Federated Kaufmann Small Cap Fund

Transcription

1 April 30, 2017 Share Class A B C R Institutional Ticker FKASX FKBSX FKCSX FKKSX FKAIX Federated Kaufmann Small Cap Fund Fund Established 2002 A Portfolio of Federated Equity Funds Dear Valued Shareholder, I am pleased to present the Semi-Annual Shareholder Report for your fund covering the period from November 1, 2016 through April 30, This report includes a complete listing of your fund s holdings, performance information and financial statements along with other important fund information. In addition, our website, FederatedInvestors.com, offers easy access to Federated resources that include timely fund updates, economic and market insights from our investment strategists, and financial planning tools. We invite you to register to take full advantage of its capabilities. Thank you for investing with Federated. I hope you find this information useful and look forward to keeping you informed. Sincerely, J. Christopher Donahue, President Not FDIC Insured May Lose Value No Bank Guarantee

2 CONTENTS Portfolio of Investments Summary Table... 1 Portfolio of Investments... 2 Financial Highlights... 9 Statement of Assets and Liabilities Statement of Operations Statement of Changes in Net Assets Notes to Financial Statements Shareholder Expense Example Evaluation and Approval of Advisory Contract Voting Proxies on Fund Portfolio Securities Quarterly Portfolio Schedule... 41

3 Portfolio of Investments Summary Table (unaudited) At April 30, 2017, the Fund s sector composition 1 wasasfollows: Percentage of Sector Total Net Assets Information Technology 31.3% Health Care 24.5% Consumer Discretionary 14.6% Industrials 9.8% Financials 4.0% Materials 3.1% Real Estate 2.5% Energy 2.4% Consumer Staples 1.5% Telecommunication Services 0.6% Utilities 0.6% Securities Lending Collateral 2 8.4% Cash Equivalents 3 5.7% Other Assets and Liabilities Net 4 (9.0)% TOTAL 100.0% 1 Except for Securities Lending Collateral, Cash Equivalents and Other Assets and Liabilities, sector classifications are based upon, and individual portfolio securities are assigned to, the classifications of the Global Industry Classification System (GICS), except that the Adviser assigns a classification to securities not classified by the GICS and to securities for which the Adviser does not have access to the classification made by the GICS. 2 Cash collateral received from lending portfolio securities which is invested in short-term investments such as repurchase agreements or money market mutual funds. 3 Cash Equivalents include any investments in money market mutual funds and/or overnight repurchase agreements other than those representing securities lending collateral. 4 Assets, other than investments in securities, less liabilities. See Statement of Assets and Liabilities. 1

4 Portfolio of Investments April 30, 2017 (unaudited) Shares or Principal Amount Value COMMON STOCKS 94.6% Consumer Discretionary 14.6% 127,300 AMC Entertainment Holdings, Inc. $ 3,857, ,400 1 Camping World Holdings, Inc. 5,979, ,100 1,2 Canada Goose Holdings, Inc. 2,307, ,900 Clubcorp Holdings, Inc. 5,849,405 17,000 1 Cracker Barrel Old Country Store, Inc. 2,723, ,800 2 Dave & Buster s Entertainment, Inc. 6,580, ,400 1,2 Duluth Holdings, Inc. 3,730,060 25,000 2 Emerald Expositions Events, Inc. 487, ,000 2 Etsy, Inc. 3,776, ,000 2 Floor & Decor Holdings, Inc. 9,720, ,500 1,2 J. Jill, Inc. 6,501, ,600 Moncler S.p.A 6,255,186 9,203,000 NagaCorp Limited 5,122,569 84,500 2 Nord Anglia Education, Inc. 2,720, ,000 2 Planet Fitness, Inc. 4,638, ,805 Samsonite International SA 2,384, ,000 Six Flags Entertainment Corp. 7,387,980 34,200 Vail Resorts, Inc. 6,759, ,000 1,2 Wingstop, Inc. 7,946, ,200 1,2 Yoox Net-A-Porter Group 4,174, ,700 1,2 Zoe s Kitchen, Inc. 2,575,735 TOTAL 101,478,173 Consumer Staples 1.5% 39,343 AdvancePierre Foods Holdings, Inc. 1,598,113 91,600 2 Blue Buffalo Pet Products, Inc. 2,257, ,500 1,2 elf Beauty, Inc. 6,717,125 TOTAL 10,573,178 Energy 2.4% 272,000 2 Callon Petroleum Corp. 3,220,480 1,278,900 2 Independence Contract Drilling, Inc. 5,895,729 32,713 1,2 Keane Group, Inc. 452, ,000 2 NCS Multistage Holdings, Inc. 3,001, ,000 US Silica Holdings, Inc. 4,357,500 TOTAL 16,927,303 2

