Federated Small Cap Strategies Fund
Federated Aggressive Growth Fund
(Portfolios of Federated Equity Funds)
Supplement to the Statements of Additional Information dated December 31, 1997
Please add the following sub-section to the "Investment Objective and Policies"
section of the Statements of Additional Information of Federated Small Cap
Strategies Fund and Federated Aggressive Growth Fund:
"Stock Index Options
As part of the Fund's strategy to hedge all or a portion of its
portfolio, the Fund may purchase and sell (or write) stock index
options listed on national exchanges or traded in the over-the-counter
market. This type of hedge will be traded on an aggregate basis and
can result in a loss of the amount of option premium invested. A stock
index fluctuates with changes in the market values of the stocks
included in the index. The effectiveness of purchasing and selling
stock index options will depend upon the extent to which price
movements in the Fund's portfolio correlate with price movements of
the stock index selected. Because the value of an index option depends
upon movements in the level of the index rather than the price of a
particular stock, whether the Fund will realize a gain or loss from
the purchase of options on an index depends upon movements in the
level of stock prices in the stock market generally or, in the case of
certain indices, in an industry or market segment, rather than
movements in the price of a particular stock. Accordingly, successful
use by the Fund of options on stock indices will be subject to
movements in the directions of the stock market generally or of a
particular industry. This requires different skills and techniques
than predicting changes in the price of individual stocks."
October 14, 1998
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Cusip 314172404 Cusip 314172503 Cusip 314172602 Cusip 314172875 Cusip
314172867 Cusip 314172859
G01971-03 (10/98)
