federated strategic value dividend fund valued shareholder, i am pleased to present the annual...

Annual Shareholder Report

October 31, 2017

Share Class | Ticker A | SVAAX C | SVACX Institutional | SVAIX R6 | SVALX

Federated Strategic Value Dividend FundFund Established 2005

A Portfolio of Federated Equity Funds

Dear Valued Shareholder,

I am pleased to present the Annual Shareholder Report for your fund covering the periodfrom November 1, 2016 through October 31, 2017. This report includes Management’sDiscussion of Fund Performance, a complete listing of your fund’s holdings, performanceinformation and financial statements along with other important fund information.

In addition, our website, FederatedInvestors.com, offers easy access to Federatedresources that include timely fund updates, economic and market insights from ourinvestment strategists, and financial planning tools. We invite you to register to take fulladvantage of its capabilities.

Thank you for investing with Federated. I hope you find this information useful and lookforward to keeping you informed.

Sincerely,

J. Christopher Donahue, President

Not FDIC Insured ▪ May Lose Value ▪ No Bank Guarantee

CONTENTS

Management’s Discussion of Fund Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Portfolio of Investments Summary Table . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Portfolio of Investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Financial Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Statement of Assets and Liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Statement of Operations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Statement of Changes in Net Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

Report of Independent Registered Public Accounting Firm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

Shareholder Expense Example . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

In Memoriam. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34

Board of Trustees and Trust Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

Evaluation and Approval of Advisory Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

Voting Proxies on Fund Portfolio Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48

Quarterly Portfolio Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48

Management’s Discussion of FundPerformance (unaudited)The total return of Federated Strategic Value Dividend Fund (the “Fund”),based on net asset value for the 12-month reporting period endedOctober 31, 2017 was 12.29% for the Class A Shares, 11.43% for the Class CShares, 12.51% for the Institutional Shares and 12.53% for the Class R6 shares.The 12.53% total return of the Class R6 Shares for the reporting periodconsisted of 4.39% in dividend income, 1.97% in capital gains and 6.17% inappreciation of the net asset value of the shares. The total return of the DowJones Select Dividend Index (DJSDI),1 a broad-based securities market indexthat represents the domestic dividend-paying universe, was 16.82% for thereporting period, while the total return of the Standard and Poor’s 500 Index(S&P 500)2 was 23.63% for the same period. The Fund’s total return for thefiscal year reflects actual cash flows, transaction costs and other expenses whichare not reflected in the total return of the DJSDI or the S&P 500.

The following discussion will focus on the performance of the Fund’sClass R6 Shares.

MARKET OVERVIEW

The reporting period began just after the election of Donald Trump as the 45th

President of the United States. This surprise outcome, combined withRepublicans retaining control over both the House and the Senate, sparked a“risk-on” trade as expectations for a business-friendly Washington crystallizedand risk tolerance levels increased. As investor exuberance was lifted so werebond yields, with the U.S. 10-year Treasury yield rising as investors piled intomore economically sensitive sectors. Financials, Industrials and Materials led themarket higher to start the period as analysts upwardly revised forecasts forU.S. GDP and earnings growth for 2017 and beyond, citing a “Trumponomics”agenda of tax cuts and reform, regulatory relief and infrastructure spending. Asthe S&P 500 was reaching new highs in early 2017, so were internationalmarkets, with the UK FTSE Index and the German DAX Index both reachingnew peaks on better European economic data and corporate earnings.

The “Trump trade’’ did hit some bumps in the spring, though, as the failureof the Republican leadership to enact Obamacare ‘repeal-and-replace’legislation caused markets to take pause amid rising uncertainty around the newadministration’s pro-growth agenda. Ultimately, the pause was short-lived,lasting just 6 weeks and culminating with a pullback of less than 3% in theS&P 500. From there, the global stock market’s steady climb higher into the endof the reporting period was fueled by an increasingly steady flow of encouragingeconomic news, solid corporate earnings and prospects for potential tax reformhitting the President’s desk by early 2018. By late October, the S&P 500, DowJones Industrial Average and NASDAQ Composite had all achievedrecord highs.

Federated Strategic Value Dividend FundAnnual Shareholder Report

1

Although international markets saw slightly less political drama than the U.S.,foreign shares plotted an advance that was strangely similar to that of theirU.S. counterparts. GDP growth in Europe was revised higher, companiescontinued to report strong earnings, and central banksremained accommodative.

U.S.-based investors in foreign equities also received an added tailwind in theform of a weaker dollar. The U.S. dollar, which had enjoyed a period ofsustained strength from 2011 through the end of 2016, finally began to losesome of its luster as economic growth outside the U.S. picked up, concerns overa break-up of the eurozone eased, and the pace of Federal Reserve interest ratehikes became more dovish than originally anticipated. By the end of thereporting period, the British pound had appreciated 11% off of its lows inJanuary 2017, while the euro recovered 12% from its bottom last December.

Over the course of the reporting period, the “risk-on” trade that dominatedthe year’s performance favored lower quality stocks in cyclical sectors, especiallythose having high betas3 and low dividend yields. In fact, low quality (“C” &“D” rated) stocks in the BofA Merrill Lynch US research coverage universeoutperformed the highest quality (“A+” rated) by 13.7%. When quintiling theS&P 500, high-beta notably outperformed low beta by 20.5% and low-yieldoutperformed high-yield by 19.9%.

DIVIDEND-BASED PERFORMANCE4

The portfolio continues to remain focused on its core goals of providinginvestors with a stable high and rising income stream from high-qualityinvestments while attempting to expose investors to a lower level of risk, endingthe month with a 30 day SEC yield of 3.5% and a gross weighted averagedividend yield of 4.4%.5 This eclipsed not only the broad market represented bythe S&P 500 with its 2.0% yield, and the 10-year U.S. Treasury Note (2.4%), butit also surpassed the 3.5% yield of the DJSDI, which aims to reflect the domestichigh dividend-paying universe. The portfolio experienced robust dividendgrowth, as 31 of the holdings increased their dividends over the past 12 months,for a total of 35 increases. The most notable increases came courtesy of Abbvie(10.9%), Crown Castle (10.5%), Dominion (10.0%), Paychex (8.7%), Altria(8.2%) and PepsiCo (7.0%). Additionally, National Grid declared a specialdividend of .84375 GBP per existing ordinary share or $5.4224 USD perAmerican Depository Share, paid on June 2, 2017.


2

Over the reporting period, the strong “risk-on” trade was a notableheadwind to the high-quality defensive dividend strategy. Albeit, on an absolutebasis, the Fund still posted positive returns across every sector. The mostprominent contributor was Health Care, posting a 25% return during thereporting period. This was driven by superior performance from Abbvie,AstraZeneca, and Sanofi which posted returns of 68%, 25% and 25%,respectively. Additionally, Utilities added notably to performance during thereporting period posting a 10% return due to strong performance from DukeEnergy, PPL and Dominion which posted returns of 15%, 14%, and 12%,respectively. Enhancing performance further, Consumer Discretionary, Energyand Consumer Staples posted noteworthy returns of 52%, 10% and 7%,respectively, during the reporting period. This outperformance was led by topperformers in these sectors such as McDonalds (41%), BP (23%), Chevron(15%), Phillip Morris (13%) and Coca Cola (12%). Lastly, REIT holding CrownCastle was additive to Fund performance, posting a 22% return during thereporting period.

From a geographic standpoint, the portfolio’s international holdings6

contributed positively to performance, as they posted a collective return of13.6% during the reporting period. This was driven by the portfolio’s Frenchand British holdings which returned 29% and 10%, respectively, during thereporting period. The international investments were further enhanced bycurrency impact, as the continued weakening of the U.S. dollar relative toforeign currencies was a tailwind for the portfolio.

Contrarily, while no sectors within the Fund posted negative total returns,weakness was noted in some individual investments during the reporting periodincluding General Mills (-13%), Occidental Petroleum (-7%) andGlaxoSmithKline (-4%). General Mills endured pricing pressure fromdisappointing earnings in their cereal and yogurt business. GlaxoSmithKlineexperienced short-term pricing pressure after its strong 3Q earnings wereovershadowed by a tempered outlook as they guided towards lower margins for2018. Occidental Petroleum posted a negative return due in part to lower oilprices early in the reporting period.


3

Due to its focus on high dividend income and growth in that income overtime, the strategy will tend to perform best when the markets prefer high-yield,high-quality, low-beta, large-cap stocks. Often times, the strategy may alsooutperform in flat markets or periods of market distress. Conversely, the Fundmay lag the broad market when investors prefer low-yield, low-quality, high-beta, small-cap stocks. Over the reporting period, the Fund faced a significantheadwind with lowest-yielding, high-beta stocks outperforming high-yielding,low-beta investments. However, the Fund still achieved its absolute return targetwhile maintaining a portfolio of high-quality assets and exposing its investors toa notably lower level of risk as evidenced by its low beta of 0.61 during thereporting period.7 Regardless of the market environment, the Fund remainedconsistent and focused on its core goals of providing a stable high and risingincome stream from high-quality investments, while attempting to exposeinvestors to a lower level of risk.

1 Please see the footnotes to the line graphs below for definitions of, and further information about,the DJSDI.

2 Please see the footnotes to the line graphs below for definitions of, and further information about, theS&P 500.

3 Beta measures a security/fund’s volatility relative to the market. A beta greater than 1.00 suggests thesecurity/fund has historically been more volatile than the market as measured by the fund’s benchmark.A beta less than 1.00 suggests the security/fund has historically had less volatility relative to the market.

4 There are no guarantees that dividend paying stocks will continue to pay dividends. In addition,dividend-paying stocks may not experience the same capital appreciation potential asnon-dividend-paying stocks.

5 In the absence of temporary expense waivers and reimbursements, the 30-day SEC yield for InstitutionalShares would have been 3.55%. The dividend yield represents the average yield of the underlyingsecurities within the Fund. The average yield is a weighted average calculated by assigning a weight toeach of the underlying securities in the Fund based upon the portion of total assets of the Fund eachunderlying security represents.

6 International investing involves special risks including currency risk, increased volatility, political risks,and differences in auditing and other financial standards.

7 Factset 3-year beta versus the S&P 500 calculated using monthly returns.


4

FUND PERFORMANCE AND GROWTH OF A $10,000 INVESTMENT

The graph below illustrates the hypothetical investment of $10,0001 in theFederated Strategic Value Dividend Fund from October 31, 2007 toOctober 31, 2017, compared to the Standard & Poor’s 500 Index (S&P 500)2

and the Dow Jones U.S. Select Dividend Index (DJSDI).3 The Average AnnualTotal Return table below shows returns for each class averaged over thestated periods.

GROWTH OF A $10,000 INVESTMENT

Growth of $10,000 as of October 31, 2017

Federated Strategic Value Dividend Fund - Institutional SharesFederated Strategic Value Dividend Fund - Class A SharesS&P 500 DJSDI

$5,000

$8,000

$11,000

$14,000

$17,000

$20,000

$23,000

10/31/07 10/31/1710/09 10/11 10/13 10/15

$17,947$16,534

$20,638$20,869

� Total returns shown for Class A Shares include the maximum sales charge of 5.50%($10,000 investment minus $550 sales charge = $9,450).

The Fund offers multiple share classes whose performance may be greater thanor less than its other share class(es) due to differences in sales charges andexpenses. See the Average Annual Return table below for the returns ofadditional classes not shown in the line graph above.