5 Shares or Principal Amount Value COMMON STOCKS continued Financials 4.0% 31,200 Affiliated Managers Group $ 5,166, ,000 Chimera Investment Corp. 7,126, ,310 FinecoBank Banca Fineco S.p.A 6,220, ,916 2,3 Hamilton Lane, Inc. 5,071, ,200 Hannon Armstrong Sustainable Infrastructure Capital, Inc. 4,519,904 TOTAL 28,104,816 Health Care 24.2% 173,800 2 Amphastar Pharmaceuticals, Inc. 2,624, ,000 1,2 AnaptysBio, Inc. 5,336, ,414 2,3 argen-x N.V. 4,585, ,500 1,2,3 ContraFect Corp. 389,375 1,089,313 2,3 Corcept Therapeutics, Inc. 10,392,046 1,000,000 1,2 Cryoport, Inc. 2,410,000 7,800 2 Dexcom, Inc. 608, ,000 2,3,4 Dyax Corp. - CVR 138,750 1,000,000 2,3 Dynavax Technologies Corp. 5,550, ,000 1,2 Egalet Corp. 790, ,028 1,2 Entellus Medical, Inc. 1,593,038 28,400 1,2 GW Pharmaceuticals PLC, ADR 3,371,932 99,100 2 Galapagos NV 8,659,073 96,900 1,2 Galapagos NV, ADR 8,416, ,274 2 Glaukos Corp. 6,619,693 26,300 2 Insulet Corp. 1,141, ,475 2 Intersect ENT, Inc. 4,949, ,000 1,2 irhythm Technologies, Inc. 3,529, ,000 2 K2M Group Holdings, Inc. 2,436, ,018 1,2,3 Minerva Neurosciences, Inc. 7,113,737 75,000 2 Nektar Therapeutics 1,422, ,300 2 NeoGenomics, Inc. 4,132,115 41,800 2 Nevro Corp. 3,938, ,000 2,3 Otonomy, Inc. 3,404,250 58,465 1,2 Penumbra, Inc. 4,995, ,130 2,3 Progenics Pharmaceuticals, Inc. 5,647,990 50,000 2 Puma Biotechnology, Inc. 2,030,000 75,000 2 Repligen Corp. 2,759,250 89,900 2 SAGE Therapeutics, Inc. 6,382, ,000 1,2,3 SCYNEXIS, Inc. 1,965,460 3

6 Shares or Principal Amount Value COMMON STOCKS continued Health Care continued 148,920 2 Spark Therapeutics, Inc. $ 8,632, ,317 2,3 SteadyMed Ltd. 5,438, ,400 2,3,5 SteadyMed Ltd. 1,075,680 30,000 2 Tesaro, Inc. 4,427,700 58,600 1,2 Ultragenyx Pharmaceutical, Inc. 3,773, ,000 2 Veeva Systems, Inc. 15,549, ,000 1,2 Veracyte, Inc. 4,446, ,000 2 Versartis, Inc. 5,980, ,100 1,2,3 Zogenix, Inc. 1,684,100 TOTAL 168,342,386 Industrials 9.8% 222,500 Air Lease Corp. 8,486, ,000 Aramex PJSC 1,057, ,000 2 Atkore International Group, Inc. 4,595,500 1,470,000 2,5,6 Biffa PLC 3,598,486 76,400 2 Continental Building Products, Inc. 1,860,340 95,100 2 Dycom Industries, Inc. 10,048, ,700 2 JELD-WEN Holding, Inc. 5,440, ,600 KAR Auction Services, Inc. 6,220, ,800 1,2 Kornit Digital Ltd. 10,106, ,700 2 MRC Global, Inc. 3,932, ,000 2 Mercury Systems, Inc. 4,186, ,500 REV Group, Inc. 5,428, ,000 2 Titan Machinery, Inc. 3,312,650 TOTAL 68,272,392 Information Technology 31.3% 95, U, Inc. 4,340,240 97,000 2 Accesso Technology Group PLC 2,318, ,376 1,2 Adesto Technologies Corp. 2,773, ,200 2 Alarm.com Holdings, Inc. 5,974, ,000 1,2 Alteryx, Inc. 4,797, ,300 2 Atlassian Corp. PLC 4,975, ,000 1,2 Blackline, Inc. 3,287, ,000 2 Box, Inc. 9,223, ,000 2 BroadSoft, Inc. 7,872, ,900 2 CalAmp Corp. 4,160,286 1,630,000 2 Camtek Ltd. 6,063,600 4

7 Shares or Principal Amount Value COMMON STOCKS continued Information Technology continued 250,000 2 Cloudera, Inc. $ 4,525,000 39,300 2 CoStar Group, Inc. 9,466, ,000 1,2 Coupa Software, Inc. 2,775, ,000 2 Envestnet, Inc. 4,176, ,000 2 GTT Communications, Inc. 10,175, ,500 1,2 Globant SA 5,778, ,000 2 GoDaddy, Inc. 6,616, ,000 2 Gridsum Holding, Inc., ADR 3,681, ,000 2 GrubHub, Inc. 5,200, ,500 2 Ichor Holdings Ltd. 9,554, ,000 1,2 Instructure, Inc. 7,767, ,000 2 Microsemi Corp. 9,388, ,000 2 Mimecast Ltd. 8,314, ,600 2 MindBody, Inc. 4,864, ,544 NIC, Inc. 3,150, ,000 1,2 Oclaro, Inc. 3,604,500 1,170,000 2 Paysafe Group PLC 6,873, ,200 2 Q2 Holdings, Inc. 6,989, ,000 1,2 Quantenna Communications, Inc. 3,680, ,500 2 RADWARE Ltd. 5,266, ,000 1,2 Rapid7, Inc. 5,390, ,600 2 RealPage, Inc. 4,949,880 50,000 2 RingCentral, Inc. 1,597, ,600 2 Shopify, Inc. 8,020,320 1,800,000 2 Sigma Designs, Inc. 11,160, ,000 2,5,6 Takeaway.com Holding BV 3,536,966 37,448 2 Tyler Technologies, Inc. 6,126,118 TOTAL 218,412,741 Materials 3.1% 66,600 Eagle Materials, Inc. 6,391, ,100 Huntsman Corp. 3,296,887 71,500 2 Kraton Corp. 2,338, ,000 2 Summit Materials, Inc. 3,592, ,200 1,2 U.S. Concrete, Inc. 6,274,400 TOTAL 21,894,054 Real Estate 2.5% 122,800 Cyrusone, Inc. 6,709,792 5

