FEDERATED EQUITY FUNDS, N-30D, 1999-06-30

FEDERATED EQUITY FUNDS
N-30D, 1999-06-30

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SEMI-ANNUAL REPORT

[Graphic]

Glen R. Johnson

President

Federated Aggressive Growth Fund

President's Message

Dear Shareholder:

Federated Aggressive Growth Fund was created in 1996, and I am pleased to
present its second Semi-Annual Report. As of April 30, 1999, the fund's total
assets of $44.6 million were spread across 106 stocks in a variety of small,
mid- and large-cap companies. These are not necessarily household names, but the
companies are selected for their growth potential. The fund's manag ers seek to
buy companies that you may learn of in the next year or so-these are stocks for
aggressive stock owners.

This report covers the first half of the fund's fiscal year which is the
six-month period from November 1, 1998 to April 30, 1999. It begins with an
interview with Keith J. Sabol, Vice President, who co-manages the fund with Aash
M. Shah, Vice President, both of Federated Investment Management Com pany.
Following their discussion are two additional items of shareholder interest.
First is a complete listing of the fund's stock holdings, and sec ond is the
publication of the fund's financial statements.

During the reporting period, Federated Aggressive Growth Fund's portfolio
included 106 common stocks and convertible securities spread across 11 indus try
sectors with its focus on the technology (42%), consumer cyclicals (16%), and
energy (11%) sectors.

During the reporting period, the stock market's upward momentum continued, led
by large-cap growth stocks and Internet stocks. Thanks to both sector weightings
and security selection, many of the fund's holdings soared in value. This in
turn produced an extraordinarily strong six-month total return of more than
43.00% for the fund across all share classes. These returns were far superior to
the 27.00% return of the fund's peer group, the Lipper Capi tal Appreciation
Funds Average, as well as the 22.32% return of the Standard & Poor's ("S&P") 500
Index ("S&P 500"). 1

1 Lipper figures represent the average of the total returns reported by all of
the mutual funds designated by Lipper Analytical Services, Inc. as fall ing into
the respective categories indicated. These figures do not reflect sales charges.
The S&P 500 is an unmanaged capitalization-weighted index of 500 stocks designed
to measure performance of the broad domestic economy through changes in the
aggregate market value of 500 stocks representing all major industries.
Investments cannot be made in an index.

Individual share class total return performance for the six-month reporting
period follows. 2

<TABLE>

TOTAL RETURN NET ASSET VALUE INCREASE <S> <C> <C> Class A
Shares 43.97% $11.19 to $16.11 = 43% Class B Shares 43.45% $11.07 to $15.88 =
43% Class C Shares 43.47% $11.02 to $15.81 = 43%

</TABLE>

Of course, we continue to see significant day-to-day volatility in the stock
market. Regardless of the market's fluctuations over time, you have two easy,
convenient ways to increase your opportunity to participate in the growth of
quality American companies. First, if you are not already doing so, you can
reinvest your dividends and capital gains automatically in additional shares-and
help your shares increase in number through the benefit of com pounding. Second,
you can "pay yourself first" by investing in the fund through a systematic
investment program. This program withdraws a specific amount from your checking
account on a regular basis to purchase more fund shares. 3 For more information,
contact your investment representative.

Thank you for entrusting a portion of your wealth to Federated Aggressive Growth
Fund. We hope you are pleased with your investment's progress, and as always, we
welcome your comments and suggestions.

Sincerely,

[Graphic]

Glen R. Johnson

President

June 15, 1999

2 Performance quoted is based on net asset value, represents past performance
and is not indicative of future results. Investment return and principal value
will fluctuate, so that an investor's shares, when redeemed, may be worth more
or less than their original cost. Total returns for the period, based on
offering price (i.e., less any applicable sales charge), for Class A, B, and C
Shares were 36.06%, 37.95%, and 42.47%, respectively.

3 Systematic investing does not assure a profit against loss in declining
markets. Because dollar-cost-averaging involves continuous investment regardless
of fluctuating price levels, investors should consider their financial ability
to continue purchasing during periods of low price lev els.

[Graphic]

Keith J. Sabol

Vice President

Federated Investment Management Company

[Graphic]

Aash M. Shah, CFA

Vice President

Federated Investment Management Company

Investment Review

WHAT IS YOUR APPRAISAL OF THE FIRST HALF OF THE FUND'S FISCAL YEAR, WHICH WAS
VOLATILE YET EXTREMELY POSITIVE FOR THE FUND?

The fourth quarter of 1998 was marked by substantial rallies in stocks of nearly
every "flavor." Blue-chip technology companies, represented by the NASDAQ 100
Index, 1 continued to dominate the overall market, gaining 31.12% for the fourth
quarter of 1998. In the broader market, the technology and communications
services sectors were the leaders, while the utilities and consumer staples
sectors were the laggards.

After a breather in the fourth quarter of 1998, large-cap stocks again domi
nated in 1999. "Blue-chip" technology companies, represented by the NASDAQ 100
Index, continued to dominate the overall market.

For the six-month reporting period ended April 30, 1999, the S&P 500 returned
22.32%, while mid-cap stocks, as measured by the S&P 400 Mid Cap Index, 1
returned 18.86%. Small-cap stocks, as measured by the Russell 2000 Small Stock
Index,1 returned 15.16%.

1 NASDAQ is the National Association of Securities Dealers Automated Quota tion
System, which lists price information for a broad spectrum of large, medium, and
small stocks. The NASDAQ 100 Index is capitalization-weighted and includes 100
of the largest non-financial companies, domestic and for eign, in the NASDAQ
National Market. The S&P 400 Mid Cap Index is an unman aged
capitalization-weighted index that measures the performance of the mid-range of
the U.S. stock market. The Russell 2000 Small Stock Index is a broadly
diversified index consisting of approximately 2,000 small capital ization common
stocks that can be used to compare the total returns of funds whose portfolios
are invested primarily in small capitalization com mon stocks. Investments
cannot be made in an index.

IT WAS AN OUTSTANDING SIX-MONTH PERIOD FOR FEDERATED AGGRESSIVE GROWTH FUND.
WHAT WERE THE FUND'S TOTAL RETURN NUMBERS RELATIVE TO ITS PEERS?

For the six-month reporting period ended April 30, 1999, the fund's total
returns for Class A, B, and C Shares were 43.97%, 43.45%, and 43.47%, respec
tively, based on net asset value. 2 These returns were far superior to the
27.00% return of the Lipper Capital Appreciation Funds Average and the 22.32%
return of the S&P 500.

WHAT ACCOUNTED FOR SUCH A HIGH LEVEL OF FUND PERFORMANCE?

As would be expected, the fourth quarter 1998 improvement in market breadth gave
the fund a tremendous boost. Despite the market's lack of breadth over the
entire six-month period, the fund performed extremely well due to the solid
performance of a number of Internet-related stocks and by our increased exposure
to energy stocks, as that sector rallied on news of another round of production
cuts from OPEC.

WHAT WERE SOME OF THE FUND'S RECENT STOCK PURCHASES?

Our recent purchases included the following:

BROADCOM CORP. (1.16% of net assets): Broadcom develops highly integrated
silicon solutions that enable broadband digital data transmission to the home
and within the business enterprise.

COVAD COMMUNICATIONS GROUP, INC. (1.27% of net assets): Covad provides dedi
cated high-speed digital communications services using digital subscriber line
technology to Internet service provider and enterprise customers. The company's
services are provided over standard copper telephone lines at speeds up to 1.5
megabits per second.

ECHOSTAR COMMUNICATION CORP. (0.99% of net assets): Echostar makes and dis
tributes direct-to-home satellite television products and services, includ
ing satellite television receiver dishes, receivers, programming,
installation and third-party consumer financing.

MIPS TEHNOLOGY, INC. (0.94% of net assets): MIPS designs and licenses high-
performance, cost-effective 32-bit and 64-bit reduced instruction-set com
puting processor intellectual property and core technology for the digital
consumer and high-end control-oriented embedded markets.

VERTICALNET, INC. (0.89% of net assets): VerticalNet owns and operates verti
cal trade communities, targeted business-to-business communities of commerce
on the Internet that act as industry-specific sources of information, inter
action and electronic commerce.

WHAT WERE THE FUND'S TOP TEN HOLDINGS AS OF APRIL 30, 1999, AND WHAT WERE THE
INDUSTRY WEIGHTINGS?

PERCENTAGE OF
NAME NET ASSETS
Pilot Network Services, Inc. 2.1%
IDT Corp. 1.5%
Cooper Cameron Corp. 1.4%
MEDE AMERICA Corp. 1.4%
Advance Paradigm, Inc. 1.4%
RF Micro Devices, Inc. 1.3%
Pacific Gateway Exchange, Inc. 1.3%
Insight Enterprises, Inc. 1.3%
Modem Media. Poppe Tyson, Inc. 1.3%
Covad Communications Group, Inc. 1.3%
TOTAL 14.3%

PERCENTAGE OF PERCENTAGE OF
SECTOR NET ASSETS S&P 500
Technology 42.2% 20.1%
Consumer Cyclicals 15.6% 9.0%
Energy 10.9% 6.2%
Capital Goods 7.2% 8.2%
Communication Services 4.9% 8.5%
Financials 4.9% 16.5%
Consumer Staples 3.3% 13.2%
Health Care 3.3% 10.9%
Transportation 1.0% 1.1%
Basic Materials 0.7% 3.6%
Utilities 0.0% 2.8%

AS WE APPROACH MID YEAR, WHAT IS YOUR OUTLOOK FOR GROWTH STOCKS, PARTICULARLY
WITH REGARD TO THE HISTORICALLY LOW VALUATIONS THE WE ARE SEEING IN THE
SMALL-CAP MARKET?

Despite the strong rally from October 1998's market bottom, there are several
indications that suggest that we may still have a ways to go. First, the
cumulative underperformance of small-cap stocks relative to large-cap stocks has
surpassed levels reached from the peak of the summer of 1988 through the trough
of the 1990 recession.

Specifically, from the small-cap peak on June 30, 1988 to the bottom of the
recession on October 30, 1990, the S&P 500 outperformed the Russell 2000 Small
Stock Index by 33% before small-cap leadership re-emerged. From the small-cap
relative performance peak on March 31, 1994 to present, the S&P 500 has
outperformed the Russell 2000 Small Stock Index by 130% on a price-only basis.
Similarly, small-cap stocks have underperformed large-cap stocks on a one-year
basis by nearly 40%. Only in 1929, 1973, and October of 1998 have we seen such a
performance divergence. This would suggest that small-cap stocks may be due at
least for a rally to reverse some of this historically large performance gap.
Obviously valuations relative to the S&P 500 appear cheap, but even compared to
their own history, small-cap valuations have become com pelling. For example, on
a price-to-book basis, small-cap stocks are trading at a level just 7% richer
than last October's trough and on par with the lows reached in the 1990
recession.

The bottom line is that, from a historical perspective, emerging growth stocks
appear inexpensive, and investors underexposed to this asset class should
increase their exposure to capitalize on the opportunities available.

Portfolio of Investments

APRIL 30, 1999 (UNAUDITED)

<TABLE>

SHARES VALUE
<S> <C> <C>
COMMON STOCKS-94.0%
BASIC MATERIALS-0.7%
24,200 1 Mail-Well, Inc. $ 316,112
CAPITAL GOODS-7.2%
12,100 1 Dupont Photomasks, Inc. 529,375
12,600 1 E-Tek Dynamics, Inc. 541,800
8,100 1 Flextronics International
Ltd. 378,169
9,200 1 Jabil Circuit, Inc. 428,375
6,200 1 Sanmina Corp. 411,525
14,000 1 Terex Corp. 442,750
21,000 1 Zomax Optical Media, Inc. 469,875
TOTAL 3,201,869
COMMUNICATION SERVICES-
4.9%
5,900 1 Covad Communications
Group, Inc. 566,400
23,000 1 IDT Corp. 655,500
9,000 1 IXC Communications, Inc. 356,625
14,800 1 Pacific Gateway Exchange,
Inc. 592,000
TOTAL 2,170,525
CONSUMER CYCLICALS-15.6%
13,200 1 Analytical Surveys, Inc. 330,000
8,200 1 Autoweb.com, Inc. 214,225
17,400 1 Blue Rhino Corp. 250,125
13,050 1 Buckle, Inc. 305,044
9,500 1 Career Education Corp. 318,250
10,000 1 Century Business Services,
Inc. 120,000
15,000 1 Diamond Technology
Partners, Class A 318,750
5,100 Ethan Allen Interiors,
Inc. 258,506
21,750 1 Insight Enterprises, Inc. 587,250
15,800 Lennar Corp. 382,163
1,500 1 Mpath Interactive, Inc. 59,062
10,500 1 MIPS Technologies, Inc. 417,375
15,700 1 Metzler Group, Inc. 437,638
16,200 1 Modem Media. Poppe Tyson,
Inc. 571,050
12,875 1 Pacific Sunwear of
California 477,582
<CAPTION>
SHARES VALUE
<S> <C> <C>
COMMON STOCKS-continued
CONSUMER CYCLICALS-
CONTINUED
8,000 1 ProBusiness Services, Inc. $ 287,000
4,500 1 Rambus, Inc. 270,563
14,600 1 Sunterra Corp. 156,950
10,600 1 United Rentals, Inc. 316,012
11,300 1 Value America, Inc. 445,644
14,000 1 Williams-Sonoma, Inc. 406,000
TOTAL 6,929,189
CONSUMER STAPLES-3.3%
33,800 1 Balance Bar Co. 236,600
11,100 1 Computer Horizons Corp. 156,788
8,900 1 Consolidated Graphics,
Inc. 379,363
21,500 1 Hollywood Entertainment
Corp. 530,781
7,000 1 P. F. Chang's China Bistro,
Inc. 176,750
TOTAL 1,480,282
ENERGY-10.9%
17,400 1 BJ Services Co. 465,450
15,000 1 Cal Dive International,
Inc. 480,000
16,600 1 Cooper Cameron Corp. 641,175
15,900 ENSCO International, Inc. 295,144
18,300 1 Friede Goldman
International, Inc. 341,981
22,700 1 Gulf Island Fabrication,
Inc. 340,500
28,800 1 Pool Energy Services Co. 516,600
26,870 1 R&B Falcon Corp. 268,700
26,000 1 Stolt Comex Seaway, S.A. 325,000
27,000 1 UTI Energy Corp. 361,125
26,000 1 Varco International, Inc. 294,125
15,500 Weatherford International,
Inc. 525,062
TOTAL 4,854,862
FINANCIALS-4.9%
12,000 1 Advance Paradigm, Inc. 630,000
30,000 1 Americredit Corp. 496,875
11,500 HealthCare Financial
Partners, Inc. 388,125
8,600 Metris Cos., Inc. 525,675
14,400 1 Scottish Annuity & Life
Holdings Ltd. 144,000
TOTAL 2,184,675
<CAPTION>
SHARES VALUE
<S> <C> <C>
COMMON STOCKS-continued
HEALTH CARE-3.3%
24,500 1 Mede America Corp. $ 637,000
18,900 1 Sabratek Corp. 308,306
72,500 1 Theragenics Corp. 525,625
TOTAL 1,470,931
TECHNOLOGY-42.2%
12,700 1 24/7 Media, Inc. 565,150
18,200 1 AVT Corp. 494,812
7,200 1 Allaire Corp. 499,500
13,000 1 AnswerThink Consulting
Group, Inc. 288,437
7,400 1 Applied Materials, Inc. 396,825
4,200 1 AppliedTheory Corp. 85,050
11,100 1 Atlantic Data Services,
Inc. 44,400
6,700 1 Broadcom Corp. 516,737
25,100 1 CBT Group PLC, ADR 389,050
14,700 1 Check Point Software
Technologies Ltd. 518,175
22,000 1 Ciber, Inc. 415,250
13,100 1 Citrix Systems, Inc. 556,750
20,200 1 Cognizant Technology
Solutions Corp. 453,238
25,300 1 Complete Business
Solutions, Inc. 566,088
6,600 1 Comverse Technology, Inc. 423,225
14,600 1 Concur Technologies, Inc. 527,425
17,800 1 Credence Systems Corp. 457,238
25,400 1 Cymer, Inc. 463,550
20,000 1 DSP Communications, Inc. 545,000
4,400 1 Echostar Communications
Corp., Class A 441,375
16,000 1 Etec Systems, Inc. 494,000
29,500 1 IMRglobal Corp. 508,875
7,100 1 Informatica Corp. 200,575
300 1 Inktomi Corp. 35,925
9,000 1 International Network
Services 342,000
400 1 Marimba, Inc. 24,300
38,100 1 Mastech Corp. 559,594
55,600 1 Maxtor Corp. 314,488
15,200 1 Mercury Interactive Corp. 428,450
7,500 1 Micrel, Inc. 441,562
<CAPTION>
SHARES OR
PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
COMMON STOCKS-continued
TECHNOLOGY-CONTINUED
15,800 1 Micromuse, Inc. $ 544,112
4,000 1 Mindspring Enterprises,
Inc. 387,750
30,000 1 Mobius Management Systems,
Inc. 270,000
14,500 1 NeoMagic Corp. 169,469
7,200 1 Neon Systems, Inc. 302,400
10,800 1 New Era of Networks, Inc. 405,675
7,700 1 Novellus Systems, Inc. 363,825
16,000 1 ONYX Software Corp. 374,000
20,700 1 PRI Automation, Inc. 513,619
49,700 1 Pilot Network Services,
Inc. 938,087
10,600 1 RF Micro Devices, Inc. 592,275
11,000 1 RoweCom, Inc. 316,250
12,900 1 Veeco Instruments, Inc. 496,650
3,500 1 VerticalNet, Inc. 397,250
1,000 1 Vignette Corp. 95,000
9,100 1 Vitesse Semiconductor
Corp. 421,444
34,000 1 Western Digital Corp. 269,875
TOTAL 18,854,725
TRANSPORTATION-1.0%
17,800 SkyWest, Inc. 462,800
TOTAL COMMON STOCKS
(IDENTIFIED COST
$34,179,571) 41,925,970
REPURCHASE AGREEMENTS-2.7%
2
$ 1,190,000 ABN AMRO, Inc., 4.94%,
dated 4/30/1999, due
5/3/1999 (at amortized
cost) 1,190,000
U.S. TREASURY-2.2%
1,000,000 United States Treasury
Bill, 6/17/1999
(identified cost $994,287) 994,574
TOTAL INVESTMENTS
(IDENTIFIED COST
$36,363,858) 3 $ 44,110,544

</TABLE>

1 Non-income producing security.

2 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
investments in the repurchase agreement is through participation in a joint
account with other Federated funds.

3 The cost of investments for federal tax purposes amounts to $36,363,858. The
net unrealized appreciation of investments on a federal tax basis amounts to
$7,746,686 which is comprised of $10,743,407 appreciation and $2,996,721
depreciation at April 30, 1999.

Note: The categories of investments are shown as a percentage of net assets
($44,585,590) at April 30, 1999.

The following acronyms are used throughout this portfolio:

ADR -American Depositary Receipt
PLC -Public Limited Company

See Notes which are an integral part of the Financial Statements

Statement of Assets and Liabilities

APRIL 30, 1999 (UNAUDITED)

<TABLE>

<S> <C> <C>
ASSETS:
Total investments in
securities, at value
(identified and tax cost
$36,363,858) $ 44,110,544
Cash 3,313
Income receivable 163
Receivable for investments
sold 924,236
Receivable for shares sold 151,625
Deferred organizational
costs 10,142
TOTAL ASSETS 45,200,023
LIABILITIES:
Payable for investments
purchased $ 573,918
Payable for shares
redeemed 12,924
Payable for daily
variation margin 442
Accrued expenses 27,149
TOTAL LIABILITIES 614,433
Net assets for 2,798,848
shares outstanding $ 44,585,590
NET ASSETS CONSIST OF:
Paid in capital $ 35,608,679
Net unrealized
appreciation of
investments 7,830,160
Accumulated net realized
gain on investments and
futures contracts 1,560,070
Distributions in excess of
net investment income (413,319)
TOTAL NET ASSETS $ 44,585,590
NET ASSET VALUE, OFFERING
PRICE AND REDEMPTION
PROCEEDS PER SHARE
CLASS A SHARES:
Net Asset Value Per Share
($11,175,740 / 693,766
shares outstanding) $16.11
Offering Price Per Share
(100/94.50 of $16.11) 1 $17.05
Redemption Proceeds Per
Share $16.11
CLASS B SHARES:
Net Asset Value Per Share
($28,749,177 / 1,810,284
shares outstanding) $15.88
Offering Price Per Share $15.88
Redemption Proceeds Per
Share (94.50/100 of
$15.88) 1 $15.01
CLASS C SHARES:
Net Asset Value Per Share
($4,660,673 / 294,798
shares outstanding) $15.81
Offering Price Per Share $15.81
Redemption Proceeds Per
Share (99.00/100 of
$15.81) 1 $15.65

</TABLE>

1 See "What Do Shares Cost?" in the Prospectus.

See Notes which are an integral part of the Financial Statements

Statement of Operations

SIX MONTHS ENDED APRIL 30, 1999 (UNAUDITED)

<TABLE>

<S> <C> <C>
INVESTMENT INCOME:
Dividends $ 9,487
Interest 13,242
TOTAL INCOME 22,729
EXPENSES:
Investment advisory fee $ 188,200
Administrative personnel
and services fee 91,740
Custodian fees 5,218
Transfer and dividend
disbursing agent fees and
expenses 72,196
Directors'/Trustees' fees 1,881
Auditing fees 6,362
Legal fees 1,780
Portfolio accounting fees 43,685
Distribution services fee-
Class B Shares 90,061
Distribution services fee-
Class C Shares 15,814
Shareholder services fee-
Class A Shares 11,752
Shareholder services fee-
Class B Shares 30,022
Shareholder services fee-
Class C Shares 5,270
Share registration costs 25,416
Printing and postage 14,698
Insurance premiums 2,476
Miscellaneous 11,753
TOTAL EXPENSES 618,324
WAIVERS:
Waiver of investment
advisory fee (182,276)
Net expenses 436,048
Net operating loss (413,319)
REALIZED AND UNREALIZED
GAIN (LOSS) ON
INVESTMENTS:
Net realized gain on
investments and futures
contracts 4,316,989
Net change in unrealized
appreciation of
investments and futures
contracts 9,230,316
Net realized and
unrealized gain on
investments and futures
contracts 13,547,305
Change in net assets
resulting from operations $ 13,133,986

</TABLE>

See Notes which are an integral part of the Financial Statements

Statement of Changes in Net Assets

<TABLE>

SIX MONTHS
ENDED YEAR
(unaudited) ENDED
APRIL 30, OCTOBER 31,
1999 1998
<S> <C> <C>
INCREASE (DECREASE) IN NET
ASSETS
OPERATIONS:
Net operating loss $ (413,319) $ (486,680)
Net realized gain (loss) on
investments and futures
contracts ($4,316,989 and
($2,591,507), respectively,
as computed for federal
tax purposes) 4,316,989 2,756,919)
Net change in unrealized
appreciation of
investments and futures
contracts 9,230,316 (2,744,645)
CHANGE IN NET ASSETS
RESULTING FROM OPERATIONS 13,133,986 (5,988,244)
DISTRIBUTIONS TO
SHAREHOLDERS:
Distributions from net
realized gains
Class A Shares - (1,113)
Class B Shares - (1,978)
Class C Shares - (293)
CHANGE IN NET ASSETS
RESULTING FROM
DISTRIBUTIONS
TO SHAREHOLDERS - (3,384)
SHARE TRANSACTIONS:
Proceeds from sale of
shares 28,794,446 42,004,648
Net asset value of shares
issued to shareholders in
payment of
distributions declared - 2,778
Cost of shares redeemed (25,618,970) (20,028,392)
CHANGE IN NET ASSETS
RESULTING FROM SHARE
TRANSACTIONS 3,175,476 21,979,034
Change in net assets 16,309,462 15,987,406
NET ASSETS:
Beginning of period 28,276,128 12,288,722
End of period $ 44,585,590 $ 28,276,128

</TABLE>

See Notes which are an integral part of the Financial Statements

Financial Highlights-Class A Shares

(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>

SIX MONTHS
ENDED YEAR PERIOD
(unaudited) ENDED ENDED
APRIL 30, OCTOBER 31, OCTOBER 31,
1999 1998 1997 1
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING
OF PERIOD $11.19 $13.31 $10.00
INCOME FROM INVESTMENT
OPERATIONS:
Net operating loss (0.11) (0.20) 2 (0.05)
Net realized and
unrealized gain (loss) on
investments and futures
contracts 5.03 (1.92) 3.37
TOTAL FROM INVESTMENT
OPERATIONS 4.92 (2.12) 3.32
LESS DISTRIBUTIONS:
Distributions in excess of
net investment income - - (0.01)
Distributions from net
realized gain on
investments and futures
contracts - (0.00) 3 -
TOTAL DISTRIBUTIONS - (0.00) 3 (0.01)
NET ASSET VALUE, END OF
PERIOD $16.11 $11.19 $13.31
TOTAL RETURN 4 43.97% (15.91%) 33.21%

RATIOS TO AVERAGE NET
ASSETS:
Expenses 5 2.73% 6 3.12% 10.71% 6
Net Operating Loss 5 (2.61%) 6 (2.92%) (9.93%)6
Expenses (after
waivers/reimbursements) 1.76% 6 1.76% 1.74% 6
Net operating loss (after
waivers/reimbursements) (1.64%) 6 (1.56%) (0.96%)6
SUPPLEMENTAL DATA:
Net assets, end of period
(000 omitted) $11,176 $7,549 $4,148
Portfolio turnover 70% 91% 97%

</TABLE>

1 Reflects operations for the period from November 25, 1996 (date of initial
public investment) to October 31, 1997.

2 Per share numbers have been calculated using the average shares method, which
more appropriately represents the per share data for the period since the use of
the undistributed income method did not accord with the results of operations.

