------------------------------------
16,000 Gannett Co., Inc. 1,094,000
------------------------------------------------------------------
50,000 Interpublic Group Cos., Inc. 2,337,500
------------------------------------------------------------------
63,300 Reynolds & Reynolds Co., Class A 2,927,625
------------------------------------------------------------------ ------------
Total 6,359,125
------------------------------------------------------------------ ------------
TECHNOLOGY--27.9%
------------------------------------------------------------------
50,000 (a) Ceridian Corp. 2,387,500
------------------------------------------------------------------
50,000 (a) Compuware Corp. 1,425,000
------------------------------------------------------------------
45,000 (a) DST Systems, Inc. 1,653,750
------------------------------------------------------------------
200,000 (a) Data General Corp. 3,075,000
------------------------------------------------------------------
</TABLE>
FEDERATED CAPITAL APPRECIATION FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- --------- ------------------------------------------------------------------ ------------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- -----------------------------------------------------------------------------------
TECHNOLOGY--CONTINUED
------------------------------------------------------------------
50,000 ECI Telecommunications, Ltd. $ 1,306,250
------------------------------------------------------------------
103,500 Gandalf Technologies, Inc. 1,837,125
------------------------------------------------------------------
50,000 General Motors Corp., Class E 2,818,750
------------------------------------------------------------------
18,800 Hewlett-Packard Co. 1,990,450
------------------------------------------------------------------
75,000 (a) Intervoice, Inc. 2,100,000
------------------------------------------------------------------
40,200 Lockheed Martin Corp. 3,241,125
------------------------------------------------------------------
75,000 Lucent Technologies, Inc. 2,634,375
------------------------------------------------------------------
23,000 (a) Microsoft Corp. 2,607,625
------------------------------------------------------------------
25,000 (a) Sheldahl, Inc. 559,375
------------------------------------------------------------------
24,200 (a) Solectron Corp. 1,076,900
------------------------------------------------------------------
25,000 (a) Systeme, Anwendungen, Produkte in der Datevnerarbeitung, ADR 1,100,000
------------------------------------------------------------------
20,000 (a) Vanstar Corp. 272,500
------------------------------------------------------------------
5,000 (a) Wind River Systems, Inc. 195,000
------------------------------------------------------------------ ------------
Total 30,280,725
------------------------------------------------------------------ ------------
TRANSPORTATION--3.2%
------------------------------------------------------------------
50,000 Kansas City Southern Industries, Inc. 2,425,000
------------------------------------------------------------------
14,200 (a) Southern Pacific Railway Co. 355,000
------------------------------------------------------------------
10,400 Union Pacific Corp. 708,500
------------------------------------------------------------------ ------------
Total 3,488,500
------------------------------------------------------------------ ------------
UTILITIES--4.5%
------------------------------------------------------------------
60,000 (a) Columbia Gas System, Inc. 2,917,500
------------------------------------------------------------------
49,000 Enron Corp. 1,972,250
------------------------------------------------------------------ ------------
Total 4,889,750
------------------------------------------------------------------ ------------
TOTAL COMMON STOCKS (IDENTIFIED COST $77,220,861) 109,018,744
------------------------------------------------------------------ ------------
</TABLE>
FEDERATED CAPITAL APPRECIATION FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ---------- ----------------------------------------------------------------- ------------
<C> <C> <S> <C>
(B) REPURCHASE AGREEMENT--2.5%
- -----------------------------------------------------------------------------------
$2,695,000 BT Securities Corporation, 5.35%, dated 4/30/1996, due 5/1/1996
(at amortized cost) $ 2,695,000
----------------------------------------------------------------- ------------
TOTAL INVESTMENTS (IDENTIFIED COST $79,915,861)(C) $111,713,744
----------------------------------------------------------------- ------------
</TABLE>
(a) Non-income producing security.
(b) The repurchase agreement is fully collateralized by U.S. government and/or
agency obligations based on market prices at the date of the portfolio. The
investment in the repurchase agreement is through participation in a joint
account with other Federated funds.
(c) The cost of investments for federal tax purposes amounts to $79,915,861. The
net unrealized appreciation of investments on a federal tax basis amounts to
$31,797,883 which is comprised of $33,080,279 appreciation and $1,282,396
depreciation at April 30, 1996.
Note: The categories of investments are shown as a percentage of net assets
($108,745,314) at April 30, 1996.
The following acronym is used throughout this portfolio:
ADR -- American Depository Receipt
(See Notes which are an integral part of the Financial Statements)
FEDERATED CAPITAL APPRECIATION FUND
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- --------------------------------------------------------------------------------------------------
Total investments in securities, at value (identified and tax cost $79,915,861) $111,713,744
- --------------------------------------------------------------------------------------------------
Income receivable 70,569
- --------------------------------------------------------------------------------------------------
Receivable for investments sold 380,625
- --------------------------------------------------------------------------------------------------
Receivable for shares sold 59,822
- -------------------------------------------------------------------------------------------------- -----------
Total assets 112,224,760
- --------------------------------------------------------------------------------------------------
LIABILITIES:
- --------------------------------------------------------------------------------------------------
Payable for investments purchased $3,198,945
- -------------------------------------------------------------------------------------
Payable to Bank 169,478
- -------------------------------------------------------------------------------------
Accrued expenses 111,023
- ------------------------------------------------------------------------------------- ---------
Total liabilities 3,479,446
- -------------------------------------------------------------------------------------------------- -----------
NET ASSETS for 1,122,131 shares outstanding $108,745,314
- -------------------------------------------------------------------------------------------------- -----------
NET ASSETS CONSIST OF:
- --------------------------------------------------------------------------------------------------
Paid in capital $ 74,319,475
- --------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments 31,797,883
- --------------------------------------------------------------------------------------------------
Accumulated net realized gain on investments 2,594,112
- --------------------------------------------------------------------------------------------------
Undistributed net investment income 33,844
- -------------------------------------------------------------------------------------------------- -----------
Total Net Assets $108,745,314
- -------------------------------------------------------------------------------------------------- -----------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
- --------------------------------------------------------------------------------------------------
CLASS A SHARES:
- --------------------------------------------------------------------------------------------------
Net Asset Value Per Share ($107,197,162 / 1,106,150 shares outstanding) $96.91
- -------------------------------------------------------------------------------------------------- -----------
Offering Price Per Share (100/94.50 of $96.91)* $102.55
- -------------------------------------------------------------------------------------------------- -----------
Redemption Proceeds Per Share $96.91
- -------------------------------------------------------------------------------------------------- -----------
CLASS B SHARES:
- --------------------------------------------------------------------------------------------------
Net Asset Value Per Share ($1,526,163 / 15,754 shares outstanding) $96.87
- -------------------------------------------------------------------------------------------------- -----------
Offering Price Per Share $96.87
- -------------------------------------------------------------------------------------------------- -----------
Redemption Proceeds Per Share (94.50/100 of $96.87)** $91.54
- -------------------------------------------------------------------------------------------------- -----------
CLASS C SHARES:
- --------------------------------------------------------------------------------------------------
Net Asset Value Per Share ($21,989 / 227 shares outstanding) $96.87
- -------------------------------------------------------------------------------------------------- -----------
Offering Price Per Share $96.87
- -------------------------------------------------------------------------------------------------- -----------
Redemption Proceeds Per Share (99.00/100 of $96.87)** $95.90
- -------------------------------------------------------------------------------------------------- -----------
</TABLE>
* See "Investing in Class A Shares," "Investing in Class B Shares" and
"Investing in Class C Shares" in the Prospectuses.
** See "Contingent Deferred Sales Charge" in the Prospectus.
(See Notes which are an integral part of the Financial Statements)
FEDERATED CAPITAL APPRECIATION FUND
STATEMENT OF OPERATIONS
PERIOD ENDED APRIL 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- ---------------------------------------------------------------------------------------------
Dividends $ 483,912
- ---------------------------------------------------------------------------------------------
Interest 37,643
- --------------------------------------------------------------------------------------------- -----------
Total income 521,555
- ---------------------------------------------------------------------------------------------
EXPENSES:
- ---------------------------------------------------------------------------------------------
Investment advisory fee $ 256,275
- ---------------------------------------------------------------------------------
Administrative personnel and services fee 61,160
- ---------------------------------------------------------------------------------
Custodian fees 7,680
- ---------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 15,634
- ---------------------------------------------------------------------------------
Directors'/Trustees' fees 4,283
- ---------------------------------------------------------------------------------
Auditing fees 5,929
- ---------------------------------------------------------------------------------
Legal fees 3,993
- ---------------------------------------------------------------------------------
Portfolio accounting fees 23,529
- ---------------------------------------------------------------------------------
Distribution services fee--Class B Shares 1,262
- ---------------------------------------------------------------------------------
Distribution services fee--Class C Shares 22
- ---------------------------------------------------------------------------------
Shareholder services fee--Class A Shares 84,997
- ---------------------------------------------------------------------------------
Shareholder services fee--Class B Shares 421
- ---------------------------------------------------------------------------------
Shareholder services fee--Class C Shares 7
- ---------------------------------------------------------------------------------
Share registration costs 31,944
- ---------------------------------------------------------------------------------
Printing and postage 10,908
- ---------------------------------------------------------------------------------
Insurance premiums 2,783
- ---------------------------------------------------------------------------------
Miscellaneous 3,993
- --------------------------------------------------------------------------------- ---------
Total expenses 514,820
- ---------------------------------------------------------------------------------
Waivers--
- ---------------------------------------------------------------------------------
Waiver of investment advisory fee (110,371)
- --------------------------------------------------------------------------------- ---------
Net expenses 404,449
- --------------------------------------------------------------------------------------------- -----------
Net investment income 117,106
- --------------------------------------------------------------------------------------------- -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
- ---------------------------------------------------------------------------------------------
Net realized gain on investments 2,594,112
- ---------------------------------------------------------------------------------------------
Net change in unrealized appreciation of investments 7,816,619
- --------------------------------------------------------------------------------------------- -----------
Net realized and unrealized gain on investments 10,410,731
- --------------------------------------------------------------------------------------------- -----------
Change in net assets resulting from operations $10,527,837
- --------------------------------------------------------------------------------------------- -----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FEDERATED CAPITAL APPRECIATION FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERIOD ENDED
(UNAUDITED) YEAR ENDED
APRIL 30, 1996(A) DECEMBER 31, 1995(A)
----------------- --------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ----------------------------------------------------------------
OPERATIONS--
- ----------------------------------------------------------------
Net investment income $ 117,106 $ 1,188,048
- ----------------------------------------------------------------
Net realized gain (loss) on investments ($2,594,112 net gain and
$16,693,345 net gain, respectively, as computed for federal tax
purposes) 2,594,112 18,575,112
- ----------------------------------------------------------------
Net change in unrealized appreciation (depreciation) 7,816,619 9,195,528
- ---------------------------------------------------------------- ------------- --------------
Change in net assets resulting from operations 10,527,837 28,958,688
- ---------------------------------------------------------------- ------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS--
- ----------------------------------------------------------------
Distributions from net investment income
- ----------------------------------------------------------------
Class A Shares (88,613) (1,235,954)
- ----------------------------------------------------------------
Distributions in excess of net investment income
- ----------------------------------------------------------------
Class B Shares (98) --
- ----------------------------------------------------------------
Distributions from net realized gains
- ----------------------------------------------------------------
Class A Shares -- (6,164,051)
- ---------------------------------------------------------------- ------------- --------------
Change in net assets resulting from distributions to
shareholders (88,711) (7,400,005)
- ---------------------------------------------------------------- ------------- --------------
SHARE TRANSACTIONS(B)--
- ----------------------------------------------------------------
Proceeds from sale of shares 2,271,048 --
- ----------------------------------------------------------------
Net asset value of shares issued to shareholders in payment of
distributions declared 18,327 2,209,356
- ----------------------------------------------------------------
Cost of shares redeemed (2,183,445) (6,944,798)
- ---------------------------------------------------------------- ------------- --------------
Change in net assets resulting from share transactions 105,930 (4,735,442)
- ---------------------------------------------------------------- ------------- --------------
Change in net assets 10,545,056 16,823,241
- ----------------------------------------------------------------
NET ASSETS:
- ----------------------------------------------------------------
Beginning of period 98,200,258 81,377,017
- ---------------------------------------------------------------- ------------- --------------
End of period (including undistributed net investment income of
$33,844 and $5,448, respectively) $ 108,745,314 $ 98,200,258
- ---------------------------------------------------------------- ------------- --------------
</TABLE>
(a) See the Organizational Note in the Notes to the Financial Statements.
(b) Includes transactions in shares of partnership interest for Federated
Exchange Fund, Ltd. through December 31, 1995.
(See Notes which are an integral part of the Financial Statements)
FEDERATED CAPITAL APPRECIATION FUND
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
(1) ORGANIZATION
Federated Equity Funds (the "Trust") is registered under the Investment Company
Act of 1940, as amended (the "Act") as an open-end, management investment
company. The Trust consists of three portfolios. The financial statements
included herein are only those of Federated Capital Appreciation Fund (the
"Fund"), a diversified portfolio. The financial statements of the other
portfolios are presented separately. The assets of each portfolio are segregated
and a shareholder's interest is limited to the portfolio in which shares are
held. The investment objective of the Fund is to provide capital appreciation.