5

Average Annual Total Returns for the Period Ended 10/31/2017(returns reflect all applicable sales charges and contingent sales charges as specified below in footnote #1)

1 Year 5 Years 10 Years

Class A Shares 6.07% 9.76% 5.16%

Class C Shares 10.43% 10.23% 4.97%

Institutional Shares 12.51% 11.33% 6.02%

Class R6 Shares4 12.53% 11.25% 5.89%

S&P 500 23.63% 15.18% 7.51%

DJSDI 16.82% 14.47% 7.63%

Performance data quoted represents past performance which is noguarantee of future results. Investment return and principal value willfluctuate so that an investor’s shares, when redeemed, may be worthmore or less than their original cost. Mutual fund performancechanges over time and current performance may be lower or higherthan what is stated. For current to the most recent month-endperformance and after-tax returns, visit FederatedInvestors.com or call1-800-341-7400. Returns shown do not reflect the deduction of taxesthat a shareholder would pay on Fund distributions or the redemptionof Fund shares. Mutual funds are not obligations of or guaranteed byany bank and are not federally insured.

1 Represents a hypothetical investment of $10,000 in the Fund after deducting applicable salescharges: For Class A Shares, the maximum sales charge of 5.50% ($10,000 investment minus $550 salescharge = $9,450); for Class C Shares, a 1.00% contingent deferred sales charge would be applied on anyredemption less than one year from the purchase date. The Fund’s performance assumes thereinvestment of all dividends and distributions. The S&P 500 and DJSDI have been adjusted to reflectreinvestment of dividends on securities in the indexes.

2 The S&P 500 is a capitalization-weighted index of 500 stocks designed to measure performance of thebroad domestic economy through changes in the aggregate market value of 500 stocks representing allmajor industries. The S&P 500 is not adjusted to reflect sales loads, expenses or other fees that theSecurities and Exchange Commission (SEC) requires to be reflected in the Fund’s performance. Theindex is unmanaged and, unlike the Fund, is not affected by cash flows. It is not possible to invest inan index.

3 The DJSDI aims to represent U.S. leading stocks by dividend yield. One hundred stocks are selected tothe index by dividend yield, subject to screens for dividend-per-share growth rate, dividend payout ratioand average daily dollar trading volume. Components are weighted by indicated annual dividend. TheDJSDI is not adjusted to reflect sales loads, expenses or other fees that the SEC requires to be reflectedin the Fund’s performance. The index is unmanaged and, unlike the Fund, is not affected by cash flows.It is not possible to invest in an index.

4 The Fund’s R6 Shares commenced operations on June 29, 2016. For the period prior to thecommencement of operations of the R6 Shares, the performance information shown is for InstitutionalShares adjusted to remove any voluntary waiver of fund expenses related to the Institutional Shares thatoccurred during the period prior to commencement of the R6 Shares.


6

Portfolio of Investments Summary Table (unaudited)At October 31, 2017, the Fund’s sector composition1 was as follows:

Sector CompositionPercentage of

Total Net Assets

Consumer Staples 20.1%

Telecommunication Services 18.7%

Utilities 18.3%

Energy 14.6%

Health Care 12.3%

Real Estate 8.8%

Financials 2.8%

Industrials 1.4%

Consumer Discretionary 0.7%

Information Technology 0.7%

Cash Equivalents2 1.6%

Other Assets and Liabilities—Net3 0.0%

TOTAL 100.0%

1 Except for Cash Equivalents and Other Assets and Liabilities, sector classifications are based upon, andindividual portfolio securities are assigned to, the classifications of the Global Industry ClassificationStandard (GICS) except that the Adviser assigns a classification to securities not classified by the GICSand to securities for which the Adviser does not have access to the classification made by the GICS.

2 Cash Equivalents include any investments in money market mutual funds and/or overnightrepurchase agreements.

3 Assets, other than investments in securities, less liabilities. See Statement of Assets and Liabilities.


7

Portfolio of InvestmentsOctober 31, 2017

Shares Value

COMMON STOCKS—98.4%

Consumer Discretionary—0.7%

1,585,950 Target Corp. $ 93,634,488

Consumer Staples—20.1%

10,142,641 Altria Group, Inc. 651,360,405

3,433,960 General Mills, Inc. 178,291,203

3,948,275 Imperial Brands PLC 161,069,543

1,872,600 Kimberly-Clark Corp. 210,686,226

675,700 PepsiCo, Inc. 74,482,411

5,828,853 Philip Morris International, Inc. 609,931,178

3,464,355 Procter & Gamble Co. 299,112,411

13,462,625 The Coca-Cola Co. 619,011,497

TOTAL 2,803,944,874

Energy—14.6%

53,519,925 BP PLC 362,772,680

3,874,474 Chevron Corp. 449,012,792

5,990,975 Exxon Mobil Corp. 499,347,766

6,008,465 Occidental Petroleum Corp. 387,966,585

5,937,775 Total S.A. 331,195,994

TOTAL 2,030,295,817

Financials—2.8%

1,573,875 Canadian Imperial Bank of Commerce 138,539,063

1,164,344 Muenchener Rueckversicherungs-Gesellschaft AG 260,474,896

TOTAL 399,013,959

Health Care—12.3%

4,092,375 AbbVie, Inc. 369,336,844

5,721,150 AstraZeneca PLC 387,689,268

20,982,123 GlaxoSmithKline PLC 376,960,851

5,383,085 Merck & Co., Inc. 296,554,153

3,000,412 Sanofi 284,249,788

TOTAL 1,714,790,904

Industrials—1.4%

1,651,100 United Parcel Service, Inc. 194,053,783

Information Technology—0.7%

1,561,825 Paychex, Inc. 99,628,817

Real Estate—8.8%

5,179,100 Crown Castle International Corp. 554,578,028


8

Shares Value

COMMON STOCKS—continued

Real Estate—continued

1,215,000 Digital Realty Trust, Inc. $ 143,904,600

2,225,500 National Retail Properties, Inc. 89,420,590

2,482,014 Omega Healthcare Investors 71,630,924

574,825 Public Storage, Inc. 119,132,481

3,894,319 Ventas, Inc. 244,368,517

TOTAL 1,223,035,140

Telecommunication Services—18.7%

18,334,959 AT&T, Inc. 616,971,370

13,306,185 BCE, Inc. 614,409,302

14,841,266 Verizon Communications, Inc. 710,451,404

231,509,989 Vodafone Group PLC 662,367,252

TOTAL 2,604,199,328

Utilities—18.3%

1,324,990 American Electric Power Co., Inc. 98,592,506

1,193,075 Consolidated Edison Co. 102,664,104

5,972,695 Dominion Energy, Inc. 484,624,472

6,768,259 Duke Energy Corp. 597,704,952

35,578,509 National Grid- SP PLC 428,162,101

10,626,905 PPL Corp. 399,146,552

4,206,025 Public Service Enterprises Group, Inc. 206,936,430

4,444,668 Southern Co. 232,011,670

TOTAL 2,549,842,787

TOTAL COMMON STOCKS(IDENTIFIED COST $12,062,198,076) 13,712,439,897

INVESTMENT COMPANY—1.6%

216,486,806 1Federated Institutional Prime Value Obligations Fund,Institutional Shares, 1.21%2

(IDENTIFIED COST $216,498,037) 216,508,455

TOTAL INVESTMENT IN SECURITIES-100.0%(IDENTIFIED COST $12,278,696,113)3 13,928,948,352

OTHER ASSETS AND LIABILITIES—NET—0.0%4 4,557,186

TOTAL NET ASSETS—100% $13,933,505,538


9

1 Affiliated holding.Affiliated holdings are investment companies which are managed by the Adviser or an affiliate of theAdviser. Transactions involving the affiliated holding during the year ended October 31, 2017, wereas follows:

FederatedInstitutionalPrime Value

Obligations Fund,Institutional Shares

Balance of Shares Held 10/31/2016 215,565,666

Purchases/Additions 2,462,056,093

Sales/Reductions (2,461,134,953)

Balance of Shares Held 10/31/2017 216,486,806

Value $ 216,508,455

Change in Unrealized Appreciation/Depreciation $ 10,418

Net Realized Gain/(Loss) $ (21,446)

Dividend Income $ 2,044,605

2 7-day net yield.3 The cost of investments for federal tax purposes amounts to $12,282,056,577.4 Assets, other than investments in securities, less liabilities. See Statement of Assets

and Liabilities.

Note: The categories of investments are shown as a percentage of total net assets atOctober 31, 2017.

Various inputs are used in determining the value of the Fund’s investments. These inputs aresummarized in the three broad levels listed below:

Level 1—quoted prices in active markets for identical securities.Level 2—other significant observable inputs (including quoted prices for similar securities,interest rates, prepayment speeds, credit risk, etc.). Also includes securities valued atamortized cost.Level 3—significant unobservable inputs (including the Fund’s own assumptions indetermining the fair value of investments).

The inputs or methodology used for valuing securities are not an indication of the riskassociated with investing in those securities.


10

The following is a summary of the inputs used, as of October 31, 2017, in valuing the Fund’sassets carried at fair value:

Valuation Inputs

Level 1—QuotedPrices

Level 2—Other

SignificantObservable

Inputs

Level 3—Significant

UnobservableInputs Total

Equity Securities:

Common Stocks

Domestic $ 9,704,549,159 $ — $— $ 9,704,549,159

International 614,409,302 3,393,481,436 — 4,007,890,738

Debt Securities:

Investment Company 216,508,455 — — 216,508,455

TOTAL SECURITIES $10,535,466,916 $3,393,481,436 $— $13,928,948,352

See Notes which are an integral part of the Financial Statements


11

Financial Highlights – Class A Shares(For a Share Outstanding Throughout Each Period)

Year Ended October 31 2017 2016 2015 2014 2013Net Asset Value, Beginning of Period $5.97 $6.06 $6.25 $5.78 $5.08Income From Investment Operations:Net investment income 0.21 0.18 0.18 0.30 0.18Net realized and unrealized gain oninvestments and foreigncurrency transactions 0.50 0.20 0.08 0.50 0.70

TOTAL FROMINVESTMENT OPERATIONS 0.71 0.38 0.26 0.80 0.88

Less Distributions:Distributions from net investment income (0.21) (0.18) (0.18) (0.30) (0.18)Distributions from net realized gain oninvestments and foreigncurrency transactions (0.13) (0.29) (0.27) (0.03) (0.00)1

TOTAL DISTRIBUTIONS (0.34) (0.47) (0.45) (0.33) (0.18)

Net Asset Value, End of Period $6.34 $5.97 $6.06 $6.25 $5.78Total Return2 12.29% 6.77% 4.45% 14.30% 17.85%

Ratios to Average Net Assets:Net expenses 1.06% 1.05% 1.05% 1.05% 1.05%Net investment income 3.36% 3.00% 3.07% 5.06% 3.46%Expense waiver/reimbursement3 0.13% 0.14% 0.13% 0.13% 0.14%Supplemental Data:Net assets, end of period (000 omitted) $2,400,842 $3,300,976 $2,358,470 $2,277,514 $1,944,577Portfolio turnover 19% 21% 16% 17% 25%

1 Represents less than $0.01.2 Based on net asset value, which does not reflect the sales charge, redemption fee or contingent

deferred sales charge, if applicable.3 This expense decrease is reflected in both the net expense and the net investment income ratios

shown above.


Annual Shareholder Report12

Financial Highlights – Class C Shares(For a Share Outstanding Throughout Each Period)







1 Represents less than $0.01.2 Based on net asset value, which does not reflect the sales charge, redemption fee or contingent

deferred sales charge, if applicable.3 This expense decrease is reflected in both the net expense and the net investment income ratios

shown above.



Financial Highlights – Institutional Shares(For a Share Outstanding Throughout Each Period)







1 Represents less than $0.01.2 Based on net asset value.3 This expense decrease is reflected in both the net expense and the net investment income ratios

shown above.



