File No. 333-______
As filed with the SEC on ________ ___, 2005
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No. __
Post-Effective Amendment No. __
(Check appropriate box or boxes)
FEDERATED STOCK & BOND FUND, INC.
(Exact Name of Registrant as Specified in Charter)
1-800-341-7400
(Area Code and Telephone Number)
5800 Corporate Drive
Pittsburgh, Pennsylvania 15237-7000
(Address of Principal Executive Offices)
John W. McGonigle, Esquire
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, Pennsylvania 15222-3779
(Name and Address of Agent for Service)
Copies to:
Matthew G. Maloney, Esquire
Dickstein Shapiro Morin & Oshinsky LLP
2101 L Street, NW
Washington, DC 20037-1526
(202) 828-2218
Approximate Date of Proposed Public Offering: As soon as
practicable after this Registration Statement becomes effective
under the Securities Act of 1933, as amended.
No filing fee is due because Registrant is relying on Section 24(f) of the
Investment Company Act of 1940, as amended.
VINTAGE MUTUAL FUNDS, INC.
Vintage Equity Fund
Vintage Growth Fund
Vintage Balanced Fund
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ___________, 2005
TO SHAREHOLDERS OF THE VINTAGE EQUITY FUND, VINTAGE GROWTH FUND AND VINTAGE
BALANCED FUND, PORTFOLIOS OF THE VINTAGE MUTUAL FUNDS, INC.: A special meeting
of the shareholders of the Vintage Equity Fund, Vintage Growth Fund and Vintage
Balanced Fund (collectively, the "Vintage Funds"), will be held at
________________, at ___ p.m. (Central time), on_______________, for the
following purposes:
1. To approve or disapprove a proposed Agreement and Plan of Reorganization
pursuant to which the Federated Capital Appreciation Fund, a portfolio of
Federated Equity Funds, would acquire all of the assets of the Vintage
Equity Fund in exchange for Class A Shares of the Federated Capital
Appreciation Fund to be distributed pro rata by the Vintage Equity Fund to
its shareholders, in complete liquidation and termination of the Vintage
Equity Fund;
2. To approve or disapprove a proposed Agreement and Plan of Reorganization
pursuant to which the Federated Capital Appreciation Fund, a portfolio of
Federated Equity Funds, would acquire all of the assets of the Vintage
Growth Fund in exchange for Class A Shares of the Federated Capital
Appreciation Fund to be distributed pro rata by the Vintage Growth Fund to
its shareholders, in complete liquidation and termination of the Vintage
Growth Fund;
3. To approve or disapprove a proposed Agreement and Plan of Reorganization
pursuant to which the Federated Stock & Bond Fund, Inc. would acquire all
of the assets of the Vintage Balanced Fund in exchange for Class A Shares
of the Federated Stock & Bond Fund, Inc. to be distributed pro rata by the
Vintage Balanced Fund to its shareholders, in complete liquidation and
termination of the Vintage Balanced Fund; and
4. To transact such other business as may properly come before the special
meeting or any adjournment thereof.
The Board of Directors has fixed ______________, 2005 as the record date for
determination of shareholders entitled to vote at the special meeting.
By Order of the Board of
Directors,
----------------
Secretary or Assistant
Secretary
___________, 2005
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YOU CAN HELP THE VINTAGE MUTUAL FUNDS, INC. AVOID THE NECESSITY AND EXPENSE OF
SENDING FOLLOW-UP LETTERS TO ENSURE A QUORUM BY PROMPTLY SIGNING AND RETURNING
THE ENCLOSED PROXY CARD. IF YOU ARE UNABLE TO ATTEND THE MEETING, PLEASE MARK,
SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD SO THAT THE NECESSARY QUORUM MAY
BE REPRESENTED AT THE SPECIAL MEETING. THE ENCLOSED ENVELOPE REQUIRES NO POSTAGE
IF MAILED IN THE UNITED STATES.
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PROSPECTUS/PROXY STATEMENT
_____________, 2005
Acquisition of the assets of
VINTAGE EQUITY FUND
a portfolio of Vintage Mutual Funds, Inc.
1415 28th Street, Suite 200
West Des Moines, IA 50266
1-800-438-6875
By and in exchange for Class A Shares of
FEDERATED CAPITAL APPRECIATION FUND,
a portfolio of Federated Equity Funds
5800 Corporate Drive
Pittsburgh, Pennsylvania 15237-7000
Telephone No: 1-800-341-7400
Acquisition of the assets of
VINTAGE GROWTH FUND
a portfolio of Vintage Mutual Funds, Inc.
1415 28th Street, Suite 200
West Des Moines, IA 50266
1-800-438-6875
By and in exchange for Class A Shares of
FEDERATED CAPITAL APPRECIATION FUND,
a portfolio of Federated Equity Funds
5800 Corporate Drive
Pittsburgh, Pennsylvania 15237-7000
Telephone No: 1-800-341-7400
Acquisition of the assets of
VINTAGE BALANCED FUND
a portfolio of Vintage Mutual Funds, Inc.
1415 28th Street, Suite 200
West Des Moines, IA 50266
1-800-438-6875
By and in exchange for Class A Shares of
FEDERATED STOCK & BOND FUND, INC.
5800 Corporate Drive
Pittsburgh, Pennsylvania 15237-7000
Telephone No: 1-800-341-7400
This Prospectus/Proxy Statement describes the proposal for the
reorganizations (the "Reorganizations") under separate Agreements and Plans of
Reorganization (together, the "Plans"), pursuant to which the Vintage Growth
Fund and the Vintage Equity Fund would transfer all their assets to the
Federated Capital Appreciation Fund in exchange for Class A shares of the
Federated Capital Appreciation Fund and the Vintage Balanced Fund would transfer
all its assets to the Federated Stock & Bond Fund, Inc., in exchange for Class A
Shares of the Federated Stock and Bond Fund, Inc. (collectively, "Federated Fund
Shares"). Hereinafter, the Federated Capital Appreciation Fund and the Federated
Stock & Bond Fund, Inc. will be referenced as each a "Federated Fund" or
together, the "Federated Funds"; the Vintage Equity Fund, Vintage Growth Fund
and Vintage Balanced Fund will be referenced as each a "Vintage Fund" and
together, the "Vintage Funds." Shares of the respective Federated Fund will be
distributed pro rata by each Vintage Fund to its shareholders in complete
liquidation and dissolution of each Vintage Fund. The Federated Capital
Appreciation Fund and the Vintage Funds are open-end, diversified series of
management investment companies registered under the 1940 Act, which
continuously offer to sell shares. The Federated Stock & Bond Fund, Inc. is an
open-end diversified management investment company registered under the 1940
Act, which continuously offers to sell shares. As a result of the
Reorganization, each owner of shares of a Vintage Fund will become the owner of
the applicable Federated Fund Shares having a total net asset value ("NAV")
equal to the total NAV of his or her holdings in the applicable Vintage Fund on
the date of the Reorganization (the "Closing Date"). The separate Plans of
Reorganization are substantially identical, and a form of each plan is attached
as Exhibit A.
For a comparison of the investment policies of the Vintage Funds and the
Federated Funds with which your Vintage Fund would be combined, see "Summary -
Comparison of Investment Objectives, Policies, Limitations and Risks."
Information concerning Federated Fund Shares, as compared to shares of the
Vintage Funds, is included in this Prospectus/Proxy Statement in the sections
entitled "Summary - Comparative Fee Tables" and "Information About the
Reorganizations - Description of Federated Fund Shares and Capitalization."
This Prospectus/Proxy Statement should be retained for future reference.
It sets forth concisely the information about each Federated Fund that a
prospective investor should know before voting on the Reorganization. This
Prospectus/Proxy Statement is accompanied by the Prospectuses of the Federated
Capital Appreciation Fund dated December 31, 2004 and the Federated Stock & Bond
Fund, Inc. dated January 31, 2005, as applicable, each of which are incorporated
herein by reference. This Prospectus/Proxy Statement is also accompanied by the
Prospectus of the Federated Capital Appreciation Fund dated December 31, 2004
and the Federated Stock & Bond Fund, Inc. dated January 31, 2005. A Statement of
Additional Information relating to this Prospectus/Proxy Statement dated
____________, 2005, is incorporated herein by reference. Statements of
Additional Information for the Federated Capital Appreciation Fund dated
December 31, 2004 and the Federated Stock & Bond Fund, Inc. dated January 31,
2005; and a Statement of Additional Information for the Vintage Funds dated July
29, 2004, have been filed with the Securities and Exchange Commission (the
"Commission") and are incorporated herein by reference. Further information
about the Federated Capital Appreciation Fund's performance is contained in the
Federated Capital Appreciation Fund's Annual Report for its fiscal year ended
October 31, 2004, and the Semi-Annual Report relating to the period ended April
30, 2005, each of which is incorporated herein by reference. Further information
about the Federated Stock & Bond Fund, Inc.'s performance is contained in the
Federated Stock & Bond Fund, Inc.'s Annual Report for its fiscal year ended
November 31, 2004, and the Semi-Annual Report relating to the period ended May
31, 2004, each of which is incorporated herein by reference. Further information
about the Vintage Funds' performance is contained in the Vintage Funds' Annual
Report for its fiscal year ended March 31, 2005 and the Semi-Annual Report
relating to the period ended September 30, 2004, which is incorporated herein by
reference. Copies of these materials and other information about the Federated
Funds and the Vintage Funds may be obtained without charge by writing or by
calling the Federated Funds or the Vintage Funds at the addresses and telephone
numbers shown on the previous pages.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS/PROXY STATEMENT. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS/PROXY STATEMENT
AND IN THE MATERIALS EXPRESSLY INCORPORATED HEREIN BY REFERENCE AND, IF GIVEN OR
MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE FUNDS.
THE SHARES OFFERED BY THIS PROSPECTUS/PROXY STATEMENT ARE NOT DEPOSITS OR
OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, ANY BANK. THESE SHARES ARE NOT
FEDERALLY INSURED BY, GUARANTEED BY, OBLIGATIONS OF OR OTHERWISE SUPPORTED BY
THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER GOVERNMENTAL AGENCY. INVESTMENT IN THESE SHARES
INVOLVES INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED.
TABLE OF CONTENTS
Page
SUMMARY
Reasons for the Proposed Reorganizations Comparison of Investment Objectives,
Policies and Risks Investment Limitations-Each Federated Fund and Vintage
Fund Comparative Fee Tables Comparison of Potential Risks and Rewards;
Performance Information Investment Advisers Portfolio Managers Advisory and
Other Fees
Purchases, Redemptions and Exchange Procedures; Dividends and Distributions
INFORMATION ABOUT THE REORGANIZATIONS
Description of the Plans of Reorganization
Description of Federated Fund Shares and Capitalization
Federal Income Tax Consequences
Agreement Among AMCORE/IMG and Federated Investors, Inc.
Reasons for the Reorganizations
Comparative Information on Shareholder Rights and Obligations
INFORMATION ABOUT THE FEDERATED FUNDS AND THE VINTAGE FUNDS
Federated Funds
Vintage Funds
ABOUT THE PROXY SOLICITATION AND THE SPECIAL MEETING
Proxies, Quorum and Voting at the Special Meeting
Share Ownership of the Funds
OTHER MATTERS AND DISCRETION OF ATTORNEYS NAMED IN THE PROXY
AGREEMENTS AND PLANS OF REORGANIZATION (Exhibit A) A-1
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE (Exhibit B) B-1
SUMMARY
This summary is qualified in its entirety by reference to the additional
information contained elsewhere in this Prospectus/Proxy Statement, or
incorporated by reference into this Prospectus/Proxy Statement. A form of each
Plan is attached to this Prospectus/Proxy Statement as Exhibit A. For more
complete information, please read the Prospectuses of the Federated Funds and
the Vintage Funds, and the Statement of Additional Information relating to this
Prospectus/Proxy Statement, all of which accompany this Prospectus/Proxy
Statement.
REASONS FOR THE PROPOSED REORGANIZATIONS
The Board of Directors ("Board" or "Directors") of the Vintage Funds has
voted to recommend to holders of shares of each Vintage Fund the approval of the
Plans whereby (a) the Federated Capital Appreciation Fund would acquire all of
the assets of the Vintage Growth Fund and the Vintage Equity Fund in exchange
for the Federated Capital Appreciation Fund's Class A Shares to be distributed
pro rata by the Vintage Growth Fund and Vintage Equity Fund to its shareholders
in complete liquidation and dissolution of the Vintage Growth Fund and (b) the
Federated Stock & Bond Fund, Inc. would acquire all of the assets of the Vintage
Balanced Fund in exchange for the Federated Stock & Bond Fund Inc.'s Class A
Shares to be distributed pro rata by the Vintage Balanced Fund to its
shareholders in complete liquidation and dissolution of the Vintage Balanced
Fund. As a result of the Reorganizations, each shareholder of a Vintage Fund
will become the owner of the applicable Federated Fund Shares having a total NAV
equal to the total NAV of his or her holdings in the applicable Vintage Fund on
the date of the Reorganizations, i.e., the Closing Date.
The Board of the Vintage Funds, including the Directors who are not
"interested persons" within the meaning of Section 2(a)(19) of the Investment
Company Act of 1940, as amended ("1940 Act"), has concluded that the
Reorganizations would be in the best interests of the Vintage Fund shareholders.
This determination was made after AMCORE Financial, Inc., ("AMCORE") and its
wholly owned subsidiary, Investors Management Group, Ltd., the Vintage Fund's
investment adviser ("IMG"), advised the Directors that the long-term viability
of the Vintage Funds is questionable, particularly in light of the relatively
low level of assets in the Vintage Funds and the decline in such assets in the
recent past, as well as the increased costs associated with the need to comply
with certain regulations recently promulgated by the Securities and Exchange
Commission. Accordingly, AMCORE/IMG have over the past several months actively
pursued alternatives which would allow shareholders to continue their original
investment objectives through a tax-free combination of their Vintage Fund's
portfolio with a comparable portfolio of another fund group(s). After extensive
discussions between representatives of AMCORE/IMG and Federated Investors, Inc.
("Federated"), AMCORE/IMG determined to recommend to the Board of the Vintage
Funds and the Board of each Federated Fund to consider and approve the
Reorganization as being in the best interest of shareholders.
As a condition to each Reorganization, the Federated Fund and the
corresponding Vintage Fund each will receive an opinion of counsel that the
Reorganization will be considered a tax-free "reorganization" under applicable
provisions of the Internal Revenue Code, as amended, so that no gain or loss
will be recognized by the Federated Fund, the corresponding Vintage Fund or the
Vintage Fund's shareholders. The tax basis of the Federated Fund Shares received
by the applicable Vintage Fund's shareholders will be the same as the tax basis
of their shares in the applicable Vintage Fund. There may be taxes payable in
connection with distributions, if any, by a Vintage Fund immediately before the
closing date. These distributions may include gains realized on dispositions of
portfolio securities in connection with the Reorganizations.
THE BOARD OF DIRECTORS OF THE VINTAGE FUNDS UNANIMOUSLY RECOMMENDS THAT
YOU VOTE FOR APPROVAL OF THE REORGANIZATION.
COMPARISON OF INVESTMENT OBJECTIVES, POLICIES AND RISKS
FEDERATED CAPITAL APPRECIATION FUND - VINTAGE EQUITY FUND
The investment objective of the Federated Capital Appreciation Fund is to
provide capital appreciation. The investment objective of the Vintage Equity
Fund is to provide long-term capital growth.
Both the Federated Capital Appreciation Fund and the Vintage Equity Fund
pursue their investment objective by investing primarily in common stocks of
domestic companies. Both the Federated Capital Appreciation Fund and the Vintage
Equity Fund may also invest in convertible securities and American Depositary
Receipts (ADRs). However, the Vintage Equity Fund's investment strategy provides
for the ability to invest in preferred securities to a greater extent than the
Federated Capital Appreciation Fund's investment strategy. The Federated Capital
Appreciation Fund's investment strategy provides for the ability to invest in
derivative contracts such as, futures and options, in a greater extent than the
Vintage Equity Fund's investment strategy. The capitalization of the companies
in which the Federated Capital Appreciation Fund and the Vintage Equity Fund
invest in may be different. The Federated Capital Appreciation Fund invests
primarily in medium to large capitalization companies, while the Vintage Equity
Fund invests primarily in large capitalization companies. The Federated Capital
Appreciation Fund seeks to invest in companies that offer superior growth
prospects or of companies whose stock is undervalued. The Vintage Equity Fund
seeks to invest in companies with strong earnings potential. The Federated
Capital Appreciation Fund evaluates each company's earnings quality in light of
its current valuation to narrow the list of attractive companies and then
evaluates product positioning, management quality and sustainability of current
growth trends of those companies. The Vintage Equity Fund's securities selection
process features thorough research and fundamental analysis seeking to identify
investment opportunities that exhibit growth potential. The Vintage Equity Fund
selects investments based on a long-term perspective and emphasizes quality and
consistency of earnings.
All mutual funds take investment risks. Therefore, it is possible to lose
money by investing in either the Federated Capital Appreciation Fund or the
Vintage Equity Fund. In addition, both the Federated Capital Appreciation Fund
and the Vintage Equity Fund are subject to stock market risk, which is posed by
the fact that the value of equity securities rises and falls over short or
extended periods of time; liquidity risk, which is posed by the fact that the
equity securities in which the Federated Capital Appreciation Fund and the
Vintage Equity Fund may invest may be less readily marketable and may be subject
to greater fluctuation in price than other securities; risk related to company
size, which is posed by the fact that the companies in which the Vintage Equity
Fund and the Federated Capital Appreciation Fund are able to invest in may tend
to have fewer shareholders, less liquidity, more volatility, unproven track
records, limited product or service base and limited access to capital; and risk
of investing in ADRs, which is posed by the fact that the ADRs in which the
Federated Capital Appreciation Fund and the Vintage Equity Fund invests are
issued by foreign companies, and therefore the share price of the Federated
Capital Appreciation Fund and the Vintage Equity Fund may be more affected by
foreign economic and political conditions, taxation policies and accounting and
auditing standards than would otherwise be the case. However, the risks for the
Federated Capital Appreciation Fund and the Vintage Equity Fund differ slightly
in that the Federated Capital Appreciation Fund may be subject to the risks of
investing in derivative contracts and sector risk to a greater extent than the
Vintage Equity Fund. The risks of investing in derivative contracts, is posed by
the fact that a fund's use of derivative contracts involves risks different
from, or possibly greater than, the risks associated with investing directly in
securities and other traditional investments while sector risk, is posed by the
fact that a fund may allocate relatively more assets to certain industry sectors
than others, and therefore, the performance of the a fund may be more
susceptible to any developments which affect those sectors emphasized by the
fund.
FEDERATED CAPITAL APPRECIATION FUND - VINTAGE GROWTH FUND
The investment objective of the Federated Capital Appreciation Fund is to
provide capital appreciation. The investment objective of the Vintage Growth
Fund is to provide long-term capital appreciation.
Both the Federated Capital Appreciation Fund and the Vintage Growth Fund
pursue their investment objective by investing primarily in common stocks of
domestic companies. Both the Federated Capital Appreciation Fund and the Vintage
Growth Fund may also invest in convertible securities and American Depositary
Receipts (ADRs). However, Vintage Growth Fund's investment strategy provides for
the ability to invest in preferred securities to a greater extent than the
Federated Capital Appreciation Fund's investment strategy. The Federated Capital
Appreciation Fund's investment strategy provides for the ability to invest in
derivative contracts such as, futures and options, in a greater extent than the
Vintage Growth Fund's investment strategy. The capitalization of the companies
in which the Federated Capital Appreciation Fund and the Vintage Growth Fund
invest in may be different. The Federated Capital Appreciation Fund invests
primarily in medium to large capitalization companies, while the Vintage Growth
Fund invests primarily in companies with a range of capitalizations that exhibit
a strong potential for price appreciation relative to the general equity
markets. The Federated Capital Appreciation Fund seeks to invest in companies
that offer superior growth prospects or of companies whose stock is undervalued.
The Vintage Growth Fund seeks to invest in companies that exhibit a strong
potential for price appreciation relative to the general equity markets. The
Federated Capital Appreciation Fund evaluates each company's earnings quality in
light of its current valuation to narrow the list of attractive companies and
then evaluates product positioning, management quality and sustainability of
current growth trends of those companies. The Vintage Growth Fund's securities
selection process features thorough research and fundamental analysis seeking to
identify investment opportunities that exhibit superior earnings potential and
products in niche markets and stocks that are perceived to be temporarily
undervalued.
All mutual funds take investment risks. Therefore, it is possible to lose
money by investing in either the Federated Capital Appreciation Fund or the
Vintage Growth Fund. In addition, both the Federated Capital Appreciation Fund
and the Vintage Growth Fund are subject to stock market risk, which is posed by
the fact that the value of equity securities rises and falls over short or
extended periods of time; liquidity risk, which is posed by the fact that the
equity securities in which the Federated Capital Appreciation Fund and the
Vintage Growth Fund may invest may be less readily marketable and may be subject
to greater fluctuation in price than other securities; risk related to company
size, which is posed by the fact that the companies in which the Federated
Capital Appreciation Fund and the Vintage Growth Fund are able to invest in may
tend to have fewer shareholders, less liquidity, more volatility, unproven track
records, limited product or service base and limited access to capital; and risk
of investing in ADRs, which is posed by the fact that the ADRs in which the fund
invests are issued by foreign companies, and therefore the share price of the
Federated Capital Appreciation Fund and the Vintage Growth Fund may be more
affected by foreign economic and political conditions, taxation policies and
accounting and auditing standards than would otherwise be the case. However, the
risks for the Federated Capital Appreciation Fund and the Vintage Growth Fund
differ slightly in that the Federated Capital Appreciation Fund may be subject
to the risks of investing in derivative contracts and sector risk to a greater
extent than the Vintage Growth Fund. The risks of investing in derivative
contracts, is posed by the fact that a fund's use of derivative contracts
involves risks different from, or possibly greater than, the risks associated
with investing directly in securities and other traditional investments while
sector risk, is posed by the fact that a fund may allocate relatively more
assets to certain industry sectors than others, and therefore, the performance
of the fund may be more susceptible to any developments which affect those
sectors emphasized by the fund.
FEDERATED STOCK & BOND FUND, INC. - VINTAGE BALANCED FUND
The investment objective of the Federated Stock & Bond Fund, Inc. is to
provide relative safety of capital with the possibility of long-term growth of
capital and income. The investment objective of the Vintage Balanced Fund is to
provide long-term growth of capital and income.
Both the Federated Stock & Bond Fund, Inc. and the Vintage Balanced Fund
pursue their investment objective by investing primarily in common stocks of
domestic companies, American Depositary Receipts (ADRs), mortgage-backed
securities, collateralized mortgage obligations, Treasury securities, agency
securities, corporate debt securities and asset-backed securities. During normal
market conditions the Federated Stock & Bond Fund invests between 45% and 75% of
its assets in equity securities and between 25% and 55% in fixed income
securities. The Vintage Balanced Fund normally invests up to 75% of its assets
in equity securities and at least 25% in fixed income securities. The Vintage
Balanced Fund's investment strategy provides the ability to invest in
convertible securities and preferred securities to a greater extent than the
Federated Stock & Bond Fund's investment strategy. The Federated Stock & Bond
Fund, Inc.'s investment strategy provides the ability to invest in derivative
contracts such as futures contracts and options, in foreign securities and
companies with smaller market capitalizations to a greater extent than the
Vintage Balanced Fund. The Federated Stock & Bond Fund, Inc., with regard to the
equity portion of the portfolio, invests primarily in securities of medium and
large capitalization companies that offer superior growth prospects or of
companies with stock that is undervalued. The Federated Stock & Bond Fund, Inc.,
with regard to the fixed income portion of the portfolio, invests primarily in
domestic investment-grade debt securities. The Vintage Balanced Fund, with
regard to the equity portion of the portfolio, selects investments based on an
earnings focus that considers qualitative and qualitative factors. The Vintage
Balanced Fund, with regard to the fixed income portion of the portfolio, expects
to maintain a dollar-weighted average maturity of 4 to 10 years. The Vintage
Balanced Fund will invest approximately 65% of the fixed income portion of its
portfolio in investment grade securities.
All mutual funds take investment risks. Therefore, it is possible to lose
money by investing in either the Federated Stock & Bond Fund, Inc. or the
Vintage Balanced Fund. In addition, both the Federated Stock & Bond Fund, Inc.
and the Vintage Balanced Fund are subject to stock market risk, which is posed
by the fact that the value of equity securities rises and falls over short or
extended periods of time; risk of investing in ADRs, which is posed by the fact
that the ADRs in which the Federated Stock & Bond Fund, Inc. and the Vintage
Balanced Fund invests are issued by foreign companies, and therefore the share
price of the Federated Stock & Bond Fund, Inc. and the Vintage Balanced Fund may
be more affected by foreign economic and political conditions, taxation policies
and accounting and auditing standards than would otherwise be the case; interest
rate risk, which is posed by the fact that prices of fixed income securities
rise and fall inversely in response to interest rate changes. In addition, this
risk increases with the length of the maturity of the debt; credit risk, which
is the possibility that an issuer will default on a security by failing to pay
interest or principal when due; prepayment risk, which is posed by the relative
volatility of mortgage-backed securities; and risk associated with noninvestment
grade securities, which occurs because the Federated Stock & Bond Fund, Inc. and
the Vintage Balanced Fund may invest a portion of its assets in securities rated
below investment grade, which may be subject to greater interest rate, credit
and liquidity risks than investment grade securities and allocation risk, which
is posed by the fact that the allocation of the investments between equity and
debt securities may have a more significant effect on a Fund's NAV when one of
these asset classes is performing more poorly than the other..
Since Federated Stock & Bond Fund, Inc. investment strategy provides the
ability to invest in derivatives, foreign securities and companies with smaller
market capitalizations to a greater extent than the Vintage Balanced Fund's
investment strategy, the Federated Stock & Bond Fund may be subject to the
following risks to a greater extent than the Vintage Balanced Fund:
(a). liquidity risk, which is posed by the fact that certain securities
may be less readily marketable and may be subject to greater fluctuation in
price than other securities;
(b). risk of investing in derivative contracts, which is posed by the fact
that investing in derivative contracts involves risks different from, or
possibly greater than, the risks associated with investing directly in
securities and other traditional investments;
(c) leverage risk, which is created when an investment exposes a fund to a
level of risk that exceeds the amount invested;
(d). risk related to company size, which is posed by mid and small market
capitalization companies tending to have fewer shareholders, less liquidity,
more volatility, unproven track records, limited product or service base and
limited access to capital;
(e). risk of foreign investing, which is posed by the fact that foreign
securities may be more affected by foreign economic and political conditions,
taxation policies and accounting and auditing standards than could otherwise be
the case;
(f). currency risk, which is posed by the fact that foreign securities are
normally denominated and traded in foreign currencies and, as a result, the
value of a fund's foreign investments may be affected favorably or unfavorably
by changes in currency exchange rates relative to the U.S. dollar;
(g). risks of investing in emerging market countries, which is posed by
the fact that securities traded in emerging markets generally entail greater
risks than securities issued or traded in developed markets; and
(h). sector risk, which is posed by the fact that a fund may allocate
relatively more assets to certain industry sectors than others, and therefore
its performance may be more susceptible to any developments which affect those
sectors emphasized by the fund.
