Mutual Fund Summary Prospectus (497k)
January 25 2013 - 3:41PM
Edgar (US Regulatory)
Summary Prospectus
January 25, 2013
Share Class
|
Ticker
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R
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FDERX
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Federated Equity
Income Fund, Inc.
Before you
invest, you may want to review the Fund's Prospectus, which contains more information about the Fund and its risks. You can find the Fund's Prospectus and other information about the Fund, including the Statement of
Additional Information and most recent reports to shareholders, online at FederatedInvestors.com/prospectus. You can also get this information at no cost by calling 1-800-341-7400 or by sending an email request to
services@federatedinvestors.com or from a financial intermediary through which Shares of the Fund may be bought or sold. The Fund's Prospectus and Statement of Additional Information, both dated January 25, 2013, are
incorporated by reference into this Summary Prospectus.
A mutual fund
seeking to provide above average income and capital appreciation by investing primarily in income-producing equity securities.
As with all
mutual funds, the Securities and Exchange Commission (SEC) has not approved or disapproved these securities or passed upon the adequacy of this Prospectus. Any representation to the contrary is a criminal offense.
Not FDIC Insured • May Lose
Value • No Bank Guarantee
Fund Summary Information
Federated Equity Income Fund, Inc.
(the “Fund”)
RISK/RETURN SUMMARY: INVESTMENT
OBJECTIVE
The Fund's
investment objective is to provide above average income and capital appreciation.
RISK/RETURN SUMMARY: FEES AND
EXPENSES
This table describes
the fees and expenses that you may pay if you buy and hold Class R Shares (R) of the Fund.
Shareholder Fees (fees paid directly from your investment)
|
R
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Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of offering price)
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None
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Maximum Deferred Sales Charge (Load) (as a percentage of original purchase price or redemption proceeds,
as applicable)
|
None
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Maximum Sales Charge (Load) Imposed on Reinvested Dividends
(and other Distributions)
(as a percentage of offering price)
|
None
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Redemption Fee (as a percentage of amount redeemed,
if applicable)
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None
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Exchange Fee
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None
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Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment)
|
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Management Fee
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0.60%
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Distribution (12b-1) Fee
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0.50%
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Other Expenses
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0.54%
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Acquired Fund Fees
and Expenses
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0.01%
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Total Annual Fund
Operating Expenses
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1.65%
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Fee Waivers
and/or Expense Reimbursements
1
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0.25%
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Total Annual Fund Operating Expenses After Fee Waivers
and/or
Expense Reimbursements
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1.40%
|
1
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The Adviser and its affiliates have voluntarily agreed to waive their fees and/or reimburse expenses so that the total annual fund operating expenses (excluding Acquired Fund Fees and Expenses) paid by the Fund's R
class (after the voluntary waivers and/or reimbursements) will not exceed 1.39% (the “Fee Limit”) up to but not including the later of (the “Termination Date”): (a) February 1, 2014; or (b) the
date of the Fund's next effective Prospectus. While the Adviser and its affiliates currently do not anticipate terminating or increasing these arrangements prior to the Termination Date, these arrangements may only be
terminated or the Fee Limit increased prior to the Termination Date with the agreement of the Fund's Board of Directors.
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Example
This Example is
intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds.
The Example assumes
that you invest $10,000 for the time periods indicated and then redeem all of your Shares at the end of those periods. The Example also assumes that your investment has a 5% return each year and that operating
expenses are as shown in the table above and remain the same. Although your actual costs and returns may be higher or lower, based on these assumptions your costs would be:
1 Year
|
$
168
|
3 Years
|
$
520
|
5 Years
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$
897
|
10 Years
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$1,955
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Portfolio Turnover
The Fund pays
transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher
taxes when Fund Shares are held in a taxable account. These costs, which are not reflected in Annual Fund Operating Expenses or in the Example, affect the Fund's performance. During the most recent fiscal year, the
Fund's portfolio turnover rate was 84% of the average value of its portfolio.
RISK/RETURN SUMMARY: INVESTMENTS,
RISKS and PERFORMANCE
What are the Fund's Main
Investment Strategies?
The Fund pursues its
investment objective by investing primarily in income-producing equity securities of mid- to large-cap domestic companies. The Fund's investment adviser ordinarily selects dividend paying stocks that have a
comparatively low volatility in share price relative to the overall equity market and which may provide relatively high dividend income and dividend growth potential, but may also select securities of companies that
offer superior total return prospects.
The Fund may also
invest, to a lesser extent, in securities of foreign (including emerging market) issuers, and may invest in real estate investment trusts and securities of other investment companies (including exchange-traded
funds).
The Fund may invest
in derivative contracts and hybrid instruments (such as, for example, futures contracts, option contracts and swap contracts) to implement its strategies as more fully described herein.
