- 5 -
FEDERATED INDEX TRUST
Federated Max-Cap Fund
Federated Mid-Cap Fund
Federated Mini-Cap Fund
Supplement to Prospectuses Dated December 31, 1998
I. At a special meeting of shareholders to be held on November 17,
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 four Trustees.
(2) To make changes to the fundamental investment policies of each
Fund:
(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:
"The Fund may not purchase or sell physical commodities,
provided that the Fund may purchase securities of
companies that deal in commodities."
<PAGE>
(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:
"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:
"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:
"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."
(j) To amend, and to make non-fundamental, the Funds'
fundamental investment policies regarding investing in
restricted securities to read as follows:
"The Fund may invest in restricted securities. Restricted
securities are any security in which the Fund may invest
pursuant to its investment objective and policies but
which are subject to restrictions on resale under federal
securities law. Under criteria established by the
Trustees, certain restricted securities are determined to
be liquid. To the extent that restricted securities are
not determined to be liquid, the Fund will limit their
purchase, together with other illiquid securities, to 15%
of its net assets."
(3) To eliminate certain fundamental investment policies of the Funds:
(a) To remove the Funds' fundamental investment policies
regarding selling securities short; and
(b) To remove Federated Max-Cap Fund's fundamental investment
policy on investing in issuers whose securities are owned
by officers and Trustees (for Federated Max-Cap Fund
only).
<PAGE>
(4) To approve amendments to, and a restatement of, the
Declaration of Trust for Federated Index Trust:
(i) To require the approval of a majority of the
outstanding voting securities of Federated
Index Trust in the event of the sale and
conveyance of the assets of the Trust to
another trust or corporation; and
(ii) To permit the Board of Trustees to liquidate
assets of Federated Index Trust, its series
or classes, and distribute the proceeds of
such assets to the holders of such shares
representing such interests, without seeking
shareholder approval.
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
prohibiting investing for control or management;
(b) Removed the Funds' non-fundamental investment policies
prohibiting engaging in call options; and
(c) Removed the Funds' non-fundamental investment policies
prohibiting purchasing put options.
(2) Approved revisions to the following non-fundamental investment
policies of the Funds:
(a) Approved revisions to the Funds' non-fundamental
investment policies regarding investments in illiquid
securities to read as follows:
"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 Fund's non-fundamental
investment policies regarding investing in securities of
other investment companies to read as follows:
"The Fund may invest its assets in securities of other
investment companies, including securities of affiliated
investment companies, as an efficient means of carrying
out its investment policies and managing its uninvested
cash."
(3) Approved the elimination of the following undertakings for the
Funds:
"The Fund does not expect to borrow money or pledge securities
in excess of 5% of the value of its net assets during the
coming fiscal year."
(4) Approved the adoption of the following non-fundamental
investment limitations pertaining to concentration by the
Funds:
"(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.'"
(5) Approved the adoption of the following non-fundamental
investment limitation for each Fund when applying its
commodities restriction:
"As a matter of non-fundamental 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."
October 7, 1999
Federated Investors
Federated Securities Corp., Distributor
Federated Investors, Inc.
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Cusip 31420E502 Cusip 31420E106 Cusip 31420E403 Cusip 31420E205 Cusip 31420E304
Cusip 31420E601