3 Amounts distributed per share do not round to $0.01.

4 Based on net asset value, which does not reflect the sales charge or con
tingent deferred sales charge, if applicable.

5 During the period, certain fees were voluntarily waived or reimbursed. If such
voluntary waivers and reimbursements had not occurred, the ratios would have
been as indicated.

6 Computed on an annualized basis.

See Notes which are an integral part of the Financial Statements

Financial Highlights-Class B Shares

(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>

SIX MONTHS
ENDED YEAR PERIOD
(unaudited) ENDED ENDED
APRIL 30, OCTOBER 31, OCTOBER 31,
1999 1998 1997 1
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING
OF PERIOD $11.07 $13.27 $10.00
INCOME FROM INVESTMENT
OPERATIONS:
Net operating loss (0.14) (0.30) 2 (0.08)
Net realized and
unrealized gain (loss) on
investments and futures
contracts 4.95 (1.90) 3.35
TOTAL FROM INVESTMENT
OPERATIONS 4.81 (2.20) 3.27
LESS DISTRIBUTIONS:
Distributions in excess of
net investment income - - (0.00) 3
Distributions from net
realized gain on
investments and futures
contracts - (0.00) 3 -
TOTAL DISTRIBUTIONS - (0.00) 3 (0.00) 3
NET ASSET VALUE, END OF
PERIOD $15.88 $11.07 $13.27
TOTAL RETURN 4 43.45% (16.56%) 32.75%

RATIOS TO AVERAGE NET
ASSETS:
Expenses 5 3.48% 6 3.83% 9.76%6
Net operating loss 5 (3.36%) 6 (3.65%) (9.21%) 6
Expenses (after
waivers/reimbursements) 2.51% 6 2.51% 2.51% 6
Net operating loss (after
waivers/reimbursements) (2.39% ) 6 (2.33%) (1.96%) 6
SUPPLEMENTAL DATA:
Net assets, end of period
(000 omitted) $28,749 $17,783 $7,184
Portfolio turnover 70% 91% 97%

</TABLE>

1 Reflects operations for the period from November 25, 1996 (date of initial
public investment) to October 31, 1997.

3 Amounts distributed per share do not round to $0.01.

4 Based on net asset value, which does not reflect the sales charge or con
tingent deferred sales charge, if applicable.

5 During the period, certain fees were voluntarily waived or reimbursed. If such
voluntary waivers and reimbursements had not occurred, the ratios would have
been as indicated.

6 Computed on an annualized basis.

See Notes which are an integral part of the Financial Statements

Financial Highlights-Class C Shares

(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>

SIX MONTHS
ENDED YEAR PERIOD
(unaudited) ENDED ENDED
APRIL 30, OCTOBER 31, OCTOBER 31,
1999 1998 1997 1
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING
OF PERIOD $11.02 $13.20 $10.00
INCOME FROM INVESTMENT
OPERATIONS:
Net operating loss (0.16) (0.29) 2 (0.06)
Net realized and
unrealized gain (loss) on
investments and futures
contracts 4.95 (1.89) 3.26
TOTAL FROM INVESTMENT
OPERATIONS 4.79 (2.18) 3.20
LESS DISTRIBUTIONS:
Distributions in excess of
net investment income - - (0.00) 3
Distributions from net
realized gain on
investments and futures
contracts - (0.00) 3 -
TOTAL DISTRIBUTIONS - (0.00) 3 (0.00) 3
NET ASSET VALUE, END OF
PERIOD $15.81 $11.02 $13.20
TOTAL RETURN 4 43.47% (16.49%) 32.04%

RATIOS TO AVERAGE NET
ASSETS:
Expenses 5 3.48% 6 3.83% 9.76% 6
Net operating loss 5 (3.36%)6 (3.64%) (9.18%)6
Expenses (after
waivers/reimbursements) 2.51% 6 2.51% 2.53% 6
Net operating loss (after
waivers/reimbursements) (2.39%) 6 (2.32%) (1.95%) 6
SUPPLEMENTAL DATA:
Net assets, end of period
(000 omitted) $4,661 $2,944 $957
Portfolio turnover 70% 91% 97%

</TABLE>

1 Reflects operations for the period from November 25, 1996 (date of initial
public investment) to October 31, 1997.

3 Amounts distributed per share do not round to $0.01.

4 Based on net asset value, which does not reflect the sales charge or con
tingent deferred sales charge, if applicable.

5 During the period, certain fees were voluntarily waived or reimbursed. If such
voluntary waivers and reimbursements had not occurred, the ratios would have
been as indicated.

6 Computed on an annualized basis.

See Notes which are an integral part of the Financial Statements

Notes to Financial Statements

APRIL 30, 1999 (UNAUDITED)

ORGANIZATION

Federated Equity Funds (the "Trust") is registered under the Investment Com pany
Act of 1940, as amended (the "Act") as a diversified, open-ended manage ment
investment company. The Trust consists of five portfolios. The financial
statements included herein are only those of Federated Aggressive Growth Fund
(the "Fund"), a diversified portfolio. The financial statements of the other
portfolios are presented separately. The assets of each portfolio are segre
gated and a shareholder's interest is limited to the portfolio in which shares
are held. The Fund offers three classes of shares: Class A Shares, Class B
Shares and Class C Shares. The investment objective of the Fund is to provide
appreciation of capital.

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 60 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 posses sion,
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 repur chase agreement
transaction.

The Fund will only enter into repurchase agreements with banks and other rec
ognized financial institutions, such as broker/dealers, which are deemed by the
Fund's adviser to be creditworthy pursuant to the guidelines and/or stan dards
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.

Distributions in excess of net investment income were a result of certain book
and tax timing differences. These distributions do not represent a return of
capital for federal income tax purposes.

Income and capital gain distributions are determined in accordance with the
income tax regulations which may differ from generally accepted accounting
principles. These differences are primarily due to differing treatments for net
operating losses.

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 posi
tions 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.

DEFERRED EXPENSES

The costs incurred by the Fund with respect to registration of its shares in its
first fiscal year, excluding the initial expense of registering its shares, have
been deferred and are being amortized over a period not to exceed five years
from the Fund's commencement date.

FUTURES CONTRACTS

The Fund purchases stock index futures contracts to manage cashflows, enhance
yield, and to potentially reduce transaction costs. Upon entering into a stock
index futures contract with a broker, the Fund is required to deposit in a
segregated account a specified amount of cash or U.S. government securi ties.
Futures contracts are valued daily and unrealized gains or losses are recorded
in a "variation margin" account. Daily, the Fund receives from or pays the
broker a specified amount of cash based upon the changes in the variation margin
account. For the period ended April 30, 1999, the Fund had realized losses of
$4,875 on futures contracts.

At April 30, 1999, the Fund had outstanding futures contracts as set forth
below:

<TABLE>

EXPIRATION CONTRACTS TO UNREALIZED
DATE RECEIVE POSITION APPRECIATION
<S> <C> <C> <C>
June 1999 5 Russell 2000 Long $83,474

</TABLE>

Futures contracts have market risks, including the risk that the change in the
value of the contract may not correlate with the changes in the value of the
underlying securities.

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 rev enues reported in
the financial statements. Actual results could differ from those estimated.

OTHER

Investment transactions are accounted for on the trade date.

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>

SIX MONTHS ENDED YEAR ENDED
APRIL 30, 1999 OCTOBER 31, 1998
CLASS A SHARES: SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
Shares sold 702,941 $ 9,725,328 1,555,844 $ 19,799,352
Shares issued to
shareholders in payment of
distributions declared - - 77 997
Shares redeemed (683,870) (9,459,879) (1,192,806) (14,847,728)
NET CHANGE RESULTING FROM
CLASS A SHARE
TRANSACTIONS 19,071 $ 265,449 363,115 $ 4,952,621

<CAPTION>
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 1999 OCTOBER 31, 1998
CLASS B SHARES: SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
Shares sold 733,599 $ 9,825,975 1,432,908 $ 18,824,917
Shares issued to
shareholders in payment of
distributions declared - - 138 1,781
Shares redeemed (529,904) (7,229,812) (367,697) (4,278,757)
NET CHANGE RESULTING FROM
CLASS B SHARE
TRANSACTIONS 203,695 $ 2,596,163 1,065,349 $ 14,547,941

<CAPTION>
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 1999 OCTOBER 31, 1998
CLASS C SHARES: SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
Shares sold 674,472 $ 9,243,143 264,256 $ 3,380,379
Shares issued to
shareholders in payment of
distributions declared - - - -
Shares redeemed (646,899) (8,929,279) (69,542) (901,907)
NET CHANGE RESULTING FROM
CLASS C SHARE
TRANSACTIONS 27,573 $ 313,864 194,714 $ 2,478,472
NET CHANGE RESULTING FROM
SHARE TRANSACTIONS 250,339 $ 3,175,476 1,623,178 $ 21,979,034

</TABLE>

INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES

INVESTMENT ADVISORY FEE

Federated Investment Management Company, the Fund's investment adviser (the
"Adviser), receives for its services an annual investment advisory fee equal to
1.00% of the Fund's average daily net assets. The Adviser may voluntarily choose
to waive any portion of its fee and/or reimburse certain operating expenses of
the Fund. The Adviser can modify or terminate this voluntary waiver and/or
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, Inc. for the period. The
administrative fee received during the period of the Administra tive Services
Agreement shall be at least $125,000 per portfolio and $30,000 per each
additional class of shares.

DISTRIBUTION SERVICES FEE

<TABLE>

PERCENTAGE OF
AVERAGE DAILY
NET ASSETS
SHARE CLASS NAME OF CLASS
<S> <C>
Class A Shares 0.25%
Class B Shares 0.75%
Class C Shares 0.75%

</TABLE>

For the period ended April 30, 1999, the Class A Shares did not incur a 12b- 1
fee.

SHAREHOLDER SERVICES FEE

Under the terms of a Shareholder Services Agreement with Federated Share holder
Services ("FSSC"), the Fund will pay FSSC up to 0.25% of average daily net
assets of the Fund for the period. The fee paid to FSSC is used to finance
certain services for shareholders and to maintain shareholder accounts.

TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES

FServ, through its subsidiary FSSC, serves as transfer and dividend disburs ing
agent for the Fund. The fee paid to FSSC 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.

ORGANIZATIONAL EXPENSES

Organizational expenses of $13,912 were borne initially by the Adviser. The Fund
has reimbursed the Adviser for these expenses. These expenses have been deferred
and are being amortized over the five-year period following the Fund's effective
date. For the period ended April 30, 1999, the Fund expensed $314 of
organizational expenses.

GENERAL

Certain of the Officers and Trustees of the Trust are Officers and Directors or
Trustees of the above companies.

INVESTMENT TRANSACTIONS

Purchases and sales of investments, excluding short-term securities, for the
period ended April 30, 1999, were as follows:

<TABLE>

<S> <C>
Purchases $27,713,400
Sales $26,487,935

</TABLE>

YEAR 2000

Similar to other financial organizations, the Fund could be adversely affected
if the computer systems used by the Fund's service providers do not properly
process and calculate date-related information and data from and after January
1, 2000. The Fund's Adviser and administrator are taking mea sures that they
believe are reasonably designed to address the Year 2000 issue with respect to
computer systems that they use and to obtain reasonable assurances that
comparable steps are being taken by each of the Fund's other service providers.
At this time, however, there can be no assurance that these steps will be
sufficient to avoid any adverse impact to the Fund.

Trustees

JOHN F. DONAHUE

THOMAS G. BIGLEY

JOHN T. CONROY, JR.

NICHOLAS P. CONSTANTAKIS

WILLIAM J. COPELAND

JOHN F. CUNNINGHAM

LAWRENCE D. ELLIS, M.D.

PETER E. MADDEN

CHARLES F. MANSFIELD, JR.

JOHN E. MURRAY, JR., J.D., S.J.D.

MARJORIE P. SMUTS

JOHN S. WALSH

Officers

JOHN F. DONAHUE

Chairman

GLEN R. JOHNSON

President

J. CHRISTOPHER DONAHUE

Executive Vice President

EDWARD C. GONZALES

Executive Vice President

JOHN W. MCGONIGLE

Executive Vice President and Secretary

RICHARD B. FISHER

Vice President

RICHARD J. THOMAS

Treasurer

C. GRANT ANDERSON

Assistant Secretary

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 gov
ernment agency. Investment in mutual funds involves investment risk, includ ing
the 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 con
cerning its objective and policies, management fees, expenses, and other
information.

[Graphic]
Federated
World-Class Investment Manager
SEMI-ANNUAL REPORT
AS OF APRIL 30, 1999

Federated Aggressive Growth Fund

Established 1996

2ND SEMI-ANNUAL REPORT

[Graphic]
Federated
Federated Aggressive Growth Fund
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
1-800-341-7400
WWW.FEDERATEDINVESTORS.COM
Federated Securities Corp., Distributor

Cusip 314172875

Cusip 314172867

Cusip 314172859

G02072-01 (6/99)

[Graphic]

SEMI-ANNUAL REPORT

[Graphic]

GLEN R. JOHNSON

President

Federated Capital Appreciation Fund

President's Message

Dear Shareholder:

Federated Capital Appreciation Fund was created in 1977, and I am pleased to
present its 23rd Semi-Annual Report. As of April 30, 1999, the fund's total net
assets of $297.6 million were spread across 123 issues of mid-cap and large-cap
corporations. Many of these companies are household names such as America
Online, MCI Worldcom, Eastman Kodak, Microsoft, and Cisco Systems. These
companies have price-to-earnings ratios on average of 26X and average growth
rates of 21%. These securities were selected for their capital appre ciation
potential and can be very volatile.

This report covers the first half of the fund's fiscal year which is the
six-month period from November 1, 1998 to April 30, 1999. It begins with an
interview with the fund's portfolio manager, Arthur J. Barry, Vice President of
Federated Investment Management Company. Following his discussion are three
additional items of shareholder interest. First is a series of graphs showing
the fund's long-term investment performance. Second is a complete listing of the
fund's highly diversified stock holdings, and third is the publication of the
fund's financial statements.

During the reporting period, the stock market's upward momentum continued to be
led by large-cap growth stocks and Internet stocks. Thanks to both sector
weightings and security selection, many of the fund's holdings increased sub
stantially in value. This in turn produced a strong total return which was
superior to the total returns of the Lipper Growth Funds Average, the Lipper
Capital Appreciation Funds Average, and the Standard & Poor's ("S&P") 500 Index
("S&P 500"). 1

Individual share class total return performance for the six-month reporting
period, including capital appreciation, income distributions and realized gains,
follows. 2

<TABLE>
<CAPTION>
TOTAL RETURN INCOME CAPITAL GAINS NET ASSET VALUE INCREASE
<S> <C> <C> <C> <C>
Class A Shares 30.20% $0.04 $0.82 $18.73 to $23.42 = 25%
Class B Shares 29.68% $0.00 $0.82 $18.62 to $23.22 = 25%
Class C Shares 29.70% $0.00 $0.82 $18.61 to $23.21 = 25%

</TABLE>

Of course, we continue to see significant day-to-day volatility in the stock
market. Regardless of the market's fluctuations, over time, you have two easy
ways to increase your opportunity to participate in the growth and earnings of
high-quality U.S. corporations. First, you can reinvest your dividends and
capital gains automatically in additional shares to help your shares increase in
number through the benefit of compounding. Second, you can "pay yourself first,"
by adding to your account on a regular basis through a sys tematic investment
program. This program withdraws a specific amount from your checking account on
a regular basis to purchase more fund shares. Buying shares regularly, (i.e.,
monthly additions of the same dollar amount) auto matically accumulates more
shares in your account at lower prices. 3 Please contact your investment
representative for more information, and please note that the fund's share price
has been volatile and that may make it suitable for regular investments.

Thank you for entrusting a portion of your wealth to Federated Capital Appre
ciation Fund. We welcome your comments and suggestions.

Sincerely,

[Graphic]

Glen R. Johnson

President

June 15, 1999

2 Performance quoted is based on net asset value, represents past performance
and is not indicative of future results. Investment return and principal value
will fluctuate, so an investor's shares, when redeemed, may be worth more or
less than their original cost. Total returns for the period, based on offering
price (i.e., less any applicable sales charge), for Class A, B, and C Shares
were 23.04%, 24.18% and 28.70%, respectively.

3 Systematic investing does not assure a profit or protect against loss in
declining markets. Because dollar-cost-averaging involves continuous investment
regardless of fluctuating price levels, investors should con sider their
financial ability to continue purchasing during periods of low price levels.

[Graphic]

ARTHUR J. BARRY, CFA

Vice President

Federated Investment Management Company

Investment Review

OVERALL, THE FIRST HALF OF THE FUND'S FISCAL YEAR WAS STRONG FOR STOCKS, WITH
LARGE-CAP STOCKS AND INTERNET ISSUES IN PARTICULAR LEADING THE WAY. WHAT ARE
YOUR COMMENTS?

After touching bottom on October 8, 1998, the equity market quickly resumed its
upward momentum, culminating in a record high by year-end 1998. The Fed eral
Reserve Board (the "Fed") helped to ease the financial liquidity crisis-
highlighted by Long Term Capital Management's problems-by lowering interest
rates. This move restored not only confidence, but overwhelming enthusiasm for
financial instruments, despite the prospect for weak earnings. The tech nology
sector led the way with the major indexes up between 40%-50% for the fourth
quarter of 1998. The expectation for a strong electronic commerce (e- commerce)
Christmas provided fuel to the Internet fire.

The breadth of the advance was broad across small-cap, mid-cap and large-cap
stocks. Mid-cap stocks outperformed due to America Online's ("AOL") 220% climb
in the fourth quarter of 1998. By year-end, the stock comprised 7% of the S&P
400 Mid Cap Index, 1 and thus the index was very sensitive to AOL's price
movements. Along with the technology sector, the investment banking and retail
sectors performed particularly well in late 1998. On the other hand,
energy-related issues performed poorly as OPEC failed to agree on production
cuts in order to lift oil prices. Growth stocks continued to dominate value
stocks, as expected, aided by the strong rally in technology stocks.

1 The S&P 400 Mid Cap Index is an unmanaged capitalization-weighted index that
measures the performance of the mid-range of the U.S. stock market.
Investments cannot be made in an index.

Turning to 1999, in general, if you did not own large-cap growth or Internet
stocks, you probably trailed the market. The S&P 500 oscillated mostly between
(1.00%) and 4.00% during the first two months of 1999 before breaking out of
this range in March.

Interest rates played a role in the market's trendless performance over the
first couple of months of 1999. Interest rates, as defined by the 30-year
Treasury, began the first quarter at 5.10% but increased to 5.60% by the end of
March, with most of the increase occurring in February. Fear that the economy
was too strong, energy prices were rising, and the Asia-Pacific region would
resume its growth, all contributed to a fear that Fed Chairman Alan Greenspan
would have to raise rates. In March 1999, rates leveled off as investors thought
spending was only seasonally strong, and productivity would help keep inflation
tame. We tend to believe in the latter analysis, but the situation is fluid as
new information is being processed every day.

Ultimately, it was a positive reporting period, particularly among large-cap
stocks. For the six-month reporting period ended April 30, 1999, the S&P 500
produced a return of 22.32%, while mid-cap stocks as represented by the S&P 400
Mid Cap Index and small-cap stocks as represented by the S&P 600 Small Cap Index
2 returned 18.86% and 9.03%, respectively.

HOW DID FEDERATED CAPITAL APPRECIATION FUND PERFORM FOR ITS SHAREHOLDERS FOR THE
SIX-MONTH REPORTING PERIOD ENDED APRIL 30, 1999?

For the six-month reporting period ended April 30, 1999, the fund's Class A, B,
and C Shares produced total returns of 30.20%, 29.68% and 29.70%, respectively,
based on net asset value. 3 The fund's returns were greater than the 23.07%
total return of the Lipper Growth Funds Average, as well as the 27.00% total
return of the Lipper Capital Appreciation Funds Average for the same six-month
reporting period.

2 The S&P 600 Small Cap Index is an unmanaged, capitalization-weighted index of
stocks representing all major industries in the small-cap range of the U.S.
stock market. Investments cannot be made in an index.

3 Performance quoted is based on net asset value, reflects past performance and
is not indicative of future results. Investment return and principal value will
fluctuate, so an investor's shares, when redeemed, may be worth more or less
than their original cost. Total return for the period, based on offering price
(i.e., less any applicable sales charge), for Class A, B, and C Shares were
23.04%, 24.18% and 28.70%, respectively.

WHAT SECTORS AND HOLDINGS ACCOUNTED FOR THE FUND'S OUTPERFORMANCE?

The fund's best relative performance came from the communication services sector
as both METRONET COMMUNICATIONS (1.16% of net assets) and FRONTIER CORP. (1.58%
of net assets) were acquired and IXC COMMUNICATIONS (0.87% of net assets) has
put itself up for sale. Other sectors that performed well for the fund were
technology and utilities. The utilities sector performed well due to our
position in MONTANA POWER (1.38% of net assets), as it continued to remake
itself into a telecommunications company. Other top contributors were AMERICA
ONLINE (2.16% of net assets), E*TRADE GROUP (0.85% of net assets) and
ABERCROMBIE & FITCH (1.12% of net assets).

WHAT INDUSTRY SECTORS ARE YOU UNDERWEIGHTING AND OVERWEIGHTING IN THE FUND?

During the fourth quarter of 1998, we became more aggressive as we thought the
market would rally in December 1998 and January 1999. We raised our expo sure to
the health care and technology sectors, while still maintaining an overweighted
position in the basic materials and utilities sectors. We also reduced exposure
to the energy and consumer staples sectors, and we continue to remain
underweighted. We currently remain overweighted in the utilities, basic
materials, and communication services sectors.

On April 30, 1999, the portfolio had 55% of invested assets in large-cap stocks
and 45% in mid-cap stocks; it is equally weighted in "value" versus "growth"
stocks.

WHAT WERE SOME OF THE FUND'S RECENT PURCHASES?

Our recent purchases included the following:

TRUE NORTH COMMUNICATIONS (TNO) (0.86% of net assets): TNO is the sixth larg est
global advertising agency. Larger agencies are taking market share, although TNO
is growing with the industry. TNO was extremely inexpensive, especially when
adjusting for its Internet holdings. We hope to see an accel eration in TNO's
growth rate or an acquisition with TNO being either the acquiree or acquirer.

FRONTIER CORP. (1.58% of net assets): Frontier cut its dividend during the
quarter, creating an excellent buying opportunity. The company has strong
assets and a relatively new management team who we believed will realize that
value. After our purchase, Frontier agreed to be acquired by Global Crossing
Ltd., another of the fund's holdings.

SEPRACOR (convertible bond, 0.46% of net assets): Sepracor has developed
technology to make existing drugs more efficacious by removing the isomer that
causes side effects. Sepracor has been awarded patents for improved ver sions of
existing drugs and is working with some pharmaceutical companies to reformulate
their products.

CINCINNATI BELL (0.95% of net assets): After spinning off its Convergys sub
sidiary, Cincinnati Bell is a pure local telephone service provider in south
western Ohio. This company is cheap compared to the major regional Bell
operating companies, and we believe it to be an attractive acquisition candi
date.

MONSANTO (convertible preferred, 0.70% of net assets): Monsanto's pending merger
with American Home Products was called and the stock plummeted. At the time of
purchase, Monsanto was very inexpensive on a price/sales valuation. Meanwhile,
the development of its COX II inhibitor, Celebrex, has progressed well. This
drug, which treats arthritis, along with Merck's Vioxx, are poten tial
blockbusters and the most anticipated drugs of 1999.

WHAT WERE THE FUND'S TOP 10 HOLDINGS AS OF APRIL 30, 1999, AND WHAT WERE THE
INDUSTRY WEIGHTINGS?

<TABLE>
<CAPTION>
PERCENTAGE OF
NAME NET ASSETS
<S> <C>
America Online, Inc. 2.16%
MCI Worldcom, Inc. 1.59%
Frontier Corp. 1.58%
Morgan Stanley Dean Witter 1.58%
Cisco Systems, Inc. 1.57%
Pacific Gateway Exchange, Inc. 1.53%
Eastman Kodak Co. 1.50%
Montana Power Co. 1.38%
Microsoft Corp. 1.37%
Tyco International, Ltd. 1.29%
TOTAL 15.55%

<CAPTION>
PERCENTAGE OF PERCENTAGE OF
SECTOR NET ASSETS S&P 500
<S> <C> <C>
Technology 20.0% 20.1%
Financials 11.9% 16.5%
Communication Services 11.5% 8.5%
Consumer Cyclicals 10.4% 9.0%
Health Care 10.2% 10.9%
Consumer Staples 9.4% 13.2%
Capital Goods 7.7% 8.2%
Utilities 6.0% 2.8%
Basic Materials 5.7% 3.6%
Energy 4.2% 6.2%
Transportation 1.3% 1.1%
Other 2.9% -

</TABLE>

AS WE REACH MID-YEAR, WHAT IS YOUR OUTLOOK FOR THE STOCK MARKET?

The six-month reporting period has been incredibly strong for the equity mar
kets, and a breather is probably in order. Large-cap growth stocks are great
stories, but the stocks are rich. The deep cyclicals have had a powerful move
upwards, and also most likely need to pause. We expect a consolidation or a
trading range for the next few months, unless the Fed decides to act on its
"bias" and actually move interest rates upward, which would be a negative. For
our part, we will continue to buy the best stocks we can find in both large-cap
and mid-cap arenas.