The Fund offers three classes of shares: Class A Shares, Class B Shares, and
Class C Shares.
Pursuant to the terms of a merger agreement dated October 10, 1995, shareholders
of Federated Exchange Fund, Ltd. agreed to acquire shares of the Fund, effective
January 2, 1996. As part of the transaction, 1,121,204 Class A shares of the
Fund were issued in exchange for all the assets of Federated Exchange Fund,
Ltd., which amounted to $98,200,258. The shares issued as a result of this
transaction represented substantially all of the Fund's outstanding shares as of
the transaction date. Due to this, and due to the similarities in investment
objectives and policies between the Fund and Federated Exchange Fund, Ltd., the
historical performance of Federated Exchange Fund, Ltd. prior to January 2,
1996, has been incorporated into the Fund's financial statements.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS--Listed equity securities are valued at the last sale
price reported on a national securities exchange. Short-term securities are
valued at the prices provided by an independent pricing service. However,
short-term securities with remaining maturities of sixty days or less at
the time of purchase may be valued at amortized cost, which approximates
fair market value.
REPURCHASE AGREEMENTS--It is the policy of the Fund to require the
custodian bank to take possession, to have legally segregated in the
Federal Reserve Book Entry System, or to have segregated within the
custodian bank's vault, all securities held as collateral under repurchase
agreement transactions. Additionally, procedures have been established by
the Fund to monitor, on a daily basis, the market value of each repurchase
agreement's collateral to ensure that the value of collateral at least
equals the repurchase price to be paid under the repurchase agreement
transaction.
FEDERATED CAPITAL APPRECIATION FUND
- --------------------------------------------------------------------------------
The Fund will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed
by the Fund's adviser to be creditworthy pursuant to the guidelines and/or
standards reviewed or established by the Board of Trustees (the
"Trustees"). Risks may arise from the potential inability of counterparties
to honor the terms of the repurchase agreement. Accordingly, the Fund could
receive less than the repurchase price on the sale of collateral
securities.
INVESTMENT INCOME, EXPENSES, AND DISTRIBUTIONS--Interest income and
expenses are accrued daily. Bond premium and discount, if applicable, are
amortized as required by the Internal Revenue Code, as amended (the
"Code"). Dividend income and distributions to shareholders are recorded on
the ex-dividend date.
FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the
Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of its income. Accordingly, no
provisions for federal tax are necessary.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in
when-issued or delayed delivery transactions. The Fund records when-issued
securities on the trade date and maintains security positions such that
sufficient liquid assets will be available to make payment for the
securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
USE OF ESTIMATES--The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts of assets, liabilities,
expenses and revenues reported in the financial statements. Actual results
could differ from those estimated.
OTHER--Investment transactions are accounted for on the trade date.
(3) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value) for each
class of shares.
FEDERATED CAPITAL APPRECIATION FUND
- --------------------------------------------------------------------------------
Transactions in shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED
PERIOD ENDED DECEMBER 31, 1995(B)
APRIL 30, 1996
---------------------- ----------------------
CLASS A SHARES SHARES AMOUNT SHARES AMOUNT
- --------------------------------------------------------- ------- ----------- ------- -----------
<S> <C> <C> <C> <C>
Shares sold 7,780 $ 729,188 -- $ --
- ---------------------------------------------------------
Shares issued to shareholders in payment of distributions
declared 194 18,232 25,468 2,209,356
- ---------------------------------------------------------
Shares redeemed (23,028) (2,143,320) (86,324) (6,944,798)
- --------------------------------------------------------- ------- ---------- ------- ----------
Net change resulting from Class A share transactions (15,054) $(1,395,900) (60,856) $(4,735,442)
- --------------------------------------------------------- ------- ----------- ------- -----------
</TABLE>
<TABLE>
<CAPTION>
PERIOD ENDED
APRIL 30, 1996(A)
----------------------
CLASS B SHARES SHARES AMOUNT
- --------------------------------------------------------- ------- -----------
<S> <C> <C> <C> <C>
Shares sold 16,172 $ 1,520,260
- ---------------------------------------------------------
Shares issued to shareholders in payment of distributions
declared 1 95
- ---------------------------------------------------------
Shares redeemed (419) (40,125)
- --------------------------------------------------------- ------- -----------
Net change resulting from Class B share transactions 15,754 $ 1,480,230
- --------------------------------------------------------- ------- -----------
</TABLE>
<TABLE>
<CAPTION>
PERIOD ENDED
APRIL 30, 1996(A)
----------------------
CLASS C SHARES SHARES AMOUNT
- --------------------------------------------------------- ------- -----------
<S> <C> <C> <C> <C>
Shares sold 227 $ 21,600
- ---------------------------------------------------------
Shares issued to shareholders in payment of distributions
declared -- --
- ---------------------------------------------------------
Shares redeemed -- --
- --------------------------------------------------------- ------- -----------
Net change resulting from Class C share transactions 227 $ 21,600
- --------------------------------------------------------- ------- -----------
Net change resulting from share transactions 927 $ 105,930
- --------------------------------------------------------- ------- -----------
</TABLE>
(a) For the period ended January 4, 1996 (date of initial public offering) to
April 30, 1996.
(b) Includes transactions in shares of partnership interest for Federated
Exchange Fund, Ltd. through December 31, 1995.
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Federated Management, the Fund's investment adviser,
(the "Adviser"), receives for its services an annual investment advisory fee
equal to 0.75% of the Fund's average daily
FEDERATED CAPITAL APPRECIATION FUND
- --------------------------------------------------------------------------------
net assets.The Adviser may voluntarily choose to waive any portion of its fee.
The Adviser can modify or terminate this voluntary waiver at any time at its
sole discretion.
ADMINISTRATIVE FEE--Federated Services Company ("FServ"), under the
Administrative Services Agreement, provides the Fund with administrative
personnel and services. The fee paid to FServ is based on the level of average
aggregate daily net assets of all funds advised by subsidiaries of Federated
Investors for the period. The administrative fee received during the period of
the Administrative Services Agreement shall be at least $125,000 per portfolio
and $30,000 per each additional class of shares.
DISTRIBUTION SERVICES FEE--The Fund has adopted a Distribution Plan (the "Plan")
pursuant to Rule 12b-1 under the Act. Under the terms of the Plan, the Fund will
compensate Federated Securities Corp.("FSC"), the principal distributor, from
the net assets of the Fund to finance activities intended to result in the sale
of the Fund's Class A Shares, Class B Shares and Class C Shares. The Plan
provides that the Fund may incur distribution expenses according to the
following schedule annually, to compensate FSC.
<TABLE>
<CAPTION>
% OF AVG. DAILY NET
SHARE CLASS NAME ASSETS OF CLASS
-------------------------------- --------------------------------
<S> <C>
Class A Shares 0.25%
Class B Shares 0.75%
Class C Shares 0.75%
</TABLE>
SHAREHOLDER SERVICES FEE--Under the terms of a Shareholder Services Agreement
with Federated Shareholder Services ("FSS"), the Fund will pay FSS up to 0.25%
of average daily net assets of the Fund for the period. The fee paid to FSS is
used to finance certain services for shareholders and to maintain shareholder
accounts.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT FEES--FServ, through its
subsidiary, Federated Shareholder Services Company serves as transfer and
dividend disbursing agent for the Fund. The fee paid to FServ is based on the
size, type, and number of accounts and transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES--FServ maintains the Fund's accounting records for
which it receives a fee. The fee is based on the level of the Fund's average
daily net assets for the period, plus out-of-pocket expenses.
GENERAL--Certain of the Officers and Trustees of the Trust are Officers and
Directors or Trustees of the above companies.
FEDERATED CAPITAL APPRECIATION FUND
- --------------------------------------------------------------------------------
(5) INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the
period ended April 30, 1996, were as follows:
<TABLE>
<S> <C>
- -------------------------------------------------------------------------------
PURCHASES $13,248,556
- ------------------------------------------------------------------------------- -----------
SALES $16,950,673
- ------------------------------------------------------------------------------- -----------
</TABLE>
<TABLE>
<S> <C>
TRUSTEES OFFICERS
- ---------------------------------------------------------------------------------------------
John F. Donahue John F. Donahue
Thomas G, Bigley Chairman
John T. Conroy, Jr. Glen R. Johnson
William J. Copeland President
James E. Dowd J. Christopher Donahue
Lawrence D. Ellis, M.D. Executive Vice President
Edward L. Flaherty, Jr. Edward C. Gonzales
Peter E. Madden Executive Vice President
Gregor F. Meyer John W. McGonigle
John E. Murray, Jr. Executive Vice President and Secretary
Wesley W. Posvar Richard B. Fisher
Marjorie P. Smuts Vice President
David M. Taylor
Treasurer
S. Elliott Cohan
Assistant Secretary
</TABLE>
Mutual Funds are not bank deposits or obligations, are not guaranteed by any
bank, and are not insured or guaranteed by the U.S. government, the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other
government agency. Investment in mutual funds involves investment risk,
including possible loss of principal.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the Funds' prospectus which contains facts concerning
their objective and policies, management fees, expenses, and other information.
LOGO
FEDERATED SECURITIES CORP.
- --------------------------------------------------------------------------------
Distributor
A Subsidiary of Federated Investors
Federated Investors Tower
Pittsburgh, PA 15222-3779
CUSIP# 314172701
CUSIP# 314172800
CUSIP# 314172883
FEDERATED CAPITAL APPRECIATION FUND
(A Portfolio of Federated Equity Funds)
Class A Shares, Class B Shares, and Class C Shares
SUPPLEMENT TO THE STATEMENT OF ADDITIONAL INFORMATION DATED DECEMBER 21,
1995.
A. Please insert the following two sentences to the end of the section
entitled "PORTFOLIO TURNOVER" on page 6 of the Statement of Additional
Information:
"For the period from January 1, 1996 to April 30, 1996, the Fund's
portfolio turnover rate was 17%. The portfolio turnover rate is
representative of only 4 months of activity."
B. Please insert the following paragraph entitled "SELLING SHORT AND
BUYING ON MARGIN" to be placed as the first sub-section under the
section entitled "INVESTMENT LIMITATIONS" on page 7:
"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 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."
C. Please note the following changes to the FEDERATED EQUITY FUNDS
MANAGEMENT Officers and Trustees list on pages 8 through 12 of the
Statement of Additional Information:
All affiliations with FEDERATED ADMINISTRATIVE SERVICES and the former
transfer agent will be deleted and replace by affiliations with
FEDERATED SERVICES COMPANY, the service company parent.
D. Please insert the following information as a second paragraph under
the section entitled "FUND OWNERSHIP" on page 11 of the Statement of
Additional Information:
"As of May 7, 1996, the following shareholders of record owned 5% or
more of the outstanding Class A Shares of the Fund: Paulette M.
Boiardi owned 91,356.7600 shares (8.28%). No shareholders of record
owned 5% or more of the outstanding Class B Shares of the Fund. The
following shareholders of record owned 5% or more of the outstanding
Class C Shares of the Fund; BHC SEC, Inc. owned 105.5800 shares
(46.53%), Thomas M. Sukbal owned 16.0230 shares (7.06%) and Bessie G.
Papas owned 51.8780 shares (22.86%)."
E. Please insert the following sub-section immediately after the sub-
section entitled "ADVISER TO THE FUND" under the main section entitled
"INVESTMENT ADVISORY SERVICES" on page 14 of the Statement of
Additional Information:
"ADVISORY FEES
For its advisory services, Federated Management receives an annual
investment advisory fee as described in the prospectus.
From the Fund's start of business date, January 1, 1996, to April 30,
1996, the Fund's adviser earned $256,275, of which $123,291 was
voluntarily waived. For funds with classes, the advisory fee is
allocated pro rata based on the net assets for each class of shares."
F. Please replace the sections entitled "ADMINISTRATIVE SERVICES" and
"TRANSFER AGENT AND DIVIDEND DISPERSING AGENT" with the new title
"OTHER SERVICES" on page 14 of the Statement of Additional Information
and insert the following:
"OTHER SERVICES
FUND ADMINISTRATION
Federated Services Company, a subsidiary of Federated Investors,
provides administrative personnel and services to the Fund for a fee
as described in the prospectus. From March 1, 1994, to March 1, 1996,
Federated Administrative Services served as the Fund's Administrator.
Prior to March 1, 1994, Federated Administrative Services, Inc. served
as the Fund's Administrator. Both former Administrators are
subsidiaries of Federated Investors. For purposes of this Statement
of Additional Information, Federated Services Company, Federated
Administrative Services, and Federated Administrative Services, Inc.
may hereinafter collectively be referred to as the "Administrators."
From the Fund's start of business date, January 1, 1996, to April 30,
1996, the Fund incurred costs for administrative services of $61,161.
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 Services
Company.
CUSTODIAN AND PORTFOLIO ACCOUNTANT
State Street Bank and Trust Company, Boston, Massachusetts, is
custodian for the securities and cash of the Fund. Federated Services
Company, Pittsburgh, Pennsylvania, provides certain accounting and
recordkeeping services with respect to the Fund's portfolio
investments. 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.