Financial Highlights – Class R6 Shares(For a Share Outstanding Throughout Each Period)

Year Ended10/31/2017

PeriodEnded

10/31/20161

Net Asset Value, Beginning of Period $6.00 $6.23Income From Investment Operations:Net investment income 0.23 0.06Net realized and unrealized gain (loss) on investments and foreigncurrency transactions 0.50 (0.22)

TOTAL FROM INVESTMENT OPERATIONS 0.73 (0.16)

Less Distributions:Distributions from net investment income (0.23) (0.07)Distributions from net realized gain on investments and foreigncurrency transactions (0.13) —

TOTAL DISTRIBUTIONS (0.36) (0.07)

Net Asset Value, End of Period $6.37 $6.00Total Return2 12.53% (2.61)%

Ratios to Average Net Assets:Net expenses 0.79% 0.78%3

Net investment income 3.73% 1.43%3

Expense waiver/reimbursement4 0.07% 0.11%3

Supplemental Data:Net assets, end of period (000 omitted) $242,131 $19,279Portfolio turnover 19% 21%5

1 Reflects operations for the period from June 29, 2016 (commencement of operations) toOctober 31, 2016.

2 Based on net asset value.3 Computed on an annualized basis.4 This expense decrease is reflected in both the net expense and the net investment income ratios

shown above.5 Portfolio turnover is calculated at the Fund level. Percentage indicated was calculated for the year

ended October 31, 2016.



Assets:

Investment in securities, at value including $216,508,455 of investment in anaffiliated holding (identified cost $12,278,696,113) $13,928,948,352

Cash 4,343,382

Cash denominated in foreign currencies (identified cost $6,929) 6,969

Income receivable 32,287,923

Receivable for investments sold 28,080,504

Receivable for shares sold 15,293,242

TOTAL ASSETS 14,008,960,372

Liabilities:

Payable for investments purchased $38,229,672

Payable for shares redeemed 31,299,892

Income distribution payable 23

Payable to adviser (Note 5) 261,016

Payable for administrative fees (Note 5) 30,613

Payable for distribution services fee (Note 5) 1,299,605

Payable for other service fees (Notes 2 and 5) 1,876,723

Accrued expenses (Note 5) 2,457,290

TOTAL LIABILITIES 75,454,834

Net assets for 2,191,195,874 shares outstanding $13,933,505,538

Net Assets Consist of:

Paid-in capital $11,380,359,165

Net unrealized appreciation of investments and translation of assets andliabilities in foreign currency 1,650,340,310

Accumulated net realized gain on investments and foreigncurrency transactions 880,738,278

Undistributed net investment income 22,067,785

TOTAL NET ASSETS $13,933,505,538

Statement of Assets and LiabilitiesOctober 31, 2017


Net Asset Value, Offering Price and Redemption Proceeds Per Share

Class A Shares:

Net asset value per share ($2,400,842,358 ÷ 378,882,338 sharesoutstanding), no par value, unlimited shares authorized $6.34

Offering price per share (100/94.50 of $6.34) $6.71

Redemption proceeds per share $6.34

Class C Shares:

Net asset value per share ($1,997,389,307 ÷ 314,712,637 sharesoutstanding), no par value, unlimited shares authorized $6.35

Offering price per share $6.35

Redemption proceeds per share (99.00/100 of $6.35) $6.29

Institutional Shares:

Net asset value per share ($9,293,143,106 ÷ 1,459,585,757 sharesoutstanding), no par value, unlimited shares authorized $6.37



Class R6 Shares:

Net asset value per share ($242,130,767 ÷ 38,015,142 sharesoutstanding), no par value, unlimited shares authorized $6.37




Statement of Assets and Liabilities – continued


Investment Income:

Dividends (including $2,044,605 received from an affiliatedholding and net of foreign taxes withheld of $13,365,396) $ 630,240,327

Expenses:

Investment adviser fee (Note 5) $106,433,998

Administrative fee (Note 5) 11,188,942

Custodian fees 927,974

Transfer agent fee (Note 2) 12,006,194

Directors’/Trustees’ fees (Note 5) 122,764

Auditing fees 27,785

Legal fees 10,840

Portfolio accounting fees 196,392

Distribution services fee (Note 5) 16,021,385

Other service fees (Notes 2 and 5) 12,164,301

Share registration costs 274,268

Printing and postage 474,147

Miscellaneous (Note 5) 128,712

TOTAL EXPENSES 159,977,702

Waiver and Reimbursements:

Waiver/reimbursement of investment adviser fee (Note 5) $(9,737,686)

Reimbursement of other operating expenses(Notes 2 and 5) (7,825,651)

TOTAL WAIVER AND REIMBURSEMENTS (17,563,337)

Net expenses 142,414,365

Net investment income 487,825,962

Realized and Unrealized Gain (Loss) on Investmentsand Foreign Currency Transactions:

Net realized gain on investments (including realized loss of$(21,446) on sales of investments in affiliated holding) 880,738,279

Net realized loss on foreign currency and foreign currencyrelated transactions (707,268)

Net realized loss on foreign exchange contracts (108,158)

Net change in unrealized appreciation of investments(including change in unrealized appreciation of $10,418 oninvestments in an affiliated holding) 267,831,379

Net change in unrealized appreciation/depreciation oftranslation of assets and liabilities in foreign currency 78,800

Net realized and unrealized gain on investments andforeign currency transactions 1,147,833,032

Change in net assets resulting from operations $1,635,658,994


Statement of OperationsYear Ended October 31, 2017


Year Ended October 31, 2017 2016

Increase (Decrease) in Net Assets

Operations:

Net investment income $ 487,825,962 $ 373,010,781

Net realized gain on investments and foreign currency transactions 879,922,853 295,815,587

Net change in unrealized appreciation/depreciation of investmentsand foreign currency translation of assets and liabilities inforeign currency 267,910,179 (9,604,627)

CHANGE IN NET ASSETS RESULTING FROM OPERATIONS 1,635,658,994 659,221,741

Distributions to Shareholders:

Distributions from net investment income

Class A Shares (92,555,083) (82,231,633)

Class C Shares (56,803,180) (41,199,098)

Institutional Shares (334,208,411) (235,617,332)

Class R6 Shares (6,130,207) (64,197)

Distributions from net realized gain on investments and foreigncurrency transactions

Class A Shares (67,787,902) (112,457,959)

Class C Shares (45,946,420) (76,119,832)

Institutional Shares (187,291,314) (281,905,363)

Class R6 Shares (624,114) —

CHANGE IN NET ASSETS RESULTING FROM DISTRIBUTIONSTO SHAREHOLDERS (791,346,631) (829,595,414)

Share Transactions:

Proceeds from sale of shares 3,935,670,776 7,701,891,315

Net asset value of shares issued to shareholders in payment ofdistributions declared 655,644,174 662,245,012

Cost of shares redeemed (6,187,696,752) (3,420,734,091)

CHANGE IN NET ASSETS RESULTING FROMSHARE TRANSACTIONS (1,596,381,802) 4,943,402,236

Change in net assets (752,069,439) 4,773,028,563

Net Assets:

Beginning of period 14,685,574,977 9,912,546,414

End of period (including undistributed net investment income of$22,067,785 and $24,754,136, respectively) $13,933,505,538 $14,685,574,977


Statement of Changes in Net Assets


Notes to Financial StatementsOctober 31, 2017

1. ORGANIZATIONFederated Equity Funds (the “Trust”) is registered under the Investment Company Act of1940, as amended (the “Act”), as an open-end management investment company. The Trustconsists of 11 portfolios. The financial statements included herein are only those of FederatedStrategic Value Dividend Fund (the “Fund”), a diversified portfolio. The financial statements ofthe other portfolios are presented separately. The assets of each portfolio are segregated anda shareholder’s interest is limited to the portfolio in which shares are held. Each portfolio paysits own expenses. The Fund offers four classes of shares: Class A Shares, Class C Shares,Institutional Shares and Class R6 Shares. All shares of the Fund have equal rights with respectto voting, except on class-specific matters. The investment objective of the Fund is to provideincome and long-term capital appreciation.

On March 30, 2017, the Fund’s T Share class became effective with the Securities andExchange Commission (SEC), but is not yet offered for sale.

2. SIGNIFICANT ACCOUNTING POLICIESThe following is a summary of significant accounting policies consistently followed by theFund in the preparation of its financial statements. These policies are in conformity withU.S. generally accepted accounting principles (GAAP).

Investment ValuationIn calculating its net asset value (NAV), the Fund generally values investments as follows:� Equity securities listed on an exchange or traded through a regulated market system are

valued at their last reported sale price or official closing price in their principal exchangeor market.

� Shares of other mutual funds or non-exchange-traded investment companies are valuedbased upon their reported NAVs.

� Derivative contracts listed on exchanges are valued at their reported settlement or closingprice, except that options are valued at the mean of closing bid and asked quotations.

� Over-the-counter (OTC) derivative contracts are fair valued using price evaluations providedby a pricing service approved by the Trustees.

� Fixed-income securities are fair valued using price evaluations provided by a pricing serviceapproved by the Trustees.

� For securities that are fair valued in accordance with procedures established by and underthe general supervision of the Trustees, certain factors may be considered such as: the lasttraded or purchase price of the security, information obtained by contacting the issuer ordealers, analysis of the issuer’s financial statements or other available documents,fundamental analytical data, the nature and duration of restrictions on disposition, themovement of the market in which the security is normally traded, public trading in similarsecurities or derivative contracts of the issuer or comparable issuers, movement of arelevant index, or other factors including but not limited to industry changes and relevantgovernment actions.

If any price, quotation, price evaluation or other pricing source is not readily available whenthe NAV is calculated, if the Fund cannot obtain price evaluations from a pricing service orfrom more than one dealer for an investment within a reasonable period of time as set forth inthe Fund’s valuation policies and procedures, or if information furnished by a pricing service,in the opinion of the valuation committee (“Valuation Committee”), is deemed not


representative of the fair value of such security, the Fund uses the fair value of the investmentdetermined in accordance with the procedures described below. There can be no assurancethat the Fund could obtain the fair value assigned to an investment if it sold the investment atapproximately the time at which the Fund determines its NAV per share.

Fair Valuation and Significant Events ProceduresThe Trustees have ultimate responsibility for determining the fair value of investments forwhich market quotations are not readily available. The Trustees have appointed a ValuationCommittee comprised of officers of the Fund, Federated Equity Management Company ofPennsylvania (“Adviser”) and certain of the Adviser’s affiliated companies to assist indetermining fair value and in overseeing the calculation of the NAV. The Trustees have alsoauthorized the use of pricing services recommended by the Valuation Committee to providefair value evaluations of the current value of certain investments for purposes of calculatingthe NAV. The Valuation Committee employs various methods for reviewing third-party pricing-service evaluations including periodic reviews of third-party pricing services’ policies,procedures and valuation methods (including key inputs, methods, models and assumptions),transactional back-testing, comparisons of evaluations of different pricing services, and reviewof price challenges by the Adviser based on recent market activity. In the event that marketquotations and price evaluations are not available for an investment, the Valuation Committeedetermines the fair value of the investment in accordance with procedures adopted by theTrustees. The Trustees periodically review and approve the fair valuations made by theValuation Committee and any changes made to the procedures.

Factors considered by pricing services in evaluating an investment include the yields orprices of investments of comparable quality, coupon, maturity, call rights and other potentialprepayments, terms and type, reported transactions, indications as to values from dealers andgeneral market conditions. Some pricing services provide a single price evaluation reflectingthe bid-side of the market for an investment (a “bid” evaluation). Other pricing services offerboth bid evaluations and price evaluations indicative of a price between the prices bid andasked for the investment (a “mid” evaluation). The Fund normally uses bid evaluations for anyU.S. Treasury and Agency securities, mortgage-backed securities and municipal securities. TheFund normally uses mid evaluations for any other types of fixed-income securities and anyOTC derivative contracts. In the event that market quotations and price evaluations are notavailable for an investment, the fair value of the investment is determined in accordance withprocedures adopted by the Trustees.

