FEDERATED EQUITY FUNDS
Federated Aggressive Growth Fund
Federated Capital Appreciation Fund
Federated Growth Strategies Fund
Federated Large Cap Growth Fund
Federated Small Cap Strategies Fund
Supplement to Prospectuses Dated December 23, 1998 (Federated Large Cap
Growth Fund) and December 31, 1998 (each
Fund other than Federated Large Cap Growth Fund)
I. At a special meeting of shareholders to be held on November 5,
1999, shareholders of the above-named Funds will be asked to vote
on the changes described below. If approved by shareholders, these
changes will take effect on or after December 1, 1999.
Shareholders will be notified if any of these changes are not
approved at the special meeting or any adjournment thereof. Please
keep this supplement for your records.
Shareholders will be asked to consider the following proposals:
(1) To elect six Trustees.
(2) To make changes to the fundamental investment policies of each
Fund (except as otherwise noted):
(a) To amend the Funds' fundamental investment policies
regarding diversification to read as follows:
"With respect to securities comprising 75% of the value of
its total assets, the Fund will not purchase securities of
any one issuer (other than cash; cash items; securities
issued or guaranteed by the government of the United
States or its agencies or instrumentalities and repurchase
agreements collateralized by such U.S. government
securities; and securities of other investment companies)
if, as a result, more than 5% of the value of its total
assets would be invested in the securities of that issuer,
or the Fund would own more than 10% of the outstanding
voting securities of that issuer."
(b) To amend the Funds' fundamental investment policies
regarding borrowing money and issuing senior securities to
read as follows:
"The Fund may borrow money, directly or indirectly, and
issue senior securities to the maximum extent permitted
under the 1940 Act."
(c) To amend the Funds' fundamental investment policies
regarding investments in real estate to read as follows:
"The Fund may not purchase or sell real estate, provided
that this restriction does not prevent the Fund from
investing in issuers which invest, deal, or otherwise
engage in transactions in real estate or interests
therein, or investing in securities that are secured by
real estate or interests therein. The Fund may exercise
its rights under agreements relating to such securities,
including the right to enforce security interests and to
hold real estate acquired by reason of such enforcement
until that real estate can be liquidated in an orderly
manner."
(d) To amend the Funds' fundamental investment policies
regarding investments in commodities to read as follows
(for each Fund except Federated Capital Appreciation
Fund):
"The Fund may not purchase or sell physical commodities,
provided that the Fund may purchase securities of
companies that deal in commodities."
(e) To amend the Funds' fundamental investment policies
regarding underwriting securities to read as follows:
"The Fund may not underwrite the securities of other
issuers, except that the Fund may engage in transactions
involving the acquisition, disposition or resale of its
portfolio securities, under circumstances where it may be
considered to be an underwriter under the Securities Act
of 1933."
(f) To amend the Funds' fundamental investment policies
regarding lending by the Funds to read as follows:
"The Fund may not make loans, provided that this
restriction does not prevent the Fund from purchasing debt
obligations, entering into repurchase agreements, lending
its assets to broker/dealers or institutional investors
and investing in loans, including assignments and
participation interests."
(g) To amend the Funds' fundamental investment policies
regarding concentration of the Funds' investments in the
securities of companies in the same industry to read as
follows (for each Fund except Federated Capital
Appreciation Fund):
"The Fund will not make investments that will result in
the concentration of its investments in the securities of
issuers primarily engaged in the same industry. Government
securities, municipal securities and bank instruments will
not be deemed to constitute an industry."
(h) To amend, and to make non-fundamental, the Funds'
fundamental investment policies regarding buying
securities on margin to read as follows (for each Fund
except Federated Capital Appreciation Fund):
"The Fund will not purchase securities on margin, provided
that the Fund may obtain short-term credits necessary for
the clearance of purchases and sales of securities, and
further provided that the Fund may make margin deposits in
connection with its use of financial options and futures,
forward and spot currency contracts, swap transactions and
other financial contracts or derivative instruments."
(i) To amend, and to make non-fundamental, the Funds'
fundamental investment policies regarding pledging assets
to read as follows (for each Fund except Federated
Aggressive Growth Fund and Federated Growth Strategies
Fund):
"The Fund will not mortgage, pledge, or hypothecate any of
its assets, provided that this shall not apply to the
transfer of securities in connection with any permissible
borrowing or to collateral arrangements in connection with
permissible activities."
(3)Toeliminate certain fundamental investment policies of the
Funds:
(a) To remove the Funds' fundamental investment policies
prohibiting selling securities short; and
(b) To remove the Funds' fundamental investment policies
prohibiting investing in oil, gas and minerals (for
Federated Aggressive Growth Fund and Federated Growth
Strategies Fund only).