INVESTMENT LIMITATIONS - EACH FEDERATED FUND AND VINTAGE FUND
In addition to the objectives and policies described above, each Federated
Fund and Vintage Fund is subject to certain investment limitations as described
in the Prospectus and Statement of Additional Information of the Federated
Capital Appreciation Fund dated December 31, 2004 and the Federated Stock & Bond
Fund, Inc. dated January 31, 2005, as applicable, and the Prospectus and
Statement of Additional Information of the Vintage Funds dated July 29, 2004,
which set forth in full the investment objectives, policies and limitations of
each Federated Fund and each Vintage Fund, all of which are incorporated by
reference herein.
A full description of the risks inherent in the investment in each
Federated Fund and each Vintage Fund is also set forth their respective
Prospectuses and Statements of Additional Information of the same date.
A summary of the fundamental and non-fundamental limitations of the
Federated Funds and the Vintage Funds are set forth on Annex A to this
Prospectus/Proxy Statement.
COMPARATIVE FEE TABLES
The Funds, like all mutual funds, incur certain expenses in their
operations. These expenses include management fees, as well as the costs of
maintaining accounts, administration, providing shareholder liaison and
distribution services and other activities.
FEDERATED CAPITAL APPRECIATION FUND - VINTAGE EQUITY FUND
FEES AND EXPENSES
This table describes the fees and expenses of the Federated Capital Appreciation
Fund Class A Shares for its most recent fiscal year end as well as on a Pro
Forma basis giving effect to the Reorganization, and the fees and expenses of
the Vintage Equity Fund Class S and Class T Shares for its most recent fiscal
year end.
Federated
Federated Capital
Capital Vintage Vintage Appreciation
Appreciation Equity Equity Fund
Shareholder Fees Fund Fund Fund Class A
Class A Class S Class Shares
Shares Shares T Pro Forma
Shares Combined(5)
Fees Paid Directly From Your Investment
Maximum Sales Charge (Load) Imposed on 5.50% None None 5.50%
Purchases (as a percentage of offering price)
Maximum Deferred Sales Charge (Load) (as a None None None None
percentage of original purchase price or
redemption proceeds, as applicable)
Maximum Sales Charge (Load) Imposed on None None None None
Reinvested Dividends (and other
Distributions) (as a percentage of offering
price)
Redemption Fee (as a percentage of amount None None None None
redeemed, if applicable)
Exchange Fee None None None None
Annual Fund Operating Expenses (Before
Waivers)(1)
Expenses That are Deducted From Fund Assets
(as a percentage of average net assets)
Management Fee 0.75% 0.75% 0.75% 0.75%
Distribution (12b-1) Fee 0.25%(2) 0.25%(3) 0.25%(2)
0.25%(3)
Shareholder Services Fee 0.25% 0.25% 0.25%
0.25%(4)
Other Expenses 0.25% 0.50% 0.50% 0.25%
Total Annual Fund Operating Expenses 1.50% 1.75% 1.75% 1.50%
1 The percentages shown above are based on expenses for the entire fiscal years
ended October 31, 2004, March 31, 2005, March 31, 2005, and October 31, 2004,
respectively. However, the rate at which expenses are accrued during the fiscal
year may not be constant and, at any particular point, may be greater or less
than the stated average percentage. Although not contractually obligated to do
so, the distributor and shareholder services provider waived certain amounts.
These are shown below along with the net expenses the Fund actually paid for the
years ended October 31, 2004, March 31, 2005, March 31, 2005 and October 31,
2004, respectively.
Total Waiver of Fund Expenses 0.25% 0.25% 0.50% 0.25%
Total Actual Fund Operating Expenses 1.25% 1.50% 1.25% 1.25%
(after waiver)
2 The Federated Capital Appreciation Fund Class A Shares did not pay or accrue
the distribution (12b-1) fee for the fiscal year ended October 31, 2004. The
Federated Capital Appreciation Fund Class A Shares have no present intention of
paying or accruing the distribution (12b-1) fee for the fiscal year ending
October 31, 2005.
3 The Vintage Equity Fund Class S Shares and Class T Shares did not pay or
accrue the distribution (12b-1) fee for the fiscal year ended March 31, 2005.
- ------------------------------------------------------------------------------
4 The shareholder services provider for the Vintage Equity Fund Class T Shares
waived the entire shareholder services fee for the fiscal year ended March 31,
2005. The shareholder services provider may reduce or eliminate the fee waiver
at any time.
5 Shareholders of the Vintage Equity Fund at the time of the Reorganization will
not be subject to the sales charge on future purchases of the Federated Stock &
Bond Inc.
EXAMPLE
This Example is intended to help you compare the cost of investing in the
Federated Capital Appreciation Fund Class A Shares, the Vintage Equity Fund
Class S and Class T Shares and the Federated Capital Appreciation Fund Class A
Shares Pro Forma Combined with the cost of investing in other mutual funds. The
Example assumes that you invest $10,000 in the Federated Capital Appreciation
Fund Class A Shares, the Vintage Equity Fund Class S and Class T Shares and the
Federated Capital Appreciation Fund Class A Shares Pro Forma Combined for the
time periods indicated and then redeem all of your Shares at the end of those
periods. The Example also assumes that your investment has a 5% return each year
and that the Fund's operating expenses are before waivers as shown in the table
and remain the same. Although your actual costs and returns may be higher or
lower, based on these assumptions your costs would be:
1 Year 3 Years 5 Years 10 Years
Federated Capital Appreciation Fund Class $694 $998 $1,323 $2,242
A Shares
Vintage Equity Fund Class S Shares $178 $551 $949 $2,062
Vintage Equity Fund Class T Shares $178 $551 $949 $2,062
Federated Capital Appreciation Fund Class
A Shares Pro Forma Combined ---------------- -------------- $1,323 $2,242
$694 $998
FEDERATED CAPITAL APPRECIATION FUND - VINTAGE GROWTH FUND
FEES AND EXPENSES
This table describes the fees and expenses of the Federated Capital Appreciation
Fund Class A Shares for its most recent fiscal year end as well as on a Pro
Forma basis giving effect to the Reorganization, and the fees and expenses of
the Vintage Growth Fund for its most recent fiscal year end.
Federated
Federated Capital
Capital Appreciation
Appreciation Vintage Fund
Shareholder Fees Fund Growth Class A
Class A Fund Shares
Shares Pro Forma
Combined(5)
Fees Paid Directly From Your Investment
Maximum Sales Charge (Load) Imposed on Purchases (as 5.50% None 5.50%
a percentage of offering price)
Maximum Deferred Sales Charge (Load) (as a percentage None None None
of original purchase price or redemption proceeds, as
applicable)
Maximum Sales Charge (Load) Imposed on Reinvested None None None
Dividends (and other Distributions) (as a percentage
of offering price)
Redemption Fee (as a percentage of amount redeemed, None None None
if applicable)
Exchange Fee None None None
Annual Fund Operating Expenses (Before Waivers)(1)
Expenses That are Deducted From Fund Assets (as a
percentage of average net assets)
Management Fee 0.75% 0.95% 0.75%
Distribution (12b-1) Fee 0.25%(2) 0.25%(2)
0.25%(3)
Shareholder Services Fee 0.25% 0.25%
0.25%(4)
Other Expenses 0.25% 0.59% 0.25%
Total Annual Fund Operating Expenses 1.50% 2.04% 1.50%
1 The percentages shown above are based on expenses for the entire fiscal years
ended October 31, 2004, March 31, 2005, and October 31, 2004, respectively.
However, the rate at which expenses are accrued during the fiscal year may not
be constant and, at any particular point, may be greater or less than the stated
average percentage. Although not contractually obligated to do so, the
distributor and shareholder service provider waived certain amounts. These are
shown below along with the net expenses the Fund actually paid for the years
ended October 31, 2004, March 31, 2005 and October 31, 2004, respectively.
Total Waiver of Fund Expenses 0.25% 0.50% 0.25%
Total Actual Fund Operating Expenses (after waiver) 1.25% 1.54% 1.25%
2 The Federated Capital Appreciation Fund Class A Shares did not pay or accrue
the distribution (12b-1) fee for the fiscal year ended October 31, 2004. The
Federated Capital Appreciation Fund Class A Shares have no present intention of
paying or accruing the distribution (12b-1) fee for the fiscal year ending
October 31, 2005. 3 The Vintage Growth Fund did not pay or accrue the
distribution (12b-1) fee for the fiscal year ended March 31, 2005.
- ------------------------------------------------------------------------------
4 The shareholder services provider for the Vintage Growth Fund waived the
entire shareholder services fee for the fiscal year ended March 31, 2005. The
shareholder services provider may reduce or eliminate the fee waiver at any
time.
5. Shareholders of the Vintage Growth Fund at the time of the Reorganization
will not be subject to the sales charge on future purchases of the Federated
Capital Appreciation Fund.
EXAMPLE
This Example is intended to help you compare the cost of investing in the
Federated Capital Appreciation Fund Class A Shares, the Vintage Growth Fund and
the Federated Capital Appreciation Fund Class A Shares Pro Forma Combined with
the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in the Federated Capital
Appreciation Fund Class A Shares, the Vintage Growth Fund and the Federated
Capital Appreciation Fund Class A Shares Pro Forma Combined for the time periods
indicated and then redeem all of your Shares at the end of those periods. The
Example also assumes that your investment has a 5% return each year and that the
Fund's operating expenses are before waivers as shown in the table and remain
the same. Although your actual costs and returns may be higher or lower, based
on these assumptions your costs would be:
1 Year 3 Years 5 Years 10 Years
Federated Capital Appreciation Fund Class $694 $998 $1,323 $2,242
A Shares
Vintage Growth Fund $207 $640 $1,098 $2,369
Federated Capital Appreciation Fund Class
A Shares Pro Forma Combined ------------------ --------------- $1,323 $2,242
$694 $998
FEDERATED STOCK & BOND FUND, INC. - VINTAGE BALANCED FUND
FEES AND EXPENSES
This table describes the fees and expenses of Federated Stock and Bond Fund,
Inc. Class A Shares for its most recent fiscal year end as well as on a Pro
Forma basis giving effect to the Reorganization, and the fees and expenses of
the Vintage Balanced Fund for its most recent fiscal year end.
Federated Federated
Stock Vintage Stock
Shareholder Fees and Balanced and Bond
Bond Fund Fund,
Fund, Inc.
Inc. Class A
Class A Shares
Shares Pro
Forma
Combined(6)
Fees Paid Directly From Your Investment
Maximum Sales Charge (Load) Imposed on Purchases 5.50% None 5.50%
(as a percentage of offering price)
Maximum Deferred Sales Charge (Load) (as a None None None
percentage of original purchase price or
redemption proceeds, as applicable)
Maximum Sales Charge (Load) Imposed on None None None
Reinvested Dividends (and other Distributions)
(as a percentage of offering price)
Redemption Fee (as a percentage of amount None None None
redeemed, if applicable)
Exchange Fee None None None
Annual Fund Operating Expenses (Before
Waivers)(1)
Expenses That are Deducted From Fund Assets (as
a percentage of average net assets)
Management Fee 0.69% 0.75% 0.69%
Distribution (12b-1) Fee None 0.25%(2) None
Shareholder Services Fee 0.25% 0.25%(3) 0.25%
Other Expenses 0.36%(4) 0.68%(5) 0.36%(4)
Total Annual Fund Operating Expenses 1.30% 1.93% 1.30%
1 The percentages shown above are based on expenses for the entire fiscal years
ended November 30, 2004, March 31, 2005, and November 30, 2004, respectively.
However, the rate at which expenses are accrued during the fiscal year may not
be constant and, at any particular point, may be greater or less than the stated
average percentage. Although not contractually obligated to do so, the Adviser,
distributor and shareholder service provider for the Vintage Balanced Fund
waived and the administrator for Federated Stock and Bond Fund, Inc. waived
certain amounts. These are shown below along with the net expenses the Fund
actually paid for the years ended November 30, 2004, March 31, 2005 and November
30, 2004, respectively.
Total Waivers of Fund Expenses 0.01% 0.58% 0.01%
Total Actual Fund Operating Expenses (after 1.29% 1.35% 1.29%
waivers)
2 The Vintage Balanced Fund did not pay or accrue the distribution (12b-1) fee
for the fiscal year ended March 31, 2005. 3 The shareholder services provider
for the Vintage Balanced Fund waived the entire shareholder services fee for the
fiscal year ended March 31, 2005. The shareholder services provider may reduce
or eliminate the fee waiver at any time.
4 The administrator voluntarily waived a portion of its fee for Federated Stock
and Bond Fund, Inc. The administrator can terminate this voluntary waiver at any
time. Total other expenses paid by Federated Stock and Bond Fund, Inc. (after
the voluntary waiver) was 0.35% for the fiscal year ended November 30, 2004.
5 The Vintage Balanced Fund's Adviser waived a portion of the other expenses for
an actual fee of 0.60% for the fiscal year ended March 31, 2005. The Adviser may
reduce or eliminate the fee waiver at any time.
- ----------------------------------------------------------------------------------------------
6 Shareholders of the Vintage Balanced Fund at the time the Reorganization will
not be subject to the sales charge on future purchases of the Federated Stock &
Bond Fund.
EXAMPLE
This Example is intended to help you compare the cost of investing in Federated
Stock and Bond Fund, Inc. Class A Shares, the Vintage Balanced Fund and the
Federated Stock and Bond Fund, Inc. Class A Shares Pro Forma Combined with the
cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in Federated Stock and Bond Fund,
Inc. Class A Shares, the Vintage Balanced Fund and Federated Stock and Bond
Fund, Inc. Class A Shares Pro Forma Combined for the time periods indicated and
then redeem all of your Shares at the end of those periods. The Example also
assumes that your investment has a 5% return each year and that the Fund's
operating expenses are before waivers as shown in the table and remain the same.
Although your actual costs and returns may be higher or lower, based on these
assumptions your costs would be:
1 Year 3 Years 5 Years 10 Years
Federated Stock and Bond Fund, Inc. Class $675 $939 $1,224 $2,032
A Shares
Vintage Balanced Fund $196 $606 $1,042 $2,254
Federated Stock and Bond Fund, Inc. Class
A Shares Pro Forma Combined ----------- $939 $1,224 $2,032
$675
COMPARISON OF POTENTIAL RISKS AND REWARDS; PERFORMANCE INFORMATION
The bar charts and tables below compare the potential risks and rewards of
investing in each Federated Fund and Vintage Fund. The bar charts provide an
indication of the risks of investing in each fund by showing changes in each
fund's performance from year to year. The tables show how each fund's average
annual total returns for the one year, five years and ten years (or start of
performance) compare to the returns of a broad-based market index. The figures
assume reinvestment of dividends and distributions. Attached as Exhibit B to
this Prospectus/Proxy Statement are a Management's Discussion of Fund
Performance and a line graph for the most recent fiscal year of each Vintage
Fund and each Federated Fund.
FEDERATED CAPITAL APPRECIATION FUND - VINTAGE EQUITY FUND AND VINTAGE GROWTH
FUND
FEDERATED CAPITAL APPRECIATION FUND-CLASS A SHARES
Risk/Return Bar Chart and Table
The performance information shown below will help you analyze the Fund's
investment risks in light of its historical returns. The bar chart shows the
variability of the Fund's Class A Shares total returns on a calendar
year-by-year basis. The Average Annual Total Return table shows returns averaged
over the stated periods, and includes comparative performance information. The
Fund's performance will fluctuate, and past performance (before and after taxes)
is no guarantee of future results.
[GRAPHIC ILLUSTRATION-Federated Capital Appreciation Fund] The graphic
presentation displayed here consists of a bar chart representing the annual
total returns of the Federated Capital Appreciation Fund as of the calendar
year-end for each of ten years.
The `y' axis reflects the "% Total Return" beginning with "-40%" and increasing
in increments of 20% up to 60%. The `x' axis represents calculation periods
(from the earliest calendar year end of the Fund's start of business) through
the calendar year ended 2004. The chart features ten distinct vertical bars,
each shaded in dark gray, and each visually representing by height the total
return percentages for the calendar year stated directly at its base. The
calculated total return percentage for the Fund for each calendar year is stated
directly at the top/bottom of each respective bar, for the calendar years 1995
through 2004. The percentages noted are 37.17%, 18.39%, 30.02%, 20.07%, 43.39%,
- -3.76%, -6.19%, -18.76%, 23.81% and 7.19%, respectively.
- ------------------------------------------------------------------------------
The total returns shown in the bar chart do not reflect the payment of any sales
charges or recurring shareholder account fees. If these charges or fees had been
included, the returns shown would have been lower.
The Fund's Class A Shares total return for the quarter ended March 31, 2005 was
(1.93)%.
- ------------------------------------------------------------------------------
Within the period shown in the bar chart, the Fund's Class A Shares highest
quarterly return was 27.57% (quarter ended December 31, 1999). Its lowest
quarterly return was (17.40)% (quarter ended September 30, 2002).
Average Annual Total Return Table
The Average Annual Total Returns for the Fund's Class A Shares are reduced to
reflect applicable sales charges. Return Before Taxes is shown. In addition,
Return After Taxes is shown for the Fund's Class A Shares to illustrate the
effect of federal taxes on the Fund returns. Actual after-tax returns depend on
each investor's personal tax situation, and are likely to differ from those
shown. The table also shows returns for the Standard & Poor's 500 Index (S&P
500), a broad-based market index, and the Lipper Large Cap Core Funds Average
(LLCCFA), an average of funds with similar objectives. Index returns do not
reflect taxes, sales charges, expenses or other fees that the Securities and
Exchange Commission requires to be reflected in the Fund's performance. Indexes
and averages are unmanaged and it is not possible to invest directly in an index
or average.
(For the periods ended December 31, 2004)
1 Year 5 Years 10 Years
Class A Shares
Return Before Taxes 1.29% (1.65)% 12.88%
Return After Taxes on 0.98% (2.10)% 11.40%
Distributions(1)
Return After Taxes on
Distributions and Sale of Fund ---------------- (1.58)% 10.66%
Shares(1) 0.86%
S&P 500 10.88% (2.30)% 12.07%
LLCCFA 7.84% (3.22)% 10.07%
- ------------------------------------------------------------------------------
1 After-tax returns are calculated using a standard set of assumptions. The
stated returns assume the highest historical federal income and capital gains
tax rates. Return After Taxes on Distributions assumes a continued investment
in the Fund and shows the effect of taxes on Fund distributions. Return After
Taxes on Distributions and Sale of Fund Shares assumes all shares were
redeemed at the end of each measurement period, and shows the effect of any
taxable gain (or offsetting loss) on redemption, as well as the effects of
taxes on Fund distributions. These after-tax returns do not reflect the effect
of any applicable state and local taxes. After-tax returns are not relevant to
investors holding Shares through tax-deferred programs, such as IRA or 401(k)
plans.
VINTAGE EQUITY FUND-CLASS S SHARES AND CLASS T SHARES
Bar Chart and Performance Information
The bar chart and performance information provide an indication of the
historical risk of an investment in the Fund by showing changes in the Fund's
performance from year to year. The Fund's past performance does not necessarily
indicate how it will perform in the future.
The annual returns in the bar chart are for the Fund's Class S Shares.
[GRAPHIC ILLUSTRATION-Vintage Equity Fund]
The graphic presentation displayed here consists of a bar chart representing the
annual total returns of the Vintage Equity Fund as of the calendar year-end for
each of ten years.
The `y' axis reflects the "% Total Return" beginning with "-40%" and increasing
in increments of 20% up to 40%. The `x' axis represents calculation periods
(from the earliest calendar year end of the Fund's start of business) through
the calendar year ended 2004. The chart features ten distinct vertical bars,
each shaded in dark gray, and each visually representing by height the total
return percentages for the calendar year stated directly at its base. The
calculated total return percentage for the Fund for each calendar year is stated
directly at the top/bottom of each respective bar, for the calendar years 1995
through 2004. The percentages noted are 35.71%, 21.35%, 30.13%, 27.46%, 21.70%,
- -7.02%, -16.85%, -28.76%, 22.13% and 3.04%, respectively.
- ------------------------------------------------------------------------------
The total return for the quarter ended March 31, 2005 was (1.75)%.
- ------------------------------------------------------------------------------
During the period shown in the bar chart, the highest return for a quarter was
27.36% (quarter ended December 31, 1998). Its lowest return for a quarter was
(19.64)% (quarter ended September 30, 2001).
Average Annual Total Return Table (as of 12/31/04)
1 Year 5 Years 10 Years Start of
Perfomance(1)
Vintage Equity, S Shares Return 3.04% (7.07)% 8.70% N/A
Before Taxes
Return After Taxes on 3.03% (7.37)% 7.21% N/A
Distributions
Return After Taxes on
Distributions and Sale of Fund ---------------- (5.70)% 6.08% N/A
Shares 2.43%
Vintage Equity, T Shares Return 3.35% (3.32)% N/A 8.00%
Before Taxes
Return After Taxes on 3.34% (7.14)% N/A 6.67%
Distributions
Return After Taxes on
Distributions and Sale of Fund ---------------- (5.53)% N/A 5.67%
Shares 2.67%
S&P 500 Stock Index 10.86% (2.30)% 12.07% 12.04%
- ------------------------------------------------------------------------------
1 Inception Date for Class T Shares 2/14/1998.
VINTAGE GROWTH FUND
Bar Chart and Performance Information
The bar chart and performance information provide an indication of the
historical risk of an investment in the Fund by showing changes in the Fund's
performance from year to year. The Fund's past performance does not necessarily
indicate how it will perform in the future.
[GRAPHIC ILLUSTRATION-Vintage Growth Fund]
The graphic presentation displayed here consists of a bar chart representing the
annual total returns of the Vintage Growth Fund as of the calendar year-end for
each of nine years.
The `y' axis reflects the "% Total Return" beginning with "-40%" and increasing
in increments of 20% up to 40%. The `x' axis represents calculation periods
(from the earliest calendar year end of the Fund's start of business) through
the calendar year ended 2004. The chart features nine distinct vertical bars,
each shaded in dark gray, and each visually representing by height the total
return percentages for the calendar year stated directly at its base. The
calculated total return percentage for the Fund for each calendar year is stated
directly at the top/bottom of each respective bar, for the calendar years 1996
through 2004. The percentages noted are 19.31%, 26.16%, 25.42%, 19.72%, -7.52%,
- -18.70%, -35.98%, 33.24% and 0.23%, respectively.
- ------------------------------------------------------------------------------
The total return for the quarter ended March 31, 2005 was (3.90)%.
- ------------------------------------------------------------------------------
During the period shown in the bar chart, the highest return for a quarter was
27.25% (quarter ended December 31, 1998). Its lowest return for a quarter was
(23.52)% (quarter ended September 30, 2001).
Average Annual Total Return Table (as of 12/31/04)
1 Year 5 Years Start of
Perfomance(1)
Vintage Growth Fund Return 0.23% (8.46)% 4.44%
Before Taxes
Return After Taxes on 0.21% (9.66)% 3.11%
Distributions
Return After Taxes on
Distributions and Sale of Fund ---------------- (7.39)% 2.55%
Shares 0.17%
Russell 1000 Growth Index 6.30% (9.29)% 8.11%
S&P 500 Stock Index 10.86% (2.30)% 9.84%
- ------------------------------------------------------------------------------
1 Inception Date 9/29/1995.
FEDERATED STOCK & BOND FUND, INC. - VINTAGE BALANCED FUND
FEDERATED STOCK & BOND FUND, INC. - CLASS A SHARES
Risk/Return Bar Chart and Table
The performance information shown below will help you analyze the Federated
Stock & Bond Fund, Inc.'s investment risks in light of its historical returns.
The bar chart shows the variability of the Federated Stock & Bond Fund, Inc.'s
Class A Shares total returns on a calendar year-by-year basis. The Average
Annual Total Return table shows returns averaged over the stated periods, and
includes comparative performance information. The Federated Stock & Bond Fund,
Inc.'s performance will fluctuate, and past performance (before and after taxes)
is no guarantee of future results.
[GRAPHIC ILLUSTRATION-Federated Stock & Bond Fund, Inc.] The graphic
presentation displayed here consists of a bar chart representing the annual
total returns of the Federated Stock & Bond Fund, Inc. as of the calendar
year-end for each of ten years.
The `y' axis reflects the "% Total Return" beginning with "-15%" and increasing
in increments of 15% up to 30%. The `x' axis represents calculation periods
(from the earliest calendar year end of the Fund's start of business) through
the calendar year ended 2004. The chart features ten distinct vertical bars,
each shaded in dark gray, and each visually representing by height the total
return percentages for the calendar year stated directly at its base. The
calculated total return percentage for the Fund for each calendar year is stated
directly at the top/bottom of each respective bar, for the calendar years 1995
through 2004. The percentages noted are 25.06%, 13.69%, 23.92%, 11.16%, 2.23%,
5.02%, 0.63%, -10.30%, 17.21% and 6.66%, respectively.
The total returns shown in the bar chart do not reflect the payment of any sales
charges or recurring shareholder account fees. If these charges or fees had been
included, the returns shown would have been lower.
The Fund's Class A Shares total return for the quarter ended March 31, 2005 was
(1.57)%.
Within the period shown in the bar chart, the Federated Stock & Bond Fund,
Inc.'s Class A Shares highest quarterly return was 10.50% (quarter ended June
30, 1997). Its lowest quarterly return was (8.73)% (quarter ended September 30,
2002).
Average Annual Total Return Table
The Average Annual Total Returns for the Federated Stock & Bond Fund, Inc.'s
Class A Shares are reduced to reflect applicable sales charges. Return Before
Taxes is shown. In addition, Return After Taxes is shown for the Federated Stock
& Bond Fund, Inc.'s Class A Shares to illustrate the effect of federal taxes on
fund returns. Actual after-tax returns depend on each investor's personal tax
situation, and are likely to differ from those shown. The table also shows
returns for the Standard and Poor's 500 Index (S&P 500) and the Lehman Brothers
Aggregate Bond Index (LBAB), both of which are broad-based market indexes, and
the Lipper Balanced Funds Average (LBFA), an average of funds with similar
investment objectives. Index returns do not reflect taxes, sales charges,
expenses, or other fees that the Securities and Exchange Commission ("SEC")
requires to be reflected in the Federated Stock & Bond Fund, Inc.'s performance.
Indexes are unmanaged and it is not possible to invest directly in an index.
Lipper figures represent the average of the total returns reported by all of the
mutual funds designated by Lipper, Inc. as falling into the respective category.
(For the periods ended December 31, 2004)
1 Year 5 Years 10 Years
Return Before Taxes 0.79% 2.29% 8.41%
Return After Taxes on Distributions 1 0.09% 1.34% 6.09%
Return After Taxes on Distributions
and Sale of Fund Shares 1 0.50% 1.40% 5.94%
S&P 500 10.88% (2.30)% 12.07%
LBAB 4.34% 7.71% 7.72%
LBFA 7.93% 2.01% 9.09%
1 After-tax returns are calculated using a standard set of assumptions. The
stated returns assume the highest historical federal income and capital gains
tax rates. Return After Taxes on Distributions assumes a continued investment in
the fund and shows the effect of taxes on fund distributions. Return After Taxes
on Distributions and Sale of fund shares assumes all shares were redeemed at the
end of each measurement period, and shows the effect of any taxable gain (or
offsetting loss) on redemption, as well as the effects of taxes on fund
distributions. These after-tax returns do not reflect the effect of any
applicable state and local taxes. After-tax returns are not relevant to
investors holding shares through tax-deferred programs, such as IRA or 401(k)
plans.