The Trustees also have adopted procedures requiring an investment to be priced at its fairvalue whenever the Adviser determines that a significant event affecting the value of theinvestment has occurred between the time as of which the price of the investment wouldotherwise be determined and the time as of which the NAV is computed. An event isconsidered significant if there is both an affirmative expectation that the investment’s valuewill change in response to the event and a reasonable basis for quantifying the resultingchange in value. Examples of significant events that may occur after the close of the principalmarket on which a security is traded, or after the time of a price evaluation provided by apricing service or a dealer, include:� With respect to securities traded principally in foreign markets, significant trends in

U.S. equity markets or in the trading of foreign securities index futures contracts;� Political or other developments affecting the economy or markets in which an issuer

conducts its operations or its securities are traded;


� Announcements concerning matters such as acquisitions, recapitalizations, litigationdevelopments, or a natural disaster affecting the issuer’s operations or regulatory changesor market developments affecting the issuer’s industry.

The Trustees have adopted procedures whereby the Valuation Committee uses a pricingservice to determine the fair value of equity securities traded principally in foreign marketswhen the Adviser determines that there has been a significant trend in the U.S. equity marketsor in index futures trading. For other significant events, the Fund may seek to obtain morecurrent quotations or price evaluations from alternative pricing sources. If a reliable alternativepricing source is not available, the Fund will determine the fair value of the investment inaccordance with the fair valuation procedures approved by the Trustees. The Trustees haveultimate responsibility for any fair valuations made in response to a significant event.

Repurchase AgreementsThe Fund may invest in repurchase agreements for short-term liquidity purposes. It is thepolicy of the Fund to require the other party to a repurchase agreement to transfer to theFund’s custodian or sub-custodian eligible securities or cash with a market value (aftertransaction costs) at least equal to the repurchase price to be paid under the repurchaseagreement. The eligible securities are transferred to accounts with the custodian or sub-custodian in which the Fund holds a “securities entitlement” and exercises “control” as thoseterms are defined in the Uniform Commercial Code. The Fund has established procedures formonitoring the market value of the transferred securities and requiring the transfer ofadditional eligible securities if necessary to equal at least the repurchase price. Theseprocedures also allow the other party to require securities to be transferred from the accountto the extent that their market value exceeds the repurchase price or in exchange for othereligible securities of equivalent market value.

The insolvency of the other party or other failure to repurchase the securities may delay thedisposition of the underlying securities or cause the Fund to receive less than the fullrepurchase price. Under the terms of the repurchase agreement, any amounts received by theFund in excess of the repurchase price and related transaction costs must be remitted to theother party.

The Fund may enter into repurchase agreements in which eligible securities are transferredinto joint trading accounts maintained by the custodian or sub-custodian for investmentcompanies and other clients advised by the Fund’s Adviser and its affiliates. The Fund willparticipate on a pro rata basis with the other investment companies and clients in its share ofthe securities transferred under such repurchase agreements and in its share of proceedsfrom any repurchase or other disposition of such securities.

Investment Income, Gains and Losses and DistributionsInvestment transactions are accounted for on a trade-date basis. Realized gains and lossesfrom investment transactions are recorded on an identified-cost basis. Interest income andexpenses are accrued daily. Dividend income and distributions to shareholders are recordedon the ex-dividend date. Foreign dividends are recorded on the ex-dividend date or when theFund is informed of the ex-dividend date. Distributions of net investment income, if any, aredeclared and paid monthly. Non-cash dividends included in dividend income, if any, arerecorded at fair value. Non-cash dividends included in dividend income, if any, are recorded atfair value. Amortization/accretion of premium and discount is included in investment income.Investment income, realized gains and losses, and certain fund-level expenses are allocated toeach class based on relative average daily net assets, except that Class A Shares, Class C


Shares, Institutional Shares and Class R6 Shares may bear distribution services fees, otherservice fees and transfer agent fees unique to those classes. The detail of the total fundexpense waiver and reimbursements of $17,563,337 is disclosed in various locations in thisNote 2 and Note 5.

Transfer AgentFees Incurred

Transfer AgentFees Reimbursed

Class A Shares $ 2,360,071 $(1,535,909)

Class C Shares 1,746,105 (1,113,694)

Institutional Shares 7,884,895 (5,176,048)

Class R6 Shares 15,123 —

TOTAL $12,006,194 $(7,825,651)

Dividends are declared separately for each class. No class has preferential dividend rights;differences in per share dividend rates are generally due to differences in separateclass expenses.

Other Service FeesThe Fund may pay other service fees up to 0.25% of the average daily net assets of the Fund’sClass A Shares and Class C Shares to unaffiliated financial intermediaries or to FederatedShareholder Services Company (FSSC) for providing services to shareholders and maintainingshareholder accounts. Subject to the terms described in the Expense Limitation note, FSSCmay voluntarily reimburse the Fund for other service fees. For the year endedOctober 31, 2017, other service fees for the Fund were as follows:

Other ServiceFees Incurred

Class A Shares $ 6,823,840

Class C Shares 5,340,461

TOTAL $12,164,301

Federal TaxesIt is the Fund’s policy to comply with the Subchapter M provision of the Internal Revenue Code(the “Code”) and to distribute to shareholders each year substantially all of its income.Accordingly, no provision for federal income tax is necessary. As of and during the year endedOctober 31, 2017, the Fund did not have a liability for any uncertain tax positions. The Fundrecognizes interest and penalties, if any, related to tax liabilities as income tax expense in theStatement of Operations. As of October 31, 2017, tax years 2014 through 2017 remain subjectto examination by the Fund’s major tax jurisdictions, which include the United States ofAmerica and the Commonwealth of Massachusetts.

The Fund may be subject to taxes imposed by governments of countries in which it invests.Such taxes are generally based on either income or gains earned or repatriated. The Fundaccrues and applies such taxes to net investment income, net realized gains and netunrealized gains as income and/or gains are earned.


When-Issued and Delayed-Delivery TransactionsThe Fund may engage in when-issued or delayed-delivery transactions. The Fund recordswhen-issued securities on the trade date and maintains security positions such that sufficientliquid assets will be available to make payment for the securities purchased. Securitiespurchased on a when-issued or delayed-delivery basis are marked to market daily and beginearning interest on the settlement date. Losses may occur on these transactions due tochanges in market conditions or the failure of counterparties to perform under the contract.

Foreign Exchange ContractsThe Fund enters into foreign exchange contracts for the delayed-delivery of securities orforeign currency exchange transactions. The Fund enters into foreign exchange contracts toprotect assets against adverse changes in foreign currency exchange rates or exchangecontrol regulations. Purchased contracts are used to acquire exposure to foreign currencies,whereas, contracts to sell are used to hedge the Fund’s securities against currencyfluctuations. Risks may arise upon entering into these transactions from the potential inabilityof counterparties to meet the terms of their commitments and from unanticipated movementsin security prices or foreign exchange rates. The foreign exchange contracts are adjusted bythe daily exchange rate of the underlying currency and any gains or losses are recorded forfinancial statement purposes as unrealized until the settlement date.

At October 31, 2017, the Fund had no outstanding foreign exchange contracts.

Foreign Currency TranslationThe accounting records of the Fund are maintained in U.S. dollars. All assets and liabilitiesdenominated in foreign currencies are translated into U.S. dollars based on the rates ofexchange of such currencies against U.S. dollars on the date of valuation. Purchases and salesof securities, income and expenses are translated at the rate of exchange quoted on therespective date that such transactions are recorded. The Fund does not isolate that portion ofthe results of operations resulting from changes in foreign exchange rates on investmentsfrom the fluctuations arising from changes in market prices of securities held. Suchfluctuations are included with the net realized and unrealized gain or loss from investments.

Reported net realized foreign exchange gains or losses arise from sales of foreigncurrencies, currency gains or losses realized between the trade and settlement dates onsecurities transactions, the difference between the amounts of dividends, interest and foreignwithholding taxes recorded on the Fund’s books, and the U.S. dollar equivalent of the amountsactually received or paid. Net unrealized foreign exchange gains and losses arise fromchanges in the value of assets and liabilities other than investments in securities at fiscal yearend, resulting from changes in the exchange rate.

The Effect of Derivative Instruments on the Statement of Operations forthe Year Ended October 31, 2017

Amount of Realized Gain or (Loss) on Derivatives Recognized in Income

ForwardCurrencyContracts

Foreign exchange contracts $(108,158)


OtherThe preparation of financial statements in conformity with GAAP requires management tomake estimates and assumptions that affect the amounts of assets, liabilities, expenses andrevenues reported in the financial statements. Actual results could differ from those estimated.The Fund applies investment company accounting and reporting guidance.

3. SHARES OF BENEFICIAL INTERESTThe following tables summarize share activity:

Year Ended October 31 2017 2016

Class A Shares: Shares Amount Shares Amount

Shares sold 84,433,729 $ 513,894,434 300,032,338 $ 1,812,381,488

Shares issued to shareholders in paymentof distributions declared 25,496,550 151,647,341 32,045,519 183,241,993

Shares redeemed (283,885,607) (1,724,856,300) (168,314,232) (1,013,286,462)

NET CHANGE RESULTING FROMCLASS A SHARE TRANSACTIONS (173,955,328) $(1,059,314,525) 163,763,625 $ 982,337,019


Class C Shares: Shares Amount Shares Amount

Shares sold 37,442,865 $ 228,161,526 146,636,760 $ 884,921,150


Shares redeemed (107,759,419) (663,400,007) (57,350,390) (343,313,833)

NET CHANGE RESULTING FROMCLASS C SHARE TRANSACTIONS (54,972,374) $(343,775,574) 107,276,719 $ 644,001,835


Institutional Shares: Shares Amount Shares Amount

Shares sold 477,965,911 $ 2,931,999,423 824,181,803 $ 4,983,084,665


Shares redeemed (612,141,700) (3,743,330,353) (342,524,045) (2,062,262,368)

NET CHANGE RESULTING FROMINSTITUTIONAL SHARETRANSACTIONS (66,809,801) $ (405,489,204) 547,007,369 $ 3,297,366,602


Year Ended10/31/2017

Period Ended10/31/20161

Class R6 Shares: Shares Amount Shares Amount

Shares sold 42,670,031 $ 261,615,393 3,508,919 $ 21,504,012

Shares issued to shareholders in paymentof distributions declared 1,072,826 6,692,200 10,530 64,196

Shares redeemed (8,941,829) (56,110,092) (305,335) (1,871,428)

NET CHANGE RESULTING FROMCLASS R6 SHARE TRANSACTIONS 34,801,028 $ 212,197,501 3,214,114 $ 19,696,780

NET CHANGE RESULTING FROMTOTAL FUND SHARE TRANSACTIONS (260,936,475) $(1,596,381,802) 821,261,827 $4,943,402,236

1 Reflects operations for the period from June 29, 2016 (date of initial investment) to October 31, 2016.

4. FEDERAL TAX INFORMATIONThe timing and character of income and capital gain distributions are determined inaccordance with income tax regulations, which may differ from GAAP. These differences aredue to differing treatments for foreign currency transactions.

For the year ended October 31, 2017, permanent differences identified and reclassifiedamong the components of net assets were as follows:

Increase (Decrease)

UndistributedNet InvestmentIncome (Loss)

AccumulatedNet RealizedGain (Loss)

$(815,432) $815,432

Net investment income (loss), net realized gains (losses) and net assets were not affected bythis reclassification.

The tax character of distributions as reported on the Statement of Changes in Net Assetsfor the years ended October 31, 2017 and 2016 was as follows:

2017 2016

Ordinary income1 $489,696,882 $374,440,262

Long-term capital gains $301,649,749 $455,155,152

1 For tax purposes, short-term capital gain distributions are considered ordinary income distributions.

As of October 31, 2017, the components of distributable earnings on a tax basis wereas follows:

Undistributed ordinary income2 $ 147,850,518

Undistributed long-term capital gains $ 758,316,009

Net unrealized appreciation $1,646,979,846

2 For tax purposes, short-term capital gains are considered ordinary income in determiningdistributable earnings.


The difference between book-basis and tax-basis net unrealized appreciation/depreciation isattributable to differing treatments for the deferral of losses on wash sales.