8 Shares or Principal Amount Value COMMON STOCKS continued Real Estate continued 135,000 MGM Growth Properties LLC $ 3,863, ,700 Ryman Hospitality Properties 6,805,326 TOTAL 17,378,818 Telecommunication Services 0.6% 692,274 5,6 Infrastrutture Wireless Italiane SPA 3,831,130 Utilities 0.6% 220,300 1,2 Aquaventure Holdings Ltd. 4,046,911 TOTAL COMMON STOCKS (IDENTIFIED COST $443,915,952) 659,261,902 CORPORATE BOND 0.1% Health Care 0.1% $ 334,000 Protalix Biotherapeutics, Inc., Conv. Bond, 7.50%, 11/15/2021 (IDENTIFIED COST $444,500) 382,045 WARRANTS 0.2% Health Care 0.2% 222,500 2,3 ContraFect Corp., Warrants 203, ,440 2,3 SCYNEXIS, Inc., Warrants 165, ,400 2,3 SteadyMed Ltd., Warrants 823,732 1,896,750 2,3 Zogenix, Inc., Warrants 443,839 TOTAL WARRANTS (IDENTIFIED COST $110,202) 1,635,827 INVESTMENT COMPANIES 14.1% 3 58,262,921 7 Federated Government Obligations Fund, Institutional Shares, 0.65% 8 58,262,921 39,821,501 Federated Institutional Prime Value Obligations Fund, Institutional Shares, 0.99% 8 39,833,448 TOTAL INVESTMENT COMPANIES (IDENTIFIED COST $98,091,679) 98,096,369 TOTAL INVESTMENTS 109.0% (IDENTIFIED COST $542,562,333) 9 759,376,143 OTHER ASSETS AND LIABILITIES - NET (9.0)% 10 (62,408,648) TOTAL NET ASSETS 100% $696,967,495 6

9 At April 30, 2017, the Fund had the following outstanding foreign exchange contracts: Settlement Date Counterparty Currency Units to Deliver/Receive In Exchange For Unrealized Appreciation Contracts Purchased: 5/2/2017 Citibank N.A. 49,863 GBP $64,528 $55 Unrealized Appreciation on Foreign Exchange Contracts is included in Other Assets and Liabilities Net. 1 All or a portion of these securities are temporarily on loan to unaffiliated broker/dealers. 2 Non-income-producing security. 3 Affiliated companies and holdings. 4 Market quotations and price evaluations are not available. Fair value determined in accordance with procedures established by and under the general supervision of the Fund s Board of Trustees (the Trustees ). 5 Denotes a restricted security that either: (a) cannot be offered for public sale without first being registered, or being able to take advantage of an exemption from registration, under the Securities Act of 1933; or (b) is subject to a contractual restriction on public sales. At April 30, 2017, these restricted securities amounted to $12,042,262, which represented 1.7% of total net assets. 6 Denotes a restricted security that may be resold without restriction to qualified institutional buyers as defined in Rule 144A under the Securities Act of 1933 and that the Fund has determined to be liquid under criteria established by the Trustees. At April 30, 2017, these liquid restricted securities amounted to $10,966,582, which represented 1.6% of total net assets. 7 All or a portion of this security is held as collateral for securities lending. 8 7-day net yield. 9 Also represents cost for federal tax purposes. 10 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 at April 30, Various inputs are used in determining the value of the Fund s investments. These inputs are summarized 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 at amortized cost. Level 3 significant unobservable inputs (including the Fund s own assumptions in determining the fair value of investments). The inputs or methodology used for valuing securities are not an indication of the risk associated with investing in those securities. 7

10 The following is a summary of the inputs used, as of April 30, 2017, in valuing the Fund s assets carried at fair value: Valuation Inputs Level 1 Quoted Prices Level 2 Other Significant Observable Inputs Level 3 Significant Unobservable Inputs Total Equity Securities: Common Stocks Domestic $530,747,463 $ $138,750 $530,886,213 International 69,758,490 58,617, ,375,689 Debt Securities: Corporate Bond 382, ,045 Warrants 1,635,827 1,635,827 Investment Companies 98,096,369 98,096,369 TOTAL SECURITIES $698,602,322 $60,635,071 $138,750 $759,376,143 Other Financial Instruments 1 Assets $ 55 $ 55 Liabilities TOTAL OTHER FINANCIAL INSTRUMENTS $ 55 $ $ $ 55 1 Other financial instruments include foreign exchange contracts. The following acronyms are used throughout this portfolio: ADR American Depositary Receipt CVR Contingent Value Right GBP British Pound See Notes which are an integral part of the Financial Statements 8

11 Financial Highlights Class A Shares (For a Share Outstanding Throughout Each Period) Six Months Ended (unaudited) Year Ended October 31, 4/30/ Net Asset Value, Beginning of Period $23.94 $25.38 $28.77 $29.88 $25.26 $23.24 Income From Investment Operations: Net investment income (loss) (0.11) 1 (0.17) 1 (0.22) 1 (0.32) 1 (0.26) 1 (0.26) 1 Net realized and unrealized gain on investments and foreign currency transactions TOTAL FROM INVESTMENT OPERATIONS Less Distributions: Distributions from net realized gain on investments and foreign currency transactions (0.19) (2.03) (5.26) (4.95) (1.62) (1.66) Net Asset Value, End of Period $28.16 $23.94 $25.38 $28.77 $29.88 $25.26 Total Return % 2.27% 7.12% 13.37% 26.65% 17.00% Ratios to Average Net Assets: Net expenses 1.96% % % % % % 4 Net investment income (loss) (0.84)% 3 (0.73)% (0.83)% (1.11)% (0.97)% (1.09)% Expense waiver/reimbursement % % 0.12% 0.23% 0.32% 0.35% Supplemental Data: Net assets, end of period (000 omitted) $341,682 $343,323 $600,840 $466,020 $463,557 $525,581 Portfolio turnover 22% 48% 88% 65% 66% 44% 1 Per share numbers have been calculated using the average shares method. 2 Based on net asset value, which does not reflect the sales charge, redemption fee or contingent deferred sales charge, if applicable. Total returns for periods of less than one year are not annualized. 3 Computed on an annualized basis. 4 The net expense ratio is calculated without reduction for fees paid indirectly for expense offset arrangements. The net expense ratios are 1.95%, 1.95%, 1.95%, 1.95% and 1.95% for the years ended October 31, 2016, 2015, 2014, 2013 and 2012, respectively, after taking into account these expense reductions. 5 This expense decrease is reflected in both the net expense and the net investment income (loss) ratios shown above. See Notes which are an integral part of the Financial Statements 9

