INDEPENDENT AUDITORS' REPORT
To the Board of Trustees and Shareholders of Federated Equity
Funds:
In planning and performing our audit of the financial statements
of Federated Equity Funds (the "Funds") (including Federated
Aggressive Growth Fund, Federated Capital Appreciation Fund,
Federated Communications Technology Fund, Federated Large Cap
Growth Fund, Federated Growth Strategies Fund, Federated Small
Cap Strategies Fund and Federated New Economy Fund) for the year
ended October 31, 2000, (on which we have issued our report dated
December 8, 2000), we considered their internal control,
including control activities for safeguarding securities, in
order to determine our auditing procedures for the purpose of
expressing our opinion on the financial statements and to comply
with the requirements of Form N-SAR, and not to provide assurance
on the Funds' internal control.
The management of the Funds are responsible for establishing and
maintaining internal control. In fulfilling this responsibility,
estimates and judgments by management are required to assess the
expected benefits and related costs of controls. Generally,
controls that are relevant to an audit pertain to the entity's
objective of preparing financial statements for external purposes
that are fairly presented in conformity with accounting
principles generally accepted in the United States of America.
Those controls include the safeguarding of assets against
unauthorized acquisition, use, or disposition.
Because of inherent limitations in any internal control,
misstatements due to error or fraud may occur and not be
detected. Also, projections of any evaluation of internal
control to future periods are subject to the risk that the
internal control may become inadequate because of changes in
conditions or that the degree of compliance with policies or
procedures may deteriorate.
Our consideration of the Funds' internal control would not
necessarily disclose all matters in internal control that might
be material weaknesses under standards established by the
American Institute of Certified Public Accountants. A material
weakness is a condition in which the design or operation of one
or more of the internal control components does not reduce to a
relatively low level the risk that misstatements due to error or
fraud in amounts that would be material in relation to the
financial statements being audited may occur and not be detected
within a timely period by employees in the normal course of
performing their assigned functions. However, we noted no
matters involving the Funds' internal control and its operation,
including controls for safeguarding securities, that we consider
to be material weaknesses as defined above as of October 31,
2000.
This report is intended solely for the information and use of
management, the Trustees and Shareholders of Federated Equity
Funds and the Securities and Exchange Commission and is not
intended to be and should not be used by anyone other than these
specified parties.
December 8, 2000