TRANSFER AGENT
Federated Services Company, through its registered transfer agent,
Federated Shareholder Services Company, maintains all necessary
shareholder records and receives a fee based on the size, type, and
number of accounts and transactions made by shareholders.
INDEPENDENT AUDITORS
The independent auditors for the Fund are Ernst & Young LLP, One
Oxford Center, Pittsburgh, Pennsylvania 15219."
G. Please insert the following information as a final paragraph under the
sub-section entitled "DISTRIBUTION PLAN AND SHAREHOLDER SERVICES
AGREEMENT" on page 14 of the Statement of Additional Information:
"From the Fund's start of business date, January 1, 1996, to April 30,
1996, the fund paid $1,284 pursuant to the Fund's Rule 12b-1 plan,
none of which was waived. For the same period, the Fund paid $82,546
in shareholder service fees, none of which was waived."
H. Please insert the following information as a final paragraph under the
section entitled "TOTAL RETURN" on page 18 of the Statement of
Additional Information:
"The Funds cumulative total return for Class A Shares from January 1,
1996 (the Fund's start of business), to April 30, 1996, was 4.65%. The
Funds cumulative total return for Class B Shares from January 4, 1996
(the Fund's start of business) to April 30, 1996, was 4.32%. The
Funds cumulative total return for Class C Shares from January 4, 1996
(the Fund's start of business) to April 30, 1996, was 8.81%.
Cumulative total return reflects the Fund's total performance over a
specified period of time. The Fund's total return is reflective of
only 4 months of fund activity since the Fund's date of initial public
investment."
I. Please insert the following information as a final paragraph under the
section entitled "YIELD" on page 16 of the Statement of Additional
Information:
"The Fund's yield for shares of Federated Exchange Fund, Ltd., the
predecessor to Class A Shares, was 0.25% for the thirty-day period
ended April 30, 1996. The yield for the Class B Shares and Class C
Shares for the same period was 0.00%.
May 31, 1996
FEDERATED SECURITIES CORP.
Distributor
A subsidiary of FEDERATED INVESTORS
Federated Investors Tower
PITTSBURGH, PA 15222-3779
CUSIP# 314172701
CUSIP# 314172800
CUSIP# 314172883
G010649-01 (5/96)
PART C. OTHER INFORMATION.
Item 24. Financial Statements and Exhibits:
(a) Financial Statements (Incorporated by reference to the Annual
Report to Shareholders of Federated Growth Strategies Fund dated
October 31, 1995 pursuant to Rule 411 under th e Securities Act
of 1933.) (File No. 811-4017).
(b) Exhibits:
(1) Conformed copy of Declaration of Trust of the
Registrant; +
(2) Copy of By-Laws of the Registrant as amended ; +
(i)................Copy of Amendment No. 2 to By-Laws
effective February 2, 1987 ; +
(ii)................Copy of Amendment No. 3 to By-Laws
effective August 25, 1988; +
(3) Not applicable;
(4) (i)................Copy of Specimen Certificate for
Shares of Beneficial Interest of the Registrant
(Federated Small Cap Strategies Fund) ;(7.)
(ii)................Copy of Specimen Certificate for
Shares of Beneficial Interest of the Registrant
(Federated Growth Strategies Fund); (8.)
(iii)................Copy of Specimen Certificate for
Shares of Beneficial Interest of the Registrant
(Federated Capital Appreciation Fund); (9.)
(5) (i)................Conformed copy of Investment Advisory
Contract on behalf of Federated Growth Trust; (5.)
(ii)................Conformed copy of Investment Advisory
Contract on behalf of Federated Equity Funds, which
includes exhibits for Federated Small Cap Strategies
Fund and Federated Capital Appreciation Fund; (10.)
(6) (i)................Conformed copy of Distributor's
Contract on behalf of Federated Growth Trust; +
(ii) Conformed copy of Distributor's Contract on behalf of
Federated Equity Funds, which includes exhibits for
Federated Small Cap Strategies Fund and Federated
Capital Appreciation Fund; (10.)
5. 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. 21 on Form N-1A filed June 30, 1995. (File Nos. 2-91090
and 811-4017)
8. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 22 on Form N-1A filed July 17, 1995. (File Nos. 2-91090
and 811-4017)
9. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 25 on Form N-1A filed August 31, 1995. (File Nos. 2-
91090 and 811-4017)
10. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 26 on Form N-1A filed September 12, 1995. (File Nos. 2-
91090 and 811-4017)
(iii)................The Registrant hereby incorporates the
conformed copy of the specimen Mutual Funds Sales and
Service Agreement; Mutual Funds Service Agreement; and
Plan Trustee/Mutual Funds Service Agreement from Item
24(b)(6) of the Cash Trust Series II Registration
Statement on Form N-1A, filed with the Commission on
July 24, 1995. (File No. 33-38550 and 811-6269).
(7) Not applicable;
(8) Conformed Copy of the Custodian Agreement of the Registrant;
(6.)
(9) (i)................Conformed copy of Shareholder Services
Agreement of the Registrant; (6.)
(ii)................Conformed copy of Administrative
Services Agreement of the Registrant; (6.)
(iii)................Conformed Copy of Agreement for Fund
Accounting, Shareholder Recordkeeping, and Custody
Services Procurement; (6.)
(iv)................The responses and exhibits described
in Item 24(6) are hereby incorporated by reference.
(10) Conformed copy of the Opinion and Consent of Counsel
regarding legality of shares being registered; (6.)
(11) Conformed copy of Consent of Independent Auditors; (12)
(12) Not applicable;
(13) Conformed copy of Initial Capital Understanding; (2.)
(14) Not applicable;
(15) Conformed Copy of Distribution Plan; (10.)
(16) Copy of Schedule for Computation of Fund Performance Data
for Federated Growth Trust, the predecessor to Federated
Growth Strategies Fund; (6.)
(17) Copy of Financial Data Schedules; +
(18) Multiple Class Plan; (to be filed by amendment)
(19) Conformed copy of Power of Attorney; +
2. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 1 on Form N-1A filed February 28, 1985. (File Nos. 2-
91090 and 811-4017)
5. 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)
6. 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)
10. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 26 on Form N-1A filed September 12, 1995. (File Nos. 2-
91090 and 811-4017)
12. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 29 on Form N-1A filed December 27, 1995. (File Nos. 2-
91090 and 811-4017)
+ All exhibits have been filed electronically.
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 May 6, 1996
Shares of Beneficial Interest
(no par value)
Federated Growth Strategies Fund
Class A Shares 10,973,669.2870
Class B Shares 264,841.3760
Class C Shares 24,739.5720
Federated Small Cap Strategies Fund
Class A Shares 510,484.9850
Class B Shares 267,423.5220
Class C Shares 46,023.9240
Federated Capital Appreciation Fund
Class A Shares 1,103,176.21909
Class B Shares 15,881.5250
Class C Shares 226.9180
Item 27. Indemnification: (1.)
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.
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)
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, Drew J. Collins, Jonathan
C. Conley, and J. Alan Minteer, Senior Vice Presidents; J. Scott
Albrecht, Joseph m. Balestrino, Randall A. Bauer, David A.
Briggs, Kenneth J. Cody, Deborah A. Cunningham, Michael P.
Donnelly, Linda A. Duessel, Mark E. Durbiano, Kathleen M. Foody-
Malus, Thomas M. Franks, Edward C. Gonzales, Timothy E. Keefe,
Stephen A. Keen, Mark S. Kopinski, Jeff A. Kozemchak, Marian R.
Marinack, Susan M. Nason, Mary Jo Ochson, Robert J. Ostrowski,
Frederick L. Plautz, Jr., Charles A. Ritter, James D. Roberge,
Frank Semack, William F. Stotz, Sandra L. Weber, and Christopher
H. Wiles, Vice Presidents; Thomas R. Donahue, Treasurer; and
Stephen A. Keen, Secretary. The business address of each of the
Officers of the investment adviser is Federated Investors Tower,
Pittsburgh, Pennsylvania 15222-3779 or 175 Water street, New
York, New York 10038-4965, as applicable. 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: 111 Corcoran Funds; Annuity
Management Series; Arrow Funds; Automated Government Money Trust;
BayFunds; Blanchard Funds; Blanchard Precious Metals Fund, Inc.;
Cash Trust Series II; Cash Trust Series, Inc.; DG Investor
Series; Edward D. Jones & Co. Daily Passport Cash Trust;
Federated Adjustable Rate U.S. Government Fund, Inc.; Federated
American Leaders Fund, Inc.; Federated ARMs Fund; Federated
Equity Funds; Federated Equity Income Fund, Inc.; Federated Fund
for U.S. Government Securities, Inc.; Federated GNMA Trust;
Federated Government Income Securities, Inc.; Federated
Government Trust; Federated High Income Bond Fund, Inc.;
Federated High Yield Trust; Federated Income Securities Trust;
Federated Income Trust; Federated Index Trust; Federated
Institutional Trust; Federated Insurance Series;
Federated Master Trust; Federated Municipal Opportunities Fund,
Inc.; Federated Municipal Securities Fund, Inc.; Federated
Municipal Trust; Federated Short-Term Municipal Trust; Federated
Short-Term U.S. Government Trust; Federated Stock and Bond Fund,
Inc.; Federated Stock Trust; Federated Tax-Free Trust; Federated
Total Return Series, Inc.; Federated U.S. Government Bond Fund;
Federated U.S. Government Securities Fund: 1-3 Years; Federated
U.S. Government Securities Fund: 2-5 Years; Federated U.S.
Government Securities Fund: 5-10 Years; Federated Utility Fund,
Inc.; First Priority Funds; Fixed Income Securities, Inc.;
Fortress Utility Fund, Inc.; High Yield Cash Trust; Independence
One Mutual Funds; Intermediate Municipal Trust; International
Series, Inc.; Investment Series Funds, Inc.; Investment Series
Trust; Liberty U.S. Government Money Market Trust; Liquid Cash
Trust; Managed Series Trust; Marshall Funds, Inc.; Money Market
Management, Inc.; Money Market Obligations Trust; Money Market
Trust; Municipal Securities Income Trust; Newpoint Funds;
Peachtree Funds; RIMCO Monument Funds; SouthTrust Vulcan Funds;
Star Funds; Targeted Duration Trust; Tax-Free Instruments Trust;
The Biltmore Funds; The Biltmore Municipal Funds; The Monitor
Funds; The Planters Funds; The Starburst Funds; The Starburst
Funds II; The Virtus Funds; Tower Mutual Funds; Trust for
Financial Institutions; Trust for Government Cash Reserves; Trust
for Short-Term U.S. Government Securities; Trust for U.S.
Treasury Obligations; Vision Group of Funds, Inc.; andWorld
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, Asst.
Secretary, and Asst.
Treasurer, Federated
Securities Corp.
Edward C. Gonzales Director, Executive Vice Executive Vice
Federated Investors Tower President, Federated, President
Pittsburgh, PA 15222-3779 Securities Corp.
John W. McGonigle Director, Federated Executive Vice
Federated Investors Tower Securities Corp. President and
Pittsburgh, PA 15222-3779 Secretary
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, Federated
Pittsburgh, PA 15222-3779 Securities Corp.
Mark W. Bloss Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard W. Boyd 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
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Underwriter With Registrant
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
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
Byron F. Bowman Vice President, Secretary, --
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
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Underwriter With Registrant
Daniel T. Culbertson Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
G. Michael Cullen Vice President, --
Federated Investors Tower Federated Securites Corp.
Pittsburgh, PA 15222-3779
Laura M. Deger Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Jill Ehrenfeld 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
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
H. Joeseph Kenedy 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
Steven A. La Versa 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
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Underwriter With Registrant
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
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
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
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
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Underwriter With Registrant
Michael P. Wolff 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
J. Timothy Radcliff Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Denis McAuley Treasurer, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Thomas R. Donahue Asstistant Secretary, --
Federated Investors Tower Assistant Treasurer,
Pittsburgh, PA 15222-3779 Federated Securities Corp.
Joseph M. Huber Assistant Secretary, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
David M. Taylor Assistant Secretary, Treasurer
Federated Investors Tower Federated Securities Corp.
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
Pittsburgh, PA 15222-3779
Federated Administrative Services
("Administrator")
Federated Management
("Adviser")
Federated Services Company P.O. Box 8600
("Transfer Agent and Dividend Boston, MA 02266-8600
Disbursing Agent")
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 Post-Effective Amendment No. 21.
Registrant hereby undertakes to file a post-effective amendment
on behalf of Federated Capital Appreciation Fund, using financial
statements for Federated Capital Appreciation Fund, which need
not be certified, within four to six months from the effective
date of Post-Effective Amendment No. 25.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
and the Investment Company Act of 1940, the Registrant, FEDERATED EQUITY
FUNDS (formerly, Federated Growth Trust), certifies that it meets all of
the requirements for effectiveness of this Amendment to its Registration
Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has
duly caused this Amendment to its Registration Statement to be signed on
its behalf by the undersigned, thereto duly authorized, in the City of
Pittsburgh and Commonwealth of Pennsylvania, on the 31st day of May, 1996.
