FEDERATED HIGH INCOME BOND FUND, INC.
SUPPLEMENT TO PROSPECTUS DATED MAY 31, 1999
I. At a special meeting of shareholders to be held on November 18, 1999,
shareholders of the above-named Fund will be asked to vote on the changes
described below. If approved by shareholders, these changes will take
effect on or after December 1, 1999. Shareholders will be notified if any
of these changes are not approved at the special meeting or any adjournment
thereof. Please keep this supplement for your records.
Shareholders will be asked to consider the following proposals:
(1) To elect six Directors.
(2) To make changes to the Fund's fundamental investment policies:
(a) To amend the Fund's fundamental investment policy regarding
diversification to read as follows:
"With respect to securities comprising 75% of the value of
its total assets, the Fund will not purchase securities of
any one issuer (other than cash; cash items; securities
issued or guaranteed by the government of the United States
or its agencies or instrumentalities and repurchase
agreements collateralized by such U.S. government
securities; and securities of other investment companies)
if, as a result, more than 5% of the value of its total
assets would be invested in the securities of that issuer,
or the Fund would own more than 10% of the outstanding
voting securities of that issuer."
(b) To amend the Fund's fundamental investment policy regarding
borrowing money and issuing senior securities to read as follows:
"The Fund may borrow money, directly or indirectly, and
issue senior securities to the maximum extent permitted
under the 1940 Act."
(c) To amend the Fund's fundamental investment policy regarding
investments in real estate to read as follows:
"The Fund may not purchase or sell real estate, provided
that this restriction does not prevent the Fund from
investing in issuers which invest, deal, or otherwise
engage in transactions in real estate or interests
therein, or investing in securities that are secured by
real estate or interests therein. The Fund may exercise
its rights under agreements relating to such securities,
including the right to enforce security interests and to
hold real estate acquired by reason of such enforcement
until that real estate can be liquidated in an orderly
manner."
(d) To amend the Fund's fundamental investment policy regarding
investments in commodities to read as follows:
"The Fund may not purchase or sell physical commodities,
provided that the Fund may purchase securities of companies
that deal in commodities."
(e) To amend the Fund's fundamental investment policy regarding
underwriting securities to read as follows:
"The Fund may not underwrite the securities of other
issuers, except that the Fund may engage in transactions
involving the acquisition, disposition or resale of its
portfolio securities, under circumstances where it may be
considered to be an underwriter under the Securities Act
of 1933."
(f) To amend the Fund's fundamental investment policy regarding
lending by the Fund to read as follows:
"The Fund may not make loans, provided that this
restriction does not prevent the Fund from purchasing debt
obligations, entering into repurchase agreements, lending
its assets to broker/dealers or institutional investors
and investing in loans, including assignments and
participation interests."
(g) To amend the Fund's fundamental investment policy regarding
concentration of the Fund's investments in the securities of
companies in the same industry to read as follows:
"The Fund will not make investments that will result in
the concentration of its investments in the securities of
issuers primarily engaged in the same industry. Government
securities, municipal securities and bank instruments will
not be deemed to constitute an industry."
(h) To amend, and to make non-fundamental, the Fund's fundamental
investment policy regarding buying securities on margin to read
as follows:
"The Fund will not purchase securities on margin, provided
that the Fund may obtain short-term credits necessary for
the clearance of purchases and sales of securities."
(i) To amend, and to make non-fundamental, the Fund's fundamental
investment policy regarding investing in securities of other
investment companies to read as follows:
"The Fund may invest its assets in securities of other
investment companies, including securities of affiliated
investment companies, as an efficient means of carrying
out its investment policies and managing its uninvested
cash."
(j) To make non-fundamental the Fund's following fundamental
investment policies relating to investing in fixed-income and
corporate debt securities:
"The Fund seeks to achieve its investment objective by
investing primarily in a diversified portfolio of
professionally managed fixed-income securities. Some of
these fixed-income securities may involve equity features.
Capital growth will be considered but only when consistent
with the investment objective of high current income.
Fixed-income securities include preferred stocks and all
types of debt obligations, such as bonds, debentures,
convertible securities, notes, equipment lease
certificates, equipment trust certificates, conditional
sales contracts, certificates of deposit, commercial paper
and obligations issued or guaranteed by the U.S.