12 Financial Highlights Class B Shares (For a Share Outstanding Throughout Each Period) Six Months Ended (unaudited) Year Ended October 31, 4/30/ Net Asset Value, Beginning of Period $21.10 $22.72 $26.41 $27.93 $23.84 $22.14 Income From Investment Operations: Net investment income (loss) (0.16) 1 (0.26) 1 (0.33) 1 (0.45) 1 (0.37) 1 (0.37) 1 Net realized and unrealized gain on investments and foreign currency transactions TOTAL FROM INVESTMENT OPERATIONS Less Distributions: Distributions from net realized gain on investments and foreign currency transactions (0.19) (2.03) (5.26) (4.95) (1.62) (1.66) Net Asset Value, End of Period $24.73 $21.10 $22.72 $26.41 $27.93 $23.84 Total Return % 1.70% 6.52% 12.75% 25.97% 16.36% Ratios to Average Net Assets: Net expenses 2.51% % % % % % 4 Net investment income (loss) (1.39)% 3 (1.28)% (1.36)% (1.68)% (1.51)% (1.64)% Expense waiver/reimbursement % % 0.12% 0.25% 0.33% 0.35% Supplemental Data: Net assets, end of period (000 omitted) $16,844 $14,987 $20,182 $25,108 $36,591 $42,298 Portfolio turnover 22% 48% 88% 65% 66% 44% 1 Per share numbers have been calculated using the average shares method. 2 Based on net asset value, which does not reflect the sales charge, redemption fee or contingent deferred sales charge, if applicable. Total returns for periods of less than one year are not annualized. 3 Computed on an annualized basis. 4 The net expense ratio is calculated without reduction for expense offset arrangements. The net expense ratios are 2.50%, 2.50%, 2.50%, 2.50% and 2.50% for the years ended October 31, 2016, 2015, 2014, 2013 and 2012, respectively, after taking into account these expense reductions. 5 This expense decrease is reflected in both the net expense and the net investment income (loss) ratios shown above. See Notes which are an integral part of the Financial Statements 10

13 Financial Highlights Class C Shares (For a Share Outstanding Throughout Each Period) Six Months Ended (unaudited) Year Ended October 31, 4/30/ Net Asset Value, Beginning of Period $21.10 $22.72 $26.41 $27.93 $23.84 $22.14 Income From Investment Operations: Net investment income (loss) (0.16) 1 (0.26) 1 (0.33) 1 (0.44) 1 (0.38) 1 (0.38) 1 Net realized and unrealized gain on investments and foreign currency transactions TOTAL FROM INVESTMENT OPERATIONS Less Distributions: Distributions from net realized gain on investments and foreign currency transactions (0.19) (2.03) (5.26) (4.95) (1.62) (1.66) Net Asset Value, End of Period $24.73 $21.10 $22.72 $26.41 $27.93 $23.84 Total Return % 1.70% 6.52% 12.75% 25.97% 16.36% Ratios to Average Net Assets: Net expenses 2.51% % % % % % 4 Net investment income (loss) (1.39)% 3 (1.27)% (1.36)% (1.67)% (1.54)% (1.65)% Expense waiver/reimbursement % % 0.08% 0.19% 0.27% 0.27% Supplemental Data: Net assets, end of period (000 omitted) $149,634 $144,340 $182,689 $182,173 $180,147 $160,295 Portfolio turnover 22% 48% 88% 65% 66% 44% 1 Per share numbers have been calculated using the average shares method. 2 Based on net asset value, which does not reflect the sales charge, redemption fee or contingent deferred sales charge, if applicable. Total returns for periods of less than one year are not annualized. 3 Computed on an annualized basis. 4 The net expense ratio is calculated without reduction for expense offset arrangements. The net expense ratios are 2.50%, 2.50%, 2.50%, 2.50% and 2.50% for the years ended October 31, 2016, 2015, 2014, 2013 and 2012, respectively, after taking into account these expense reductions. 5 This expense decrease is reflected in both the net expense and the net investment income (loss) ratios shown above. See Notes which are an integral part of the Financial Statements 11

14 Financial Highlights Class R Shares (For a Share Outstanding Throughout Each Period) Six Months Ended (unaudited) Year Ended October 31, 4/30/ Net Asset Value, Beginning of Period $24.02 $25.44 $28.82 $29.91 $25.26 $23.24 Income From Investment Operations: Net investment income (loss) (0.10) 1 (0.16) 1 (0.21) 1 (0.31) 1 (0.25) 1 (0.27) 1 Net realized and unrealized gain on investments and foreign currency transactions TOTAL FROM INVESTMENT OPERATIONS Less Distributions: Distributions from net realized gain on investments and foreign currency transactions (0.19) (2.03) (5.26) (4.95) (1.62) (1.66) Net Asset Value, End of Period $28.26 $24.02 $25.44 $28.82 $29.91 $25.26 Total Return % 2.35% 7.15% 13.43% 26.77% 17.00% Ratios to Average Net Assets: Net expenses 1.92% % % % % % 4 Net investment income (loss) (0.80)% 3 (0.68)% (0.76)% (1.07)% (0.93)% (1.10)% Expense waiver/reimbursement % % 0.31% 0.38% 0.44% 0.44% Supplemental Data: Net assets, end of period (000 omitted) $40,960 $37,850 $39,846 $35,789 $34,058 $31,485 Portfolio turnover 22% 48% 88% 65% 66% 44% 1 Per share numbers have been calculated using the average shares method. 2 Based on net asset value. Total returns for periods of less than one year are not annualized. 3 Computed on an annualized basis. 4 The net expense ratio is calculated without reduction for fees paid indirectly for expense offset arrangements. The net expense ratios are 1.91%, 1.90%, 1.90%, 1.90% and 1.90% for the years ended October 31, 2016, 2015, 2014, 2013 and 2012, respectively, after taking into account these expense reductions. 5 This expense decrease is reflected in both the net expense and the net investment income (loss) ratios shown above. See Notes which are an integral part of the Financial Statements 12