Two Ways You May Seek to Invest for Success:

INITIAL INVESTMENT:

IF YOU HAD MADE AN INITIAL INVESTMENT OF $23,000 IN THE CLASS A SHARES OF
FEDERATED CAPITAL APPRECIATION FUND ON 1/1/77, REINVESTED DIVIDENDS AND CAP ITAL
GAINS, AND DID NOT REDEEM ANY SHARES, YOUR ACCOUNT WOULD HAVE BEEN WORTH
$534,659 ON 4/30/99. YOU WOULD HAVE EARNED A 15.13% 1 AVERAGE ANNUAL TOTAL
RETURN FOR THE INVESTMENT LIFE SPAN.

One key to investing wisely is to reinvest all distributions in fund shares.
This increases the number of shares on which you can earn future dividends, and
you gain the benefit of compounding.

As of 3/31/99, Class A Shares' average annual 1-year, 5-year, and 10-year total
returns were 7.90%, 21.30%, and 15.65%, respectively. Class B Shares' average
annual 1-year and since inception (1/4/96) total returns were 7.81% and 21.86%,
respectively. Class C Shares' average annual 1-year and since inception (1/4/96)
total returns were 12.26% and 22.44%, respectively. 2

[Graphic representation "A1" omitted - see Appendix.]

1 Total return represents the change in the value of an investment after
reinvesting all income and capital gains, and takes into account the 5.50% sales
charge applicable to an initial investment in Class A Shares. Data quoted
represents past performance and does not guarantee future results. Investment
return and principal value will fluctuate, so an investor's shares, when
redeemed, may be worth more or less than their original cost.

2 The total returns stated take into account all applicable sales charges. The
maximum sales charges and contingent deferred sales charges for the fund are as
follows: Class A Shares, 5.50% sales charge; Class B Shares, 5.50% contingent
deferred sales charge; Class C Shares, 1.00% contingent deferred sales charge.

ONE STEP AT A TIME:

$1,000 INITIAL INVESTMENT AND SUBSEQUENT INVESTMENTS OF $1,000 EACH YEAR FOR 22
YEARS (REINVESTING ALL DIVIDENDS AND CAPITAL GAINS) GREW TO $186,135.

With this approach, the key is consistency.

If you had started investing $1,000 annually in the Class A Shares of Feder ated
Capital Appreciation Fund on 1/1/77, reinvested your dividends and cap ital
gains, and did not redeem any shares, you would have invested only $23,000 but
your account would have reached a total value of $186,135 1 by 4/30/99. You
would have earned an average annual total return of 15.83%.

A practical investment plan helps you pursue long-term performance from
growth-oriented stocks. Through systematic investing, you buy shares on a
regular basis and reinvest all earnings. An investment plan works for you when
you invest only $1,000 annually. You can take it one step at a time. Put time,
money, and compounding to work.

[Graphic representation "A2" omitted - see Appendix.]

1 This chart assumes that the subsequent annual investments are made on the last
day of each anniversary month. No method of investing can guarantee a profit or
protect against loss in down markets.

Hypothetical Investor Profile-

Investing for a College Education

David and Joan Rice are a fictitious couple who, like many shareholders, are
searching for a way to make their money grow over time.

David and Joan are planning for the college education of their child. On April
30, 1989, they invested $5,000 in the Class A Shares of Federated Cap ital
Appreciation Fund. Since then, David and Joan have made additional investments
of $250 every month.

As this chart shows, over 10 years, the original $5,000 investment along with
their additional monthly $250 investments totaling $35,000 has grown to $99,905.
This represents a 17.60% average annual total return. For the Rices, a dedicated
program of monthly investment really paid off.

[Graphic representation "A3" omitted - see Appendix.]

This hypothetical scenario is provided for illustrative purposes only and
does not represent the result obtained by any particular shareholder. Past
performance does not guarantee future results.

Portfolio of Investments

APRIL 30, 1999 (UNAUDITED)

<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
COMMON STOCKS-91.2%
BASIC MATERIALS-4.7%
106,500 Corn Products
International, Inc. $ 3,075,188
36,000 1 Level 3 Communications,
Inc. 3,242,250
38,300 Martin Marietta Materials 2,367,419
39,000 Southdown, Inc. 2,498,438
220,000 USEC, Inc. 2,736,250
TOTAL 13,919,545
CAPITAL GOODS-7.7%
140,000 1 Allied Waste Industries, Inc. 2,476,250
30,000 General Electric Co. 3,165,000
88,600 HON Industries, Inc. 2,392,200
26,000 Koninklijke (Royal)
Philips Electronics NV, ADR 2,219,750
100,000 1 Orbital Sciences Corp. 2,106,250
140,900 1 Republic Services, Inc. 2,897,256
76,923 1 Solectron Corp. 3,730,766
47,212 Tyco International Ltd. 3,835,975
TOTAL 22,823,447
COMMUNICATION SERVICES-11.5%
69,813 AT&T Corp. 3,525,556
49,089 1 AT&T Corp. - Liberty Media
Group, Inc., Class A 3,135,560
125,000 Cincinnati Bell, Inc. 2,828,125
85,000 Frontier Corp. 4,690,938
45,000 GTE Corp. 3,012,188
30,400 1 Global Crossing Ltd. 1,641,600
65,000 1 IXC Communications, Inc. 2,575,625
57,707 1 MCI Worldcom, Inc. 4,742,794
62,100 1 MetroNet Communications
Corp., Class B 3,446,550
114,000 1 Pacific Gateway Exchange, Inc. 4,560,000
TOTAL 34,158,936
<CAPTION>
SHARES VALUE
<C> <S> <C>
COMMON STOCKS-continued
CONSUMER CYCLICALS-8.2%
35,000 1 Abercrombie & Fitch Co.,
Class A $ 3,329,375
54,000 Black & Decker Corp. 3,064,500
229,100 1 Dal-Tile International, Inc. 2,577,375
7,000 1 DoubleClick, Inc. 978,687
131,744 Hollinger International, Inc. 1,852,650
52,000 Home Depot, Inc. 3,116,750
87,000 Mattel, Inc. 2,251,125
17,000 Omnicom Group, Inc. 1,232,500
19,000 1 Rambus, Inc. 1,142,375
27,000 1 Tommy Hilfiger Corp. 1,886,625
95,000 True North Communications,
Inc. 2,565,000
10,000 1 Value America, Inc. 394,375
TOTAL 24,391,337
CONSUMER STAPLES-8.4%
10,000 1 Adelphia Communications
Corp., Class A 682,500
101,000 Bergen Brunswig Corp.,
Class A 1,919,000
20,000 Clorox Co. 2,307,500
58,300 Dial Corp. 1,982,200
80,000 Earthgrains Co. 1,695,000
36,000 1 Jacor Communications,
Inc., Class A 2,889,000
38,500 1 Meyer (Fred), Inc. 2,083,812
56,000 PepsiCo, Inc. 2,068,500
46,000 Philip Morris Cos., Inc. 1,612,875
72,900 RJR Nabisco Holdings Corp. 1,877,175
37,500 1 Safeway, Inc. 2,022,656
33,000 1 Suiza Foods Corp. 1,239,563
121,800 1 The Pepsi Bottling Group,
Inc. 2,565,413
TOTAL 24,945,194
<CAPTION>
SHARES VALUE
<C> <S> <C>
COMMON STOCKS-continued
ENERGY-4.2%
29,369 BP Amoco PLC, ADR $ 3,324,204
50,500 1 Cooper Cameron Corp. 1,950,563
68,200 Halliburton Co. 2,907,025
28,400 Mobil Corp. 2,974,900
37,000 Sunoco, Inc. 1,322,750
TOTAL 12,479,442
FINANCIALS-11.9%
70,000 Ace, Ltd. 2,117,500
62,000 Allstate Corp. 2,255,250
16,000 American Express Co. 2,091,000
27,000 CIGNA Corp. 2,354,062
6,500 Capital One Financial Corp. 1,128,969
26,000 Chase Manhattan Corp. 2,151,500
46,599 Citigroup, Inc. 3,506,575
55,000 Conseco, Inc. 1,735,938
22,000 1 E*Trade Group, Inc. 2,541,000
47,290 Morgan Stanley, Dean
Witter & Co. 4,690,577
67,000 Nationwide Financial
Services, Inc., Class A 3,107,125
57,500 UNUM Corp. 3,140,938
50,000 UnionBanCal Corp. 1,706,250
71,000 Wells Fargo Co. 3,066,312
TOTAL 35,592,996
HEALTH CARE-9.7%
50,000 1 Agouron Pharmaceuticals,
Inc. 2,953,125
49,200 American Home Products
Corp. 3,001,200
40,000 1 Amgen, Inc. 2,457,500
68,000 AstraZeneca PLC, ADR 2,669,000
40,000 Baxter International, Inc. 2,520,000
51,000 Bristol-Myers Squibb Co. 3,241,687
24,200 Johnson & Johnson 2,359,500
30,000 Merck & Co., Inc. 2,107,500
99,000 1 Oxford Health Plans, Inc. 1,973,812
43,000 Smithkline Beecham Corp.,
ADR 2,824,562
62,300 Teva Pharmaceutical
Industries Ltd., ADR 2,850,225
TOTAL 28,958,111
<CAPTION>
SHARES VALUE
<C> <S> <C>
COMMON STOCKS-continued
TECHNOLOGY-20.0%
95,000 1 Adaptec, Inc. $ 2,285,937
45,000 1 America Online, Inc. 6,423,750
66,400 1 Apple Computer, Inc. 3,054,400
41,000 1 Cisco Systems, Inc. 4,676,562
46,000 1 Citrix Systems, Inc. 1,955,000
90,000 1 Crown Castle International
Corp. 1,721,250
42,000 1 DST Systems, Inc. 2,446,500
73,800 1 Data General Corp. 862,537
58,000 1 Dell Computer Corp. 2,388,875
33,400 1 EMC Corp. Mass 3,638,512
60,000 Eastman Kodak Co. 4,477,500
16,500 1 Exodus Communications, Inc. 1,487,063
6,000 1 Inktomi Corp. 718,500
24,000 Intel Corp. 1,468,500
17,500 1 Lexmark Intl. Group, Class A 2,161,250
100,000 1 Loral Space &
Communications 1,950,000
44,000 Lucent Technologies, Inc. 2,645,500
2,800 1 Marimba, Inc. 170,100
105,000 1 Mastech Corp. 1,542,187
50,000 1 Microsoft Corp. 4,065,625
38,500 Northern Telecom Ltd. 2,625,219
8,200 1 Razorfish, Inc. 356,700
38,000 1 RF Micro Devices, Inc. 2,123,250
1,500 1 Rhythms NetConnections,
Inc. 123,750
47,000 1 Sun Microsystems, Inc. 2,811,187
6,500 1 Vignette Corp. 617,500
24,500 1 WorldGate Communications,
Inc. 698,250
TOTAL 59,495,404
<CAPTION>
SHARES OR
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
COMMON STOCKS-continued
TRANSPORTATION-0.2%
13,200 CNF Transportation, Inc. $ 576,675
UTILITIES-4.7%
46,900 Enron Corp. 3,529,225
55,000 Montana Power Co. 4,100,938
76,200 Peco Energy Co. 3,614,737
120,000 SCANA Corp. 2,820,000
TOTAL 14,064,900
TOTAL COMMON STOCKS
(IDENTIFIED COST
$177,618,187) 271,405,987
CORPORATE BONDS-1.8%
CONSUMER CYCLICALS-1.3% $ 2,200,000 Costco Cos., Inc., Conv.
Bond, 8/19/2017 2,104,300
1,060,000 2 Omnicom Group, Inc., Conv.
Bond, 2.25%, 1/6/2013 1,740,181
TOTAL 3,844,481
HEALTH CARE-0.5% 725,000 Sepracor, Inc., Conv.
Bond, 6.25%, 2/15/2005 1,383,880
TOTAL CORPORATE BONDS
(IDENTIFIED COST
$3,622,861) 5,228,361
PREFERRED STOCKS-5.3%
BASIC MATERIALS-1.0%
165,000 Dimon, Inc., Conv. Pfd.,
$2.01 928,125
45,000 Monsanto Co., Conv. Pfd.,
$2.60 2,072,813
TOTAL 3,000,938
CONSUMER CYCLICALS-0.9%
41,000 Premier Parks, Inc., Conv.
Pfd., $4.05 2,603,500
CONSUMER STAPLES-1.0%
37,800 Ralston Purina Co., SAILS,
$1.08 1,757,700
32,500 2 Suiza Foods Corp., Conv.
Pfd., $2.75 1,185,860
TOTAL 2,943,560
<CAPTION>
SHARES OR
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
PREFERRED STOCKS-continued
TRANSPORTATION-1.1%
37,500 CNF Transportation, Inc.,
Cumulative Conv. Pfd.,
Series A, $2.50 $ 2,343,750
18,800 2 Union Pacific Corp., Conv.
Pfd., $3.13 1,032,383
TOTAL 3,376,133
UTILITIES-1.3% 33,000 K N Energy, Inc., Conv.
Pfd., $3.55 1,138,500
54,500 Texas Utilities Co.,
Cumulative PRIDES, $4.63 2,803,344
TOTAL 3,941,844
TOTAL PREFERRED STOCKS
(IDENTIFIED COST
$17,195,432) 15,865,975
REPURCHASE AGREEMENT -2.9% 3
$ 8,620,000 ABN AMRO, Inc., 4.94%,
dated 4/30/1999, due
5/3/1999 (at amortized
cost) 8,620,000
TOTAL INVESTMENTS
(IDENTIFIED COST
$207,056,480) 4 $ 301,120,323

</TABLE>

1 Non-income producing security.

2 Denotes a restricted security which is subject to restrictions on resale under
federal securities laws. These securities have been deemed liquid based upon
criteria approved by the fund's Board of Trustees. At April 30, 1999, these
securities amounted to $3,958,424 which represents 1.3% of net assets.

3 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.

4 The cost of investments for federal tax purposes amounts to $207,056,480. The
net unrealized appreciation of investments on a federal tax basis amounts to
$94,063,843 which is comprised of $101,556,933 appreciation and $7,493,090
depreciation at April 30, 1999.

Note: The categories of investments are shown as a percentage of net assets
($297,640,681) at April 30, 1999.

The following acronyms are used throughout this portfolio:

ADR -American Depositary Receipt
PRIDES -Preferred Redeemable Increased Dividend Equity Securities
SAILS -Stock Appreciation Income Linked Security

See Notes which are an integral part of the Financial Statements

Statement of Assets and Liabilities

APRIL 30, 1999 (UNAUDITED)

<TABLE>
<S> <C> <C>
ASSETS:
Total investments in
securities, at value
(identified and tax cost
$207,056,480) $ 301,120,323
Cash 1,213
Income receivable 277,532
Receivable for investments
sold 3,736,431
Receivable for shares sold 870,496
TOTAL ASSETS 306,005,995
LIABILITIES:
Payable for investments
purchased $ 8,254,280
Payable for shares
redeemed 34,463
Payable for taxes withheld 1,039
Accrued expenses 75,532
TOTAL LIABILITIES 8,365,314
Net assets for 12,741,710
shares outstanding $ 297,640,681
NET ASSETS CONSIST OF:
Paid in capital $ 188,726,774
Net unrealized
appreciation of
investments 94,063,843
Accumulated net realized
gain on investments 14,823,317
Undistributed net
investment income 26,747
TOTAL NET ASSETS $ 297,640,681
NET ASSET VALUE, OFFERING
PRICE AND REDEMPTION
PROCEEDS PER SHARE
CLASS A SHARES:
Net Asset Value Per Share
($212,588,586 / 9,079,142
shares outstanding) $23.42
Offering Price Per Share
(100/94.50 of $23.42) 1 $24.78
Redemption Proceeds Per
Share $23.42
CLASS B SHARES:
Net Asset Value Per Share
($75,413,234 / 3,247,280
shares outstanding) $23.22
Offering Price Per Share $23.22
Redemption Proceeds Per
Share (94.50/100 of
$23.22) 1 $21.94
CLASS C SHARES:
Net Asset Value Per Share
($9,638,861 / 415,288
shares outstanding) $23.21
Offering Price Per Share $23.21
Redemption Proceeds Per
Share (99.00/100 of
$23.21) 1 $22.98

</TABLE>

1 See "What Do Shares Cost?" in the Prospectus.

See Notes which are an integral part of the Financial Statements

Statement of Operations

SIX MONTHS ENDED APRIL 30, 1999 (UNAUDITED)

<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Dividends (net of foreign
taxes withheld of $12,730) $ 1,739,177
Interest 305,156
TOTAL INCOME 2,044,333
EXPENSES:
Investment advisory fee $ 937,975
Administrative personnel
and services fee 91,740
Custodian fees 8,086
Transfer and dividend
disbursing agent fees and
expenses 85,917
Directors'/Trustees' fees 1,984
Auditing fees 8,033
Legal fees 1,041
Portfolio accounting fees 43,541
Distribution services fee-
Class B Shares 226,739
Distribution services fee-
Class C Shares 26,383
Shareholder services fee-
Class A Shares 228,284
Shareholder services fee-
Class B Shares 75,580
Shareholder services fee-
Class C Shares 8,794
Share registration costs 31,792
Printing and postage 21,224
Insurance premiums 2,232
Miscellaneous 1,984
TOTAL EXPENSES 1,801,329
Net investment income 243,004
REALIZED AND UNREALIZED
GAIN ON INVESTMENTS:
Net realized gain on
investments 14,835,873
Net change in unrealized
appreciation of
investments 49,818,424
Net realized and
unrealized gain on
investments 64,654,297
Change in net assets
resulting from operations $ 64,897,301

</TABLE>

See Notes which are an integral part of the Financial Statements

Statement of Changes in Net Assets

<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR
(unaudited) ENDED
APRIL 30, OCTOBER 31,
1999 1998
<S> <C> <C>
INCREASE (DECREASE) IN NET
ASSETS
OPERATIONS:
Net investment income $ 243,004 $ 575,456
Net realized gain on
investments ($14,835,873
and $9,401,664,
respectively,
as computed for federal tax
purposes) 14,835,873 9,739,436
Net change in unrealized
appreciation
(depreciation) of
investments 49,818,424 (1,668,574)
CHANGE IN NET ASSETS
RESULTING FROM OPERATIONS 64,897,301 8,646,318
DISTRIBUTIONS TO
SHAREHOLDERS:
Distributions from net
investment income
Class A Shares (302,825) (930,172)
Class B Shares - (23,332)
Class C Shares - (4,448)
Distributions from net
realized gains on
investments
Class A Shares (6,933,488) (17,245,708)
Class B Shares (2,217,536) (2,692,221)
Class C Shares (250,672) (311,507)
CHANGE IN NET ASSETS
RESULTING FROM
DISTRIBUTIONS
TO SHAREHOLDERS (9,704,521) (21,207,388)
SHARE TRANSACTIONS:
Proceeds from sale of
shares 66,576,058 97,596,378
Net asset value of shares
issued to shareholders in
payment of
distributions declared 5,646,006 9,343,176
Cost of shares redeemed (43,488,707) (53,089,335)
CHANGE IN NET ASSETS
RESULTING FROM SHARE
TRANSACTIONS 28,733,357 53,850,219
Change in net assets 83,926,137 41,289,149
NET ASSETS:
Beginning of period 213,714,544 172,425,395
End of period (including
undistributed net
investment income of
$26,747 and $86,568,
respectively) $ 297,640,681 $ 213,714,544

</TABLE>

See Notes which are an integral part of the Financial Statements

Financial Highlights-Class A Shares

(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD) 1

<TABLE>
<CAPTION>
SIX MONTHS
ENDED PERIOD
(unaudited) YEAR ENDED ENDED YEAR ENDED
APRIL 30, OCTOBER 31, OCTOBER 31, DECEMBER 31, 3
1999 1998 1997 1996 2 1995 1994
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $18.73 $20.08 $16.17 $14.60 $11.47 $11.90
INCOME FROM
INVESTMENT OPERATIONS:
Net investment income 0.04 0.09 0.09 0.04 0.18 0.20
Net realized and
unrealized gain (loss)
on investments 5.51 1.01 4.85 1.89 4.07 (0.24)
TOTAL FROM
INVESTMENT OPERATIONS 5.55 1.10 4.94 1.93 4.25 (0.04)
LESS DISTRIBUTIONS:
Distributions from net
investment income (0.04) (0.12) (0.11) (0.03) (0.18) (0.19)
Distributions from net
realized gain on
investments (0.82) (2.33) (0.92) (0.33) (0.94) (0.20)
TOTAL DISTRIBUTIONS (0.86) (2.45) (1.03) (0.36) (1.12) (0.39)
NET ASSET VALUE,
END OF PERIOD $23.42 $18.73 $20.08 $16.17 $14.60 $11.47
TOTAL RETURN 4 30.20% 6.23% 32.10% 13.36% 37.17% (0.30%)

RATIOS TO AVERAGE
NET ASSETS:
Expenses 5 1.24% 6 1.31% 1.30% 1.50% 6 1.23% 1.15%
Net investment income 5 0.40% 6 0.42% 0.78% 0.04% 6 1.14% 1.63%
Expenses (after waivers) 1.24% 6 1.29% 1.23% 1.23% 6 1.08% 1.15%
Net investment income
(after waivers) 0.40% 6 0.44% 0.85% 0.31% 6 1.29% 1.63%
SUPPLEMENTAL DATA:
Net assets, end of period
(000 omitted) $212,589 $158,587 $148,175 $108,804 $98,200 $81,377
Portfolio turnover 31% 68% 85% 79% 81% 23%

</TABLE>

1 All years prior to 1998 have been restated to reflect a 6-for-1 stock split
effective as of October 29, 1997.

2 Reflects operations for the period from January 1, 1996 (start of business) to
October 31, 1996.

3 Amounts presented prior to January 1, 1996 represent results of operations for
Federated Exchange Fund, Ltd.

4 Based on net asset value, which does not reflect the sales charge or con
tingent deferred sales charge, if applicable.

5 During the period, certain fees were voluntarily waived. If such voluntary
waivers had not occurred, the ratios would have been as indicated.

6 Computed on an annualized basis.

See Notes which are an integral part of the Financial Statements

Financial Highlights-Class B Shares

(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD) 1

<TABLE>
<CAPTION>
SIX MONTHS
ENDED PERIOD
(unaudited) ENDED
APRIL 30, YEAR ENDED OCTOBER 31, OCTOBER 31,
1999 1998 1997 1996 2
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $18.62 $20.04 $16.12 $14.70
INCOME FROM INVESTMENT OPERATIONS:
Net investment income/(net operating loss) (0.02) (0.03) 0.12 (0.04) 3
Net realized and unrealized gain on investments 5.44 0.96 4.72 1.80
TOTAL FROM INVESTMENT OPERATIONS 5.42 0.93 4.84 1.76
LESS DISTRIBUTIONS:
Distributions from net investment income - (0.02) - (0.01)
Distributions from net realized gain on investments (0.82) (2.33) (0.92) (0.33)
TOTAL DISTRIBUTIONS (0.82) (2.35) (0.92) (0.34)
NET ASSET VALUE, END OF PERIOD $23.22 $18.62 $20.04 $16.12
TOTAL RETURN 4 29.68% 5.20% 31.65% 12.00%

RATIOS TO AVERAGE NET ASSETS:
Expenses 5 1.99% 6 2.06% 2.04% 2.25% 6
Net investment income/(net operating loss) 5 (0.35%) 6 (0.33%) 0.01% (0.63%) 6
Expenses (after waivers) 1.99% 6 2.04% 1.98% 1.98% 6
Net investment income/(net operating loss)
(after waivers) (0.35%) 6 (0.31%) 0.07% (0.36%) 6
SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $75,413 $49,242 $21,636 $6,369
Portfolio turnover 31% 68% 85% 79%

</TABLE>

1 All years prior to 1998 have been restated to reflect a 6-for-1 stock split
effective as of October 29, 1997.

2 Reflects operations for the period from January 4, 1996 (date of initial
public offering) to October 31, 1996.

3 Per share information presented is based upon the monthly average number of
shares outstanding due to large fluctuations in the number of shares out
standing during the period.

4 Based on net asset value, which does not reflect the sales charge or con
tingent deferred sales charge, if applicable.

5 During the period, certain fees were voluntarily waived. If such voluntary
waivers had not occurred, the ratios would have been as indicated.

6 Computed on an annualized basis.

See Notes which are an integral part of the Financial Statements

Financial Highlights-Class C Shares

(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD) 1

<TABLE>
<CAPTION>
SIX MONTHS
ENDED PERIOD
(unaudited) ENDED
APRIL 30, YEAR ENDED OCTOBER 31, OCTOBER 31,
1999 1998 1997 1996 2
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $18.61 $19.95 $16.13 $14.70
INCOME FROM INVESTMENT OPERATIONS:
Net investment income/(net operating loss) (0.02) (0.04) 0.13 (0.04) 3
Net realized and unrealized gain on investments 5.44 1.05 4.61 1.81
TOTAL FROM INVESTMENT OPERATIONS 5.42 1.01 4.74 1.77
LESS DISTRIBUTIONS:
Distributions from net investment income - (0.02) - (0.01)
Distributions from net realized gain on investments (0.82) (2.33) (0.92) (0.33)
TOTAL DISTRIBUTIONS (0.82) (2.35) (0.92) (0.34)
NET ASSET VALUE, END OF PERIOD $23.21 $18.61 $19.95 $16.13
TOTAL RETURN 4 29.70% 5.67% 30.90% 12.05%

RATIOS TO AVERAGE NET ASSETS:
Expenses 5 1.99% 6 2.06% 2.04% 2.25% 6
Net investment income/(net operating loss) 5 (0.35%) 6 (0.33%) 0.02% (0.64%) 6
Expenses (after waivers) 1.99% 6 2.04% 1.98% 1.98% 6
Net investment income/(net operating loss)
(after waivers) (0.35%) 6 (0.31%) 0.08% (0.37%) 6
SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $9,639 $5,885 $2,614 $710
Portfolio turnover 31% 68% 85% 79%

</TABLE>

1 All years prior to 1998 have been restated to reflect a 6-for-1 stock split
effective as of October 29, 1997.

2 Reflects operations for the period from January 4, 1996 (date of initial
public offering) to October 31, 1996.

3 Per share information presented is based upon the monthly average number of
shares outstanding due to large fluctuations in the number of shares out
standing during the period.

