INTERNATIONAL SERIES INC, 497, 1994-04-04

INTERNATIONAL SERIES INC
497, 1994-04-04

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International Equity Fund
A Portfolio of International Series, Inc.
(formerly, FT Series, Inc.)
Class A Shares

Prospectus

The Class A Shares of International Equity Fund (the "Fund") offered by this
prospectus represent interests in the Fund, which is a diversified investment
portfolio in International Series, Inc. (formerly, FT Series, Inc.) (the
"Corporation"), an open-end, management investment company (a mutual fund).

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 by the
Federal Deposit Insurance Corporation, the Federal Reserve Board, or any other
government agency. Investment in these shares involves investment risks
including the possible loss of principal.

This prospectus contains the information you should read and know before you
invest in Class A Shares of the Fund. Keep this prospectus for future reference.

The Fund has also filed a Combined Statement of Additional Information for Class
A Shares and Class C Shares dated March 29, 1994, with the Securities and
Exchange Commission. The information contained in the Combined Statement of
Additional Information is incorporated by reference into this prospectus. You
may request a copy of the Combined Statement of Additional Information free of
charge by calling 1-800-235-4669. To obtain other information or to make
inquiries about the Fund, contact the Fund at the address listed in the back of
this prospectus.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

Prospectus dated March 29, 1994

Table of Contents
- --------------------------------------------------------------------------------

Summary of Fund Expenses--Class A Shares 1
- ------------------------------------------------------

Financial Highlights--Class A Shares 2
- ------------------------------------------------------

General Information 3
- ------------------------------------------------------

Liberty Family of Funds 3
- ------------------------------------------------------

Liberty Family Retirement Program 4
- ------------------------------------------------------

Investment Information 5
- ------------------------------------------------------

Investment Objective 5
Investment Policies 5
Acceptable Investments 5
Equity and Fixed Income Securities 5
Forward Commitments 6
Money Market Instruments 6
Repurchase Agreements 6
Options and Financial Futures Contracts 6
When-Issued and Delayed Delivery Transactions 6
Foreign Currency Transactions 6
Forward Foreign Currency Exchange Contracts 7
Put and Call Options With Respect
to Equity Securities 7
Financial Futures and Options on Financial Futures 8
Portfolio Turnover 9
Risk Considerations 9
Exchange Rates 9
Foreign Companies 9
U.S. Government Policies 10
Short Sales 10
Risks Associated with Financial Futures Contracts
and Options on Financial Futures Contracts 10
Investment Limitations 10

Net Asset Value 11
- ------------------------------------------------------

Investing in Class A Shares 12
- ------------------------------------------------------

Share Purchases 12
Through a Financial Institution 12
Directly from the Distributor 12
By Wire 12
Minimum Investment Required 12
What Shares Cost 13
Dealer Concession 13
Subaccounting Services 14
Reducing the Sales Charge 14
Quantity Discounts and Accumulated Purchases 14
Letter of Intent 14
Reinvestment Privilege 15
Purchases with Proceeds from Redemptions
of Unaffiliated Mutual Fund Shares 15
Concurrent Purchases 15
Systematic Investment Program 15
Certificates and Confirmations 15
Dividends 16
Capital Gains 16
Retirement Plans 16

Exchange Privilege 16
- ------------------------------------------------------

Reduced Sales Charge 16
Requirements for Exchange 16
Tax Consequences 17
Making an Exchange 17
Telephone Instructions 17

Redeeming Class A Shares 17
- ------------------------------------------------------

Through a Financial Institution 18
Directly from the Fund 18
By Telephone 18
By Mail 18
Signatures 18

Systematic Withdrawal Program 19

Accounts with Low Balances 19
Redemption in Kind 19

International Series, Inc. Information 20
- ------------------------------------------------------

Management of the Corporation 20
Board of Directors 20
Officers and Directors 20
Investment Adviser 23
Advisory Fees 23
Adviser's Background 24
Sub-Adviser 24
Sub-Advisory Fees 24
Sub-Adviser's Background 25
Distribution of Class A Shares 25
Other Payments to Financial Institutions 25
Administration of the Fund 25
Administrative Services 25
Shareholder Services Plan 26
Custodian 26
Transfer Agent and Dividend Disbursing Agent 26
Legal Counsel 26
Independent Public Accountants 27
Brokerage Transactions 27
Expenses of the Fund and Class A Shares 27

Shareholder Information 27
- ------------------------------------------------------

Voting Rights 27

Tax Information 28
- ------------------------------------------------------

Federal Income Tax 28
Pennsylvania Corporate and
Personal Property Taxes 29

Performance Information 29
- ------------------------------------------------------

Other Classes of Shares 29
- ------------------------------------------------------

Financial Highlights--Class C Shares 30
- ------------------------------------------------------

Financial Statements 31
- ------------------------------------------------------

Addresses Inside Back Cover
- ------------------------------------------------------