Because the Fund
refers to equity income investments in its name, it will notify shareholders at least 60 days in advance of any change in its investment policies that would enable the Fund to invest normally less than 80% of its net
assets (plus any borrowings for investment purposes) in income producing equity investments.
What are the Main Risks of
Investing in the Fund?
All mutual funds
take investment risks. Therefore, it is possible to lose money by investing in the Fund. The primary factors that may reduce the Fund's returns include:
■
|
Stock Market Risk.
The value of equity securities in the Fund's portfolio will fluctuate and, as a result, the Fund's Share price may decline suddenly or over a sustained period of time. Information publicly
available about a company, whether from the company's financial statements or other disclosures or from third parties, or information available to some but not all market participants, can affect the price of a
company's shares in the market.
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■
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Risk Related to Investing for Value.
Due to their relatively low valuations, value stocks are typically less volatile than growth stocks. For instance, the price of a value stock may experience a smaller increase on a forecast
of higher earnings, a positive fundamental development or positive market development. Further, value stocks tend to have higher dividends than growth stocks. This means they depend less on price changes for returns
and may lag behind growth stocks in an up market.
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■
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Sector Risk.
Companies with similar characteristics may be grouped together in broad categories called sectors. Sector risk is the possibility that a certain sector may underperform other sectors or
the market as a whole. As the Adviser allocates more of the Fund's portfolio holdings to a particular sector, the Fund's performance will be more susceptible to any economic, business or other developments which
generally affect that sector.
|
■
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Risk of Foreign Investing.
Foreign securities pose additional risks because foreign economic or political conditions may be less favorable than those of the United States. Securities in foreign markets may also be
subject to taxation policies that reduce returns for U.S. investors.
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■
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Risk of Investing in ADRs and Domestically Traded Securities of Foreign Issuers.
Because the Fund may invest in ADRs and other domestically traded securities of foreign companies, the Fund's Share price may be more affected by foreign economic and political conditions,
taxation policies and accounting and auditing standards than would otherwise be the case.
|
■
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Risk of Investing in Emerging Market Countries.
Securities issued or traded in emerging markets generally entail greater risks than securities issued or traded in developed markets. For example, their prices may be significantly more
volatile than prices in developed countries. Emerging market economies may also experience more severe downturns (with corresponding currency devaluations) than developed economies.
|
■
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Currency Risk.
Exchange rates for currencies fluctuate daily. The combination of currency risk and stock market risk tends to make securities traded in foreign markets more volatile than securities
traded exclusively in the United States.
|
■
|
Eurozone Related Risk.
A number of countries in the European Union (EU) have experienced, and may continue to experience, severe economic and financial difficulties. Additional EU member countries may also fall
subject to such difficulties. These events could negatively affect the value and liquidity of the Fund's investments in euro-denominated securities and derivatives contracts, securities of issuers located in the EU or
with significant exposure to EU issuers or countries.
|
■
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Exchange-Traded Funds Risk.
An investment in an exchange-traded fund (ETF) generally presents the same primary risks as an investment in a conventional fund (i.e., one that is not exchanged traded) that has the same
investment objectives, strategies and policies.
|
■
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Custodial Services and Related Investment Costs.
Custodial services and other costs relating to investment in international securities markets generally are more expensive than in the United States. Such markets have settlement and
clearance procedures that differ from those in the United States The inability of the Fund to make intended securities purchases due to settlement problems could cause the Fund to miss attractive investment
opportunities. In addition, security settlement and clearance procedures in some emerging countries may not fully protect the Fund against loss of its assets.
|
■
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Risk of Investing in Derivative Contracts and Hybrid Instruments.
Derivative contracts and hybrid instruments involve risks different from, or possibly greater than, risks associated with investing directly in securities and other traditional
investments. Specific risk issues related to the use of such contracts include valuation and tax issues, increased potential for losses and/or costs to the Fund, and a potential reduction in gains to the Fund. Each of
these risk issues is described in greater detail in this Prospectus. Derivative contracts and hybrid instruments may also involve other risks described in this Prospectus or the Fund's Statement of Additional
Information (SAI), such as stock market, interest rate, credit, currency, liquidity and leverage risks.
|
■
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Leverage Risk.
Leverage risk is created when an investment, which includes, for example, an investment in a derivative contract, exposes the Fund to a level of risk that exceeds the amount invested.
Changes in the value of such an investment magnify the Fund's risk of loss and potential for gain.
|
■
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Counterparty Credit Risk.