At October 31, 2017, the cost of investments for federal tax purposes was $12,282,056,577.The net unrealized appreciation of investments for federal tax purposes excluding anyunrealized appreciation resulting from the translation from foreign currencies to U.S. dollars ofassets and liabilities other than investments in securities was $1,646,891,775. This consists ofnet unrealized appreciation from investments for those securities having an excess of valueover cost of $1,925,491,660 and net unrealized depreciation from investments for thosesecurities having an excess of cost over value of $278,599,885.

5. INVESTMENT ADVISER FEE AND OTHER TRANSACTIONSWITH AFFILIATES

Investment Adviser FeeThe advisory agreement between the Fund and the Adviser provides for an annual fee equal to0.75% of the Fund’s average daily net assets. Subject to the terms described in the ExpenseLimitation note, the Adviser may voluntarily choose to waive any portion of its fee. For the yearended October 31, 2017, the Adviser voluntarily waived $9,502,869 of its fee and reimbursed$7,825,651 of transfer agent fees. The Adviser has agreed to reimburse the Fund for certaininvestment adviser fees as a result of transactions in other affiliated investment companies.For the year ended ended October 31, 2017, the Adviser reimbursed $234,817.

Administrative FeeFederated Administrative Services (FAS), under the Administrative Services Agreement,provides the Fund with administrative personnel and services. For purposes of determining theappropriate rate breakpoint, “Investment Complex” is defined as all of the Federated Fundssubject to a fee under the Administrative Services Agreement. The fee paid to FAS is based onthe average daily net assets of the Investment Complex as specified below:

Administrative FeeAverage Daily Net Assetsof the Investment Complex

0.100% on assets up to $50 billion

0.075% on assets over $50 billion

Subject to the terms described in the Expense Limitation note, FAS may voluntarily choose towaive any portion of its fee. For the year ended October 31, 2017, the annualized fee paid toFAS was 0.079% of average daily net assets of the Fund.

Prior to September 1, 2017, the breakpoints of the Administrative Fee paid to FAS, describedabove, were:

Administrative FeeAverage Daily Net Assets ofthe Investment Complex

0.150% on the first $5 billion

0.125% on the next $5 billion

0.100% on the next $10 billion

0.075% on assets in excess of $20 billion

In addition, FAS may charge certain out-of-pocket expenses to the Fund.


Distribution Services FeeThe Fund has adopted a Distribution Plan (the “Plan”) pursuant to Rule 12b-1 under the Act.Under the terms of the Plan, the Fund will compensate Federated Securities Corp. (FSC), theprincipal distributor, from the daily net assets of the Fund’s Class A shares and Class C sharesto finance activities intended to result in the sale of these shares. The Plan provides that theFund may incur distribution expenses at the following percentages of average daily net assets,annually, to compensate FSC.

Share Class NamePercentage of Average Daily

Net Assets of Class

Class A Shares 0.05%

Class C Shares 0.75%

Subject to the terms described in the Expense Limitation note, FSC may voluntarily choose towaive any portion of its fee. For the year ended October 31, 2017, distribution services fees forthe Fund were as follows:

Distribution ServicesFees Incurred

Class C Shares $16,021,385

When FSC receives fees, it may pay some or all of them to financial intermediaries whosecustomers purchase shares. For the year ended October 31, 2017, FSC retained $4,127,565 offees paid by the Fund. For the year ended October 31, 2017, the Fund’s Class A Shares did notincur a distribution services fee; however, it may begin to incur this fee upon approval ofthe Trustees.

Sales ChargesFront-end sales charges and contingent deferred sales charges (CDSC) do not representexpenses of the Fund. They are deducted from the proceeds of sales of Fund shares prior toinvestment or from redemption proceeds prior to remittance, as applicable. For the year endedOctober 31, 2017, FSC retained $550,799 in sales charges from the sale of Class A Shares. FSCalso retained $540,520 of CDSC relating to redemptions of Class C Shares.

Other Service FeesFor the year ended October 31, 2017, FSSC received $31,576 of the other service feesdisclosed in Note 2.

Expense LimitationThe Adviser and certain of its affiliates (which may include FSC, FAS and FSSC) on their owninitiative have agreed to waive certain amounts of their respective fees and/or reimburseexpenses. Total annual fund operating expenses (as shown in the financial highlights,excluding tax reclaim recovery expenses, interest expense, extraordinary expenses and proxy-related expenses paid by the Fund, if any) paid by the Fund’s Class A Shares, Class C Shares,Institutional Shares and Class R6 Shares (after the voluntary waivers and/or reimbursements)will not exceed 1.05%, 1.80%, 0.80% and 0.78% (the “Fee Limit”), respectively, up to but notincluding the later of (the “Termination Date”): (a) January 1, 2019; or (b) the date of the


Fund’s next effective Prospectus. While the Adviser and its applicable affiliates currently do notanticipate terminating or increasing these arrangements prior to the Termination Date, thesearrangements may only be terminated or the Fee Limit increased prior to the Termination Datewith the agreement of the Trustees.

Interfund TransactionsDuring the year ended October 31, 2017, the Fund engaged in purchase and sale transactionswith funds that have a common investment adviser (or affiliated investment advisers), commonDirectors/Trustees and/or common Officers. These purchase transactions complied with Rule17a-7 under the Act and amounted to $981,377.

GeneralCertain Officers and Trustees of the Fund are Officers and Directors or Trustees of certain ofthe above companies. To efficiently facilitate payment, Directors’/Trustees’ fees and certainexpenses related to conducting meetings of the Directors/Trustees and other miscellaneousexpenses are paid by an affiliate of the Adviser which in due course are reimbursed by theFund. These expenses related to conducting meetings of the Directors/Trustees and othermiscellaneous expenses may be included in Accrued and Miscellaneous Expenses on theStatement of Assets and Liabilities and Statement of Operations, respectively.

6. INVESTMENT TRANSACTIONSPurchases and sales of investments, excluding long-term U.S. government securities andshort-term obligations, for the year ended October 31, 2017, were as follows:

Purchases $2,677,821,593

Sales $4,560,830,819

7. LINE OF CREDITThe Fund participates with certain other Federated Funds, on a several basis, in an up to$500,000,000 unsecured, 364-day, committed, revolving line of credit (LOC) agreement. TheLOC was made available to finance temporarily the repurchase or redemption of shares of theFund, failed trades, payment of dividends, settlement of trades and for other short-term,temporary or emergency general business purposes. The Fund cannot borrow under the LOCif an inter-fund loan is outstanding. The Fund’s ability to borrow under the LOC also is subjectto the limitations of the Act and various conditions precedent that must be satisfied before theFund can borrow. Loans under the LOC are charged interest at a fluctuating rate per annumequal to the highest, on any day, of (a) (i) the federal funds effective rate, (ii) the one monthLondon Interbank Offered Rate (LIBOR), and (iii) 0.0%, plus (b) a margin. The LOC alsorequires the Fund to pay, quarterly in arrears and at maturity, its pro rata share of acommitment fee based on the amount of the lenders’ commitment that has not been utilized.As of October 31, 2017, the Fund had no outstanding loans. During the year endedOctober 31, 2017, the Fund did not utilize the LOC.


8. INTERFUND LENDINGPursuant to an Exemptive Order issued by the SEC, the Fund, along with other funds advisedby subsidiaries of Federated Investors, Inc., may participate in an interfund lending program.This program provides an alternative credit facility allowing the Fund to borrow from otherparticipating affiliated funds. As of October 31, 2017, there were no outstanding loans. Duringthe year ended October 31, 2017, the program was not utilized.

9. FEDERAL TAX INFORMATION (UNAUDITED)For the year ended October 31, 2017, the amount of long-term capital gains designated by theFund was $301,649,749.

For the fiscal year ended October 31, 2017, 100.0% of total ordinary income (includingshort-term capital gain) distributions made by the Fund are qualifying dividends which may besubject to a maximum tax rate of 15%, as provided for by the Jobs and Growth Tax Relief Actof 2003. Complete information is reported in conjunction with the reporting of yourdistributions on Form 1099-DIV.

Of the ordinary income (including short-term capital gain) distributions made by the Fundduring the year ended October 31, 2017, 73.10% qualify for the dividend received deductionavailable to corporate shareholders.


Report of Independent Registered PublicAccounting FirmTO THE BOARD OF TRUSTEES OF FEDERATED EQUITY FUNDS ANDSHAREHOLDERS OF FEDERATED STRATEGIC VALUE DIVIDEND FUND:

We have audited the accompanying statement of assets and liabilities ofFederated Strategic Value Dividend Fund (the “Fund”) (one of the portfoliosconstituting Federated Equity Funds), including the portfolio of investments, asof October 31, 2017, and the related statement of operations for the year thenended, the statement of changes in net assets for each of the two years in theperiod then ended, and the financial highlights for each of the periods or yearsindicated therein. These financial statements and financial highlights are theresponsibility of the Fund’s management. Our responsibility is to express anopinion on these financial statements and financial highlights based onour audits.

We conducted our audits in accordance with standards of the Public CompanyAccounting Oversight Board (United States). Those standards require that weplan and perform the audit to obtain reasonable assurance about whether thefinancial statements and financial highlights are free of material misstatement.We were not engaged to perform an audit of the Fund’s internal control overfinancial reporting. Our audits included consideration of internal control overfinancial reporting as a basis for designing audit procedures that are appropriatein the circumstances, but not for the purpose of expressing an opinion on theeffectiveness of the Fund’s internal control over financial reporting. Accordingly,we express no such opinion. An audit also includes examining, on a test basis,evidence supporting the amounts and disclosures in the financial statements andfinancial highlights, assessing the accounting principles used and significantestimates made by management, and evaluating the overall financial statementpresentation. Our procedures included confirmation of securities owned as ofOctober 31, 2017, by correspondence with the custodian and others or by otherappropriate auditing procedures where replies from others were not received.We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred toabove present fairly, in all material respects, the financial position of theFederated Strategic Value Dividend Fund, a portfolio of Federated EquityFunds, at October 31, 2017, the results of its operations for the year then ended,the changes in its net assets for each of the two years in the period then ended,and the financial highlights for each of the periods or years indicated therein, inconformity with U.S. generally accepted accounting principles.

Boston, MassachusettsDecember 22, 2017


Shareholder Expense Example (unaudited)As a shareholder of the Fund, you incur two types of costs: (1) transaction costs,including sales charges (“loads”) on purchase or redemption payments; and(2) ongoing costs, including management fees and to the extent applicable,distribution (12b-1) fees and/or other service fees and other Fund expenses.This Example is intended to help you to understand your ongoing costs (indollars) of investing in the Fund and to compare these costs with the ongoingcosts of investing in other mutual funds. It is based on an investment of $1,000invested at the beginning of the period and held for the entire period fromMay 1, 2017 to October 31, 2017.

ACTUAL EXPENSES

The first section of the table below provides information about actual accountvalues and actual expenses. You may use the information in this section, togetherwith the amount you invested, to estimate the expenses that you incurred overthe period. Simply divide your account value by $1,000 (for example, an $8,600account value divided by $1,000 = 8.6), then multiply the result by the numberin the first section under the heading entitled “Expenses Paid During Period”to estimate the expenses attributable to your investment during this period.

HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES

The second section of the table below provides information about hypotheticalaccount values and hypothetical expenses based on the Fund’s actual expenseratio and an assumed rate of return of 5% per year before expenses, which is notthe Fund’s actual return. Thus, you should not use the hypothetical accountvalues and expenses to estimate the actual ending account balance or yourexpenses for the period. Rather, these figures are required to be provided toenable you to compare the ongoing costs of investing in the Fund with otherfunds. To do so, compare this 5% hypothetical example with the 5%hypothetical examples that appear in the shareholder reports of the other funds.