VINTAGE BALANCED FUND
Bar Chart and Performance Information
The bar chart and performance information provide an indication of the
historical risk of an investment in the Fund by showing changes in the Fund's
performance from year to year. The Fund's past performance does not necessarily
indicate how it will perform in the future.
[GRAPHIC ILLUSTRATION-Vintage Balanced Fund]
The graphic presentation displayed here consists of a bar chart representing the
annual total returns of the Vintage Balanced Fund as of the calendar year-end
for each of nine years.
The `y' axis reflects the "% Total Return" beginning with "-40%" and increasing
in increments of 20% up to 40%. The `x' axis represents calculation periods
(from the earliest calendar year end of the Fund's start of business) through
the calendar year ended 2004. The chart features nine distinct vertical bars,
each shaded in dark gray, and each visually representing by height the total
return percentages for the calendar year stated directly at its base. The
calculated total return percentage for the Fund for each calendar year is stated
directly at the top/bottom of each respective bar, for the calendar years 1996
through 2004. The percentages noted are 13.48%, 22.82%, 20.71%, 11.66%, -3.19%,
- -6.85%, -18.11%, 13.72% and 3.18%, respectively.
- ------------------------------------------------------------------------------
The total return for the quarter ended March 31, 2005 was (1.44)%.
- ------------------------------------------------------------------------------
During the period shown in the bar chart, the highest return for a quarter was
16.95% (quarter ended December 31, 1998). Its lowest return for a quarter was
(12.13)% (quarter ended June 30, 2002).
Average Annual Total Return Table (as of 12/31/04)
1 Year 5 Years Start of
Perfomance(1)
Vintage Balanced Fund Return Before Taxes 3.18% (2.83)% 6.36%
Return After Taxes on Distributions 2.63% (3.72)% 4.89%
Return After Taxes on Distributions and Sale
of Fund Shares ----------------- (2.93)% 4.06%
2.10%
50% S&P 500 Stock Index/ 50% Lehman Brothers
Intermediate Gov't/Credit Index ----------------- 2.75% 9.83%
6.97%
1 Inception Date 6/1/1995.
INVESTMENT ADVISERS
The Board of Directors governs the Vintage Funds. The Board selects and
oversees the adviser, Investors Management Group, Ltd. ("IMG"), a subsidiary of
AMCORE Investment Group, N.A., who manages the Vintage Funds' assets, including
buying and selling portfolio securities. IMG is registered as an investment
adviser under the Investment Advisers Act of 1940 (the "Advisers Act"). The
address of IMG is 1415 28th Street, Suite 200, West Des Moines, IA 50266.
IMG had approximately $4.6 billion in equity, fixed income and money
market assets under management. IMG provides continuous investment management to
pension and profit sharing plans, insurance companies, public agencies, banks,
endowments and charitable institutions, other mutual funds, individuals and
others.
A Board of Trustees governs the Federated Capital Appreciation Fund. This
Board selects and oversees the adviser, Federated Equity Management Company of
Pennsylvania ("FEMCOPA"), subsidiary of Federated, who manages the Federated
Capital Appreciation Fund's assets, including buying and selling portfolio
securities. FEMCOPA is registered as an investment adviser under the Advisers
Act. The address of FEMCOPA is Federated Investors Tower, 1001 Liberty Avenue,
Pittsburgh, PA 15222-3779.
A Board of Directors governs the Federated Stock & Bond Fund, Inc. This
Board selects and oversees the adviser, FEMCOPA and sub-adviser, Federated
Investment Management Company ("FIMC"), both subsidiaries of Federated, who
manages the Federated Stock & Bond Fund Inc.'s assets, including buying and
selling portfolio securities. FEMCOPA and FIMC are both registered as an
investment adviser under the Advisers Act. The address of FEMCOPA and FIMC is
Federated Investors Tower, 1001 Liberty Avenue, Pittsburgh, PA 15222-3779.
FEMCOPA, FIMC and other subsidiaries of Federated advise approximately 133
equity, fixed-income, and money market mutual funds as well as a variety of
customized separately managed accounts, which totaled approximately $179 billion
in assets as of December 31, 2004. Federated was established in 1955 and is one
of the largest investment managers in the United States with approximately 1,385
employees. Federated provides investment products to more than 5,700 investment
professionals and institutions.
PORTFOLIO MANAGERS
Federated Capital Appreciation Fund
David P. Gilmore has been the fund's Portfolio Manager since September 2000.
He has been the fund's Portfolio Manager since January 2003. Mr. Gilmore
joined Federated in August 1997 as an Investment Analyst. He was promoted to
Senior Investment Analyst in July 1999 and became a Vice President of the
fund's adviser in July 2001. Mr. Gilmore was a Senior Associate with Coopers
& Lybrand from January 1992 to May 1995. Mr. Gilmore is a Chartered Financial
Analyst and attended the University of Virginia, where he earned his M.B.A.,
from September 1995 to May 1997. Mr. Gilmore has a B.S. from Liberty
University.
Linda A. Duessel has been the fund's Portfolio Manager since November 2001.
Ms. Duessel joined Federated in 1991 and has been a Portfolio Manager since
1995. She became a Senior Vice President of the fund's adviser in January
2000 and served as a Vice President of the fund's adviser from 1995 through
1999. Ms. Duessel was a Senior Investment Analyst and an Assistant Vice
President of the fund's adviser from 1991 until 1995. Ms. Duessel is a
Chartered Financial Analyst and received her M.S. in Industrial
Administration from Carnegie Mellon University.
Federated Stock & Bond Fund, Inc.
John W. Harris has been the fund's Portfolio Manager since December 1999. He
is Vice President of the fund. Mr. Harris initially joined Federated in 1987
as an Investment Analyst. He served as an Investment Analyst and an Assistant
Vice President from 1990 through 1992 and as a Senior Investment Analyst and
Vice President through May 1993. After leaving the money management field to
travel extensively, he rejoined Federated in 1997 as a Senior Investment
Analyst and became a Portfolio Manager and Assistant Vice President of the
fund's adviser in December 1998. In January 2000, Mr. Harris became a Vice
President of the fund's adviser. Mr. Harris is a Chartered Financial Analyst.
He received his M.B.A. from the University of Pittsburgh.
David P. Gilmore has been the fund's Portfolio Manager since January 2003.
Mr. Gilmore joined Federated in August 1997 as an Investment Analyst. He was
promoted to Senior Investment Analyst in July 1999 and became a Vice
President of the fund's adviser in July 2001. Mr. Gilmore was a Senior
Associate with Coopers & Lybrand from January 1992 to May 1995. Mr. Gilmore
is a Chartered Financial Analyst and attended the University of Virginia,
where he earned his M.B.A., from September 1995 to May 1997. Mr. Gilmore has
a B.S. from Liberty University.
Joseph M. Balestrino has been the fund's Portfolio Manager since October
1994. Mr. Balestrino joined Federated in 1986 and has been a Senior Portfolio
Manager and Senior Vice President of the fund's adviser since 1998. He was a
Portfolio Manager and a Vice President of the fund's adviser from 1995 to
1998. Mr. Balestrino served as a Portfolio Manager and an Assistant Vice
President of the adviser from 1993 to 1995. Mr. Balestrino is a Chartered
Financial Analyst and received his Master's Degree in Urban and Regional
Planning from the University of Pittsburgh.
Christopher J. Smith has been the fund's Portfolio Manager since November
2001. Mr. Smith joined Federated in 1995 as a Portfolio Manager and a Vice
President of a Federated advisory subsidiary. He has been a Vice President of
the fund's adviser since 1997. He was an Assistant Vice President of
Provident Life & Accident Insurance Company from 1987 through 1994. Mr. Smith
is a Chartered Financial Analyst. He received his M.A. in Economics and
Finance from the University of Kentucky.
Mark E. Durbiano has been the fund's Portfolio Manager since September 1996.
Mr. Durbiano joined Federated in 1982 and has been a Senior Portfolio Manager
and a Senior Vice President of the fund's adviser since 1996. From 1988
through 1995, Mr. Durbiano was a Portfolio Manager and a Vice President of
the fund's adviser. Mr. Durbiano is a Chartered Financial Analyst and
received his M.B.A. in Finance from the University of Pittsburgh.
Todd A. Abraham has been the fund's Portfolio Manager since February 2003.
Mr. Abraham has been a Portfolio Manager since 1995 and a Vice President of
the fund's adviser since 1997. Mr. Abraham joined Federated in 1993 as an
Investment Analyst and served as Assistant Vice President from 1995 to 1997.
Mr. Abraham served as a Portfolio Analyst at Ryland Mortgage Co. from 1992 to
1993. Mr. Abraham is a Chartered Financial Analyst and received his M.B.A. in
Finance from Loyola College.
Vintage Equity Fund
Vintage Growth Fund
Vintage Balanced Fund
The Vintage Equity Fund and Vintage Growth Fund are managed by the Equity Team
of IMG. The Equity Team consists of Jeff Lorenzen, Jim Thompson and Don Radke.
Jim Thompson is the lead member of the Equity Team for the Vintage Equity Fund
and Don Radke is the lead member of the Equity Team for the Vintage Growth Fund.
The Equity Team meets as a group to determine current investment strategy and
the lead member of the team manages the day to day purchases and sale of
securities for respective the fund. The equity portion of the Vintage Balanced
Fund is managed by the Equity Team with Jim Thompson as the lead member and the
Fixed Income Team manages the fixed income portion. The Fixed Income Team
consists of Jeff Lorenzen and Kevin Croft. Kevin Croft is the lead member of the
Fixed Income Team for the Vintage Balanced Fund. The allocation of the Vintage
Balanced Fund's assets between equities and fixed income securities is
determined jointly by the Equity and Fixed Income Teams.
Jeff Lorenzen, CFA has been employed by IMG Ltd in various positions since 1992.
He is currently President of IMG and has served as Chief Investment Officer
since 2003. Prior to that he was Supervising Fixed Income Manager from
2000-2003. Jeff has a B.B.A degree from the University of Iowa and a M.B.A. from
Drake University.
Jim Thompson, CFA has been Director of Investment Strategy and Equity Research
with IMG since 2003. Prior to that he was a High Yield Analyst with Principal
Global Investors from 2002-2003, and a graduate student from 2000-2001. Jim has
a BS degree from Drake University and a M.B.A. from the University of Iowa.
Don Radke has been an Equity Manager for IMG since 2000. Don has a B.A. degree
from the University of Wisconsin-Milwaukee and a M.B.A from the University of
Minnesota.
Kevin Croft, CFA has been Supervising Fixed Income Manager of IMG since 2003.
Prior to that, he was employed as a Portfolio Manager with Principal Global
Investors from 1993-2003. Kevin has B.S.B.A. degree and a M.B.A. from Drake
University.
ADVISORY AND OTHER FEES
The annual investment advisory fee for each Federated Fund and each
Vintage Fund, as a percentage of the each Federated Fund's and each Vintage
Fund's daily net assets, is as follows:
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FEDERATED FUNDS ADVISORY FEES VINTAGE FUNDS ADVISORY FEE
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
Federated Capital 0.75% Vintage Equity Fund 0.75%
Appreciation Fund
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
Vintage Growth Fund 0.95%
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
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Federated Stock & Bond 0.55%* Vintage Balanced Fund 0.75%
Fund, Inc.
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*In addition to this fee, FEMCOPA receives 4.50% of the Fund's gross
income.
Both the investment adviser to the Federated Funds, FEMCOPA, and the
investment adviser to the Vintage Funds, IMG, may voluntarily choose to waive a
portion of its advisory fee or reimburse other expenses of the respective funds
advised by FEMCOPA or IMG. These voluntary waivers or reimbursements may be
terminated by FEMCOPA and IMG, respectively, at any time in each adviser's
discretion.
Federated Administrative Services ("FAS"), an affiliate of FEMCOPA,
provides certain administrative personnel and services necessary to operate the
Federated Funds. FAS provides these services at an annual rate based upon the
average daily net assets advised by FEMCOPA and its affiliates. The rate charged
ranges from 0.150% to 0.075% of the average aggregate daily net assets of the
Federated Funds. FAS's minimum annual administrative fee with respect to the
Federated Capital Appreciation Fund and Federated Stock & Bond Fund, Inc. is
$150,000 per portfolio plus $40,000 for each additional class of shares. FAS may
choose to voluntarily waive a portion of its fee. IMG serves as administrator to
the Vintage Funds and provides certain administrative personnel and services
necessary to operate the Vintage Funds. IMG provides these services at an annual
rate based upon the average daily net assets of the Vintage Funds. The rate is
0.26% of the average daily net assets of the Vintage Funds. There is no minimum
fee chargeable to each Vintage Fund. IMG may voluntarily choose to waive a
portion of its fee.
Administrative Fee Expenses
- -------------------------------------------------------------------------------------------------------------
Fund (Fiscal Year End) Amount/ Fund Amount/
Percentage of Average (Fiscal Year End) Percentage of Average
Daily Net Assets Daily Net Assets
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
Federated Capital $2,470,049/ Vintage Equity Fund $401,665/
Appreciation Fund (October 0.0762% (March 31, 2005) 0.26%
31, 2004)
- -------------------------------------------------------------------------------------------------------------
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Vintage Growth Fund $110,597/
March 31, 2005) 0.26%
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
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Federated Stock & Bond $252,258/ Vintage Balanced Fund $81,402/
Fund, Inc. 0.0762% (March 31, 2005) 0.26%
(November 30, 2004)
- -------------------------------------------------------------------------------------------------------------
Each Federated Fund has entered into a Shareholder Services Agreement
under which it may make payments up to 0.25% of the average daily NAV of its
shares to obtain certain personal services for shareholders and the maintenance
of shareholder accounts. The Shareholder Services Agreement provides that
Federated Shareholder Services Company ("FSSC"), an affiliate of FEMCOPA, either
will perform shareholder services directly or will select financial institutions
to perform such services. Financial institutions will receive fees based upon
shares owned by their clients or customers.
Each Vintage Fund has entered into an Administrative Services Plan under
which it is authorized to make payments up to 0.25% of the average daily NAV of
its shares to obtain certain personal services for shareholders and the
maintenance of shareholder accounts. The Administrative Services Plan provides
that banks and other financial institutions will perform such services. Banks
and other financial institutions will receive fees based upon shares owned by
their clients or customers.
Federated Securities Corp. ("FSC"), an affiliate of FEMCOPA, is the
principal distributor for shares of the Federated Funds. The Federated Capital
Appreciation Fund (Class A Shares) has adopted a Rule 12b-1 Distribution Plan
(the "Distribution Plan") pursuant to which the Federated Capital Appreciation
Fund may pay a fee to the distributor in an amount computed at an annual rate of
0.25% of the average daily net assets of the Federated Capital Appreciation Fund
to finance any activity which is principally intended to result in the sale of
shares subject to the Distribution Plan. The Federated Capital Appreciation Fund
(Class A Shares) has no present intention of paying or accruing the distribution
(12b-1) fee for the fiscal year ending October 31, 2005. The Federated Stock &
Bond Fund, Inc. (Class A Shares) does not have a Rule 12b-1 Plan in effect and,
accordingly, does not, compensate brokers and dealers for sales and
administrative services performed in connection with sales Shares of the Funds
pursuant to a plan of distribution adopted pursuant to Rule 12b-1.
BISYS Fund Services Limited Partnership is the principal distributor for
shares of the Vintage Funds. The Vintage Funds have adopted a Rule 12b-1
Distribution Plan (the "Distribution Plan") pursuant to which each such Vintage
Fund may pay a fee to the distributor in an amount computed at an annual rate of
0.25% of the average daily net assets of each such Vintage Fund to finance any
activity which is principally intended to result in the sale of shares subject
to the Distribution Plan. The Vintage Growth Fund, Vintage Balanced Fund and
Class T Shares of the Vintage Equity Fund are not currently incurring the 12b-1
fee under the Distribution Plan.
FSC, from its own assets, may pay financial institutions supplemental fees
as financial assistance for providing substantial sales services,
distribution-related support services or shareholder services with respect to
the Federated Funds. Such assistance may be based on such factors as the number
or value of shares the financial institution sells; the value of clients' assets
invested; or the type and nature of services or support furnished by the
financial institution. Any payments made by FSC may be funded from the resources
of its affiliates or FEMCOPA.
The total annual operating expenses, as a percentage of average net
assets, for Class A Shares of the Federated Capital Appreciation Fund were 1.25%
of average daily net assets (after waivers) for the fiscal year ended October
31, 2004. Without such waivers, the expense ratio of Class A Shares of the
Federated Capital Appreciation Fund would have been 1.50%, of average daily net
assets. The total annual operating expenses, as a percentage of average net
assets, for the Vintage Equity Fund's Class S Shares and Class T Shares was
1.41% and 1.47%, respectively, of average daily net assets for the fiscal year
ended June 30, 2004. The total annual operating expenses for the Vintage Growth
Fund was 1.51% of average daily net assets for the fiscal year ended June 30,
2004.
The total annual operating expenses, as a percentage of average net
assets, for Class A Shares of the Federated Stock & Bond Fund, Inc. were 1.29%
of average daily net assets (after waivers) for the fiscal year ended November
30, 2004. Without such waivers, the expense ratio of Class A Shares of the
Federated Stock & Bond Fund, Inc. would have been 1.30%, of average daily net
assets. The total annual operating expenses, as a percentage of average net
assets, for the Vintage Balanced Fund was 1.31% (after waivers) of average daily
net assets for the fiscal year ended June 30, 2004. Without such waivers, the
expense ratio of the Vintage Balanced Fund would have been 1.41%, of average
daily net assets.
PURCHASES, REDEMPTIONS AND EXCHANGE PROCEDURES; DIVIDENDS AND DISTRIBUTIONS
The transfer agent and dividend disbursing agent for the Federated Funds
is State Street Bank and Trust Company. The transfer agent and dividend
disbursing agent for the Vintage Funds is BISYS Fund Services, Inc.
Procedures for the purchase, exchange and redemption of the Federated
Funds' shares are similar to the procedures applicable to the purchase,
exchange, and redemption of the Vintage Funds' shares. Reference is made to the
Prospectuses of the Federated Funds and the Prospectuses of the Vintage Funds
for a complete description of the purchase, exchange and redemption procedures
applicable to purchases, exchanges and redemptions of the Federated Funds' and
the Vintage Funds' shares, respectively, each of which is incorporated by
reference thereto. Set forth below is a brief description of the significant
purchase, exchange and redemption procedures applicable to the Federated Funds'
shares and the Vintage Funds' shares.
Purchases
The Federated Funds' shares are sold at NAV plus a maximum front-end sales
charge with respect to purchases of shares of 5.50% each for: the Federated
Capital Appreciation Fund (Class A Shares) and the Federated Stock & Bond Fund,
Inc. (Class A Shares). A contingent deferred sales charge ("CDSC") of 0.75% of
the redemption amount applies to each Federated Fund Class A shares redeemed up
to 24 months after purchase under certain investment programs where (i) the
amount of the purchase was $1 million or greater and thus not subject to a
front-end sales charge; and (ii) an investment professional received an advance
payment on the transaction. Class A Shares received by the Vintage Fund
shareholders in the Reorganizations will not be subject to this CDSC, but the
CDSC may apply on future purchases of Class A Shares depending upon the nature
of the arrangement under which such shares are purchased. Shareholders of the
Vintage Funds will not be charged front-end sales charges in connection with the
Reorganization. Additionally, the shareholders of the Vintage Funds at the time
of the Reorganization will not be subject to the sales charge on future
purchases of the Federated Funds.
Each Federated Fund is subject to the following investment minimums: an
initial investment of $1,500 ($250 for retirement plans), and a subsequent
investment of $100 ($100 for retirement plans and $50 for systematic investment
plans). Initial investment minimums of the Federated Funds are not applicable
for the purposes of the Reorganization. Purchases of shares of the Federated
Funds may be made through an investment professional, directly from the Fund or
through an exchange from another Federated mutual fund. Purchases through
investment professionals may be subject to higher or lower minimum investment
requirements
The Vintage Funds' shares are sold at NAV, without any front-end load or
CDSC. Each Vintage Fund is subject to the following investment minimums: an
initial investment outside of Automated Investment Plan of $1,000 ($25 for
401(k) and 403(b) and other plans); and a subsequent investment of $50 ($25 for
401(k) and 403(b) and other plans). Within the Automatic Investment Plan, the
initial investment is $250 per fund and the subsequent investment is $25 per
fund. Purchases of the Vintage Funds may be made directly from the Vintage
Funds, through qualified banks, broker/dealers, investment advisory firms and
other organizations that have entered into dealer and/or shareholder agreements
with the distributor and/or servicing agreements with the Funds.
Purchase orders for Federated Funds and the Vintage Funds are effected at
the offering price next calculated after receipt of the order. The NAV per share
for the Federated Capital Appreciation Fund, Federated Stock & Bond Fund, Inc.,
Vintage Equity Fund, Vintage Growth Fund and Vintage Balanced Fund is calculated
as of the close of trading (normally 4:00 p.m. Eastern time) on the New York
Stock Exchange (the "NYSE") on each day in which the NYSE is open for business.
The Federated Capital Appreciation Fund and Federated Stock & Bond Fund,
Inc. also provide the following purchase options: by a Systematic Investment
Program established with the Fund; through a depository institution that is an
automated clearing house (ACH) member and through a Retirement Account. The
Vintage Funds also provide for purchases through an Automatic Investment Plan.
With respect to future purchases of Class A Shares of any Federated Fund,
current shareholders of the Vintage Funds who purchase their shares directly
from the Federated Fund, will not be subject to front-end sales charges. Current
shareholders of the Vintage Funds who purchase through a broker-dealer, however,
may be subject to a front-end sales charge on future purchases of Class A Shares
of any Federated Fund.
Exchanges
Class A Shares of the Federated Capital Appreciation Fund and Class A
Shares of the Federated Stock & Bond Fund, Inc. may be exchanged at NAV for
Class A Shares of other funds for which FEMCOPA (or its affiliates) serves as
adviser and distributor. Class A Shares of the Federated Capital Appreciation
Fund and Class A Shares of the Federated Stock & Bond Fund may be exchanged
through an investment professional if you purchased shares through an investment
professional or directly from the fund if you purchased shares directly from the
fund. The exchange is subject to any initial or subsequent minimum investment
amounts of the fund into which the exchange is being made, and is treated as a
sale of your shares for federal income tax purposes.
Shares of the Vintage Equity Fund, Vintage Growth Fund and the Vintage
Balanced Fund may be exchanged at NAV for shares of the same class of the other
Vintage funds. Shares of the Vintage Equity Fund, Vintage Growth Fund and
Vintage Balanced Fund may be exchanged by mail, telephone or online. The
exchange is subject to any initial or subsequent minimum investment amounts of
the fund into which the exchange is being made, and is treated as a sale of your
shares for federal income tax purposes.
Redemptions
Redemptions of Class A Shares of the Federated Capital Appreciation Fund
and Class A Shares of the Federated Stock & Bond Fund, Inc. may be made through
an investment professional if you purchased shares through an investment
professional or directly from the Fund if you purchased shares directly from the
fund. Shares are redeemed at their NAV next determined after the redemption
request is received in proper form on each day on which the fund computes its
NAV less, in the case of Class A Shares of the Federated Capital Appreciation
Fund and Federated Stock & Bond Fund, Inc., a CDSC of 0.75% of the redemption
amount with respect to Class A Shares redeemed up to 24 months after purchase
under certain investment programs where (i) the amount of the purchase was $1
million or greater and thus not subject to a front-end sales charge; and (ii) an
investment professional received an advance payment on the transaction. Class A
Shares received by the Vintage Fund shareholders in the Reorganizations will not
be subject to this CDSC, but the CDSC may apply on future purchases of Class A
Shares depending upon the nature of the arrangement under which such shares are
purchased. Proceeds normally are wired or mailed within one business day after
receiving a request in proper form, although payment may be delayed up to seven
days. Federated Funds offer the following redemption options: an electronic
transfer to your account at a financial institution that is an ACH member, or
wire payment to your account at a domestic commercial bank that is a Federal
Reserve System member.
Redemptions of the Vintage Equity Fund, Vintage Growth Fund and Vintage
Balanced Fund may be made either directly through the Vintage Funds or through
your financial intermediary. Shares of the Vintage Funds are redeemed at the NAV
next determined after the redemption request is received in proper form on each
day that the funds compute their NAV. Proceeds normally are wired or mailed
within three business day. Shareholders of the Vintage Funds who have recently
purchased shares by check or electronic funds transfer, may have their
redemption payment delayed until the Fund is reasonably satisfied that the check
or electronic funds transfer has been collected (which may take up to 10
business days).
Dividends and Other Distributions
With respect to the Federated Capital Appreciation Fund, dividends are
declared and paid annually. With respect to the Federated Stock & Bond Fund,
Inc., dividends are declared and paid quarterly. With respect to the Vintage
Funds, dividends are declared and paid quarterly. With respect to all Federated
Funds and all Vintage Funds, capital gains distributions, if any, are paid at
least annually. Unless a shareholder otherwise instructs, dividends and/or
capital gain distributions will be reinvested automatically in additional shares
at NAV.
Legal and Regulatory Matters
Like many other mutual fund companies, in September 2003, Federated
Investors, Inc., the parent company of the Federated funds' advisers and
distributor (collectively, "Federated"), received detailed requests for
information on shareholder trading activities in the Federated funds ("Funds")
from the SEC, the New York State Attorney General, and the National Association
of Securities Dealers. Since that time, Federated has received additional
inquiries from regulatory authorities on these and related matters, and more
such inquiries may be received in the future.
As a result of these inquiries, Federated and the Funds have conducted an
internal investigation of the matters raised, which revealed instances in which
a few investors were granted exceptions to Federated's internal procedures for
limiting frequent transactions and that one of these investors made an
additional investment in another Federated fund related to its frequent trading
activities. The investigation has also identified inadequate procedures which
permitted a limited number of investors (including several employees) to engage
in undetected frequent trading activities and/or the placement and acceptance of
orders to purchase shares of fluctuating NAV funds after the funds' closing
times. Federated has issued a series of press releases describing these matters
in greater detail and emphasizing that it is committed to compensating the Funds
for any detrimental impact these transactions may have had on them. In that
regard, on February 3, 2004, Federated and the independent directors of the
Funds announced the establishment by Federated of a restoration fund that is
intended to cover any such detrimental impact. The press releases and related
communications are available in the "About Us" section of Federated's website at
FederatedInvestors.com, and any future press releases on this subject will also
be posted there.
