Federated Equity Funds (ICA No. 811-4017)
Federated American Leaders Fund, Inc. (ICA No. 811-1704)
Federated International Series, Inc. (ICA No. 811-3984)
Federated Investment Series Funds, Inc. (ICA No. 811-07021)
Federated Stock and Bond Fund, Inc. (ICA No. 811-1)
Money Market Obligations Trust (ICA No. 811-5950)
6/15/00
INITIAL SHAREHOLDER LETTER
Date
Dear IAI Mutual Fund Shareholder:
We are pleased to announce that Federated Investors, Inc. and Investment
Advisers, Inc. have agreed to a transaction merging the IAI Mutual Funds into
Federated Mutual Funds. Upon your approval, Federated will be responsible for
portfolio management and shareholder servicing of the funds.
With $125 billion in assets and 45 years of investment management
experience, Federated offers the economy of scale we believe is necessary to
succeed in today's increasingly competitive financial marketplace. Based on
managed assets, Federated ranks in the top 5% of equity managers and the top 6%
of fixed income managers.* It is the 10th largest mutual fund company in the
country** and has made a significant commitment to the development of superior
portfolio management strategies and world-class shareholder services.
Federated has considerable experience in smoothly managing transitions such
as this. Federated has won customer service awards from DALBAR, a research and
publishing firm that monitors the mutual fund business. In their 1999 Bank
Study, Federated earned high honors for the eighth consecutive year by capturing
#1 rankings in 18 out of 53 categories.
Following this merger, Investment Advisers, Inc. will continue as an
institutional money manager, managing large accounts for corporate and
non-profit clients.
IMPORTANT POINTS CONCERNING THE MERGER
o If approved, it will be completed during September 2000.
o It is designed to be a tax-free event for shareholders.
o The Federated Funds have substantially similar investment objectives and
management styles when compared with the corresponding IAI Funds.
WHAT TO EXPECT
During the month of July, you will receive a proxy statement asking for your
approval of this merger. The proxy will provide you with details of the proposed
merger so that you can make an informed decision. The Board of Directors of the
IAI Mutual Funds has carefully considered this proposal and unanimously
recommends that you vote to approve the merger. We would like to highlight what
we believe are the most important benefits to you as a shareholder:
o COMPETITIVE PERFORMANCE HISTORY
While past performance is no guarantee of future performance, we are
impressed with the quality of intensive, bottom-up research and
fundamental analysis that characterizes Federated's world-class investment
process. We believe that you can look forward to the continued opportunity
for competitive performance with Federated's team.
o COMPETITIVE FUND EXPENSES
All Federated Funds have expense ratios competitive with industry
averages.
O A DIVERSIFIED PRODUCT LINE
Federated manages and distributes funds that span the full spectrum of
investment objectives and asset classes, allowing investors to construct
well-diversified portfolios to suit their individual risk tolerance.
PURCHASE AND EXCHANGE INTO PRODUCTS AT NAV
IAI shareholders of record at the time of the acquisition will be allowed to
purchase or exchange into any other Federated Fund on a NO-LOAD BASIS, provided
the amount invested meets the fund's minimum dollar amount. You will not pay a
sales charge to become a shareholder of the Federated funds, nor will you have
to pay any sales charge in the future if you wish to purchase or exchange into
other Federated funds. This is of great benefit because most of Federated's
funds have a front-end load, which is being waived for IAI shareholders.
YOU SOON WILL BE RECEIVING DETAILED PROXY INFORMATION ABOUT THE ACQUISITION. WE
ENCOURAGE YOU TO READ THE MATERIAL CAREFULLY BECAUSE IT CONTAINS IMPORTANT
INFORMATION. IN ADDITION, YOU CAN OBTAIN A FREE COPY OF THE PROXY FROM THE SEC
BY ACCESSING THEIR WEB SITE AT WWW.SEC.GOV. IAI Investor Services has set up a
hotline to field questions regarding the merger - you can call 1-800-945-3863 or
visit the IAI Web site at WWW.IAIFUNDS.COM. You may also call 1-800-245-5777 to
speak directly with an IAI representative. For more complete information about
the Federated funds, including charges and expenses, call for a prospectus,
check your local paper or access their Web site at WWW.FEDERATEDINVESTORS.COM.
Investors should read the prospectus carefully before investing. For information
regarding your Schwab account, please call 1-800-435-4000 or visit
WWW.SCHWAB.COM.
We believe this is a good opportunity for our shareholders and trust you will
too. Again, we sincerely appreciate your business and thank you for your
confidence in our firm and products. It has been a privilege to serve each
shareholder in the IAI mutual funds.
Sincerely,
J. Peter Thompson Keith Wirtz
Chairman President
IAI Mutual Funds Board of Directors IAI Mutual Funds
Federated Securities Corp., distributor of the Federated funds.
*Strategic Insight, 4/28/00
**Investment Company Institute 4/28/00
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment
No.______)
Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ X ] Soliciting Material Pursuant to Sec. 240.14a-11(c) or
Sec. 240.14a-12
Federated Equity Funds
...............................................................................
(Name of Registrant as Specified In Its Charter)
Federated Investors, Inc.
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ X ]No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1. Title of each class of securities to which transaction applies:
2. Aggregate number of securities to which transaction applies:
3. Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
4. Proposed maximum aggregate value of transaction:
5. Total fee paid:
[ ] Fee paid previously with preliminary proxy materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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