File No. 333-126178
As filed with the Securities and Exchange Commission on August 9, 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. 1
Post-Effective Amendment No. __
(Check appropriate box or boxes)
FEDERATED STOCK AND 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 SEPTEMBER 15, 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 1415 28th
Street, West Des Moines, Iowa, at 10:00 a.m. (Central time), on September 15,
2005 for the following purposes:
1. To approve or disapprove a proposed Agreement and Plan of Reorganization
pursuant to which 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 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 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 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 Federated Stock and Bond Fund, Inc. would acquire all of the
assets of the Vintage Balanced Fund in exchange for Class A Shares of Federated
Stock and 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 August 3, 2005 as the record date for
determination of shareholders entitled to vote at the special
meeting.
By Order of the Board of Directors,
/s/ Amy Mitchell
Amy Mitchell
Secretary
August 10, 2005
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.
PROSPECTUS/PROXY STATEMENT
August 10, 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
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
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
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
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
Telephone No: 1-800-438-6875
By and in exchange for Class A Shares of
FEDERATED STOCK AND 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 Federated Capital
Appreciation Fund in exchange for Class A Shares of Federated Capital
Appreciation Fund and the Vintage Balanced Fund would transfer all its assets to
Federated Stock and Bond Fund, Inc. in exchange for Class A Shares of Federated
Stock and Bond Fund, Inc. (collectively, "Federated Fund Shares"). Hereinafter,
Federated Capital Appreciation Fund and Federated Stock and 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. 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. Federated Stock and 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
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 prospectus of Federated Capital
Appreciation Fund dated December 31, 2004 and the prospectus of Federated Stock
and Bond Fund, Inc. dated January 31, 2005. A Statement of Additional
Information relating to this Prospectus/Proxy Statement dated August 10, 2005,
is incorporated herein by reference. Statements of Additional Information for
Federated Capital Appreciation Fund dated December 31, 2004 and Federated Stock
and Bond Fund, Inc. dated January 31, 2005; and a prospectus and Statement of
Additional Information for the Vintage Funds dated July 29, 2005, have been
filed with the Securities and Exchange Commission (the "Commission" or "SEC")
and are incorporated herein by reference. Further information about Federated
Capital Appreciation Fund's performance is contained in 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 Federated
Stock and Bond Fund, Inc.'s performance is contained in Federated Stock and 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, 2005, 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 1
Reasons for the Proposed Reorganizations 1
Comparison of Investment Objectives, Policies and Risks 2
Federated Capital Appreciation Fund - Vintage Equity Fund 2
Federated Capital Appreciation Fund - Vintage Growth Fund 3
Federated Stock and Bond Fund, Inc. - Vintage Balanced Fund 5
Investment Limitations-Each Federated Fund and Vintage Fund 6
Comparative Fee Tables 8
Federated Capital Appreciation Fund - Vintage Equity Fund 8
Federated Capital Appreciation Fund - Vintage Growth Fund 10
Federated Stock and Bond Fund, Inc. - Vintage Balanced Fund 15
Comparison of Potential Risks and Rewards; Performance Information 20
Federated Capital Appreciation Fund - Vintage Equity Fund and
Vintage Growth Fund 20
Federated Stock and Bond Fund, Inc. - Vintage Balanced Fund 24
Investment Advisers 27
Portfolio Managers 27
Advisory and Other Fees 29
Purchases, Redemptions and Exchange Procedures; Dividends and
Distributions; Retirement Plan Custodian; Legal and Regulatory Matters 31
INFORMATION ABOUT THE REORGANIZATIONS 35
Description of the Plans of Reorganization 35
Description of Federated Fund Shares and Capitalization 36
Federal Income Tax Consequences 37
Agreement Among AMCORE/IMG and Federated Investors, Inc. 39
Reasons for the Reorganizations 39
Comparative Information on Shareholder Rights and Obligations 40
INFORMATION ABOUT THE FEDERATED FUNDS AND THE VINTAGE FUNDS 42
Federated Funds 42
Vintage Funds 43
ABOUT THE PROXY SOLICITATION AND THE SPECIAL MEETING 43
Proxies, Quorum and Voting at the Special Meeting 43
Share Ownership of the Funds 44
OTHER MATTERS AND DISCRETION OF ATTORNEYS NAMED IN THE PROXY 46
SUMMARY OF INVESTMENT LIMITATIONS (Annex A) 47
AGREEMENTS AND PLANS OF REORGANIZATION (Exhibit A) A-1
Federated Capital Appreciation Fund - Vintage Equity Fund A-1
Federated Capital Appreciation Fund - Vintage Growth Fund A-13
Federated Stock and Bond Fund, Inc. - Vintage Balanced Fund A-25
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE (Exhibit B) B-1
Federated Capital Appreciation Fund B-1
Vintage Equity Fund B-3
Vintage Growth Fund B-5
Federated Stock and Bond Fund, Inc. B-8
Vintage Balanced Fund B-11
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. A copy of each Federated Fund's prospectus
accompanies 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) Federated Capital Appreciation Fund would acquire all of the assets
of the Vintage Equity Fund and the Vintage Growth Fund in exchange for Federated
Capital Appreciation Fund's Class A Shares to be distributed pro rata by the
Vintage Equity Fund and Vintage Growth Fund to its shareholders in complete
liquidation and dissolution of the Vintage Equity Fund and Vintage Growth Fund
and (b) Federated Stock and Bond Fund, Inc. would acquire all of the assets of
the Vintage Balanced Fund in exchange for Federated Stock and 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. Consummation of any one
Reorganization is not conditioned upon the consummation of any other
Reorganization.
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 SEC. 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 REORGANIZATIONS.
Comparison of Investment Objectives, Policies and Risks
FEDERATED CAPITAL APPRECIATION FUND - VINTAGE EQUITY FUND
The investment objectives for Federated Capital Appreciation Fund and the
Vintage Equity Fund are similar. The investment objective of 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 Federated Capital Appreciation Fund and the Vintage Equity Fund pursue
their investment objective by investing primarily in common stocks of domestic
companies. Both Federated Capital Appreciation Fund and the Vintage Equity Fund
may also invest in convertible securities and American Depositary Receipts
(ADRs). Federated Capital Appreciation Fund selects stocks by evaluating 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. Using
this type of fundamental analysis the most promising companies are then chosen.
The Vintage Equity Fund's securities selection process features thorough
research and fundamental analysis seeking to identify investment opportunities
based on a long-term perspective and emphasizes quality and consistency of
earnings. The earnings focus of the selection process utilizes a number of
factors such as revenue potential, balance sheet strength, management quality,
industry leadership, profit margins, cash flow generation and identifiable
growth catalysts. Therefore, both Federated Capital Appreciation Fund and the
Vintage Equity Fund's approach to security selection emphasizes fundamental
analysis of companies.
Some of the main differences between Federated Capital Appreciation Fund and the
Vintage Equity Fund are as follows: Federated Capital Appreciation Fund uses
a blend of growth and value styles in that it seeks to invest in companies
with superior
growth prospects or companies whose stock is undervalued. The Vintage Equity
Fund seeks to in invest in companies with strong earnings potential; the Vintage
Equity Fund's investment strategy provides for the ability to invest in
preferred securities to a greater extent than Federated Capital Appreciation
Fund's investment strategy;
Federated Capital Appreciation Fund's investment strategy provides for the
ability to invest in derivative contracts such as, futures and options, to a
greater extent than the Vintage Equity Fund's investment strategy. Federated
Capital Appreciation Fund use of derivatives may cause it to be subject to the
risks of investing in derivative contracts and to liquidity risk to a greater
extent than the Vintage Equity Fund;
the market capitalization of the companies in which Federated Capital
Appreciation Fund and the Vintage Equity Fund invest in may be different.
Federated Capital Appreciation Fund invests primarily in medium to large
capitalization companies, while the Vintage Equity Fund invests primarily in
large capitalization companies. Additionally, Federated Capital Appreciation
Fund's investment strategy permits it to participate in initial public offerings
without regard to the issuer's market capitalization. Therefore, Federated
Capital Appreciation Fund may be subject to the risks of investing in companies
with smaller market capitalizations to a greater extent than the Vintage Equity
Fund; the Vintage Equity Fund has a specific investment policy that provides
that the Vintage Equity Fund will normally invest 80% of its assets in equity
securities. While Federated Capital Appreciation Fund's investment strategy
contemplates that it will invest primarily in equity securities, it does not
contain a corresponding investment policy requiring it to normally invest 80% of
its assets in equity securities; All mutual funds take investment risks.
Therefore, it is possible to lose money by investing in either Federated Capital
Appreciation Fund or the Vintage Equity Fund. In addition, both 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 the equity securities
rises and falls over short or extended periods of time; liquidity risk, which is
posed by the fact that equity securities or derivative contracts in which
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 (Federated Capital Appreciation Fund's investments in
derivative contracts or initial public offerings may subject Federated Capital
Appreciation Fund to liquidity risk to a greater extent then the Vintage Equity
Fund); risk related to company size, which is posed by the fact that the
companies in which Federated Capital Appreciation Fund and Vintage Equity 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 (as noted above Federated Capital Appreciation Fund may be
subject to risks related to company size to a greater extent than the Vintage
Equity Fund); risk of investing in ADRs, which is posed by the fact that the
ADRs in which Federated Capital Appreciation Fund and the Vintage Equity Fund
invests are issued by foreign companies, and therefore the share price of
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; and sector
risk, which is posed by the fact that both Federated Capital Appreciation Fund
and the Vintage Equity Fund may allocate relatively more assets to certain
industry sectors than others, and therefore, the performance of the funds may be
more susceptible to any developments which affect those sectors emphasized.
Also, as noted above, Federated Capital Appreciation Fund may be subject to the
risks of investing in derivative contracts 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.
FEDERATED CAPITAL APPRECIATION FUND - VINTAGE GROWTH FUND
The investment objectives for Federated Capital Appreciation Fund and the
Vintage Growth Fund are similar. The investment objective of Federated Capital
Appreciation Fund is to provide capital appreciation. The investment objective
of the Vintage Growth Fund is to provide long-term capital growth.