FEDERATED EQUITY FUNDS
(formerly, Federated Growth Trust)
BY: /s/ Charles H Field
Charles H. Field, Assistant Secretary
Attorney in Fact for John F. Donahue
May 31, 1996
Pursuant to the requirements of the Securities Act of 1933, as amended,
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/ Charles H. Field Attorney In Fact May 31, 1996
Charles H. Field For the Persons
ASSISTANT SECRETARY Listed Below
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.* Trustee
Wesley W. Posvar* Trustee
Marjorie P. Smuts* Trustee
Exhibit 3(a) under Form N1-A
Exhibit 1 under Item 601/Reg. S-K
FEDERATED GROWTH TRUST
DECLARATION OF TRUST
Page
Article I Name and Definitions 1
1. Name 1
2. Definitions
(a) Affiliated Person, Assignment, Commission,
Interested Person, Majority Shareholder Vote,
Principal Underwriter 1
(b) Trust 1
(c) Accumulated Net Income 1
(d) Shareholder 2
(e) Trustees 2
(f) Shares 2
(g) 1940 Act 2
Article II Purpose of Trust 2
Article III Beneficial Interest 2
1. Shares of Beneficial Interest 2
2. Ownership of Shares 2
3. Investment in the Trust 3
4. No Pre-emptive Rights 3
Article IV The Trustees 3
1. Management of the Trust 3
2. Election of Trustees at 1984 Meeting of Shareholders 4
3. Terms of Office of Trustees 4
4. Termination of Service and Appointment of Trustees 4
5. Temporary Absence of Trustees 5
6. Number of Trustees 5
7. Effect of Death, Resignation, Ect. of a Trustee 5
8. Ownership of the Trust 6
Page
Article V Powers of the Trustees 6
1. Powers 6
2. Principal Transactions 10
3. Trustees and Officers as Shareholders 10
4. Parties to Contract 10
Article VI Trustees' Expenses and Compensation 11
1. Trustee Reimbursement 11
2. Trustee Compensation 12
Article VII Investment Adviser, Administrative Services, Principal
Underwriter and Transfer Agent 13
1. Investment Adviser 13
2. Administrative Services 13
3. Principal Underwriter 14
4. Transfer Agent 14
5. Provisions and Amendments 14
Article VIIIShareholders' Voting Powers and Meetings 15
1. Voting Powers 15
2. Meetings 15
3. Quorum and Required Vote 16
4. Additional Provisions 16
Article IX Custodian 16
1. Appointment and Duties 16
2. Central Certificate System 17
Page
Article X Distributions and Redemptions 18
1. Distributions 18
2. Redemptions and Repurchases 19
3. Determination of Accumulated Net Income 20
4. Net Asset Value of Shares 21
5. Suspension of the Right of Redemption 21
6. Trust's Right to Redeem Shares 21
Article XI Limitation of Liability and Indemnification 22
1. Limitation of Personal Liability and
Indemnification of Shareholders 22
2. Limitation of Personal Liability of
Trustees, Officers, Employees or
Agents of the Trust 23
3. Express Exculpatory Clauses and Instruments 23
4. Indemnification of Trustees, Officers,
Employees and Agents 24
Article XII Miscellaneous 25
1. Trust is not a Partnership 25
2. Trustee's Good Faith Action, Expert Advice, No
Bond or Surety 26
3. Establishment of Record Dates 26
4. Termination of Trust 27
5. Offices of the Trust, Filing of Copies,
References, Headings 28
6. Applicable Law 28
7. Amendments 29
8. Use of Name 29
FEDERATED GROWTH TRUST
DECLARATION OF TRUST
Dated
April 17, 1984
DECLARATION OF TRUST made April 17, 1984, by John F. Donahue, William
J. Copeland, James E. Dowd, Edward L. Flaherty, Jr., J. Joseph Maloney,
Jr., Gregor F. Meyer, Wesley W. Posvar and Marjorie P. Smuts.
WHEREAS the Trustees desire to establish a trust fund for the
investment and reinvestment of funds contributed thereto;
NOW, THEREFORE, The Trustees declare that all money and property
contributed to the trust fund hereunder shall be held and managed under
this Declaration of Trust IN TRUST as herein set forth below.
ARTICLE I
NAMES AND DEFINITIONS
Section 1. Name. This Trust shall be known as the "Federated Growth
Trust".
Section 2. Definitions. Wherever used herein, unless otherwise
required by the context or specifically provided:
(a) The term "Affiliated Person," "Assignment," "Commission,"
"Interested Person," "Majority Shareholder Vote" (the 67% or 50%
requirement of the third sentence of Section 2(a)(42) of the 1940 Act,
whichever may be applicable) and "Principal Underwriter" shall have
the meanings given them in the Investment Company Act of 1940, as
amended from time to time;
(b) The "Trust" refers to Federated Growth Trust;
(c) "Accumulated Net Income" means the accumulated net income of
the Trust determined in he manner provided or authorized in Article X,
Section 3;
(d) "Shareholder" means a record owner of Shares of the Trust;
(e) The "Trustees' refer tot he individual Trustees in their
capacity as Trustees hereunder of the Trust and their successor or
successors for the time being in office as such Trustees:
(f) "Shares" means the equal proportionate units of interest
into which the beneficial interest in the Trust shall be divided from
time to time and includes fractions of Shares as well as whole Shares;
and
(g) The "1940 Act" refers to the Investment Company Act of 1940,
as amended from time to time.
ARTICLE II
PURPOSE OF THE TRUST
The purpose of this Trust is to provide investors a continuous source
of managed investments primarily in securities.
ARTICLE III
BENEFICIAL INTEREST
Section 1. Shares of Beneficial Interest. The beneficial interest in
the Trust shall at all times be divided into transferable Shares, without
par value, each of which shall represent an equal proportionate interest in
the Trust with each other Share outstanding, none having priority or
preference over another. The number of Shares which may be issued is
unlimited. The Trustees may from time to time divide or combine the
outstanding Shares into a greater or lesser number without thereby changing
the proportionate beneficial interest in he Trust. Contributions to the
Trust may be accepted for, and Shares shall be redeemed as, whole Shares
and/or fractions.
Section 2. Ownership of Shares. The ownership of Shares shall be
recorded in the books of the Trust or a transfer agent. The Trustees may
make such rules as they consider appropriate for the transfer of shares and
similar matters. The record books of the Trust or any transfer agent, as
the case may be, shall be conclusive as to who are the holders of Shares
and as to the number of Shares held from time to time by each.
Section 3. Investment in the Trust. The Trustees shall accept
investments in the Trust from such persons and on such terms a they may
from time to time authorize. After the date of the initial contribution of
capital (which shall occur prior to the initial public offering of Shares
of the Trust), the number of Shares to represent the initial contribution
shall be considered as outstanding and the amount received by the Trustees
on account of the contribution shall be treated as an asset of the Trust.
Subsequent to such initial contribution of capital, Shares (including
Shares which may have been redeemed or repurchased by the Trust) may be
issued or sold at a price which will net the Trust, before paying any taxes
in connection with such issue or sale, not less than the net asset value
(as defined in Article X, Section 4) thereof; provided, however, that the
Trustees may in their discretion impose a sales charge upon investments in
the Trust.
Section 4. No Pre-emptive Rights. Shareholders shall have no pre-
emptive or other right to subscribe to any additional Shares or other
securities issued by the Trust or the Trustees.
ARTICLE IV
THE TRUSTEES
Section 1. Management of the Trust. The business and affairs of the
Trust shall be managed by the Trustees, and they shall have all powers
necessary and desirable to carry out that responsibility. The Trustees who
shall serve until the election of Trustees at the 1984 Meeting of
Shareholders shall be John F. Donahue, William J. Copeland, James E. Dowd,
Edward L. Flaherty, Jr., J. Joseph Maloney, Jr., Gregor F. Meyer, Wesley W.
Posvar and Marjorie P. Smuts.
Section 2. Election of Trustees at 1984 Meeting of Shareholders. In
the year 1984, on a date fixed by the Trustees, which shall be subsequent
to the initial public offering of Shares of the Trust, the Shareholders
shall elect Trustees. The number of Trustees shall be determined by the
Trustees pursuant to Article IV, Section 6.
Section 3. Term of Office of Trustees. The Trustees hall hold office
during the lifetime of this Trust, and until its termination as hereinafter
provided; except (a) that any Trustee may resign his trust by written
instrument signed by him and delivered to the other Trustees, which shall
take effect upon such delivery or upon such later date as is specified
therein; (b) that any Trustee may be removed at any time by written
instrument signed by at least two-thirds of the number of Trustees prior to
such removal, specifying the date when such removal becomes effective; (c)
that any Trustee who requests in writing to be retired or who has become
mentally or physically incapacitated may be retired by written instrument
signed by a majority of the other Trustees, specifying the date of his
retirement; and (d) a Trustee may be removed at any special meeting of
Shareholder of the Trust by a vote of two-thirds of the outstanding Shares.
Section 4. Termination of Service and Appointment of Trustees. In
case of the death, resignation, retirement, removal or mental or physical
incapacity of any of the Trustees, or in case a vacancy shall, by reason of
an increase in number, or for any other reason, exist, the remaining
Trustees shall fill such vacancy by appointing such other person as they in
their discretion shall see fit. Such appointment shall be effected by the
signing of a written instrument by majority of the Trustees in office.
Within three months of such appointment, the Trustees shall cause notice of
such appointment to be mailed to each Shareholder at his address as
recorded on the books of the Trust. An appointment of a Trustee may be
made by the Trustees then in office and notice thereof mailed to
Shareholders as aforesaid in anticipation of a vacancy to occur by reason
of retirement, resignation or increase in number of Trustees effective at a
later date, provided that said appointment shall become effective only at
or after the effective date of said retirement, resignation or increase in
number of Trustees. As soon as any Trustee so appointed shall have
accepted this Trust, the trust estate shall vest in the new Trustee or
Trustees, together with the continuing Trustees, without any further act or
conveyance, and he shall be deemed a Trustee hereunder. Any appointment
authorized by this Section 4 is subject to the provisions of Section 16(a)
of the 1940 Act.
Section 5. Temporary Absence of Trustee. Any Trustee may, by power
of attorney, delegate his power for a period not exceeding six months at
any one time to any other Trustee or Trustees, provided that in no case
shall less than two of the Trustees personally exercise the other power
hereunder except herein otherwise expressly provided.
Section 6. Number of Trustees. The number of Trustees, not less than
three (3) nor more than twenty (20) serving hereunder at any time shall be
determined by the Trustees themselves.
Whenever a vacancy in the Board of Trustees shall occur, until such
vacancy is filled or while any Trustee is physically or mentally
incapacitated, the other Trustees shall have all the powers hereunder and
the certificate signed by a majority of the other Trustees of such vacancy,
absence or incapacity, shall be conclusive, provided, however, that no
vacancy which reduces the number of Trustees below three (3) shall remain
unfilled for a period longer than six calendar months.
Section 7. Effect of Death, Resignation, etc. Of a Trustee. The
death, resignation, retirement, removal, or mental or physical incapacity
of the Trustees, or any one of them, shall not operate to annul the Trust
or to revoke any existing agency created pursuant to the terms of this
Declaration Trust.
Section 8. Ownership of the Trust. The assets of the Trust shall be
held separate and apart from any assets now or hereafter held in any
capacity other than as Trustee hereunder by the Trustee or any successor
Trustee. All of the assets of the Trust shall at all times be considered
as vested in the Trustees. No Shareholder shall be deemed to have a
severable ownership in any individual asset of the Trust or any right of
partition or possession thereof, but each Shareholder shall have a
proportionate undivided beneficial interest in the Trust.
ARTICLE V
POWERS OF THE TRUSTEES
Section 1. Powers. The Trustees in all instances shall act as
principals, and are and shall be free from the control of the Shareholders.
The Trustees shall have full power and authority to do any and all acts and
to make and execute any and all contracts and instruments that they may
consider necessary or appropriate in connection with the management of the
Trust. The Trustees shall not be bound or limited by present or future
laws or customs in regard to trust investments, but shall have full
authority and power to make any and all investments which they, in their
uncontrolled discretion, shall deem proper to accomplish the purpose of
this Trust. Without limiting the foregoing, the Trustees shall have the
following specific powers and authority, subject to any applicable
limitation in this Declaration of Trust or in the By-Laws of the Trust.