Shortly after Federated's first public announcement concerning the
foregoing matters, and notwithstanding Federated's commitment to taking remedial
actions, Federated and various Funds were named as defendants in several class
action lawsuits now pending in the United States District Court for the District
of Maryland seeking damages of unspecified amounts. The lawsuits were
purportedly filed on behalf of people who purchased, owned and/or redeemed
shares of Federated-sponsored mutual funds during specified periods beginning
November 1, 1998. The suits are generally similar in alleging that Federated
engaged in illegal and improper trading practices including market timing and
late trading in concert with certain institutional traders, which allegedly
caused financial injury to the mutual fund shareholders.
Federated and various Funds have also been named as defendants in several
additional lawsuits, the majority of which are now pending in the United States
District Court for the Western District of Pennsylvania, alleging, among other
things, excessive advisory and Rule 12b-1 fees, and seeking damages of
unspecified amounts.
The board of the Funds has retained the law firm of Dickstein Shapiro
Morin & Oshinsky LLP to represent the Funds in these lawsuits. Federated and the
Funds, and their respective counsel, are reviewing the allegations and will
respond appropriately. Additional lawsuits based upon similar allegations may be
filed in the future. The potential impact of these recent lawsuits and future
potential similar suits is uncertain. Although we do not believe that these
lawsuits will have a material adverse effect on the Funds, there can be no
assurance that these suits, the ongoing adverse publicity and/or other
developments resulting from the regulatory investigations will not result in
increased Fund redemptions, reduced sales of Fund shares, or other adverse
consequences for the Funds.
INFORMATION ABOUT THE REORGANIZATIONS
DESCRIPTION OF THE PLANS OF REORGANIZATION
The following summary is qualified in its entirety by reference to the
three forms of Plan found in Exhibit A. Each Plan provides for the
Reorganization to occur on the Closing Date, which is expected to be on or about
__________, 2005. The Plans provide that all of the assets of each Vintage Fund
will be transferred to the corresponding Federated Fund at 4:00 p.m. Eastern
time on the Closing Date of the Reorganization. In exchange for the transfer of
these assets, each Federated Fund will simultaneously issue a number of full and
fractional Federated Fund Shares to the corresponding Vintage Fund equal in
value to the aggregate NAV of the corresponding Vintage Fund calculated at the
time of the Reorganization.
Following the transfer of assets in exchange for the respective Federated
Fund Shares, each corresponding Vintage Fund will distribute all the Federated
Fund Shares pro rata to its shareholders of record in complete liquidation of
such Vintage Fund. Shareholders of each Vintage Fund owning shares at the time
of the Reorganization will receive a number of the corresponding Federated Fund
Shares with the same aggregate value as the shareholder had in the Vintage Fund
immediately before the Reorganization. Such distribution will be accomplished by
the establishment of accounts in the names of each Vintage Fund's shareholder on
the share records of the corresponding Federated Fund's transfer agent. Each
account will receive the respective pro rata number of full and fractional
Federated Fund Shares due to the shareholder of the corresponding Vintage Fund.
The Vintage Funds will then be terminated. The Federated Funds do not issue
share certificates to shareholders. Federated Fund Shares to be issued will have
no preemptive or conversion rights. No sales charges will be imposed in
connection with the receipt of such shares by the Vintage Funds' shareholders.
The Plans contain customary representations, warranties and conditions.
Each Plan provides that the consummation of the Reorganization with respect to
each Vintage Fund and the corresponding Federated Fund is conditioned upon,
among other things: (i) approval of the Reorganization by the applicable Vintage
Fund's shareholders; and (ii) the receipt by the Vintage Fund and the Federated
Fund of a tax opinion to the effect that the Reorganization will be tax-free to
the Vintage Fund and its shareholders, and the Federated Fund. Any Plan may be
terminated if, before the Closing Date, any of the required conditions have not
been met, the representations and warranties are not true, or the Board of
Directors of the Vintage Funds and the Federated Stock & Bond Fund, Inc., and
the Board of Trustees of Federated Equity Funds, as the case may be, determines
that the Reorganization is not in the best interest of the shareholders of the
Vintage Fund or the corresponding Federated Fund, respectively.
Costs of Reorganization. The expenses of each Reorganization will be paid
by FEMCOPA and/or IMG. Reorganization expenses include, without limitation: (a)
expenses associated with the preparation and filing of this Prospectus/Proxy
Statement; (b) postage; (c) printing; (d) accounting fees; (e) legal fees
incurred by each fund; (f) solicitation costs; and (g) other related
administrative or operational costs. Any registration or licensing fee will be
borne by the Federated Fund incurring such fee. Any brokerage charges associated
with the disposition by a Federated Fund, after the Reorganization, of
securities acquired by it from a Vintage Fund, will be borne by the Federated
Fund.
DESCRIPTION OF FEDERATED FUND SHARES AND CAPITALIZATION
Federated Fund Shares to be issued to shareholders of the Vintage Funds
under the Plans will be fully paid and non-assessable when issued, transferable
without restriction and will have no preemptive or conversion rights. Reference
is hereby made to the Prospectus of each Federated Fund provided herewith for
additional information about Federated Fund Shares.
The following tables show the net assets of each Federated Fund and the
corresponding Vintage Fund as of April 29, 2005, and on a pro forma basis as of
that date:
FEDERATED CAPITAL APPRECIATION FUND - VINTAGE EQUITY FUND
The following table sets forth the unaudited capitalization of the Vintage
Equity Fund Class S Shares and Class T Shares, the Federated Capital
Appreciation Fund Class A Shares and on a pro-forma basis as of April 29, 2005:
- -----------------------------------------------------------------------------------------------------------------------
Federated Capital
Federated Capital Appreciation Fund Class
Vintage Equity Fund Vintage Equity Appreciation Fund- A Shares-
- Class S Shares Fund - Class T Class A Shares Pro Forma Combined
Shares Adjustment
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
Net Assets $76,323,430 $33,241,745 $2,461,010,644 $2,570,575,819
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
Net Asset Value
Per Share $14.08 $14.32 $24.29 $24.29
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
Shares 5,422,834 2,321,207 101,314,386 (3,233,330) 105,825,097
Outstanding
- -----------------------------------------------------------------------------------------------------------------------
FEDERATED CAPITAL APPRECIATION FUND - VINTAGE GROWTH FUND
The following table sets forth the unaudited capitalization of the Vintage
Growth Fund, the Federated Capital Appreciation Fund Class A Shares and on a pro
forma basis as of April 29, 2005:
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Federated Capital
Federated Capital Appreciation Fund Class
Vintage Growth Fund Appreciation Fund- A Shares-
Class A Shares Adjustment Pro Forma Combined
- -----------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------
Net Assets $33,369,733 $2,461,010,644 $2,494,380,377
- -----------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------
Net Asset Value
Per Share $9.02 $24.29 $24.29
- -----------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------
Shares Outstanding 3,700,236 101,314,386 (2,326,431) 102,688,191
- -----------------------------------------------------------------------------------------------------------
FEDERATED STOCK & BOND FUND, INC. - VINTAGE BALANCED FUND
The following table sets forth the unaudited capitalization of the Vintage
Balanced Fund into the Federated Stock and Bond Fund, Inc. Class A Shares as of
April 29, 2005:
- -------------------------------------------------------------------------------------------------------
Federated Stock and Federated Stock
Bond Fund, Inc.- and Bond Fund,
Vintage Balanced Class A Shares Inc. Class A
Fund Adjustment Shares-
Pro Forma Combined
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
Net Assets $21,995,348 $230,886,658 $252,882,006
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
Net Asset Value
Per Share $11.59 $18.26 $18.26
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
Shares Outstanding 1,897,481 12,640,981 (692,916) 13,845,546
- -------------------------------------------------------------------------------------------------------
FEDERAL INCOME TAX CONSEQUENCES
As a condition to each Reorganization, the Federated Fund and the
corresponding Vintage Fund will receive an opinion of counsel, to the effect
that, on the basis of the existing provisions of the Internal Revenue Code of
1986, as amended (the "Code"), current administrative rules and court decisions,
for federal income tax purposes:
o the Reorganization as set forth in the Plan will constitute a
"reorganization" under section 368(a)(1) of the Code, and the Federated
Fund and the corresponding Vintage Fund each will be a "party to a
reorganization" within the meaning of section 368(b) of the Code;
o no gain or loss will be recognized by a Federated Fund upon its receipt of
the corresponding Vintage Fund's assets solely in exchange for the
Federated Fund Shares;
o no gain or loss will be recognized by the Vintage Fund upon transfer of
its assets to the corresponding Federated Fund solely in exchange for the
Federated Fund Shares or upon the distribution of the Federated Fund
Shares to the Vintage Fund's shareholders in exchange for their Vintage
Fund shares;
o no gain or loss will be recognized by shareholders of the Vintage Fund
upon exchange of their Vintage Fund Shares for the corresponding Federated
Fund Shares;
o the tax basis of the assets of the Vintage Fund acquired by the Federated
Fund will be the same as the tax basis of such assets to the Vintage Fund
immediately prior to the Reorganization;
o the aggregate tax basis of the Federated Fund Shares received by each
shareholder of the corresponding Vintage Fund pursuant to the
Reorganization will be the same as the aggregate tax basis of the shares
of the Vintage Fund held by such shareholder immediately prior to the
Reorganization;
o the holding period of the Vintage Fund's assets in the hands of the
corresponding Federated Fund will include the period during which those
assets were held by the Vintage Fund; and
o the holding period of the Federated Fund Shares received by each
shareholder of the corresponding Vintage Fund pursuant to the Plan will
include the period during which the shares of the Vintage Fund exchanged
therefore were held by such shareholder, provided the shares of the
Vintage Fund were held as capital assets on the date of the
Reorganization.
The foregoing opinion may state that no opinion is expressed as to the
effect of the Reorganizations on the Federated Funds, the Vintage Funds or the
Vintage Funds' shareholders with respect to any asset as to which unrealized
gain or loss is required to be recognized for federal income tax purposes at the
end of a taxable year (or on the termination or transfer thereof) under a
mark-to-market system of accounting.
Shareholders of the Vintage Funds should consult their tax advisors
regarding the effect, if any, of the Reorganizations in light of their
individual circumstances. Because the foregoing discussion only relates to the
federal income tax consequences of the Reorganizations, those shareholders also
should consult their tax advisors about state and local tax consequences, if
any, of the Reorganizations.
Before the Reorganizations, each of the Vintage Funds expects to
distribute ordinary income and realized capital gains, if any, to shareholders.
The following funds had unutilized capital loss carryovers. The final
amount of unutilized capital loss carryovers for each fund is subject to change
and will not be determined until the time of the reorganization.
- --------------------------------------------------------------------------------------------------------
Fund (Fiscal Year End) Unutilized Capital Fund (Fiscal Year End) Unutilized Capital
Loss Carryovers Loss Carryovers
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
Federated Capital $33,528,587 Vintage Equity Fund $0
Appreciation Fund (October (March 31, 2005)
31, 2004)
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
Vintage Growth Fund $40,220,268
(March 31, 2005)
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
Federated Stock & Bond $5,184,479 Vintage Balanced Fund $7,604,416
Fund, Inc. (March 31, 2005)
(November 30, 2004)
- --------------------------------------------------------------------------------------------------------
The same funds had the following tax basis appreciation or
(depreciation)
- --------------------------------------------------------------------------------------------------------
Fund (Fiscal Year End) Tax Basis Appreciation Fund (Fiscal Year End) Tax Basis Appreciation
or (Depreciation) or (Depreciation)
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
Federated Capital $272,912,794 Vintage Equity Fund $25,161,201
Appreciation Fund (October (March 31, 2005)
31, 2004)
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
Vintage Growth Fund $1,009,201
(March 31, 2005)
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
Federated Stock & Bond $32,001,009 Vintage Balanced Fund $2,309,684
Fund, Inc. (March 31, 2005)
(November 30, 2004)
- --------------------------------------------------------------------------------------------------------
After and as a result of the Reorganizations, it is anticipated that the
ability of the accounting survivors to use the Vintage Funds' capital loss
carryovers and to deduct losses recognized on the sale of assets of the Vintage
Funds to the extent that the losses were "built-in losses" as of the time of the
reorganization, will be significantly limited under Section 382 of the code.
The Reorganizations will not require any of the Vintage Funds to dispose of
a material portion of their portfolio securities prior to the Reorganizations
due to non-conformance of those securities with the investment objectives,
policies or limitations of the corresponding Federated Fund, nor will the
Reorganizations require any of the Federated Funds to sell acquired portfolio
securities, other than in the ordinary course of business, in order to rebalance
their portfolios to comply with the prospectus limitations of the Vintage Funds.
AGREEMENT AMONG AMCORE/IMG
AND FEDERATED INVESTORS, INC.
AMCORE/IMG and Federated have entered into a definitive agreement (the
"Agreement") regarding the sale by AMCORE/IMG to Federated of certain assets
relating to IMG's business of providing investment advisory and investment
management services to the Vintage Funds and IMG's cooperation in the
reorganization of the Vintage Funds and related matters. Pursuant to the
Agreement, IMG will receive from Federated a lump sum payment on the closing
date of the Reorganization based primarily upon the net assets of the Vintage
Funds. Consummation of the agreement is conditioned upon, among other things,
shareholders of the Vintage Funds approving the Reorganization.
Also in connection with the Reorganization, it is expected that AMCORE/IMG
or one of AMCORE's subsidiaries will enter into an agreement with subsidiaries
of Federated pursuant to which IMG or one of its subsidiaries would be entitled
to receive servicing and/or account administration fees on shareholder accounts
in certain Federated mutual funds for which IMG or one of its subsidiaries
provides services. For more information with respect to applicable arrangements
for the payment of servicing and/or account administration fees, see
"Comparative Fee Tables" and "Advisory and Other Fees" herein.
REASONS FOR THE REORGANIZATIONS
In the opinion of IMG the long-term viability of the Vintage Funds is
questionable, particularly in light of the relatively low level of assets in the
Vintage Funds and the decline in such assets in the recent past, as well as the
increased costs associated with the need to comply with certain regulations
recently promulgated by the Securities and Exchange Commission. IMG believes
that each Vintage Fund and its respective Federated Fund have similar investment
objectives, and the combination of the Federated Capital Appreciation Fund with
the Vintage Equity Fund and Vintage Growth Fund and the Federated Stock & Bond
Fund, Inc. with the Vintage Balanced Fund would provide each Vintage Fund's
shareholders with the benefit of higher fund asset levels and lower fund
expenses. Accordingly, IMG has over the past several months actively pursued
alternatives which would allow shareholders to continue their original
investment objectives through a tax-free combination of their Vintage Fund's
portfolio with a comparable portfolio of another fund group(s). After extensive
discussions between representatives of IMG and Federated, IMG determined to
recommend to the Board of the Vintage Funds and the Board of each Federated Fund
to consider and approve the Reorganization as being in the best interest of
shareholders.
The Board of Directors met on May 20 and June 20, 2005 to receive
information concerning the Vintage Funds, to review this information and to
consider the terms of the proposed Reorganizations. After consultation with
legal counsel, the Board of Directors, including the Directors who are not
"interested persons" (within the meaning of the 1940 Act), unanimously approved
the Plans and recommended their approval to the shareholders of the Vintage
Funds. In approving the Reorganizations, the Board of Directors determined that
participation in the Reorganizations is in the best interests of the Vintage
Funds. In approving the Plans, the Board of Directors considered a number of
factors, including the following:
- - the terms and conditions of the Plans;
- - the compatibility of the funds' objectives, limitations, and policies;
- - performance history of the Vintage Funds and the Federated Funds;
- - historic expenses ratios of the Vintage Funds and the Federated Funds on a
comparative basis and projected pro forma estimated expense ratios for the
Federated Funds;
- - possible economies of scale to be gained from the Reorganization;
- - the fact that the Reorganization is expected to be free from federal
taxes;
- - the agreement by FEMCOPA and/or IMG, or their respective affiliates, to
bear the expenses of the Reorganizations incurred by the Vintage Funds;
and
- - the fact that IMG and Federated have entered into the Fund Purchase
Agreement.
The Board of Directors of Federated Stock and Bond Fund, Inc. and the
Board of Trustees of Federated Capital Appreciation Fund have reviewed and
considered the terms of the proposed Reorganizations. The Board of Directors and
Board of Trustees, including the Directors and Trustees who are not "interested
persons" (within the meaning of the 1940 Act), unanimously approved the Plans.
BASED ON THIS INFORMATION, THE BOARD RECOMMENDS THAT THE SHAREHOLDERS
OF EACH VINTAGE FUND APPROVE THE REORGANIZATION.
COMPARATIVE INFORMATION ON SHAREHOLDER RIGHTS AND OBLIGATIONS
GENERAL. The Federated Capital Appreciation Fund and the Vintage Funds are
open-end, diversified series of management investment companies registered under
the 1940 Act, which continuously offer to sell shares. The Federated Stock &
Bond Fund, Inc. is an open-end diversified management investment company
registered under the 1940 Act, which continuously offers to sell shares at their
current NAV. The Federated Capital Appreciation Fund is a series of a business
trust pursuant to a Declaration of Trust under the laws of the Commonwealth of
Massachusetts. The Federated Stock & Bond Fund, Inc. and each Vintage Fund is
organized as a Maryland corporation pursuant to its Articles of Incorporation
under the laws of the State of Maryland. Each of the Federated Funds and the
Vintage Funds is governed by its respective Declaration of Trust/Articles of
Incorporation, Bylaws and Board of Trustees/Directors, in addition to applicable
state and federal law. The rights of shareholders of the Federated Funds and
shareholders of the Vintage Funds as set forth in the applicable Declaration of
Trust/Articles of Incorporation and Bylaws. Set forth below is a brief summary
of the significant rights of shareholders of the Federated Funds and
shareholders of the Vintage Funds.
SHARES OF THE FEDERATED FUNDS AND THE VINTAGE FUNDS. The Federated Capital
Appreciation Fund is authorized to issue an unlimited number of shares of
beneficial interest, which have no par value. The Board of Federated Equity
Funds has established four classes of shares of the Federated Capital
Appreciation Fund, known as Class A Shares, Class B Shares, Class C Shares and
Class K Shares. The Board of the Federated Stock & Bond Fund, Inc. has
established four classes of shares, known as Class A Shares, Class B Shares,
Class C Shares and Class K Shares. The Federated Stock & Bond Fund, Inc. is
authorized to issue 2,000,000,000 shares of common stock (750,000,000-Class A
Shares; 500,000,000-Class B Shares; 500,000,000-Class C Shares; and
250,000-Class K Shares), par value $.001 per share, with an aggregate par value
of $2,000,000. The Board of the Vintage Mutual Funds, Inc. has established two
classes of shares of the Vintage Equity Fund, known as Class S Shares and Class
T Shares. The Vintage Mutual Funds, Inc are authorized to issue 100,000,000,000
shares of capital stock, par value of $.0001, with an aggregate par value of
$100,000,000. Of the 100,000,000,000 authorized shares, 1,600,000,000 have been
designated to the Vintage Equity Fund (800,000,000 for Class S Shares and
800,000,000 for Class T Shares), 1,600,000,000 have been designated to the
Vintage Growth Fund and 1,600,000,000 have been designated to the Vintage
Balanced Fund. The remaining shares of capital stock have been designated to
other portfolios of the Vintage Mutual Funds, Inc. Issued and outstanding shares
of both of the Federated Funds and the Vintage Funds are fully paid and
non-assessable, and freely transferable.
VOTING RIGHTS. Neither the Federated Funds nor the Vintage Funds are
required to hold annual meetings of shareholders, except as required under the
1940 Act or by state law. Shareholder approval is generally necessary only for
certain changes in operations or the election of trustees under certain
circumstances. Each of the Federated Funds and the Vintage Funds provides that a
special meeting of shareholders may be called for any permissible purpose upon
the written request of the holders of at least 10% of the Federated Funds and at
least 25% of the Vintage Funds of the outstanding shares of the series or class
of the Federated Funds or the Vintage Funds, as the case may be, entitled to
vote. Each share of each Federated Fund and each Vintage Fund gives the
shareholder one vote in trustee elections and other matters submitted to
shareholders for vote. All shares of each portfolio or class in each of the
Federated Funds and the Vintage Funds have equal voting rights with other
portfolios or classes within the business trust or corporation of which they are
a series, except that in matters affecting only a particular portfolio or class,
only shares of that portfolio or class are entitled to vote.
TRUSTEES/DIRECTORS. The Declaration of Trust for the Federated Equity Funds
provides that the term of office of each Trustee shall be for the lifetime of
the Federated Equity Funds or the earlier of his or her death, resignation,
retirement, removal or mental or physical incapacity. The Bylaws for the
Federated Stock & Bond Fund, Inc. and Vintage Funds provide that each Director
shall hold office until the annual meeting next after the Director becomes a
Director and until the election and qualifications of his successor. A Director
of the Vintage Funds is limited to 12 consecutive terms. A Trustee of the
Federated Equity Funds may be removed by: (i) written instrument signed by at
least two-thirds of the Trustees, (ii) a majority vote of the Trustees if the
Trustee has become mentally or physically incapacitated or (iii) a vote of
two-thirds of the outstanding shares at any special meeting of shareholders. A
Director of the Federated Stock & Bond Fund, Inc. may be removed at any meeting
of shareholders by a vote of a majority of all shares entitled to vote. A
vacancy on the Board of any Federated Fund and the Vintage Funds may be filled
by the Trustees/Directors remaining in office. A meeting of shareholders of the
Federated Funds and the Vintage Funds will be required for the purpose of
electing additional Trustees/Directors whenever fewer than a majority of the
Trustees/Directors then in office were elected by shareholders.
LIABILITY OF TRUSTEES/DIRECTORS AND OFFICERS. Under the Declarations of
Trust of the Federated Capital Appreciation Funds, a Trustee or officer will be
personally liable only for his or her own willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his or
her office. The Bylaws for the Federated Capital Appreciation Fund further
provide that Trustees and officers will be indemnified by the Federated Capital
Appreciation Fund, as the case may be, to the fullest extent permitted by law
against liability and against all expenses of litigation unless the person's
conduct is determined to constitute willful misfeasance, bad faith, gross
negligence or reckless disregard of the person's duties.
SHAREHOLDER LIABILITY. Under certain circumstances, shareholders of the
Federated Funds may be held personally liable as partners under Massachusetts
law for obligations of the Federated Capital Appreciation Fund. To protect its
shareholders, the Federated Capital Appreciation Fund has filed legal documents
with the Commonwealth of Massachusetts that expressly disclaim the liability of
its shareholders for such acts or obligations of the Federated Capital
Appreciation Fund. These documents require that notice of this disclaimer be
given in each agreement, obligation or instrument that the Federated Capital
Appreciation Fund or its Trustees enter into or sign.
In the unlikely event a shareholder is held personally liable for a
Federated Fund's obligations on behalf of a Federated Fund, the Federated Fund
is required to use its property to protect or compensate the shareholder. On
request, such Federated Fund will defend any claim made and pay any judgment
against a shareholder for any act or obligation on behalf of such Federated
Fund. Therefore, financial loss resulting from liability as a shareholder will
occur only if such Federated Fund itself cannot meet its obligations to
indemnify shareholders and pay judgments against them from assets of such
Federated Fund.
Shareholders of the Vintage Funds have the same potential liability under
Maryland law.
TERMINATION. In the event of the termination of any Federated Fund or any
portfolio or class of such Federated Fund or of the termination of the Vintage
Funds or any portfolio or class of the Vintage Funds, the shareholders of the
respective portfolio or class are entitled to receive, when and as declared by
its Trustees/Directors, the excess of the assets belonging to the respective
portfolio or class over the liabilities belonging to the respective portfolio or
class. In either case, the assets belonging to the portfolio or class will be
distributed among the shareholders in proportion to the number of shares of the
respective portfolio or class held by them.
INFORMATION ABOUT THE FEDERATED FUNDS AND THE VINTAGE FUNDS
FEDERATED FUNDS
Federated Equity Funds on behalf of the Federated Capital Appreciation
Fund and Federated Stock & Bond Fund, Inc. are subject to the informational
requirements of the Securities Act of 1933, as amended, the Securities Exchange
Act of 1934, as amended, and the 1940 Act, and in accordance therewith file
reports and other information with the Securities and Exchange Commission.
Reports, proxy and information statements, and other information filed by such
Federated Fund, can be obtained by calling or writing such Federated Fund and
can also be inspected and copied by the public at the public reference
facilities maintained by the Securities and Exchange Commission in Washington,
DC located at Room 1024, 450 Fifth Street, N.W., Washington, DC 20549 and at
certain of its regional offices located at Room 1204, Everett McKinley Dirksen
Building, 219 South Dearborn Street, Chicago, IL 60604 and 233 Broadway, New
York, NY 10007. Copies of such material can be obtained at prescribed rates from
the Public Reference Branch, Office of Consumer Affairs and Information
Services, Securities and Exchange Commission, Washington, DC 20549, or obtained
electronically from the Securities and Exchange Commission's Internet website
(www.sec.gov).
This Prospectus/Proxy Statement, which constitutes part of a Registration
Statement filed by each Federated Fund with the Securities and Exchange
Commission under the Securities Act of 1933, as amended, omits certain of the
information contained in the Registration Statement. Reference is hereby made to
the Registration Statement and to the exhibits thereto for further information
with respect to the applicable Federated Fund and the shares offered hereby.
Statements contained herein concerning the provisions of documents are
necessarily summaries of such documents, and each such statement is qualified in
its entirety by reference to the copy of the applicable documents filed with the
Securities and Exchange Commission.
VINTAGE FUNDS
Each Vintage Fund is subject to the informational requirements of the
Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as
amended, and the 1940 Act, and in accordance therewith files reports and other
information with the Securities and Exchange Commission. Reports, the proxy and
information statements, and other information filed by the Vintage Funds can be
obtained by calling or writing the Vintage Funds and can also be inspected and
copied by the public at the public reference facilities maintained by the
Securities and Exchange at the addresses listed in the previous section, or
obtained electronically from the Securities and Exchange Commission's Internet
website (www.sec.gov).
ABOUT THE PROXY SOLICITATION AND THE SPECIAL MEETING
Proxies are being solicited by the Board of the Vintage Funds. The proxies
will be voted at the special meeting of shareholders of the Vintage Funds to be
held on _______________ [date] at ______________ [address], at _______ [time]
(such special meeting and any adjournment or postponement thereof are referred
to as the "Special Meeting").
The cost of the solicitation, including the printing and mailing of proxy
materials, will be borne by FEMCOPA and/or IMG. In addition to solicitations
through the mail, proxies may be solicited by officers, employees, and agents of
FEMCOPA, or, if necessary, a communications firm retained for this purpose. Such
solicitations may be by telephone, telegraph, through the Internet or otherwise.
Any telephonic solicitations will follow procedures designed to ensure accuracy
and prevent fraud, including requiring identifying shareholder information,
recording the shareholder's instructions, and confirming to the shareholder
after the fact. Shareholders who communicate proxies by telephone or by other
electronic means have the same power and authority to issue, revoke, or
otherwise change their voting instructions as shareholders submitting proxies in
written form. FEMCOPA and/or IMG may reimburse custodians, nominees, and
fiduciaries for the reasonable costs incurred by them in connection with
forwarding solicitation materials to the beneficial owners of shares held of
record by such persons.