Both Federated Capital Appreciation Fund and the Vintage Growth Fund pursue
their investment objective by investing primarily in common stocks of domestic
companies. Both Federated Capital Appreciation Fund and the Vintage Growth Fund
may also invest in convertible securities and American Depositary Receipts
(ADRs). 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 invests primarily in companies that exhibit a strong
potential for price appreciation relative to other companies or relative to the
general equity markets. The Vintage Growth Fund invests in securities of
companies that its adviser believes to be in high growth industries, companies
with products in niche markets, and securities which are temporarily
undervalued. Federated Capital Appreciation Fund selects stocks by evaluating
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. Using
this type of fundamental analysis the most promising companies are then chosen.
The Vintage Growth Fund's securities selection process features thorough
research and fundamental analysis seeking to identify investment opportunities
based on a long-term perspective and emphasizes quality and consistency of
earnings. The earnings focus of the selection process utilizes a number of
factors such as revenue potential, balance sheet strength, management quality,
industry leadership, profit margins, cash flow generation and identifiable
growth catalysts. Therefore, both the Federated Vintage Growth Fund and
Federated Capital Appreciation Fund's approach to security selection emphasizes
fundamental analysis of companies.
Some of the main differences between the Vintage Growth Fund and Federated
Capital Appreciation Fund are as follows: Federated Capital Appreciation Fund
uses a blend of growth and value styles in that it seeks to invest in companies
with superior growth prospects or companies whose stock is undervalued. The
Vintage Growth Fund seeks to in invest in companies with a strong potential for
price appreciation relative to other companies and the general equity markets,
although as noted above the Vintage Growth Fund may also invest in securities
that are temporarily undervalued; the Vintage Growth Fund's investment strategy
provides for the ability to invest in preferred securities to a greater extent
than Federated Capital Appreciation Fund's investment strategy; Federated
Capital Appreciation Fund's investment strategy provides for the ability to
invest in derivative contracts such as, futures and options, to a greater extent
than the Vintage Growth Fund's investment strategy. Federated Capital
Appreciation Fund use of derivatives may cause it to be subject to the risks of
investing in derivative contracts and to liquidity risk to a greater extent than
the Vintage Growth Fund; the capitalization of the companies in which Federated
Capital Appreciation Fund and the Vintage Growth Fund invest in may be
different. Federated Capital Appreciation Fund invests primarily in medium to
large capitalization companies, while the Vintage Growth Fund invests in
companies with a range of market capitalizations. Additionally, Federated
Capital Appreciation Fund's investment strategy permits it to participate in
initial public offerings without regard to the issuer's market capitalization;
All mutual funds take investment risks. Therefore, it is possible to lose money
by investing in either Federated Capital Appreciation Fund or the Vintage Growth
Fund. In addition, both 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 and
derivative contracts in which 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 (Federated Capital
Appreciation Fund's investments in derivative contracts or initial public
offerings may subject Federated Capital Appreciation Fund to liquidity risk to a
greater extent then the Vintage Growth Fund); risk related to company size,
which is posed by the fact that the companies in which 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; 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
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; sector risk,
which is posed by the fact that both Federated Capital Appreciation Fund and the
Vintage Growth Fund may allocate relatively more assets to certain industry
sectors than others, and therefore, the performance of the funds may be more
susceptible to any developments which affect those sectors emphasized. Also, as
noted above, Federated Capital Appreciation Fund may be subject to the risks of
investing in derivative contracts 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.
FEDERATED STOCK AND BOND FUND, INC. - VINTAGE BALANCED FUND
The investment objectives of Federated Stock and Bond Fund Inc. and the Vintage
Balanced Fund are similar. The investment objective of Federated Stock and 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
Federated Stock and 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 Federated Stock and Bond Fund, Inc. 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 25% or more 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
Federated Stock and Bond Fund, Inc.'s investment strategy. Federated Stock and
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. Federated Stock and Bond Fund, Inc., with regard
to its equity portion of the portfolio, invests primarily in securities of
medium and large capitalization companies that offer superior growth prospects
or of companies whose stock is undervalued. The adviser for Federated Stock and
Bond Fund, Inc. evaluates a company's earnings potential, market valuation, and
expected long-term growth to narrow a list of attractive companies and then
evaluates the remaining companies based upon factors such as earnings quality
and the economic, financial market and industry factors that may affect the
issuing company. Federated Stock and Bond Fund, Inc. may invest a portion of its
equity portfolio in foreign securities and securities with smaller market
capitalizations. Federated Stock and Bond Fund, Inc. normally invests the
majority of the fixed income portion of its portfolio in domestic
investment-grade debt securities. Federated Stock and Bond Fund, Inc.'s adviser
selects the fixed income portion based upon an analysis of a variety of economic
and market indicators to arrive at a projected yield spread for each security
type (the yield spread is the difference between the yield of a security verses
the yield of a U.S. Treasury security with a comparable average life). The
security's projected spread is then weighed against the security's current
spread, credit risk and risk of prepayment. Federated Stock and Bond Fund,
Inc.'s weighted average effective maturity is determined by the economic and
market outlook of the fund's adviser. The Vintage Balanced Fund, with regard to
the equity portion of the portfolio, selects securities based on an earnings
focus that considers qualitative and quantitative factors. Such factors include
revenue potential, balance sheet strength, management quality, industry
leadership, profit margins, cash flow generation and identifiable growth
catalysts. 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. The Vintage
Balanced Fund may also invest up to 25% of the fixed income portion of its
portfolio in lower rated fixed income securities. All mutual funds take
investment risks. Therefore, it is possible to lose money by investing in either
Federated Stock and Bond Fund, Inc. or the Vintage Balanced Fund. In addition,
both Federated Stock and 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
Federated Stock and Bond Fund, Inc. and the Vintage Balanced Fund may invest in
are issued by foreign companies, and therefore the share price of Federated
Stock and 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 with this risk increasing as the
length of the maturity of the debt increases; 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; risk associated with noninvestment
grade securities, which occurs because Federated Stock and 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; 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; and sector risk, which
is posed by the fact that Federated Stock and Bond Fund, Inc. and the Vintage
Balanced 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.
Since Federated Stock and Bond Fund, Inc.'s 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, Federated Stock and Bond Fund, Inc. 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 or derivative
contracts may be less readily marketable and may be subject to greater
fluctuation in price than other securities or derivative contracts; (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; and (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.
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 Federated Capital
Appreciation Fund dated December 31, 2004 and Federated Stock and Bond Fund,
Inc. dated January 31, 2005, as applicable, and the prospectus and Statement of
Additional Information of the Vintage Funds dated July 29, 2005, 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. The limitations for the Federated Funds and the Vintage Funds are
generally similar; however, you may want to note these differences:
With regard to their limitation on borrowing money and issuing senior securities
Federated Capital Appreciation's limitation provides that the fund can borrow
money and issue senior securities to the maximum extent permitted under the 1940
Act; Federated Stock and Bond Fund, Inc.'s states that the fund will not issue
senior securities except as permitted by its investment objectives and policies
and can borrow up to one-third of its assets for temporary purposes or to meet
redemptions, but cannot borrow for investment leverage; the Vintage Funds may
not issue senior securities or borrow money except that the fund may borrow up
to 10% of their assets for temporary purposes but will not purchase securities
with borrowings in excess of 5% of its total assets; With regard to investing in
commodities the Federated Funds' limitation states that they will not invest in
commodities while the Vintage Funds' limitation states that they will not
purchase or sell commodities except to the extent disclosed in the current
prospectus of the funds; With regard to their limitation on purchasing illiquid
securities the Federated Funds may invest up to 15% of their assets in illiquid
securities while the Vintage Funds may only invest 10% of their assets in
illiquid securities; The Vintage Funds have the following non-fundamental
investment limitations that the Federated Funds do not have: The Vintage Funds
may not purchase participation or direct interests in oil, gas, or other mineral
exploration or development programs; The Vintage Funds may not invest more than
5% of total assets in puts, calls, straddles, spreads or any combination
thereof; The Vintage Funds may not invest more than 10% of total assets in
securities of issuers which together with any predecessors have a record of less
than three years' continuous operations; Federated Stock and Bond Fund, Inc. has
a non-fundamental limitation that prohibits it from investing in securities of a
company for the purpose of exercising control or management.
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
Federated Capital Appreciation Fund's 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's Class S Shares and Class
T Shares for its most recent fiscal year end.
Federated
Federated Capital Vintage Equity Capital
Appreciation Vintage Equity Fund-Class Appreciation
Fund-Class Fund-Class T Shares Fund
A Shares S Shares Class A
Shares Pro
Forma
Combined(5)
Shareholder Fees
Fees Paid Directly From Your Investment
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage 5.50% None None 5.50%
of offering price)
Maximum Deferred Sales Charge (Load) (as a percentage of original None None None None
purchase price or redemption proceeds, as applicable)
Maximum Sales Charge (Load) Imposed on Reinvested Dividends (and None None None None
other Distributions) (as a percentage of offering price)
Redemption Fee (as a percentage of amount redeemed, if applicable) None None None None
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%(3) 0.25%(2)
Shareholder Services Fee 0.25% 0.25% 0.25%(4) 0.25%
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 each 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 (after waiver) 1.25% 1.50% 1.25% 1.25%
2 Federated Capital Appreciation Fund's Class A Shares did not pay or accrue
the distribution (12b-1) fee for the fiscal year ended October 31, 2004.
Federated Capital Appreciation Fund's 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's 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's 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 Federated
Capital Appreciation Fund.