4 Based on net asset value, which does not reflect the sales charge or con
tingent deferred sales charge, if applicable.

5 During the period, certain fees were voluntarily waived. If such voluntary
waivers had not occurred, the ratios would have been as indicated.

6 Computed on an annualized basis.

See Notes which are an integral part of the Financial Statements

Notes to Financial Statements

APRIL 30, 1999 (UNAUDITED)

ORGANIZATION

Federated Equity Funds (the "Trust") is registered under the Investment Com pany
Act of 1940, as amended (the "Act") as an open-end, management invest ment
company. The Trust consists of five 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 port
folios 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 Fund offers three classes of shares: Class A Shares, Class B Shares and
Class C Shares. The investment objective of the Fund is to provide capi tal
appreciation.

Pursuant to the terms of the merger agreement dated October 10, 1995, share
holders 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 out standing shares as
of the transaction date. Due to this, and due to the sim ilarities 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.

SIGNIFICANT ACCOUNTING POLICIES

INVESTMENT VALUATIONS

REPURCHASE AGREEMENTS

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

WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS

RESTRICTED SECURITIES

Restricted securities are securities that may only be resold upon registra tion
under federal securities laws or in transactions exempt from such regis tration.
In some cases, the issuer of restricted securities has agreed to register such
securities for resale, at the issuer's expense either upon demand by the Fund or
in connection with another registered offering of the securities. Many
restricted securities may be resold in the secondary market in transactions
exempt from registration. Such restricted securities may be determined to be
liquid under criteria established by the Trustees. The Fund will not incur any
registration costs upon such resales. The Fund's restricted securities are
valued at the price provided by dealers in the sec ondary market or, if no
market prices are available, at the fair value as determined by the Fund's
pricing committee.

USE OF ESTIMATES

OTHER

Investment transactions are accounted for on the trade date.

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>
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 1999 OCTOBER 31, 1998
CLASS A SHARES: SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
Shares sold 1,902,497 $ 39,590,605 3,215,849 $ 59,576,047
Shares issued to
shareholders in payment of
distributions declared 161,179 3,341,186 366,688 6,503,204
Shares redeemed (1,451,986) (29,340,739) (2,493,386) (46,093,087)
NET CHANGE RESULTING FROM
CLASS A SHARE
TRANSACTIONS 611,690 $ 13,591,052 1,089,151 $ 19,986,164

<CAPTION>
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 1999 OCTOBER 31, 1998
CLASS B SHARES: SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
Shares sold 858,607 $ 18,442,767 1,733,696 $ 33,737,245
Shares issued to
shareholders in payment of
distributions declared 100,462 2,066,497 144,522 2,550,992
Shares redeemed (356,802) (7,612,535) (312,900) (5,988,176)
NET CHANGE RESULTING FROM
CLASS B SHARE
TRANSACTIONS 602,267 $ 12,896,729 1,565,318 $ 30,300,061

<CAPTION>
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 1999 OCTOBER 31, 1998
CLASS C SHARES: SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
Shares sold 389,153 $ 8,542,686 224,084 $ 4,283,086
Shares issued to
shareholders in payment of
distributions declared 11,597 238,323 16,382 288,980
Shares redeemed (301,739) (6,535,433) (55,205) (1,008,072)
NET CHANGE RESULTING FROM
CLASS C SHARE
TRANSACTIONS 99,011 $ 2,245,576 185,261 $ 3,563,994
NET CHANGE RESULTING FROM
SHARE TRANSACTIONS 1,312,968 $ 28,733,357 2,839,730 $ 53,850,219

</TABLE>

INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES

INVESTMENT ADVISORY FEE

Federated Investment Management Company, 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 voluntary 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

DISTRIBUTION SERVICES FEE

<TABLE>
<CAPTION>
PERCENTAGE OF AVERAGE
SHARE CLASS NAME DAILY NET ASSETS OF CLASS
<S> <C>
Class A Shares 0.25%
Class B Shares 0.75%
Class C Shares 0.75%

</TABLE>

For the period ended April 30, 1999, Class A Shares did not incur a distribu
tion services fee.

SHAREHOLDER SERVICES FEE

TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES

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.

INVESTMENT TRANSACTIONS

Purchases and sales of investments, excluding short-term securities, for the
period ended April 30, 1999, were as follows:

Purchases $100,720,299
Sales $ 75,360,856

YEAR 2000

Trustees

JOHN F. DONAHUE

THOMAS G. BIGLEY

JOHN T. CONROY, JR.

NICHOLAS P. CONSTANTAKIS

WILLIAM J. COPELAND

JOHN F. CUNNINGHAM

LAWRENCE D. ELLIS, M.D.

PETER E. MADDEN

CHARLES F. MANSFIELD, JR.

JOHN E. MURRAY, JR., J.D., S.J.D.

MARJORIE P. SMUTS

JOHN WALSH

Officers

JOHN F. DONAHUE

Chairman

GLEN R. JOHNSON

President

J. CHRISTOPHER DONAHUE

Executive Vice President

EDWARD C. GONZALES

Executive Vice President

JOHN W. MCGONIGLE

Executive Vice President and Secretary

RICHARD B. FISHER

Vice President

RICHARD J. THOMAS

Treasurer

C. GRANT ANDERSON

Assistant Secretary

[Graphic]
Federated
World-Class Investment Manager
SEMI-ANNUAL REPORT
AS OF APRIL 30, 1999

Federated Capital Appreciation Fund

Established 1977

23RD SEMI-ANNUAL REPORT

[Graphic]
Federated
Federated Capital Appreciation Fund
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
1-800-341-7400
WWW.FEDERATEDINVESTORS.COM
Federated Securities Corp., Distributor

Cusip 314172701

Cusip 314172800

Cusip 314172883

G01649-05 (6/99)

[Graphic]

SEMI-ANNUAL REPORT

[Graphic]

GLEN R. JOHNSON
President
Federated Growth Strategies Fund

President's Message

Dear Shareholder:

Federated Growth Strategies Fund was created in 1984, and I am pleased to
present its 15th Semi-Annual Report. As of April 30, 1999, the fund's total
assets of $817 million were invested in 110 common stocks of mid- to large- cap
corporations, i.e., median stock that has a market cap of approximately $10.5
billion.

This report covers the first half of the fund's fiscal year which is the
six-month period from November 1, 1998 to April 30, 1999. It begins with an
interview with the fund's portfolio manager, James E. Grefenstette, Vice
President of Federated Investment Management Company. Following his discus sion
are three additional items of shareholder interest. First is a series of graphs
showing the fund's long-term investment performance. Second is a com plete
listing of the fund's stock holdings, and third is the publication of the fund's
financial statements.

Federated Growth Strategies Fund is managed to pursue long-term growth through a
highly diversified portfolio of mid- and large-capitalization stocks selected
for their strong potential for earnings growth. The fund's portfolio includes
common stocks representing 11 industry sectors with names that investors
recognize immediately-America Online, Black & Decker, Dell Computer, General
Electric, Home Depot, Johnson & Johnson, Merck, and Charles Schwab, to name a
few.

During the reporting period, the stock market's upward momentum continued to be
led by large-cap growth stocks and Internet stocks. Thanks to both sector
weightings and security selection, many of the fund's holdings rose in value.
This in turn produced an extraordinarily strong six-month total return of more
than 40.00% for the fund across all share classes. These returns were far
superior to the 23.07% return of the fund's peer group, the Lipper Growth Funds
Average, as well as the 22.32% return of the Standard & Poor's ("S&P") 500 Index
("S&P 500"). 1

1 Lipper figures represent the average of the total returns reported by all of
the mutual funds designated by Lipper Analytical Services, Inc. as fall ing into
the respective categories indicated. These figures do not reflect sales charges.
The S&P 500 is an unmanaged capitalization-weighted index of 500 stocks designed
to measure performance of the broad domestic econ omy through changes in the
aggregate market value of 500 stocks represent ing all major industries.
Investments cannot be made in an index.

Individual share class total return performance for the six-month reporting
period follows. 2

TOTAL RETURN NET ASSET VALUE INCREASE Class A Shares 41.31%
$23.53 to $33.25 = 41% Class B Shares 40.78% $22.88 to $32.21 = 41% Class C
Shares 40.79% $23.02 to $32.41 = 41%

Of course, we continue to see significant day-to-day volatility in the stock
market. By reinvesting your dividends and capital gains automatically in
additional fund shares, you can take advantage of share price fluctuations in
volatile markets by adding to your account on a regular basis. You can also add
to your account on a regular basis through a systematic investment pro gram,
whereby a specific amount is withdrawn from your checking account on a regular
basis to purchase more fund shares. Buying shares regularly (i.e., monthly
additions of the same dollar amount) automatically accumulates more shares in
your account at lower prices. 3 Please contact your investment rep resentative
for more information, and please note that the fund's share price has been
volatile and that may make it suitable for regular investments.

Thank you for selecting Federated Growth Strategies Fund to pursue your
long-term financial goals. We welcome your comments and suggestions.

Sincerely,

[Graphic]

Glen R. Johnson
President
June 15, 1999

2 Performance quoted is based on net asset value, represents past perfor mance
and is not indicative of future results. Investment return and prin cipal value
will fluctuate so that an investor's shares, when redeemed, may be worth more or
less than their original cost. Total returns for the period, based on offering
price (i.e., less any applicable sales charge), for Class A, B, and C Shares
were 33.53%, 35.28% and 39.79%, respectively.

[Graphic]

JAMES E. GREFENSTETTE, CFA
Vice President
Federated Investment Management Company

Investment Review

WHAT IS YOUR APPRAISAL OF THE EQUITY MARKET OVER THE FIRST HALF OF THE FUND'S
FISCAL YEAR, WHICH WAS A PARTICULARLY REWARDING PERIOD FOR THE FUND'S GROWTH
STOCK HOLDINGS?

The fourth quarter of 1998 started with an accelerated continuation of the poor
performance of the third quarter of 1998. As a credit crisis loomed- sparked by
the troubles in the third quarter and the collapse of Long Term Capital
Management-the first six trading days of the fourth quarter of 1998 saw the S&P
500 decline almost 6% and the S&P 600 Small Cap Index 1 trade off nearly 15%.
The Federal Reserve Board then lowered rates in both October and November of
1998. This proved to be a pivotal point as the market took the lower rates and
added liquidity and proceeded to rally into the end of the quarter.

The first quarter of 1999 was almost a replay of 1998. Stocks staged a narrow
rally, lead by growth stocks in general and technology stocks in particular.
Despite malaise outside of the U.S., however, domestic consumer demand remained
healthy, propelling the U.S. economy to continued growth.

We enjoyed a positive period for stocks, particularly large-cap stocks. For the
six-month reporting period ended April 30, 1999, the S&P 500 produced a return
of 22.32%, while mid-cap stocks, as represented by the S&P 400 Mid Cap Index, 1
returned 18.86%.

1 The S&P 600 Small Cap Index is an unmanaged, capitalization-weighted index of
stocks representing all major industries in the small-cap range of the U.S.
stock market. The S&P 400 Mid Cap Index is an unmanaged capitalization- weighted
index that measures the performance of the mid-range of the U.S.
stock market. Investments cannot be made in an index.

HOW DID THE FUND PERFORM IN TERMS OF TOTAL RETURN FOR THE SIX-MONTH PERIOD ENDED
APRIL 30, 1999 COMPARED TO ITS PEERS?

For the six-month period ended April 30, 1999, the fund produced total returns
for Class A, B, and C Shares of 41.31%, 40.78% and 40.79%, respec tively, based
on net asset value. 2 These returns were far superior to the 23.07% return of
the fund's peer group, the Lipper Growth Funds Average.

WHAT INDUSTRY SECTORS AND SECURITIES CONTRIBUTED TO THE FUND'S PERFORMANCE?

The technology and consumer cyclicals sectors impacted the fund's performance,
while successful selective positioning occurred within the health care,
communication services, and financial sectors. Exceptionally strong stocks
included E*TRADE (0.55% of net assets), AMERICA ONLINE (2.20% of net assets),
VISX (0.95% of net assets) and RF MICRODEVICES (1.03% of net assets).

FEDERATED GROWTH STRATEGIES FUND HAS ITS INVESTABLE UNIVERSE AS MID-CAP TO
LARGE-CAP STOCKS. HAS THE FUND'S MARKET CAP BIAS CHANGED DURING THE REPORTING
PERIOD?

The fund has had a mid-cap bias for most of the last four years because in that
arena we found faster growing companies at attractive prices. Recently in 1999,
our disciplines have modestly guided our market cap exposure to large-cap
issues, reducing the difference in median market cap between the fund and the
typical growth fund in the Lipper universe.

WHAT ARE SOME OF THE FUND'S RECENT PORTFOLIO ADDITIONS?

Our recent purchases included the following:

MCI WORLDCOM (1.73% of net assets): MCI provides consumers and businesses with
local, long distance, Internet and data services. This company should continue
to benefit from the strong growth in demand for telecommunication services
around the world.

SCHWAB (CHARLES) (0.50% of net assets): Schwab provides a variety of financial
services to just about every type of investor. Schwab has been very successful
at implementing and exploiting the latest in information technology for its
clients. The company has 5.6 million customers and its revenues in 1998 equalled
$2.7 billion, 19% higher than in 1997.

NETWORK APPLIANCE (0.51% of net assets): This firm produces data-intensive
network storage devices. Demand for storage-related products and services should
continue to grow as information generating devices continue to proliferate.

E*TRADE (0.55% of net assets): This is one of the most successful providers of
online investing services. It is a pure play in the rapid growth of financial
commerce over the Web.

BROADCOM (0.86% of net assets): Broadcom develops integrated silicon solutions
(chips) that enable broadband digital data transmission to the home and within
the business enterprise. These chips go into devices such as cable set-top
boxes, cable modems, and high-speed networking components.

SEPRACOR (0.39% of net assets): This firm develops and commercializes improved
versions of widely prescribed drugs using medicinal and chiral chemistry to
minimize adverse reactions and improve positive ones.

VISX (0.95% of net assets): VISX develops proprietary technologies and systems
for laser vision correction. The company's Excimer Laser System removes
submicron layers of tissues from the surface of the cornea to reshape the eye
and improve vision.

2 Performance quoted is based on net asset value, represents past performance
and is not indicative of future results. Investment return and principal value
will fluctuate so that an investor's shares, when redeemed, may be worth more or
less than their original cost. Total returns for the period, based on offering
price (i.e., less any applicable sales charge), for Class A, B, and C Shares
were 33.53%, 35.28% and 39.79%, respectively.

WHAT WERE THE FUND'S TOP 10 HOLDINGS AS OF APRIL 30, 1999, AND WHAT WERE THE
INDUSTRY WEIGHTINGS?

PERCENTAGE OF
NAME NET ASSETS
America Online, Inc. 2.20%
Providian Financial Corp. 2.10%
EMC Corp. 2.00%
Echostar Communications Corp. 1.80%
Sun Microsystems, Inc. 1.70%
MCI Worldcom, Inc. 1.70%
Microsoft Corp. 1.70%
Tyco International, Ltd. 1.70%
MBNA Corp. 1.60%
Cisco Systems, Inc. 1.50%
TOTAL 18.00%

PERCENTAGE OF PERCENTAGE
SECTOR NET ASSETS OF S&P 500
Technology 30.2% 20.1%
Financial 12.8% 16.5%
Health Care 11.5% 10.9%
Consumer Cyclicals 10.0% 9.0%
Communication Services 9.1% 8.5%
Consumer Staples 6.8% 13.2%
Capital Goods 5.9% 8.2%
Energy 5.5% 6.2%
Basic Materials 3.0% 3.6%
Transportation 1.7% 1.1%
Utilities 1.1% 2.8%

WHAT IS YOUR OVERALL OUTLOOK FOR THE MARKET NOW?

Growth investing, as an equity style, has outperformed value investing for most
of the last few years. We expect this pattern of performance to continue for the
next several quarters. We believe the market will be disappointed with the rate
of economic growth generated through the end of the year. As this happens,
investors should continue to buy stocks that are less sensitive to the strength
of the economy. As a result, we continue to favor industry sectors that offer
the potential for strong secular growth, such as technol ogy, health care and
certain consumer services.

Two Ways You May Seek to Invest for Success:

INITIAL INVESTMENT

IF YOU MADE AN INITIAL INVESTMENT OF $15,000 IN THE CLASS A SHARES OF FEDER ATED
GROWTH STRATEGIES FUND ON 8/23/84, REINVESTED YOUR DIVIDENDS AND CAPITAL GAINS,
AND DID NOT REDEEM ANY SHARES, YOUR ACCOUNT WOULD HAVE BEEN WORTH $150,522 ON
4/30/99. YOU WOULD HAVE EARNED A 17.06% 1 AVERAGE ANNUAL TOTAL RETURN FOR THE
INVESTMENT LIFE SPAN.

One key to investing wisely is to reinvest all distributions in fund shares.
This increases the number of shares on which you can earn future dividends, and
you gain the benefit of compounding.

As of 3/31/99, Class A Shares' average annual 1-year, 5-year, and 10-year total
returns were 5.45%, 19.68%, and 15.15%, respectively. Class B Shares' 1-year and
since inception (8/16/95) total returns were 5.29% and 22.24%, respectively.
Class C Shares' 1-year and since inception (8/16/95) total returns were 9.83%
and 22.89%, respectively. 2

[Graphic representation "A4" omitted - see Appendix.]

1 Total return represents the change in the value of an investment after
reinvesting all income and capital gains, and takes into account the 5.50% sales
charge applicable to an initial investment in Class A Shares. Data quoted
represents past performance and does not guarantee future results. Investment
return and principal value will fluctuate, so that an investor's shares, when
redeemed, may be worth more or less than their original cost.

ONE STEP AT A TIME

$1,000 INITIAL INVESTMENT AND SUBSEQUENT INVESTMENTS OF $1,000 EACH YEAR FOR 14
YEARS (REINVESTING ALL DIVIDENDS AND CAPITAL GAINS) GREW TO $58,485.

With this approach, the key is consistency.

If you had started investing $1,000 annually in the Class A Shares of Feder ated
Growth Strategies Fund on 8/23/84, reinvested your dividends and capital gains
and did not redeem any shares, you would have invested only $15,000, but your
account would have reached a total value of $58,485 1 by 4/30/99. You would have
earned an average annual total return of 17.51%.

A practical investment plan helps you pursue long-term performance from growth
oriented stocks. Through systematic investing, you buy shares on a regular basis
and reinvest all earnings. An investment plan works for you when you invest only
$1,000 annually. You can take it one step at a time. Put time, money and
compounding to work.

[Graphic representation "A5" omitted - see Appendix.]

1 This chart assumes that the subsequent annual investments are made on the last
day of each anniversary month. No method of investing can guarantee a profit or
protect against loss in down markets.

Hypothetical Investor Profile-
Investing for a College Education

David and Joan Rice are a fictional couple who, like many shareholders, are
searching for a way to make their money grow over time.

David and Joan have been planning for the college education of their child. On
April 30, 1989, they invested $5,000 in the Class A Shares of Federated Growth
Strategies Fund. Since then, David and Joan have made additional investments of
$250 every month.

As this chart shows, over 10 years, the original $5,000 investment along with
their additional monthly $250 investments totaling $35,000 has grown to $93,291.
This represents a 15.82% average annual total return. For the Rices, a dedicated
program of monthly investments really paid off.

[Graphic representation "A6" omitted - see Appendix.]

This hypothetical scenario is provided for illustrative purposes only and
does not represent the result obtained by any particular shareholder. Past
performance does not guarantee future results.

Portfolio of Investments

APRIL 30, 1999 (UNAUDITED)

<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
COMMON STOCKS-97.5%
BASIC MATERIALS-3.0%
112,600 Ecolab, Inc. $ 4,722,163
92,100 1 Level 3 Communications, Inc. 8,294,756
149,400 Vulcan Materials Co. 7,133,850
62,300 Weyerhaeuser Co. 4,181,887
TOTAL 24,332,656
CAPITAL GOODS-5.9%
71,900 General Electric Co. 7,585,450
129,900 1 Gulfstream Aerospace Corp. 6,332,625
74,800 Pitney Bowes, Inc. 5,231,325
83,500 1 Sanmina Corp. 5,542,313
113,300 Symbol Technologies, Inc. 5,410,075
166,900 Tyco International Ltd. 13,560,625
30,000 United Technologies Corp. 4,346,250
TOTAL 48,008,663
COMMUNICATION SERVICES-9.1%
165,750 1 AT&T Corp. - Liberty Media
Group, Inc., Class A 10,587,281
97,200 Ameritech Corp. 6,652,125
97,050 Century Telephone
Enterprises, Inc. 3,906,263
120,500 Frontier Corp. 6,650,094
115,300 1 IXC Communications, Inc. 4,568,763
172,126 1 MCI Worldcom, Inc. 14,146,606
138,700 1 MetroNet Communications
Corp., Class B 7,697,850
90,500 1 Pacific Gateway Exchange,
Inc. 3,620,000
93,100 1 Qwest Communications
International, Inc. 7,954,231
180,600 1 WinStar Communications,
Inc. 8,781,675
TOTAL 74,564,888
CONSUMER CYCLICALS-10.0%
109,000 1 Abercrombie & Fitch Co.,
Class A 10,368,625
82,000 1 Best Buy Co., Inc. 3,915,500
93,500 Black & Decker Corp. 5,306,125
64,100 Circuit City Stores, Inc. 3,942,150
98,800 1 Gemstar International
Group Ltd. 10,411,050
<CAPTION>
SHARES VALUE
<C> <S> <C>
COMMON STOCKS-continued
CONSUMER CYCLICALS-CONTINUED
311,400 1 Gentex Corp. $ 9,361,462
157,000 Home Depot, Inc. 9,410,188
68,800 Omnicom Group, Inc. 4,988,000
103,650 1 Rambus, Inc. 6,231,956
144,450 1 Staples, Inc. 4,333,500
197,300 TJX Cos., Inc. 6,572,556
97,500 1 Tommy Hilfiger Corp. 6,812,812
TOTAL 81,653,924
CONSUMER STAPLES-6.8%
246,200 1 Brinker International, Inc. 6,801,275
109,900 1 Cablevision SA, Class A 8,503,512
67,300 Clorox Co. 7,764,738
100,500 Comcast Corp., Class A 6,601,594
50,200 1 Consolidated Graphics, Inc. 2,139,775
141,700 Dial Corp. 4,817,800
194,800 1 Keebler Foods Co. 6,257,950
139,000 1 Pepsi Bottling Group, Inc.
(The) 2,927,687
76,400 Quaker Oats Co. 4,932,575
94,200 1 Safeway, Inc. 5,080,912
TOTAL 55,827,818
ENERGY-5.5%
179,100 Diamond Offshore Drilling, Inc. 5,921,494
296,600 ENSCO International, Inc. 5,505,638
76,500 Elf Aquitaine SA, ADR 5,976,562
126,700 Halliburton Co. 5,400,588
40,300 Mobil Corp. 4,221,425
125,500 Schlumberger Ltd. 8,016,313
121,200 Sunoco, Inc. 4,332,900
195,100 Transocean Offshore, Inc. 5,792,031
TOTAL 45,166,951
FINANCIALS-12.8%
106,500 Aflac, Inc. 5,777,625
43,300 American International
Group, Inc. 5,085,044
50,400 Capital One Financial
Corp. 8,753,850
77,900 Citigroup, Inc. 5,861,975
<CAPTION>
SHARES VALUE
<C> <S> <C>
COMMON STOCKS-continued
FINANCIALS-CONTINUED
38,900 1 E*Trade Group, Inc. $ 4,492,950
94,400 Federal Home Loan Mortgage
Corp. 5,923,600
239,700 Firstar Corp. 7,205,981
60,600 1 Knight/Trimark Group, Inc. 9,283,162
448,030 MBNA Corp. 12,628,846
73,900 Morgan Stanley, Dean
Witter & Co. 7,329,956
125,000 Old Kent Financial Corp. 5,906,250
135,600 Providian Financial Corp. 17,500,875
37,200 Schwab (Charles) Corp. 4,082,700
64,800 Zions Bancorp 4,321,350
TOTAL 104,154,164
HEALTH CARE-11.4%
109,300 1 Agouron Pharmaceuticals, Inc. 6,455,531
57,800 Allergan, Inc. 5,194,775
85,600 American Home Products Corp. 5,221,600
58,600 1 Biogen, Inc. 5,570,662
159,100 1 Centocor, Inc. 7,060,063
85,800 Guidant Corp. 4,606,388
41,700 Johnson & Johnson 4,065,750
87,900 Lilly (Eli) & Co. 6,471,637
152,600 Merck & Co., Inc. 10,720,150
80,600 Pfizer, Inc. 9,274,038
117,500 Schering Plough Corp. 5,676,719
38,000 1 Sepracor, Inc. 3,211,000
137,000 1 Universal Health Services,
Inc., Class B 7,098,312
60,400 1 VISX, Inc. 7,776,500
118,900 1 Watson Pharmaceuticals,
Inc. 4,815,450
TOTAL 93,218,575
TECHNOLOGY-30.2%
227,800 1 Adaptec, Inc. 5,481,438
127,600 1 America Online, Inc. 18,214,900
252,600 1 American Tower Systems Corp. 5,351,963
28,700 1 At Home Corp., Class A 4,131,006
92,000 1 Broadcom Corp. 7,095,500
105,800 1 Cisco Systems, Inc. 12,067,812
<CAPTION>
SHARES VALUE
<C> <S> <C>
COMMON STOCKS-continued
TECHNOLOGY-CONTINUED
162,000 1 Citrix Systems, Inc. $ 6,885,000
70,900 1 Cree Research, Inc. 2,977,800
119,700 1 Dell Computer Corp. 4,930,144
151,200 1 EMC Corp. Mass 16,471,350
144,100 1 Echostar Communications
Corp., Class A 14,455,031
91,800 1 Etec Systems, Inc. 2,834,325
47,800 1 Exodus Communications, Inc. 4,307,975
288,700 1 ICG Communications, Inc. 6,369,444
34,000 1 Inktomi Corp. 4,071,500
173,400 1 International Network
Services 6,589,200
41,700 1 Lexmark Intl. Group, Class
A 5,149,950
79,800 Lucent Technologies, Inc. 4,797,975
7,800 1 Marimba, Inc. 473,850
407,400 1 Mastech Corp. 5,983,687
168,400 1 Microsoft Corp. 13,693,025
83,000 1 Network Appliance, Inc. 4,175,938
103,400 1 New Era of Networks, Inc. 3,883,963
105,000 Nokia Oyj, Class A, ADR 7,789,687
147,900 1 Oracle Corp. 4,002,544
85,400 1 Qlogic Corp. 5,972,663
40,400 1 Qualcomm, Inc. 8,080,000
150,400 1 RF Micro Devices, Inc. 8,403,600
237,300 1 Sun Microsystems, Inc. 14,193,506
102,900 1 Tellabs, Inc. 11,273,981
71,500 1 USWeb Corp. 1,604,281
39,100 1 Uniphase Corp. 4,745,762
136,400 1 Vitesse Semiconductor
Corp. 6,317,025
152,400 1 Xilinx, Inc. 6,953,250
40,900 1 Yahoo, Inc. 7,144,719
TOTAL 246,873,794
TRANSPORTATION-1.7%
36,500 1 FDX Corp. 4,108,531
300,050 Southwest Airlines Co. 9,770,378
TOTAL 13,878,909
<CAPTION>
SHARES OR
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
COMMON STOCKS-continued
UTILITIES-1.1%
119,900 Enron Corp. $ 9,022,475
TOTAL COMMON STOCKS
(IDENTIFIED COST
$541,949,146) 796,702,817
REPURCHASE AGREEMENTS-2.8% 2
$ 22,455,000 ABN AMRO, Inc., 4.94%,
dated 4/30/1999, due
5/3/1999 (at amortized
cost) 22,455,000
TOTAL INVESTMENTS
(IDENTIFIED COST
$564,404,146) 3 $ 819,157,817
</TABLE>

1 Non-income producing security.

3 The cost of investments for federal tax purposes amounts to $564,404,146. The
net unrealized appreciation of investments on a federal tax basis amounts to
$254,753,671 which is comprised of $269,209,111 appreciation and $14,455,440
depreciation at April 30, 1999.

