Description of the Settlement

On November 28, 2005, the SEC issued an Order to settle administrative proceedings against Federated (the "Respondents"). The Respondents agreed to entry of the Order without admitting or denying the Commission's findings therein. Pursuant to the Order, the Respondents were required to pay a total of $72 million into a Fair Fund.

The Order also provided for the appointment of an Independent Distribution Consultant (IDC) Dr. Kenneth Lehn, Ph.D., has been engaged by the Respondents as the IDC in this matter. In his capacity, Dr. Lehn was responsible for developing a plan to distribute the Fair Fund (the "Distribution Plan") which is acceptable to the staff of the Commission. This was completed in consultation with the Respondents and the Independent Trustees of the affected Federated Funds. The Respondents will compensate the IDC for his time and expenses in accordance with the terms set forth in the Order. Please see "Related Documents" page for a link to the Order approving the Plan as well as a link to the Approved Plan of Distribution.

The Distribution Plan was approved on January 28, 2010. Distributions are to begin in August 2010. The recipients of the settlement funds will be shareholders who held shares within certain Federated Mutual Funds during the period of March 2002 through September 2003. Also there were findings that one of the Respondents allowed a Federated Fund investor and a Federated employee to engage in late trading for the period of July 1998 through September 2003.