(a) To buy, and invest funds in their hands in, securities
including, but not limited to, common stocks, preferred stocks, bonds,
debentures, warrants and rights to purchase securities, certificates
of beneficial interest, money market instruments, notes or other
evidences or indebtedness issued by any corporation, trust or
association, domestic or foreign, or issued or guaranteed by the
United States of America or any agency or instrumentality thereof, by
the government of any foreign country, by any State of the United
States, or by any political subdivision or agency or instrumentality
of any State or foreign country, or in "when-issued" or "delayed-
delivery" contracts for any such securities, or in any repurchase
agreement (agreements under which the seller agrees at the time of
sale to repurchase the security at an agreed time and price), or
retain Trust assets in cash, and from time to time change the
investments of the assets of the Trust;
(b) To adopt By-Laws not inconsistent with the Declaration of
Trust providing for the conduct of the business of the Trust and to
amend and repeal them to the extent that they do not reserve that
right to the Shareholders;
(c) To Elect and remove such officers and appoint and terminate
such agents as they consider appropriate;
(d) To appoint or otherwise engage a bank or trust company as
custodian of any assets of the Trust subject to any conditions set
forth in this Declaration of Trust or in the By-Laws;
(e) To appoint or otherwise engage transfer agents, dividend
disbursing agents, Shareholder servicing agents, investment advisers,
sub-investment advisers, principal underwriters, administrative
service agents, and such other agents as the Trustees may from time to
time appoint or otherwise engage;
(f) To provide for the distribution of interests of the Trust
either through a principal underwriter in the manner hereinafter
provided for or by the Trust itself, or both;
(g) To set record dates in the manner hereinafter provided for;
(h) To delegate such authority as they consider desirable to a
committee or committees composed of Trustees, including without
limitation, an Executive Committee, or to any officers of the Trust
and to any agent, custodian or underwriter;
(i) To sell or exchange any or all of the assets of the Trust,
subject to the provisions of Article XII, Section 4(b) hereof;
(j) To vote or give assent, or exercise any rights of ownership,
with respect to stock or other securities or property; and to execute
and deliver powers of attorney to such person or persons as the
Trustees shall deem proper, granting to such person or persons such
power and discretion with relation to securities or property as the
Trustees shall deem proper;
(k) To exercise powers and rights of subscription or otherwise
which in any manner arise out of ownership of securities;
(l) To hold any security or property in a form not indicating
any trust, whether in bearer, unregistered or other negotiable form; o
either in its own name or in the name of a custodian or a nominee or
nominees, subject in either case to proper safeguards according to the
usual practice of Massachusetts trust companies or investment
companies;
(m) To consent to or participate in any plan for the
reorganization, consolidation or merger of any corporation or concern,
any security of which is held in the Trust; to consent to any
contract, lease, mortgage, purchase, or sale of property by such
corporation or concern, and to pay calls or subscriptions with respect
to any security held in the Trust;
(n) To engage in and to prosecute, compound, compromise,
abandon, or adjust, by arbitration, or otherwise, any actions, suits,
proceedings, disputes, claims, demands, and things relating to the
Trust, and out of the assets of the Trust to pay, or to satisfy, any
debts, claims or expenses incurred in connection therewith, including
those of litigation, upon any evidence that the Trustees may deem
sufficient (such powers shall include without limitation any actions,
suits, proceedings, disputes, claims, demands and things relating to
the Trust wherein any of the Trustees may be names individually and
the subject matter of which arises by reason of business for or on
behalf of the Trust);
(o) To make distributions of income and of capital gains to
Shareholders in the manner hereinafter provided for;
(p) To borrow money but only as a temporary measure for
extraordinary or emergency purposes and then (a) only in amounts not
in excess of 5% of the value of its total assets or (b) in any amount
up to one-third of the value of its total assets, including the amount
borrowed, in order to meet redemption requests without immediately
selling any portfolio securities. The Trust may also enter into
reverse repurchase agreements in amounts not in excess of one-third of
its total assets in order to meet redemption requests without
immediately selling any portfolio instruments. The Trustees shall not
pledge, mortgage or hypothecate the assets of the Trust, except in
connection with any borrowing described in (a) and (b) herein and in
amounts not in excess of the lesser of the dollar amounts borrowed or
10% of the value of the Trust's total assets at the time of such
borrowing.
(q) From time to time to issue and sell the Shares of the Trust
either for cash or for property whenever and in such amounts as the
Trustee may deem desirable, but subject to the limitation set forth in
Section 3 of Article III.
(R) To purchase insurance of any kind, including, without
limitation, insurance on behalf of any person who is or was a Trustee,
Officer, employee or agent of the Trust, or is or was serving at the
request of the Trust as a Trustee, Director, Officer, agent or
employee of another corporation, partnership, joint venture, trust or
other enterprise against any liability asseted against him and
incurred by him in any such capacity or arising out of his status as
such.
No one dealing with the Trustees shall be under any obligation to make
any inquiry concerning the authority of the Trustees, or to see the
application of any payments made or property transferred tot he Trustees or
upon their order.
Section 2. Principal Transactions. The Trustees shall not on behalf
of the Trust buy any securities (other than Shares of the Trust) from or
sell any securities (other than Shares of the Trust) to, or lend any assets
of the Trust to, any Trustee or officer or employees of the Trust or any
firm of which any such Trustee or officer is a member acting as principal
unless permitted by the 1940 Act, but the Trust may employ any such other
party or any such person or firm or company in which any such person is an
interested person in any capacity not prohibited by the 1940 Act.
Section 3. Trustees and Officers as Shareholders. Any Trustee,
officer or other agent of the Trust may acquire, own and dispose of shares
of the Trust to the same extent as if he were not a Trustee, officer or
agent; and the Trustees may issue and sell or cause to be issued or sold
Shares of the Trust to and buy such Shares from any such person or any firm
or company in which he is an interested person subject only to the general
limitations herein contained as to the sale and purchase of such Shares;
and all subject to any restrictions which may be contained in the By-Laws.
Section 4. Parties to Contract. The Trustees may enter into any
contract of the character described in Section 1, 2, 3, or 4 of Article VII
or in Article IX hereof or any other capacity not prohibited by the 1940
Act with any corporation, firm, trust or association, although one or more
of the shareholders, Trustees, officers, employees or agents of the Trust
or their affiliates may be an officer, director, Trustee, shareholder or
interested person of such other party to the contract, and no such contract
shall be invalidated or rendered voidable by reason of the existence of any
such relationship, nor shall any person holding such relationship be liable
merely by reason of such relationship for any loss or expense to the Trust
under or by reason of said contract or accountable for any profit realized
directly or indirectly therefrom, in the absence of actual fraud. The same
person (including a firm, corporation, trust or association) may be the
other party to contracts entered into pursuant to Sections 1, 2, 3 and 4 of
Article VII or Article IX or any other capacity deemed legal under the 1940
Act, and any individual may be financially interested or otherwise an
interested person of persons who are parties to any or all of the contracts
mentioned in this Section 4.
ARTICLE VI
TRUSTEES' EXPENSES AND COMPENSATION
Section 1. Trustee Reimbursement. The Trustees shall be reimbursed
from the Trust estate for all of their expenses and disbursements,
including, without limitation, expenses of organizing the Trust and
continuing its existence; fees and expenses of Trustees and Officers of the
Trust; fees for investment advisory services, administrative services and
principal underwriting services provided for in Article VII, Sections 1, 2
and 3; fees and expenses of preparing and printing its Registration
Statements under the Securities Act of 1933 and the Investment Company Act
of 1940 and any amendments thereto; expenses of registering and qualifying
the Trust and its shares under federal and state laws and regulations;
expenses of preparing, printing and distributing prospectuses and any
amendments thereof sent to shareholders, underwriters, broker-dealers and
to investors who may be considering the purchase of shares; expenses of
registering, licensing or other authorization of the Trust as a broker-
dealer and of its Officers as agents and salesmen under federal and state
laws and regulations; interest expense, taxes, fees and commissions of
every kind; expense of issue (including cost of share certificates),
purchase, repurchase and redemption of shares, including expenses
attributable to a program of periodic issue; charges and expenses of
custodians, transfer agents, dividend disbursing agents, shareholder
servicing agents and registrars; printing and mailing costs; auditing,
accounting and legal expenses; reports to shareholders and governmental
officers and commissions; expenses of meetings of shareholders and proxy
solicitations therefor; insurance expenses; association membership dues and
nonrecurring items as may arise, including all losses and liabilities by
them incurred in administering the Trust, including expenses incurred in
connection with litigation, proceedings and claims and the obligations of
the Trust under Article XI hereof to indemnify its Trustees, Officers,
employees, shareholders and agents, and any contract obligation to
indemnify principal underwriters under Section 3 of Article VII and for the
payment of such expenses, disbursements, losses and liabilities, the
Trustees shall have a lien on the Trust estate prior to any rights or
interests of the Shareholders thereto. This section shall not preclude the
Trust from directly paying any of the aforementioned fees and expenses.
Section 2. Trustee Compensation. The Trustees shall be entitled to
compensation from the Trust for their respective services as Trustees, to
be determined from time to time by vote of the Trustees, and the Trustees
shall also determine the compensation of all Officers, consultants and
agents who they may elect or appoint. The Trust may pay any Trustee or any
corporation, firm, trust or association of which a Trustee is an interested
person for services rendered to the Trust in any capacity not prohibited by
the 1940 Act, and such payments shall not be deemed compensation for
services as a Trustee under the first sentence of this Section 2 of Article
VI.
ARTICLE VII
INVESTMENT ADVISER, ADMINISTRATIVE SERVICES,
PRINCIPAL UNDERWRITER, AND TRANSFER AGENT
Section 1. Investment Adviser. Subject to a Majority Shareholder
Vote, the Trustees may in their discretion from time to time enter into an
investment advisory contract whereby the other party to such contract shall
undertake to furnish the Trustees investment advisory services upon such
terms and conditions and for such compensation as the Trustees may in their
discretion determine. Subject to a Majority Shareholder Vote, the
investment adviser may enter into a sub-investment advisory contract to
receive investment advice and/or statistical and factual information from
the sub-investment adviser upon such terms and conditions and for such
compensation as the Trustees may in their discretion agree to.
Notwithstanding any provisions of this Declaration of Trust, the Trustees
may authorize the investment adviser or sub-investment adviser or any
person furnishing administrative personnel and services as set forth in
Article VII, Section 2 (subject to such general or specific instructions as
the Trustees may from time to time adopt) to effect purchases, sales or
exchanges of portfolio securities of the Trust on behalf of the Trustees or
may authorize any officer or Trustee to effect such purchases, sales, or
exchanges pursuant to recommendations of the investment adviser (and all
without further action by the Trustees). Any such purchases, sales and
exchanges shall be deemed to have been authorized by the Trustees. The
Trustees may also authorize the investment adviser to determine what firms
shall be employed to effect transactions ins securities for the account of
the Trust and to determine what firms shall participate in any such
transactions or shall share in commissions or fees charged in connection
with such transactions.
Section 2. Administrative Services. The Trustees may in their
discretion from time to time contract for administrative personnel and
services whereby the other party shall agree to provide the Trustees
administrative personnel and services to operate the Trust on a daily
basis, on such terms and conditions as the Trustees may in their discretion
determine. Such services may be provided by one or more entities.
Section 3. Principal Underwriter. The Trustees may in their
discretion from time to time enter into an exclusive or nonexclusive
contract or contracts providing for the sale of the Shares of the Trust to
net the Trust not less than the amount provided in Article III, Section 3
hereof, whereby the Trust may either agree to sell the Shares to the other
party to the contract or appoint such other party its sales agent for such
shares. In either case, the contract shall be on such terms and conditions
(including indemnification of principal underwriters allowable under
applicable law and regulation) as the Trustees may in their discretion
determine not inconsistent with the provisions of this Article VII; and
such contract may also provide for the repurchase or sale of Shares of the
Trust by such other party as principal or as agent of the Trust and may
provide that the other party may maintain a market for shares of the Trust.
Section 4. Transfer Agent. The Trustees may in their discretion from
time to time enter into transfer agency and shareholder services contract
whereby the other party shall undertake to furnish the Trustees transfer
agency and shareholder services. The contracts shall be on such terms and
conditions as the Trustees may in their discretion determine not
inconsistent with the provisions of this Declaration of Trust or of the By-
Laws. Such services may be provided by one or more entities.
Section 5. Provisions and Amendments. Any contract entered into
pursuant to Sections 1 or 3 of this Article VII shall be consistent with
and subject to the requirements of Section 15 of the 1940 Act (including
any amendments thereof or other applicable Act of Congress hereafter
enacted) with respect to its continuance in effect, its termination and the
method of authorization and approval of such contract or renewal thereof.
ARTICLE VIII
SHAREHOLDERS' VOTING POWERS AND MEETINGS
Section 1. Voting Powers. The Shareholders shall have power to vote
(i) for the election of Trustees as provided in Article IV, Section 2; (ii)
for the removal of Trustees as provided in Article IV, Section 3(d); (iii)
with respect to any investment adviser or sub-investment adviser as
provided in Article VII, Section 1; (iv) with respect to the amendment of
this Declaration of Trust as provided in Article XII, Section 7; (v) to the
same extent as the shareholders of a Massachusetts business corporation as
to whether or not a court action, proceeding or claim should be brought or
maintained derivatively or as a class action on behalf of the Trust or the
Shareholders; and (vi) with respect to such additional matters relating to
the Trust as may be required by law, by this Declaration of Trust, or the
By-Laws of the Trust or any regulation of the Trust with the Commission or
any State, or as the Trustees may consider desirable. Each whole Share
shall be entitled to one vote as to any matter on which it is entitled to
vote, and each fractional Shares shall be entitled to a proportionate
fractional vote. There shall be no cumulative voting in the election of
Trustees. Shares may be voted in person or by proxy. Until Shares are
issued, the Trustees may exercise all rights of Shareholders and may take
any action required or permitted by law, this Declaration of Trust or any
By-Laws of the Trust to be taken by Shareholders.
