497 1 fundstickers.txt FEDERATED COMPLEX OF FUNDS ------------------------------------------------------------------------------- Supplement dated December 12, 2005 to current Prospectuses. Please replace the section entitled "Legal Proceedings" with the following: 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. 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 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 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. 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 intend to defend this litigation. 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. The Federated Complex of Funds consists of the following registrants and all portfolios and classes thereof: Cash Trust Series, Inc. Cash Trust Series II Federated Adjustable Rate Securities Fund Federated American Leaders Fund, Inc. Federated Equity Funds Federated Equity Income Fund, Inc. Federated Fixed Income Securities, Inc. Federated GNMA Trust Federated Government Income Securities, Inc. Federated High Income Bond Fund, Inc. Federated High Yield Trust Federated Income Securities Trust Federated Income Trust Federated Index Trust Federated Institutional Trust Federated Insurance Series Federated International Series, Inc. Federated Investment Series Funds, Inc. Federated Intermediate Government Fund, Inc. Federated Managed Allocation Portfolios Federated Municipal High Yield Advantage Fund, Inc. Federated Municipal Securities Fund, Inc. Federated Municipal Securities Income Trust Federated Short-Term Municipal Trust Federated Stock and Bond Fund, Inc. Federated Stock Trust Federated Total Return Government Bond Fund Federated Total Return Series, Inc. Federated U.S. Government Bond Fund Federated U.S. Government Securities Fund: 1-3 Years Federated U.S. Government Securities Fund: 2-5 Years Federated World Investment Series, Inc. 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