EXAMPLE
This Example is intended to help you compare the cost of investing in Federated
Capital Appreciation Fund's Class A Shares, the Vintage Equity Fund's Class S
and Class T Shares and Federated Capital Appreciation Fund's 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 Capital Appreciation
Fund's Class A Shares, the Vintage Equity Fund's Class S and Class T Shares and
Federated Capital Appreciation Fund's 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 A Shares $694 $998 $1,323 $2,242
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 $694 $998 $1,323 $2,242
Federated Capital Appreciation Fund - Vintage Growth Fund
Fees and Expenses
This table describes the fees and expenses of Federated Capital Appreciation
Fund's 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 Capital Vintage Federated Capital
Appreciation Growth Appreciation Fund
Fund-Class A Shares Vintage Class A Shares
Pro Forma
Combined(5)
Shareholder Fees
Fees Paid Directly From Your Investment
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering 5.50% None 5.50%
price)
Maximum Deferred Sales Charge (Load) (as a percentage of original purchase None None None
price or redemption proceeds, as applicable)
Maximum Sales Charge (Load) Imposed on Reinvested Dividends (and other None None None
Distributions) (as a percentage of offering price)
Redemption Fee (as a percentage of amount redeemed, if applicable) None None None
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%(3)
0.25%(2) Shareholder Services Fee 0.25% 0.25%(4) 0.25% 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 each 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 Federated Capital Appreciation Fund's Class A Shares did not pay or accrue the
distribution (12b-1) fee for the fiscal year ended October 31, 2004. Federated
Capital Appreciation Fund's 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 Federated Capital Appreciation Fund.
EXAMPLE
This Example is intended to help you compare the cost of investing in Federated
Capital Appreciation Fund's Class A Shares, the Vintage Growth Fund and
Federated Capital Appreciation Fund's 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 Capital Appreciation
Fund's Class A Shares, the Vintage Growth Fund and Federated Capital
Appreciation Fund's 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 A Shares $694 $998 $1,323 $2,242
Vintage Growth Fund $207 $640 $1,098 $2,369
Federated Capital Appreciation Fund-Class A Shares Pro Forma
Combined $694 $998 $1,323 $2,242
Federated Capital Appreciation Fund
Financial Highlights - Class A Shares
(For a Share Outstanding Throughout Each Period)
Six Months Ended
(unaudited) Year Ended October 31
4/30/2005 2004 2003 2002 2001 2000
Net Asset Value, Beginning of $24.04
Period $22.58 $19.40 $22.48 $29.05 $25.36
Income From Investment
Operations:
Net investment income 0.18 0.111 0.09 0.132 0.17 0.11
Net realized and unrealized
gain (loss) on investments,
futures contracts and options 0.30 1.46 3.17 (3.04)2 (4.97) 4.96
Total from investment operations 0.48 1.57 3.26 (2.91) (4.80) 5.07
Less Distributions:
Distributions from net
investment income (0.21) (0.11) (0.08) (0.17) (0.08) (0.07)
Distributions from net realized
gain on investments (0.02) -- -- -- (1.69) (1.31)
Total distributions (0.23) (0.11) (0.08) (0.17) (1.77) (1.38)
Net Asset Value, End of Period $24.29 $24.04 $22.58 $19.40 $22.48 $29.05
Total Return3 1.98%4 6.97%4 16.89% (13.10)% (17.25)% 20.61%
Ratios to Average Net Assets:
Expenses 1.23%5,6 1.25%6 1.27%6 1.23%6 1.23% 1.24%
Net investment income 1.38%5 0.46% 0.62% 0.76%2 0.80% 0.41%
Expense waiver/reimbursement7 0.01%5 0.00%8 0.00%8 0.00%8 0.00%8 0.00%8
Supplemental Data:
Net assets, end of period (000 $2,458,618 $2,605,203 $2,179,111 $1,337,564 $699,510 $637,523
omitted)
Portfolio turnover 14% 45% 40% 71% 61% 126%
1 Based on average shares outstanding.
2 Effective November 1, 2001, Federated Capital Appreciation Fund adopted the
provisions of the American Institute of Certified Public Accountants (AICPA)
Audit and Accounting Guide for Investment Companies and began accreting
discount/amortizing premium on long-term debt securities. For the year ended
October 31, 2002, this change had no effect on the net investment income per
share, the net realized and unrealized gain /loss on investments per share or
the ratio of net investment income to average net assets. Per share, ratios and
supplemental data for periods prior to November 1, 2001 have not been restated
to reflect this change in presentation.
3 Based on net asset value, which does not reflect the sales charge, redemption
fee or contingent deferred sales charge, if applicable. Total returns for
periods of less than one year are not annualized. 4 During the six months ended
April 30, 2005, and the year ended October 31, 2004, Federated Capital
Appreciation Fund was reimbursed by the adviser, which had an impact of less
than 0.01% on the total return. See Notes to Financial Statements (Note 5). 5
Computed on an annualized basis.
6 The expense ratio is calculated without reduction for fees paid indirectly for
directed brokerage arrangements. The impact to the expense ratios was less than
0.01% for the six-month period ended April 30, 2005 and the years ended October
31, 2004, October 31, 2003, and October 31, 2002, respectively, after taking
into account these expense reductions. 7 This voluntary expense decrease is
reflected in both the expense and the net investment income ratios shown above.
8 Represents less than 0.01%.
See Notes in Federated Capital Appreciation Fund's Annual Report which are
an integral part of the Financial Statements
Vintage Equity Fund-Class S Shares and Class T Shares
Vintage Growth Fund
Financial Highlights
The financial highlights table is intended to help you understand the Fund's
financial performance for the past five years (or, if shorter, the period of the
Fund's operations). Certain information reflects financial results for a single
Fund share. The total returns in the table represent the rate that an investor
would have earned (or lost) on an investment in the Fund (assuming reinvestment
of all dividends and distributions). Deloitte and Touche LLP audited the
information for the year ended March 31, 2004 and March 31, 2005. Their report,
along with the Fund's financial statements, are included in the Funds' annual
reports, which are available upon request. The financial information for the
periods prior to April 1, 2003 was audited by other auditors.
Investment Activities Dividends and Distributions
NAV Net Net Realized/ Total from From Net From Net Total
Beginning Investment Unrealized Investment Investment Realized Return of Dividends
of Period Income (Loss) Gains (Losses) Activities Income Gains Capital and
Distributions
Vintage Equity Fund-Class S Shares
Year Ended March 31, 2005 $ 13.96 0.09 0.25 0.34 0.00 0.00 0.00 0.00
Year Ended March 31, 2004 $ 11.19 (0.03) 2.80 2.77 0.00 0.00 0.00 0.00
Year Ended March 31, 2003 $ 15.83 (0.04) (4.60) (4.64) 0.00 0.00 0.00 0.00
Year Ended March 31, 2002 $ 16.44 (0.09) (0.52) (0.61) 0.00 0.00 0.00 0.00
Year Ended March 31, 2001 $ 23.28 (0.09) (4.94) (5.03) 0.00 (1.81) 0.00 (1.81)
Vintage Equity Fund-Class T Shares
Year Ended March 31, 2005 $ 14.17 0.14 0.24 0.38 0.00 0.00 0.00 0.00
Year Ended March 31, 2004 $ 11.33 0.00 2.84 2.84 0.00 0.00 0.00 0.00
Year Ended March 31, 2003 $ 15.99 (0.01) (4.65) (4.66) 0.00 0.00 0.00 0.00
Year Ended March 31, 2002 $ 16.56 (0.04) (0.53) (0.57) 0.00 0.00 0.00 0.00
Year Ended March 31, 2001 $ 23.38 (0.03) (4.98) (5.01) 0.00 (1.81) 0.00 (1.81)
Vintage Growth Fund
Year Ended
March 31, 2005 $ 9.59 0.00 (0.48) (0.48) 0.00 0.00 0.00 0.00
Year Ended
March 31, 2004 $ 6.93 (0.06) 2.72 2.66 0.00 0.00 0.00 0.00
Year Ended
March 31, 2003 $ 10.51 (0.05) (3.53) (3.58) 0.00 0.00 0.00 0.00
Year Ended
March 31, 2002 $ 11.03 (0.09) (0.35) (0.44) 0.00 (0.08) 0.00 (0.08)
Year Ended
March 31, 2001 $ 20.49 (0.10) (5.93) (6.03) 0.00 (3.43) 0.00 (3.43)
Total Return / Ratios / Supplementary Data
----------------------------------------------------------------------------------------
NAV Total Net Assets Ratio of Ratio of Net Ratio of Ratio of Net
Investment Investment
End of Income (Loss) Expenses to Income (Loss)
Period Expenses to to Average to
End of (000 Average Average Net Net Assets* Average Net Portfolio
Period Return omitted) Net Assets Assets* Assets* Turnover
------------------------------------------------ ---------------- ------------------------------
Vintage Equity-Fund
Class S Shares
Year Ended March 31, 2005 $ 14.30 2.44 % $ 79,075 1.50 % 0.49% - - 39.55 %
Year Ended March 31, 2004 $ 13.96 24.75 % $ 113,425 1.49 % (0.25%) - - 83.72 %
Year Ended March 31, 2003 $ 11.19 (29.31 %) $ 110,017 1.41 % (0.30%) - - 38.63 %
Year Ended March 31, 2002 $ 15.83 (3.65 %) $ 204,521 1.39 % (0.52%) - - 58.75 %
Year Ended March 31, 2001 $ 16.44 (22.98 %) $ 232,217 1.39 % (0.40%) - - 71.85 %
Vintage Equity Fund-Class
T Shares
Year Ended March 31, 2005 $ 14.55 2.69 % $ 34,457 1.25 % 0.59% 1.50 % 0.34 % 39.55 %
Year Ended March 31, 2004 $ 14.17 25.07 % $ 92,185 1.24 % 0.00% - - 83.72 %
Year Ended March 31, 2003 $ 11.33 (29.14 %) $ 92,735 1.16 % (0.05%) - - 38.63 %
Year Ended March 31, 2002 $ 15.99 (3.44 %) $ 162,622 1.14 % (0.27%) - - 58.75 %
Year Ended March 31, 2001 $ 16.56 (22.79 %) $ 182,099 1.14 % (0.15%) - - 71.85 %
Vintage Growth Fund
Year Ended March 31, 2005 $ 9.11 (5.01 %) $ 34,311 1.54 % 0.13% 1.79 % (0.12 %) 57.72 %
Year Ended March 31, 2004 $ 9.59 38.38 % $ 50,256 1.53 % (0.66%) - - 143.93 %
Year Ended March 31, 2003 $ 6.93 (34.06 %) $ 36,107 1.52 % (0.68%) - - 80.30 %
Year Ended March 31, 2002 $ 10.51 (4.12 %) $ 94,754 1.36 % (0.81%) - - 106.39 %
Year Ended March 31, 2001 $ 11.03 (32.83 %) $ 105,225 1.33 % (0.66%) - - 183.82 %
* During the period certain fees were voluntarily reduced. If such voluntary fee
reductions had not occurred, the ratios would have been as indicated.