Credit risk includes the possibility that a party to a transaction involving the Fund will fail to meet its obligations. This could cause the Fund to lose the benefit of the transaction or
prevent the Fund from selling or buying other securities to implement its investment strategy.
|
■
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Technology Risk
. Proprietary and third-party data and systems are utilized to support decision making for the Fund. Data imprecision, software or other technology malfunctions, programming inaccuracies
and similar circumstances may impair the performance of these systems, which may negatively affect Fund performance.
|
The Shares offered
by this Prospectus are not deposits or obligations of any bank, are not endorsed or guaranteed by any bank and are not insured or guaranteed by the U.S. government, the Federal Deposit Insurance Corporation, the
Federal Reserve Board or any other government agency.
Performance: Bar Chart and
Table
Risk/Return Bar Chart
The Fund's Class R
Shares are expected to commence operations on or around January 25, 2013. The Fund offers five other classes of shares: Class A Shares, Class B Shares, Class C Shares, Class F Shares and Institutional Shares. The bar
chart and performance table below reflect historical performance data for the Fund and are intended to help you analyze the Fund's investment risks in light of its historical returns. The bar chart shows the
variability of the Fund's A class total returns on a calendar year-by-year basis. The Average Annual Total Return Table shows returns
averaged
over the stated periods, and includes comparative performance information.
The Fund's performance will fluctuate, and past performance (before and after taxes) is not necessarily an indication of future results.
Updated performance information for the Fund
is available under the “Products” section at FederatedInvestors.com or by calling 1-800-341-7400.
The total returns shown in the
bar chart do not reflect the payment of any sales charges or recurring shareholder account fees. If these charges or fees had been included, the returns shown would have been lower.
Within the periods shown in
the bar chart, the Fund's A class highest quarterly return was 16.99% (quarter ended June 30, 2003). Its lowest quarterly return was (16.14)% (quarter ended December 31, 2008).
Average Annual Total Return
Table
The Fund's R class
is expected to commence operations on January 25, 2013. For the period prior to commencement of operations of the R class, the performance information shown is for the Fund's A class, adjusted to reflect the expenses
of the R class. The performance of the A class has been adjusted to reflect the absence of sales charges and adjusted to remove any voluntary waiver of the Fund's expenses related to the A class that may have occurred
during the period prior to the commencement of operations of the R class.
Return Before
Taxes is shown for the Fund's R class.
(For the Period Ended December
31, 2012)
|
1 Year
|
5 Years
|
10 Years
|
R:
|
|
|
|
Return Before Taxes
|
10.99%
|
1.41%
|
6.85%
|
Russell 1000 Value Index
1
(reflects no deduction for fees, expenses or taxes)
|
17.51%
|
0.59%
|
7.38%
|
1
|
The Russell 1000 Value Index measures the performance of those Russell 1000 companies with lower price-to-book ratios and lower forecasted growth values.
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FUND MANAGEMENT
The Fund's
Investment Adviser is Federated Equity Management Company of Pennsylvania.
John L. Nichol,
Senior Portfolio Manager, has been the Fund's portfolio manager since October 2002.
Linda Bakhshian,
Portfolio Manager, has been the Fund's portfolio manager since November 2009.
purchase and sale of fund
shares
You may purchase,
redeem or exchange Shares of the Fund on any day the New York Stock Exchange is open. Shares may be purchased through a financial intermediary firm that has entered into a Fund selling and/or servicing agreement with
the Distributor or an affiliate (“Financial Intermediary”) or directly from the Fund, by wire or by check. Please note that certain purchase restrictions may apply. Redeem or exchange Shares through a
financial intermediary or directly from the Fund by telephone at 1-800-341-7400 or by mail.
The minimum initial
and subsequent investment amounts for Individual Retirement Account rollovers into the Fund's R class are generally $250 and $100, respectively. There is no minimum initial or subsequent amount for employer-sponsored
retirement plans. The minimum investment amount for Systematic Investment Programs is $50.
Tax Information
The Fund's
distributions are taxable as ordinary income or capital gains except when your investment is through a 401(k) plan, an Individual Retirement Account or other tax-advantaged investment plan.
Payments to Broker-Dealers and
Other Financial Intermediaries
If you purchase the
Fund through a broker-dealer or other financial intermediary (such as a bank), the Fund and/or its related companies may pay the intermediary for the sale of Fund Shares and related services. These payments may create
a conflict of interest by influencing the broker-dealer or other intermediary and your salesperson to recommend the Fund over another investment. Ask your salesperson or visit your financial intermediary's website for
more information.
Federated Equity Income Fund,
Inc.
Federated Investors Funds
4000 Ericsson Drive
Warrendale, PA 15086-7561
Contact us at
FederatedInvestors.com
or call 1-800-341-7400.
Federated Securities Corp.,
Distributor
Investment Company Act File No.
811-4743
CUSIP 313915605
Q451453 (1/13)
Federated is a registered trademark
of Federated Investors, Inc.
2013 ©Federated Investors, Inc.
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