Please note that the expenses shown in the table are meant to highlight yourongoing costs only and do not reflect any transaction costs, such as sales charges(“loads”) on purchase or redemption payments. Therefore, the second section ofthe table is useful in comparing ongoing costs only, and will not help youdetermine the relative total costs of owning different funds. In addition, if thesetransaction costs were included, your costs would have been higher.

BeginningAccount Value

5/1/2017

EndingAccount Value

10/31/2017Expenses PaidDuring Period1

Actual:

Class A Shares $1,000 $1,049.90 $5.48

Class C Shares $1,000 $1,045.80 $9.33

Institutional Shares $1,000 $1,051.00 $4.19

Class R6 Shares $1,000 $1,051.10 $4.08

Hypothetical (assuming a 5% returnbefore expenses):

Class A Shares $1,000 $1,019.90 $5.40

Class C Shares $1,000 $1,016.10 $9.20

Institutional Shares $1,000 $1,021.10 $4.13

Class R6 Shares $1,000 $1,021.20 $4.02

1 Expenses are equal to the Fund’s annualized net expense ratios, multiplied by the average account valueover the period, multiplied by 184/365 (to reflect the one-half-year period). The annualized net expenseratios are as follows:

Class A Shares 1.06%

Class C Shares 1.81%

Institutional Shares 0.81%

Class R6 Shares 0.79%


In MemoriamWith profound sadness, Federated announces the passing of John F. (“Jack”)Donahue and John W. (“John”) McGonigle. They will be greatly missed.

JACK DONAHUE

(Former Chairman and President, and Emeritus Director/Trustee, of the Federated Funds,and Founder, Former Chairman, President and Chief Executive Officer, and ChairmanEmeritus, of Federated Investors, Inc.)

Jack Donahue, along with Richard B. Fisher, founded Federated in 1955 andserved as a leader and member of the Boards of Directors/Trustees of theFederated Funds and the Board of Directors of Federated Investors, Inc.Mr. Donahue was a family man of deep faith with exemplary character andfealty, who served his religion, family, community, and the Federated Funds andFederated, as well as their shareholders, officers and employees, with distinction.His integrity, intelligence, and keen sense of fiduciary duty, coupled with hisfaith, family and background as a West Point graduate and Strategic AirCommand B-29 pilot, served as a foundation for his strong business acumen andleadership. Among his many achievements, Mr. Donahue’s steadfast andinnovative leadership of the Federated Funds and Federated, as well as withinthe investment management industry, led to the birth of money market funds inthe 1970s and their growth as an innovative, efficient and effective cashmanagement vehicle throughout the 1980s, 1990s, 2000s and beyond. Federatedexpresses deep gratitude to Mr. Donahue for his inspiring leadership,distinguished service and contributions as a husband, father, founder, Boardmember and officer, colleague and friend.

JOHN MCGONIGLE

(Former Secretary of the Federated Funds, Former Director, Secretary and Chief LegalOfficer of Federated Investors, Inc.)

John McGonigle served the Federated Funds and their respective Boards withdistinction for more than 50 years as Fund Secretary and also served as Directorfor several closed-end funds. Mr. McGonigle was a gifted lawyer and wisecounselor with a genial presence, keen intellect and convivial demeanor. A manof deep faith, he was a devoted husband, father and grandfather. A graduate ofDuquesne University School of Law, Mr. McGonigle served as an officer in theU.S. Army for two years, achieving the rank of Captain. He also served on thestaff of the Securities and Exchange Commission before joining Federated in1966. Among many professional accomplishments, Mr. McGonigle helpedfashion the regulatory foundation for money market funds, establishedFederated’s first offshore funds in Ireland, and represented Federated on theBoard of Governors of the Investment Company Institute where he was amember of the Executive Committee. Federated expresses deep gratitude forMr. McGonigle and his impact on his family, friends, the community, and themutual fund industry.


Board of Trustees and Trust OfficersThe Board of Trustees is responsible for managing the Trust’s business affairsand for exercising all the Trust’s powers except those reserved for theshareholders. The following tables give information about each Trustee and thesenior officers of the Fund. Where required, the tables separately list Trusteeswho are “interested persons” of the Fund (i.e., “Interested” Trustees) and thosewho are not (i.e., “Independent” Trustees). Unless otherwise noted, the addressof each person listed is Federated Investors Tower, 1001 Liberty Avenue,Pittsburgh, PA 15222. The address of all Independent Trustees listed is4000 Ericsson Drive, Warrendale, PA 15086-7561; Attention: Mutual FundBoard. As of December 31, 2016, the Trust comprised 14 portfolio(s), and theFederated Fund Family consisted of 40 investment companies (comprising124 portfolios). Unless otherwise noted, each Officer is elected annually. Unlessotherwise noted, each Trustee oversees all portfolios in the Federated FundFamily and serves for an indefinite term. The Fund’s Statement of AdditionalInformation includes additional information about Trust Trustees and isavailable, without charge and upon request, by calling 1-800-341-7400.

INTERESTED TRUSTEES BACKGROUND

NameBirth DatePositions Held with TrustDate Service Began

Principal Occupation(s) for Past Five Years,Other Directorships Held and Previous Position(s)

J. Christopher Donahue*Birth Date: April 11, 1949PRESIDENT AND TRUSTEEIndefinite TermBegan serving: September 1999

Principal Occupations: Principal Executive Officer and President ofcertain of the Funds in the Federated Fund Family; Director or Trustee ofthe Funds in the Federated Fund Family; President, Chief Executive Officerand Director, Federated Investors, Inc.; Chairman and Trustee, FederatedInvestment Management Company; Trustee, Federated InvestmentCounseling; Chairman and Director, Federated Global InvestmentManagement Corp.; Chairman and Trustee, Federated Equity ManagementCompany of Pennsylvania; Trustee, Federated Shareholder ServicesCompany; Director, Federated Services Company.

Previous Positions: President, Federated Investment Counseling;President and Chief Executive Officer, Federated Investment ManagementCompany, Federated Global Investment Management Corp. and PassportResearch, Ltd; Chairman, Passport Research, Ltd.



Principal Occupation(s) for Past Five Years,Other Directorships Held and Previous Position(s)

John B. Fisher*Birth Date: May 16, 1956TRUSTEEIndefinite TermBegan serving: May 2016

Principal Occupations: Principal Executive Officer and President ofcertain of the Funds in the Federated Fund Family; Director or Trustee ofcertain of the Funds in the Federated Fund Family; Vice President,Federated Investors, Inc.; President, Director/Trustee and CEO, FederatedAdvisory Services Company, Federated Equity Management Company ofPennsylvania, Federated Global Investment Management Corp., FederatedInvestment Counseling, Federated Investment Management Company;President of some of the Funds in the Federated Fund Complex andDirector, Federated Investors Trust Company.

Previous Positions: President and Director of the Institutional SalesDivision of Federated Securities Corp.; President and Director of FederatedInvestment Counseling; President and CEO of Passport Research, Ltd.;Director, Edgewood Securities Corp.; Director, Federated ServicesCompany; Director, Federated Investors, Inc.; Chairman and Director,Southpointe Distribution Services, Inc. and President, Technology,Federated Services Company.

* Reasons for “interested” status: J. Christopher Donahue and John B. Fisher are interested due to theirbeneficial ownership of shares of Federated Investors, Inc. and due to positions they hold with Federatedand its subsidiaries.

INDEPENDENT TRUSTEES BACKGROUND


Principal Occupation(s) for Past Five Years,Other Directorships Held, Previous Position(s) and Qualifications

John T. CollinsBirth Date: January 24, 1947TRUSTEEIndefinite TermBegan serving: October 2013

Principal Occupations: Director or Trustee of the Federated Fund Family;formerly, Chairman and CEO, The Collins Group, Inc. (a private equityfirm) (Retired).

Other Directorships Held: Director, Current Chair of the CompensationCommittee, KLX Corp.

Qualifications: Mr. Collins has served in several business and financialmanagement roles and directorship positions throughout his career.Mr. Collins previously served as Chairman and CEO, The Collins Group, Inc.(a private equity firm). Mr. Collins serves as Chairman Emeriti, BentleyUniversity. Mr. Collins previously served as Director and Audit CommitteeMember, Bank of America Corp.; Director, FleetBoston Financial Corp.; andDirector, Beth Israel Deaconess Medical Center (Harvard UniversityAffiliate Hospital).




G. Thomas HoughBirth Date: February 28, 1955TRUSTEEIndefinite TermBegan serving: August 2015

Principal Occupations: Director or Trustee of the Federated Fund Family;formerly, Vice Chair, Ernst & Young LLP (public accounting firm) (Retired).

Other Directorships Held: Director, Chair of the Audit Committee,Governance Committee, Publix Super Markets, Inc.; Director, Member ofthe Audit Committee and Technology Committee of Equifax, Inc.

Qualifications: Mr. Hough has served in accounting, businessmanagement and directorship positions throughout his career. Mr. Houghmost recently held the position of Americas Vice Chair of Assurance withErnst & Young LLP (public accounting firm). Mr. Hough is an ExecutiveCommittee member of the United States Golf Association, he serves on thePresident’s Cabinet and Business School Board of Visitors for theUniversity of Alabama and is on the Business School Board of Visitors forWake Forest University.

Maureen Lally-GreenBirth Date: July 5, 1949TRUSTEEIndefinite TermBegan serving: August 2009

Principal Occupations: Director or Trustee of the Federated Fund Family;Dean of the Duquesne University School of Law; Adjunct Professor of Law,Duquesne University School of Law; formerly, Interim Dean of theDuquesne University School of Law; Associate General Secretary andDirector, Office of Church Relations, Diocese of Pittsburgh.

Other Directorships Held: Director, CONSOL Energy Inc.

Qualifications: Judge Lally-Green has served in various legal andbusiness roles and directorship positions throughout her career. JudgeLally-Green previously served as: Associate General Secretary, Diocese ofPittsburgh; a member of the Superior Court of Pennsylvania; and as aProfessor of Law, Duquesne University School of Law. Judge Lally-Greenalso currently holds the positions on either a public or not for profit Boardof Directors as follows: Director and Chair, UPMC Mercy Hospital; Regent,St. Vincent Seminary; Director and Vice Chair, Our Campaign for theChurch Alive!, Inc.; Director, Saint Vincent College; Member, PennsylvaniaState Board of Education (public); and Director and Chair, Cardinal WuerlNorth Catholic High School, Inc. Judge Lally-Green has held the positionsof: Director, Auberle; Director, Epilepsy Foundation of Western and CentralPennsylvania; Director, Ireland Institute of Pittsburgh; Director, SaintThomas More Society; Director, Catholic High Schools of the Diocese ofPittsburgh, Inc.; and Director, Pennsylvania Bar Institute.

Peter E. MaddenBirth Date: March 16, 1942TRUSTEEIndefinite TermBegan serving: November 1991

Principal Occupation: Director or Trustee, and Chair of the Board ofDirectors or Trustees, of the Federated Fund Family; Retired.

Other Directorships Held: None.

Qualifications: Mr. Madden has served in several business management,mutual fund services and directorship positions throughout his career.Mr. Madden previously served as President, Chief Operating Officer andDirector, State Street Bank and Trust Company (custodian bank) and StateStreet Corporation (financial services). He was Director, VISA USA andVISA International and Chairman and Director, Massachusetts BankersAssociation. Mr. Madden served as Director, Depository Trust Corporationand Director, The Boston Stock Exchange. Mr. Madden also served as aRepresentative to the Commonwealth of Massachusetts General Court.




Charles F. Mansfield, Jr.Birth Date: April 10, 1945TRUSTEEIndefinite TermBegan serving: January 1999

Principal Occupations: Director or Trustee of the Federated Fund Family;Management Consultant.


Qualifications: Mr. Mansfield has served as a Marine Corps officer and inseveral banking, business management, educational roles and directorshippositions throughout his long career. He remains active as aManagement Consultant.