Federated Stock and Bond Fund, Inc. - Vintage Balanced Fund
Fees and Expenses
This table describes the fees and expenses of Federated Stock and Bond Fund,
Inc.'s 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 Stock and Federated Stock and Bond
Bond Fund, Inc.-Class Vintage Fund, Inc.-Class A Shares
A Shares Balanced Pro Forma Combined(6)
Shareholder Fees Fund
Fees Paid Directly From Your Investment
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of 5.50% None 5.50%
offering price)
Maximum Deferred Sales Charge (Load) (as a percentage of original None None None
purchase price or redemption proceeds, as applicable)
Maximum Sales Charge (Load) Imposed on Reinvested Dividends (and other None None None
Distributions) (as a percentage of offering price)
Redemption Fee (as a percentage of amount redeemed, if applicable) None None None
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 each 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 waivers) 1.29% 1.35% 1.29%
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 Federated Stock and Bond Fund, Inc..
EXAMPLE
This Example is intended to help you compare the cost of investing in Federated
Stock and Bond Fund, Inc.'s Class A Shares, the Vintage Balanced Fund and
Federated Stock and Bond Fund, Inc.'s 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.'s Class A Shares, the Vintage Balanced Fund and Federated Stock and Bond
Fund, Inc.'s 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 A Shares $675 $939 $1,224 $2,032
Vintage Balanced Fund $196 $606 $1,042 $2,254
Federated Stock and Bond Fund, Inc.-Class A Shares Pro Forma $675 $939 $1,224 $2,032
Combined
Federated Stock And Bond Fund, Inc.
Financial Highlights - Class A Shares
(For a Share Outstanding Throughout Each Period)
Six Months
Ended Period
(unaudited) Year Ended Ended Year Ended October 31,
5/31/2005 11/30/2004 11/30/2003 1 2003 2002 2001 2000
Net Asset Value, $18.38 $17.38 $17.32
Beginning of Period $15.61 $17.22 $18.78 $18.71
Income From Investment
Operations:
Net investment income 0.14 0.36 0.02 0.31 0.39 0.48 0.55
Net realized and
unrealized gain (loss) on
investments, foreign 0.18 1.01 0.11
currency transactions,
and futures contracts 1.71 (1.62 ) (1.04 ) 0.48
Total from investment
operations 0.32 1.37 0.13 2.02 (1.23 ) (0.56 ) 1.03
Less Distributions:
Distributions from net (0.13) (0.37 ) (0.07 )
investment income (0.31 ) (0.38 ) (0.53 ) (0.54)
Distributions from net
realized gain on
investments, foreign --- -- --
currency transactions,
and futures contracts --- --- (0.47 ) (0.42)
Total distributions (0.13) (0.37 ) (0.07 ) (0.31 ) (0.38 ) (1.00 ) (0.96)
Net Asset Value, End of $18.57 $18.38 $17.38
Period $17.32 $15.61 $17.22 $18.78
Total Return2 1.74%3 7.89 % 0.75 % 13.08 % (7.32 )% (3.12 )% 5.79%
Ratios to Average Net
Assets:
Expenses 1.24%4,5 1.29 %5 1.26 %4,5 1.31 %5 1.26 %5 1.31 % 1.29%
Net investment income 1.50%4 1.72 % 1.64 %4 1.89 % 2.32 % 2.64 % 2.98%
Expense 0.00%4,7 0.01 % 0.01 %4
waiver/reimbursement6 0.00 %7 0.00 %7 0.00 %7 0.00%7
Supplemental Data:
Net assets, end of period
(000 omitted) $230,150 $237,428 $226,701 $224,461 $184,294 $175,854 $177,236
Portfolio turnover 17% 47 % 1 % 74 % 54 % 28 % 26%
Federated Stock and Bond Fund, Inc. changed its fiscal year end from October 31
to November 30. This period represents the one-month period from November 1,
2003 to November 30, 2003. Based on net asset value, which does not reflect the
sales charge, redemption fee, or contingent deferred sales charge, if
applicable. Total returns for periods of less than one year are not annualized.
During the period, Federated Stock and Bond Fund, Inc. was reimbursed by the
adviser, which had an impact of less than 0.01% on total return. (See Notes to
Financial Statements, Note 5.) Computed on an annualized basis.
The expense ratio is calculated without reduction for fees paid indirectly for
directed brokerage arrangements. The impact to the expense ratios was less than
0.01% for the six months ended May 31, 2005, the year ended November 30, 2004,
the period ended November 30, 2003, and the years ended October 31, 2003 and
October 31, 2002, respectively, after taking into account these expense
reductions. This voluntary expense decrease is reflected in both the expense and
the net investment income ratios shown above. Represents less than 0.01%.
See Notes in Federated Stock and Bond Fund, Inc.'s Annual Report which are an
integral part of the Financial Statements
Vintage Balanced Fund
Financial Highlights
The financial highlights table is intended to help you understand the Fund's
financial performance for the past five years (or, if shorter, the period of the
Fund's operations). Certain information reflects financial results for a single
Fund share. The total returns in the table represent the rate that an investor
would have earned (or lost) on an investment in the Fund (assuming reinvestment
of all dividends and distributions). Deloitte and Touche LLP audited the
information for the year ended March 31, 2004 and March 31, 2005. Their report,
along with the Fund's financial statements, are included in the Funds' annual
reports, which are available upon request. The financial information for the
periods prior to April 1, 2003 was audited by other auditors.
Investment Activities Dividends and Distributions
-----------------------------------------------------------------------------------------------------
NAV Net Net Realized/ Total from From Net From Net Return of Total
Investment Unrealized Dividends
Beginning Income (Loss) Gains (Losses) Investment Investment Realized and
of Period Activities Income Gains Capital Distributions
-------------- -------------------------------------------------------------------------------------------
Vintage Balanced Fund
Year Ended March 31, 2005 $11.63 0.20 (0.01) 0.19 (0.20) 0.00 0.00 (0.20)
Year Ended March 31, 2004 $10.00 0.11 1.63 1.74 (0.11) 0.00 0.00 (0.11)
Year Ended March 31, 2003 $12.54 0.16 (2.54) (2.38) (0.16) 0.00 0.00 (0.16)
Year Ended March 31, 2002 $12.80 0.20 (0.26) (0.06) (0.20) 0.00 0.00 (0.20)
Year Ended March 31, 2001 $16.58 0.31 (2.72) (2.41) (0.31) (1.06) 0.00 (1.37)
Ratio of Net Ratio of Net
Net Assets Investment Ratio of Investment
End of Period Ratio of Income (Loss) to Expenses to Income (Loss)
NAV (000 omitted) Expenses to Average Net Average to
End of Total Average Assets* Net Assets* Average Net Portfolio
Period Return Net Assets Assets* Turnover
-----------------------------------------------------------------------------------------------------------------
Vintage Balanced Fund
Year Ended March 31, 2005 $ 11.62 1.61 % $ 24,250 1.35 % 1.61 % 1.68 % 1.28% 39.63%
Year Ended March 31, 2004 $ 11.63 17.46 % $ 38,220 1.37 % 1.00 % - - 75.52%
Year Ended March 31, 2003 $ 10.00 (18.88 %) $ 36,978 1.25 % 1.46 % - - 36.19%
Year Ended March 31, 2002 $ 12.54 (0.45 %) $ 56,945 1.19 % 1.56 % - - 38.28%
Year Ended March 31, 2001 $ 12.80 (15.39 %) $ 68,114 1.12 % 2.03 % - - 45.49%
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
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 is a Management's Discussion of Fund Performance
and a line graph for the most recent fiscal year for 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 Federated Capital
Appreciation Fund's investment risks in light of its historical returns. The bar
chart shows the variability of Federated Capital Appreciation 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. Federated Capital Appreciation 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 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
Federated Capital Appreciation 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 Federated Capital Appreciation 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.
Federated Capital Appreciation Fund's Class A Shares total return for the
quarter ended June 30, 2005 was 2.97%. Within the period shown in the bar
chart, Federated Capital Appreciation 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 Federated Capital Appreciation 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 Federated Capital
Appreciation 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 SEC requires to be reflected in Federated
Capital Appreciation 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 Distributions(1) 0.98% (2.10)% 11.40%
Return After Taxes on Distributions and Sale
of Fund Shares(1) 0.86% (1.58)% 10.66%
S&P 500 10.88% (2.30)% 12.07%
LLCCFA 7.84% (3.22)% 10.07%
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
Federated Capital Appreciation 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 Federated Capital Appreciation 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 Vintage Equity Fund by showing changes
in the Vintage Equity Fund's performance from year to year. The Vintage Equity
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 Vintage Equity 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 Vintage Equity
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 Vintage
Equity 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 June 30, 2005 was 0.69%.
During the period shown in the bar chart, the highest return for a quarter was
27.51% (quarter ended December 31, 1998). Its lowest return for a quarter was
(19.63)% (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 Fund, Class S Shares Return
Before Taxes 3.04% (7.07)% 8.70% 7.86%
Return After Taxes on Distributions 3.03% (7.37)% 7.21% 6.53%
Return After Taxes on Distributions and Sale
of Fund Shares 2.43% (5.70)% 6.08% 5.54%
Vintage Equity Fund, Class T Shares Return
Before Taxes 3.35% (6.83)% 8.87% 8.00%
Return After Taxes on Distributions 3.34% (7.14)% 7.38% 6.67%
Return After Taxes on Distributions and Sale
of Fund Shares 2.67% (5.53)% 6.23% 5.67%
S&P 500 10.86% (2.30)% 12.07% 12.04%
1 Inception Date for Class Shares 12/15/92. 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 Vintage Growth Fund by showing changes
in the Vintage Growth Fund's performance from year to year. The Vintage Growth
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 Vintage Growth
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
Vintage Growth 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 June 30, 2005 was (1.10)%.