The purpose of the Special Meeting is set forth in the accompanying
Notice. The Directors know of no business other than that mentioned in the
Notice that will be presented for consideration at the Special Meeting. Should
other business properly be brought before the Special Meeting, proxies will be
voted in accordance with the best judgment of the persons named as proxies. This
Prospectus/Proxy Statement and the enclosed proxy card are expected to be mailed
on or about _____________ to shareholders of record at the close of business on
_______________ (the "Record Date").
Annual and semi-annual reports of the Federated Capital Appreciation Fund,
which includes audited financial statements for the fiscal year ended October
31, 2004 and unaudited financial statements for the period ended April 30, 2004,
respectively; annual and semi-annual reports of the Federated Stock & Bond Fund,
Inc., which includes audited financial statements for the fiscal year ended
November 30, 2004 and unaudited financial statements for the period ended May
31, 2004, respectively; and the annual reports of the Vintage Funds, which
includes audited financial statements for the fiscal year ended March 31, 2005,
were previously mailed to shareholders. The Federated Funds or the Vintage
Funds, as the case may be, will promptly provide, without charge and upon
request, to each person to whom this Prospectus/Proxy Statement is delivered, a
copy of the annual reports and/or the semi-annual reports for the Federated
Funds and the Vintage Funds. Requests for annual reports or semi-annual reports
for the Federated Funds and the Vintage Funds may be made by writing to the
Federated Funds' or the Vintage Funds' principal executive offices or by calling
the Federated Funds or the Vintage Funds. The principal executive office of the
Federated Funds is located at 5800 Corporate Drive, Pittsburgh, Pennsylvania
15237-7000. The principal executive office of the Vintage Fund is P.O. Box
182445, Columbus, OH 43218-2445. The Federated Funds' toll-free telephone number
is 1-800-341-7400, and the Vintage Funds' toll-free telephone number is
1-800-438-6375.
PROXIES, QUORUM AND VOTING AT THE SPECIAL MEETING
Only shareholders of record on the Record Date will be entitled to vote at
the Special Meeting. Each share of the Vintage Funds is entitled to one vote.
Fractional shares are entitled to proportionate shares of one vote. The votes of
shareholders of the Federated Funds are not being solicited since their approval
is not required in order to effect each Reorganization.
Any person giving a proxy has the power to revoke it any time prior to its
exercise by executing a superseding proxy or by submitting a written notice of
revocation to the Secretary of the Vintage Funds. In addition, although mere
attendance at the Special Meeting will not revoke a proxy, a shareholder present
at the Special Meeting may withdraw his or her proxy and vote in person. All
properly executed and unrevoked proxies received in time for the Special Meeting
will be voted in accordance with the instructions contained in the proxies. If
no instruction is given on the proxy, the persons named as proxies will vote the
shares represented thereby in favor of the matter set forth in the attached
Notice.
Each Vintage Fund will vote separately on the approval of each Plan. In
order to hold the Special Meeting with respect to a Vintage Fund, a "quorum" of
shareholders of that Fund must be present. Holders of greater than fifty percent
(50%) of the total number of outstanding shares of the applicable Vintage Fund,
present in person or by proxy, shall be required to constitute a quorum for the
purpose of voting on the proposal relating to that Fund.
Shareholder approval with respect to a Vintage Fund requires the
affirmative vote of more than 50% of the outstanding shares of each of such
Vintage Fund. In the event that shareholders of one Vintage Fund do not approve
the Plan, Reorganizations will proceed with respect to the Vintage Funds that
have approved the Plan, subject to the other conditions contained in the Plan
having been met.
For purposes of determining a quorum for transacting business at the
Special Meeting, abstentions and broker "non-votes" (that is, proxies from
brokers or nominees indicating that such persons have not received instructions
from the beneficial owner or other persons entitled to vote shares on a
particular matter with respect to which the brokers or nominees do not have
discretionary power) will be treated as shares that are present but which have
not been voted. For this reason, abstentions and broker non-votes will have the
effect of a "no" vote for purposes of obtaining the requisite approval of each
proposal.
If a quorum is not present, the persons named as proxies may vote those
proxies that have been received to adjourn the Special Meeting to a later date.
In the event that a quorum is present but sufficient votes in favor of the
proposal have not been received, the persons named as proxies may propose one or
more adjournments of the Special Meeting to permit further solicitations of
proxies with respect to the proposal. All such adjournments will require the
affirmative vote of a majority of the shares present in person or by proxy at
the session of the Special Meeting to be adjourned. The persons named as proxies
will vote AGAINST an adjournment those proxies that they are required to vote
against the proposal, and will vote in FAVOR of such an adjournment all other
proxies that they are authorized to vote. A shareholder vote may be taken on the
proposal in this Proxy Statement and Prospectus prior to any such adjournment if
sufficient votes have been received for approval.
SHARE OWNERSHIP OF THE FUNDS
Officers and Directors of the Vintage Mutual Funds own less than 1% of he
Vintage Equity Fund's outstanding shares.
At the close of business on the Record Date, the following persons owned, to the
knowledge of management, more than 5% of the outstanding shares of the Vintage
Growth Fund:
Officers and Directors of the Vintage Mutual Funds own less than 1% of
Vintage Growth Fund's outstanding shares.
At the close of business on the Record Date, the following persons owned, to the
knowledge of management, more than 5% of the outstanding shares of Vintage
Growth Fund:
Officers and Trustees of the Federated Equity Funds own less than 1% of the
Federated Capital Appreciation Fund's outstanding shares.
At the close of business on the Record Date, the following person owned, to the
knowledge of management, more than 5% of the outstanding Class A Shares of the
Federated Capital Appreciation Fund:
Officers and Directors of the Vintage Mutual Funds own less than 1% of the
Vintage Balanced Fund's outstanding shares.
At the close of business on the Record Date, the following person owned, to the
knowledge of management, more than 5% of the outstanding shares of the Vintage
Balanced Fund:
Officers and Directors of the Federated Stock & Bond Fund, Inc. own less than
1% of outstanding shares.
At the close of business on the Record Date, the following person owned, to the
knowledge of management, more than 5% of the outstanding Class A Shares of the
Federated Stock & Bond Fund, Inc.:
Shareholders owning 25% or more of outstanding shares may be in control and be
able to affect the outcome of certain matters presented for a vote of
shareholders.
OTHER MATTERS AND DISCRETION OF ATTORNEYS NAMED IN THE PROXY
The Vintage Mutual Funds are not required, and do not intend, to hold
regular annual meetings of shareholders. Shareholders wishing to submit
proposals for consideration for inclusion in a Prospectus/Proxy Statement for
the next meeting of shareholders should send their written proposals to the
Vintage Mutual Funds, P.O. Box 182445, Columbus, OH 43218-2445, so that they are
received within a reasonable time before any such meeting.
No business other than the matters described above is expected to come
before the Special Meeting, but should any other matter requiring a vote of
shareholders arise, including any question as to an adjournment or postponement
of the Special Meeting, the persons named on the enclosed proxy card will vote
on such matters according to their best judgment in the interests of the Vintage
Mutual Funds.
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SHAREHOLDERS ARE REQUESTED TO COMPLETE, DATE AND SIGN THE ENCLOSED PROXY CARD
AND RETURN IT IN THE ENCLOSED ENVELOPE, WHICH NEEDS NO POSTAGE IF MAILED IN
THE UNITED STATES.
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By Order of the Board of Directors,
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Secretary or Assistant Secretary
_______________________, 2005
Annex A
SUMMARY OF INVESTMENT LIMITATIONS
The following chart contains a summary of the fundamental and non-fundamental
investment limitations of the Fund and the Portfolio. A policy that is
fundamental may not be changed without shareholder approval.
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INVESTMENT LIMITATIONS
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FEDERATED CAPITAL APPRECIATION FUND VINTAGE FUNDS
FEDERATED STOCK & BOND FUND, INC.
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Diversification (fundamental) Diversification (fundamental)
With respect to securities comprising 75% of the The fund will not purchase securities of
value of its total assets, the fund will not any one issuer, other than obligations
purchase securities of any one issuer (other issued or guaranteed by the U.S. Government
than cash; cash items; securities issued or or its agencies or instrumentalities, if,
guaranteed by the government of the United immediately after such purchase, with
States or its agencies or instrumentalities and respect to 75% of its portfolio, more than
repurchase agreements collateralized by such 5% of the value of the total assets of the
U.S. government securities; and securities of fund would be invested in such issuer, or
other investment companies) if, as a result, the fund would hold more than 10% of any
more than 5% of the value of its total assets class of securities of the issuer or more
would be invested in the securities of that than 10% of the outstanding voting
issuer, or the fund would own more than 10% of securities of the issuer.
the outstanding voting securities of that issuer.
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Borrowing Money and Issuing Senior
Borrowing Money and Issuing Senior Securities Securities (fundamental)
(fundamental)
The fund may not borrow money or issue
FEDERATED CAPITAL APPRECIATION FUND
senior securities, except
that the fund may borrow
from banks or enter into
reverse
The fund may borrow money, directly or repurchase agreements for temporary
indirectly, and issue senior securities to the purposes in amounts up to 10% (25% for the
maximum extent permitted under the Investment Bond fund) of the value of its total assets
Company Act of 1940 (1940 Act). at the time of such borrowing; or mortgage,
pledge, or hypothecate any assets, except
FEDERATED STOCK & BOND FUND, INC. in connection with any such borrowing and
in amounts not in excess of the lesser of
The fund will not issue senior securities, the dollar amounts borrowed or 10% of the
except as permitted by its investment objectives value of the fund's total assets at the
and policies, and except that the fund may enter time of its borrowing. The fund will not
into reverse repurchase agreements and otherwise purchase securities while borrowings
borrow up to one-third of the value of its net (including reverse repurchase agreements)
assets including the amount borrowed, as a in excess of 5% of its total assets are
temporary, extraordinary or emergency measure or outstanding
to facilitate management of the portfolio by
enabling the fund to meet redemption requests
when the liquidation of portfolio instruments
would be inconvenient or disadvantageous. This
practice is not for investment leverage.
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Investing in Real Estate (fundamental) Investing in Real Estate (fundamental)
The fund may not purchase or sell real estate, The fund may not purchase or sell real
provided that this restriction does not prevent estate (although investments by the Equity
the fund from investing in issuers which invest, fund in marketable securities of companies
deal, or otherwise engage in transactions in engaged in such activities are not
real estate or interests therein, or investing prohibited by this restriction)
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.
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Underwriting (fundamental) Underwriting (fundamental)
The fund may not underwrite securities
FEDERATED CAPITAL APPRECIATION FUND issued by other persons, except to the
extent that a fund may be deemed to be an
The fund may not underwrite the securities of underwriter under certain
securities laws other issuers, except that the fund may engage in the
disposition of "restricted in transactions involving the acquisition,
securities" disposition or resale of its portfolio securities, under
circumstances where it may be considered to be an underwriter under the
Securities Act of 1933.
FEDERATED STOCK & BOND FUND, INC.
The fund will not engage in underwriting or agency distribution of securities
issued by others.
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Lending (fundamental) Lending (fundamental)
Make loans, except that the fund may
FEDERATED CAPITAL APPRECIATION FUND purchase or hold debt securities, lend
portfolio securities in accordance with its
The fund may not make loans, provided that this investment objective and
policies, and may restriction does not prevent the fund from enter into
repurchase agreements 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.
FEDERATED STOCK & BOND FUND, INC. The fund will not lend any assets except
portfolio securities. The purchase of corporate or government bonds, debentures,
notes or other evidences of indebtedness shall not be considered a loan for
purposes of this limitation.
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Commodities (fundamental) Commodities (fundamental)
The fund may not purchase or sell
FEDERATED CAPITAL APPRECIATION FUND commodities or commodities contracts,
except to the extent disclosed in the
The fund may not purchase or sell physical current Prospectus of the funds
commodities, provided that the fund may purchase securities of companies that
deal in commodities.
FEDERATED STOCK & BOND FUND, INC.
The fund will not invest in commodities, commodity contracts, or real estate,
provided, that the fund may acquire securities of real estate investment trusts,
and marketable securities of companies which may represent indirect interests in
real estate, and any investment security which derives its value from real
estate.
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Concentration of Investments (fundamental)
Concentration (fundamental)
The fund will not make investments that will The fund will not purchase any
securities result in the concentration of its investments which would cause more
than 25% of the in the securities of issuers primarily engaged value of the
fund's total assets at the in the same industry. Government securities, time of
purchase to be invested in municipal securities and bank instruments will
securities of one or more issuers not be deemed to constitute an industry.
conducting their principal business
activities in the same
industry, provided that (a)
there is no limitation with
respect to obligations
issued or guaranteed by the
U.S. Government or its
agencies or
instrumentalities and
repurchase agreements
secured by obligations of
the U.S. Government or its
agencies or
instrumentalities; (b)
wholly-owned finance
companies will be
considered to be in the
industries of their parents
if their activities are
primarily related to
financing the activities of
their parents; and (c)
utilities will be divided
according to their
services. For example, gas,
gas transmission, electric
and gas, electric, and
telephone will each be
considered a separate
industry
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Illiquid Securities (non-fundamental) Illiquid Securities (non-fundamental)
The fund will not purchase securities for which The fund may not enter into repurchase
there is no readily available market, or enter agreements with maturities in excess of
into repurchase agreements or purchase time seven days if such investments, together
deposits that the fund cannot dispose of within with other instruments in that fund that
seven days, if immediately after and as a are not readily marketable or are otherwise
result, the value of such securities would illiquid, exceed 10 percent of that fund's
exceed, in the aggregate, 15% of the fund's net net assets.
assets.
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Purchases on Margin (non-fundamental) Purchases on Margin (non-fundamental)
The fund may not purchase securities on
FEDERATED CAPITAL APPRECIATION FUND margin, except for use of short-term credit
necessary for clearance of purchases of
The fund will not purchase securities on margin, portfolio securities
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.
Selling Short and Purchases on Margin
(fundamental)
FEDERATED STOCK & BOND FUND, INC.
The fund will not sell any securities short or
purchase any securities on margin
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Pledging Assets (fundamental)
Pledging Assets (non-fundamental)
The fund may not borrow money or issue
FEDERATED CAPITAL APPRECIATION FUND senior securities, except that the fund may
The fund will not mortgage, pledge, or borrow from banks or enter into reverse
hypothecate any assets, provided that this shall repurchase agreements for
temporary not apply to the transfer of securities in purposes in amounts up to
10% (25% for the connection with any permissible borrowings or to Bond fund) of
the value of its total assets collateral arrangements in connection with at the
time of such borrowing; or mortgage, permissible activities. pledge, or
hypothecate any assets, except
in connection with any such
borrowing and in amounts
not in excess of the lesser
of the dollar amounts
borrowed or 10% of the
value of the fund's total
assets at the time of its
borrowing. The fund will
not purchase securities
while borrowings (including
reverse repurchase
agreements) in excess of 5%
of its total assets are
outstanding
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Investing in Securities of Other Investment Investing in Securities of Other Investment
Companies (non-fundamental) Companies (non-fundamental)
FEDERATED CAPITAL APPRECIATION FUND The fund may not purchase securities of
other investment companies, except (a) in
The fund may invest its assets in securities of connection with a merger, consolidation,
other investment companies, including the acquisition or reorganization, and (b) a
securities of affiliated money market funds, as fund may invest in other investment
an efficient means of carrying out its companies, including other funds for which
investment policies and managing its uninvested IMG acts as adviser subject to such
cash. These other investment companies are restrictions as may be imposed by the 1940
managed independently of the fund and incur Act or any state laws.
additional expenses. Therefore, any such
investment by the fund may be subject to
duplicate expenses. However, the Adviser
believes that the benefits and efficiencies of
this approach should outweigh the additional
expenses.
FEDERATED STOCK & BOND FUND, INC.
The fund may invest its assets in securities of other investment companies,
including the securities of affiliated money market funds, as an efficient means
of carrying out its investment policies and managing its uninvested cash. The
fund may also invest in mortgage backed, high yield and emerging market
securities primarily by investing in another investment company (which is not
available for general investment by the public) that owns those securities and
that is advised by an affiliate of the Adviser. The fund may also invest in such
securities directly. These other investment companies are managed independently
of the fund and incur additional expenses. Therefore, any such investment by the
fund may be subject to duplicate expenses. However, the Adviser believes that
the benefits and efficiencies of this approach should outweigh the additional
expenses.
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The fund has no
corresponding limitation.
Acquiring Securities (non-fundamental)
FEDERATED STOCK & BOND FUND, INC.
The fund will not invest in securities of a
company for the purpose of exercising control or
management.
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The fund has no corresponding limitation. (non-fundamental)
The fund may not purchase
participation or direct
interests in oil, gas or
other mineral exploration
or development programs.
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The fund has no corresponding limitation. (non-fundamental)
The fund may not invest
more than 5 percent of
total assets in puts,
calls, straddles, spreads
or any combination thereof.
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The fund has no corresponding limitation. (non-fundamental)
The fund may not invest more than 10
percent of total assets in securities of
issuers which together with any
predecessors have a record of less than
three years' continuous operation.
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EXHIBIT A
AGREEMENTS AND PLANS OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION BETWEEN THE FEDERATED STOCK & BOND FUND,
INC. AND THE VINTAGE MUTUAL FUNDS, INC., WITH RESPECT TO THE VINTAGE BALANCED
FUND
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made as of
this ____ day of ________________, by and between Federated Stock and Bond Fund,
Inc., a Maryland corporation, with its principal place of business at 5800
Corporate Drive, Pittsburgh, PA, 15237 (the "Acquiring Fund"), and Vintage
Mutual Funds, Inc., a Maryland corporation, with its principal place of business
at 1415 28th Street, Suite 200, West Des Moines, IA, 50266 (the "Corporation"),
with respect to its Vintage Balanced Fund, a series of the Corporation
("Acquired Fund" and, collectively with the Acquiring Fund, the "Funds").
This Agreement is intended to be, and is adopted as, a plan of
reorganization within the meaning of Section 368 of the United States Internal
Revenue Code of 1986, as amended (the "Code") and the Treasury Regulations
promulgated thereunder. The reorganization will consist of: (i) the transfer of
all of the assets of the Acquired Fund in exchange for Class A Shares, no par
value per share, of the Acquiring Fund ("Acquiring Fund Shares"); and (ii) the
distribution of Class A Shares of the Acquiring Fund to the holders of Shares of
the Acquired Fund and the liquidation of the Acquired Fund as provided herein,
all upon the terms and conditions set forth in this Agreement (the
"Reorganization").
WHEREAS, the Acquired Fund is a separate series of the Corporation, and
the Acquiring Fund and the Corporation are open-end, registered management
investment companies and the Acquired Fund owns securities that generally are
assets of the character in which the Acquiring Fund is permitted to invest;
WHEREAS, the Acquiring Fund and the Acquired Fund are authorized to issue
their shares of common stock;
WHEREAS, the Directors of the Acquiring Fund have determined that the
Reorganization, with respect to the Acquiring Fund, is in the best interests of
the Acquiring Fund and that the interests of the existing shareholders of the
Acquiring Fund will not be diluted as a result of the Reorganization;
WHEREAS, the Directors of the Corporation have determined that the
Reorganization, with respect to the Acquired Fund, is in the best interests of
the Acquired Fund and that the interests of the existing shareholders of the
Acquired Fund will not be diluted as a result of the Reorganization;
NOW, THEREFORE, in consideration of the premises and of the covenants and
agreements hereinafter set forth, the parties hereto covenant and agree as
follows:
ARTICLE I
TRANSFER OF ASSETS OF THE ACQUIRED FUND IN EXCHANGE FOR ACQUIRING FUND SHARES
AND LIQUIDATION OF THE ACQUIRED FUND
1.1 THE EXCHANGE. Subject to the terms and conditions contained herein and on
the basis of the representations and warranties contained herein, the Acquired
Fund agrees to transfer all of its assets, as set forth in paragraph 1.2, to the
Acquiring Fund. In exchange, the Acquiring Fund agrees: (i) to deliver to the
Acquired Fund the number of full and fractional Acquiring Fund Shares,
determined by (a) multiplying the shares outstanding of the Acquired Fund by (b)
the ratio computed by dividing (x) the net asset value per share of the Acquired
Fund by (y) the net asset value per share of the Acquiring Fund Shares computed
in the manner and as of the time and date set forth in paragraph 2.2. Holders of
the Acquired Fund will receive Class A Shares of the Acquiring Fund. Such
transactions shall take place at the closing on the Closing Date provided for in
paragraph 3.1.
1.2 ASSETS TO BE ACQUIRED. The assets of the Acquired Fund to be acquired by the
Acquiring Fund shall consist of property having a value equal to the total net
assets of the Acquired Fund, including, without limitation, cash, securities,
commodities, interests in futures and dividends or interest receivable, owned by
the Acquired Fund and any deferred or prepaid expenses shown as an asset on the
books of the Acquired Fund on the Closing Date.
The Acquired Fund has provided the Acquiring Fund with its most recent
audited financial statements, which contain a list of all of the Acquired Fund's
assets as of the date of such statements. The Acquired Fund hereby represents
that as of the date of the execution of this Agreement, there have been no
changes in its financial position as reflected in such financial statements
other than those occurring in the ordinary course of business in connection with
the purchase and sale of securities, the issuance and redemption of Acquired
Fund shares and the payment of normal operating expenses, dividends and capital
gains distributions.
1.3 LIABILITIES TO BE DISCHARGED. The Acquired Fund will discharge all of
its liabilities and obligations prior to the Closing Date.
1.4 LIQUIDATION AND DISTRIBUTION. On or as soon after the Closing Date as is
conveniently practicable: (a) the Acquired Fund will distribute in complete
liquidation of the Acquired Fund, pro rata to its shareholders of record,
determined as of the close of business on the Closing Date (the "Acquired Fund
Shareholders"), all of the Acquiring Fund Shares received by the Acquired Fund
pursuant to paragraph 1.1; and (b) the Acquired Fund will thereupon proceed to
dissolve and terminate as set forth in paragraph 1.8 below. Such distribution
will be accomplished by the transfer of Acquiring Fund Shares credited to the
account of the Acquired Fund on the books of the Acquiring Fund to open accounts
on the share records of the Acquiring Fund in the name of the Acquired Fund
Shareholders, and representing the respective pro rata number of Acquiring Fund
Shares due such shareholders. All issued and outstanding shares of the Acquired
Fund (the "Acquired Fund Shares") will simultaneously be canceled on the books
of the Acquired Fund. The Acquiring Fund shall not issue certificates
representing Acquiring Fund Shares in connection with such transfer. After the
Closing Date, the Acquired Fund shall not conduct any business except in
connection with its termination.
1.5 OWNERSHIP OF SHARES. Ownership of Acquiring Fund Shares will be shown on the
books of the Acquiring Fund's transfer agent. Acquiring Fund Shares will be
issued simultaneously to the Acquired Fund, in an amount described in Section
1.1, to be distributed to Acquired Fund Shareholders.
1.6 TRANSFER TAXES. Any transfer taxes payable upon the issuance of Acquiring
Fund Shares in a name other than the registered holder of the Acquired Fund
shares on the books of the Acquired Fund as of the Closing Date shall, as a
condition of such issuance and transfer, be paid by the person to whom such
Acquiring Fund Shares are to be issued and transferred.
1.7 REPORTING RESPONSIBILITY. Any reporting responsibility of the Acquired Fund
is and shall remain the responsibility of the Acquired Fund.
1.8 TERMINATION. The Acquired Fund shall be terminated promptly following the
Closing Date and the making of all distributions pursuant to paragraph 1.4.
1.9 BOOKS AND RECORDS. All books and records of the Acquired Fund, including all
books and records required to be maintained under the Investment Company Act of
1940 (the "1940 Act"), and the rules and regulations thereunder, shall be
available to the Acquiring Fund from and after the Closing Date and shall be
turned over to the Acquiring Fund as soon as practicable following the Closing
Date.
1.10 SALES LOAD ON ACQUIRING FUND SHARES. Shareholders of the Acquired Fund as
of the Closing Date shall not be subject to the sales load of the Acquiring
Fund on future purchases of the Acquiring Fund.
ARTICLE II
VALUATION
2.1 VALUATION OF ASSETS. The value of the Acquired Fund's assets to be acquired
by the Acquiring Fund hereunder shall be the value of such assets at the closing
on the Closing Date, using the valuation procedures set forth in the Acquiring
Fund's Articles of Incorporation and the Acquiring Fund's then current
prospectus and statement of additional information or such other valuation
procedures as shall be mutually agreed upon by the parties.
2.2 VALUATION OF SHARES. The net asset value per share of Acquiring Fund Shares
shall be the net asset value per share computed at the closing on the Closing
Date, using the valuation procedures set forth in the Acquiring Fund's Articles
of Incorporation and the Acquiring Fund's then current prospectus and statement
of additional information, or such other valuation procedures as shall be
mutually agreed upon by the parties.
2.3 SHARES TO BE ISSUED. The number of the Acquiring Fund's shares to be issued
(including fractional shares, if any) in exchange for the Acquired Fund's
assets, shall be determined by (a) multiplying the shares outstanding of the
Acquired Fund by (b) the ratio computed by (x) dividing the net asset value per
share of the Acquired Fund determined in accordance with Section 2.1 by (y) the
net asset value per share of the Acquiring Fund Shares determined in accordance
with paragraph 2.2.
2.4 DETERMINATION OF VALUE. All computations of value shall be made by State
Street Bank and Trust Company, on behalf of the Acquiring Fund and by the
Acquired Fund.
ARTICLE III
CLOSING AND CLOSING DATE
3.1 CLOSING DATE. The closing shall occur on or about _____________2005, or such
other date(s) as the parties may agree to in writing (the "Closing Date"). All
acts taking place at the closing shall be deemed to take place at 4:00 p.m.
Eastern Time on the Closing Date unless otherwise provided herein. The closing
shall be held at the offices of Federated Services Company, 1001 Liberty Avenue,
Pittsburgh, Pennsylvania 15222-3779, or at such other time and/or place as the
parties may agree.
3.2 CUSTODIAN'S CERTIFICATE. The Bank of New York, as custodian for the Acquired
Fund (the "Custodian"), shall deliver at the Closing a certificate of an
authorized officer stating that: (a) the Acquired Fund's portfolio securities,
cash, and any other assets have been delivered in proper form to the Acquiring
Fund on the Closing Date; and (b) all necessary taxes including all applicable
federal and state stock transfer stamps, if any, shall have been paid, or
provision for payment shall have been made, in conjunction with the delivery of
portfolio securities by the Acquired Fund.
3.3 EFFECT OF SUSPENSION IN TRADING. In the event that on the scheduled Closing
Date, either: (a) the NYSE or another primary exchange on which the portfolio
securities of the Acquiring Fund or the Acquired Fund are purchased or sold,
shall be closed to trading or trading on such exchange shall be restricted; or
(b) trading or the reporting of trading on the NYSE or elsewhere shall be
disrupted so that accurate appraisal of the value of the net assets of the
Acquiring Fund or the Acquired Fund is impracticable, the Closing Date shall be
postponed until the first business day after the day when trading is fully
resumed and reporting is restored.