15 Financial Highlights Institutional Shares (For a Share Outstanding Throughout Each Period) Six Months Ended (unaudited) Period Ended 4/30/ /31/ Net Asset Value, Beginning of Period $24.03 $24.05 Income From Investment Operations: Net investment income (loss) (0.05) 2 (0.05) 2 Net realized and unrealized gain on investments and foreign currency transactions TOTAL FROM INVESTMENT OPERATIONS 4.49 (0.02) Less Distributions: Distributions from net realized gain on investments and foreign currency transactions (0.19) Net Asset Value, End of Period $28.33 $24.03 Total Return % (0.08)% Ratios to Average Net Assets: Net expenses 1.50% % 4 Net investment income (loss) (0.38)% 4 (0.26)% 4 Expense waiver/reimbursement % % 4 Supplemental Data: Net assets, end of period (000 omitted) $147,847 $81,269 Portfolio turnover 22% 48% 6 1 Reflects operations for the period from December 30, 2015 (start of performance) to October 31, Per share numbers have been calculated using the average shares method. 3 Based on net asset value. Total returns for periods of less than one year are not annualized. 4 Computed on an annualized basis. 5 This expense decrease is reflected in both the net expense and the net investment income (loss) ratios shown above. 6 Portfolio turnover is calculated at the Fund level. Percentage indicated was calculated for the year ended October 31, See Notes which are an integral part of the Financial Statements 13

16 Statement of Assets and Liabilities April 30, 2017 (unaudited) Assets: Total investment in securities, at value including $55,980,547 of securities loaned, $98,096,369 of investment in affiliated holdings and $41,903,508 of investment in affiliated companies (Note 5) (identified cost $542,562,333) $759,376,143 Cash denominated in foreign currencies (identified cost $726,961) 726,555 Income receivable 145,688 Receivable for investments sold 12,672,548 Receivable for shares sold 1,049,224 Unrealized appreciation on foreign exchange contracts 55 TOTAL ASSETS 773,970,213 Liabilities: Payable for investments purchased $16,965,934 Payable for shares redeemed 1,041,173 Payable for collateral due to broker for securities lending 58,262,921 Payable to adviser (Note 5) 73,701 Payable for administrative fees (Note 5) 4,498 Payable for distribution services fee (Note 5) 163,912 Payable for other service fees (Notes 2 and 5) 191,856 Accrued expenses (Note 5) 298,723 TOTAL LIABILITIES 77,002,718 Net assets for 25,535,938 shares outstanding $696,967,495 Net Assets Consist of: Paid-in capital $451,604,115 Net unrealized appreciation of investments and translation of assets and liabilities in foreign currency 216,813,212 Accumulated net realized gain on investments and foreign currency transactions 37,743,089 Accumulated net investment income (loss) (9,192,921) TOTAL NET ASSETS $696,967,495 14

17 Statement of Assets and Liabilities continued Net Asset Value, Offering Price and Redemption Proceeds Per Share Class A Shares: Net asset value per share ($341,682,262 12,134,701 shares outstanding), no par value, unlimited shares authorized $28.16 Offering price per share (100/94.50 of $28.16) $29.80 Redemption proceeds per share $28.16 Class B Shares: Net asset value per share ($16,844, ,212 shares outstanding), no par value, unlimited shares authorized $24.73 Offering price per share $24.73 Redemption proceeds per share (94.50/100 of $24.73) $23.37 Class C Shares: Net asset value per share ($149,634,119 6,051,091 shares outstanding), no par value, unlimited shares authorized $24.73 Offering price per share $24.73 Redemption proceeds per share (99.00/100 of $24.73) $24.48 Class R Shares: Net asset value per share ($40,960,177 1,449,645 shares outstanding), no par value, unlimited shares authorized $28.26 Offering price per share $28.26 Redemption proceeds per share $28.26 Institutional Shares: Net asset value per share ($147,846,804 5,219,289 shares outstanding), no par value, unlimited shares authorized $28.33 Offering price per share $28.33 Redemption proceeds per share $28.33 See Notes which are an integral part of the Financial Statements 15

18 Statement of Operations Six Months Ended April 30, 2017 (unaudited) Investment Income: Dividends (including $235,984 received from affiliated holdings (Note 5) and net of foreign taxes withheld of $39,835) $ 2,821,398 Interest (including income on securities loaned of $782,171) 795,048 TOTAL INCOME 3,616,446 Expenses: Investment adviser fee (Note 5) $4,220,926 Administrative fee (Note 5) 254,680 Custodian fees 37,124 Transfer agent fee (Note 2) 465,969 Directors /Trustees fees (Note 5) 2,977 Auditing fees 22,167 Legal fees 8,500 Portfolio accounting fees 76,089 Distribution services fee (Note 5) 1,136,415 Other service fees (Notes 2 and 5) 631,151 Share registration costs 46,777 Printing and postage 35,853 Miscellaneous (Note 5) 20,272 TOTAL EXPENSES 6,958,900 Waiver and Reimbursements: Reimbursement of investment adviser fee (Note 5) $ (31,919) Waiver/reimbursement of other operating expenses (Notes 2 and 5) (372,832) TOTAL WAIVER AND REIMBURSEMENTS (404,751) Net expenses 6,554,149 Net investment income (loss) (2,937,703) Realized and Unrealized Gain (Loss) on Investments and Foreign Currency Transactions: Net realized gain on investments and foreign currency transactions (including realized gain of $86,960,368 on sales of investments in affiliated companies (Note 5)) 40,683,108 Net change in unrealized appreciation of investments and translation of assets and liabilities in foreign currency 72,935,091 Net realized and unrealized gain on investments and foreign currency transactions 113,618,199 Change in net assets resulting from operations $110,680,496 See Notes which are an integral part of the Financial Statements 16