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 Before Taxes 0.23% (8.46)% 4.44%
Return After Taxes on Distributions 0.21% (9.66)% 3.11%
Return After Taxes on Distributions and Sale
of Fund Shares 0.17% (7.39)% 2.55%
RUSSELL 1000 GROWTH INDEX 6.30% (9.29)% 7.20%
S&P 500 10.86% (2.30)% 9.84%
1 Inception Date 9/29/1995.
FEDERATED STOCK AND BOND FUND, INC. - VINTAGE BALANCED FUND
FEDERATED STOCK AND BOND FUND, INC. - CLASS A SHARES
Risk/Return Bar Chart and Table
The performance information shown below will help you analyze Federated Stock
and Bond Fund, Inc.'s investment risks in light of its historical returns. The
bar chart shows the variability of Federated Stock and 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. Federated Stock and Bond Fund, Inc.'s
performance will fluctuate, and past performance (before and after taxes) is no
guarantee of future results.
[GRAPHIC ILLUSTRATION-Federated Stock and Bond Fund, Inc.]
The graphic presentation displayed here consists of a bar chart representing the
annual total returns of Federated Stock and 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
Federated Stock and Bond Fund, Inc.'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 Federated Stock and Bond Fund, Inc. 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.
Federated Stock and Bond Fund, Inc.'s Class A Shares total return for the
quarter ended June 30, 2005 was 2.42%. Within the period shown in the bar
chart, Federated Stock and 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 Federated Stock and 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 Federated Stock and 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 SEC requires to be reflected in Federated Stock
and 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
Federated Stock and Bond Fund, Inc. 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 Federated Stock and Bond Fund, Inc. 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 Vintage Balanced Fund by showing changes
in the Fund's performance from year to year. The Vintage Balanced 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
Vintage Balanced 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 Vintage Balanced 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 June 30, 2005 was 1.74%.
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 2.10% (2.93)% 4.06%
50% S&P 500 / 50% LEHMAN BROTHERS INTERMEDIATE
GOV'T/CREDIT INDEX 6.97% 2.75% 9.83%
1 Inception Date 6/1/1995.
Investment Advisers
A 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 Federated Capital Appreciation Fund. This Board
selects and oversees the adviser, Federated Equity Management Company of
Pennsylvania ("FEMCOPA"), a subsidiary of Federated, who manages 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 Federated Stock and 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
Federated Stock and 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. 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 designated as a back-up portfolio
manager for the fund, and as such does not have primary responsibility for the
day-to-day management of the fund's portfolio. 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 and 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 the respective 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, Kevin Croft and Laurie Mardis. 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 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.
Laurie Mardis, CFA has been a Fixed Income Manager with IMG since 2001. Prior to
that she worked for Wells Fargo and Company from 1996-2001, in fixed income
research and portfolio management. Laurie has a 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 each Federated Fund's and each Vintage Fund's daily net
assets, is as follows:
- ------------------------------------------ -------------------- ----------------------------- -----------------------
FEDERATED FUNDS ADVISORY FEES VINTAGE FUNDS ADVISORY FEE
- ------------------------------------------ -------------------- ----------------------------- -----------------------
- ------------------------------------------ -------------------- ----------------------------- -----------------------
Federated Capital Appreciation Fund 0.75% Vintage Equity Fund 0.75%
- ------------------------------------------ -------------------- ----------------------------- -----------------------
- ------------------------------------------ -------------------- ----------------------------- -----------------------
Vintage Growth Fund 0.95%
- ------------------------------------------ -------------------- ----------------------------- -----------------------
- ------------------------------------------ -------------------- ----------------------------- -----------------------
- ------------------------------------------ -------------------- ----------------------------- -----------------------
- ------------------------------------------ -------------------- ----------------------------- -----------------------
Federated Stock and Bond Fund, Inc. 0.55%* Vintage Balanced Fund 0.75%
- ------------------------------------------ -------------------- ----------------------------- -----------------------
*In addition, 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 Federated Capital
Appreciation Fund and Federated Stock and 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 (Fiscal Year End) Amount/
Percentage of Average Percentage of Average
Daily Net Assets Daily Net Assets
- --------------------------------------------- ---------------------------- ------------------------------ ------------------------
- --------------------------------------------- ---------------------------- ------------------------------ ------------------------
Federated Capital Appreciation Fund $2,470,049/ Vintage Equity Fund $401,665/
(October 31, 2004) 0.0762% (March 31, 2005) 0.26%
- --------------------------------------------- ---------------------------- ------------------------------ ------------------------
- --------------------------------------------- ---------------------------- ------------------------------ ------------------------
Vintage Growth Fund $110,597/
(March 31, 2005) 0.26%
- --------------------------------------------- ---------------------------- ------------------------------ ------------------------
- --------------------------------------------- ---------------------------- ------------------------------ ------------------------
- --------------------------------------------- ---------------------------- ------------------------------ ------------------------
- --------------------------------------------- ---------------------------- ------------------------------ ------------------------
Federated Stock and Bond Fund, Inc. $252,258/ Vintage Balanced Fund $81,402/
(November 30, 2004) 0.0762% (March 31, 2005) 0.26%
- --------------------------------------------- ---------------------------- ------------------------------ ------------------------
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. Federated Capital
Appreciation Fund (Class A Shares) has adopted a Rule 12b-1 Distribution Plan
(the "Distribution Plan") pursuant to which 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 Federated Capital Appreciation Fund to
finance any activity which is principally intended to result in the sale of
shares subject to the Distribution Plan. 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. Federated Stock and
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 of Federated Stock
and Bond Fund, Inc. shares pursuant to a plan of distribution adopted pursuant
to Rule 12b-1. 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.
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 Equity Fund, Vintage Growth Fund and Vintage
Balanced Fund are not currently incurring the 12b-1 fee under the Distribution
Plan. BISYS Fund Services Limited Partnership, at its expense, with voluntary
assistance from IMG in its sole discretion, may also provide other compensation
to broker/dealers that are Participating Organizations ("Dealers") in connection
with sales of shares of a Vintage Fund. Compensation may include financial
assistance to Dealers in connection with conferences, sales or training programs
for their employees, seminars for the public, advertising campaigns regarding
one or more of the m Vintage Funds, and other Dealer-sponsored special events.
In some instances, this compensation may be made available only to certain
Dealers whose representatives have sold or are expected to sell a significant
amount of shares. Compensation will also include payment for travel expenses,
including lodging, incurred in connection with trips taken by invited registered
representatives and members of their families to locations within or outside of
the United States for meetings or seminars of a business nature. Compensation
will also include the following types of non-cash compensation offered through
sales contests: (1) vacation trips, including the provision of travel
arrangements and lodging at luxury resorts at exotic locations; (2) tickets for
entertainment events (such as concerts, cruises and sporting events) and (3)
merchandise (such as clothing, trophies, clocks and pens). Dealers may not use
sales of shares to qualify for this compensation to the extent such may be
prohibited by the laws of any state or any self-regulatory The total annual
operating expenses, as a percentage of average net assets, for Class A Shares of
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 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 were 1.50% and 1.25%,
respectively, of average daily net assets for the fiscal year ended March 31,
2005. Without such waivers, the expense ratio of the Vintage Equity Fund's Class
S Shares and Class T Shares would have been 1.75% and 1.75%, respectively, of
average daily net assets. The total annual operating expenses for the Vintage
Growth Fund was 1.54% of average daily net assets for the fiscal year ended
March 31, 2005. Without such waivers, the expense ratio of the Vintage Growth
Fund would have been 2.04% of average daily net assets.
The total annual operating expenses, as a percentage of average net assets, for
Class A Shares of Federated Stock and 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 Federated Stock and
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 1.35% (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 1.93% of average daily net assets.
Purchases, Redemptions and Exchange Procedures; Dividends and Distributions;
Retirement Plan Custodian; Legal and Regulatory Matters 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: Federated Capital
Appreciation Fund (Class A Shares) and Federated Stock and Bond Fund, Inc.
(Class A Shares). A contingent deferred sales charge ("CDSC") of 0.75% of the
redemption amount applies to each Federated Fund's 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. 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. The Vintage Funds' shares are sold at NAV,
without any front-end load or CDSC.
The following is a list of the minimum investment amounts for each Federated
Fund and each Vintage Fund:
- ------------------------- ------------------ ----------------- ------------------ ------------------- -------------------------
Fund Initial Subsequent Retirement Plan Retirement Plan Systematic Investment
Investment Investment Investment Subsequent Plan Subsequent
Minimum Minimum Minimum Investment Minimum Investment
Minimum/Subsequent
Investment Minimum
- ------------------------- ------------------ ----------------- ------------------ ------------------- -------------------------
- ------------------------- ------------------ ----------------- ------------------ ------------------- -------------------------
Federated Capital $1,500 $100 $250 $100 $50/$50
Appreciation Fund
- ------------------------- ------------------ ----------------- ------------------ ------------------- -------------------------
- ------------------------- ------------------ ----------------- ------------------ ------------------- -------------------------
Vintage Equity Fund $1,000 $50 $25 $25 $250/$25
- ------------------------- ------------------ ----------------- ------------------ ------------------- -------------------------
- ------------------------- ------------------ ----------------- ------------------ ------------------- -------------------------
Vintage Growth Fund $1,000 $50 $25 $25 $250/$25
- ------------------------- ------------------ ----------------- ------------------ ------------------- -------------------------
- ------------------------- ------------------ ----------------- ------------------ ------------------- -------------------------
- ------------------------- ------------------ ----------------- ------------------ ------------------- -------------------------
- ------------------------- ------------------ ----------------- ------------------ ------------------- -------------------------
Federated Stock and $1,500 $100 $250 $100 $50/$50
Bond Fund, Inc.
- ------------------------- ------------------ ----------------- ------------------ ------------------- -------------------------
- ------------------------- ------------------ ----------------- ------------------ ------------------- -------------------------
Vintage Balanced Fund $1,000 $50 $25 $25 $250/$25
- ------------------------- ------------------ ----------------- ------------------ ------------------- -------------------------
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.