Note: The categories of investments are shown as a percentage of net assets
($816,990,398) at April 30, 1999.

The following acronym is used throughout this portfolio:

ADR -American Depositary Receipt

See Notes which are an integral part of the Financial Statements

Statement of Assets and Liabilities

APRIL 30, 1999 (UNAUDITED)

<TABLE>
<S> <C> <C>
ASSETS:
Total investments in
securities, at value
(identified and tax cost
$564,404,146) $ 819,157,817
Income receivable 105,476
Receivable for investments
sold 13,947,859
Receivable for shares sold 992,568
TOTAL ASSETS 834,203,720
LIABILITIES:
Payable for investments
purchased $ 16,697,001
Payable for shares
redeemed 162,614
Payable to Bank 164,025
Payable for taxes withheld 680
Accrued expenses 189,002
TOTAL LIABILITIES 17,213,322
Net assets for 24,709,606
shares outstanding $ 816,990,398
NET ASSETS CONSIST OF:
Paid in capital $ 494,437,336
Net unrealized
appreciation of
investments 254,753,671
Accumulated net realized
gain on investments 71,161,012
Distributions in excess of
net investment income (3,361,621)
TOTAL NET ASSETS $ 816,990,398
NET ASSET VALUE, OFFERING
PRICE AND REDEMPTION
PROCEEDS PER SHARE
CLASS A SHARES:
Net Asset Value Per Share
($671,238,355 / 20,188,427
shares outstanding) $33.25
Offering Price Per Share
(100/94.50 of $33.25) 1 $35.19
Redemption Proceeds Per
Share $33.25
CLASS B SHARES:
Net Asset Value Per Share
($126,175,613 / 3,917,098
shares outstanding) $32.21
Offering Price Per Share $32.21
Redemption Proceeds Per
Share (94.50/100 of
$32.21) 1 $30.44
CLASS C SHARES:
Net Asset Value Per Share
($19,576,430 / 604,081
shares outstanding) $32.41
Offering Price Per Share $32.41
Redemption Proceeds Per
Share (99.00/100 of
$32.41) 1 $32.09
</TABLE>

1 See "What Do Shares Cost?" in the Prospectus.

See Notes which are an integral part of the Financial Statements

Statement of Operations

SIX MONTHS ENDED APRIL 30, 1999 (UNAUDITED)

<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Dividends (net of foreign
taxes withheld of $9,704) $ 1,127,925
Interest 292,168
TOTAL INCOME 1,420,093
EXPENSES:
Investment advisory fee $ 2,639,522
Administrative personnel
and services fee 265,360
Custodian fees 21,235
Transfer and dividend
disbursing agent fees and
expenses 336,647
Directors'/Trustees' fees 3,968
Auditing fees 8,033
Legal fees 2,083
Portfolio accounting fees 75,434
Distribution services fee-
Class B Shares 378,373
Distribution services fee-
Class C Shares 59,451
Shareholder services fee-
Class A Shares 733,899
Shareholder services fee-
Class B Shares 126,124
Shareholder services fee-
Class C Shares 19,817
Share registration costs 47,795
Printing and postage 54,052
Insurance premiums 3,075
Miscellaneous 8,431
TOTAL EXPENSES 4,783,299
WAIVERS:
Waiver of shareholder
services fee-Class C
Shares (1,585)
Net expenses 4,781,714
Net operating loss (3,361,621)
REALIZED AND UNREALIZED
GAIN ON INVESTMENTS:
Net realized gain on
investments 83,214,768
Net change in unrealized
appreciation of
investments 159,576,458
Net realized and
unrealized gain on
investments 242,791,226
Change in net assets
resulting from operations $ 239,429,605
</TABLE>

See Notes which are an integral part of the Financial Statements

Statement of Changes in Net Assets

<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR
(unaudited) ENDED
APRIL 30, OCTOBER 31,
1999 1998
<S> <C> <C>
INCREASE (DECREASE) IN NET
ASSETS
OPERATIONS:
Net operating loss $ (3,361,621) $ (3,851,714)
Net realized gain (loss) on
investments ($83,214,768
and ($9,726,866)
respectively, as computed
for federal tax purposes) 83,214,768 (10,057,424)
Net change in unrealized
appreciation/depreciation 159,576,458 (26,112,888)
CHANGE IN NET ASSETS
RESULTING FROM OPERATIONS 239,429,605 (40,022,026)
DISTRIBUTIONS TO
SHAREHOLDERS:
Distributions from net
realized gains
Class A Shares - (103,524,864)
Class B Shares - (8,434,003)
Class C Shares - (1,228,553)
CHANGE IN NET ASSETS
RESULTING FROM
DISTRIBUTIONS
TO SHAREHOLDERS - (113,187,420)
SHARE TRANSACTIONS:
Proceeds from sale of
shares 353,508,962 718,975,850
Net asset value of shares
issued to shareholders in
payment of
distributions declared 1,036 85,299,452
Cost of shares redeemed (377,129,912) (605,010,967)
CHANGE IN NET ASSETS
RESULTING FROM SHARE
TRANSACTIONS (23,619,914) 199,264,335
Change in net assets 215,809,691 46,054,889
NET ASSETS:
Beginning of period 601,180,707 555,125,818
End of period $ 816,990,398 $ 601,180,707
</TABLE>

See Notes which are an integral part of the Financial Statements

Financial Highlights-Class A Shares

(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(unaudited)
APRIL 30, YEAR ENDED OCTOBER 31,
1999 1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $23.53 $31.54 $25.84 $26.22 $21.28 $23.92
INCOME FROM
INVESTMENT OPERATIONS:
Net investment income
(loss) (0.12) 1 (0.14) 1 (0.04) 0.04 0.24 0.21
Net realized and
unrealized gain (loss) on
investments 9.84 (1.48) 8.56 5.01 5.64 (2.18)
TOTAL FROM
INVESTMENT OPERATIONS 9.72 (1.62) 8.52 5.05 5.88 (1.97)
LESS DISTRIBUTIONS:
Distributions from net
investment income - - (0.00) 2 (0.04) (0.26) (0.19)
Distributions from net
realized gain on
investments - (6.39) (2.82) (5.39) (0.68) (0.48)
TOTAL DISTRIBUTIONS - (6.39) (2.82) (5.43) (0.94) (0.67)
NET ASSET VALUE,
END OF PERIOD $33.25 $23.53 $31.54 $25.84 $26.22 $21.28
TOTAL RETURN 3 41.31% (6.12% ) 36.37% 23.16% 29.03% (8.43% )

RATIOS TO AVERAGE
NET ASSETS:
Expenses 4 1.24% 5 1.20% 1.24% 1.28% 1.26% 0.99%
Net investment income
(loss) 4 (0.83%)5 (0.54%) (0.24%) - 0.89% 0.89%
Expenses (after waivers) 1.24% 5 1.20% 1.14% 1.13% 1.10% 0.99%
Net investment income
(loss) (after waivers) (0.83%)5 (0.54%) (0.14%) 0.15% 1.05% 0.89%
SUPPLEMENTAL DATA:
Net assets, end of period
(000 omitted) $671,238 $510,552 $509,678 $307,382 $249,110 $320,630
Portfolio turnover 73% 119% 146% 89% 125% 59%
</TABLE>

1 Per share numbers have been calculated using the average shares method, which
more appropriately represents the per share data for the period since the use of
the undistributed income method did not accord with the results of operations.

2 Amounts distributed per share do not round to $0.01.

3 Based on net asset value, which does not reflect the sales charge or con
tingent deferred sales charge, if applicable.

4 During the period, certain fees were voluntarily waived. If such voluntary
waivers had not occurred, the ratios would have been as indicated.

5 Computed on an annualized basis.

See Notes which are an integral part of the Financial Statements

Financial Highlights-Class B Shares

(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(unaudited)
APRIL 30, YEAR ENDED OCTOBER 31,
1999 1998 1997 1996 1995 1
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING
OF PERIOD $22.88 $31.02 $25.65 $26.23 $25.51
INCOME FROM INVESTMENT
OPERATIONS:
Net operating loss (0.22) 2 (0.34) 2 (0.10) (0.10) (0.02)
Net realized and
unrealized gain (loss) on
investments 9.55 (1.41) 8.29 4.91 0.74
TOTAL FROM
INVESTMENT OPERATIONS 9.33 (1.75) 8.19 4.81 0.72
LESS DISTRIBUTIONS:
Distributions from net
realized gain
on investments - (6.39) (2.82) (5.39) -
NET ASSET VALUE, END OF
PERIOD $32.21 $22.88 $31.02 $25.65 $26.23
TOTAL RETURN 3 40.78% (6.78%) 35.23% 22.03% 2.82%

RATIOS TO AVERAGE NET
ASSETS:
Expenses 1.99% 4 1.96% 1.99% 2.03% 2.04% 4
Net operating loss (1.58%)4 (1.34%) (1.04%) (0.79% ) (0.66%)4
SUPPLEMENTAL DATA:
Net assets, end of period
(000 omitted) $126,176 $77,975 $39,588 $10,858 $1,345
Portfolio turnover 73% 119% 146% 89% 125%
</TABLE>

1 Reflects operations for the period from August 16, 1995 (date of initial
public investment) to October 31, 1995.

3 Based on net asset value, which does not reflect the sales charge or con
tingent deferred sales charge, if applicable.

4 Computed on an annualized basis.

See Notes which are an integral part of the Financial Statements

Financial Highlights-Class C Shares

(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(unaudited)
APRIL 30, YEAR ENDED OCTOBER 31,
1999 1998 1997 1996 1995 1
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING
OF PERIOD $23.02 $31.16 $25.68 $26.22 $25.51
INCOME FROM INVESTMENT
OPERATIONS:
Net operating loss (0.22) 2 (0.34) 2 (0.20) (0.05) (0.02)
Net realized and
unrealized gain (loss)
on investments 9.61 (1.41) 8.50 4.90 0.73
TOTAL FROM
INVESTMENT OPERATIONS 9.39 (1.75) 8.30 4.85 0.71
LESS DISTRIBUTIONS:
Distributions from net
realized gain
on investments - (6.39) (2.82) (5.39) -
NET ASSET VALUE, END OF
PERIOD $32.41 $23.02 $31.16 $25.68 $26.22
TOTAL RETURN 3 40.79% (6.74%) 35.66% 22.12% 2.78%

RATIOS TO AVERAGE NET
ASSETS:
Expenses 1.97% 4 1.94% 1.90% 1.92% 2.05% 4
Net operating loss (1.56%)4 (1.34%) (0.91%) (0.72%) (0.71)%4
Expenses 5 1.99% 4 1.96% 1.99% 2.04% 2.05% 4
Net operating loss 5 (1.58%)4 (1.36%) (1.00%) (0.84% ) (0.71%)4
SUPPLEMENTAL DATA:
Net assets, end of period
(000 omitted) $19,576 $12,654 $5,860 $3,667 $57
Portfolio turnover 73% 119% 146% 89% 125%
</TABLE>

1 Reflects operations for the period from August 16, 1995 (date of initial
public investment) to October 31, 1995.

3 Based on net asset value, which does not reflect the sales charge or con
tingent deferred sales charge, if applicable.

4 Computed on an annualized basis.

5 During the period, certain fees were voluntarily waived. If such volun tary
waivers had not occured, the ratios would have been as indicated.

See Notes which are an integral part of the Financial Statements

Notes to Financial Statements

APRIL 30, 1999 (UNAUDITED)

ORGANIZATION

Federated Equity Funds (the "Trust") is registered under the Investment Com pany
Act of 1940, as amended (the "Act"), as a diversified, open-end manage ment
investment company. The Trust consists of five portfolios. The financial
statements included herein are only those of Federated Growth Strategies Fund
(the "Fund"), a diversified portfolio. The financial statements of the other
portfolios are presented separately. The assets of each portfolio are segre
gated and a shareholder's interest is limited to the portfolio in which shares
are held. The Fund offers three classes of shares: Class A Shares, Class B
Shares and Class C Shares. The investment objective of the Fund is appreciation
of capital.

SIGNIFICANT ACCOUNTING POLICIES

INVESTMENT VALUATIONS

Listed equity securities are valued at the last sale price reported on a
national securities exchange. U.S. government securities are generally val ued
at the mean of the latest bid and asked price as furnished by an indepen dent
pricing service. Short-term securities are valued at the prices provided by an
independent pricing service. However, short-term securities with remaining
maturities of 60 days or less at the time of purchase may be valued at amortized
cost, which approximates fair market value.

REPURCHASE AGREEMENTS

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

At October 31, 1998, the Fund, for federal tax purposes, had a capital loss
carryforward of $9,726,866 which will reduce the Fund's taxable income aris ing
from future net realized gain on investments, if any, to the extent per mitted
by the Code, and thus will reduce the amount of the distributions to
shareholders which would otherwise be necessary to relieve the Fund of any
liability for federal tax. Pursuant to the Code, such capital loss carryfor ward
will expire in 2006.

WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS

USE OF ESTIMATES

OTHER

Investment transactions are accounted for on the trade date.

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>
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 1999 OCTOBER 31, 1998
CLASS A SHARES: SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
Shares sold 10,415,888 $ 299,136,421 25,071,328 $ 645,857,373
Shares issued to
shareholders in payment of
distributions declared 18 501 3,075,195 76,080,478
Shares redeemed (11,926,312) (339,200,219) (22,609,750) (586,682,842)
NET CHANGE RESULTING
FROM CLASS A
SHARE TRANSACTIONS (1,510,406) $ (40,063,297) 5,536,773 $ 135,255,009

<CAPTION>
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 1999 OCTOBER 31, 1998
CLASS B SHARES: SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
Shares sold 1,202,700 $ 34,425,802 2,280,389 $ 58,695,285
Shares issued to
shareholders in payment of
distributions declared 22 535 336,440 8,148,608
Shares redeemed (693,507) (19,683,315) (485,257) (11,921,023)
NET CHANGE RESULTING FROM
CLASS B
SHARE TRANSACTIONS 509,215 $ 14,743,022 2,131,572 $ 54,922,870

<CAPTION>
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 1999 OCTOBER 31, 1998
CLASS C SHARES: SHARES AMOUNT SHARES AMOUNT
Shares sold 690,764 $ 19,946,739 589,924 $ 14,423,192
Shares issued to
shareholders in payment of
distributions declared - - 43,940 1,070,366
Shares redeemed (636,487) (18,246,378) (272,103) (6,407,102)
NET CHANGE RESULTING FROM
CLASS C
SHARE TRANSACTIONS 54,277 $ 1,700,361 361,761 $ 9,086,456
NET CHANGE RESULTING FROM
SHARE TRANSACTIONS (946,914) $ (23,619,914) 8,030,106 $ 199,264,335
</TABLE>

INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES

INVESTMENT ADVISORY FEE

Federated Investment Management Company, the Fund's investment 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. The Adviser can modify or terminate this volun tary waiver
at any time at its sole discretion.

ADMINISTRATIVE FEE

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 Fed erated
Sercurities 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 B
and Class C Shares. The Plan provides that the Fund may incur distribution
expenses, according to the following schedule, annually, to compensate FSC.

PERCENTAGE OF
AVERAGE DAILY
NET ASSETS
SHARE CLASS NAME OF CLASS
Class B Shares 0.75%
Class C Shares 0.75%

SHAREHOLDER SERVICES FEE

Under the terms of a Shareholder Services Agreement with Federated Share holder
Service Company ("FSSC"), the Fund will pay FSSC up to 0.25% of aver age daily
net assets of the Fund for the period. The fee paid to FSSC is used to finance
certain services for shareholders and to maintain shareholder accounts. FSSC may
voluntarily choose to waive any portion of its fee. FSSC can modify or terminate
this voluntary waiver at any time at its sole discre tion.

TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES

FServ, through its subsidiary, FSSC serves as transfer and dividend disburs ing
agent for the Fund. The fee paid to FSSC 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.

INVESTMENT TRANSACTIONS

Purchases and sales of investments, excluding short-term securities, for the
period ended April 30, 1999, were as follows:

Purchases $509,204,524
Sales $535,715,369

YEAR 2000

Trustees

JOHN F. DONAHUE
THOMAS G. BIGLEY
JOHN T. CONROY, JR.
NICHOLAS P. CONSTANTAKIS
WILLIAM J. COPELAND
JOHN F. CUNNINGHAM
LAWRENCE D. ELLIS, M.D.
PETER E. MADDEN
CHARLES F. MANSFIELD, JR.
JOHN E. MURRAY, JR., J.D., S.J.D.
MARJORIE P. SMUTS
JOHN S. WALSH

Officers

JOHN F. DONAHUE
Chairman

GLEN R. JOHNSON
President

J. CHRISTOPHER DONAHUE
Executive Vice President

EDWARD C. GONZALES
Executive Vice President

JOHN W. MCGONIGLE
Executive Vice President and Secretary

RICHARD B. FISHER
Vice President

RICHARD J. THOMAS
Treasurer

C. GRANT ANDERSON
Assistant Secretary

[Graphic]
Federated
World-Class Investment Manager
SEMI-ANNUAL REPORT

AS OF APRIL 30, 1999

Federated Growth Strategies Fund

Established 1984

15TH SEMI-ANNUAL REPORT

[Graphic]
Federated
Federated Growth Strategies Fund
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
1-800-341-7400
WWW.FEDERATEDINVESTORS.COM
Federated Securities Corp., Distributor

Cusip 314172107
Cusip 314172206
Cusip 314172305
8010409 (6/99)

[Graphic]

SEMI-ANNUAL REPORT

[Graphic]

GLEN R. JOHNSON
President
Federated Large Cap Growth Fund

President's Message

Dear Shareholder:

Federated Large Cap Growth Fund was created on December 29, 1998 and I am
pleased to present its first Semi-Annual Report. The fund's assets totaled $71.3
million on April 30, 1999. This rapid growth in assets is evidence of investors'
desire to own large growth stocks especially in the technology, consumer
cyclical, and financial sectors. These corporations are readily recognizable
names around the world, such as Microsoft, MCI Worldcom, Lucent Technologies,
and Providian Financial.

This report covers the four-month period from December 29, 1998 through April
30, 1999. It begins with an interview with the fund's portfolio man ager, James
E. Grefenstette, Vice President of Federated Investment Manage ment Company.
Following his discussion are two additional items of shareholder interest. First
is a complete listing of the fund's highly diver sified stock holdings, and
second is the publication of the fund's financial statements.

Federated Large Cap Growth Fund gives investors the opportunity to pursue
capital appreciation and attractive after-tax total returns by owning shares of
approximately 100 of the largest domestic companies in the growth uni
verse-high-quality, well-established companies that have helped to empower both
the U.S. economy and the U.S. stock market growth in this past decade. These
companies are typically world-class leaders with long histories of earnings and
growth-vintage firms that have stood the test of time. They employ tens of
thousands of people, have a large domestic presence, and are expanding their
markets around the globe. Their products are used worldwide, and their extensive
distribution networks allow them to compete successfully in many countries and
many industries. As the world continues to move toward a free market economy,
these companies should be well positioned to benefit from growing overseas
markets.

As James explains, Federated Large Cap Growth Fund is managed to enhance
after-tax returns by minimizing paid out taxable capital gains that trigger tax
payments.

During the fund's initial period of operation, the stock market's upward
momentum continued, led by large-cap growth stocks and Internet stocks. The fund
produced strong total returns through appreciation in the value of its holdings.
Individual share class total return performance for the period from December 29,
1998 to April 30, 1999, including the net asset value increase and income
distributions, follows. 1

<TABLE>
<CAPTION>
TOTAL RETURN INCOME NET ASSET VALUE INCREASE
<S> <C> <C> <C>
Class A Shares 13.63% $0.02 $10.00 to $11.36 = 14%
Class B Shares 13.52% $0.02 $10.00 to $11.35 = 14%
Class C Shares 13.52% $0.02 $10.00 to $11.35 = 14%
</TABLE>

Please remember the fund is a long-term investment and will always be subject to
the day-to-day volatility of the stock market. Regardless of the market's
fluctuations, over time, you have two easy ways to increase your opportunity to
participate in the growth and earnings of high-quality U.S. corporations. First,
you can reinvest your dividends and capital gains automatically in additional
shares to help your shares increase in number through the benefit of
compounding. Second, you can "pay yourself first," by adding to your account on
a regular basis through a systematic investment program. This pro gram withdraws
a specific amount from your checking account on a regular basis to purchase more
fund shares. Buying shares regularly (i.e., monthly additions of the same dollar
amount) automatically accumulates more shares in your account at lower prices. 2
Please contact your investment representative for more information.

Thank you for entrusting a portion of your wealth to Federated Large Cap Growth
Fund. We welcome your comments and suggestions.

Sincerely,

[Graphic]

Glen R. Johnson
President
June 15, 1999

1 Performance quoted is based on net asset value, represents past performance
and is not indicative of future results. Investment return and principal value
will fluctuate, so that an investor's shares, when redeemed, may be worth more
or less than their original cost. Total returns for the period, based on
offering price (i.e., less any applicable sales charge), for Class A, B, and C
Shares were 7.38%, 8.02% and 12.52%, respectively.

2 Systematic investing does not assure a profit or protect against loss in
declining markets. Because dollar-cost-averaging invloves continuous investment
regardless of fluctuating price levels, investors should con sider their
financial ability to continue purchasing during periods of low price levels.

[Graphic]

JAMES E. GREFENSTETTE, CFA
Vice President
Federated Investment Management Company

Investment Review

THIS IS THE FIRST REPORT FOR FEDERATED LARGE CAP GROWTH FUND. HOW IS THE FUND
MANAGED?

We manage the fund to pursue capital appreciation and attractive after-tax total
returns by owning 100 of the largest, fast-growing companies that trade in the
U.S. We weight the fund's assets more heavily in stocks with the char
acteristics that we believe will lead to outperformance among growth stocks.
These characteristics include, but are not limited to, faster-than-average
historic earnings growth, positive trends in projected earnings estimates,
positive relative price momentum and favorable valuation.

We re-identify the 100 largest (according to market capitalization), fast-
growing companies approximately twice a year. We then cull from the portfolio
those stocks that are no longer among the largest or the fastest growing.

Initially determined, the largest 500 companies in the domestic equity uni verse
are divided into growth and value sectors based on estimated long-term growth
rates, price-to-earnings ratios, and price-to-book ratios. These mea sures
reveal which companies have the best potential for long-term growth. We then
select approximately 100 of the largest stocks as measured by market
capitalization.