Section 2. Meetings. A Shareholders meeting shall be held as
specified in Section 2 of Article IV at the principal office of the Trust
or such other place as the Trustees may designate. Special meetings of the
Shareholders may be called by the Trustees or the Chief Executive Officer
of the Trust and shall be called by the Trustees upon the written request
of Shareholders owning at least one-tenth of the outstanding Shares
entitled to vote. Shareholders shall be entitled to at least fifteen days'
notice of any meeting.
Section 3. Quorum and Required Vote. Except as otherwise provided by
law, to constitute a quorum for the transaction of any business at any
meeting of Shareholders there must be present, in person or by proxy,
holders of one-fourth of the total number of Shares of the Trust then
outstanding and entitled to vote at such meeting. If a quorum, as above
defined, shall not be present for the purpose of any vote that may properly
come before the meeting, the Shareholders present in person or by proxy and
entitled to vote on such matter may by vote adjourn the meeting from time
to time to be held at the same place without further notice than by
announcement to be given at the meeting until a quorum, as above defined,
entitled to vote on such matter shall be present, whereupon any such matter
may be voted upon at the meeting as though held when originally convened.
Subject to any applicable requirement of law or of this Declaration of
Trust or the By-Laws, a plurality of the votes cast shall elect a Trustee
and all other matters shall be decided by a majority of the votes cast
entitled to vote thereon.
Section 4. Additional Provisions. The By-Laws may include further
provisions for Shareholders' votes and meeting and related matters.
ARTICLE IX
CUSTODIAN
Section 1. Appointment and Duties. The Trustees shall appoint or
otherwise engage bank or trust company having an aggregate capital, surplus
and undivided profits (as shown in its last published report) of at least
two million dollars ($2,000,000) as custodian with authority as its agent,
but subject to such restrictions, limitations and other requirements, if
any, as may be contained in the By-Laws of the Trust:
(1) To receive and hold the securities owned by the Trust and
deliver the same upon written order;
(2) To receive and receipt for any moneys due to the Trust and
deposit the same in its own banking department or elsewhere as the
Trustees may direct; and
(3) To disburse such funds upon orders or vouchers;
(4) To keep the books and accounts of the Trust and furnish
clerical and accounting services;
(5) To compute, if authorized to do so by the Trustees, the
Accumulated Net Income of the Trust and the net asset value of the
Shares in accordance with the provisions hereof;
all upon such basis of compensation as may be agreed upon between the
Trustees and the custodian. If so directed by a Majority Shareholder Vote,
the custodian shall deliver and pay over all property of the Trust held by
it as specified in such vote.
The Trustees may also authorize the custodian to employ one or more
sub-custodians from time to time to perform such of the acts and services
of the custodian and upon such terms and conditions, as may be agreed upon
between the custodian and such sub-custodian and approved by the Trustees,
provided that in every case such sub-custodian shall be a bank or trust
company organized under the laws of the United States or one of the states
thereof and having an aggregate capital, surplus and undivided profits (as
shown in its last published report) of at least two million dollars
($2,000,000).
Section 2. Central Certificate System. Subject to such rules,
regulations and orders as the Commission may adopt, the Trustees may direct
the custodian to deposit all or any part of the securities owned by the
Trust in a system for the central handling of securities established by a
national securities exchange or a national securities association
registered with the Commission under the Securities Exchange Act of 1934,
or such other person as may be permitted by the Commission or otherwise in
accordance with the 1940 Act as from time to time amended, pursuant to
which system all securities of any particular class or series of any issuer
deposited within the system are treated as fungible and may be transferred
or pledged by bookkeeping entry without physical delivery of such
securities, provided that all such deposits shall be subject to withdrawal
only upon the order of the custodian at the direction of the Trustees.
ARTICLE X
DISTRIBUTIONS AND REDEMPTIONS
Section 1. Distributions.
(a) The Trustees may from time to time declare and pay dividends, and
the amount of such dividends and the payment of them shall be wholly in the
discretion of the Trustees.
(b) The Trustees may, on each day Accumulated Net Income of the Trust
(as defined in Section 3 of this Article X) is determined and is positive,
declare such Accumulated Net Income as a dividend to Shareholders of record
at such time as the Trustees shall designate, payable in additional full
and fractional Shares or in cash.
(c) The Trustees may distribute in respect of any fiscal year as
ordinary dividends and as capital gains distributions, respectively,
amounts sufficient to enable the Trust as a regulated investment company to
avoid any inability for federal income taxes in respect of that year.
(d) The decision of the Trustees as to what, in accordance with good
accounting practice, is income and what is principal shall be final, and
except as specifically provided herein the decision of the Trustees as to
what expense and charges of the Trust shall be charged against principal
and what against the income shall be final. Any income not distributed in
any year may be permitted to accumulate and as long as not distributed may
be invested from time to time in the same manner as the principal funds of
the Trust.
(e) The Trustees shall have power, to the fullest extent permitted by
the laws of Massachusetts, at any time, or from time to time, to declare
and cause to be paid dividends, which dividends, at the election of the
Trustees, may be accrued, automatically reinvested in additional Shares (or
fractions thereof) of the Trust or paid in cash or additional Shares, all
upon such terms and conditions as the Trustees may prescribe.
(f) Anything in this instrument to the contrary notwithstanding, the
Trustees may at any time declare and distribute a dividend consisting of
shares of the Trust.
Section 2. Redemptions and Repurchases
(a) In case any Shareholder of record of the Trust at any time
desires to dispose of Shares recorded in his name, he may deposit a written
request (or such other form of request as the Trustees may from time to
time authorize) requesting that the Trust purchase his Shares, together
with such other instruments or authorizations to effect the transfer as the
Trustees may from time to time require, at the office of the Custodian, and
the Trust shall purchase his said Shares, but only at the net asset value
of such Shares (as defined in Section 4 of this Article X) determined by or
on behalf of the Trustees next after said deposit.
Payment for such Shares shall be made by the Trust to the Shareholder
of record within seven (7) days after the date upon which the request (and,
if required, such other instruments or authorizations of transfer) is
deposited, subject to the right of the Trustees to postpone beyond the date
on which it would normally occur by reason of a declaration by the Trustees
suspending the right of redemption pursuant to Section 5 of this Article X,
the right of the Shareholder to have his Shares purchased by the Trust
shall be similarly suspended, and he may withdraw his request (or such
other instruments or authorizations of transfer) from deposit if he so
elects; or, if he does not so elect, the purchase price shall be the net
asset value of his Shares, determined next after termination of such
suspension and payment therefor shall be made within seven (7) days
thereafter.
(b) The Trust may purchase Shares of the Trust by agreement with the
owner thereof (1) at a price not exceeding the net asset value per Share
determined next after the purchase or contract of purchase is made or (2)
at a price not exceeding the net asset value per Share determined at some
later time.
(c) Shares purchased by the Trust either pursuant to paragraph (a) or
paragraph (b) of this Section 2 shall be deemed treasury Shares and may be
resold by the Trust.
(d) If the Trustees determine that economic conditions would make it
seriously detrimental to the best interests of the remaining Shareholders
of the Trust to make payment wholly or partly in cash, the Trust may pay
the redemption price in whole or in part by a distribution in kind of
securities from the portfolio of the Trust, in lieu of cash in conformity
with applicable rules of the Securities and Exchange Commission, taking
such securities at the same value employed in determining net asset value,
and selecting the securities in such manner as the Trustees may deem fair
and equitable.
Section 3. Determination of Accumulated Net Income. The Accumulated
Net Income of the Trust shall be determined by or on behalf of the Trustees
at such time as the Trustees shall in their discretion determine. Such
determination shall be made in accordance with generally accepted
accounting principles and practices and may include realized and/or
unrealized gains from the sale or other disposition of securities or other
property of the Trust. The power and duty to determine Accumulated Net
Income may be delegated by the Trustees from time to time to one or more of
the Trustees or officers of the Trust, to the other party to any contract
entered into pursuant to Section 1 or 2 of Article VII, or to the custodian
or to a transfer agent.
Section 4. Net Asset Value of Shares. The net asset value of each
Share of the Trust outstanding shall be determined at such time or times as
may be determined by or on behalf of the Trustees. The power and duty to
determine net asset value may be delegated by the Trustees from time to
time to one or more of the Trustees or Officers of the Trust, to the other
party to any contract entered into pursuant to Section 1 or 2 of Article
VII or to the custodian or to a transfer agent.
The net asset value of each Share of the Trust as of any particular
time shall be the quotient (adjusted to the nearer cent) obtained by
dividing the value, as of such time, of the net assets of the Trust (i.e.,
the value of the assets of the Trust less its liabilities exclusive of
capital and surplus) by the total number of Shares outstanding (exclusive
of treasury Shares) at such time in accordance with the requirements of the
1940 Act and applicable provisions of the By-Laws of the Trust in
conformity with generally accepted accounting practices and principles.
The Trustees may declare a suspension of the determination of net
asset value for the whole or any part of any period in accordance with the
Investment Company Act of 1940 and the rules and regulations adopted
thereunder.
Section 5. Suspension of the Right of Redemption. The Trustees may
declare a suspension of the right of redemption or postpone the date of
payment for the whole or any part of any period in accordance with the
Investment Company Act of 1940 and the rules and regulations adopted
thereunder.
Section 6. Trust's Right to Redeem Shares. The Trust shall have the
right to cause the redemption of Shares in any Shareholder's account for
their then current net asset value (which will be promptly paid to the
Shareholder in cash), of at any time the total investment in the account
does not have a minimum dollar value determined from time to time by the
Trustees in their sole discretion. Shares of the Trust are redeemable at
the option of the Trust if, in the opinion of the Trustees, ownership of
Trust Shares has or may become concentrated to an extent which would cause
the Trust to be a personal holding company within the meaning of the
Federal Internal Revenue Code (and thereby disqualified under Sub-chapter M
of said Code); in such circumstances the Trust may compel the redemption of
Shares, reject any order for the purchase of Shares or refuse to give
effect to the transfer of Shares.
ARTICLE XI
LIMITATION OF LIABILITY AND INDEMNIFICATION
Section 1. Limitation of Personal Liability and Indemnification of
Shareholders. The Trustees, officers, employees or agents of the Trust
shall have no power to bind any Shareholder personally or to call upon any
Shareholder for the payment of any sum of money or assessment whatsoever,
other than such as the Shareholder may at any time agree to pay by the way
of subscription to any Shares or otherwise.
No Shareholder or former Shareholder of the Trust shall be liable
solely by reason of his being or having been a Shareholder for any debt,
claim, action, demand, suit, proceeding, judgment, decree, liability or
obligation of any kind, against, or with respect to the Trust arising out
of any action taken or omitted for or on behalf of the Trust, and the Trust
shall be solely liable therefor and resort shall be had solely to the Trust
property for the payment or performance thereof.
Each Shareholder or former Shareholder of the Trust (or their heirs,
executors, administrators or other legal representatives or, in case of a
corporate entity, its corporate or general successor) shall be entitled to
indemnity and reimbursement out of the Trust property to the full extent of
such liability and the costs of any litigation or other proceedings in
which such liability shall have been determined, including, without
limitations, the fees and disbursements o counsel if, contrary to the
provisions hereof, such Shareholder or former Shareholder of the Trust
shall be held to personal liability.
The Trust shall, upon request by the Shareholder or former
Shareholders, assume the defense of any claim made against any Shareholder
for any act or obligation of the Trust and satisfy any judgment thereon.
Section 2. Limitation of Personal Liability of Trustees, Officers,
Employees or Agents of the Trust. No Trustee, officer, employee or agent
of the Trust shall have the power to bind any other Trustee, officer,
employee or agent of the Trust personally. The Trustees, officers,
employees or agents of the Trust incurring any debts, liabilities or
obligations, or in taking or omitting any other actions for or in
connection with the Trust are, and each shall be deemed to be, acting as
Trustee, officer, employee or agent of the Trust and not in his own
individual capacity.
Provided they have acted under the belief that their actions are in
the best interest of the Trust, the Trustee and officers shall not be
responsible for or liable in any event for neglect or wrongdoing by them or
any officer, agent, employee, investment adviser or principal underwriter
of the Trust or of any entity providing administrative services for the
Trust, but nothing herein contained shall protect any Trustee or officer
against any liability to which he would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence or reckless disregard of
the duties involved in the conduct of his office.
Section 3. Express Exculpatory Clauses and Instruments. The Trustees
shall use every reasonable means to assure that all persons having dealings
with the Trust shall be informed that the property of the Shareholders and
the Trustees, officers, employees and agent of the Trust shall not be
subject to claims against or obligations of the Trust to any extent
whatsoever. The Trustees shall cause to be interested in any written
agreement, undertaking or obligation made or issued on behalf of the Trust
(including certificates for Shares of the Trust) an appropriate reference
to this Declaration, providing that neither the Shareholders, the Trustees,
the officers, the employees not any agent of the Trust shall be liable
thereunder, and that the other parties to such instrument shall look solely
to the Trust property for the payment of any claim thereunder or for the
performance thereof; but the omission of such provisions from any such
instrument shall not render any Shareholder, Trustees, officer, employee or
agent liable, nor shall the Trustee, or any officer, agent or employee of
the Trust be liable to anyone for such omission. If, notwithstanding this
provision, any Shareholder, Trustee, officer, employee or agent shall be
held liable to any other person by reason of the omission of such provision
from any such agreement, undertaking or obligation, the Shareholder,
Trustee, officer, employee or agent shall be entitled to indemnity and
reimbursement out of the Trust property, as provided in this Article XI.