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
Federated Capital Appreciation Fund, Federated Stock and 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.
Federated Capital Appreciation Fund and Federated Stock and 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,
shareholders of the Vintage Funds as of the date of the Reorganization 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 Federated Capital Appreciation Fund and Class A Shares of
Federated Stock and 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 Federated Capital Appreciation Fund and Class A
Shares of Federated Stock and Bond Fund, Inc. may be exchanged through an
investment professional if you purchased shares through an investment
professional or directly from the fund, by telephone or mail, 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
Federated Capital Appreciation Fund and Class A Shares of Federated Stock and
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
Federated Capital Appreciation Fund and Federated Stock and 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).
Frequent Trading
Each of the Federated Fund's Board and Vintage Funds' Board has adopted policies
and procedures regarding frequent trading. The Federated Funds' Board has
approved policies and procedures intended to discourage excessive frequent or
short-term trading of the fund's shares. Frequent or short-term trading into and
out of the fund can have adverse consequences for the fund and shareholders who
use the fund as a long-term investment vehicle. Such trading in significant
amounts can disrupt the fund's investment strategies (e.g., by requiring it to
sell investments at inopportune times or maintain excessive short-term or cash
positions to support redemptions), increase brokerage and administrative costs
and affect the timing and amount of taxable gains distributed by the Fund.
Investors engaged in such trading may also seek to profit by anticipating
changes in the fund's NAV in advance of the time as of which NAV is calculated.
The Vintage Funds' Board has approved the following policy: The Funds discourage
market timers and other investors that make frequent purchases and redemptions
of fund shares. With and through its transfer agent and distributor, the funds
will monitor purchase and redemption activity. Purchase applications of known
market timers will be rejected. The distributor will contact shareholders of
accounts that evidence frequent purchase and redemption activity to determine
the basis for the activity and may refuse to accept future purchases from these
shareholders.
Dividends and Other Distributions
With respect to Federated Capital Appreciation Fund, dividends are declared and
paid annually. With respect to Federated Stock and 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.
Retirement Plan Custodian
Due to the Reorganization, the custodian of each Vintage Fund's shareholders'
retirement plan assets will change. Each Vintage Fund's retirement plans (i.e.
Individual Retirement Accounts (IRAs); Simplified Pension Plans (SEP IRAs);
Salary Reduction Simplified Employee Pension Plans (SAR SEPs); Roth IRAs; 403(b)
(7) Plans; Profit Sharing Plans; and Money Purchase Pension Plans) will have a
different custodian after the Reorganization. Currently, Huntington National
Bank serves as custodian for the above mentioned retirement plans. After the
Reorganization, State Street Bank and Trust Company will serve as custodian. It
is not anticipated that there will be any change in the custody fees charged to
the retirement plans, however for shareholders who hold retirement plans in
other portfolios of Vintage Mutual Fund Funds, Inc. that are not subject to the
Reorganizations there may be an increase in fees due to the shareholder having
retirement plans at two different custodians and therefore subject to two sets
of custodian fees. Shareholders' retirement plan accounts will automatically
transfer to the new custodian as part of the Plan of Reorganization.
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 Plans found in Exhibit A. Each Plan provides for the Reorganization to
occur on the Closing Date, which is expected to be on or about September 16,
2005 or such other date(s) as the parties may agree to in writing (the "Closing
Date"). 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 Federated Stock and 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 July 31, 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's Class S Shares and Class T Shares into Federated Capital
Appreciation Fund's Class A Shares as of July 31, 2005:
- ------------------------ ------------------ ------------------- --------------------- -------------- ---------------------
Federated Capital
Federated Capital Appreciation Fund
Vintage Equity Vintage Equity Appreciation Fund- Class A Shares-
Fund - Class S Fund - Class T Class A Shares Pro Forma Combined
Shares Shares Adjustment
- ------------------------ ------------------ ------------------- --------------------- -------------- ---------------------
- ------------------------ ------------------ ------------------- --------------------- -------------- ---------------------
- ------------------------ ------------------ ------------------- --------------------- -------------- ---------------------
- ------------------------ ------------------ ------------------- --------------------- -------------- ---------------------
Net Assets $73,142,287 $30,900,292 $2,452,405,488 $2,556,448,067
- ------------------------ ------------------ ------------------- --------------------- -------------- ---------------------
- ------------------------ ------------------ ------------------- --------------------- -------------- ---------------------
Net Asset Value Per
Share $14.85 $15.12 $25.66 $25.66
- ------------------------ ------------------ ------------------- --------------------- -------------- ---------------------
- ------------------------ ------------------ ------------------- --------------------- -------------- ---------------------
Shares Outstanding 4,925,159 2,043,634 95,572,669 (2,914,133) 99,627,329
- ------------------------ ------------------ ------------------- --------------------- -------------- ---------------------
FEDERATED CAPITAL APPRECIATION FUND - VINTAGE GROWTH FUND
The following table sets forth the unaudited capitalization of the Vintage Growth Fund into Federated
Capital Appreciation Fund's Class A Shares as of July 31, 2005:
- ---------------------------- ----------------------- --------------------- ----------------- ----------------------
Federated Capital
Federated Capital Appreciation Fund
Vintage Growth Fund Appreciation Fund- Class A Shares-
Class A Shares Adjustment Pro Forma Combined
- ---------------------------- ----------------------- --------------------- ----------------- ----------------------
- ---------------------------- ----------------------- --------------------- ----------------- ----------------------
- ---------------------------- ----------------------- --------------------- ----------------- ----------------------
- ---------------------------- ----------------------- --------------------- ----------------- ----------------------
Net Assets $30,634,411 $2,452,405,488 $2,483,039,899
- ---------------------------- ----------------------- --------------------- ----------------- ----------------------
- ---------------------------- ----------------------- --------------------- ----------------- ----------------------
Net Asset Value Per Share
$9.34 $25.66 $25.66
- ---------------------------- ----------------------- --------------------- ----------------- ----------------------
- ---------------------------- ----------------------- --------------------- ----------------- ----------------------
Shares Outstanding 3,281,596 95,572,669 (2,087,737) 96,766,528
- ---------------------------- ----------------------- --------------------- ----------------- ----------------------
FEDERATED CAPITAL APPRECIATION FUND - VINTAGE EQUITY FUND AND VINTAGE GROWTH FUND
The following table sets forth the unaudited capitalization of Vintage Equity Fund's Class S Shares and
Class T Shares and Vintage Growth Fund into Federated Capital Appreciation Fund's Class A Shares as of July
31, 2005:
- ---------------------- ----------------------------------- ---------------- -------------------- ---------------------------------
Federated Capital
Vintage Equity Vintage Equity Federated Capital Appreciation Fund
Fund - Class S Fund - Class T Appreciation Fund- Class A Shares-
Shares Shares Vintage Growth Class A Shares Pro Forma Combined
Fund Adjustment
- ---------------------- ----------------------------------- ---------------- -------------------- ------------ --------------------
- ---------------------- ----------------------------------- ---------------- -------------------- ------------ --------------------
- ---------------------- ----------------------------------- ---------------- -------------------- ------------- -------------------
- ---------------------- ----------------------------------- ---------------- -------------------- ------------- -------------------
Net Assets $73,142,287 $30,900,292 $30,634,411 $2,452,405,488 $2,587,082,478
- ---------------------- ----------------------------------- ---------------- -------------------- -------------- ------------------
- ---------------------- ----------------------------------- ---------------- -------------------- --------------- -----------------
Net Asset Value Per
Share $14.85 $15.12 $9.34 $25.66 $25.66
- ---------------------- ----------------------------------- ---------------- -------------------- --------------- -----------------
- ---------------------- ----------------------------------- ---------------- -------------------- --------------- -----------------
Shares Outstanding 4,925,159 2,043,634 3,281,596 95,572,669 (5,001,870) 100,821,188
- ---------------------- ----------------------------------- ---------------- -------------------- ---------------- ----------------
FEDERATED STOCK AND BOND FUND, INC. - VINTAGE BALANCED FUND
The following table sets forth the unaudited capitalization of Vintage Balanced Fund into Federated Stock
and Bond Fund, Inc.'s Class A Shares as of July 31, 2005:
- ---------------------------------------------------- ------------------------- -------------------- -------------------------
Federated Stock and Federated Stock and
Bond Fund, Inc.- Class Bond Fund, Inc. Class A
Vintage Balanced Fund A Shares Shares-
Adjustment Pro Forma Combined
- ---------------------------------------------------- ------------------------- -------------------- -------------------------
- ---------------------------------------------------- ------------------------- -------------------- -------------------------
- ---------------------------------------------------- ------------------------- -------------------- -------------------------
- ---------------------------------------------------- ------------------------- -------------------- -------------------------
Net Assets $21,603,847 $231,963,530 $253,567,377
- ---------------------------------------------------- ------------------------- -------------------- -------------------------
- ---------------------------------------------------- ------------------------- -------------------- -------------------------
Net Asset Value Per Share
$11.94 $18.98 $18.98
- ---------------------------------------------------- ------------------------- -------------------- -------------------------
- ---------------------------------------------------- ------------------------- -------------------- -------------------------
Shares Outstanding 1,809,840 12,219,453 (671,597) 13,357,696
- ---------------------------------------------------- ------------------------- -------------------- -------------------------
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:
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; 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;
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;
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; 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;
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; 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 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 as of the end of each
fund's fiscal year end. 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 Fund (Fiscal Year End) Unutilized Capital
Capital Loss Loss Carryovers
Carryovers
- ----------------------------------------- ------------------- ------------------------------- -----------------------
- ----------------------------------------- ------------------- ------------------------------- -----------------------
Federated Capital Appreciation Fund $33,528,587 Vintage Equity Fund $0
(October 31, 2004) (March 31, 2005)
- ----------------------------------------- ------------------- ------------------------------- -----------------------
- ----------------------------------------- ------------------- ------------------------------- -----------------------
Vintage Growth Fund $40,220,268
(March 31, 2005)
- ----------------------------------------- ------------------- ------------------------------- -----------------------
- ----------------------------------------- ------------------- ------------------------------- -----------------------
- ----------------------------------------- ------------------- ------------------------------- -----------------------
- ----------------------------------------- ------------------- ------------------------------- -----------------------
Federated Stock and Bond Fund, Inc. $5,184,479 Vintage Balanced Fund $7,604,416
(November 30, 2004) (March 31, 2005)
- ----------------------------------------- ------------------- ------------------------------- -----------------------
The same funds had the following tax basis appreciation or (depreciation) as of each fund's fiscal year end.
