77 E  LEGAL PROCEEDINGS
FEDERATED
Since October 2003, Federated and related entities
(collectively, "Federated"), and various Federated
funds ("Funds"), have been named as
defendants in several class action lawsuits now pend
ing in the United States District Court for the Distr
ict of Maryland. The lawsuits were
purportedly filed on behalf of people who purchased,
owned and/or redeemed shares of Federated-sponsored
mutual funds during specified periods
beginning November 1, 1998. The suits are generally
similar in alleging that Federated engaged in illegal
 and improper trading practices including
market timing and late trading in concert with certain
 institutional traders, which allegedly caused financia
l injury to the mutual fund shareholders.
These lawsuits began to be filed shortly after Federat
ed's first public announcement that it had received re
quests for information on shareholder
trading activities in the Funds from the SEC, the Off
ice of the New York State Attorney General ("NYAG"), and
 other authorities. In that regard,
on November 28, 2005, Federated announced that it had
reached final settlements with the SEC and the NYAG with
 respect to those matters.
Specifically, the SEC and NYAG settled proceedings again
st three Federated subsidiaries involving undisclosed ma
rket timing arrangements and late
trading. The SEC made findings: that Federated Investment
 Management Company ("FIMC"), an SEC-registered investment
adviser to various Funds,
and Federated Securities Corp., an SEC-registered broker-
dealer and distributor for the Funds, violated provisions
of the Investment Advisers Act
and Investment Company Act by approving, but not disclosin
g, three market timing arrangements, or the associated con
flict of interest between
FIMC and the funds involved in the arrangements, either to
 other fund shareholders or to the funds' board; and that F
ederated Shareholder
Services Company, formerly an SEC-registered transfer agent,
 failed to prevent a customer and a Federated employee from
late trading in violation
of provisions of the Investment Company Act. The NYAG found
that such conduct violated provisions of New York State law.
 Federated entered
into the settlements without admitting or denying the regula
tors' findings. As Federated previously reported in 2004, it has
already paid
approximately $8.0 million to certain funds as determined by
 an independent consultant. As part of these settlements, Fed
erated agreed to pay
disgorgement and a civil money penalty in the aggregate amount
 of an additional $72 million and, among other things, agreed t
hat it would not
serve as investment adviser to any registered investment comp
any unless (i) at least 75% of the fund's directors are inde
pendent of Federated,
(ii) the chairman of each such fund is independent of Federated
, (iii) no action may be taken by the fund's board or any commit
tee thereof
unless approved by a majority of the independent trustees of th
e fund or committee, respectively, and (iv) the fund appoints a
 "senior officer" who
reports to the independent trustees and is responsible for moni
toring compliance by the fund with applicable laws and fiduciar
y duties and for
managing the process by which management fees charged to a fun
d are approved. The settlements are described in Federated's anno
uncement
which, along with previous press releases and related communica
tions on those matters, is available in the "About Us" section
 of Federated's
website at FederatedInvestors.com.
Federated entities have also been named as defendants in severa
l additional lawsuits that are now pending in the United States Di
strict Court for
the Western District of Pennsylvania, alleging, among other thin
gs, excessive advisory and Rule 12b-1 fees.
The Board of the Funds retained the law firm of Dickstein Shapi
ro LLP to represent the Funds in each of the lawsuits described in the
preceding two paragraphs. Federated and the Funds, and their re
spective counsel, have been defending this litigation, and none
of the Funds
remains a defendant in any of the lawsuits (though some could po
tentially receive any recoveries as nominal defendants). Additi
onal lawsuits based
upon similar allegations may be filed in the future. The potent
ial impact of these lawsuits, all of which seek unquantified dama
ges, attorneys' fees,
and expenses, and future potential similar suits is uncertain.
Although we do not believe that these lawsuits will have a mate
rial adverse effect on
the Funds, there can be no assurance that these suits, ongoing
adverse publicity and/or other developments resulting from the regulatory
investigations will not result in increased Fund redemptions, r
educed sales of Fund shares, or other adverse consequences for the Funds.

EDWARD JONES
In the normal course of business, Edward Jones is named, from
time to time, as a defendant in various legal actions, including
 arbitrations, class
actions, and other litigation. Certain of these legal actions
include claims for substantial compensatory and/or punitive dam
ages or claims for
indeterminate amounts of damages. Edward Jones is involved, fro
m time to time, in investigations and proceedings by governmental and self-
regulatory agencies, certain of which may result in adverse judgme
nts, fines, or penalties.
  The potential impact of these legal proceedings is uncertain.
 As of the date of this prospectus, Edward Jones does not belie
ve that any current
or anticipated legal proceedings will have a material adverse i
mpact on Edward Jones or the Fund. However, there can be no assurance that
these suits, the ongoing adverse publicity and/or other develop
ments resulting from the regulatory investigations will not result
 in increased Fund
redemptions, reduced sales of Fund shares, or other adverse c
onsequences for the Fund.





Current as of:  8/18/94