II. The following actions have been taken by the Board of Trustees
with regard to certain non-fundamental investment policies and
limitations of the Funds:
(1) Approved the elimination of the following non-fundamental
investment limitations of the Funds:
(a) Removed the Funds' non-fundamental investment policies
regarding the number of companies represented in their
portfolios;
(b) Removed the Funds' non-fundamental investment limitations
regarding investing for control or management (for
Federated Aggressive Growth Fund, Federated Growth
Strategies Fund and Federated Small Cap Strategies Fund
only);
(c) Removed the Funds' non-fundamental investment limitation
regarding writing call options (for Federated Aggressive
Growth Fund, Federated Growth Strategies Fund and
Federated Small Cap Strategies Fund only);
(d) Removed the Fund's non-fundamental investment limitation
regarding purchasing put options (for Federated Aggressive
Growth Fund only); and
(e) Removed the Fund's non-fundamental investment limitation
regarding investing in warrants (for Federated Aggressive
Growth Fund only).
(2) Approved the elimination of undertakings limiting the extent
to which the Funds may borrow money, sell securities short, or
invest in reverse repurchase agreements (for all Funds except
Federated Large Cap Growth Fund):
(3) Approved revisions to the following non-fundamental investment
policies of the Funds:
(a) Approved revisions to the Funds' non-fundamental policies
regarding investments in illiquid securities to read as
follows (for all Funds except Federated Capital
Appreciation Fund):
"The Fund will not purchase securities for which there is
no readily available market, or enter into repurchase
agreements or purchase time deposits maturing in more than
seven days, if immediately after and as a result, the
value of such securities would exceed, in the aggregate,
15% of the Fund's net assets."
(b) Approved revisions to the Funds' non-fundamental
investment policies regarding pledging assets to read as
follows (for Federated Aggressive Growth Fund and
Federated Growth Strategies Fund only):
"The Fund will not mortgage, pledge or hypothecate any of
its assets, provided that this shall not apply to the
transfer of securities in connection with any permissible
borrowings or to collateral arrangements in connection
with permissible activities."
(c) Approved revisions to the Funds' non-fundamental
investment policies specifying that the Funds' investment
adviser, in managing each Fund and in determining the
amount of the Fund's assets to invest in a particular
security, will limit the Fund's exposure to the major
categories that comprise the S&P 500 Index (for Federated
Growth Strategies Fund) or the S&P 600 Small Cap Index
(for Federated Small Cap Strategies Fund ) (for Federated
Growth Strategies Fund and Federated Small Cap Strategies
Fund only).
(4) Approved the adoption of the following non-fundamental
investment policies for the Funds:
(a) Adopted a policy providing that the Fund may purchase
American Depositary Receipts, European Depositary Receipts
and Global Depositary Receipts (for Federated Aggressive
Growth Fund only);
(b) Adopted a policy providing that the Fund may invest in
real estate investment trusts (for Federated Capital
Appreciation Fund only); and
(c) Adopted a policy providing that the Fund may invest in
rights offerings (for Federated Capital Appreciation Fund
only).
(5) Approved the adoption of the following non-fundamental
investment limitations pertaining to concentration by the
Funds (for each Fund except Federated Capital Appreciation
Fund):
"(a) utility companies will be divided according to their
services (for example, gas, gas transmission, electric and
telephone will be considered a separate industry); (b)
financial service companies will be classified according to
the end users of their services (for example, automobile
finance, bank finance and diversified finance will each be
considered a separate industry); and (c) asset-backed
securities will be classified according to the underlying
assets securing such securities. To conform to the current
view of the SEC staff that only domestic bank instruments may
be excluded from industry concentration limitations, as a
matter of non-fundamental policy, the Fund will not exclude
foreign bank instruments from industry concentration
limitation tests so long as the policy of the SEC remains in
effect. In addition, investments in bank instruments, and
investments in certain industrial development bonds funded by
activities in a single industry, will be deemed to constitute
investment in an industry, except when held for temporary
defensive purposes. The investment of more than 25% of the
value of the Fund's total assets in any one industry will
constitute `concentration.'"
(6) Approved the addition of the following non-fundamental
investment limitation for each Fund when applying its
commodities restriction (for each Fund except Federated
Capital Appreciation Fund):
"As a matter of non-fundamental operating policy, for purposes
of the commodities policy, investments in transactions
involving futures contracts and options, forward currency
contracts, swap transactions and other financial contracts
that settle by payment of cash are not deemed to be
investments in commodities."
September 24, 1999
Federated Investors
Federated Securities Corp., Distributor
Federated Investors, Inc.
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Cusip 314172875 Cusip 314172867 Cusip 314172859 Cusip 314172701 Cusip 314172800
Cusip 314172883 Cusip 314172107 Cusip 314172206 Cusip 314172305 Cusip 314172842
Cusip 314172834 Cusip 314172826 Cusip 314172404 Cusip 314172503 Cusip 314172602