When possible, we strive to maximize after-tax returns by minimizing capital
gains through several strategies, for example, low portfolio turnover. We
attempt to use a "buy and hold" strategy, buying securities with the intent of
holding them for a long period of time and avoiding short-term trading. Second,
we sell the highest-cost shares first in order to minimize capital gains
distributions. Finally, we strive to match gains with losses by using realized
capital losses to offset realized capital gains.

WHAT IS YOUR APPRAISAL OF THE EQUITY MARKET DURING FEDERATED LARGE CAP GROWTH
FUND'S INITIAL PERIOD OF OPERATION?

To the benefit of the fund, timing helped in that the Federal Reserve Board (the
"Fed") lowered rates in October and November of 1998. This proved to be a
pivotal point as the market enthusiastically embraced the lower rates, added
liquidity and rallied higher into the end of the fourth quarter of 1998.

Ultimately, it was a positive period for stocks. For the four-month period ended
April 30, 1999, the Standard & Poor's ("S&P") 500 Index produced a return of
9.05%, while mid-cap stocks as represented by the S&P 400 Mid Cap Index and
small-cap stocks as represented by the Russell 2000 Small Stock Index returned
1.00% and 3.05%, respectively. 1

HOW DID THE FUND PERFORM DURING THE REPORTING PERIOD ENDED APRIL 30, 1999?

For the period from December 29, 1998-the initial date of operation-through
April 30, 1999, the fund's total returns for Class A, B, and C Shares were
13.63%, 13.52% and 13.52%, respectively, based on net asset value. 2

WHAT ARE SOME OF THE FUND'S RECENT

PORTFOLIO ADDITIONS?

Our recent purchases include the following:

YAHOO! (2.99% of net assets): Yahoo is a leading Internet media company,
offering an online guide to Web navigation, content and a variety of ser
vices. This company offers some of the most frequently visited sites on the
Web and should remain a participant in the rapid growth of the Internet.

MCI WORLDCOM (3.09% of net assets): MCI provides consumers and businesses with
local, long distance, Internet and data services. This company should continue
to benefit by the strong growth in demand for telecommunication ser vices.

SCHWAB (CHARLES) (3.37% of net assets): Schwab provides a variety of finan cial
services to just about every type of investor. This company has been very
successful at implementing and exploiting the latest in information technology
for its clients. Schwab has 5.6 million clients, and 1998 reve nues totaled $2.7
billion (a 19% increase over 1997).

BIOGEN (2.79% of net assets): Biogen develops and manufactures drugs that treat
multiple sclerosis, kidney disease and cardiovascular diseases. This company is
a leading force in biotechnology research and should continue to see strong
growth as new drugs get approved from its rich pipeline of prod ucts in
development.

1 The S&P 500 Index is an unmanaged capitalization-weighted index of 500 stocks
designed to measure performance of the broad domestic economy through changes in
the aggregate market value of 500 stocks representing all major industries. The
S&P 400 Mid Cap Index is an unmanaged index of 400 U.S. stocks selected to
represent the market size, liquidity and industry group representation of the
mid-cap market. The Russell 2000 Small Stock Index is a broadly diversified
unmanaged index consisting of approximately 2,000 small capitalization common
stocks that can be used to compare the total returns of funds whose portfolios
are invested primarily in small capitalization common stocks. Investments cannot
be made in an index.

WHAT WERE THE FUND'S TOP 10 HOLDINGS AS OF APRIL 30, 1999, AND WHAT WERE THE
INDUSTRY WEIGHTINGS?

<TABLE>
<CAPTION>
PERCENTAGE OF
NAME NET ASSETS
<S> <C>
Providian Financial Corp. 3.90%
America Online, Inc. 3.80%
Schwab (Charles) Corp. 3.40%
Microsoft Corp. 3.30%
Lucent Technologies, Inc. 3.30%
MCI Worldcom, Inc. 3.10%
American International Group, Inc. 3.10%
EMC Corp. 3.10%
Tyco International, Ltd. 3.00%
Yahoo, Inc. 3.00%
TOTAL 33.00%
</TABLE>

<TABLE>
<CAPTION>
PERCENTAGE OF PERCENTAGE OF
SECTOR NET ASSETS S&P 500 INDEX
<S> <C> <C>
Technology 33.7% 20.1%
Financials 14.3% 16.5%
Consumer Cyclicals 13.8% 9.0%
Health Care 13.2% 10.9%
Consumer Staples 9.1% 13.2%
Communication Services 7.1% 8.5%
Capital Goods 5.8% 8.2%
Energy - 6.2%
Transportation - 1.1%
Utilities - 2.8%
Basic Materials - 3.6%
</TABLE>

WHAT IS YOUR OVERALL OUTLOOK FOR LARGE-CAP GROWTH STOCKS?

We expect the strong performance of growth stocks to continue for the next
several quarters. We believe the market may be disappointed with the rate of
economic growth generated through the end of the year. As this happens,
investors should continue to buy these stocks that are less sensitive to the
strength of the economy. We continue to favor sectors that offer the poten tial
for strong secular growth, such as technology, health care and certain consumer
services.

Portfolio of Investments

APRIL 30, 1999 (UNAUDITED)

<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
COMMON STOCKS-97.0%
AEROSPACE/DEFENSE-0.0%
200 Boeing Co. $ 8,125
BANKS (MONEY CENTER)-0.5%
3,900 Chase Manhattan Corp. 322,725
BEVERAGES (NON-ALCOHOLIC)-
0.0%
100 Coca-Cola Co. 6,800
200 PepsiCo, Inc. 7,387
TOTAL 14,187
BIOTECHNOLOGY-3.5%
20,900 Biogen, Inc. 1,986,806
13,200 Genzyme Corp. 498,300
TOTAL 2,485,106
BROADCASTING-2.4%
7,200 CBS Corp. 328,050
100 Clear Channel
Communications, Inc. 6,949
20,600 Comcast Corp., Class A 1,353,162
TOTAL 1,688,161
CELLULAR/WIRELESS
TELECOMMUNICATIONS-2.6%
19,900 Airtouch Communications,
Inc. 1,858,163
400 NEXTEL Communications,
Inc., Class A 16,375
TOTAL 1,874,538
CHEMICALS - DIVERSIFIED-
0.0%
200 Monsanto Co. 9,050
COMMUNICATIONS EQUIPMENT-
6.7%
200 General Instrument Corp. 7,300
38,600 Lucent Technologies, Inc. 2,320,825
100 Motorola, Inc. 8,012
24,200 Nokia Oyj, Class A, ADR 1,795,337
4,700 Northern Telecom Ltd. 320,481
2,900 Tellabs, Inc. 317,731
TOTAL 4,769,686
<CAPTION>
SHARES VALUE
<C> <S> <C>
COMMON STOCKS-continued
COMPUTERS (HARDWARE)-4.6%
200 Compaq Computer Corp. $ 4,462
4,600 Dell Computer Corp. 189,463
200 Gateway 2000, Inc. 13,238
5,800 International Business
Machines Corp. 1,213,287
30,400 Sun Microsystems, Inc. 1,818,300
TOTAL 3,238,750
COMPUTERS (NETWORKING)- 2.6%
200 3Com Corp. 5,225
16,000 Cisco Systems, Inc. 1,825,000
TOTAL 1,830,225
COMPUTERS (PERIPHERALS)- 5.6%
20,000 EMC Corp. Mass 2,178,750
14,800 Lexmark Intl. Group, Class A 1,827,800
300 Seagate Technology, Inc. 8,363
TOTAL 4,014,913
COMPUTERS
SOFTWARE/SERVICES-10.2%
19,100 America Online, Inc. 2,726,525
300 Cadence Design Systems,
Inc. 4,069
200 Computer Associates
International, Inc. 8,538
100 Computer Sciences Corp. 5,956
1,600 Compuware Corp. 39,000
29,200 Microsoft Corp. 2,374,325
200 Network Associates, Inc. 2,650
300 Oracle Corp. 8,119
500 Parametric Technology
Corp. 6,531
12,200 Yahoo, Inc. 2,131,188
TOTAL 7,306,901
CONSUMER FINANCE-6.8%
200 Household International,
Inc. 10,063
74,900 MBNA Corp. 2,111,244
21,300 Providian Financial Corp. 2,749,031
TOTAL 4,870,338
<CAPTION>
SHARES VALUE
<C> <S> <C>
COMMON STOCKS-continued
DISTRIBUTORS (FOOD &
HEALTH)-1.8%
20,600 Cardinal Health, Inc. $ 1,232,137
911 McKesson HBOC, Inc. 31,885
TOTAL 1,264,022
ELECTRICAL EQUIPMENT-2.8%
13,400 General Electric Co. 1,413,700
11,500 Solectron Corp. 557,750
TOTAL 1,971,450
ELECTRONICS -
SEMICONDUCTORS-2.4%
4,200 Altera Corp. 303,450
13,700 Intel Corp. 838,269
8,800 Linear Technology Corp. 500,500
200 Maxim Integrated Products,
Inc. 11,200
200 Micron Technology, Inc. 7,425
100 Texas Instruments, Inc. 10,213
TOTAL 1,671,057
ENTERTAINMENT-2.4%
300 Disney (Walt) Co. 9,525
41,900 Viacom, Inc., Class B 1,712,663
TOTAL 1,722,188
EQUIPMENT
(SEMICONDUCTORS)-0.0%
200 Applied Materials, Inc 10,725
HEALTH CARE
(DRUGS/PHARMACEUTICALS)-
5.8%
15,100 Lilly (Eli) & Co. 1,111,737
600 Merck & Co., Inc. 42,150
14,300 Pfizer, Inc. 1,645,394
28,100 Schering Plough Corp. 1,357,581
TOTAL 4,156,862
HEALTH CARE (LONG TERM
CARE)-0.0%
500 HEALTHSOUTH, Corp. 6,719
HEALTH CARE (MANAGED
CARE)-0.0%
200 United Healthcare Corp. 11,225
<CAPTION>
SHARES VALUE
<C> <S> <C>
COMMON STOCKS-continued
HEALTH CARE (MEDICAL
PRODUCTS/SUPPLIES)-2.6%
300 Boston Scientific Corp. $ 12,769
25,800 Guidant Corp. 1,385,137
6,400 Medtronic, Inc. 460,400
TOTAL 1,858,306
HEALTH CARE (SPECIAL
SERVICES)-0.1%
1,200 Alza Corp. 40,275
HEALTH CARE DIVERSIFIED-
1.2%
1,300 Abbott Laboratories 62,969
5,000 American Home Products
Corp. 305,000
600 Bristol-Myers Squibb Co. 38,138
3,900 Johnson & Johnson 380,250
500 Warner-Lambert Co. 33,969
TOTAL 820,326
HOUSEHOLD PRODUCTS (NON-
DURABLE)-0.0%
100 Procter & Gamble Co. 9,381
INSURANCE (LIFE/HEALTH)-
0.6%
7,300 Aflac, Inc. 396,025
300 Conseco, Inc. 9,469
TOTAL 405,494
INSURANCE (MULTI-LINE)-
3.1%
18,700 American International
Group, Inc. 2,196,081
INVESTMENT
BANKING/BROKERAGE-3.4%
21,900 Schwab (Charles) Corp. 2,403,525
LEISURE TIME (PRODUCTS)-
1.9%
22,700 Harley Davidson, Inc. 1,353,487
300 Mattel, Inc. 7,762
TOTAL 1,361,249
MANUFACTURING
(DIVERSIFIED)-3.0%
26,700 Tyco International Ltd. 2,169,375
<CAPTION>
SHARES VALUE
<C> <S> <C>
COMMON STOCKS-continued
NATURAL GAS - DISTRIBUTOR -
PIPE LINE-0.0%
200 Williams Cos., Inc. (The) $ 9,450
OIL & GAS (DRILLING &
EQUIPMENT)-0.0%
200 Halliburton Co. 8,525
200 Schlumberger Ltd. 12,775
TOTAL 21,300
OIL & GAS
(EXPLORATION/PRODUCTS)-
0.0%
300 Anadarko Petroleum Corp. 11,381
PERSONAL CARE-0.0%
200 Gillette Co. 10,438
PHOTOGRAPHY/IMAGING-0.0%
200 Xerox Corp. 11,750
RETAIL (BUILDING
SUPPLIES)-2.7%
18,100 Home Depot, Inc. 1,084,869
16,200 Lowe's Cos., Inc. 854,550
TOTAL 1,939,419
RETAIL (COMPUTERS &
ELECTRONICS)-1.3%
20,000 Best Buy Co., Inc. 955,000
RETAIL - GENERAL
MERCHANDISING CHAIN-1.7%
26,600 Wal-Mart Stores, Inc. 1,223,600
RETAIL - SPECIALTY-1.2%
40,100 Office Depot, Inc. 882,200
RETAIL SPECIALTY -
APPAREL-3.3%
15,600 Gap (The), Inc. 1,038,375
38,500 TJX Cos., Inc. 1,282,531
TOTAL 2,320,906
<CAPTION>
SHARES OR
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
COMMON STOCKS-continued
RETAIL STORES - DRUG STORE-
2.5%
1,100 CVS Corp. $ 52,388
63,400 Walgreen Co. 1,703,875
TOTAL 1,756,263
SERVICES (COMMERCIAL &
CONSUMER)-1.6%
400 Cendant Corp. 7,200
16,700 Cintas Corp. 1,148,125
200 Service Corp.
International 4,150
TOTAL 1,159,475
SERVICES (DATA
PROCESSING)-1.6%
31,300 Ceridian Corp. 1,146,363
TELEPHONE LONG DISTANCE-
4.5%
19,494 AT&T Corp. 984,447
26,800 MCI Worldcom, Inc. 2,202,625
TOTAL 3,187,072
TOBACCO-0.0%
700 Philip Morris Cos., Inc. 24,544
TOTAL COMMON STOCKS
(IDENTIFIED COST
$69,205,778) 69,170,126
REPURCHASE AGREEMENT-3.6% 1
$ 2,560,000 ABN AMRO, Inc., 4.94%,
dated 4/30/1999, due
5/3/1999 (at amortized
cost 2,560,000
TOTAL INVESTMENTS
(IDENTIFIED COST
$71,765,778) 2 $ 71,730,126
</TABLE>

1 The repurchase agreements is fully collateralized by U.S. Treasury 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.

2 The cost of investments for federal tax purposes amounts to $71,765,778. The
net unrealized depreciation of investments on a federal tax basis amounts to
$35,652 which is comprised of $2,253,475 appreciation and $2,289,127
depreciation at April 30, 1999.

Note: The categories of investments are shown as a percentage of net assets
($71,303,422) at April 30, 1999.

The following acronym is used throughout this portfolio:

ADR -American Depositary Receipt

See Notes which are an integral part of the Financial Statements

Statement of Assets and Liabilities

APRIL 30, 1999 (UNAUDITED)

<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS:
Total investments in
securities, at value
(identified and tax cost
$71,765,778) $ 71,730,126
Cash 1,755
Income receivable 2,754
Receivable for shares sold 5,111,596
TOTAL ASSETS 76,846,231
LIABILITIES:
Payable for investments
purchased $ 5,432,078
Payable for shares
redeemed 15,616
Accrued expenses 95,115
TOTAL LIABILITIES 5,542,809
Net assets for 6,280,545
shares outstanding $ 71,303,422
NET ASSETS CONSIST OF:
Paid in capital $ 71,413,655
Net unrealized
depreciation of
investments (35,652)
Accumulated net realized
gain on investments 4
Distributions in excess of
net investment income (74,585)
TOTAL NET ASSETS $ 71,303,422
NET ASSET VALUE, OFFERING
PRICE AND REDEMPTION
PROCEEDS PER SHARE
CLASS A SHARES:
Net Asset Value Per Share
($30,747,681 / 2,706,191
shares outstanding) $11.36
Offering Price Per Share
(100/$94.50 of $11.36) 1 $12.02
Redemption Proceeds Per
Share $11.36
CLASS B SHARES:
Net Asset Value Per Share
($36,915,870 / 3,253,559
shares outstanding) $11.35
Offering Price Per Share $11.35
Redemption Proceeds Per
Share (94.50/100 of
$11.35) 1 $10.73
CLASS C SHARES:
Net Asset Value Per Share
($3,639,871 / 320,795
shares outstanding) $11.35
Offering Price Per Share $11.35
Redemption Proceeds Per
Share (99.00/100 of
$11.35) 1 $11.24
</TABLE>

1 See "What Do Shares Cost?" in the Prospectus.

See Notes which are an integral part of the Financial Statements

Statement of Operations

PERIOD ENDED APRIL 30, 1999 (UNAUDITED) 1

<TABLE>
<CAPTION>
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends (net of foreign
taxes withheld of $685) $ 13,392
Interest 25,926
TOTAL INCOME 39,318
EXPENSES:
Investment advisory fee $ 52,227
Administrative personnel
and services fee 61,328
Custodian fees 4,920
Transfer and dividend
disbursing agent fees and
expenses 60,066
Directors'/Trustees' fees 2,373
Auditing fees 6,327
Legal fees 1,581
Portfolio accounting fees 6,816
Distribution services fee-
Class B Shares 26,883
Distribution services fee-
Class C Shares 2,191
Shareholder services fee-
Class A Shares 7,718
Shareholder services fee-
Class B Shares 8,961
Shareholder services fee-
Class C Shares 730
Share registration costs 57,632
Printing and postage 8,897
Insurance premiums 1,384
Miscellaneous 791
TOTAL EXPENSES 310,825
WAIVERS AND
REIMBURSEMENTS:
Waiver of investment
advisory fee $ (52,227)
Reimbursement of other
operating expenses (145,655)
TOTAL WAIVERS AND
REIMBURSEMENTS (197,882)
Net expenses 112,943
Net operating loss (73,625)
REALIZED AND UNREALIZED
GAIN (LOSS) ON
INVESTMENTS:
Net realized gain on
investments 4
Net change in unrealized
depreciation of
investments (35,652)
Net realized and
unrealized loss on
investments (35,648)
Change in net assets
resulting from operations $ (109,273)
</TABLE>

1 Reflects operations for the period from December 29, 1998 (date of initial
public investment) to April 30, 1999.

See Notes which are an integral part of the Financial Statements

Statement of Changes in Net Assets

<TABLE>
<CAPTION>
PERIOD
ENDED
(unaudited)
APRIL 30,
1999 1
<S> <C>
INCREASE (DECREASE) IN NET
ASSETS
OPERATIONS:
Net operating loss $ (73,625)
Net realized gain on
investments 4
Net change in unrealized
depreciation (35,652)
CHANGE IN NET ASSETS
RESULTING FROM OPERATIONS (109,273)
DISTRIBUTIONS TO
SHAREHOLDERS:
Distributions from net
investment income
Class A Shares (960)
SHARE TRANSACTIONS:
Proceeds from sale of
shares 76,733,438
Net asset value of shares
issued to shareholders in
payment of distributions
declared -
Cost of shares redeemed (5,319,783)
CHANGE IN NET ASSETS
RESULTING FROM SHARE
TRANSACTIONS 71,413,655
Change in net assets 71,303,422
NET ASSETS:
Beginning of period -
End of period $ 71,303,422
</TABLE>

1 Reflects operations for the period from December 29, 1998 (date of initial
public investment) to April 30, 1999.

See Notes which are an integral part of the Financial Statements

Financial Highlights-Class A Shares

(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)

<TABLE>
<CAPTION>
PERIOD
ENDED
(unaudited)
APRIL 30,
1999 1
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.00
INCOME FROM INVESTMENT OPERATIONS:
Net operating loss (0.02) 2
Net realized and unrealized gain on investments 1.38
TOTAL FROM INVESTMENT OPERATIONS 1.36
LESS DISTRIBUTIONS:
Distributions from net investment income - 3
NET ASSET VALUE, END OF PERIOD $11.36
TOTAL RETURN 4 13.63%

RATIOS TO AVERAGE NET ASSETS:
Expenses 5 4.71% 6
Net operating loss 5 (4.12%) 6
Expenses (after waivers) 1.20% 6
Net operating loss (after waivers) (0.61%) 6
SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $30,748
Portfolio turnover 0%
</TABLE>

1 Reflects operations for the period from December 29, 1998 (date of initial
public investment) to April 30, 1999.

3 Amount represents less than $0.01 per share.

4 Based on net asset value, which does not reflect the sales charge or con
tingent deferred sales charge, if applicable.

5 During the period, certain fees were voluntarily waived. If such voluntary
waivers had not occurred, the ratios would have been as indicated.

6 Computed on an annualized basis.

See Notes which are an integral part of the Financial Statements

Financial Highlights-Class B Shares

(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)

<TABLE>
<CAPTION>
PERIOD
ENDED
(unaudited)
APRIL 30,
1999 1
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.00
INCOME FROM INVESTMENT OPERATIONS:
Net operating loss (0.05) 2
Net realized and unrealized gain on investments 1.40
TOTAL FROM INVESTMENT OPERATIONS 1.35
LESS DISTRIBUTIONS:
Distributions from net investment income - 3
NET ASSET VALUE, END OF PERIOD $11.35
TOTAL RETURN 4 13.52%

RATIOS TO AVERAGE NET ASSETS:
Expenses 5 4.28% 6
Net operating loss 5 (3.73%) 6
Expenses (after waivers) 1.95% 6
Net operating loss (after waivers) (1.40%) 6
SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $36,916
Portfolio turnover 0%
</TABLE>

1 Reflects operations for the period from December 29, 1998 (date of initial
public investment) to April 30, 1999.

3 Amount represents less than $0.01 per share.

4 Based on net asset value, which does not reflect the sales charge or con
tingent deferred sales charge, if applicable.

5 During the period, certain fees were voluntarily waived. If such voluntary
waivers had not occurred, the ratios would have been as indicated.

6 Computed on an annualized basis.

See Notes which are an integral part of the Financial Statements

Financial Highlights-Class C Shares

(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)

RATIOS TO AVERAGE NET ASSETS:
Expenses 5 4.08% 6
Net operating loss 5 (3.56%) 6
Expenses (after waivers) 1.97% 6
Net operating loss (after waivers) (1.45%) 6
SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $3,640
Portfolio turnover 0%
</TABLE>

1 Reflects operations for the period from December 29, 1998 (date of initial
public investment) to April 30, 1999.

3 Amount represents less than $0.01 per share.

4 Based on net asset value, which does not reflect the sales charge or con
tingent deferred sales charge, if applicable.

5 During the period, certain fees were voluntarily waived. If such voluntary
waivers had not occurred, the ratios would have been as indicated.

6 Computed on an annualized basis.

See Notes which are an integral part of the Financial Statements

Notes to Financial Statements

APRIL 30, 1999 (UNAUDITED)

ORGANIZATION

Federated Equity Funds (the "Trust") is registered under the Investment Com pany
Act of 1940, as amended (the "Act") as a diversified, open-end, manage ment
investment company. The Trust consists of five portfolios. The financial
statements included herein are only those of Federated Large Cap Growth Fund
(the "Fund"), a diversified portfolio. The financial statements of the other
portfolios are presented separately. The assets of each portfolio are segre
gated and a shareholder's interest is limited to the portfolio in which shares
are held. The Fund offers three classes of shares: Class A Shares, Class B
Shares and Class C Shares. The investment objective of the Fund is appreciation
of capital.

SIGNIFICANT ACCOUNTING POLICIES

INVESTMENT VALUATIONS

REPURCHASE AGREEMENTS

The Fund will only enter into repurchase agreements with banks and other rec
ognized financial institutions, such as broker/dealers, which are deemed by the
Fund's adviser to be creditworthy pursuant to the guidelines and/or stan dards
reviewed or established by the Board of Trustees ("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

WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS

USE OF ESTIMATES

OTHER

Investment transactions are accounted for on the trade date.

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, 1999 1
CLASS A SHARES: SHARES AMOUNT
<S> <C> <C>
Shares sold 3,137,744 $ 35,320,737
Shares issued to
shareholders in payment of
distributions declared - -
Shares redeemed (431,553) (4,594,187)
NET CHANGE RESULTING FROM
CLASS A SHARE
TRANSACTIONS 2,706,191 $ 30,726,550

<CAPTION>
PERIOD ENDED
APRIL 30, 1999 1
CLASS B SHARES: SHARES AMOUNT
<S> <C> <C>
Shares sold 3,317,715 $ 37,697,702
Shares issued to
shareholders in payment of
distributions declared - -
Shares redeemed (64,156) (718,873)
NET CHANGE RESULTING FROM
CLASS B SHARE
TRANSACTIONS 3,253,559 $ 36,978,829

<CAPTION>
PERIOD ENDED
APRIL 30, 1999 1
CLASS C SHARES: SHARES AMOUNT
<S> <C> <C>
Shares sold 321,386 $ 3,714,999
Shares issued to
shareholders in payment of
distributions declared - -
Shares redeemed (591) (6,723)
NET CHANGE RESULTING FROM
CLASS C SHARE
TRANSACTIONS 320,795 $ 3,708,276
NET CHANGE RESULTING FROM
SHARE TRANSACTIONS 6,280,545 $ 71,413,655
</TABLE>

1 Reflects operations for the period from December 29, 1998 (date of initial
public investment) to April 30, 1999.

INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES

INVESTMENT ADVISORY FEE

Federated Investment Management Company, 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. The Adviser can modify or terminate this
voluntary waiver at any time at its sole discretion.

ADMINISTRATIVE FEE

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 Feder ated
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 B
and Class C Shares. The Plan provides that the Fund may incur distribution
expenses according to the following schedule annually, to com pensate FSC. 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.