19 Statement of Changes in Net Assets Six Months Ended (unaudited) 4/30/2017 Year Ended 10/31/2016 Increase (Decrease) in Net Assets Operations: Net investment income (loss) $ (2,937,703) $ (5,753,978) Net realized gain on investments and foreign currency transactions 40,683,108 5,999,967 Net change in unrealized appreciation/depreciation of investments and translation of assets and liabilities in foreign currency 72,935,091 (2,042,611) CHANGE IN NET ASSETS RESULTING FROM OPERATIONS 110,680,496 (1,796,622) Distributions to Shareholders: Distributions from net realized gain on investments and foreign currency transactions Class A Shares (2,659,203) (46,841,205) Class B Shares (134,561) (1,814,674) Class C Shares (1,251,422) (16,172,258) Class R Shares (290,614) (3,195,420) Institutional Shares (658,919) CHANGE IN NET ASSETS RESULTING FROM DISTRIBUTIONS TO SHAREHOLDERS (4,994,719) (68,023,557) Share Transactions: Proceeds from sale of shares 126,178, ,348,228 Net asset value of shares issued to shareholders in payment of distributions declared 4,692,617 63,446,435 Cost of shares redeemed (161,357,898) (418,762,640) CHANGE IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS (30,487,036) (151,967,977) Change in net assets 75,198,741 (221,788,156) Net Assets: Beginning of period 621,768, ,556,910 End of period (including accumulated net investment income (loss) of $(9,192,921) and $(6,255,218), respectively) $ 696,967,495 $ 621,768,754 See Notes which are an integral part of the Financial Statements 17

20 Notes to Financial Statements April 30, 2017 (unaudited) 1. ORGANIZATION Federated Equity Funds (the Trust ) is registered under the Investment Company Act of 1940, as amended (the Act ), as an open-end management investment company. The Trust consists of 14 portfolios. The financial statements included herein are only those of Federated Kaufmann Small Cap Fund (the Fund ), a diversified portfolio. The financial statements of the other portfolios are presented separately. The assets of each portfolio are segregated and a shareholder s interest is limited to the portfolio in which shares are held. Each portfolio pays its own expenses. The Fund offers five classes of shares: Class A Shares, Class B Shares, Class C Shares, Class R Shares and Institutional Shares. All shares of the Fund have equal rights with respect to voting, except on class-specific matters. The investment objective of the Fund is to provide capital appreciation. On March 30, 2017, the Fund s T Share class became effective with the Securities and Exchange Commission (SEC), but is not yet offered for sale. 2. SIGNIFICANT ACCOUNTING POLICIES The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. These policies are in conformity with U.S. generally accepted accounting principles (GAAP). Investment Valuation In 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 exchange or market. Shares of other mutual funds or non-exchange-traded investment companies are valued based upon their reported NAVs. Fixed-income securities are fair valued using price evaluations provided by a pricing service approved by the Trustees. Derivative contracts listed on exchanges are valued at their reported settlement or closing price, 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 provided by a pricing service approved by the Trustees. For securities that are fair valued in accordance with procedures established by and under the general supervision of the Trustees, certain factors may be considered such as: the last traded or purchase price of the security, information obtained by contacting the issuer or dealers, analysis of the issuer s financial statements or other available documents, fundamental analytical data, the nature and duration of restrictions on disposition, the movement of the market in which the security is normally traded, public trading in similar securities or derivative contracts of the issuer or comparable issuers, movement of a relevant index, or other factors including but not limited to industry changes and relevant government actions. If any price, quotation, price evaluation or other pricing source is not readily available when the NAV is calculated, if the Fund cannot obtain price evaluations from a pricing service or from more than one dealer for an investment within a reasonable period of time as set forth in the 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 18

21 representative of the fair value of such security, the Fund uses the fair value of the investment determined in accordance with the procedures described below. There can be no assurance that the Fund could obtain the fair value assigned to an investment if it sold the investment at approximately the time at which the Fund determines its NAV per share. Fair Valuation and Significant Events Procedures The Trustees have ultimate responsibility for determining the fair value of investments for which market quotations are not readily available. The Trustees have appointed a Valuation Committee comprised of officers of the Fund, Federated Equity Management Company of Pennsylvania ( Adviser ) and certain of the Adviser s affiliated companies to assist in determining fair value and in overseeing the calculation of the NAV. The Trustees have also authorized the use of pricing services recommended by the Valuation Committee to provide fair value evaluations of the current value of certain investments for purposes of calculating the NAV. The Valuation Committee employs various methods for reviewing third-party pricingservice 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 review of price challenges by the Adviser based on recent market activity. In the event that market quotations and price evaluations are not available for an investment, the Valuation Committee determines the fair value of the investment in accordance with procedures adopted by the Trustees. The Trustees periodically review and approve the fair valuations made by the Valuation Committee and any changes made to the procedures. Factors considered by pricing services in evaluating an investment include the yields or prices of investments of comparable quality, coupon, maturity, call rights and other potential prepayments, terms and type, reported transactions, indications as to values from dealers and general market conditions. Some pricing services provide a single price evaluation reflecting the bid-side of the market for an investment (a bid evaluation). Other pricing services offer both bid evaluations and price evaluations indicative of a price between the prices bid and asked for the investment (a mid evaluation). The Fund normally uses bid evaluations for any U.S. Treasury and Agency securities, mortgage-backed securities and municipal securities. The Fund normally uses mid evaluations for any other types of fixed-income securities and any OTC derivative contracts. In the event that market quotations and price evaluations are not available for an investment, the fair value of the investment is determined in accordance with procedures adopted by the Trustees. The Trustees also have adopted procedures requiring an investment to be priced at its fair value whenever the Adviser determines that a significant event affecting the value of the investment has occurred between the time as of which the price of the investment would otherwise be determined and the time as of which the NAV is computed. An event is considered significant if there is both an affirmative expectation that the investment s value will change in response to the event and a reasonable basis for quantifying the resulting change in value. Examples of significant events that may occur after the close of the principal market on which a security is traded, or after the time of a price evaluation provided by a pricing 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; 19

