Sub-Item 77E

LEGAL PROCEEDINGS

Since October 2003, Federated and related
entities (collectively, "Federated"), and various
Federated funds ("Funds"), have been named
as defendants in several class action lawsuits
now pending in the United States District Court
for the District of Maryland. 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.
These lawsuits began to be filed shortly after
Federated's first public announcement
that it had received requests for information on
shareholder trading activities in the Funds from
the SEC, the Office of the New York
State Attorney General ("NYAG"), and other
authorities. In that regard, on November 28, 2005,
Federated announced that it had
reached final settlements with the SEC and the
NYAG with respect to those matters. Specifically,
the SEC and NYAG settled
proceedings against three Federated subsidiaries
involving undisclosed market timing arrangements
and late trading. The SEC made
findings: that Federated Investment Management
Company ("FIMC"), an SEC-registered investment
adviser to various Funds, and
Federated Securities Corp., an SEC-registered
broker-dealer and distributor for the Funds,
violated provisions of the Investment Advisers
Act and Investment Company Act by approving,
but not disclosing, three market timing arrangements,
or the associated conflict of
interest between FIMC and the funds involved in
the arrangements, either to other fund
shareholders or to the funds' board; and that
Federated Shareholder Services Company, formerly
an SEC-registered transfer agent, failed to prevent
a customer and a Federated
employee from late trading in violation of provisions
of the Investment Company Act. The NYAG found
that such conduct violated
provisions of New York State law. Federated entered
into the settlements without admitting or denying
the regulators' findings. As
Federated previously reported in 2004, it has
already paid approximately $8.0 million to certain
funds as determined by an independent
consultant. As part of these settlements, Federated
agreed to pay disgorgement and a civil money penalty
in the aggregate amount of
an additional $72 million and, among other things,
agreed that it would not serve as investment adviser
to any registered investment
company unless (i) at least 75% of the fund's
directors are independent of Federated,
(ii) the chairman of each such fund is
independent of Federated, (iii) no action may
be taken by the fund's board or any committee
thereof unless approved by a majority of
the independent trustees of the fund or committee,
respectively, and (iv) the fund appoints
a "senior officer" who reports to the
independent trustees and is responsible for
monitoring compliance by the fund with applicable
laws and fiduciary duties and for
managing the process by which management fees
charged to a fund are approved. The settlements
are described in Federated's
announcement which, along with previous press
releases and related communications on
those matters, is available in the "About Us"
section of Federated's website at FederatedInvestors.com.
Federated entities have also been named as
defendants in several additional lawsuits
that 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.
The Board of the Funds retained the law firm of
Dickstein Shapiro LLP to represent the Funds
in each of the lawsuits described in
the preceding two paragraphs. Federated and
the Funds, and their respective counsel,
have been defending this litigation, and none of
the Funds remains a defendant in any of
the lawsuits (though some could potentially
receive any recoveries as nominal defendants).
Additional lawsuits based upon similar
allegations may be filed in the future.
The potential impact of these lawsuits,
all of which seek
unquantified damages, attorneys' fees, and
expenses, 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, 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.