PERCENTAGE OF
AVERAGE DAILY
NET ASSETS
SHARE CLASS NAME OF CLASS
Class B Shares 0.75%
Class C Shares 0.75%

SHAREHOLDER SERVICES FEE

Under the terms of a Shareholder Services Agreement with Federated Share holder
Services Company ("FSSC"), the Fund will pay FSSC up to 0.25% of aver age daily
net assets of the Fund shares for the period. The fee paid to FSSC is used to
finance certain services for shareholders and to maintain share holder accounts.
FSSC may voluntarily choose to waive any portion of its fee. FSSC can modify or
terminate this voluntary waiver at any time at its sole discretion.

TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES

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.

INVESTMENT TRANSACTIONS

Purchases and sales of investments, excluding short-term securities, for the
period ended April 30, 1999, were as follows:

Purchases $ 69,205,846
Sales -

YEAR 2000

Trustees

Officers

JOHN F. DONAHUE
Chairman

GLEN R. JOHNSON
President

J. CHRISTOPHER DONAHUE
Executive Vice President

EDWARD C. GONZALES
Executive Vice President

JOHN W. MCGONIGLE
Executive Vice President and Secretary

RICHARD B. FISHER
Vice President

RICHARD J. THOMAS
Treasurer

C. GRANT ANDERSON
Assistant Secretary

[Graphic]
Federated
World-Class Investment Manager
SEMI-ANNUAL REPORT
AS OF APRIL 30, 1999

Federated Large Cap Growth Fund

Established 1998

1ST SEMI-ANNUAL REPORT

[Graphic]
Federated
Federated Large Cap Growth Fund
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
1-800-341-7400
WWW.FEDERATEDINVESTORS.COM
Federated Securities Corp., Distributor

Cusip 314172842
Cusip 314172834
Cusip 314172826
G02516-02 (6/99)

[Graphic]

SEMI-ANNUAL REPORT

[Graphic]

GLEN R. JOHNSON
President
Federated Small Cap Strategies Fund

President's Message

Dear Shareholder:

Federated Small Cap Strategies Fund was created in 1995, and I am pleased to
present its fourth Semi-Annual Report. The fund's assets totaled $376.7 million
as of April 30, 1999 with ownership of 163 U.S. small-cap com panies across 10
industry sectors. These corporations, on average, have price-to-earnings ratios
of under 20X and average earnings per share growth rates of 27%. The fund's
benchmarks are the Russell 2000 Small Stock Index and the Standard & Poor's
("S&P") 600 Small Cap Index. 1

This report covers first half of the fund's fiscal year which is the six-month
period from November 1, 1998 through April 30, 1999. It begins with an interview
with the fund's portfolio manager, Aash M. Shah, Vice President of Federated
Investment Management Company. Following his discussion are three additional
items of shareholder interest. First is a series of graphs showing the fund's
investment performance. Second is a complete listing of the fund's stock
holdings, and third is the publication of the fund's financial state ments.

Federated Small Cap Strategies Fund is managed to offer shareholders signif
icant opportunities for long-term growth by owning a highly diversified port
folio of small-cap stocks. 2 These stocks, issued by companies with a typical
market capitalization of less than $1 billion, offer the potential for high
returns over time in exchange for a higher level of risk as compared to stocks
issued by large, well-established companies. To help reduce risk and seek
opportunities in this dynamic market, the fund's portfolio is carefully selected
and broadly diversified.

During the six-month reporting period, the stock market continued its upward
momentum, led by large-cap growth stocks and Internet stocks. Small-cap stocks
recorded positive performance though trailing the broad market. As Aash notes,
valuation levels of small company stocks have remained extremely attractive (but
you might say "unloved") versus larger caps.

1 The Russell 2000 Small Stock Index is a broadly diversified unmanaged index
consisting of approximately 2,000 small capitalization common stocks that can be
used to compare the total returns of funds whose portfolios are invested
primarily in small capitalization common stocks. The S&P 600 Small Cap Index is
an unmanaged capitalization-weighted index of stocks repre senting all major
industries in the small-cap range of the U.S. stock mar ket. Investments cannot
be made in an index.

2 Small-cap stocks have historically experienced greater volatility than
average.

Individual share class total return performance for the six-month reporting
period follows. 3

TOTAL RETURN NET ASSET VALUE INCREASE Class A Shares 12.91%
$15.26 to $17.23 = 12% Class B Shares 12.57% $14.96 to $16.84 = 12% Class C
Shares 12.51% $14.95 to $16.82 = 12%

There is significant day-to-day volatility in the stock market. However,
regardless of the market's fluctuations, over time, you can easily increase your
investment in smaller American companies by reinvesting your dividends and
capital gains automatically in additional fund shares.

You can also add to your account on a regular basis through a systematic
investment program. This program withdraws a specific amount from your check ing
account on a regular basis to purchase more fund shares. Buying shares regularly
(i.e., monthly additions of the same dollar amount) automatically accumulates
more shares in your account at lower prices. 4 Please contact your investment
representative for more information, and please note that the fund's share price
has been volatile and that may make it suitable for regu lar investments.

Thank you for selecting Federated Small Cap Strategies Fund to pursue your
long-term financial goals. We welcome your comments and suggestions.

Sincerely,

[Graphic]

Glen R. Johnson
President
June 15, 1999

3 Performance quoted is based on net asset value, represents past performance
and is not indicative of future results. Investment return and principal value
will fluctuate, so that an investor's shares, when redeemed, may be worth more
or less than their original cost. Total returns for the period, based on
offering price (i.e., less any applicable sales charge), for Class A, B, and C
Shares were 6.69%, 7.07% and 11.51%, respectively.

4 Systematic investing does not assure a profit or protect against a loss in
declining markets. Because dollar-cost-averaging involves continuous investment
regardless of fluctuating price levels, investors should con sider their
financial ability to continue purchasing during periods of low price levels.

[Graphic]

AASH M. SHAH, CFA
Vice President
Federated Investment Management Company

Investment Review

WHAT IS YOUR ANALYSIS OF THE FIRST HALF OF THE FUND'S FISCAL YEAR, WHICH WAS A
POSITIVE THOUGH VOLATILE PERIOD FOR SMALL-CAP STOCKS?

During the fourth quarter of 1998, the overall equity market was very strong.
The small-cap market rebounded significantly from the bottom of a severe bear
market and experienced only slight underperformance versus large-cap stocks.
During the fourth quarter of 1998, the Lipper Small Cap Funds Average 1 was up
19.10%, the S&P 600 Small Cap Index was up 17.60%, the Russell 2000 Small Stock
Index was up 16.50%, while the S&P 500 Index1 was up 21.30%, and the Dow Jones
Industrial Average1 was up 17.60%. Federated Small Cap Strategies Fund Class A
Shares were up 25.02% during the fourth quarter of 1998,2 sig nificantly
outperforming both the small-cap and large-cap indexes. The small-cap "growth"
style of investing outperformed the small-cap "value" style during this quarter.

1 Lipper figures represent the average of the total returns reported by the
mutual funds designated by Lipper Analytical Services, Inc. as falling into the
respective categories indicated. These figures do not reflect sales charges. The
S&P 500 Index is an unmanaged capitalization-weighted index of 500 stocks
designed to measure performance of the broad domestic economy through changes in
the aggregate market value of 500 stocks repre senting all major industries. The
Dow Jones Industrial Average is an unman aged index representing share prices of
major industrial corporations, public utilities, and transportation companies.
Investments cannot be made in an index.

2 Performance quoted is based on net asset value for Class A Shares. The per
formance for the fourth quarter of 1998 based on offering price was 18.18%.

We enjoyed this increase in share price briefly, however, in 1999, small-cap
stocks experienced severe underperformance versus large-cap stocks. In the first
quarter of 1999, the Lipper Small Cap Funds Average was down 6.00%, the S&P 600
Small Cap Index was down 9.20%, the Russell 2000 Small Stock Index was down
5.80%, while the S&P 500 Index was up 5.00% and the Dow Jones Indus trial
Average was up 7.00%. The fund's Class A Shares were down 11.41% during the
first quarter of 1999, 3 significantly underperforming both the small-cap and
large-cap indexes. The small-cap "growth" style of investing continued to
outperform small-cap "value" investing during the first quarter of 1999.

HOW DID FEDERATED SMALL CAP STRATEGIES FUND PERFORM OVER THE SIX-MONTH REPORTING
PERIOD ENDED APRIL 30, 1999 COMPARED TO ITS PEERS?

For the six-month period ended April 30, 1999, the fund produced total returns
for Class A, B, and C Shares of 12.91%, 12.57% and 12.51%, respec tively, based
on net asset value. 4 These returns lagged the 14.68% total return of the Lipper
Small Cap Funds Average.

For the six-month reporting period ended April 30, 1999, the S&P 500 Index
returned 22.32%, while the S&P 600 Small Cap Index was up 9.03% and the Rus sell
2000 Small Stock Index was up 15.16%.

WHAT INDUSTRY SECTORS DO YOU FAVOR?

We are currently overweighted in the basic materials sector and underweighted in
consumer staples, health care, energy, and utilities. In our two largest sector
focuses, technology and consumer cyclicals, we are overweighted.

Our goal is to remain fully invested in the best 3% of small companies that we
can find across a universe of more than 5,000 small companies in the U.S. We are
maintaining our cash position below 3%, which means that the fund is fully
invested.

WHAT ARE SOME OF THE FUND'S RECENT PORTFOLIO ADDITIONS?

Our recent purchases included the following:

AFFILIATED MANAGERS GROUP (1.02% of net assets): Affiliated Managers Group
acquires equity interests in investment management firms. The company's
affiliates provide investment management services, mainly in the U.S. and
Europe, to mutual funds, partnerships, and institutional and individual cli
ents.

AK STEEL HOLDING CORP. (0.66% of net assets): AK Steel produces and sells
flat-rolled steel, including coated, cold-rolled and hot-rolled carbon
steel, primarily to the automotive, appliance, construction and manufactur
ing markets.

HCC INSURANCE HOLDINGS, INC. (0.80% of net assets): HCC Insurance provides
property and casualty insurance to individual and commercial customers,
underwritten on both a direct and reinsurance basis, and also provides insur
ance agency services.

PIER 1 IMPORTS (0.22% of net assets): Pier 1 Imports operates 732 franchises and
33 retail stores under the names Pier 1 Imports and The Pier, which sell a
variety of furniture, decorative home furnishings, dining and kitchen goods, and
accessories.

3 Performance quoted is based on net asset value for Class A Shares. The per
formance for the first quarter of 1999 based on offering price was (16.30%).

4 Performance quoted is based on net asset value, represents past performance
and is not indicative of future results. Investment return and principal value
will fluctuate, so that an investor's shares, when redeemed, may be worth more
or less than their original cost. Total returns for the period, based on
offering price (i.e., less any applicable sales charge), for Class A, B, and C
Shares were 6.69%, 7.07% and 11.51%, respectively.

RYLAND GROUP, INC. (0.31% of net assets): The Ryland Group specializes in the
construction and sale of single-family, attached and detached homes in 23
metropolitan markets in 20 states. Ryland also provides mortgage services.

WHAT WERE THE FUND'S TOP 10 HOLDINGS AS OF APRIL 30, 1999, AND WHAT WERE THE
INDUSTRY WEIGHTINGS?

PERCENTAGE OF
NAME NET ASSETS
Micrel, Inc. 1.40%
SEI Investments 1.32%
ProBusiness Services, Inc. 1.26%
Spartech Corp. 1.19%
CSG Systems International, Inc. 1.18%
Mutual Risk Management Ltd. 1.15%
Pilot Network Services, Inc. 1.14%
Stanley Furniture Company, Inc. 1.14%
Carlisle Companies, Inc. 1.13%
City National Corp. 1.11%
TOTAL 12.02%

PERCENTAGE OF PERCENTAGE OF
SECTOR NET ASSETS S&P 600 INDEX
Technology 20.7% 15.8%
Consumer Cyclicals 20.3% 19.9%
Financials 13.7% 15.0%
Capital Goods 13.6% 14.1%
Health Care 7.6% 9.9%
Consumer Staples 5.9% 9.2%
Basic Materials 4.6% 4.8%
Energy 3.9% 3.5%
Utilities 2.7% 4.6%
Transportation 2.4% 3.0%

WHILE SMALL-CAP STOCKS TURNED IN POSITIVE PERFORMANCE FOR THE REPORTING
PERIOD, LARGE-CAP STOCKS HAVE BEEN DOMINATING. WHAT IS THE LONG-TERM POTEN
TIAL OF THE SMALL-CAP MARKET?

Small-cap stocks remain very attractive for long-term investors. Two power ful
long-term drivers are: 1) valuation levels of small company stocks are extremely
attractive versus large-cap stocks; and 2) earnings growth in the small-cap
market is expected to outpace larger cap stocks over the next three-five years.
Our analysis of the small-cap market reveals numerous opportunities for finding
companies with rapidly growing revenues and earn ings at attractive prices.
Companies in the small-cap sector still appear very reasonably priced relative
to large-cap companies.

There are two characteristics of this fund that make it an ideal investment
vehicle for this market. First, sector discipline-we stay invested in all 11
economic sectors at all times with appropriate overweighted and underweighted
positions (one half to two times sector bands). Second, our small-cap
discipline-we have kept the median capitalization of the fund below $1 billion,
which is truly a small-cap orientation. Although small-cap equities may be more
volatile than their larger counterparts, history has shown them to be an
excellent long-term investment. Based on monthly histor ical data from 1946 to
1998, given a 15-year holding period, small-cap stocks outperformed large-cap
stocks 83% of the time.

Two Ways You May Seek to Invest for Success:

INITIAL INVESTMENT

IF YOU HAD MADE AN INITIAL INVESTMENT OF $4,000 IN THE CLASS A SHARES OF FED
ERATED SMALL CAP STRATEGIES FUND ON 11/1/95, REINVESTED YOUR DIVIDENDS AND
CAPITAL GAINS, AND DID NOT REDEEM ANY SHARES, YOUR ACCOUNT WOULD HAVE BEEN WORTH
$6,619 ON 4/30/99. YOU WOULD HAVE EARNED A 15.51% 1 AVERAGE ANNUAL TOTAL RETURN
FOR THE INVESTMENT LIFE SPAN.

One key to investing wisely is to reinvest all distributions in fund shares.
This increases the number of shares on which you can earn future dividends, and
you gain the benefit of compounding.

As of 3/31/99, the Class A Shares' average annual 1-year, 3-year, and since
inception (11/1/95) total returns were (24.27)%, 6.89%, and 13.56%, respec
tively. Class B Shares' average annual 1-year, 3-year, and since inception
(11/1/95) total returns were (24.83)%, 6.97%, and 13.99%, respectively. Class C
Shares' average annual 1-year, 3-year, and since inception (11/1/95) total
returns were (21.23)%, 8.08%, and 14.59%, respectively. 2

[Graphic representation "A7" omitted - see Appendix.]

1 Total return represents the change in the value of an investment after
reinvesting all income and capital gains, and takes into account the 5.50% sales
charge applicable to an intital investment in Class A Shares. Data quoted
represents past performance and does not guarantee future results. Investment
return and principal value will fluctuate, so an investor's shares, when
redeemed, may be worth more or less than their original cost.

2 The total returns stated take into account all applicable sales charges. The
maximum sales charges and contingent deferred sales charges for the fund are as
follows: Class A Shares, the 5.50% sales charge; Class B Shares, 5.50%
contingent deferred sales charge; Class C Shares, 1.00% con tingent deferred
sales charge.

ONE STEP AT A TIME

$1,000 INITIAL INVESTMENT AND SUBSEQUENT INVESTMENTS OF $1,000 EACH YEAR FOR 3
YEARS (REINVESTING ALL DIVIDENDS AND CAPITAL GAINS) GREW TO $4,599.

With this approach, the key is consistency.

If you had started investing $1,000 annually in the Class A Shares of Feder ated
Small Cap Strategies Fund on 11/1/95, reinvested your dividends and cap ital
gains, and did not redeem any shares, you would have invested only $4,000, but
your account would have reached a total value of $4,599 1 by 4/30/99. You would
have earned an average annual total return of 7.31%.

A practical investment plan helps you pursue a long-term performance from
growth-oriented stocks of small companies. Through systematic investing, you buy
shares on a regular basis and reinvest all earnings. An investment plan works
for you even if you invest only $1,000 annually. You can take it one step at a
time. Put time, money, and compounding to work.

[Graphic representation "A8" omitted - see Appendix.]

1 This chart assumes that the subsequent annual investments are made on the last
day of each anniversary month. No method of investing can guarantee a profit or
protect against loss in down markets.

Hypothetical Profile-Investing for a College Education

David and Joan Rice are a fictitious couple who, like many shareholders, are
searching for a way to make their money grow over time.

David and Joan are planning for the college education of their child. On Novem
ber 1, 1995, they invested $5,000 in the Class A Shares of Federated Small Cap
Strategies Fund. Since then, David and Joan have made additional investments of
$250 every month.

As this chart shows, over four years, their original $5,000 investment along
with their additional monthly $250 investments totaling $15,250 has grown to
$18,925. This represents a 9.72% average annual total return. For the Rices, a
dedicated program of monthly investment really paid off.

[Graphic representation "A9" omitted - see Appendix.]

This hypothetical scenario is provided for illustrative purposes only and
does not represent the result obtained by any particular shareholder. Past
performance does not guarantee future results.

Portfolio of Investments

APRIL 30, 1999 (UNAUDITED)

<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
COMMON STOCKS-95.4%
BASIC MATERIALS-4.6%
96,000 AK Steel Holding Corp. $ 2,496,000
111,200 1 ATMI, Inc. 2,557,600
95,500 1 Bethlehem Steel Corp. 871,437
143,800 Cambrex Corp. 3,684,875
82,800 1 Daisytek International
Corp. 1,386,900
111,800 Lone Star Industries, Inc. 3,989,862
173,800 RPM, Inc. 2,444,062
TOTAL 17,430,736
CAPITAL GOODS-13.6%
142,400 AMETEK, Inc. 3,248,500
81,100 1 Allied Waste Industries,
Inc. 1,434,456
118,800 Applied Power, Inc., Class
A 3,749,625
51,100 Aptargroup, Inc. 1,430,800
60,000 Ballard Power Systems,
Inc. 2,280,000
65,200 1 Benchmark Electronics,
Inc. 2,192,350
86,200 1 Blyth Industries, Inc. 1,961,050
86,600 Carlisle Cos., Inc. 4,243,400
139,000 1 Ducommun, Inc. 1,581,125
49,850 1 Dycom Industries, Inc. 2,277,522
22,600 1 Electro Scientific
Industries, Inc. 861,625
207,100 Furon Co. 3,701,912
73,700 1 HADCO Corp. 1,934,625
188,000 1 Newpark Resources, Inc. 1,727,250
93,800 1 Rayovac Corp. 2,532,600
30,200 1 SPS Technologies, Inc. 1,317,475
43,700 1 Sanmina Corp. 2,900,587
189,200 Spartech Corp. 4,493,500
154,625 1 Tetra Tech, Inc. 3,739,992
21,100 1 Zebra Technologies Corp.,
Class A 701,575
86,490 1 Zebra Technologies Corp.,
Class B 2,875,792
TOTAL 51,185,761
<CAPTION>
SHARES VALUE
<C> <S> <C>
COMMON STOCKS-continued
CONSUMER CYCLICALS-20.3%
67,000 1 Action Performance Cos.,
Inc. $ 2,269,625
117,000 1 Acxiom Corp. 2,954,250
52,200 1 Alternative Living
Services, Inc. 1,161,450
47,800 1 American Eagle Outfitters,
Inc. 3,573,050
76,800 1 Black Box Corp. 2,630,400
31,400 1 CDW Computer Centers, Inc. 2,810,300
12,500 1 CMG Information Services,
Inc. 3,182,031
23,200 1 Catalina Marketing Corp. 1,982,150
44,000 1 Corinthian Colleges, Inc. 720,500
98,800 1 DeVRY, Inc. 2,605,850
63,600 1 Dura Automotive Systems,
Inc. 1,820,550
84,300 1 Gentex Corp. 2,534,269
193,300 1 Helen of Troy Ltd. 2,706,200
140,500 1 ITT Educational Services,
Inc. 3,451,031
86,800 1 Linens 'N Things, Inc. 3,971,100
62,800 1 O'Reilly Automotive, Inc. 2,873,100
92,000 1 Pacific Sunwear of
California 3,412,625
112,600 Pier 1 Imports, Inc. 830,425
2,900 1 Priceline.com, Inc. 470,887
132,450 1 ProBusiness Services, Inc. 4,751,644
74,200 1 Rent-A-Center, Inc. 2,300,200
45,100 Ryland Group, Inc. 1,183,875
113,897 Service Corp.
International 2,363,363
202,000 1 Stanley Furniture Co., Inc. 4,292,500
100,800 Strayer Education, Inc. 3,490,200
104,600 1 Sylvan Learning Systems,
Inc. 2,628,075
23,300 1 Timberland Co., Class A 1,613,525
51,200 1 Toll Brothers, Inc. 1,094,400
106,500 Unifirst Corp. 1,857,094
30,900 1 Value America, Inc. 1,218,619
152,500 Wolverine World Wide, Inc. 1,830,000
38,100 1 Zale Corp. 1,440,656
12,900 1 Ziff-Davis, Inc. 454,725
TOTAL 76,478,669
<CAPTION>
SHARES VALUE
<C> <S> <C>
COMMON STOCKS-continued
CONSUMER STAPLES-5.9%
79,400 1 Century Communications
Corp., Class A $ 3,895,563
154,500 1 Del Monte Foods Co. 2,066,437
55,000 Earthgrains Co. 1,165,312
43,000 1 Entercom Communication
Corp. 1,596,375
57,000 1 Patterson Dental Co. 2,055,562
100,600 Ruby Tuesday, Inc. 1,835,950
133,900 1 Smithfield Foods, Inc. 3,163,388
23,400 1 Valassis Communications,
Inc. 1,310,400
33,000 1 Whole Foods Market, Inc. 1,287,000
141,800 1 World Color Press 3,624,762
TOTAL 22,000,749
ENERGY-3.9%
80,100 Cross Timbers Oil Co. 876,094
73,400 Devon Energy Corp. 2,440,550
92,100 1 Newfield Exploration Co. 2,475,187
127,600 1 Pride International, Inc. 1,491,325
124,700 Santa Fe International
Corp. 2,681,050
119,900 1 Stolt Comex Seaway, S.A. 1,498,750
103,600 1 Tuboscope, Inc. 1,411,550
174,200 Vintage Petroleum, Inc. 1,872,650
TOTAL 14,747,156
FINANCIALS-13.7%
132,100 1 Affiliated Managers Group,
Inc. 3,839,156
26,800 Chittenden Corp. 770,500
108,100 City National Corp. 4,175,362
165,500 Community First
Bankshares, Inc. 3,382,406
76,239 1 Delphi Financial Group,
Inc., Class A 2,372,939
123,000 Enhance Financial Services
Group, Inc. 2,544,562
34,500 Executive Risk, Inc. 2,475,375
196,400 1 FirstFed Financial Corp. 3,400,175
124,700 Fremont General Corp. 2,494,000
143,000 HCC Insurance Holdings,
Inc. 3,020,875
58,300 HealthCare Financial
Partners, Inc. 1,967,625
37,900 Heller Financial, Inc. 1,028,037
48,000 Investment Technology
Group, Inc. 1,662,000
<CAPTION>
SHARES VALUE
<C> <S> <C>
COMMON STOCKS-continued
FINANCIALS-CONTINUED
48,000 1 Jefferies Group, Inc. $ 1,098,000
111,100 Mutual Risk Management
Ltd. 4,319,013
181,000 North Fork Bancorp, Inc. 4,072,500
52,300 SEI Investments, Co. 4,968,500
179,200 1 Scottish Annuity & Life
Holdings Ltd. 1,792,000
52,200 St. Paul Bancorp, Inc. 1,265,850
64,400 1 Triad Guaranty, Inc. 1,014,300
TOTAL 51,663,175
HEALTH CARE-7.6%
152,800 1 Cephalon, Inc. 1,852,700
41,900 1 Express Scripts, Inc.,
Class A 3,084,888
74,800 1 HCR Manor Care, Inc. 2,075,700
177,600 Hooper Holmes, Inc. 2,830,500
114,400 1 Mede America Corp. 2,974,400
119,200 1 Medicis Pharmaceutical
Corp., Class A 2,898,050
31,400 1 Medimmune, Inc. 1,730,925
137,500 1 Prime Medical Services,
Inc. 988,281
107,000 1 Sabratek Corp. 1,745,438
6,300 1 Sepracor, Inc. 532,350
140,700 1 Sybron International Corp. 3,895,631
73,400 1 Universal Health Services,
Inc., Class B 3,803,038
TOTAL 28,411,901
TECHNOLOGY-20.7%
103,300 1 ABR Information Services,
Inc. 1,807,750
116,100 1 AVT Corp. 3,156,469
241,050 1 Apex PC Solutions, Inc. 4,007,456
41,800 1 Aspect Development, Inc. 457,188
230,100 1 Atlantic Data Services,
Inc. 920,400
139,500 1 BARRA, Inc. 2,728,969
115,200 1 CSG Systems International,
Inc. 4,449,600
190,300 1 Cable Design Technologies,
Class A 2,830,713
58,700 1 Check Point Software
Technologies Ltd. 2,069,175
121,500 1 Ciber, Inc. 2,293,313
64,100 1 CommScope, Inc. 1,562,438
86,000 1 Complete Business
Solutions, Inc. 1,924,250
<CAPTION>
SHARES VALUE
<C> <S> <C>
COMMON STOCKS-continued
TECHNOLOGY-CONTINUED
49,800 1 Comverse Technology, Inc. $ 3,193,425
40,500 1 Concur Technologies, Inc. 1,463,063
159,450 1 Cybex Computer Products
Corp. 3,029,550
131,000 1 DSP Group, Inc. 2,374,375
37,000 1 Digital River, Inc. 1,429,125
71,200 1 Etec Systems, Inc. 2,198,300
77,050 FactSet Research Systems 3,592,456
41,000 1 Intraware, Inc. 1,255,625
129,500 1 Kulicke & Soffa Industries 2,962,313
33,200 1 Macromedia, Inc. 1,375,725
3,600 1 Marimba, Inc. 218,700
176,000 1 Mastech Corp. 2,585,000
89,700 1 Micrel, Inc. 5,281,088
12,000 1 Mindspring Enterprises, Inc. 1,163,250
12,900 1 Mpath Interactive, Inc. 507,938
4,100 1 Net Perceptions, Inc. 108,138
72,800 1 Orbotech, Ltd. 3,494,400
228,200 1 Pilot Network Services,
Inc. 4,307,275
1,900 1 Rhythms NetConnections,
Inc. 156,750
113,600 1 SS&C Technologies, Inc. 1,633,000
35,600 1 Transaction Systems
Architects, Inc., Class A 1,154,775
17,200 1 Usinternetworking, Inc. 879,350
35,500 1 Verity, Inc. 1,242,500
45,200 1 Vitesse Semiconductor
Corp. 2,093,325
172,000 1 World Access, Inc. 2,064,000
TOTAL 77,971,167
TRANSPORTATION-2.4%
46,300 Airborne Freight Corp. 1,481,600
77,500 1 America West Holdings
Corp., Class B 1,617,813
38,000 CNF Transportation, Inc. 1,660,125
75,000 1 Consolidated Freightways
Corp. 843,750
18,700 Expeditors International
Washington, Inc. 1,133,688
34,100 USFreightways Corp. 1,278,750
62,125 Werner Enterprises, Inc. 1,195,906
TOTAL 9,211,632
<CAPTION>
SHARES OR
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
COMMON STOCKS-continued
UTILITIES-2.7%
27,700 Central Hudson Gas &
Electric Corp. $ 1,028,363
35,700 Commonwealth Energy System 1,448,081
29,000 New Jersey Resources Corp. 1,069,375
46,400 Piedmont Natural Gas, Inc. 1,479,000
47,200 Sierra Pacific Resources 1,681,500
44,500 Southwest Gas Corp. 1,271,031
40,500 United Water Resources, Inc. 842,906
60,100 WICOR, Inc. 1,419,863
TOTAL 10,240,119
TOTAL COMMON STOCKS
(IDENTIFIED COST
$317,792,646) 359,341,065
U.S. TREASURY OBLIGATION-
3.0%
$ 11,500,000 2 United States Treasury
Bill, 6/17/1999
(Identified cost
$11,433,488) 11,433,488
REPURCHASE AGREEMENT-0.1%
475,000 3 ABN AMRO, Inc., 4.94%,
dated 4/30/1999, due
5/3/1999 (AT AMORTIZED
COST) 475,000
TOTAL INVESTMENTS
(IDENTIFIED COST
$329,701,134) 4 $ 371,249,553
</TABLE>

1 Non-income producing security.

2 Represents a security held as collateral which is used to ensure the fund is
able to satisfy the obligations of its outstanding long futures con tract. The
underlying face amount, at value, of open index futures is $11,308,500 at April
30, 1999, which represents 3.0% of net assets.