22 Announcements concerning matters such as acquisitions, recapitalizations, litigation developments, or a natural disaster affecting the issuer s operations or regulatory changes or market developments affecting the issuer s industry. The Trustees have adopted procedures whereby the Valuation Committee uses a pricing service to determine the fair value of equity securities traded principally in foreign markets when the Adviser determines that there has been a significant trend in the U.S. equity markets or in index futures trading. For other significant events, the Fund may seek to obtain more current quotations or price evaluations from alternative pricing sources. If a reliable alternative pricing source is not available, the Fund will determine the fair value of the investment in accordance with the fair valuation procedures approved by the Trustees. The Trustees have ultimate responsibility for any fair valuations made in response to a significant event. Repurchase Agreements The Fund may invest in repurchase agreements for short-term liquidity purposes. It is the policy of the Fund to require the other party to a repurchase agreement to transfer to the Fund s custodian or sub-custodian eligible securities or cash with a market value (after transaction costs) at least equal to the repurchase price to be paid under the repurchase agreement. The eligible securities are transferred to accounts with the custodian or subcustodian in which the Fund holds a securities entitlement and exercises control as those terms are defined in the Uniform Commercial Code. The Fund has established procedures for monitoring the market value of the transferred securities and requiring the transfer of additional eligible securities if necessary to equal at least the repurchase price. These procedures also allow the other party to require securities to be transferred from the account to the extent that their market value exceeds the repurchase price or in exchange for other eligible securities of equivalent market value. The insolvency of the other party or other failure to repurchase the securities may delay the disposition of the underlying securities or cause the Fund to receive less than the full repurchase price. Under the terms of the repurchase agreement, any amounts received by the Fund in excess of the repurchase price and related transaction costs must be remitted to the other party. The Fund may enter into repurchase agreements in which eligible securities are transferred into joint trading accounts maintained by the custodian or sub-custodian for investment companies and other clients advised by the Fund s Adviser and its affiliates. The Fund will participate on a pro rata basis with the other investment companies and clients in its share of the securities transferred under such repurchase agreements and in its share of proceeds from any repurchase or other disposition of such securities. Investment Income, Gains and Losses, Expenses and Distributions Investment transactions are accounted for on a trade-date basis. Realized gains and losses from investment transactions are recorded on an identified-cost basis. Interest income and expenses are accrued daily. Dividend income and distributions to shareholders are recorded on the ex-dividend date. Foreign dividends are recorded on the ex-dividend date or when the Fund is informed of the ex-dividend date. Distributions of net investment income, if any, are declared and paid annually. Non-cash dividends included in dividend income, if any, are recorded at fair value. Amortization/accretion of premium and discount is included in investment income. Investment income, realized and unrealized gains and losses, and certain fund-level expenses are allocated to each class based on relative average daily net assets, except that Class A Shares, Class B Shares, Class C Shares, Class R Shares and 20

23 Institutional Shares may bear distribution services fees, other service fees and transfer agent fees unique to those classes. The detail of the total fund expense waiver and reimbursements of $404,751 is disclosed in various locations in this Note 2 and Note 5. For the six months ended April 30, 2017, transfer agent fees for the Fund were as follows: Transfer Agent Fees Incurred Transfer Agent Fees Reimbursed Class A Shares $231,714 $(121,182) Class B Shares 15,587 (10,753) Class C Shares 104,817 (60,661) Class R Shares 53,419 Institutional Shares 60,432 (34,421) TOTAL $465,969 $(227,017) 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 separate class expenses. Other Service Fees The Fund may pay other service fees up to 0.25% of the average daily net assets of the Fund s Class A Shares, Class B Shares and Class C Shares to unaffiliated financial intermediaries or to Federated Shareholder Services Company (FSSC) for providing services to shareholders and maintaining shareholder accounts. Financial intermediaries may include a company affiliated with management of Federated Investors, Inc. A financial intermediary affiliated with management of Federated Investors, Inc. received $6,802 of other service fees for the six months ended April 30, Subject to the terms described in the Expense Limitation note, FSSC may voluntarily reimburse the Fund for other service fees. For the six months ended April 30, 2017, other service fees for the Fund were as follows: Other Service Fees Incurred Class A Shares $430,474 Class B Shares 19,779 Class C Shares 180,898 TOTAL $631,151 Federal Taxes It 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 six months ended April 30, 2017, the Fund did not have a liability for any uncertain tax positions. The Fund recognizes interest and penalties, if any, related to tax liabilities as income tax expense in the Statement of Operations. As of April 30, 2017, tax years 2013 through 2016 remain subject to examination by the Fund s major tax jurisdictions, which include the United States of America and the Commonwealth of Massachusetts. 21