- ----------------------------------------- ------------------- ------------------------------ ------------------------
Fund (Fiscal Year End) Tax Basis Fund (Fiscal Year End) Tax Basis Appreciation
Appreciation or or (Depreciation)
(Depreciation)
- ----------------------------------------- ------------------- ------------------------------ ------------------------
- ----------------------------------------- ------------------- ------------------------------ ------------------------
Federated Capital Appreciation Fund $272,912,794 Vintage Equity Fund $25,161,201
(October 31, 2004) (March 31, 2005)
- ----------------------------------------- ------------------- ------------------------------ ------------------------
- ----------------------------------------- ------------------- ------------------------------ ------------------------
Vintage Growth Fund $1,009,201
(March 31, 2005)
- ----------------------------------------- ------------------- ------------------------------ ------------------------
- ----------------------------------------- ------------------- ------------------------------ ------------------------
- ----------------------------------------- ------------------- ------------------------------ ------------------------
- ----------------------------------------- ------------------- ------------------------------ ------------------------
Federated Stock and Bond Fund, Inc. $32,001,009 Vintage Balanced Fund $2,309,684
(November 30, 2004) (March 31, 2005)
- ----------------------------------------- ------------------- ------------------------------ ------------------------
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 SEC. IMG believes that each Vintage Fund and its
respective Federated Fund have similar investment objectives, and the
combination of Federated Capital Appreciation Fund with the Vintage Equity Fund
and Vintage Growth Fund and Federated Stock and 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 Vintage Funds' Board 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, 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 determined that participation in the Reorganizations
is in the best interests of the Vintage Funds. In approving the Plans, the Board
considered a number of factors, including the following:
the terms and conditions of the Plans;
the compatibility of the funds' objectives, limitations, and policies; the
long term performance history of the Vintage Funds and the Federated Funds;
historic expense 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. 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. Federated Stock and 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.
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.
Federated Stock and Bond Fund, Inc. and the Vintage Funds are 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 are 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. 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 Federated
Capital Appreciation Fund, known as Class A Shares, Class B Shares, Class C
Shares and Class K Shares. The Board of Federated Stock and Bond Fund, Inc. has
established four classes of shares, known as Class A Shares, Class B Shares,
Class C Shares and Class K Shares. Federated Stock and 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 Federated Equity Funds
provides that the term of office of each Trustee shall be for the lifetime of
Federated Equity Funds or the earlier of his or her death, resignation,
retirement, removal or mental or physical incapacity. The Bylaws for Federated
Stock and 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 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
Federated Stock and 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 Declaration of Trust of
Federated Equity Funds (Federated Capital Appreciation Fund is a portfolio of
Federated Equity 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 Federated Equity Funds further provide that Trustees and officers will be
indemnified by Federated Equity Funds, 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.
The Articles of Incorporation for Federated Stock and Bond Fund, Inc.
provide that Directors and officers will be indemnified by Federated Stock and
Bond Fund, Inc. to the fullest extent permitted by law against liability and
against all expenses reasonably incurred or paid by him in connection with any
debt, claim, action, demand, suit, proceeding, judgment, Federated Stock and
Bond Fund, Inc. at the request of Federated Stock and Bond Fund, Inc. and
against amounts paid or incurred by him in the settlement thereof, provided that
no indemnification shall be provided to a Director or officer against any
liability to Federated Stock and Bond Fund, Inc. or its shareholders by reason
of willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his or her office. The Bylaws for Federated
Stock and Bond Fund, Inc. state that Federated Stock and Bond Fund, Inc. shall
indemnify its Directors to the fullest extent that indemnification of Directors
is permitted by the Maryland General Corporation Law. Federated Stock and Bond
Fund, Inc. shall indemnify its Officers to the same extent as its Directors and
to such further extent as is consistent with law. The Bylaws of Federated Stock
and Bond Fund, Inc. further state that it will not protect any Director or
Officer against any liability to Federated Stock and Bond Fund, Inc. or any
shareholder thereof to which such person would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office.
The Articles of Incorporation of the Vintage Funds state that Vintage
Mutual Funds, Inc. shall indemnify to the fullest extent permitted by law
(including the Maryland General Corporate Law and the Investment Company Act)
any person made or threatened to be made a party to any action, suit or
proceeding, whether criminal, civil, administrative or investigative, by reason
of the fact that such person is or was a Director or Officer of the Vintage
Mutual Funds, Inc. To the fullest extent permitted by law (including the
Maryland General Corporate Law and the Investment Company Act), expenses
incurred by any such person in defending any such action, suit or proceeding
shall be paid or reimbursed by Vintage Mutual Funds, Inc. promptly upon receipt
by it of an undertaking of such person to repay such expenses if it shall
ultimately be determined that such person is not entitled to be indemnified by
Vintage Mutual Funds, Inc.
SHAREHOLDER LIABILITY. Federated Capital Appreciation Fund is organized as a
portfolio of a Massachusetts business trust. Under certain circumstances,
shareholders of Federated Capital Appreciation Fund may be held personally
liable as partners under Massachusetts law for obligations of Federated Capital
Appreciation Fund. To protect its shareholders, 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 Federated Capital Appreciation Fund. These documents require that
notice of this disclaimer be given in each agreement, obligation or instrument
that Federated Capital Appreciation Fund or its Trustees enter into or sign. In
the unlikely event a shareholder is held personally liable for Federated Capital
Appreciation Fund's obligations Federated Capital Appreciation Fund is required
to use its property to protect or compensate the shareholder. On request,
Federated Capital Appreciation Fund will defend any claim made and pay any
judgment against a shareholder for any act or obligation on Federated Capital
Appreciation Fund. Therefore, financial loss resulting from liability as a
shareholder will occur only if Federated Capital Appreciation Fund itself cannot
meet its obligations to indemnify shareholders and pay judgments against them
from assets of Federated Capital Appreciation Fund.
The above discussion of potential shareholder liability does not apply to
Federated Stock and Bond Fund, Inc. and the Vintage Funds since they are
organized as Maryland corporations.
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 Federated Capital Appreciation Fund; and
Federated Stock and 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 SEC. Reports, proxy and information
statements, and other information filed by such Federated Fund can be obtained
by calling or writing the fund and can also be inspected and copied by the
public at the public reference facilities maintained by the SEC in Washington,
DC located at Room 1024, 450 Fifth Street, N.W., Washington DC 20549. Copies of
such material can be obtained at prescribed rates from the Public Reference
Branch, Office of Consumer Affairs and Information Services, SEC, Washington DC
20549, or obtained electronically from the EDGAR database on the SEC's website
(www.sec.gov).
This Prospectus/Proxy Statement, which constitutes part of a Registration
Statement filed by each Federated Fund with the SEC 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 SEC.
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 SEC. 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 SEC at the addresses listed in the
previous section, or obtained electronically from the SEC's 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 September 15, 2005 at 1415 28th Street, West Des Moines, Iowa, at 10:00 a.m.
(Central 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 August 11, 2005 to shareholders of record at the close of business
on August 3, 2005 (the "Record Date").
Annual and semi-annual reports of 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, 2005,
respectively; annual and semi-annual reports of Federated Stock and 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, 2005, 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, PA 15237-7000.
The principal executive office of the Vintage Fund is 1415 28th Street, West Des
Moines, IA, 50266 . 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 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 the
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 Class S Shares of the Vintage Equity Fund:
Barb Co., Rockford, IL, owned approximately 2,061,650 shares (41.99%).
At the close of business on the Record Date, the following persons owned, to the
knowledge of management, more than 5% of the outstanding Class T Shares of the
Vintage Equity Fund: Sweback & Company, Rockford, IL, owned approximately
1,882,033 shares (92.39% and Firwood, Rockford, IL, owned approximately 154,947
shares (7.61%).
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:
Swebak & Company, Rockford, IL, owned approximately 1,427,022 shares (43.9%) and
Barb Co., Rockford, IL, owned approximately 942,095 shares (28.71%).
Officers and Trustees of Federated Equity Funds own less than 1% of 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 Federated Capital Appreciation
Fund:
Edward Jones and Co., Maryland Heights, MO, owned approximately 11,825,587
shares (12.45%).
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:
Barb Co., Rockford, IL, owned approximately 942,486 shares (52.14%) and National
Financial Services LLC, Carlstadt, NJ, owned approximately 99,048 shares
(5.48%).
Officers and Directors of Federated Stock and 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 Federated Stock and Bond Fund, Inc.: Edward Jones
and Co., Maryland Heights, MO, owned approximately 3,644,722 shares (34.33%).
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.
Edward Jones and Co. is organized in the state of Missouri and is a subsidiary
of Jones Financial Companies LLLP; organized in the state of Missouri. National
Financial Services LLC is organized in the state of Massachusetts and is a
subsidiary of Fidelity Brokerage Services LLC.; organized in the state of
Massachusetts.
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,
Inc., 1415 28th Street, West Des Moines, Iowa 50266, 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, Inc.
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.
By Order of the Board of Directors,
/s/ Amy Mitchell
Amy Mitchell
Secretary
August 10, 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.
INVESTMENT LIMITATIONS
- ------------------------------------------------------------- ----------------------------------------------------
FEDERATED CAPITAL APPRECIATION FUND VINTAGE FUNDS
FEDERATED STOCK AND BOND FUND, INC.