4 The cost of investments for federal tax purposes amounts to $329,701,134. The
net unrealized appreciation of investments on a federal tax basis amounts to
$41,548,419 which is comprised of $75,436,889 appreciation and $33,888,470
depreciation at April 30, 1999.

Note: The categories of investments are shown as a percentage of net assets
($376,648,815) at April 30, 1999.

The following acronym is used throughout this portfolio:

PC -Participation Certificate

See Notes which are an integral part of the Financial Statements

Statement of Assets and Liabilities

APRIL 30, 1999 (UNAUDITED)

<TABLE>
<S> <C> <C>
ASSETS:
Total investments in
securities, at value
(identified and tax cost
$329,701,134) $ 371,249,553
Cash 452
Income receivable 105,526
Receivable for investments
sold 6,255,127
Receivable for shares sold 616,140
Deferred organizational
costs 37,190
TOTAL ASSETS 378,263,988
LIABILITIES:
Payable for investments
purchased $ 1,004,019
Payable for shares
redeemed 348,878
Payable for daily
variation margin 90,750
Accrued expenses 171,526
TOTAL LIABILITIES 1,615,173
Net assets for 22,172,610
shares outstanding $ 376,648,815
NET ASSETS CONSIST OF:
Paid in capital $ 361,881,150
Net unrealized
appreciation of
investments 41,266,045
Accumulated net realized
loss on investments (24,026,522)
Accumulated net investment
loss (2,471,858)
TOTAL NET ASSETS $ 376,648,815
NET ASSET VALUE, OFFERING
PRICE AND REDEMPTION
PROCEEDS PER SHARE
CLASS A SHARES:
Net Asset Value Per Share
($144,922,191 / 8,409,583
shares outstanding) $17.23
Offering Price Per Share
(100/94.50 of $17.23) 1 $18.23
Redemption Proceeds Per
Share $17.23
CLASS B SHARES:
Net Asset Value Per Share
($197,964,054 / 11,755,738
shares outstanding) $16.84
Offering Price Per Share $16.84
Redemption Proceeds Per
Share (94.50/100 of
$16.84) 1 $15.91
CLASS C SHARES:
Net Asset Value Per Share
($33,762,570 / 2,007,289
shares outstanding) $16.82
Offering Price Per Share $16.82
Redemption Proceeds Per
Share (99.00/100 of
$16.82) 1 $16.65

</TABLE>

1 See "What Do Shares Cost?" in the Prospectus.

See Notes which are an integral part of the Financial Statements

Statement of Operations

SIX MONTHS ENDED APRIL 30, 1999 (UNAUDITED)

<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Dividends $ 704,165
Interest 264,523
TOTAL INCOME 968,688
EXPENSES:
Investment advisory fee $ 1,470,030
Administrative personnel
and services fee 147,787
Custodian fees 15,000
Transfer and dividend
disbursing agent fees and
expenses 384,208
Directors'/Trustees' fees 3,224
Auditing fees 7,954
Legal fees 1,488
Portfolio accounting fees 55,992
Distribution services fee-
Class B Shares 775,263
Distribution services fee-
Class C Shares 136,831
Shareholder services fee-
Class A Shares 185,979
Shareholder services fee-
Class B Shares 258,421
Shareholder services fee-
Class C Shares 45,610
Share registration costs 38,850
Printing and postage 59,507
Insurance premiums 1,912
Miscellaneous 1,735
TOTAL EXPENSES 3,589,791
WAIVER:
Waiver of investment
advisory fee $ (149,245)
Net expenses 3,440,546
Net operating loss (2,471,858)
REALIZED AND UNREALIZED
GAIN ON INVESTMENTS:
Net realized gain on
investments and futures
contracts 18,288,598
Net change in unrealized
appreciation of
investments and
futures contracts 29,945,227
Net realized and
unrealized gain on
investments and
futures contracts 48,233,825
Change in net assets
resulting from operations $ 45,761,967
</TABLE>

See Notes which are an integral part of the Financial Statements

Statement of Changes in Net Assets

<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR
(unaudited) ENDED
APRIL 30, OCTOBER 31,
1999 1998
<S> <C> <C>
INCREASE (DECREASE) IN NET
ASSETS
OPERATIONS:
Net operating loss $ (2,471,858) $ (4,997,810)
Net realized gain (loss) on
investments and futures
contracts ($18,288,598 and
$(41,800,279),
respectively, as computed
for federal tax purposes) 18,288,598 (42,268,177)
Net change in unrealized
appreciation/(depreciation
) of investments and
futures contracts 29,945,227 (35,042,376)
CHANGE IN NET ASSETS
RESULTING FROM OPERATIONS 45,761,967 (82,308,363)
DISTRIBUTIONS TO
SHAREHOLDERS:
Distributions from net
realized gains on
investments and futures
contracts
Class A Shares - (20,318)
Class B Shares - (28,368)
Class C Shares - (4,031)
CHANGE IN NET ASSETS
RESULTING FROM
DISTRIBUTIONS
TO SHAREHOLDERS - (52,717)
SHARE TRANSACTIONS:
Proceeds from sale of
shares 272,812,503 810,112,441
Net asset value of shares
issued to shareholders in
payment of
distributions declared - 58,240
Cost of shares redeemed (312,681,287) (701,511,227)
CHANGE IN NET ASSETS
RESULTING FROM SHARE
TRANSACTIONS (39,868,784) 108,659,454
Change in net assets 5,893,183 26,298,374
NET ASSETS:
Beginning of period 370,755,632 344,457,258
End of period (including
accumulated net investment
loss of $2,471,858 at
April 30, 1999) $ 376,648,815 $ 370,755,632
</TABLE>

See Notes which are an integral part of the Financial Statements

Financial Highlights-Class A Shares

(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(unaudited)
APRIL 30, YEAR ENDED OCTOBER 31,
1999 1998 1997 1996
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING
OF PERIOD $15.26 $18.75 $14.68 $10.00
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income (0.09) (0.14) 1 (0.04) (0.05) 2
Net realized and
unrealized gain (loss) on
investments 2.06 (3.35) 4.33 4.75
TOTAL FROM INVESTMENT
OPERATIONS 1.97 (3.49) 4.29 4.70
LESS DISTRIBUTIONS:
Distributions in excess of
net investment income - - - (0.02)
Distributions from net
realized gain on
investments and
futures contracts - (0.00) 3 (0.22) -
TOTAL DISTRIBUTIONS (0.00) (0.00) (0.22) (0.02)
NET ASSET VALUE, END OF
PERIOD $17.23 $15.26 $18.75 $14.68
TOTAL RETURN 4 12.91% (18.60%) 29.55% 47.06%

RATIOS TO AVERAGE NET
ASSETS:
Expenses 5 1.37% 6 1.35% 1.44% 3.05%
Net investment income 5 (0.88%)6 (0.89%) (0.65% ) (2.09%)
Expenses (after waivers) 1.29% 6 1.28% 1.44% 1.35%
Net investment income
(after waivers) (0.80%)6 (0.82%) (0.65% ) (0.39%)
SUPPLEMENTAL DATA:
Net assets, end of period
(000 omitted) $144,922 $142,250 $134,903 $23,242
Portfolio turnover 25% 59% 118% 83%
</TABLE>

2 Per share information presented is based upon the monthly average number of
shares outstanding due to large fluctuations in the number of shares out
standing during the period.

3 Amounts distributed per share do not round to $0.01.

4 Based on net asset value, which does not reflect the sales charge or con
tingent deferred sales charge, if applicable.

5 During the period, certain fees were voluntarily waived. If such voluntary
waivers had not occurred, the ratios would have been as indicated.

6 Computed on an annualized basis.

See Notes which are an integral part of the Financial Statements

Financial Highlights-Class B Shares

(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(unaudited)
APRIL 30, YEAR ENDED OCTOBER 31,
1999 1998 1997 1996
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING
OF PERIOD $14.96 $18.53 $14.62 $10.00
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income (0.18) (0.28) 1 (0.09) (0.16) 2
Net realized and
unrealized gain (loss) on
investments 2.06 (3.29) 4.22 4.78
TOTAL FROM INVESTMENT
OPERATIONS 1.88 (3.57) 4.13 4.62
LESS DISTRIBUTIONS:
Distributions from net
realized gain on
investments - (0.00) 3 (0.22) -
NET ASSET VALUE, END OF
PERIOD $16.84 $14.96 $18.53 $14.62
TOTAL RETURN 4 12.57% (19.25%) 28.56% 46.20%

RATIOS TO AVERAGE NET
ASSETS:
Expenses 5 2.12% 6 2.10% 2.19% 3.80%
Net investment income 5 (1.63%) 6 (1.64%) (1.40%) (2.97%)
Expenses (after waivers) 2.04% 6 2.03% 2.19% 2.10%
Net investment income
(after waivers) (1.55%) 6 (1.57%) (1.40% ) (1.27%)
SUPPLEMENTAL DATA:
Net assets, end of period
(000 omitted) $197,964 $195,188 $183,180 $32,112
Portfolio turnover 25% 59% 118% 83%

</TABLE>

2 Per share information presented is based upon the monthly average number of
shares outstanding due to large fluctuations in the number of shares out
standing during the period.

3 Amounts distributed per share do not round to $0.01.

4 Based on net asset value, which does not reflect the sales charge or con
tingent deferred sales charge, if applicable.

5 During the period, certain fees were voluntarily waived. If such voluntary
waivers had not occurred, the ratios would have been as indicated.

6 Computed on an annualized basis.

See Notes which are an integral part of the Financial Statements

Financial Highlights-Class C Shares

(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(unaudited)
APRIL 30, YEAR ENDED OCTOBER 31,
1999 1998 1997 1996
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING
OF PERIOD $14.95 $18.51 $14.60 $10.00
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income (0.18) (0.27) 1 (0.10) (0.16) 2
Net realized and
unrealized gain (loss) on
investments 2.05 (3.29) 4.13 4.76
TOTAL FROM INVESTMENT
OPERATIONS 1.87 (3.56) 4.13 4.60
LESS DISTRIBUTIONS:
Distributions from net
realized gain on
investments - (0.00) 3 (0.22) -
NET ASSET VALUE, END OF
PERIOD $16.82 $14.95 $18.51 $14.60
TOTAL RETURN 4 12.51% (19.22% ) 28.60% 46.00%

RATIOS TO AVERAGE NET
ASSETS:
Expenses 5 2.12% 6 2.10% 2.19% 3.80%
Net investment income 5 (1.63%) 6 (1.64% ) (1.40% ) (2.98%)
Expenses (after waivers) 2.04% 6 2.03% 2.19% 2.10%
Net investment income
(after waivers) (1.55% ) 6 (1.57% ) (1.40% ) (1.28%)
SUPPLEMENTAL DATA:
Net assets, end of period
(000 omitted) $33,763 $33,318 $26,375 $5,496
Portfolio turnover 25% 59% 118% 83%

</TABLE>

2 Per share information presented is based upon the monthly average number of
shares outstanding due to large fluctuations in the number of shares out
standing during the period.

3 Amounts distributed per share do not round to $0.01.

4 Based on net asset value, which does not reflect the sales charge or con
tingent deferred sales charge, if applicable.

5 During the period, certain fees were voluntarily waived. If such voluntary
waivers had not occurred, the ratios would have been as indicated.

6 Computed on an annualized basis.

See Notes which are an integral part of the Financial Statements

Notes to Financial Statements

APRIL 30, 1999 (UNAUDITED)

ORGANIZATION

Federated Equity Funds (the "Trust") is registered under the Investment Com pany
Act of 1940, as amended (the "Act") as an open-end, management invest ment
company. The Trust consists of five 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 port
folios 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 Fund offers three classes of shares: Class A Shares, Class B Shares and
Class C Shares. The investment objective of the Fund is to provide capi tal
appreciation.

SIGNIFICANT ACCOUNTING POLICIES

INVESTMENT VALUATIONS

REPURCHASE AGREEMENTS

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"). Distributions to shareholders are recorded on the ex- dividend
date.

FEDERAL TAXES

At October 31, 1998, the Fund, for federal tax purposes, had a capital loss
carryforward of $41,800,279, which will reduce the Fund's taxable income arising
from future net realized gain on investments, if any, to the extent permitted by
the Code, and thus will reduce the amount of the distributions to shareholders
which would otherwise be necessary to relieve the Fund of any liability for
federal tax. Pursuant to the Code, such capital loss carryfor ward will expire
in 2006.

WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS

DEFERRED EXPENSES

FUTURES CONTRACTS

The Fund purchases stock index futures contracts to manage cashflows, enhance
yield, and to potentially reduce transaction costs. Upon entering into a stock
index futures contract with a broker, the Fund is required to deposit in a
segregated account a specified amount of cash or U.S. government securi ties.
Futures contracts are valued daily and unrealized gains or losses are recorded
in a "variation margin" account. Daily, the Fund receives from or pays to the
broker a specified amount of cash based upon changes in the vari ation margin
account. When a contract is closed, the Fund recognizes a real ized gain or
loss. For the period ended April 30, 1999, the Fund had realized gains/losses of
$1,057,087 on futures contracts.

Futures contracts have market risks, including the risk that the change in the
value of the contract may not correlate with changes in the value of the
underlying securities.

At April 30, 1999, the Fund had outstanding futures contracts as set forth
below:

CONTRACTS
EXPIRATION TO DELIVER/ UNREALIZED
DATE RECEIVE POSITION (DEPRECIATION)
June 1999 33 S&P 500 Long ($282,374)

USE OF ESTIMATES

OTHER

Investment transactions are accounted for on the trade date.

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>
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 1999 OCTOBER 31, 1998
CLASS A SHARES: SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
Shares sold 13,310,468 $ 222,633,492 37,888,409 $ 673,621,012
Shares issued to
shareholders in payment of
distributions declared 0 0 765 14,034
Shares redeemed (14,225,324) (238,175,586) (35,758,633) (637,209,629)
NET CHANGE RESULTING FROM
CLASS A
SHARE TRANSACTIONS (914,856) $ (15,542,094) 2,130,541 $ 36,425,417

<CAPTION>
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 1999 OCTOBER 31, 1998
CLASS B SHARES: SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
Shares sold 1,633,120 $ 26,737,248 5,918,299 $ 105,138,404
Shares issued to
shareholders in payment of
distributions declared 0 0 2,507 40,446
Shares redeemed (2,920,719) (47,574,163) (2,761,407) (47,086,005)
NET CHANGE RESULTING FROM
CLASS B
SHARE TRANSACTIONS (1,287,599) $ (20,836,915) 3,159,399 $ 58,092,845

<CAPTION>
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 1999 OCTOBER 31, 1998
CLASS C SHARES: SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
Shares sold 1,433,731 $ 23,441,763 1,872,055 $ 31,353,025
Shares issued to
shareholders in payment of
distributions declared 0 0 208 3,760
Shares redeemed (1,655,797) (26,931,538) (1,068,067) (17,215,593)
NET CHANGE RESULTING FROM
CLASS C
SHARE TRANSACTIONS (222,066) $ (3,489,775) 804,196 $ 14,141,192
NET CHANGE RESULTING FROM
SHARE TRANSACTIONS (2,424,521) $ (39,868,784) 6,094,136 $ 108,659,454
</TABLE>

INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES

INVESTMENT ADVISORY FEE

Federated Investment Management Company, 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/or reimburse certain operating expenses of
the Fund. The Adviser can modify or terminate this voluntary waiver and/or
reimbursement at any time at its sole discretion.

ADMINISTRATIVE FEE

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 Feder ated
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,
Class B, and Class C Shares. The Plan provides that the Fund may incur
distribution expenses according to the following schedule annu ally, to
compensate FSC.

PERCENTAGE OF AVERAGE
SHARE CLASS NAME DAILY NET ASSETS OF CLASS
Class A Shares 0.25%
Class B Shares 0.75%
Class C Shares 0.75%

For the period ended April 30, 1999, Class A Shares did not incur a distribu
tion services fee.

SHAREHOLDER SERVICES FEE

Under the terms of a Shareholder Services Agreement with Federated Share holder
Services Company ("FSSC"), the Fund will pay FSSC up to 0.25% of aver age daily
net assets of the Fund's shares for the period. The fee paid to FSSC is used to
finance certain services for shareholders and to maintain shareholder accounts.
FSSC may voluntarily choose to waive any portion of its fee. FSSC can modify or
terminate this voluntary waiver at any time at its sole discretion.

TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES

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.

ORGANIZATIONAL EXPENSES

Organizational and/or start-up administrative service expenses of $45,877 were
borne initially by FServ. The Fund has agreed to reimburse FServ for the
organizational and/or start-up administrative expenses during the five-year
period following effective date.

GENERAL

Certain of the Officers and Trustees of the Trust are Officers and Directors or
Trustees of the above companies.

INVESTMENT TRANSACTIONS

Purchases and sales of investments, excluding short-term securities, for the
period ended April 30, 1999, were as follows:

Purchases $ 97,547,794
Sales $131,791,891

YEAR 2000

Trustees

Officers

JOHN F. DONAHUE
Chairman

GLEN R. JOHNSON
President

J. CHRISTOPHER DONAHUE
Executive Vice President

EDWARD C. GONZALES
Executive Vice President

JOHN W. MCGONIGLE
Executive Vice President and Secretary

RICHARD B. FISHER
Vice President

RICHARD J. THOMAS
Treasurer

C. GRANT ANDERSON
Assistant Secretary

SEMI-ANNUAL REPORT
AS OF APRIL 30, 1999

[Graphic]
Federated
World-Class Investment Manager

Federated Small Cap Strategies Fund

Established 1995

4TH SEMI-ANNUAL REPORT

[Graphic]
Federated
Federated Small Cap Strategies Fund
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
1-800-341-7400
WWW.FEDERATEDINVESTORS.COM
Federated Securities Corp., Distributor

Cusip 314172404
Cusip 314172503
Cusip 314172602
G01658-05 (6/99)

[Graphic]

A1. The graphic presentation here displayed consists of a boxed legend in the
upper left quadrant indicating the components of the corresponding mountain
chart. The color coded mountain chart is a visual representation of the
narrative text above it. The "x" axis reflects computation periods from 1/1/77
to 4/30/99. The "y" axis is measured in increments of $100,000 ranging from $0
to $600,000 and indicates that the ending value of hypothetical initial
investment of $23,000 in the fund's Class A Shares, assuming the reinvestment of
capital gains and dividends, would have grown to $534,659 on 4/30/99.

A2. The graphic presentation here displayed consists of a boxed legend in the
upper left quadrant indicating the components of the corresponding mountain
chart. The color coded mountain chart is a visual representation of the
narrative text above it. The "x" axis reflects computation periods from 1/1/77
to 4/30/99. The "y" axis is measured in increments of $50,000 ranging from $0 to
$200,000 and indicates that the ending value of hypothetical yearly investments
of $1,000 in the fund's Class A Shares, assuming the reinvestment of capital
gains and dividends, would have grown to $186,135 on 4/30/99.

A3. The graphic presentation here displayed consists of a boxed legend in the
upper left quadrant indicating the components of the corresponding mountain
chart. The color-coded mountain chart is a visual representation of the
narrative text beneath it. The "x" axis reflects computation periods from
4/30/89 to 4/30/99. The "y" axis is measured in increments of $20,000 ranging
from $0 to $100,000 and indicates that the ending value of a hypothetical
initial investment of $5,000 and subsequent monthly investments of $250 over 10
years in the fund's Class A Shares would have grown to $99,905 on 4/30/99.

A4. The graphic presentation here displayed consists of a boxed legend in the
upper left quadrant indicating the components of the corresponding mountain
chart. The color coded mountain chart is a visual representation of the
narrative text above it. The "x" axis reflects computation periods from 8/23/84
to 4/30/99. The "y" axis is measured in increments of $40,000 ranging from $0 to
$160,000 and indicates that the ending value of hypothetical initial investment
of $15,000 in the fund's Class A Shares, assuming the reinvestment of capital
gains and dividends, would have grown to $150,522 on 4/30/99.

A5. The graphic presentation here displayed consists of a boxed legend in the
upper left quadrant indicating the components of the corresponding mountain
chart. The color coded mountain chart is a visual representation of the
narrative text above it. The "x" axis reflects computation periods from 8/23/84
to 4/30/99. The "y" axis is measured in increments of $10,000 ranging from $0 to
$60,000 and indicates that the ending value of hypothetical yearly investments
of $1,000 in the fund's Class A Shares, assuming the reinvestment of capital
gains and dividends, would have grown to $58,485 on 4/30/99.

A6. The graphic presentation here displayed consists of a boxed legend in the
upper left quadrant indicating the components of the corresponding mountain
chart. The color-coded mountain chart is a visual representation of the
narrative text beneath it. The "x" axis reflects computation periods from
4/30/89 to 4/30/99. The "y" axis is measured in increments of $20,000 ranging
from $0 to $100,000 and indicates that the ending value of a hypothetical
initial investment of $5,000 and subsequent monthly investments of $250 over 10
years in the fund's Class A Shares would have grown to $93,291 on 4/30/99.

A7. The graphic presentation here displayed consists of a boxed legend in the
upper left quadrant indicating the components of the corresponding mountain
chart. The color coded mountain chart is a visual representation of the
narrative text above it. The "x" axis reflects computation periods from 11/1/95
to 4/30/99. The "y" axis is measured in increments of $1,000 ranging from $0 to
$8,000 and indicates that the ending value of hypothetical initial investment of
$4,000 in the fund's Class A Shares, assuming the reinvestment of capital gains
and dividends, would have grown to $6,619 on 4/30/99.

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A8. The graphic presentation here displayed consists of a boxed legend in the
upper left quadrant indicating the components of the corresponding mountain
chart. The color coded mountain chart is a visual representation of the
narrative text above it. The "x" axis reflects computation periods from 11/1/95
to 4/30/99. The "y" axis is measured in increments of $1,000 ranging from $0 to
$5,000 and indicates that the ending value of hypothetical yearly investments of
$1,000 in the fund's Class A Shares, assuming the reinvestment of capital gains
and dividends, would have grown to $4,599 on 4/30/99.

A9. The graphic presentation here displayed consists of a boxed legend in the
upper left quadrant indicating the components of the corresponding mountain
chart. The color-coded mountain chart is a visual representation of the
narrative text beneath it. The "x" axis reflects computation periods from
11/1/95 to 4/30/99. The "y" axis is measured in increments of $5,000 ranging
from $0 to $20,000 and indicates that the ending value of a hypothetical initial
investment of $5,000 and subsequent monthly investments of $250 over 4 years in
the fund's Class A Shares would have grown to $18,925 on 4/30/99.