MANAGEMENT DISCUSSION AND ANALYIS
FirstMerit Equity Fund
Annual Report for 12 Months Ended November 30, 1999
The global deflationary environment continues to keep prices depressed for most
goods and services. Without pricing power, companies that can grow units become
the most desirable equity. During 1999 companies that grew unit volumes saw
their stocks perform positively and those without unit growth suffered severe
losses. We believe that 2000 will bring more of the same. We continue to
overweight unit growers in the technology and drug sectors and are increasing to
an overweight in the telecommunications sector.
Rising interest rates and Fed paranoia should only increase investors interest
in unit growers over price growers. We continue to believe the fund is well
positioned to benefit from the current deflationary environment.
FIRSTMERIT EQUITY FUND
Growth of $10,000 Invested in FirstMerit Equity
[GRAPH REPRESENTION OMIITED. SEE APPENDIX A.]
<TABLE>
<CAPTION>
Average Annual Total Return/4/ For The Period Ended
November 30, 1999
<S> <C>
1 Year 30.34%
5 Year 24.52%
Start of Performance (9/13/94) 22.97%
</TABLE>
The graph above illustrates the hypothetical investment of $10,000/1/ in the
FirstMerit Equity Fund (the "Fund") from September 13, 1994 (start of
performance) to November 30, 1999, compared to the Standard and Poor's 500 Index
(S&P 500)/2/ and the Lipper Growth & Income Fund Average ("LGIFA")/3/.
Past performance is not predictive of future performance. Your investment return
and principal value will fluctuate so when shares are redeemed, they may be
worth more or less than original cost. Mutual funds are not obligations of or
guaranteed by any bank and are not federally insured.
This report must be preceded or accompanied by the Fund's prospectus dated
January 31, 1999, and, together with financial statements contained therein,
constitutes the Fund's annual report.
1 Represents a hypothetical investment of $10,000 in the Fund after deducting
the maximum sales charge of 4.50% ($10,000 investment minus $450 sales charge
= $9,550). The Fund's performance assumes the reinvestment of all dividends
and distributions. The S&P 500 and LGIFA have been adjusted to reflect the
reinvestment of dividends on securities in the index and average.
2 The S&P 500 is not adjusted to reflect sales loads, expenses, or other fees
that the SEC requires to be reflected in the Fund's performance. The index is
unmanaged.
3 The Lipper Growth & Income Fund Average represents the average of the total
returns reported by all of the mutual funds designated by Lipper Analytical
Services, Inc. as falling into the respective catagories, and is not adjusted
to reflect any sales load. However, these total returns are reported net of
expenses or other fees that the SEC requires to be reflected in the Fund's
performance.
4 Total return quoted reflects all applicable sales charges.
FirstMerit Equity Fund
5800 Corporate Drive
Pittsburgh, PA 15237-7000
1-800-341-7400
Federated Securities Corp., Distributor
Investment Company Act File No. 000-0000
Cusip 337944102
G00940-01 (1-00)
The graphic presentation here displayed consists of a legend in the
upper left quadrant indicating the components of the corresponding line
graph. FirstMerit Equity Fund (the "Fund"), based on a 4.50% sales
load, is represented by a solid line. The Standard & Poor's 500 Index
(the "S&P 500") is represented by a dotted line and the Lipper Growth &
Income Fund Average (the "LGIFA") is represented by a dashed line. The
line graph is a visual representation of a comparison of change in
value of a $10,000 hypothetical investment in the Fund, the S&P 500 and
the LGIFA. The "x" axis reflects computation periods from 9/13/94 to
11/30/99. The "y" axis reflects the cost of the investment. The right
margin reflects the ending value of the hypothetical investment in the
Fund, based on a 4.50% sales load, as compared to the S&P 500 and the
LGIFA. The ending values were $30,796, $32,346, and $24,456,
respectively.