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- ------------------------------------------------------------- ----------------------------------------------------
Diversification (fundamental) Diversification (fundamental)
With respect to securities comprising 75% of the value The Vintage Funds will not purchase
of its total assets, the fund will not purchase securities of any one issuer, other than
securities of any one issuer (other than cash; cash obligations issued or guaranteed by the
items; securities issued or guaranteed by the U.S. Government or its agencies or
government of the United States or its agencies or instrumentalities, if, immediately after
instrumentalities and repurchase agreements such purchase, with respect to 75% of its
collateralized by such U.S. government securities; and portfolio, more than 5% of the value of
securities of other investment companies) if, as a the total assets of the fund would be
result, more than 5% of the value of its total assets invested in such issuer, or the fund
would be invested in the securities of that issuer, or would hold more than 10% of any class of
the fund would own more than 10% of the outstanding securities of the issuer or more than 10%
voting securities of that issuer. of the outstanding voting securities of
the issuer.
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Borrowing Money and Issuing Senior Securities Borrowing Money and Issuing Senior
(fundamental) Securities (fundamental)
FEDERATED CAPITAL APPRECIATION FUND The Vintage Funds may not borrow money or
The fund may borrow money, directly or indirectly, and issue senior securities, except that the
issue senior securities to the maximum extent fund may borrow from banks or enter into
permitted under the Investment Company Act of 1940 reverse repurchase agreements for
(1940 Act). temporary purposes in amounts up to 10%
FEDERATED STOCK AND BOND FUND, INC. of the value of its total assets at the
The fund will not issue senior securities, except as time of such borrowing; The Vintage Funds
permitted by its investment objectives and policies, will not purchase securities with
and except that the fund may enter into reverse borrowings (including reverse repurchase
repurchase agreements and otherwise borrow up to agreements) in excess of 5% of its total
one-third of the value of its net assets including the assets are outstanding
amount borrowed, as a temporary, extraordinary or
emergency measure or 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.
- ------------------------------------------------------------- ----------------------------------------------------
- ------------------------------------------------------------- ----------------------------------------------------
Investing in Real Estate (fundamental) Investing in Real Estate (fundamental)
The fund may not purchase or sell real estate, The Vintage Funds may not purchase or
provided that this restriction does not prevent the sell real estate (although investments by
fund from investing in issuers which invest, deal, or the Vintage Equity Fund in marketable
otherwise engage in transactions in real estate or securities of companies engaged in such
interests therein, or investing in securities that are activities are not prohibited by this
secured by real estate or interests therein. The fund restriction)
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)
FEDERATED CAPITAL APPRECIATION FUND The Vintage Funds may not underwrite
The fund may not underwrite the securities of other securities issued by other persons,
issuers, except that the fund may engage in except to the extent that a Vintage Fund
transactions involving the acquisition, disposition or may be deemed to be an underwriter under
resale of its portfolio securities, under certain securities laws in the
circumstances where it may be considered to be an disposition of "restricted securities"
underwriter under the Securities Act of 1933.
FEDERATED STOCK AND 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)
FEDERATED CAPITAL APPRECIATION FUND The Vintage Funds will not make loans,
The fund may not make loans, provided that this except that the Vintage Funds may
restriction does not prevent the fund from purchasing purchase or hold debt securities, lend
debt obligations, entering into repurchase agreements, portfolio securities in accordance with
lending its assets to broker/dealers or institutional its investment objective and policies,
investors and investing in loans, including and may enter into repurchase agreements
assignments and participation interests.
FEDERATED STOCK AND 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) FEDERATED CAPITAL
APPRECIATION FUND The Vintage Funds may not purchase or The fund may not
purchase or sell physical sell commodities or commodities commodities, provided
that the fund may purchase contracts, except to the extent disclosed securities
of companies that deal in commodities. in the current prospectus of the funds
FEDERATED STOCK AND 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.
- ------------------------------------------------------------- ----------------------------------------------------
- ------------------------------------------------------------- ----------------------------------------------------
Concentration (fundamental) Concentration of Investments (fundamental)
The fund will not make investments that will result in The Vintage Funds will not purchase any
the concentration of its investments in the securities securities which would cause more than
of issuers primarily engaged in the same industry. 25% of the value of the Vintage Fund's
Government securities, municipal securities and bank total assets at the time of purchase to
instruments will not be deemed to constitute an be invested in securities of one or more
industry. issuers 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
- ------------------------------------------------------------- ----------------------------------------------------
- ------------------------------------------------------------- ----------------------------------------------------
Illiquid Securities (non-fundamental) Illiquid Securities (non-fundamental)
The fund will not purchase securities for which there The Vintage Funds may not enter into
is no readily available market, or enter into repurchase agreements with maturities in
repurchase agreements or purchase time deposits that excess of seven days if such investments,
the fund cannot dispose of within seven days, if together with other instruments in that
immediately after and as a result, the value of such fund that are not readily marketable or
securities would exceed, in the aggregate, 15% of the are otherwise illiquid, exceed 10 percent
fund's net assets. of that fund's net assets.
- ------------------------------------------------------------- ----------------------------------------------------
- ------------------------------------------------------------- ----------------------------------------------------
Purchases on Margin (non-fundamental) Purchases on Margin (non-fundamental)
FEDERATED CAPITAL APPRECIATION FUND The Vintage Funds may not purchase
The fund will not purchase securities on margin, securities on margin, except for use of
provided that the fund may obtain short-term credits short-term credit necessary for clearance
necessary for the clearance of purchases and sales of of purchases of portfolio securities
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 AND BOND
FUND, INC. The fund will not sell any securities short or purchase any
securities on margin
- ------------------------------------------------------------- ----------------------------------------------------
- ------------------------------------------------------------- ----------------------------------------------------
Pledging Assets (non-fundamental) Pledging Assets (fundamental)
FEDERATED CAPITAL APPRECIATION FUND The Vintage Funds may not mortgage,
The fund will not mortgage, pledge, or hypothecate any pledge, or hypothecate any assets, except
assets, provided that this shall not apply to the in connection with any such borrowing and
transfer of securities in connection with any in amounts not in excess of the lesser of
permissible borrowings or to collateral arrangements the dollar amounts borrowed or 10% of the
in connection with permissible activities. value of the Vintage Fund's total assets
at the time of its borrowing.
- ------------------------------------------------------------- ----------------------------------------------------
- ------------------------------------------------------------- ----------------------------------------------------
INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES INVESTING IN SECURITIES OF OTHER
(NON-FUNDAMENTAL) INVESTMENT COMPANIES (NON-FUNDAMENTAL)
FEDERATED CAPITAL APPRECIATION FUND The Vintage Funds may not purchase
The fund may invest its assets in securities of other securities of other investment companies,
investment companies, including the securities of except (a) in connection with a merger,
affiliated money market funds, as an efficient means consolidation, acquisition or
of carrying out its investment policies and managing reorganization, and (b) a fund may invest
its uninvested cash. These other investment companies in other investment companies, including
are managed independently of the fund and incur other funds for which IMG acts as adviser
additional expenses. Therefore, any such investment by subject to such restrictions as may be
the fund may be subject to duplicate expenses. imposed by the 1940 Act or any state laws.
However, the Adviser believes that the benefits and
efficiencies of this approach should outweigh the
additional expenses.
FEDERATED STOCK AND 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.
- ------------------------------------------------------------- ----------------------------------------------------
- ------------------------------------------------------------- ----------------------------------------------------
Acquiring Securities (non-fundamental) The Vintage Funds have no corresponding
FEDERATED STOCK AND BOND FUND, INC. limitation.
The fund will not invest in securities of a company
for the purpose of exercising control or management.
- ------------------------------------------------------------- ----------------------------------------------------
- ------------------------------------------------------------- ----------------------------------------------------
The fund has no corresponding limitation. (non-fundamental)
The Vintage
Funds may not
purchase
participation
or direct
interests in
oil, gas or
other mineral
exploration or
development
programs.
- ------------------------------------------------------------- ----------------------------------------------------
- ------------------------------------------------------------- ----------------------------------------------------
The fund has no corresponding limitation. (non-fundamental)
The Vintage
Funds may not
invest more
than 5 percent
of total
assets in
puts, calls,
straddles,
spreads or any
combination
thereof.
- ------------------------------------------------------------- ----------------------------------------------------
- ------------------------------------------------------------- ----------------------------------------------------
The fund has no corresponding limitation. (non-fundamental)
The Vintage Funds 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.
- ------------------------------------------------------------- ----------------------------------------------------
Exhibit A
AGREEMENTS AND PLANS OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION BETWEEN FEDERATED EQUITY FUNDS, WITH
RESPECT TO FEDERATED CAPITAL APPRECIATION FUND AND THE VINTAGE MUTUAL FUNDS,
INC., WITH RESPECT TO THE VINTAGE EQUITY FUND
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made as of this
7th day of July, 2005, by and between Federated Equity Funds, a Massachusetts
Business Trust, with its principal place of business at 5800 Corporate Drive,
Pittsburgh, PA, 15237 (the "Federated Trust"), with respect to its Federated
Capital Appreciation Fund (the "Acquiring Fund"), a series of the Federated
Trust, 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 Equity 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").
STATEMENT OF ADDITIONAL INFORMATION
August 10, 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 August 10, 2005, is not a
prospectus. A Combined Prospectus and Proxy Statement, dated August 10, 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, 2005.
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, 2005.
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.
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, 2005, is incorporated by reference to Vintage Mutual Fund, Inc.'s
Post-Effective Amendment No. 28 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 29, 2005.
The unaudited financial statements of Federated Stock & Bond Fund,
Inc., dated May 31, 2005 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 28, 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.
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 and 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 A 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)
13.6 The Registrant hereby incorporates by reference the conformed copy
of Amendment No. 3 to the Agreement for Administrative Services
between Federated Administrative Services Company and the Registrant
dated June 1, 2005, from Item 23 (h) (ii) of the Cash Trust
Series, Inc. Registration Statement on Form N-1A, filed with the
Commission on July 27, 2005. (File Nos. 33-29838 and 811-5843);
14. Conformed copy of Consent of Independent Auditors of Federated Stock and
Bond Fund, Inc.; (26) 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)
26. Response is incorporated by reference to Registrant's Initial
Registration Statement filed on Form N-14 July 28, 2005 (File Nos.
333-126178 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, FEDERATED STOCK AND 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 9th day of August, 2005.
FEDERATED STOCK AND BOND FUND, INC.
BY: /s/ Todd P. Zerega
Todd P. Zerega, Assistant Secretary
August 9, 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 August 9, 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