Section 4. Indemnification of Trustees, Officers, Employees and
Agents.
(a) Every person who is or has been a Trustee, officer, employee or
agent of the Trust and persons who serve at the Trust's request as
director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise shall be indemnified by the Trust
to fullest extent permitted by law against liability and against all
expenses reasonably incurred or paid by him in connection with any debt,
claim, action, demand, suit, proceeding, judgment, decree, liability or
obligation of any kind in which he becomes involved as a party or otherwise
by virtue of his being or having been a Trustee, officer, employee or agent
of the Trust or of another corporation, partnership, joint venture, trust
or other enterprise at the request of the Trust and against amounts paid or
incurred by him in the settlement thereof.
(b) The words "claim," "action," "suit" or "proceeding" shall apply
to all claims, actions, suits or proceedings (civil, criminal,
administrative, legislative, investigative or other, including appeals),
actual or threatened, and the words "liability" and "expenses" shall
include, without limitation, attorneys' fees, costs, judgments, amounts
paid in settlement, fines, penalties and other liabilities.
(c) No indemnification shall be provided hereunder to a Trustee,
officer, employee or agent against any liability to the Trust or its
Shareholders by reason of willful misfeasance, bad faith, gross negligence,
or reckless disregard of the duties involved in the conduct of his office.
(d) The rights of indemnification herein provided may be insured
against by policies maintained by the Trust, shall be severable, shall not
affect any other rights to which any Trustee, officer, employee or agent
may now or hereafter be entitled, shall continue as to a person who has
ceased to be such Trustee, officer, employee, or agent and shall inure to
the benefit of the heirs, executors and administrators of such a person.
(e) Expenses in connection with the preparation and presentation of a
defense to any claim, actions, suit or proceeding of the character
described in paragraph (a) of this Section 4 may be paid by the Trust prior
to final disposition thereof upon receipt of an undertaking by or on behalf
of the Trustees, officer, employee or agent secured by a surety bond or
other suitable insurance that such amount will be paid over by him to the
Trust if it is ultimately determined that he is not entitled to
indemnification under this Section 4.
ARTICLE XII
MISCELLANEOUS
Section 1. Trust is not a Partnership. It is hereby expressly
declared that a trust and not a partnership is created hereby.
Section 2. Trustee's Good Faith Action, Expert Advice, No Bond or
Surety. The exercise by the Trustees of their powers and discretions
hereunder in good faith and with reasonable care under the circumstances
then prevailing, shall be binding upon everyone interested. Subject to the
provisions of Article XI, the Trustees shall not be liable for errors of
judgment or mistakes of fact or law. The Trustees may take advice of
counsel or other experts with respect to the meaning and operation of this
Declaration of Trust, and subject to the provisions of Article XI, shall be
under no liability for any act or omission in accordance with such advice
or for failing to follow such advice. The Trustees shall not be required
to give any bond as such, not any surety if a bond is required.
Section 3. Establishment of Record Dates. The Trustees may close the
Share transfer books of the Trust for a period not exceeding sixty (60)
days preceding the date of any meeting of Shareholders, or the date for the
payment of any dividend or the making of any distribution to Shareholders,
or the date for the allotment of rights, or the date when any change or
conversion or exchange of Shares shall go into effect; or in lieu of
closing the Share transfer books as aforesaid, the Trustees may fix in
advance a date, not exceeding sixty (60) days preceding the date of any
meeting of Shareholders, or the date for the payment of any dividend or the
making of may distribution to Shareholders, or the date for the allotment
of rights, or the date when any change or conversion or exchange of Shares
shall go into effect, or the last day on which the consent or dissent of
Shareholders may be effectively expressed for any purpose, as a record date
for the determination of the Shareholders entitled to notice of, and, to
vote at, any such meeting and any adjournment thereof, or entitled to
receive payment of any such dividend or distribution, or to any such
allotment of rights, or to exercise the rights in respect of any such
change, conversion or exchange of shares, or to exercise the right to give
such consent or dissent, and in such case such Shareholder and only such
Shareholder as shall be Shareholders of record on the date so fixed shall
be entitled to such notice of, and to vote at, such meeting, or to receive
payment of such dividend or distribution, or to receive such allotment or
rights, or to exercise such rights, as the case may be, notwithstanding any
transfer of any Shares on the books of the Trust after any such date fixed
as aforesaid.
Section 4. Termination of Trust.
(a) This Trust shall continue without limitation of time but subject
to the provisions of paragraphs (b), (c) and (d) of this Section 4.
(b) The Trustees, with the approval of the holders of at least two-
thirds of the outstanding Shares, may be unanimous action sell and convey
the assets of the Trust to another trust or corporation organized under the
laws of any state of the United States, which is a diversified open-end
management investment company as defined in the 1940 Act, for an adequate
consideration which may include the assumption of all outstanding
obligations, taxes and other liabilities, accrued or contingent, of the
Trust and which may include shares of beneficial interest or stock of such
trust or corporation. Upon making provision for the payment of all such
liabilities, by such assumption or otherwise, the Trustees shall distribute
the remaining proceeds ratably among the holders of the Shares of the Trust
then outstanding.
(c) Subject to a Majority Shareholder Vote, the Trustees may at any
time sell and convert into money all the assets of the Trust. Upon making
provisions for the payment of all outstanding obligations, taxes and other
liabilities, accrued or contingent, of the Trust, the Trustees shall
distribute the remaining assets of the Trust ratably among the holders of
the outstanding Shares.
(d) Upon completion of the distribution of the remaining proceeds of
the remaining assets as provided in paragraphs (b) and (c), the Trust shall
terminate and the Trustees shall be discharged of any and all further
liabilities and duties hereunder and the right, title and interest of all
parties shall be canceled and discharged.
Section 5. Officers of the Trust, Filing of Copies, References,
Headings. The Trust shall maintain a usual place of business in
Massachusetts, which, initially, shall be 31 Milk Street, Boston,
Massachusetts, and shall continue to maintain an office at such address
unless changed by the Trustees to another location in Massachusetts. The
Trust may maintain other offices as the Trustees may from time to time
determine. The original or a copy of this instrument and of each
declaration of trust supplemental hereto shall be kept at the office of the
Trust where it may be inspected by any Shareholder. A copy of this
instrument and of each supplemental declaration of trust shall be filed by
the Trustees with the Massachusetts Secretary of State and Boston City
Clerk, as well as any other governmental office where such filing may from
time to time be required. Anyone dealing with the Trust may rely on a
certificate by an officer of the Trust as to whether or not any such
supplemental declaration of trust has been made and as to any matters in
connection with the Trust hereunder, and with the same effect as if it were
the original, may rely on a copy certified by an officer of the Trust to be
a copy of this instrument or of any such supplemental declaration of trust.
In this instrument or of any such supplemental declaration of trust. In
this instrument or of any such supplemental declaration of trust,
references to this instrument, and all expressions like "herein," "hereof"
and "hereunder," shall be deemed to refer to this instrument as amended or
affected by an such supplemental declaration of trust. Headings are placed
herein for convenience of reference only and in case of any conflict, the
text of this instrument, rather than the headings, shall control. This
instrument may be executed in any number of counterparts each of which
shall be deemed an original.
Section 6. Applicable Law. The Trust set forth in this instrument is
created under and is to be governed by and construed and administered
according to the laws of the Commonwealth of Massachusetts. The Trust
shall be of the type commonly called a Massachusetts business trust, and
without limiting the provisions hereof, the Trust may exercise all powers
which are ordinarily exercised by such a trust.
Section 7. Amendments. Prior to the initial issuance of Shares
pursuant to the second sentence of Section 3 of Article III, a majority of
the Trustees then in office may amend or otherwise supplement this
instrument by making a Declaration of Trust supplemental hereto, which
thereafter shall form a part hereof. Subsequent to such initial issuance
of Shares, if authorized by a majority of the Trustees then in office and
by a Majority Shareholder Vote, or by any larger vote which may be required
by applicable law or this Declaration of Trust in any particular case, the
Trustees shall amend or otherwise supplement this instrument, by making a
Declaration of Trust supplemental hereto, which thereafter shall form a
part hereof. Any such supplemental Declaration of Trust shall be signed by
at least a majority of the Trustees then in office. Copies of the
supplemental Declaration of Trust shall be filed as specified in Section 5
of this Article XII.
Section 8. Use of Name. The Trust acknowledges that Federated
Investors, Inc. has reserved the right to grant the non-exclusive use of
the name "Federated" or any derivative thereof to any other investment
company, investment adviser, distributor, or other business enterprise, and
to withdraw from the Trust the use of the name "Federated".
IN WITNESS WHEREOF, the undersigned have executed this instrument the
day and year first above written.
/s/ John F. Donahue /s/ J. Joseph Maloney, Jr.
John F. Donahue J. Joseph Maloney, Jr.
/s/ William J. Copeland /s/ Gregor G. Meyer
William J. Copeland Gregor G. Meyer
/s/ James E. Dowd /s/ Wesley W. Posvar
James E. Dowd Wesley W. Posvar
/s/ Edward L. Flaherty, Jr. /s/ Marjorie P. Smuts
Exhibit (2)(i)
Amendment No. 2 to By-Laws
FEDERATED GROWTH TRUST
Effective February 2, 1987
ARTICLE II
POWERS AND DUTIES OF TRUSTEES AND OFFICERS
Section 2. Chairman of the Trustees ("Chairman"). The Chairman shall
be the chief executive officer of the Trust. He shall have general
supervision over the business of the Trust and policies of the Trust. He
shall employ and define the duties of all employees of the Trust, shall
have power to discharge any such employees, shall exercise general
supervision over the affairs of the Trust and shall perform such other
duties as may be assigned to him from time to time by the Trustees. He
shall preside at the meetings of shareholders and of the Trustees. The
Chairman shall appoint a Trustee or officer to preside at such meetings in
Exhibit 2(ii)
FEDERATED GROWTH TRUST
AMENDMENT NO. 3 TO BY-LAWS
EFFECTIVE AUGUST 25, 1988
ARTICLE X
FISCAL YEAR
The fiscal year of the Trust shall be the period of twelve months ending on
<TABLE>
<CAPTION>
Exhibit 99 under Form N1-A
Exhibit 16 under Item 601/Reg. S-K
<S> <C> <C> <C>
Federated Capital Appreciation Fund
Class A Shares
Yield = 2{( $131,251.40 - $108,480.50 )+1)^6-1}=
Computation of SEC Yield 1,107,883*( $96.91 - 0.028 )
40
As of: April 30, 1996
SEC Yield = 0.25%
Dividend and/or Interest
Inc for the 30 days ended $131,251.40
Net Expenses for $108,480.50
the Period
Avg Daily Shares
Outstanding and entitled
to receive dividends 1,107,883
Maxium offering price $96.91
per share as of 4/30/96
Undistributed net income 0.02840
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Exhibit
99 under
Form N1-
A
Exhibit
16 under
Item
601/Reg.