3.4 TRANSFER AGENT'S CERTIFICATE. BISYS Fund Services, Inc., as transfer agent
for the Acquired Fund as of the Closing Date, shall deliver at the Closing a
certificate of an authorized officer stating that its records contain the names
and addresses of Acquired Fund Shareholders, and the number and percentage
ownership of outstanding shares owned by each such shareholder immediately prior
to the Closing. The Acquiring Fund shall issue and deliver or cause, State
Street Bank and Trust Company, its transfer agent, to issue and deliver a
confirmation evidencing Acquiring Fund Shares to be credited on the Closing Date
to the Secretary of the Corporation or provide evidence satisfactory to the
Acquired Fund that the Acquiring Fund Shares have been credited to the Acquired
Fund's account on the books of the Acquiring Fund. At the Closing, each party
shall deliver to the other such bills of sale, checks, assignments, share
certificates, receipts and other documents, if any, as such other party or its
counsel may reasonably request.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.1 REPRESENTATIONS OF THE ACQUIRED FUND. The Corporation, on behalf of
the Acquired Fund, represents and warrants to the Acquiring Fund, as follows:
a) The Acquired Fund is a separate series of the Corporation, duly organized,
validly existing, and in good standing under the laws of the State of
Maryland.
b) The Corporation is registered as an open-end management investment company
under the 1940 Act, and the Corporation's registration with the Securities
and Exchange Commission (the "Commission") as an investment company under
the 1940 Act is in full force and effect.
c) The current prospectus and statement of additional information of the
Acquired Fund conform in all material respects to the applicable
requirements of the Securities Act of 1933 (the "1933 Act") and the
1940 Act, and the rules and regulations thereunder, and do not include
any untrue statement of a material fact or omit to state any material
fact required to be stated or necessary to make the statements therein,
in light of the circumstances under which they were made, not
misleading.
d) The Acquired Fund is not, and the execution, delivery, and performance of
this Agreement (subject to shareholder approval) will not, result in the
violation of any provision of the Corporation's Articles of Incorporation
or By-Laws or of any material agreement, indenture, instrument, contract,
lease, or other undertaking to which the Acquired Fund is a party or by
which it is bound.
e) The Acquired Fund has no material contracts or other commitments (other
than this Agreement) that will be terminated with liability to it before
the Closing Date, except for liabilities, if any, to be discharged as
provided in paragraph 1.3 hereof.
f) Except as otherwise disclosed in writing to the Acquiring Fund, no
litigation, administrative proceeding, or investigation of or before
any court or governmental body is presently pending or to its knowledge
threatened against the Acquired Fund or any of its properties or
assets, which, if adversely determined, would materially and adversely
affect its financial condition, the conduct of its business, or the
ability of the Acquired Fund to carry out the transactions contemplated
by this Agreement. The Acquired Fund knows of no facts that might form
the basis for the institution of such proceedings and is not a party to
or subject to the provisions of any order, decree, or judgment of any
court or governmental body that materially and adversely affects its
business or its ability to consummate the transactions contemplated
herein.
g) The audited financial statements of the Acquired Fund as of March 31,
2005, and for the fiscal year then ended have been prepared in accordance
with generally accepted accounting principles, and such statements (copies
of which have been furnished to the Acquiring Fund) fairly reflect the
financial condition of the Acquired Fund as of such date, and there are no
known contingent liabilities of the Acquired Fund as of such date that are
not disclosed in such statements.
h) Since the date of the financial statements referred to in paragraph (h)
above, there have been no material adverse changes in the Acquired
Fund's financial condition, assets, liabilities or business (other than
changes occurring in the ordinary course of business), or any
incurrence by the Acquired Fund of indebtedness maturing more than one
year from the date such indebtedness was incurred, except as otherwise
disclosed to and accepted by the Acquiring Fund. For the purposes of
this paragraph (i), a decline in the net asset value of the Acquired
Fund shall not constitute a material adverse change.
i) All federal and other tax returns and reports of the Acquired Fund
required by law to be filed, have been filed, and all federal and other
taxes shown due on such returns and reports have been paid, or provision
shall have been made for the payment thereof. To the best of the Acquired
Fund's knowledge, no such return is currently under audit, and no
assessment has been asserted with respect to such returns.
j) All issued and outstanding shares of the Acquired Fund are duly and
validly issued and outstanding, fully paid and non-assessable by the
Acquired Fund. All of the issued and outstanding shares of the
Acquired Fund will, at the time of the Closing Date, be held by the
persons and in the amounts set forth in the records of the Acquired
Fund's transfer agent as provided in paragraph 3.4. The Acquired Fund
has no outstanding options, warrants, or other rights to subscribe for
or purchase any of the Acquired Fund shares, and has no outstanding
securities convertible into any of the Acquired Fund shares.
k) At the Closing Date, the Acquired Fund will have good and marketable
title to the Acquired Fund's assets to be transferred to the Acquiring
Fund pursuant to paragraph 1.2, and full right, power, and authority to
sell, assign, transfer, and deliver such assets hereunder, free of any
lien or other encumbrance, except those liens or encumbrances to which
the Acquiring Fund has received notice, and, upon delivery and payment
for such assets, and the filing of any articles, certificates or other
documents under the laws of the State of Maryland, the Acquiring Fund
will acquire good and marketable title, subject to no restrictions on
the full transfer of such assets, other than such restrictions as might
arise under the 1933 Act, and other than as disclosed to and accepted
by the Acquiring Fund.
l) The execution, delivery and performance of this Agreement have been
duly authorized by all necessary action on the part of the Acquired
Fund. Subject to approval by the Acquired Fund Shareholders, this
Agreement constitutes a valid and binding obligation of the Acquired
Fund, enforceable in accordance with its terms, subject as to
enforcement, to bankruptcy, insolvency, reorganization, moratorium, and
other laws relating to or affecting creditors' rights and to general
equity principles.
m) The information to be furnished by the Acquired Fund for use in no-action
letters, applications for orders, registration statements, proxy
materials, and other documents that may be necessary in connection with
the transactions contemplated herein shall be accurate and complete in all
material respects and shall comply in all material respects with federal
securities and other laws and regulations.
n) From the effective date of the Registration Statement (as defined in
paragraph 5.7), through the time of the meeting of the Acquired Fund
Shareholders and on the Closing Date, any written information furnished
by the Corporation with respect to the Acquired Fund for use in the
Proxy Materials (as defined in paragraph 5.7), or any other materials
provided in connection with the Reorganization, does not and will not
contain any untrue statement of a material fact or omit to state a
material fact required to be stated or necessary to make the
statements, in light of the circumstances under which such statements
were made, not misleading.
o) The Acquired Fund has elected to qualify and has qualified as a "regulated
investment company" under the Code (a "RIC"), as of and since its first
taxable year; has been a RIC under the Code at all times since the end of
its first taxable year when it so qualified; and qualifies and will
continue to qualify as a RIC under the Code for its taxable year ending
upon its liquidation.
p) No governmental consents, approvals, authorizations or filings are
required under the 1933 Act, the Securities Exchange Act of 1934 (the
"1934 Act"), the 1940 Act or Maryland law for the execution of this
Agreement by the Corporation, for itself and on behalf of the Acquired
Fund, except for the effectiveness of the Registration Statement, and
the filing of any articles, certificates or other documents that may be
required under Maryland law, and except for such other consents,
approvals, authorizations and filings as have been made or received,
and such consents, approvals, authorizations and filings as may be
required subsequent to the Closing Date, it being understood, however,
that this Agreement and the transactions contemplated herein must be
approved by the shareholders of the Acquired Fund as described in
paragraph 5.2.
4.2 REPRESENTATIONS OF THE ACQUIRING FUND. The Acquiring Fund, represents and
warrants to the Corporation, on behalf of the Acquired Fund, as follows:
a) The Acquiring Fund is a separate series of a corporation, validly existing
and in good standing under the laws of the State of Maryland.
b) The Acquiring Fund is registered as an open-end management investment
company under the 1940 Act, and the Acquiring Fund's registration with the
Commission as an investment company under the 1940 Act is in full force
and effect.
c) The current prospectus and statement of additional information of the
Acquiring Fund conform in all material respects to the applicable
requirements of the 1933 Act and the 1940 Act and the rules and
regulations thereunder, and do not include any untrue statement of a
material fact or omit to state any material fact required to be stated or
necessary to make such statements therein, in light of the circumstances
under which they were made, not misleading.
d) The Acquiring Fund is not, and the execution, delivery and performance of
this Agreement will not, result in a violation of the Acquiring Fund's
Articles of Incorporation or By-Laws or of any material agreement,
indenture, instrument, contract, lease, or other undertaking to which the
Acquiring Fund is a party or by which it is bound.
e) Except as otherwise disclosed in writing to the Acquired Fund, no
litigation, administrative proceeding or investigation of or before any
court or governmental body is presently pending or to its knowledge
threatened against the Acquiring Fund or any of its properties or
assets, which, if adversely determined, would materially and adversely
affect its financial condition, the conduct of its business or the
ability of the Acquiring Fund to carry out the transactions
contemplated by this Agreement. The Acquiring Fund knows of no facts
that might form the basis for the institution of such proceedings and
it is not a party to or subject to the provisions of any order, decree,
or judgment of any court or governmental body that materially and
adversely affects its business or its ability to consummate the
transaction contemplated herein.
f) The financial statements of the Acquiring Fund as of November 30, 2004 and
for the fiscal year then ended have been prepared in accordance with
generally accepted accounting principles, and such statements (copies of
which have been furnished to the Acquired Funds) fairly reflect the
financial condition of the Acquiring Fund as of such date, and there are
no known contingent liabilities of the Acquiring Fund as of such date that
are not disclosed in such statements.
g) The unaudited financial statements of the Acquiring Fund as of May 31,
2004, and for the six months then ended have been prepared in accordance
with generally accepted accounting principles, and such statements (copies
of which have been furnished to the Acquired Fund) fairly reflect the
financial condition of the Acquiring Fund as of such date, and there are
no known contingent liabilities of the Acquiring Fund as of such date that
are not disclosed in such statements.
h) Since the date of the financial statements referred to in paragraph (g)
above, there have been no material adverse changes in the Acquiring
Fund's financial condition, assets, liabilities or business (other than
changes occurring in the ordinary course of business), or any
incurrence by the Acquiring Fund of indebtedness maturing more than one
year from the date such indebtedness was incurred, except as otherwise
disclosed to and accepted by the Acquired Fund. For the purposes of
this paragraph (h), a decline in the net asset value of the Acquiring
Fund shall not constitute a material adverse change.
i) All federal and other tax returns and reports of the Acquiring Fund
required by law to be filed, have been filed. All federal and other taxes
shown due on such returns and reports have been paid or provision shall
have been made for their payment. To the best of the Acquiring Fund's
knowledge, no such return is currently under audit, and no assessment has
been asserted with respect to such returns.
j) All issued and outstanding Acquiring Fund Shares are duly and validly
issued and outstanding, fully paid and non-assessable by the Acquiring
Fund. The Acquiring Fund has no outstanding options, warrants, or other
rights to subscribe for or purchase any Acquiring Fund Shares, and there
are no outstanding securities convertible into any Acquiring Fund Shares.
k) The execution, delivery and performance of this Agreement have been duly
authorized by all necessary action on the part of the Acquiring Fund, and
this Agreement constitutes a valid and binding obligation of the Acquiring
Fund, enforceable in accordance with its terms, subject as to enforcement,
to bankruptcy, insolvency, reorganization, moratorium, and other laws
relating to or affecting creditors' rights and to general equity
principles.
l) Acquiring Fund Shares to be issued and delivered to the Acquired Fund for
the account of the Acquired Fund Shareholders pursuant to the terms of
this Agreement will, at the Closing Date, have been duly authorized. When
so issued and delivered, such shares will be duly and validly issued
Acquiring Fund Shares, and will be fully paid and non-assessable.
m) The information to be furnished by the Acquiring Fund for use in no-action
letters, registration statements, proxy materials, and other documents
that may be necessary in connection with the transactions contemplated
herein shall be accurate and complete in all material respects and shall
comply in all material respects with federal securities and other laws and
regulations.
n) From the effective date of the Registration Statement (as defined in
paragraph 5.7), through the time of the meeting of the Acquired Fund
Shareholders and on the Closing Date, any written information furnished
by the Acquiring Fund for use in the Proxy Materials (as defined in
paragraph 5.7), or any other materials provided in connection with the
Reorganization, does not and will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated or
necessary to make the statements, in light of the circumstances under
which such statements were made, not misleading.
o) The Acquiring Fund has elected to qualify and has qualified as a RIC under
the Code as of and since its first taxable year; has been a RIC under the
Code at all times since the end of its first taxable year when it so
qualified; and qualifies and shall continue to qualify as a RIC under the
Code for its current taxable year.
p) No governmental consents, approvals, authorizations or filings are
required under the 1933 Act, the 1934 Act, the 1940 Act or Maryland law
for the execution of this Agreement by the Acquiring Fund, or the
performance of the Agreement by the Acquiring Fund, except for the
effectiveness of the Registration Statement, and the filing of any
articles, certificates or other documents that may be required under
Maryland law, and such other consents, approvals, authorizations and
filings as have been made or received, and except for such consents,
approvals, authorizations and filings as may be required subsequent to
the Closing Date.
q) The Acquiring Fund agrees to use all reasonable efforts to obtain the
approvals and authorizations required by the 1933 Act, the 1940 Act, and
any state Blue Sky or securities laws as it may deem appropriate in order
to continue its operations after the Closing Date.
ARTICLE V
COVENANTS OF THE ACQUIRING FUND AND THE ACQUIRED FUND
5.1 OPERATION IN ORDINARY COURSE. The Acquiring Fund and the Acquired Fund will
each operate its respective business in the ordinary course between the date of
this Agreement and the Closing Date, it being understood that such ordinary
course of business will include customary dividends and shareholder purchases
and redemptions.
5.2 APPROVAL OF SHAREHOLDERS. The Corporation will call a special meeting of the
Acquired Fund Shareholders to consider and act upon this Agreement and to take
all other appropriate action necessary to obtain approval of the transactions
contemplated herein.
5.3 INVESTMENT REPRESENTATION. The Acquired Fund covenants that the Acquiring
Fund Shares to be issued pursuant to this Agreement are not being acquired for
the purpose of making any distribution, other than in connection with the
Reorganization and in accordance with the terms of this Agreement.
5.4 ADDITIONAL INFORMATION. The Acquired Fund will assist the Acquiring Fund in
obtaining such information as the Acquiring Fund reasonably requests concerning
the beneficial ownership of the Acquired Fund's shares.
5.5 FURTHER ACTION. Subject to the provisions of this Agreement, the Acquiring
Fund and the Acquired Fund will each take or cause to be taken, all action, and
do or cause to be done, all things reasonably necessary, proper or advisable to
consummate and make effective the transactions contemplated by this Agreement,
including any actions required to be taken after the Closing Date.
5.6 STATEMENT OF EARNINGS AND PROFITS. As promptly as practicable, but in any
case within sixty days after the Closing Date, the Acquired Fund shall furnish
the Acquiring Fund, in such form as is reasonably satisfactory to the Acquiring
Fund, a statement of the earnings and profits of the Acquired Fund for federal
income tax purposes that will be carried over by the Acquiring Fund as a result
of Section 381 of the Code, and which will be certified by the Corporation's
Treasurer.
5.7 PREPARATION OF REGISTRATION STATEMENT AND SCHEDULE 14A PROXY STATEMENT. The
Acquiring Fund will prepare and file with the Commission a registration
statement on Form N-14 relating to the Acquiring Fund Shares to be issued to
shareholders of the Acquired Fund (the "Registration Statement"). The
Registration Statement on Form N-14 shall include a proxy statement and a
prospectus of the Acquiring Fund relating to the transaction contemplated by
this Agreement. The Registration Statement shall be in compliance with the 1933
Act, the 1934 Act and the 1940 Act, as applicable. Each party will provide the
other party with the materials and information necessary to prepare the
registration statement on Form N-14 (the "Proxy Materials"), for inclusion
therein, in connection with the meeting of the Acquired Fund's Shareholders to
consider the approval of this Agreement and the transactions contemplated
herein.
5.8 The Acquired Fund shall have declared and paid a dividend or dividends
which, together with all previous such dividends, shall have the effect of
distributing to its shareholders all of the Acquired Fund's investment company
taxable income (computed without regard to any deduction for dividends paid), if
any, plus the excess, if any, of its interest income excludible from gross
income under Section 103(a) of the Code over its deductions disallowed under
Sections 265 and 171(a)(2) of the Code for all taxable periods or years ending
on or before the Closing Date, and all of its net capital gains realized (after
reduction for any capital loss carry forward), if any, in all taxable periods or
years ending on or before the Closing Date.
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRED FUND
The obligations of the Acquired Fund to consummate the transactions
provided for herein shall be subject, at its election, to the performance by the
Acquiring Fund of all the obligations to be performed by the Acquiring Fund
pursuant to this Agreement on or before the Closing Date, and, in addition,
subject to the following conditions:
6.1 All representations, covenants, and warranties of the Acquiring Fund
contained in this Agreement shall be true and correct in all material respects
as of the date hereof and as of the Closing Date, with the same force and effect
as if made on and as of the Closing Date. The Acquiring Fund shall have
delivered to the Acquired Fund a certificate executed in the Acquiring Fund's
name by its President or Vice President and its Treasurer or Assistant
Treasurer, in form and substance satisfactory to the Acquired Fund and dated as
of the Closing Date, to such effect and as to such other matters as the Acquired
Fund shall reasonably request.
ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND
The obligations of the Acquiring Fund to consummate the transactions
provided for herein shall be subject, at its election, to the performance by the
Acquired Fund of all the obligations to be performed by the Acquired Fund
pursuant to this Agreement, on or before the Closing Date and, in addition,
shall be subject to the following conditions:
7.1 All representations, covenants, and warranties of the Acquired Fund
contained in this Agreement shall be true and correct in all material respects
as of the date hereof and as of the Closing Date, with the same force and effect
as if made on and as of such Closing Date. The Acquired Fund shall have
delivered to the Acquiring Fund on such Closing Date a certificate executed in
the Acquired Fund's name by the Corporation's President or Vice President and
the Treasurer or Assistant Treasurer, in form and substance satisfactory to the
Acquiring Fund and dated as of such Closing Date, to such effect and as to such
other matters as the Acquiring Fund shall reasonably request.
7.2 The Acquired Fund shall have delivered to the Acquiring Fund a statement of
the Acquired Fund's assets and liabilities, together with a list of the Acquired
Fund's portfolio securities showing the tax costs of such securities by lot and
the holding periods of such securities, as of the Closing Date, certified by the
Treasurer of the Corporation.
ARTICLE VIII
FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE
ACQUIRING FUND AND ACQUIRED FUND
If any of the conditions set forth below do not exist on or before the
Closing Date with respect to the Acquired Fund or the Acquiring Fund, the other
party to this Agreement shall, at its option, not be required to consummate the
transactions contemplated by this Agreement:
8.1 This Agreement and the transactions contemplated herein, with respect to the
Acquired Fund, shall have been approved by the requisite vote of the holders of
the outstanding shares of the Acquired Fund in accordance with applicable law
and the provisions of the Corporation's Articles of Incorporation and By-Laws.
Certified copies of the resolutions evidencing such approval shall have been
delivered to the Acquiring Fund. Notwithstanding anything herein to the
contrary, neither the Acquiring Fund nor the Acquired Fund may waive the
conditions set forth in this paragraph 8.1.
8.2 On the Closing Date, the Commission shall not have issued an unfavorable
report under Section 25(b) of the 1940 Act, or instituted any proceeding seeking
to enjoin the consummation of the transactions contemplated by this Agreement
under Section 25(c) of the 1940 Act. Furthermore, no action, suit or other
proceeding shall be threatened or pending before any court or governmental
agency in which it is sought to restrain or prohibit, or obtain damages or other
relief in connection with this Agreement or the transactions contemplated
herein.
8.3 All required consents of other parties and all other consents, orders, and
permits of federal, state and local regulatory authorities (including those of
the Commission and of State securities authorities, including any necessary
"no-action" positions and exemptive orders from such federal and state
authorities) to permit consummation of the transactions contemplated herein
shall have been obtained, except where failure to obtain any such consent,
order, or permit would not involve a risk of a material adverse effect on the
assets or properties of the Acquiring Fund or the Acquired Fund, provided that
either party hereto may waive any such conditions for itself.
8.4 The Registration Statement shall have become effective under the 1933 Act,
and no stop orders suspending the effectiveness thereof shall have been issued.
To the best knowledge of the parties to this Agreement, no investigation or
proceeding for that purpose shall have been instituted or be pending, threatened
or contemplated under the 1933 Act.
8.5 The parties shall have received an opinion of Reed Smith LLP substantially
to the effect that for federal income tax purposes:
a) The transfer of all of the Acquired Fund's assets to the Acquiring Fund
solely in exchange for Acquiring Fund Shares (followed by the distribution
of Acquiring Fund Shares to the Acquired Fund Shareholders in dissolution
and liquidation of the Acquired Fund) will constitute a "reorganization"
within the meaning of Section 368(a) of the Code, and the Acquiring Fund
and the Acquired Fund will each be a "party to a reorganization" within
the meaning of Section 368(b) of the Code.
b) No gain or loss will be recognized by the Acquiring Fund upon the receipt
of the assets of the Acquired Fund solely in exchange for Acquiring Fund
Shares.
c) No gain or loss will be recognized by the Acquired Fund upon the transfer
of the Acquired Fund's assets to the Acquiring Fund solely in exchange for
Acquiring Fund Shares or upon the distribution (whether actual or
constructive) of Acquiring Fund Shares to Acquired Fund Shareholders in
exchange for their Selling Fund Shares.
d) No gain or loss will be recognized by any Acquired Fund Shareholder upon
the exchange of its Acquired Fund Shares for Acquiring Fund Shares.
e) The aggregate tax basis of the Acquiring Fund Shares received by each
Acquired Fund Shareholder pursuant to the Reorganization will be the
same as the aggregate tax basis of the Acquired Fund Shares held by it
immediately prior to the Reorganization. The holding period of
Acquiring Fund Shares received by each Acquired Fund Shareholder will
include the period during which the Acquired Fund Shares exchanged
therefore were held by such shareholder, provided the Acquired Fund
Shares are held as capital assets at the time of the Reorganization.
f) The tax basis of the Acquired Fund's assets acquired by the Acquiring Fund
will be the same as the tax basis of such assets to the Acquired Fund
immediately prior to the Reorganization. The holding period of the assets
of the Acquired Fund in the hands of the Acquiring Fund will include the
period during which those assets were held by the Acquired Fund.
Such opinion shall be based on customary assumptions and such
representations Reed Smith LLP may reasonably request, and the Acquired
Fund and Acquiring Fund will cooperate to make and certify the accuracy of
such representations. The foregoing opinion may state that no opinion is
expressed as to the effect of the Reorganization on the Acquiring Fund,
the Acquired Fund or any Acquired Fund Shareholder with respect to any
asset as to which unrealized gain or loss is required to be reorganized
for federal income tax purposes at the end of a taxable year (or on the
termination or transfer thereof) under a mark-to-market system of
accounting. Notwithstanding anything herein to the contrary, neither the
Acquiring Fund nor the Acquired Fund may waive the conditions set forth in
this paragraph 8.5.
ARTICLE IX
EXPENSES
9.1 Federated Equity Management Company of Pennsylvania and/or AMCORE Financial,
Inc. and/or Investors Management Group, Ltd. or their affiliates will pay all
expenses associated with the Reorganization, provided, however, that Acquiring
Fund shall bear expenses associated with the qualification of Acquiring Fund
Shares for sale in the various states. Reorganization expenses include, without
limitation: (a) expenses associated with the preparation and filing of the Proxy
Materials; (b) postage; (c) printing; (d) accounting fees; (e) legal fees
incurred by each Fund; (f) solicitation costs of the transaction; and (g) other
related administrative or operational costs.
ARTICLE X
ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES
10.1 The Acquiring Fund and the Corporation, on behalf of the Acquired Fund,
agree that neither party has made to the other party any representation,
warranty and/or covenant not set forth herein, and that this Agreement
constitutes the entire agreement between the parties.
10.2 Except as specified in the next sentence set forth in this paragraph 10.2,
the representations, warranties, and covenants contained in this Agreement or in
any document delivered pursuant to or in connection with this Agreement, shall
not survive the consummation of the transactions contemplated hereunder. The
covenants to be performed after the Closing Date, shall continue in effect
beyond the consummation of the transactions contemplated hereunder.
ARTICLE XI
TERMINATION
11.1 This Agreement may be terminated by the mutual agreement of the Acquiring
Fund and the Corporation. In addition, either the Acquiring Fund or the
Corporation may at its option terminate this Agreement at or before the Closing
Date due to:
a) a breach by the other of any representation, warranty, or agreement
contained herein to be performed at or before the Closing Date, if not
cured within 30 days;
b) a condition herein expressed to be precedent to the obligations of the
terminating party that has not been met and it reasonably appears that it
will not or cannot be met; or
c) a determination by a party's Board of Directors, as appropriate, that the
consummation of the transactions contemplated herein is not in the best
interest of the Corporation or the Acquiring Fund, respectively, and
notice given to the other party hereto.
11.2 In the event of any such termination, in the absence of willful default,
there shall be no liability for damages on the part of either the Acquiring
Fund, the Acquired Fund, the Corporation, or their respective Directors or
officers, to the other party or its Directors or officers.
ARTICLE XII
AMENDMENTS
12.1 This Agreement may be amended, modified, or supplemented in such manner as
may be mutually agreed upon in writing by the officers of the Corporation and
the Acquiring Fund as specifically authorized by their respective Board of
Directors; provided, however, that following the meeting of the Acquired Fund
Shareholders called by the Acquired Fund pursuant to paragraph 5.2 of this
Agreement, no such amendment may have the effect of changing the provisions for
determining the number of Acquiring Fund Shares to be issued to the Acquired
Fund Shareholders under this Agreement to the detriment of such shareholders
without their further approval.
ARTICLE XIII
HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT;
LIMITATION OF LIABILITY
13.1 The Article and paragraph headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
13.2 This Agreement may be executed in any number of counterparts, each of which
shall be deemed an original.
13.3 This Agreement shall be governed by and construed in accordance with the
laws of the Commonwealth of Pennsylvania.
13.4 This Agreement shall bind and inure to the benefit of the parties hereto
and their respective successors and assigns, but, except as provided in this
paragraph, no assignment or transfer hereof or of any rights or obligations
hereunder shall be made by any party without the written consent of the other
party. Nothing herein expressed or implied is intended or shall be construed to
confer upon or give any person, firm, or corporation, other than the parties
hereto and their respective successors and assigns, any rights or remedies under
or by reason of this Agreement.
IN WITNESS WHEREOF, the parties have duly executed this Agreement, all
as of the date first written above.
VINTAGE MUTUAL FUNDS, INC.
on behalf of its portfolio,
Vintage Balanced Fund
___________, Secretary
FEDERATED STOCK & BOND FUND, INC.
John W. McGonigle, Secretary
EXHIBIT B
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
FEDERATED CAPITAL APPRECIATION FUND
Management's Discussion of Fund Performance
This report covers Federated Capital Appreciation Fund's fiscal year performance
period from November 1, 2003 through October 31, 2004. During this reporting
period, the fund's Class A, Class B, Class C, and Class K Shares produced total
returns of 6.97%, 6.19%, 6.19%, and 6.49%, respectively, based on net asset
value.1
The fund underperformed its benchmark, the S&P 500 Index2, which returned 9.42%
during the same period. The fund outperformed its peer group as measured by the
Lipper Large Cap Core Funds Average3 category, which produced an average total
return of 5.97% for the same period.