24 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 Fund accrues and applies such taxes to net investment income, net realized gains and net unrealized gains as income and/or gains are earned. When-Issued and Delayed-Delivery Transactions The Fund may engage in when-issued or delayed-delivery transactions. The Fund records when-issued securities on the trade date and maintains security positions such that sufficient liquid assets will be available to make payment for the securities purchased. Securities purchased on a when-issued or delayed-delivery basis are marked to market daily and begin earning interest on the settlement date. Losses may occur on these transactions due to changes in market conditions or the failure of counterparties to perform under the contract. Foreign Exchange Contracts The Fund enters into foreign exchange contracts to manage currency and market risks. Purchased contracts are used to acquire exposure to foreign currencies, whereas, contracts to sell are used to hedge the Fund s securities against currency fluctuations. Risks may arise upon entering into these transactions from the potential inability of counterparties to meet the terms of their commitments and from unanticipated movements in security prices or foreign exchange rates. The foreign exchange contracts are adjusted by the daily exchange rate of the underlying currency and any gains or losses are recorded for financial statement purposes as unrealized until the settlement date. Foreign exchange contracts are subject to Master Netting Agreements (MNA) which are agreements between the Fund and its counterparties that provide for the net settlement of all transactions and collateral with the Fund, through a single payment, in the event of default or termination. Amounts presented on the Portfolio of Investments and Statement of Assets and Liabilities are not net settlement amounts but gross. Foreign exchange contracts outstanding at period end, including net unrealized appreciation/depreciation or net settlement amount, are listed after the Fund s Portfolio of Investments. The average value at settlement date payable of foreign exchange contracts purchased by the Fund throughout the period was $34. This is based on the contracts held as of each month-end throughout the six-month fiscal period. Foreign Currency Translation The accounting records of the Fund are maintained in U.S. dollars. All assets and liabilities denominated in foreign currencies (FCs) are translated into U.S. dollars based on the rates of exchange of such currencies against U.S. dollars on the date of valuation. Purchases and sales of securities, income and expenses are translated at the rate of exchange quoted on the respective date that such transactions are recorded. The Fund does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in market prices of securities held. Such fluctuations 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 FCs, currency gains or losses realized between the trade and settlement dates on securities transactions, the difference between the amounts of dividends, interest and foreign withholding taxes recorded on the Fund s books, and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in the value of assets and liabilities other than investments in securities at fiscal year end, resulting from changes in the exchange rate. 22

25 Additional Disclosure Related to Derivative Instruments Fair Value of Derivative Instruments Derivatives not accounted for as hedging instruments under ASC Topic 815 Foreign exchange contracts Statement of Assets and Liabilities Location Asset Fair Value Unrealized appreciation on foreign exchange contracts $55 The Effect of Derivative Instruments on the Statement of Operations for the Six Months Ended April 30, 2017 Amount of Realized Gain or (Loss) on Derivatives Recognized in Income Forward Currency Contracts Foreign exchange contracts $(4,722) Change in Unrealized Appreciation or (Depreciation) on Derivatives Recognized in Income Forward Currency Contracts Foreign exchange contracts $(68) Securities Lending The Fund participates in a securities lending program providing for the lending of equity securities to qualified brokers. The Fund normally receives cash collateral for securities loaned that is invested in an affiliated money market fund or in short-term securities including repurchase agreements. Collateral is maintained at a minimum level of 100% of the market value of investments loaned, plus interest, if applicable. Earnings on collateral are allocated between the borrower of the security, the securities lending agent, as a fee for its services under the program and the Fund, according to agreed-upon rates. Securities lending transactions are subject to MNA. Amounts presented on the Portfolio of Investments and Statement of Assets and Liabilities are not net settlement amount but gross. As indicated below, the cash collateral received by the Fund exceeds the market value of the securities loaned reducing the net settlement amount to zero. The chart below identifies the amount of collateral received as well as the market value of securities on loan. Additionally, the securities lending agreement executed by the Fund includes an indemnification clause. This clause stipulates that the borrower will reimburse the Fund for any losses as a result of any failure of the borrower to return equivalent securities to the Fund. 23

26 As of April 30, 2017, securities subject to this type of arrangement and related collateral were as follows: Market Value of Securities Loaned Market Value of Collateral $55,980,547 $58,262,921 Restricted Securities The Fund may purchase securities which are considered restricted. Restricted securities are securities that either: (a) cannot be offered for public sale without first being registered, or being able to take advantage of an exemption from registration, under the Securities Act of 1933; or (b) are subject to contractual restrictions on public sales. In some cases, when a security cannot be offered for public sale without first being registered, the issuer of the restricted security has agreed to register such securities for resale, at the issuer s expense, either upon demand by the Fund or in connection with another registered offering of the securities. Many such restricted securities may be resold in the secondary market in transactions exempt from registration. Restricted securities may be determined to be liquid under criteria established by the Trustees. The Fund will not incur any registration costs upon such resales. The Fund s restricted securities, like other securities, are priced in accordance with procedures established by and under the general supervision of the Trustees. Additional information on restricted securities, excluding securities purchased under Rule 144A that have been deemed liquid by the Trustees, if applicable, held at April 30, 2017, is as follows: Acquisition Market Security Date Cost Value SteadyMed Ltd. 7/29/2016 $467,622 $1,075,680 Other The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts of assets, liabilities, expenses and revenues 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 INTEREST The following tables summarize share activity: Six Months Ended 4/30/2017 Year Ended 10/31/2016 Class A Shares: Shares Amount Shares Amount Shares sold 1,334,154 $ 34,635,955 3,546,734 $ 80,986,986 Shares issued to shareholders in payment of distributions declared 101,389 2,541,835 1,843,870 44,437,276 Shares redeemed (3,642,587) (95,374,366) (14,725,926) (322,197,132) NET CHANGE RESULTING FROM CLASS A SHARE TRANSACTIONS (2,207,044) $(58,196,576) (9,335,322) $(196,772,870) 24