Thomas M. O’NeillBirth Date: June 14, 1951TRUSTEEIndefinite TermBegan serving: August 2006

Principal Occupations: Director or Trustee, Chair of the Audit Committeeof the Federated Fund Family; Sole Proprietor, Navigator ManagementCompany (investment and strategic consulting).


Qualifications: Mr. O’Neill has served in several business, mutual fundand financial management roles and directorship positions throughout hiscareer. Mr. O’Neill serves as Director, Medicines for Humanity andDirector, The Golisano Children’s Museum of Naples, Florida. Mr. O’Neillpreviously served as Chief Executive Officer and President, ManagingDirector and Chief Investment Officer, Fleet Investment Advisors; Presidentand Chief Executive Officer, Aeltus Investment Management, Inc.; GeneralPartner, Hellman, Jordan Management Co., Boston, MA; Chief InvestmentOfficer, The Putnam Companies, Boston, MA; Credit Analyst and LendingOfficer, Fleet Bank; Director and Consultant, EZE Castle Software(investment order management software); and Director, MidwayPacific (lumber).

P. Jerome RicheyBirth Date: February 23, 1949TRUSTEEIndefinite TermBegan serving: October 2013

Principal Occupations: Director or Trustee of the Federated Fund Family;Management Consultant; formerly, Senior Vice Chancellor and Chief LegalOfficer, University of Pittsburgh and Executive Vice President and ChiefLegal Officer, CONSOL Energy Inc.


Qualifications: Mr. Richey has served in several business and legalmanagement roles and directorship positions throughout his career.Mr. Richey most recently held the positions of Senior Vice Chancellor andChief Legal Officer, University of Pittsburgh. Mr. Richey previously servedas Chairman of the Board, Epilepsy Foundation of Western Pennsylvaniaand Chairman of the Board, World Affairs Council of Pittsburgh. Mr. Richeypreviously served as Chief Legal Officer and Executive Vice President,CONSOL Energy Inc.; and Board Member, Ethics Counsel and Shareholder,Buchanan Ingersoll & Rooney PC (a law firm).




John S. WalshBirth Date: November 28, 1957TRUSTEEIndefinite TermBegan serving: January 1999

Principal Occupations: Director or Trustee of the Federated Fund Family;President and Director, Heat Wagon, Inc. (manufacturer of constructiontemporary heaters); President and Director, Manufacturers Products, Inc.(distributor of portable construction heaters); President, Portable HeaterParts, a division of Manufacturers Products, Inc.


Qualifications: Mr. Walsh has served in several business managementroles and directorship positions throughout his career. Mr. Walshpreviously served as Vice President, Walsh & Kelly, Inc.(paving contractors).

OFFICERS

NameBirth DateAddressPositions Held with TrustDate Service Began

Principal Occupation(s) for Past Five Yearsand Previous Position(s)

Lori A. HenslerBirth Date: January 6, 1967TREASUREROfficer since: April 2013

Principal Occupations: Principal Financial Officer and Treasurer of theFederated Fund Family; Senior Vice President, Federated AdministrativeServices; Financial and Operations Principal for Federated Securities Corp.and Edgewood Services, Inc.; and Assistant Treasurer, Federated InvestorsTrust Company. Ms. Hensler has received the Certified PublicAccountant designation.

Previous Positions: Controller of Federated Investors, Inc.; Senior VicePresident and Assistant Treasurer, Federated Investors ManagementCompany; Treasurer, Federated Investors Trust Company; AssistantTreasurer, Federated Administrative Services, Federated AdministrativeServices, Inc., Federated Securities Corp., Edgewood Services, Inc.,Federated Advisory Services Company, Federated Equity ManagementCompany of Pennsylvania, Federated Global Investment ManagementCorp., Federated Investment Counseling, Federated InvestmentManagement Company, Passport Research, Ltd., and Federated MDTA,LLC; Financial and Operations Principal for Federated Securities Corp.,Edgewood Services, Inc. and Southpointe Distribution Services, Inc.

Richard B. FisherBirth Date: May 17, 1923VICE PRESIDENTOfficer since: April 1987

Principal Occupations: Vice Chairman or Vice President of some of theFunds in the Federated Fund Family; Vice Chairman, Federated Investors,Inc.; Chairman, Federated Securities Corp.

Previous Positions: President and Director or Trustee of some of theFunds in the Federated Fund Family; Executive Vice President,Federated Investors, Inc.; Director and Chief Executive Officer, FederatedSecurities Corp.


NameBirth DateAddressPositions Held with TrustDate Service Began

Principal Occupation(s) for Past Five Yearsand Previous Position(s)

Peter J. GermainBirth Date: September 3, 1959CHIEF LEGAL OFFICER,SECRETARY AND EXECUTIVEVICE PRESIDENTOfficer since: January 2005

Principal Occupations: Mr. Germain is Chief Legal Officer, Secretary andExecutive Vice President of the Federated Fund Family. He is GeneralCounsel, Chief Legal Officer, Secretary and Executive Vice President,Federated Investors, Inc.; Trustee and Senior Vice President, FederatedInvestors Management Company; Trustee and President, FederatedAdministrative Services; Director and President, Federated AdministrativeServices, Inc.; Director and Vice President, Federated Securities Corp.;Director and Secretary, Federated Private Asset Management, Inc.;Secretary, Federated Shareholder Services Company; and Secretary,Retirement Plan Service Company of America. Mr. Germain joinedFederated in 1984 and is a member of the Pennsylvania Bar Association.

Previous Positions: Deputy General Counsel, Special Counsel, ManagingDirector of Mutual Fund Services, Federated Investors, Inc.; Senior VicePresident, Federated Services Company; and Senior Corporate Counsel,Federated Investors, Inc.

Stephen Van MeterBirth Date: June 5, 1975CHIEF COMPLIANCE OFFICERAND SENIOR VICE PRESIDENTOfficer since: July 2015

Principal Occupations: Senior Vice President and Chief ComplianceOfficer of the Federated Fund Family; Vice President and Chief ComplianceOfficer of Federated Investors, Inc. and Chief Compliance Officer of certainof its subsidiaries. Mr. Van Meter joined Federated in October 2011. Heholds FINRA licenses under Series 3, 7, 24 and 66.

Previous Positions: Mr. Van Meter previously held the position ofCompliance Operating Officer, Federated Investors, Inc. Prior to joiningFederated, Mr. Van Meter served at the United States Securities andExchange Commission in the positions of Senior Counsel, Office of ChiefCounsel, Division of Investment Management and Senior Counsel, Divisionof Enforcement.

Stephen F. AuthBirth Date: September 13, 1956101 Park Avenue41st FloorNew York, NY 10178CHIEF INVESTMENT OFFICEROfficer since: November 2002

Principal Occupations: Stephen F. Auth is Chief Investment Officer ofvarious Funds in the Federated Fund Family; Executive Vice President,Federated Investment Counseling, Federated Global InvestmentManagement Corp. and Federated Equity Management Companyof Pennsylvania.

Previous Positions: Executive Vice President, Federated InvestmentManagement Company and Passport Research, Ltd. (investment advisorysubsidiary of Federated); Senior Vice President, Global PortfolioManagement Services Division; Senior Vice President, FederatedInvestment Management Company and Passport Research, Ltd.; SeniorManaging Director and Portfolio Manager, Prudential Investments.


Evaluation and Approval of AdvisoryContract – May 2017FEDERATED STRATEGIC VALUE DIVIDEND FUND (THE “FUND”)

Following a review and recommendation of approval by the Fund’s independenttrustees, the Fund’s Board of Trustees (the “Board”) reviewed and unanimouslyapproved the continuation of the Fund’s investment advisory contract for anadditional one-year term at its May 2017 meetings. The Board’s decisionregarding the contract reflects the exercise of its business judgment afterconsidering all of the information received on whether to continue theexisting arrangements.

The Board had previously appointed a Senior Officer, whose duties includespecified responsibilities relating to the process by which advisory fees are to becharged to a Federated fund. The Senior Officer has the authority to retainconsultants, experts, or staff as may be reasonably necessary to assist in theperformance of his duties, reports directly to the Board, and may be terminatedonly with the approval of a majority of the independent members of the Board.The Senior Officer prepared and furnished to the Board an independent,written evaluation that covered topics discussed below (the “Senior Officer’sEvaluation”). The Board considered the Senior Officer’s Evaluation, along withother information, in deciding to approve the investment advisory contract.

The Board also considered judicial decisions concerning allegedly excessiveinvestment advisory fees in its decision. Using these judicial decisions as a guide,the Board has indicated that the following factors may be relevant to an adviser’sfiduciary duty with respect to its receipt of compensation from a fund: (1) thenature and quality of the services provided by an adviser to a fund and itsshareholders (including the performance of the Fund and of comparable funds);(2) an adviser’s cost of providing the services (including the profitability to anadviser of providing advisory services to a fund); (3) the extent to which anadviser may realize “economies of scale” as a fund grows larger and, if sucheconomies of scale exist, whether they have been shared with a fund and itsshareholders or the family of funds; (4) any “fall-out financial benefits” thataccrue to an adviser because of its relationship with a fund (including researchservices received from brokers that execute fund trades and any fees paid toaffiliates of an adviser for services rendered to a fund); (5) comparative fee andexpense structures (including a comparison of fees paid to an adviser with thosepaid by similar funds); and (6) the extent of care, conscientiousness andindependence with which the Fund’s board members perform their duties andtheir expertise (including whether they are fully informed about all facts theBoard deems relevant to its consideration of an adviser’s services and fees). TheBoard noted that the Securities and Exchange Commission (“SEC”) disclosurerequirements regarding the basis for the Board’s approval of the Fund’sinvestment advisory contract generally align with the factors listed above.Consistent with the judicial decisions and SEC disclosure requirements, the


Board also considered management fees charged to institutional and otherclients of Federated Equity Management Company of Pennsylvania (the“Adviser”) and its advisory affiliates for what might be viewed as like services.The Board was aware of these factors and was guided by them in its review ofthe Fund’s investment advisory contract to the extent it considered them to beappropriate and relevant, as discussed further below.

The Board considered and weighed these factors in light of its substantialaccumulated experience in governing the Fund and working with FederatedInvestors, Inc. and its affiliates (“Federated”) on matters relating to the Federatedfunds. The Board was assisted in its deliberations by independent legal counsel.In addition to the extensive materials that comprise and accompany the SeniorOfficer’s Evaluation, the Board received detailed information about the Fundand the Federated organization throughout the year, and in connection with itsMay meetings. Federated provided much of this information at each regularmeeting of the Board, and furnished additional information in connection withthe May meetings at which the Board’s formal approval of the investmentadvisory contract occurred. At the May meetings in addition to meeting inseparate sessions of the independent trustees without management present,senior management of the Adviser also met with the independent trustees andtheir counsel to discuss the materials presented and any other matters thoughtrelevant by the Adviser or the trustees. Between regularly scheduled meetings,the Board also received information on particular matters as the need arose. TheBoard’s consideration of the investment advisory contract included review ofthe Senior Officer’s Evaluation, accompanying data and additional informationcovering such matters as: the Adviser’s investment philosophy, revenue,profitability, personnel and processes; investment and operating strategies; theFund’s short-term and long-term performance (in absolute terms, both on agross basis and net of expenses, as well as in terms relative to its particularinvestment program and certain competitor or “peer group” funds and/or otherbenchmarks, as appropriate) and comments on the reasons for performance; theFund’s investment objectives; the Fund’s expenses, including the advisory feeand the overall expense structure of the Fund (both in absolute terms andrelative to similar and/or competing funds), with due regard for contractual orvoluntary expense limitations; the use and allocation of brokerage commissionsderived from trading the Fund’s portfolio securities (if any); and the nature,quality and extent of the advisory and other services provided to the Fund bythe Adviser and its affiliates. The Board also considered the preferences andexpectations of Fund shareholders; the entrepreneurial risk assumed by theAdviser in sponsoring the Fund; the continuing state of competition in themutual fund industry and market practices; the range of comparable fees forsimilar funds in the mutual fund industry; the Fund’s relationship to theFederated funds which include a comprehensive array of funds with differentinvestment objectives, policies and strategies which are generally available forexchange without the incurrence of additional sales charges; compliance and


audit reports concerning the Federated funds and the Federated companies thatservice them (including communications from regulatory agencies), as well asFederated’s responses to any issues raised therein; and relevant developments inthe mutual fund industry and how the Federated funds and/or Federated areresponding to them. The Board’s evaluation process is evolutionary. The criteriaconsidered and the emphasis placed on relevant criteria change in recognition ofchanging circumstances in the mutual fund marketplace.