The 12-month period ended October 31, 2004 generated positive returns for most
domestic and global equity market benchmarks, continuing the trend begun in the
first quarter of 2003. In general, small- and mid-cap companies outperformed
large-cap companies during the reporting period, and this negatively influenced
the fund's relative performance, as it had a larger market cap bias as compared
to the S&P 500 Index. Value-based strategies generally outperformed growth-based
strategies as well. This positively influenced the fund's performance as it had
a slight value tilt during the year. As of October 31, 2004, the fund was evenly
balanced with 50% of assets in value stocks and 50% of assets in growth stocks.
Sector allocation was a positive contributor to performance, while stock
selection was a negative contributor. From a sector positioning standpoint, the
fund's returns were aided by being overweight Energy, Industrials, and
Telecommunication Services. The fund's returns were limited by its cash position
in a rising market, as well as by its being underweight Utilities and overweight
Materials. On a stock selection basis, the fund's return was hindered by stock
performance within the Information Technology, Utilities, and Telecommunication
Services sectors. The fund benefited from positive selection within the
Industrials, Energy, and Healthcare sectors.
Top contributors during the year were: Exxon Mobil Corp., General Electric
Co., Transocean Sedco Forex, Inc., ConocoPhillips, and Halliburton Co.
Detractors of performance during the year were: Intel Corp., Hewlett-Packard
Co., Applied Materials, Inc., Tenet Healthcare, and Merck & Co., Inc.
1 Performance data quoted represents past performance and is no guarantee of
future results. Investment return and principal value will fluctuate so an
investor's shares, when redeemed, may be worth more or less than their original
cost. Total returns for the period based on offering price for Class A, Class B,
Class C, and Class K Shares were 1.10%, 0.69%, 4.15%, and 6.49%, respectively.
Mutual fund performance changes over time and current performance may be lower
or higher than what is stated. To view current to the most recent month-end
performance and after-tax returns, visit www.federatedinvestors.com or call
1-800-341-7400.
2 The S&P 500 Index is an unmanaged capitalization-weighted index of 500 stocks
designed to measure performance of the broad domestic economy through changes in
the aggregate market value of 500 stocks representing all major industries.
Investments cannot be made in an index.
3 Lipper figures represent the average total returns reported by all mutual
funds designated by Lipper, Inc. as falling into the category indicated. They do
not reflect sales charges. Investments cannot be made in an average.
GROWTH OF A $10,000 INVESTMENT - CLASS A SHARES
The graph below illustrates the hypothetical investment of $10,000(1) in
Federated Capital Appreciation Fund (Class A Shares) (the "Fund") from October
31, 1994 to October 31, 2004, compared to the S&P 500 Index (S&P 500),(2) and
the Lipper Large Cap Core Funds Average (LLCCFA).3
Average Annual Total Returns 4 for the Period Ended 10/31/2004
1 Year 1.10%
5 Years 0.49%
10 Years 11.64%
[GRAPHIC ILLUSTRATION-Federated Capital Appreciation Fund] The graphic
presentation here displayed consists of a line graph. The corresponding
components of the line graph are listed underneath. The Class A Shares of
Federated Capital Appreciation Fund (the "Fund") are represented by a solid
line. The S&P 500 is represented by a dotted line and the LLCCFA is represented
by a broken line. The line graph is a visual representation of a comparison of
change in value of a $10,000 hypothetical investment in the Class A Shares of
the Fund, the S&P 500 and the LLCCFA. The "x" axis reflects computation periods
from 10/31/94 to 10/31/04. The "y" axis reflects the cost of the investment. The
right margin reflects the ending value of the hypothetical investment in the
Fund's Class A Shares as compared to the S&P 500 and the LLCCFA. The ending
values were $31,827, $28,323 and $21,062, respectively.
Performance data quoted represents past performance and is no guarantee of
future results. Returns shown do not reflect the deduction of taxes that a
shareholder would pay on Fund distributions or the redemption of Fund shares.
For after-tax returns, visit www.federatedinvestors.com. Investment return and
principal value will fluctuate so that an investor's shares, when redeemed, may
be worth more or less than their original cost. Mutual fund performance changes
over time and current performance may be lower or higher than what is stated.
Mutual funds are not obligations of or guaranteed by any bank and are not
federally insured.
1 Represents a hypothetical investment of $10,000 in the Fund with no sales
charge. Effective January 1, 1996, the fiscal year end of this Fund was changed
from December 31, to October 31. Effective November 14, 1995, the maximum sales
charge was 5.50% ($10,000 investment minus $550 sales charge = $9,450). The
Fund's performance assumes the reinvestment of all dividends and distributions.
The S&P 500 and LLCCFA have been adjusted to reflect reinvestment of dividends
on securities in the index and the average. 2 The S&P 500 is not adjusted to
reflect sales loads, expenses, or other fees that the Securities and Exchange
Commission (SEC) requires to be reflected in the Fund's performance. The index
is unmanaged and unlike the Fund, is not affected by cashflows.
3 The LLCCFA represents the average of the total returns reported by all of the
mutual funds designated by Lipper, Inc. as falling into the category indicated,
and is not adjusted to reflect any sales charges. However, these total returns
are reported net of expenses or other fees that the SEC requires to be reflected
in a mutual fund's performance. 4 Total returns quoted reflect all applicable
sales charges.
The Vintage Equity Fund
The last year has been marked by solid economic growth, excellent profit growth,
rising commodity prices and rising interest rates. The balance of positive and
negative influences has resulted in an historically narrow range of trading,
with a single significant rally occurring between the presidential election and
the end of December.
The longevity and strength of the recovery in corporate profitability has
surprised analysts for the last three quarters. While the job recovery has been
somewhat slower than expected, corporate conservatism has resulted in margins
that have now surpassed the cycle highs of 1999-2000.
Commodity prices have been a pivotal headwind for equities. Rising input costs
for many corporations have resulted in efforts to push through price increases.
Success increases fears of inflation, while failure to institute price increases
raises fears of margin compression and production slowdowns.
Rising interest rates have also put a damper on equity valuations, with concerns
that the Fed will need to continue raising rates for some time in order to
control percolating inflation pressures. Still, the equity markets appear to be
anticipating a much more hawkish Fed than the bond markets, as rates have risen
but remain historically low at less than 4.5%.
Outside of the commodity driven sectors, we view this as a stock selection
rather than a theme or sector driven market. Traditional sector rotation cycles
have not materialized and 2004 produced a relatively modest spread in sector
returns compared to recent years.
Over the twelve-month period ending March 31, 2005, the S&P 500 increased 4.8%,
led by the energy sector with a return of 44.1%. The utility, industrials, and
materials sectors also had strong returns for the period of 19.9%, 15.2%, and
14.8%, respectively. The financials and information technology sectors were the
weakest performers, with declines of 3.4% and 2.9%, respectively, for the
period.
The surging global oil demand, shortages of refining capacity, and unusual
capital restraint produced the strong performance in the energy sector over the
twelve-month period. In addition, the continuation of low interest rates and the
prospect of increased generation revenues as a result of higher oil and natural
gas prices resulted in strong utility sector performance. The industrials sector
benefited from continuing growth in capital equipment purchases and strong
demand for transportation services, which has been a result of the fact that
many firms deferred purchases during the early part of the decade as a result of
weak economic conditions. Further, the materials sector benefited from strong
global demand for a variety of materials (steel, copper, etc.) as a result of
high levels of construction and manufacturing activity, particularly in China
and the U.S.
The underperformance of the financial sector resulted from the threat of rising
interest rates and the fear of widespread accounting irregularities at large
financial institutions as a result of those uncovered at American International
Group. Concern surrounding the potential effects on the economy of higher
interest rates and higher oil prices led to the decline in the information
technology sector. Additionally, healthcare sector returns were negatively
impacted by health concerns surrounding key drugs and the prospect for growth at
many of the major pharmaceutical companies.
The March Fed statement noted that inflationary pressures have picked up in
recent months. While we see some evidence of pricing power that has not existed
for many years, we believe the disinflationary influences of globalization and
technology-led productivity gains will prove to be more persistent than
cost-push inflation.
For the remainder of the year, we see fears of inflation and high oil prices as
being significant headwinds to stock prices. Likewise, the considerable
deceleration in earnings growth means earnings are unlikely to be a significant
upside catalyst on their own. Absolute valuations are not particularly
compelling, but equities are unusually attractive when compared to other asset
classes. Therefore, we expect range bound to lower trading, with a reduction in
either inflation expectations or oil prices necessary to push stocks materially
higher.
After a difficult first-half of the fiscal year, relative performance for the
Vintage Equity Fund improved for the final two quarters. Improved focus on stock
selection aided results, while sector and style influences were reduced
significantly.
For the year, Exxon Mobil was the single greatest contributor to fund
performance by a considerable margin as it was our largest energy sector
holding. We also benefited by the strength of the transportation market with a
position in Burlington Northern Santa Fe, which produced the highest percent
return of any stock in the portfolio. Our ownership of Edison International,
helped us keep pace with strong returns in the utility sector, while Praxair was
our best performing materials holding.
Conversely, our positions in Citigroup and American International Group were
hurt by concerns over interest rates and accounting fears. Likewise, the focus
on health risks of key Pfizer drugs negatively impacted performance. Finally,
technology stocks hindered fund performance with Cisco Systems having the most
impact.
As we move into the next fiscal year, we are managing our energy position very
close to the benchmark with an occasional bias to the upside. We are positioned
to benefit from higher interest rates but are focusing on stock selection within
the sectors in order to reduce volatility. We have a slight premium in dividend
yield and maintain a valuation discount to the market, in order to maximize our
relative performance in a market that lacks clear direction.
Value of a Hypothetical $10,000 Investment
[GRAPHIC ILLUSTRATION-Vintage Equity Fund]
The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed underneath. The Class S
Shares of Vintage Equity Fund (the "Fund") are represented by a solid line and
the Class T Shares of the Fund are represented by a broken line. The S&P 500
Stock Index is represented by a dash/dot/dash line. The line graph is a visual
representation of a comparison of change in value of a $10,000 hypothetical
investment in the Class S Shares and Class T Shares of the Fund and the S&P 500
Stock Index. The "x" axis reflects computation periods from 12/15/92 to 3/31/05.
The "y" axis reflects the cost of the investment. The right margin reflects the
ending value of the hypothetical investment in the Fund's Class S Shares and
Class T Shares as compared to the S&P 500 Stock Index. The ending values were
$24,509, $24,933 and $35,348, respectively. The legend in the bottom quadrant of
the graphic presentation indicates the Fund's Class S Shares and Class T Shares
Average Annual Total Returns for the one-year and three-year period ended
3/31/2005 and from the start of performance of (12/15/92). The total returns for
the one year period for the Fund's Class S Shares and Class T Shares were 2.44%
and 2.69%, respectively. The total returns for the three year period for the
Fund's Class S Shares and Class T Shares were -7.70% and -7.47%, respectively.
The total returns from the start of performance for the Fund's Class S Shares
and Class T Shares were 7.54% and 7.68%, respectively.
Performance data quoted represent past performance; past performance is not
predictive of future results. The value of shares in the Vintage Mutual Funds
will fluctuate so that the shares, when redeemed, may be worth more or less than
their original cost. The composition of the Fund's holdings is subject to
change. Performance data current to the most recent month end may be obtained by
accessing the website at www.vintagefunds.com. Equity securities (stocks) are
more volatile and carry more risk than other forms of investments, including
investments in high-grade fixed income securities. The net asset value per share
of this Fund will fluctuate as the value of the securities in the portfolio
changes.
The performance of the Vintage Equity Fund is measured against a composite of
the S&P 500 Index, an unmanaged index generally representative of the
performance of the U.S. stock market. The index does not reflect the deduction
of fees associated with a mutual fund, such as investment management fees. The
Fund's performance reflects the deduction of fees for these value-added
services. The performance table and graph do not reflect the deduction of taxes
that a shareholder would pay on fund distributions or the redemption of fund
shares.
The Vintage Growth Fund
The last year has been marked by solid economic growth, excellent profit growth,
rising commodity prices and rising interest rates. The balance of positive and
negative influences has resulted in an historically narrow range of trading,
with a single significant rally occurring between the presidential election and
the end of December.
The longevity and strength of the recovery in corporate profitability has
surprised analysts for the last three quarters. While the job recovery has been
somewhat slower than expected, corporate conservatism has resulted in margins
that have now surpassed the cycle highs of 1999-2000.
Commodity prices have been a pivotal headwind for equities. Rising input costs
for many corporations have resulted in efforts to push through price increases.
Success increases fears of inflation, while failure to institute price increases
raises fears of margin compression and production slowdowns.
Rising interest rates have also put a damper on equity valuations, with concerns
that the Fed will need to continue raising rates for some time in order to
control percolating inflation pressures. Still, the equity markets appear to be
anticipating a much more hawkish Fed than the bond markets, as rates have risen
but remain historically low at less than 4.5%.
Outside of the commodity driven sectors, we view this as a stock selection
rather than a theme or sector driven market. Traditional sector rotation cycles
have not materialized and 2004 produced a relatively modest spread in sector
returns compared to recent years.
Over the twelve-month period ending March 31, 2005, the S&P 500 increased 4.8%,
led by the energy sector with a return of 44.1%. The utility, industrials, and
materials sectors also had strong returns for the period of 19.9%, 15.2%, and
14.8%, respectively. The financials and information technology sectors were the
weakest performers, with declines of 3.4% and 2.9%, respectively, for the
period.
The surging global oil demand, shortages of refining capacity, and unusual
capital restraint produced the strong performance in the energy sector over the
twelve-month period. In addition, the continuation of low interest rates and the
prospect of increased generation revenues as a result of higher oil and natural
gas prices resulted in strong utility sector performance. The industrials sector
benefited from continuing growth in capital equipment purchases and strong
demand for transportation services, which has been a result of the fact that
many firms deferred purchases during the early part of the decade as a result of
weak economic conditions. Further, the materials sector benefited from strong
global demand for a variety of materials (steel, copper, etc.) as a result of
high levels of construction and manufacturing activity, particularly in China
and the U.S.
The underperformance of the financial sector resulted from the threat of rising
interest rates and the fear of widespread accounting irregularities at large
financial institutions as a result of those uncovered at American International
Group. Concern surrounding the potential effects on the economy of higher
interest rates and higher oil prices led to the decline in the information
technology sector. Additionally, healthcare sector returns were negatively
impacted by health concerns surrounding key drugs and the prospect for growth at
many of the major pharmaceutical companies.
The March Fed statement noted that inflationary pressures have picked up in
recent months. While we see some evidence of pricing power that has not existed
for many years, we believe the disinflationary influences of globalization and
technology-led productivity gains will prove to be more persistent than
cost-push inflation.
For the remainder of the year, we see fears of inflation and high oil prices as
being significant headwinds to stock prices. Likewise, the considerable
deceleration in earnings growth means earnings are unlikely to be a significant
upside catalyst on their own. Absolute valuations are not particularly
compelling, but equities are unusually attractive when compared to other asset
classes. Therefore, we expect range bound to lower trading, with a reduction in
either inflation expectations or oil prices necessary to push stocks materially
higher.
The Fund experienced a rough first two quarters of the fiscal year (second and
third calendar quarters), but kept pace with the market during the second half
of the Fund's year. The year could ultimately be classified as a sideways move
by the Fund's benchmark, the Russell 1000 Growth index, with it posting only a
1.2% gain over the Fund's fiscal year.
Style and size continued to dominate returns on the year. During most of fiscal
2005, value stocks continued to outperform growth names, and smaller
capitalization companies had greater returns than large cap entities. On the
year, the Russell 1000 Value index returned a dramatic 13.2%, versus 1.16% for
the Russell 1000 Growth. Similarly, the S&P Smallcap 600 outperformed the S&P
100 12.1% to 1.9%.
The best returns for the Fund and the market occurred during the 2004 fourth
quarter rally that was broad based and dramatic, reversing a very weak third
quarter that included a severe mid-August swoon. During the fourth quarter, the
Russell 1000 Growth rallied 9.17%, but then eventually gave back 4% in the
ensuing first quarter of 2005.
Overweight exposure in certain market segments such as technology
(semiconductors), pharmaceuticals and media contributed significantly to the
underperformance of the Fund during the third quarter. The Fund was a bit early
in increasing its technology exposure, while pharmaceuticals battled product and
pipeline concerns and media growth trends were suspect.
As we head into fiscal 2006, the markets have been directionless for some time,
with alternating concerns about slowing global growth, rising interest rates,
inflationary trends, slowing monetary growth and a weakening consumer. Despite
generally good earnings results for the first calendar quarter of 2005, the
equity markets seemed more focused on the potential for a soft spot in the
economic recovery.
By no means have we entered a bear phase of the equity markets, but
historically, the fourth year of a recovery sees slower economic and earnings
growth. Thus, these concerns are currently running through the market, reflected
in the S&P 500 trading at only 15.3 times forward 12-month earnings estimates.
However, a catalyst for the markets may occur once investors gain a better sense
that the end of the Federal Reserve's tightening cycle is near. If that
impression takes hold, or oil prices suffer a significant drop, a breath of life
could come back to cyclically oriented companies and financials, and the equity
markets may then move more solidly upward.
Longer term, we favor a rotation into stable growth companies with declining
exposure to deep cyclical industries. Large cap stocks have finally begun to
outperform small caps, and growth companies are starting to outperform value
names. Both of these trends have been anticipated for some time, and the current
economic backdrop should allow for these shifts to continue.
Value of a Hypothetical $10,000 Investment
[GRAPHIC ILLUSTRATION-Vintage Growth Fund]
The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed underneath. The Vintage
Growth Fund (the "Fund") is represented by a solid line. The S&P 500 Stock Index
is represented by a broken line and the Russell 1000 Growth is represented by a
dash/dot/dash line. The line graph is a visual representation of a comparison of
change in value of a $10,000 hypothetical investment in the shares of the Fund
and the S&P 500 Stock Index and the Russell 1000 Growth. The "x" axis reflects
computation periods from 9/29/95 to 3/31/05. The "y" axis reflects the cost of
the investment. The right margin reflects the ending value of the hypothetical
investment in the Fund's shares as compared to the S&P 500 Stock Index and the
Russell 1000 Growth. The ending values were $14,371,$24,230 and $24,468,
respectively. The legend in the bottom quadrant of the graphic presentation
indicates the Fund's Average Annual Total Returns for the one-year and
three-year period ended 3/31/2005 and from the start of performance of
(9/29/95). The total returns for the one year period, three-year and start of
performance periods for the Fund were -5.01%, -10.99% and 5.88%, respectively.
Performance data quoted represent past performance; past performance is not
predictive of future results. The value of shares in the Vintage Mutual Funds
will fluctuate so that the shares, when redeemed, may be worth more or less than
their original cost. The composition of the Fund's holdings is subject to
change. Performance data current to the most recent month end may be obtained by
accessing the website at www.vintagefunds.com. Small-cap companies typically
carry additional risk since smaller companies generally have a higher risk of
failure and, by definition are not as well-established as blue-chip companies.
Historically, small-company stocks have experienced a greater degree of market
volatility than stocks on average.
Equity securities (stocks) are more volatile and carry more risk than other
forms of investments, including investments in high-grade fixed income
securities. The net asset value per share of this Fund will fluctuate as the
value of the securities in the portfolio changes.
The performance of the Vintage Growth Fund is measured against the S&P 500 Stock
Index and the Russell 1000 Growth Index+, which represent the performance of the
stock market as a whole and the large-capitalization growth market respectively.
The indices are unmanaged and do not reflect the deduction of expenses
associated with a mutual fund, such as investment management fees. The Fund's
performance reflects the deduction of fees for these value-added services. The
performance table and graph do not reflect the deduction of taxes that a
shareholder would pay on fund distributions or the redemption of fund shares.
+ The Fund had previously been measured against the NASDAQ Composite Index and
the S&P Midcap 400 Stock Index. However, the Fund is now measured against the
Russell 1000 Growth Index as it better reflects the investment objective of the
Fund.
FEDERATED STOCK & BOND FUND, INC.
Management's Discussion of Fund Performance
For the reporting period ended November 30, 2004, the fund's Class A, Class B,
Class C, and Class K Shares produced total returns of 7.89%, 7.08%, 7.09%, and
7.64%, respectively, at net asset value. The S&P 500 Index (S&P 500) and the
Lehman Brothers Aggregate Bond Index (Lehman Aggregate) returned 12.86% (1) and
4.44%, (2) respectively, for the same period.
Stock prices rose during the first three months of the reporting period before
declining during the spring and summer months of 2004. The total return of the
S&P 500 from December to February 2004 was 8.67% and from March to August was
(2.74)%. Stock prices rose again in the fall, with the S&P 500 returning 6.78%
for the period September 1, 2004 to November 30, 2004.
Interest rates fell during the first few months, then climbed significantly
between mid-March and early June. Between March 16 and June 14, the average
yield-to-maturity of the Lehman Aggregate increased from 3.73% to 4.94%.
Interest rates traded lower between the summer and the end of November, as
indicated by the average yield-to-maturity of the Lehman Aggregate of 4.50%.
The asset allocation of the fund is set relative to a neutral position of 60% in
stocks and 40% in investment grade bonds. During the reporting period, the fund
benefited from an above neutral allocation to stocks maintained for the entire
reporting period. The benefits from this higher allocation to stocks were most
evident during stock market rallies in December 2003 and November 2004. The
returns of the fund were reduced by this strategy during July and August of
2004, when interest rates and stock prices declined.
STOCKS
The equity holdings of the fund produced lower returns than the S&P 500, which
returned 12.86% during the reporting period. The fund's returns relative to the
benchmark were reduced by a bias toward larger market capitalization stocks and
the specific stocks owned within certain sectors.
During the reporting period, stock returns were positive for most domestic and
global equity market benchmarks overall, continuing the trend that began in the
first quarter of 2003. In general, small and middle market capitalization stocks
had higher returns than large market capitalization stocks during the reporting
period. The fund's returns relative to the S&P 500 were reduced by a
higher-than-benchmark exposure to large market capitalization stocks.
Value-based strategies generally outperformed growth-based strategies as well.
The fund benefited from a slight value bias maintained during the reporting
period.
Sector allocation was a positive contributor to performance, while stock
selection was a negative contributor. From a sector positioning standpoint, the
fund's returns were aided by being overweight Energy, Telecommunication
Services, and Industrials. The fund's returns were limited by being underweight
Utilities and being overweight Materials and Consumer Staples. On a stock
selection basis, the fund's return was hindered by stock performance within the
Information Technology, Utilities, and Healthcare sectors. The fund benefited
from stock performance within the Energy and Industrials sectors.
Top contributors during the year were: Exxon Mobil , General Electric ,
Transocean Inc. , Halliburton , and Microsoft Corp. Laggards during the year
were: Intel Corp. , Cisco Systems , Pfizer Inc. , Hewlett-Packard , and Tenet
Healthcare .
FIXED INCOME
The bond portion of the fund outperformed its benchmark, the Lehman Aggregate,
which returned 4.44%, during the reporting period.
The bond market continued to benefit investors over the past 12 months despite
higher U.S. Treasury interest rates and commencement of the Federal Reserve
Board's (the "Fed") program to gradually tighten monetary policy. The first of a
series of 0.25% moves by the Fed began on June 30, 2004. Short- and
intermediate-term interest rates rose over the past 12 months, while long-term
rates were relatively unchanged. For example, Two-Year Treasury note rates had
risen by 95 basis points in the last year, while 30-year U.S. Treasury bond
rates had fallen 13 basis points. Spread bonds (such as agencies, corporates,
mortgage-backed securities and asset-backed securities) produced positive excess
returns compared to similar duration Treasury issues.
The portfolio's sector and security selection had the greatest positive impact
on the fund's performance during the past year, while its duration management
also added to returns. The portfolio duration was at 91% of the benchmark for
most of the past 12 months and slightly barbelled. Sector allocation was a huge
benefit to the portfolio due to a sizeable overweight in investment-grade and
noninvestment-grade corporate bonds, emerging markets, and international
developed country bonds. An underweight to mortgage-backed securities in the
latter part of the reporting period hurt performance.
Security selection in the fixed-income portion of the fund was a very positive
addition due mostly to positions in Delphi Funding group and Union Central Life
Insurance , two small- to mid-sized insurance companies that showed substantial
financial improvement over the past year. The portfolio also benefited slightly
from positions in BSkyB , Homer City , Valero Energy , and Mid-American Energy .
Securities that hurt performance included positions in Citizens Communications ,
Cox Communications , Husky Oil , Kennametal , and Century Tel .
Performance data quoted represents past performance which is no guarantee of
future results. Investment return and principal value will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than their original
cost. Mutual fund performance changes over time and current performance may be
lower or higher than what is stated. For current to the most recent month end
performance and after-tax returns, visit www.federatedinvestors.com or call
1-800-341-7400.
1 The S&P 500 is a capitalization-weighted index of 500 stocks designed to
measure performance of the broad domestic economy through changes in the
aggregate market value of 500 stocks representing all major industries. The
index is unmanaged, and unlike the fund, is not affected by cashflows.
Investments cannot be made in an index.
2 The Lehman Aggregate is composed of securities from the Lehman Brothers
Government/Corporate Bond Index, Mortgage-Backed Securities Index and the
Asset-Backed Securities Index. Total return comprises price
appreciation/depreciation and income as a percentage of the original investment.
Indexes are rebalanced monthly by market capitalization. The index is unmanaged,
and unlike the fund, is not affected by cashflows. Investments cannot be made in
an index.
GROWTH OF A $10,000 INVESTMENT -- CLASS A SHARES
The graph below illustrates the hypothetical investment of $10,000 (1) in the
Federated Stock and Bond Fund, Inc. (Class A Shares) (the "Fund") from October
31, 1994 to November 30, 2004 compared to the Standard and Poor's 500 Index (S&P
500), (2) the Lehman Brothers Aggregate Bond Index (LBAB), (2) and the Lipper
Balanced Funds Average (LBFA). (3)
Average Annual Total Return 4 for the Period Ended 11/30/2004
1 Year 1.97%
5 Years 2.08%
10 Years 8.20%
[GRAPHIC ILLUSTRATION-Federated Stock & Bond Fund, Inc.] The graphic
presentation here displayed consists of a line graph. The corresponding
components of the line graph are listed underneath. The Class A Shares of
Federated Stock & Bond Fund, Inc. (the "Fund") are represented by a solid line.
The S&P 500 is represented by a dotted line, the LBAB is represented by a broken
line and the LBFA is represented by a dash/dot/dash line. The line graph is a
visual representation of a comparison of change in value of a $10,000
hypothetical investment in the Class A Shares of the Fund, the S&P 500, the LBAB
and the LBFA. The "x" axis reflects computation periods from 10/31/94 to
10/31/04. The "y" axis reflects the cost of the investment. The right margin
reflects the ending value of the hypothetical investment in the Fund's Class A
Shares as compared to the S&P 500, the LBAB and the LBFA. The ending values were
$21,480, $29,562, $21,806 and $20,944, respectively.