S-K
Schedule for Computation of Initial
Fund Performance Data Invest of: $1,000
Federated Capital Appreciation Fund
Class A Shares Initial
Offering
Price/Share= $92.68
Return Since Inception 1/2/96 NAV= $96.91
ending 4/30/96
FYE: October 31, 1996
</TABLE>
<TABLE>
<CAPTION>
DECLARED: Quarterly
PAID: Quarterly
<S> <C> <C> <C> <C> <C> <C> <C>
Beginning Capital Reinvest Ending Total
Reinvest Period Dividend Gain Price Period Ending Investment
Dates Shares /Share /Share /Share Shares Price Value
1/31/96 10.790 0.000000000 0.00000 $0.00 10.790 $91.06 $982.52
2/29/96 10.790 0.000000000 0.00000 $0.00 10.790 $93.72 $1,011.22
3/31/96 10.790 0.080000000 0.00000 $93.87 10.799 $93.87 $1,013.70
4/30/96 10.799 0.000000000 0.00000 $0.00 10.799 $96.91 $1,046.53
$1,000 (1+T) = Ending Value
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Exhibit 99
under Form
N1-A
Exhibit 16
under Item
601/Reg. S-K
Federated Capital Appreciation Fund
Class B Shares
Yield = 2{( $1,604.09 - $2,118.49)+1)^6-1}=
Computation of SEC Yield 13,525 *( $96.87 - 0.00320
As of: April 30, 1996
SEC Yield = -0.47%
Dividend and/or Interest
Inc for the 30 days ended $1,604.09
Net Expenses for $2,118.49
the Period
Avg Daily Shares
Outstanding and entitled
to receive dividends 13,525
Maxium offering price $96.87
per share as of 4/30/96
</TABLE>
<TABLE>
<CAPTION>
Schedule for Computation of Initial
Fund Performance Data Invest of: $1,000
Federated Capital Appreciation Fund
Class B Shares Initial
Offering
Price/Share= $88.22
Return Since Inception 1/3/96 Ending NAV= $92.02
ending 4/30/96
FYE: October 31, 1996
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Beginning Capital Reinvest Ending Total
DECLARED: Quarterly Reinvest Period Dividend Gain Price Period Ending Investment
PAID: Quarterly Dates Shares /Share /Share /Share Shares Price Value
1/31/96 11.335 0.000000000 0.00000 $0.00 11.335 $91.06 $1,032.19
2/29/96 11.335 0.000000000 0.00000 $0.00 11.335 $93.72 $1,062.34
3/31/96 11.335 0.009000000 0.00000 $93.89 11.336 $93.89 $1,064.37
4/30/96 11.336 0.000000000 0.00000 $0.00 11.336 $92.02 $1,043.17
$1,000 (1+T) = Ending Value T = 4.32%
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Federated Capital
Appreciation Fund
Class C Shares
Yield = 2{( $21.84 - $28.85 )+1)^6-
1}=
Computation of SEC Yield 184 *( $96.87 - 0.00180 )
As of: April 30, 1996
SEC Yield = -0.47%
Dividend and/or Interest
Inc for the 30 days ended $21.84
Net Expenses for $28.85
the Period
Avg Daily Shares
Outstanding and entitled
to receive dividends 184
Maxium offering price $96.87
per share as of 4/30/96
</TABLE>
<TABLE>
<CAPTION>
Schedule for Computation of Initial
Fund Performance Data Invest of: $1,000
Federated Capital Appreciation
Fund
Class C Shares Initial
Offering
Price/Share= $88.22
Return Since Inception 1/3/96 Ending NAV= $95.99
ending 4/30/96
FYE: October 31, 1996
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Beginning Capital Reinvest Ending Total
DECLARED: Quarterly Reinvest Period Dividend Gain Price Period Ending Investment
PAID: Quarterly Dates Shares /Share /Share /Share Shares Price Value
1/31/96 11.335 0.000000000 0.00000 $0.00 11.335 $91.06 $1,032.19
2/29/96 11.335 0.000000000 0.00000 $0.00 11.335 $93.72 $1,062.34
3/31/96 11.335 0.005000000 0.00000 $93.89 11.336 $93.89 $1,064.33
4/30/96 11.336 0.000000000 0.00000 $0.00 11.336 $95.99 $1,088.13
$1,000 (1+T) = Ending Value
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Exhibit 99
under Form
N1-A
Exhibit 16
under Item
601/Reg. S-K
Federated Small Cap Strategies Fund
Class A Shares
Yield = 2{( $0.00 - $5,780.86 )+1)^6-1}=
Computation of SEC Yield 393,787 *( $14.05 - 0.0000)
0
As of: April 30, 1996
SEC Yield = -1.25%
Dividend and/or Interest
Inc for the 30 days ended $0.00
Net Expenses for $5,780.86
the Period
Avg Daily Shares
Outstanding and entitled
to receive dividends 393,787
Maxium offering price $14.05
per share as of 4/30/96
</TABLE>
Schedule for Computation of Initial
Fund Performance Data Invest of: $1,000
Federated Small Cap Strategies Fund
Class A Shares Initial
Offering
Price/Share= $10.58
Return Since Inception 11/1/95 NAV= $14.05
ending 4/30/96
FYE: October 31, 1996
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Beginning Capital Reinvest Ending Total
DECLARED: Quarterly Reinvest Period Dividend Gain Price Period Ending Investment
PAID: Quarterly Dates Shares /Share /Share /Share Shares Price Value
11/30/95 94.518 0.000000000 0.00000 $0.00 94.518 $11.01 $1,040.64
12/31/95 94.518 0.020000000 0.00000 $11.47 94.683 $11.74 $1,111.58
1/31/96 94.683 0.000000000 0.00000 $0.00 94.683 $11.58 $1,096.43
2/29/96 94.683 0.000000000 0.00000 $0.00 94.683 $12.22 $1,157.02
3/31/96 94.683 0.000000000 0.00000 $0.00 94.683 $12.62 $1,194.90
4/30/96 94.683 0.000000000 0.00000 $0.00 94.683 $14.05 $1,330.29
$1,000 (1+T) = Ending Value T = 33.03%
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Federated Small Cap Strategies Fund
Class B Shares
Yield = 2{( $0.00 - $4,487.80 )+1)^6-1}=
Computation of SEC Yield 196,051*( $14.04 - 0.00000)
As of: April 30, 1996
SEC Yield = -1.95%
Dividend and/or Interest
Inc for the 30 days ended $0.00
Net Expenses for $4,487.80
the Period
Avg Daily Shares
Outstanding and entitled
to receive dividends 196,051
Maxium offering price $14.04
per share as of 4/30/96
</TABLE>
Schedule for Computation of Initial
Fund Performance Data Invest of: $1,000
Federated Small Cap Strategies Fund
Class B Shares Initial
Offering
Price/Share= $10.00
Return Since Inception 11/1/95 NAV= $13.49
ending 4/30/96
FYE: October 31, 1996
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Beginning Capital Reinvest Ending Total
DECLARED: Quarterly Reinvest Period Dividend Gain Price Period Ending Investment
PAID: Quarterly Dates Shares /Share /Share /Share Shares Price Value
11/30/95 100.000 0.000000000 0.00000 $0.00 100.000 $11.01 $1,101.00
12/31/95 100.000 0.000000000 0.00000 $0.00 100.000 $11.75 $1,175.00
1/31/96 100.000 0.000000000 0.00000 $0.00 100.000 $11.58 $1,158.00
2/29/96 100.000 0.000000000 0.00000 $0.00 100.000 $12.21 $1,221.00
3/31/96 100.000 0.000000000 0.00000 $0.00 100.000 $12.61 $1,261.00
4/30/96 100.000 0.000000000 0.00000 $0.00 100.000 $13.49 $1,349.00
$1,000 (1+T) = Ending Value T = 34.90%
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Federated Small Cap Strategies Fund
Class C Shares
Yield = 2{( $0.00 - $790.96 )+1)^6-1}=
Computation of SEC Yield 34,575 *( $14.03 - 0.00000 )
As of: April 30, 1996
SEC Yield = -1.95%
Dividend and/or Interest
Inc for the 30 days ended $0.00
Net Expenses for $790.96
the Period
Avg Daily Shares
Outstanding and entitled
to receive dividends 34,575
Maxium offering price $14.03
per share as of 4/30/96
</TABLE>
Schedule for Computation of Initial
Fund Performance Data Invest of: $1,000
Federated Small Cap Strategies Fund
Class C Shares Initial
Offering
Price/Share= $10.00
Return Since Inception 11/1/95 NAV= $13.93
ending 4/30/96
FYE: October 31, 1996
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Beginning Capital Reinvest Ending Total
DECLARED: Quarterly Reinvest Period Dividend Gain Price Period Ending Investment
PAID: Quarterly Dates Shares /Share /Share /Share Shares Price Value
11/30/95 100.000 0.000000000 0.00000 $0.00 100.000 $11.01 $1,101.00
12/31/95 100.000 0.000000000 0.00000 $0.00 100.000 $11.75 $1,175.00
1/31/96 100.000 0.000000000 0.00000 $0.00 100.000 $11.58 $1,158.00
2/29/96 100.000 0.000000000 0.00000 $0.00 100.000 $12.21 $1,221.00
3/31/96 100.000 0.000000000 0.00000 $0.00 100.000 $12.61 $1,261.00
4/30/96 100.000 0.000000000 0.00000 $0.00 100.000 $13.93 $1,393.00
$1,000 (1+T) = Ending Value T = 39.30%
</TABLE>
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 Deputy 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 Securities and Exchange Commission's electronic
disclosure system known as EDGAR; and to file the same, with all exhibits
thereto and other documents in connection thterewith, with the Securities
and Exchange Commission, granting unto said attorneys-in-fact and agents,
and each of them, full power and authority to sign and perform each and
every act and thing requisite and necessary to be done in connection
thereiwth, as fully to all intents and purposes as each of them might or
could do in person, hereby ratifying and confirming all that said attorneys-
in-fact and agents, or any of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue thereof.
SIGNATURES TITLE DATE
/s/ John F. Donahue Chairman December 1, 1995
John F. Donahue (Cheif Executive Officer)
/s/ Glen R. Johnson President December 1, 1995
Glen R. Johnson
/s/David M. Taylor Treasurer December 1, 1995
David M. Taylor (Principal Financial and
Accounting Officer)
/s/ Thomas G. Bigley Trustee December 1, 1995
Thomas G. Bigley
/s/ John T. Conroy, Jr. Trustee December 1, 1995
John T. Conroy, Jr.
/s/ William J. Copeland Trustee December 1, 1995
William J. Copeland
/s/ James E. Dowd Trustee December 1, 1995
James E. Dowd
/s/ Lawrence D. Ellis, M.D. Trustee December 1, 1995
Lawrence D. Ellis, M.D.
/s/ Edward L. Flaherty, Jr. Trustee December 1, 1995
Edward L. Flaherty, Jr.
/s/ Peter E. Madden Trustee December 1, 1995
Peter E. Madden
/s/ Gregor F. Meyer Trustee December 1, 1995
Gregor F. Meyer
/s/ John E. Murray, Jr. Trustee December 1, 1995
John E. Murray, Jr.
/s/ Wesley W. Posvar Trustee December 1, 1995
Wesley W. Posvar
/s/ Marjorie P. Smuts Trustee December 1, 1995
Marjorie P. Smuts
Sworn to and subscribed before me this 1st day of December, 1995.
/s/ Marie M. Hamm
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 1
<NAME> Federated Exchange Fund, Ltd.
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<INVESTMENTS-AT-COST> 66,157,403
<INVESTMENTS-AT-VALUE> 91,404,824
<RECEIVABLES> 1,794,666
<ASSETS-OTHER> 3,506
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 93,202,996
<PAYABLE-FOR-SECURITIES> 797,750
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 290,704
<TOTAL-LIABILITIES> 1,088,454
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 92,114,542
<SHARES-COMMON-STOCK> 1,140,441
<SHARES-COMMON-PRIOR> 1,182,060
<ACCUMULATED-NII-CURRENT> 35,988
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 66,831,133
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 25,247,421
<NET-ASSETS> 92,114,542
<DIVIDEND-INCOME> 1,111,116
<INTEREST-INCOME> 65,180
<OTHER-INCOME> 0
<EXPENSES-NET> 480,811
<NET-INVESTMENT-INCOME> 695,485
<REALIZED-GAINS-CURRENT> 3,335,554
<APPREC-INCREASE-CURRENT> 10,461,685
<NET-CHANGE-FROM-OPS> 14,492,724
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 712,852
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 43,664
<SHARES-REINVESTED> 2,045
<NET-CHANGE-IN-ASSETS> 10,737,525
<ACCUMULATED-NII-PRIOR> 53,355
<ACCUMULATED-GAINS-PRIOR> 66,537,926
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 291,041
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 480,811
<AVERAGE-NET-ASSETS> 86,245,295
<PER-SHARE-NAV-BEGIN> 68.840
<PER-SHARE-NII> 0.610
<PER-SHARE-GAIN-APPREC> 11.940
<PER-SHARE-DIVIDEND> 0.620
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 80.770
<EXPENSE-RATIO> 112
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 021
<NAME> Federated Equity Funds
Federated Small Cap Strategies Fund
Class A
<PERIOD-TYPE> 2-MOS
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-END> OCT-31-1995
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 0
<RECEIVABLES> 0
<ASSETS-OTHER> 899
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 899
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 899
<SHARES-COMMON-STOCK> 30
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 300
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 700
<PER-SHARE-NAV-BEGIN> 10.000
<PER-SHARE-NII> 0.000
<PER-SHARE-GAIN-APPREC> 0.000
<PER-SHARE-DIVIDEND> 0.000
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 10.000
<EXPENSE-RATIO> 0.00
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 022
<NAME> Federated Equity Funds
Federated Small Cap Strategies Fund
Class B
<PERIOD-TYPE> 2-MOS
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-END> OCT-31-1995
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 0
<RECEIVABLES> 0
<ASSETS-OTHER> 899
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 899
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 899
<SHARES-COMMON-STOCK> 30
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 300
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 700
<PER-SHARE-NAV-BEGIN> 10.000
<PER-SHARE-NII> 0.000
<PER-SHARE-GAIN-APPREC> 0.000
<PER-SHARE-DIVIDEND> 0.000
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 10.000
<EXPENSE-RATIO> 0.00
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 023
<NAME> Federated Equity Funds
Federated Small Cap Strategies Fund
Class C
<PERIOD-TYPE> 2-MOS
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-END> OCT-31-1995
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 0
<RECEIVABLES> 0
<ASSETS-OTHER> 899
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 899
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 899
<SHARES-COMMON-STOCK> 30
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 299
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 700
<PER-SHARE-NAV-BEGIN> 10.000
<PER-SHARE-NII> 0.000
<PER-SHARE-GAIN-APPREC> 0.000
<PER-SHARE-DIVIDEND> 0.000
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 10.000
<EXPENSE-RATIO> 0.00
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>