While mindful that courts have cautioned against giving such comparisonstoo much weight, the Board has found the use of comparisons of the Fund’sfees and expenses to other mutual funds with comparable investment programsto be relevant to its deliberations. In this regard, the Board was presented with,and considered, information regarding the contractual advisory fee rates, netadvisory fee rates, total expense ratios and each element of the Fund’s totalexpense ratio (i.e., gross and net advisory fees, custody fees, portfolio accountingfees and transfer agency fees) relative to the Fund’s peers. The Board focused oncomparisons with other similar mutual funds more heavily than non-mutualfund products or services because it is believed that they are more relevant. Forexample, other mutual funds are the products most like the Fund, in that theyare readily available to Fund shareholders as alternative investment vehicles. Also,they are the type of investment vehicle, in fact, chosen and maintained by theFund’s investors. The range of their fees and expenses, therefore, appears to be arelevant indicator of what consumers have found to be reasonable in themarketplace in which the Fund competes.

The Board reviewed the contractual advisory fee rate, net advisory fee ratewhere partially waived and other expenses of the Fund and noted the positionof the Fund’s fee rates relative to its peers. In this regard, the Board noted thatthe contractual advisory fee rate was above the median of the relevant peergroup, but the Board noted the applicable waivers and reimbursements and thatthe overall expense structure of the Fund remained competitive in the contextof the other factors considered relevant by the Board.

For comparison, the Senior Officer has reviewed Federated’s fees forproviding advisory services to products outside the Federated funds(e.g., institutional and separate accounts and sub-adviser services). He concludedthat mutual funds and institutional accounts are inherently different products.Those differences include, but are not limited to, different types of targetedinvestors; being subject to different laws and regulations; different legalstructures; different average account sizes and portfolio management techniquesmade necessary by different cash flows and different associated costs; and thetime spent by portfolio managers and their teams, funds financial services, legal,compliance and risk management in reviewing securities pricing, addressingdifferent administrative responsibilities, addressing different degrees of risk


associated with management and a variety of different costs. The Senior Officerdid not consider the fees for providing advisory services to these outsideproducts to be determinative in judging the appropriateness of mutual fundadvisory fees.

The Senior Officer noted that the services, administrative responsibilities andrisks associated with such relationships is quite different than serving as aprimary adviser to a fund.

Following such evaluation, and full deliberations, the Board concluded thatthe expenses of the Fund are reasonable and supported renewal of the Fund’sinvestment advisory contract.

The Board considered the nature, extent and quality of the services providedto the Fund by the Adviser and the resources of the Adviser and its affiliatesdedicated to the Fund. In this regard, the Board evaluated, among other things,the Adviser’s personnel, experience, track record, overall reputation andwillingness to invest in personnel and infrastructure that benefit the Fund. Inaddition, the Board reviewed the qualifications, backgrounds and responsibilitiesof the portfolio management team primarily responsible for the day-to-daymanagement of the Fund. The Board noted the compliance programs of, andthe compliance-related resources provided to, the Fund by the Adviser. TheFund’s ability to deliver competitive performance when compared to its peergroup was also deemed to be relevant by the Board as a useful indicator of howthe Adviser is executing the Fund’s investment program. The Adviser’s ability toexecute this program was one of the Board’s considerations in reaching aconclusion that the nature, extent and quality of the Adviser’s investmentmanagement services warrant the continuation of the investmentadvisory contract.

In evaluating the Fund’s investment performance, the Board consideredperformance results in light of the Fund’s investment objective, strategies andrisks, as disclosed in the Fund’s prospectus. The Board particularly considereddetailed investment reports on the Fund’s performance that were provided tothe Board throughout the year and in connection with the May meetings. TheSenior Officer also reviewed information compiled by Federated, using datasupplied by independent fund ranking organizations, regarding the performanceof, and fees charged by, other mutual funds, noting his view that comparisons tofund peer groups may be helpful, though not conclusive, in judging thereasonableness of the proposed fees. The Board considered, in evaluating suchcomparisons, that in some cases individual funds may exhibit significant andunique differences in their objectives and management techniques whencompared to other funds within an industry peer group.


For the periods covered by the Evaluation, the Fund’s performance for thethree-year period was above the median of the relevant peer group, and theFund’s performance fell below the median of the relevant peer group for theone-year and five-year periods. The Board discussed the Fund’s performancewith the Adviser and recognized the efforts being taken by the Adviser in thecontext of other factors considered relevant by the Board.

Following such evaluation, and full deliberations, the Board concluded thatthe performance of the Fund supported renewal of the Fund’s investmentadvisory contract.

The Board also received financial information about Federated, includinginformation regarding the compensation and ancillary (or “fall-out”) benefitsFederated derived from its relationships with the Federated funds. Thisinformation covered not only the fees under the investment advisory contracts,but also fees received by Federated’s subsidiaries for providing other services tothe Federated funds under separate contracts (e.g., for serving as the Federatedfunds’ administrator). The information also detailed any indirect benefitFederated may derive from its receipt of research services from brokers whoexecute Federated fund trades. In addition, the Board considered the fact that, inorder for a fund to be competitive in the marketplace, Federated and its affiliatesfrequently waived fees and/or reimbursed expenses and have disclosed to Fundinvestors and/or indicated to the Board their intention to do so in the future.Moreover, the Board receives regular reporting as to the institution, adjustmentor elimination of these voluntary waivers. The Board considered Federated’sprevious reductions in contractual management fees to certain funds in responseto the Senior Officer’s recommendations.

Federated furnished information, requested by the Senior Officer, thatreported revenues on a fund-by-fund basis and made estimates of the allocationof expenses on a fund-by-fund basis, using allocation methodologies specified bythe Senior Officer. The Senior Officer noted that, while these cost allocationreports apply consistent allocation processes, the inherent difficulties inallocating costs continues to cause the Senior Officer to question the precisionof the process and to conclude that such reports may be unreliable, since a singlechange in an allocation estimate may dramatically alter the resulting estimate ofcost and/or profitability of a fund and may produce unintended consequences.The allocation information, including the Senior Officer’s view that fund-by-fund estimations may be unreliable, was considered in the analysis by the Board.

The Board and the Senior Officer also reviewed information compiled byFederated comparing its profitability information to other publicly held fundmanagement companies. In this regard, the Senior Officer concluded thatFederated’s profit margins did not appear to be excessive. The Senior Officeralso noted that Federated appeared financially sound, with the resources to fulfillits obligations under its contracts with the Fund.


The Senior Officer’s Evaluation also discussed the notion of possiblerealization of “economies of scale” as a fund grows larger. In this regard, theBoard considered that the Adviser has made significant and long-terminvestments in areas that support all of the Federated funds, such as personneland processes for the portfolio management, shareholder services, compliance,internal audit and risk management functions, as well as systems technology(including technology relating to cybersecurity) and that the benefits of theseefforts (as well as any economies of scale, should they exist) were likely to beenjoyed by the fund family as a whole. The Board noted that the Adviser’sinvestments in these areas are extensive. In addition, the Board considered thatFederated and its affiliates have frequently waived fees and/or reimbursedexpenses and that this has allowed fund shareholders to share potentialeconomies of scale from a fund’s inception. Federated, as it does throughout theyear, and in connection with the Board’s review, furnished information relativeto revenue sharing or adviser paid fees. Federated and the Senior Officer notedthat this information should be viewed to determine if there was an incentive toeither not apply breakpoints, or to apply breakpoints at higher levels. It shouldnot be viewed to determine the appropriateness of advisory fees because itwould represent marketing and distribution expenses. Finally, the Board alsonoted the absence of any applicable regulatory or industry guidelines on thissubject, which (as discussed in the Senior Officer’s Evaluation) is compoundedby the lack of any common industry practice or general pattern with respect tostructuring fund advisory fees with “breakpoints” that serve to reduce the fee asa fund attains a certain size.

While the Senior Officer noted certain items for follow-up reporting to theBoard and further consideration by management, he stated that his observationsand information accompanying the Senior Officer’s Evaluation supported afinding by the Board that the management fee for the Fund was reasonable.Under these circumstances, no changes were recommended to, and no objectionwas raised to the continuation of the Fund’s investment advisory contract.

In its decision to continue an existing investment advisory contract, the Boardwas mindful of the potential disruptions of the Fund’s operations and variousrisks, uncertainties and other effects that could occur as a result of a decision toterminate or not renew an investment advisory contract. In particular, the Boardrecognized that many shareholders have invested in the Fund on the strength ofthe Adviser’s industry standing and reputation and with the expectation that theAdviser will have a continuing role in providing advisory services to the Fund.Thus, the Board’s approval of the investment advisory contract reflected the factthat it is the shareholders who have effectively selected the Adviser by virtue ofhaving invested in the Fund. The Board concluded that, in light of the factorsdiscussed above, including the nature, quality and scope of the services providedto the Fund by the Adviser and its affiliates, continuation of the investmentadvisory contract was appropriate.


The Board based its decision to approve the investment advisory contract onthe totality of the circumstances and relevant factors and with a view to past andfuture long-term considerations. Not all of the factors and considerationsidentified above were necessarily relevant to the Fund, nor did the Boardconsider any one of them to be determinative. With respect to the factors thatwere relevant, the Board’s decision to approve the continuation of the contractreflects its determination that Federated’s performance and actions provided asatisfactory basis to support the decision to continue the existing arrangement.


Voting Proxies on Fund Portfolio SecuritiesA description of the policies and procedures that the Fund uses to determinehow to vote proxies, if any, relating to securities held in the Fund’s portfolio isavailable, without charge and upon request, by calling 1-800-341-7400. A reporton “Form N-PX” of how the Fund voted any such proxies during the mostrecent 12-month period ended June 30 is available via the Proxy Voting Record(Form N-PX) link associated with the Fund and share class name atwww.FederatedInvestors.com/FundInformation. Form N-PX filings are alsoavailable at the SEC’s website at www.sec.gov.

Quarterly Portfolio ScheduleThe Fund files with the SEC a complete schedule of its portfolio holdings, as ofthe close of the first and third quarters of its fiscal year, on “Form N-Q.” Thesefilings are available on the SEC’s website at www.sec.gov and may be reviewedand copied at the SEC’s Public Reference Room in Washington, DC.(Call 1-800-SEC-0330 for information on the operation of the PublicReference Room.) You may also access this information via the link to theFund and share class name at www.FederatedInvestors.com/FundInformation.


Notes

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Mutual funds are not bank deposits or obligations, are not guaranteed by any bank and arenot insured or guaranteed by the U.S. government, the Federal Deposit InsuranceCorporation, the Federal Reserve Board or any other government agency. Investment inmutual funds involves investment risk, including the possible loss of principal.

This Report is authorized for distribution to prospective investors only whenpreceded or accompanied by the Fund’s Prospectus, which contains factsconcerning its objective and policies, management fees, expenses andother information.

e e eratd dFederated Strategic Value Dividend FundFederated Investors Funds4000 Ericsson DriveWarrendale, PA 15086-7561

Contact us at FederatedInvestors.comor call 1-800-341-7400.

Federated Securities Corp., Distributor

CUSIP 314172586CUSIP 314172578CUSIP 314172560CUSIP 31421N881

33982 (12/17)

Federated is a registered trademark of Federated Investors, Inc.2017 ©Federated Investors, Inc.

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