Performance data quoted represents past performance which is no guarantee of
future results. Investment return and principal value will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than their original
cost. Mutual fund performance changes over time and current performance may be
lower or higher than what is stated. For current to the most recent month end
performance and after-tax returns, visit www.federatedinvestors.com or call
1-800-341-7400. Returns shown do not reflect the deduction of taxes that a
shareholder would pay on Fund distributions or the redemption of fund shares.
Mutual funds are not obligations of or guaranteed by any bank and are not
federally insured. Total returns reflect the maximum sales charge of 5.5%.
1 Represents a hypothetical investment of $10,000 in the Fund after deducting
the maximum sales charge of 5.50% ($10,000 investment minus $550 sales charge =
$9,450). The Fund's performance assumes the reinvestment of all dividends and
distributions. The S&P 500, LBAB and LBFA have been adjusted to reflect
reinvestment of dividends on securities in the indexes and average. 2 The S&P
500 and LBAB are not adjusted to reflect sales charges, expenses, or other fees
that the Securities and Exchange Commission (SEC) requires to be reflected in
the Fund's performance. The indexes are unmanaged, and unlike the Fund, are not
affected by cashflows. It is not possible to invest directly in an index.
3 The LBFA represents the average of the total returns reported by all of the
mutual funds designated by Lipper, Inc. as falling into the category indicated,
and is not adjusted to reflect any sales charges. 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.
The Vintage Balanced Fund
The last year has been marked by solid economic growth, excellent profit growth,
rising commodity prices and rising interest rates. The balance of positive and
negative influences has resulted in an historically narrow range of trading,
with a single significant rally occurring between the presidential election and
the end of December.
The longevity and strength of the recovery in corporate profitability has
surprised analysts for the last three quarters. While the job recovery has been
somewhat slower than expected, corporate conservatism has resulted in margins
that have now surpassed the cycle highs of 1999-2000.
Commodity prices have been a pivotal headwind for equities. Rising input costs
for many corporations have resulted in efforts to push through price increases.
Success increases fears of inflation, while failure to institute price increases
raises fears of margin compression and production slowdowns.
Rising interest rates have also put a damper on equity valuations, with concerns
that the Fed will need to continue raising rates for some time in order to
control percolating inflation pressures. Still, the equity markets appear to be
anticipating a much more hawkish Fed than the bond markets, as rates have risen
but remain historically low at less than 4.5%.
Outside of the commodity driven sectors, we view this as a stock selection
rather than a theme or sector driven market. Traditional sector rotation cycles
have not materialized and 2004 produced a relatively modest spread in sector
returns compared to recent years.
Over the twelve-month period ending March 31, 2005, the S&P 500 increased 4.8%,
led by the energy sector with a return of 44.1%. The utility, industrials, and
materials sectors also had strong returns for the period of 19.9%, 15.2%, and
14.8%, respectively. The financials and information technology sectors were the
weakest performers, with declines of 3.4% and 2.9%, respectively, for the
period.
The surging global oil demand, shortages of refining capacity, and unusual
capital restraint produced the strong performance in the energy sector over the
twelve-month period. In addition, the continuation of low interest rates and the
prospect of increased generation revenues as a result of higher oil and natural
gas prices resulted in strong utility sector performance. The industrials sector
benefited from continuing growth in capital equipment purchases and strong
demand for transportation services, which has been a result of the fact that
many firms deferred purchases during the early part of the decade as a result of
weak economic conditions. Further, the materials sector benefited from strong
global demand for a variety of materials (steel, copper, etc.) as a result of
high levels of construction and manufacturing activity, particularly in China
and the U.S.
The underperformance of the financial sector resulted from the threat of rising
interest rates and the fear of widespread accounting irregularities at large
financial institutions as a result of those uncovered at American International
Group. Concern surrounding the potential effects on the economy of higher
interest rates and higher oil prices led to the decline in the information
technology sector. Additionally, healthcare sector returns were negatively
impacted by health concerns surrounding key drugs and the prospect for growth at
many of the major pharmaceutical companies.
The March Fed statement noted that inflationary pressures have picked up in
recent months. While we see some evidence of pricing power that has not existed
for many years, we believe the disinflationary influences of globalization and
technology-led productivity gains will prove to be more persistent than
cost-push inflation.
For the remainder of the year, we see fears of inflation and high oil prices as
being significant headwinds to stock prices. Likewise, the considerable
deceleration in earnings growth means earnings are unlikely to be a significant
upside catalyst on their own. Absolute valuations are not particularly
compelling, but equities are unusually attractive when compared to other asset
classes. Therefore, we expect range bound to lower trading, with a reduction in
either inflation expectations or oil prices necessary to push stocks materially
higher.
For the year, Exxon Mobil was the single greatest contributor to fund
performance by a considerable margin as it was our largest energy sector
holding. We also benefited by the strength of the transportation market with a
position in Burlington Northern Santa Fe, which produced the highest percent
return of any stock in the portfolio. Our ownership of Edison International,
helped us keep pace with strong returns in the utility sector, while Praxair was
our best performing materials holding.
Conversely, our positions in Citigroup and American International Group were
hurt by concerns over interest rates and accounting fears. Likewise, the focus
on health risks of key Pfizer drugs negatively impacted performance. Finally,
technology stocks hindered fund performance with Cisco Systems having the most
impact.
As we move into the next fiscal year, we are managing our energy position very
close to the benchmark with an occasional bias to the upside. We are positioned
to benefit from higher interest rates but are focusing on stock selection within
the sectors in order to reduce volatility. We have a slight premium in dividend
yield and maintain a valuation discount to the market, in order to maximize our
relative performance in a market that lacks clear direction.
Value of a Hypothetical $10,000 Investment
[GRAPHIC ILLUSTRATION-Vintage Balanced Fund]
The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed underneath. The Vintage
Balanced Fund (the "Fund") is represented by a solid line. The 50% S&P 500 Stock
Index/50% Lehman Brothers Intermediate Government/Credit Index is represented by
a broken line a. The line graph is a visual representation of a comparison of
change in value of a $10,000 hypothetical investment in the shares of the Fund
and the 50% S&P 500 Stock Index/50% Lehman Brothers Intermediate
Government/Credit Index. The "x" axis reflects computation periods from 6/1/95
to 3/31/05. The "y" axis reflects the cost of the investment. The right margin
reflects the ending value of the hypothetical investment in the Fund's shares as
compared to the 50% S&P 500 Stock Index/50% Lehman Brothers Intermediate
Government/Credit Index. The ending values were $20,547 and $22,758,
respectively. The legend in the bottom quadrant of the graphic presentation
indicates the Fund's Average Annual Total Returns for the one-year and
three-year period ended 3/31/2005 and from the start of performance of (6/1/95).
The total returns for the one year period, three-year and start of performance
periods for the Fund were 1.61%, -4.02% and 6.04%, respectively.
Performance data quoted represent past performance; past performance is not
predictive of future results. The value of shares in the Vintage Mutual Funds
will fluctuate so that the shares, when redeemed, may be worth more or less than
their original cost. The composition of the Fund's holdings is subject to
change. Performance data current to the most recent month end may be obtained by
accessing the website at www.vintagefunds.com.
Bond Funds will tend to experience smaller fluctuations in value than stock
funds. However, investors in any bond fund should anticipate fluctuations in
price, especially for longer-term issues and in environments of rising interest
rates.
Equity securities (stocks) are more volatile and carry more risk than other
forms of investments, including investments in high-grade fixed income
securities. The net asset value per share of this Fund will fluctuate as the
value of the securities in the portfolio changes.
The performance of the Vintage Balanced Fund is measured against a composite of
the S&P 500 Index, an unmanaged index generally representative of the
performance of the U.S. stock market, and the Lehman Brothers Intermediate
Government/ Credit Index, an unmanaged index generally considered to be
representative of the performance of government and corporate bonds with
maturities of 1-10 years. In the composite, each index is given a 50% weighting.
The two indices do not reflect the deduction of fees associated with a mutual
fund, such as investment management fees. The Fund's performance reflects the
deduction of fees for these value-added services. The performance table and
graph do not reflect the deduction of taxes that a shareholder would pay on fund
distributions or the redemption of fund shares.
STATEMENT OF ADDITIONAL INFORMATION
June __, 2005
Acquisition of the assets of
VINTAGE EQUITY FUND,
a portfolio of Vintage Mutual Funds
1415 28th Street, Suite 200
West Des Moines, IA 50266
Telephone No: 1-800-438-6875
By and in exchange for Class A Shares of
FEDERATED CAPITAL APPRECIATION FUND,
a portfolio of Federated Equity Funds
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, Pennsylvania 15237-7000
Telephone No: 1-800-341-7400
Acquisition of the assets of
VINTAGE GROWTH FUND,
a portfolio of Vintage Mutual Funds
1415 28th Street, Suite 200
West Des Moines, IA 50266
Telephone No: 1-800-438-6875
By and in exchange for Class A Shares of
FEDERATED CAPITAL APPRECIATION FUND,
a portfolio of Federated Equity Funds
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, Pennsylvania 15237-7000
Telephone No: 1-800-341-7400
Acquisition of the assets of
VINTAGE BALANCED FUND,
a portfolio of Vintage Mutual Funds
1415 28th Street, Suite 200
West Des Moines, IA 50266
Telephone No: 1-800-438-6875
By and in exchange for Class A Shares of
FEDERATED STOCK & BOND FUND, INC.
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, Pennsylvania 15237-7000
Telephone No: 1-800-341-7400
This Statement of Additional Information, dated ______________, 2005, is
not a prospectus. A Combined Prospectus and Proxy Statement, dated
________________, 2005, related to the above-referenced matter may be obtained
from Federated Equity Funds, on behalf of Federated Capital Appreciation Fund
and Federated Stock & Bond Fund, Inc., at Federated Investors Funds, 5800
Corporate Drive, Pittsburgh, Pennsylvania 15237-7000. This Statement of
Additional Information should be read in conjunction with such Combined
Prospectus and Proxy Statement.
TABLE OF CONTENTS
1. Statement of Additional Information of Federated Capital Appreciation
Fund, a portfolio of Federated Equity Funds, dated December 31, 2004.
2. Statement of Additional Information of Federated Stock & Bond Fund, Inc.,
dated January 31, 2005.
3. Statement of Additional Information of the Vintage Equity Fund, Vintage
Growth Fund and Vintage Balanced Fund, portfolios of Vintage Mutual Funds,
Inc., dated July 29, 2004.
5. Audited Financial Statements of Federated Capital Appreciation Fund, a
portfolio of Federated Equity Funds, dated October 31, 2004.
6. Audited Financial Statements of Federated Stock & Bond Fund, Inc., dated
November 30, 2004.
7. Audited Financial Statements of the Vintage Equity Fund, Vintage Growth
Fund and Vintage Balanced Fund, portfolios of Vintage Mutual Funds, Inc.,
dated March 31, 2005.
8. Unaudited Financial Statements of Federated Capital Appreciation Fund, a
portfolio of Federated Equity Funds, dated April 30, 2005.
9. Unaudited Financial Statements of Federated Stock & Bond Fund, Inc., dated
May 31, 2004.
10. Unaudited Financial Statements of the Vintage Equity Fund, Vintage Growth
Fund and Vintage Balanced, a portfolio of Vintage Mutual Funds, Inc.,
dated September 30, 2004.
.
PAGE 11
INFORMATION INCORPORATED BY REFERENCE
The Statement of Additional Information of Federated Capital Appreciation
Fund, a portfolio of Federated Equity Funds, dated December 31, 2004, is
incorporated by reference to Federated Equity Funds' Post-Effective Amendment
No. 67 to its Registration Statement on Form N-1A (File No. 2-91090), which was
filed with the Securities and Exchange Commission on or about December 30, 2004.
A copy may be obtained from the Fund at 1-800-341-7400.
The Statement of Additional Information of Federated Stock & Bond Fund,
Inc., dated January 31, 2005, is incorporated by reference to Federated Stock &
Bond Fund, Inc.'s Post-Effective Amendment No. 108 to its Registration Statement
on Form N-1A (File No. 2-10415), which was filed with the Securities and
Exchange Commission on or about January 31, 2005. A copy may be obtained from
the Fund at 1-800-341-7400.
The Statement of Additional Information of Vintage Equity Fund, Vintage
Growth Fund and Vintage Balanced Fund, portfolios of Vintage Mutual Funds, Inc.,
dated July 29, 2004, is incorporated by reference to Vintage Mutual Fund, Inc.'s
Post-Effective Amendment No. 25 to its Registration Statement on Form N-1A (File
No. 33-87498), which was filed with the Securities and Exchange Commission on or
about July 29, 2004. A copy may be obtained from the Fund at 1-800-438-6875.
The audited financial statements of Federated Capital Appreciation Fund,
dated October 31, 2004, are incorporated by reference to the Annual Report to
shareholders of Federated Capital Appreciation Fund, which was filed with the
Securities and Exchange Commission pursuant to Section 30(b) of the Investment
Company Act of 1940, as amended, on or about December 29, 2004.
The audited financial statements of Federated Stock & Bond Fund, Inc.,
dated November 30, 2004, are incorporated by reference to the Annual Report to
shareholders of Federated Stock & Bond Fund, Inc., which was filed with the
Securities and Exchange Commission pursuant to Section 30(b) of the Investment
Company Act of 1940, as amended, on or about January 28, 2005.
The audited financial statements of Vintage Equity Fund, Vintage Growth
Fund and Vintage Balanced Fund., dated March 31, 2005, are incorporated by
reference to the Annual Report to shareholders of Vintage Equity Fund, Vintage
Growth Fund and Vintage Balanced Fund, which was filed with the Securities and
Exchange Commission pursuant to Section 30(b) of the Investment Company Act of
1940, as amended, on or about May 26, 2005.
The unaudited financial statements of Federated Capital Appreciation Fund,
dated April 30, 2005 are incorporated by reference to the Semi-Annual Report to
shareholders of Federated Capital Appreciation Fund, which was filed with the
Securities and Exchange Commission pursuant to Section 30(b) of the Investment
Company Act of 1940, as amended, on or about June 27, 2005.
The unaudited financial statements of Federated Stock & Bond Fund, Inc.,
dated May 31, 2004 are incorporated by reference to the Semi-Annual Report to
shareholders of Federated Stock & Bond Fund, Inc., which was filed with the
Securities and Exchange Commission pursuant to Section 30(b) of the Investment
Company Act of 1940, as amended, on or about July 26, 2004.
The unaudited financial Statements of Vintage Equity Fund, Vintage Growth
Fund and Vintage Balanced Fund dated, dated September 30, 2004 are incorporated
by reference to the Semi-Annual Report to shareholders of Vintage Equity Fund,
Vintage Growth Fund and Vintage Balanced Fund, which was filed with the
Securities and Exchange Commission pursuant to Section 30(b) of the Investment
Company Act of 1940, as amended, on or about December 3, 2004.
- 3 -
VINTAGE MUTUAL FUNDS, INC.
Vintage Equity Fund
Vintage Growth Fund
Vintage Balanced Fund
Investment Adviser
Investors Management Group, Ltd.
1415 28th Street
Suite 200
West Des Moines, IA 50266
Distributor
BISYS Fund Services Limited Partnership
3435 Stelzer Road
Columbus, Ohio 43219
Administrator
Investors Management Group, Ltd.
1415 28th Street
Suite 200
West Des Moines, IA 50266
PART C. OTHER INFORMATION.
Item 15. Indemnification:
Indemnification is provided to Trustees and officers of Federated Stock & Bond
Fund, Inc. (the "Registrant") pursuant to the Registrant's Articles of
Incorporation and Bylaws, except where such indemnification is not permitted by
law. However, the Articles of Incorporation and Bylaws do not protect the
Directors or officers from liability based on willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the conduct of
their office. Directors and officers of the Registrant are insured against
certain liabilities, including liabilities arising under the Securities Act of
1933 (the "Act").
Insofar as indemnification for liabilities arising under the Act may be
permitted to Directors, officers, and controlling persons of the Registrant by
the Registrant pursuant to the Articles of Incorporation or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by Directors, officers, or controlling
persons of the Registrant in connection with the successful defense of any act,
suit, or proceeding) is asserted by such Directors, officers, or controlling
persons in connection with the shares being registered, the Registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
Insofar as indemnification for liabilities may be permitted pursuant to Section
17 of the 1940 Act for Directors, officers, or controlling persons of the
Registrant by the Registrant pursuant to the Declaration of Trust or otherwise,
the Registrant is aware of the position of the Securities and Exchange
Commission as set forth in Investment Company Act Release No. IC-11330.
Therefore, the Registrant undertakes that in addition to complying with the
applicable provisions of the Declaration of Trust or otherwise, in the absence
of a final decision on the merits by a court or other body before which the
proceeding was brought, that an indemnification payment will not be made unless
in the absence of such a decision, a reasonable determination based upon factual
review has been made (i) by a majority vote of a quorum of non-party Directors
who are not interested persons of the Registrant or (ii)
by independent legal counsel in a written opinion that the indemnitee was not
liable for an act of willful misfeasance, bad faith, gross negligence, or
reckless disregard of duties. The Registrant further undertakes that advancement
of expenses incurred in the defense of a proceeding (upon undertaking for
repayment unless it is ultimately determined that indemnification is
appropriate) against an officer, Trustee, or controlling person of the
Registrant will not be made absent the fulfillment of at least one of the
following conditions: (i) the indemnitee provides security for his undertaking;
(ii) the Registrant is insured against losses arising by reason of any lawful
advances; or (iii) a majority of a quorum of disinterested non-party Directors
or independent legal counsel in a written opinion makes a factual determination
that there is reason to believe the indemnitee will be entitled to
indemnification.
Item 16. Exhibits
1 Conformed copy of Articles of Amendment to the Articles of Incorporation
of the Registrant; (25)
1.1 Conformed copy of Articles Supplementary, to the Articles of Incorporation
of the Registrant; (25)
2. Copies of By-Laws of the Registrant as amended; (14)
2.1 Copy of Amendment #13 to the By-Laws of the Registrant; (19)
2.2 Copy of Amendment #14 to the By-Laws of the Registrant; (19)
2.3 Copy of Amendment #15 to the By-Laws of the Registrant; (19)
2.4 Copy of Amendment #16 to the By-Laws of the Registrant; (22)
2.5 Copy of Amendment #17 to the By-Laws of the Registrant; (24)
2.6 Copy of Amendment #18 to the By-Laws of the Registrant; (25)
3. Not Applicable
4. Agreement and Plan of Reorganization is included as Exhibit 1 to the
Combined Proxy Statement and Prospectus of the Registration Statement*
5. Copy of Specimen Certificate for Shares of Capital Stock of the
Registrant; (15)
5.1 Copy of Specimen Certificate for Shares of Capital Stock (Class B Shares)
of the Registrant; (16)
5.2 Copy of Specimen Certificate for Shares of Capital Stock (Class C Shares)
of the Registrant; (16)
6. Conformed copy of Investment Advisory Contract of the Registrant; (13) 6.1
Conformed Copy of the Amendment to the Investment Advisory Contract of the
Registrant; (21)
6.2 Conformed copy of Assignment of Investment Advisory Contract of the
Registrant; (24)
6.3 Conformed copy of Sub-Advisory Agreement of the Registrant; (24)
7. Conformed copy of Distributor's Contract including Exhibit A of the
Registrant; (12)
7.1 Conformed copy of Exhibit B to the Distributor's Contract of the
Registrant; (15)
7.2 Conformed Copy of Distributor's Contract and Exhibit 1 to the
Distributor's Contract of the Registrant; (18)
7.3 The Registrant hereby incorporates the conformed copy of the specimen Mutual
Funds Sales and Service 7.4 Conformed Copy of Amendment dated June 01, 2001 to
the Distributor's
Contract of the Registrant; (21)
7.5 Conformed copy of Exhibit B to the Distributor's Contract of the
Registrant; (23)
7.6 Conformed copy of Exhibit C to the Distributor's Contract of the
Registrant; (23)
7.7 Conformed copy of Amendment dated October 01, 2003 to the Distributor's
Contract of the Registrant; (24)
8. Not Applicable
9. Conformed copy of Custodian Agreement of the Registrant; (13) 9.1 Conformed
copy of Custodian Fee Schedule; (17)
10. Copy of Distribution Plan of the Registrant dated February 12, 2004; (25)
10.1 Conformed copy of Exhibit A to the Distribution Plan of the Registrant;
(25) 10.2 Conformed copy of Exhibit B to the Distribution Plan of the
Registrant; (25) 10.3 Conformed copy of Exhibit 1 Amendment to Distribution Plan
of the Registrant
(Class B Shares); (18)
11. Form of Opinion and Consent of Counsel regarding the legality of Shares
being issued; *
12. Form of Opinion regarding tax consequences of Reorganization; (to be filed
by amendment)
13. The Registrant hereby incorporates the conformed copy of the Second
Amended and Restated Services Agreement, with attached Schedule 1 revised
6/30/04, from Item 23(h)(vii) of the Cash Trust Series, Inc. Registration
Statement on Form N-1A, filed with the Commission on July 29, 2004. (File
Nos.
33-29838 and 811-5843)
13.1 The Registrant hereby incorporates the conformed copy of the Financial
Administration and Accounting Services Agreement, with attached Exhibit A
revised 6/30/04, from Item (h)(viii) of the Cash Trust Series, Inc.
Registration Statement on Form N-1A, filed with the Commission on July 29,
2004. (File Nos. 33-29838 and 811-5843)
13.2 The Registrant hereby incorporates by reference the conformed copy of the
Agreement for Administrative Services, with Exhibit 1 and Amendments 1 and
2 attached, between Federated Administrative Services and the Registrant
from Item 23(h)(iv)of the Federated Total Return Series, Inc. Registration
Statement on Form N-1A, filed with the Commission on November 29, 2004.
(File Nos. 33-50773 and 811-7115);
13.3 The Registrant hereby incorporates the conformed copy of Transfer Agency
and Service Agreement between the Federated Funds and State Street Bank and
Trust Company from Item 23(h)(ix)of the Federated Total Return Government
Bond Fund Registration Statement on Form N-1A, filed with the Commission on
April 28, 2005. (File Nos. 33-60411 and 811-07309);
13.4 Conformed copy of Principal Shareholder Servicer's Agreement (Class B
Shares); (18)
13.5 Conformed copy of Shareholder Services Agreement (Class B Shares); (18)
14. Conformed copy of Consent of Independent Auditors of Federated Stock &
Bond Fund, Inc.; *
14.1 Conformed copy of Consent of Independent Auditors of Vintage Mutual Funds,
Inc.; *
15. Not Applicable
16. Conformed copy of Power of Attorney of the Registrant; (22) 16.1 Conformed
copy of Limited Power of Attorney of the Registrant; (16) 16.2 Conformed copy of
Power of Attorney of Chief Investment Officer of the
Registrant; (22)
16.3 Conformed copy of Power of Attorney of Treasurer of the Registrant; (19)
17. Form of Proxy; *
- ---------------------------------------------------------
* All exhibits are being filed electronically.
12. Response is incorporated by reference to Registrant's
Post-Effective Amendment No. 83 filed on Form N-1A December
28, 1993.(File Nos. 2-10415 and 811-1)
13. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 85 filed on Form N-1A December
29, 1994.(File Nos. 2-10415 and 811-1)
14. Response is incorporated by reference to Registrant's
Post-Effective Amendment No. 87 filed on Form N-1A December
27, 1995. (File Nos. 2-10415 and 811-1)
15. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 88 filed on Form N-1A July 1, 1996. (File Nos. 2-10415 and
811-1)
16. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 91 filed on Form N-1A December
23, 1996. (File Nos. 2-10415 and 811-1)
17. Response is incorporated by reference to Registrant's
Post-Effective Amendment No. 94 filed on Form N-1A October 31,
1997. (File Nos. 2-10415 and 811-1)
18. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 96 filed on Form N-1A December
29, 1997. (File Nos. 2-10415 and 811-1)
19. Response is incorporated by reference to Registrant's
Post-Effective Amendment No. 98 filed on Form N-1A December
30, 1998. (File Nos. 2-10415 and 811-1)
21. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 102 filed on Form N-1A December
26, 2001 (File Nos. 2-10415 and 811-1)
22. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 103 filed on Form N-1A December 30, 2002 (File Nos. 2-10415
and 811-1)
23. Response is incorporated by reference to Registrant's Post Effective
Amendment No. 105 filed on Form N-1A April 01, 2003 (File Nos.
2-10415 and 811-1)
24. Response is incorporated by reference to Registrant's Post Effective
Amendment No. 106 filed on Form N-1A January 23, 2004 (File Nos. 2-10415
and 811-1)
25. Response is incorporated by reference to Registrant's Post Effective
Amendment No. 107 filed on Form N-1A November 12, 2004 (File Nos. 2-10415
and 811-1)
Item 17. Undertakings
(1) The undersigned Registrant agrees that prior to any public reoffering
of the securities registered through the use of a prospectus which is a part of
this Registration Statement by any person or party who is deemed to be an
underwriter within the meaning of Rule 145(c) of the Securities Act of 1933, the
reoffering prospectus will contain the information called for by the applicable
registration form for reofferings by persons who may be deemed underwriters, in
addition to the information called for by the other items of the applicable
form.
(2) The undersigned Registrant agrees that every prospectus that is filed
under paragraph (1) above will be filed as a part of an amendment to the
Registration Statement and will not be used until the amendment is effective,
and that, in determining any liability under the Securities Act of 1933, each
post-effective amendment shall be deemed to be a new Registration Statement for
the securities offered therein, and the offering of the securities at that time
shall be deemed to be the initial bona fide offering of them.
(3) The undersigned Registrant agrees to file by Post-Effective Amendment
the opinion of counsel regarding the tax consequences of the proposed
reorganization required by Item 16(12) of Form N-14 within a reasonable time
after receipt of such opinion.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant, STOCK & BOND FUND, INC., has duly caused its Registration
Statement on Form N-14 to be signed on its behalf by the undersigned, thereto
duly authorized, in the City of Pittsburgh and Commonwealth of Pennsylvania, on
the 28th day of June, 2005.
FEDERATED STOCK AND BOND FUND, INC.
BY: /s/ Todd P. Zerega
Todd P. Zerega, Assistant Secretary
June 28, 2005
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to its Registration Statement has been signed below by the
following person in the capacity and on the date indicated:
NAME TITLE DATE
- ---- ----- ----
By: /s/ Todd P. Zerega
Todd P. Zerega Attorney In Fact June 28, 2005
ASSISTANT SECRETARY For the Persons
Listed Below
John F. Donahue* Chairman and Director
J. Christopher Donahue* President and Director
(Principal Executive Officer)
Richard J. Thomas * Treasurer
(Principal Financial Officer)
Thomas G. Bigley* Director
John T. Conroy, Jr.* Director
Nicholas P. Constantakis* Director
John F. Cunningham* Director
Lawrence D. Ellis, M.D.* Director
Peter E. Madden* Director
Charles F. Mansfield, Jr* Director
John E. Murray, Jr., J.D., S.J.D.* Director
Marjorie P. Smuts* Director
John S. Walsh* Director
* By Power of Attorney