Government or any of its agencies or instrumentalities
(including obligations secured by such instruments such as
repurchase agreements).
Corporate debt securities may bear fixed, fixed and
contingent, or variable rates of interest and may involve
equity features, such as conversion or exchange rights or
warrants for the acquisition of stock of the same or a
different issuer or participations based on revenues,
sales or profits or the purchase of common stock in a unit
transaction (where corporate debt securities and common
stock are offered as a unit)."
(k) To make non-fundamental the Fund's following fundamental
investment policy relating to investing in equity securities:
"Under normal circumstances less than 10% of the value of
the Fund's total assets will be invested in equity
securities including common stocks, warrants or rights."
(l) To amend, and to make non-fundamental, the Fund's fundamental
investment policy relating to temporary investments to read as
follows:
"The Fund may temporarily depart from its principal
investment strategies by investing its assets in cash,
cash items, and shorter-term, higher-quality debt
securities and similar obligations."
(3) To eliminate certain of the Fund's fundamental investment policies:
(a) To remove the Fund's fundamental investment policy regarding
selling securities short;
(b) To remove the Fund's fundamental investment policy regarding
investing in oil, gas and minerals;
(c) To remove the Fund's fundamental investment policy regarding
investing in securities of new issuers;
(d) To remove the Fund's fundamental investment policy regarding
investing in issuers whose securities are owned by officers and
Directors;
(e) To remove the Fund's fundamental investment policy regarding
investing for the purpose of exercising control;
(f) To remove the Fund's fundamental investment policy regarding
dealing in puts and calls;
(g) To remove the Fund's fundamental investment policy regarding
investing in foreign securities; and
(h) To remove the Fund's fundamental investment policy relating to
short-term trading and portfolio turnover.
(4) To approve an amendment to and a restatement of the Fund's Articles of
Incorporation to permit the Board of Directors to liquidate assets of
the Fund or a class without seeking shareholder approval to the extent
permitted under Maryland law.
II. The following actions have been taken by the Board of Directors with
regard to certain non-fundamental investment policies and limitations of the
Fund:
(1) Approved revisions to the Fund's non-fundamental investment limitation
regarding investing in illiquid securities to read as follows:
"The Fund will not purchase securities for which there is no
readily available market, or enter into repurchase agreements
or purchase time deposits maturing in more than seven days, if
immediately after and as a result, the value of such
securities would exceed, in the aggregate, 15% of the Fund's
net assets."
(2) Approved the elimination of the following undertakings for the Fund:
"The Fund has no present intent to make loans, borrow money, or
sell securities short in excess of 5% of the value of its net
assets during the current fiscal year."
(3) Approved the adoption of the following non-fundamental investment
limitations pertaining to concentration by the Fund:
"(a) utility companies will be divided according to their
services (for example, gas, gas transmission, electric and
telephone will each be considered a separate industry); (b)
financial service companies will be classified according to
the end users of their services (for example, automobile
finance, bank finance and diversified finance will each be
considered a separate industry); and (c) asset-backed
securities will be classified according to the underlying
assets securing such securities. To conform to the current
view of the SEC that only domestic bank instruments may be
excluded from industry concentration limitations, as a matter
of non-fundamental policy, the Fund will not exclude foreign
banks from industry concentration limits as long as the policy
of the SEC remains in effect. In addition, investments in bank
instruments, and investments in certain industrial development
bonds funded by activities in a single industry, will be
deemed to constitute investment in an industry, except when
held for temporary defensive purposes. The investment of more
than 25% of the value of the Fund's total assets in any one
industry will constitute `concentration.'"
(4) Approved the addition of the following non-fundamental investment
limitation for the Fund when applying its commodities
restriction:
"As a matter of non-fundamental policy, for purposes of the
commodities policy, investments in transactions involving
futures contracts and options, forward currency contracts,
swap transactions and other financial contracts that settle by
payment of cash are not deemed to be investments in
commodities."
September 24, 1999
Federated Investors
Federated Securities Corp., Distributor
Federated Investors, Inc.
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Cusip 314195108
Cusip 314195207
Cusip 314195306