Summary of Fund Expenses--Class A Shares
- --------------------------------------------------------------------------------

<TABLE>
<S> <C> <C>
Shareholder Transaction Expenses
Maximum Sales Load Imposed on Purchases (as a percentage of offering price).............................. 4.50%
Maximum Sales Load Imposed on Reinvested Dividends (as a percentage of offering price)................... None
Contingent Deferred Sales Charge (as a percentage of original
purchase price or redemption proceeds as applicable)................................................... None
Redemption Fee (as a percentage of amount redeemed, if applicable)....................................... None
Exchange Fee............................................................................................. None

Annual Class A Shares Operating Expenses
(As a percentage of average net assets)
Management Fee (after waiver) (1)........................................................................ 0.99%
12b-1 Fee................................................................................................ None
Total Other Expenses..................................................................................... 0.61%
Shareholder Servicing Fee (2)............................................................. 0.03%
Total Class A Shares Operating Expenses (3)..................................................... 1.60%
</TABLE>

(1) The management fee has been reduced to reflect the voluntary waiver of a
portion of the management fee. The maximum management fee is 1.00%.

(2) The maximum Shareholder Servicing Fee is 0.25%.

(3) The Total Class A Shares Operating Expenses would have been 1.61% absent the
voluntary waiver of a portion of the management fee.

The purpose of this table is to assist an investor in understanding the
various costs and expenses that a shareholder of Class A Shares of the Fund will
bear, either directly or indirectly. For more complete descriptions of the
various costs and expenses, see "Investing in Class A Shares" and "International
Series, Inc. Information." Wire-transferred redemptions of less than $5,000 may
be subject to additional fees.

<TABLE>
<CAPTION>
EXAMPLE 1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>

You would pay the following expenses on a $1,000 investment
assuming (1) 5% annual return and (2) redemption at the end
of each time period...................................................... $61 $93 $128 $226
</TABLE>

The above example should not be considered a representation of past or
future expenses. Actual expenses may be greater or less than those shown.

The information set forth in the foregoing table and example relates only to
Class A Shares of the Fund. The Fund also offers another class of shares called
Class C Shares. Class A Shares and Class C Shares are subject to certain of the
same expenses; however, Class C Shares are subject to a 12b-1 fee of 0.75% and a
contingent deferred sales charge of 1.00%, but are not subject to a sales load.
See "Other Classes of Shares."

International Equity Fund
Class A Shares
Financial Highlights
- --------------------------------------------------------------------------------
(For a share outstanding throughout each period)

The following table has been audited by Arthur Andersen & Co., the Fund's
independent public accountants. Their report dated January 21, 1994, on the
Fund's financial statements for the year ended November 30, 1993, and on the
following table for each of the periods presented, is included in the Annual
Report, which is incorporated by reference. This table should be read in
conjunction with the Fund's financial statements and notes thereto, which may be
obtained from the Fund.

<TABLE>
<CAPTION>
Year Ended November 30,
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1993 1992 1991 1990 1989 1988 1987 1986 1985
Net asset value, beginning of
period $ 14.09 $ 14.44 $ 14.28 $ 17.59 $ 17.34 $ 19.99 $ 22.87 $ 14.62 $ 9.50
- -----------------------------
Income from investment
operations
- -----------------------------
Net investment income 0.06 0.10 0.11 0.19 0.18 0.19 0.24 0.04 0.09
- -----------------------------
Net realized and unrealized
gain (loss) on investments 2.53 (0.37) 0.37 (1.16) 1.60 3.27 (0.72) 8.63 5.04
- ----------------------------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
Total from investment
operations 2.59 (.27) 0.48 (.97) 1.78 3.46 (0.48) 8.67 5.13
- -----------------------------
Less distributions
- -----------------------------
Dividends to shareholders
from net investment income (0.06) (0.08) (0.21) (0.20) (0.23) (0.23) (0.05) (0.08) (0.01)
- -----------------------------
Distributions for
shareholders from net
realized gain on investment
transactions -- -- (0.11) (2.14) (1.30) (5.88) (2.35) (0.34) --
- -----------------------------
Distributions in excess of
net investment income (0.13)(b)
- ----------------------------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
Total distributions (0.19) (0.08) (0.32) (2.34) (1.53) (6.11) (2.40) (0.42) (0.01)
- ----------------------------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
Net asset value, end of
period $ 16.49 $ 14.09 $ 14.44 $ 14.28 $ 17.59 $ 17.34 $ 19.99 $ 22.87 $ 14.62
- ----------------------------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
Total return* 18.52% (1.86%) 3.49% (6.72)% 11.55% 24.33% (2.70%) 60.75% 54.07%
- -----------------------------
Ratios to average net assets
- -----------------------------
Expenses 1.60% 1.57% 1.52% 1.32% 1.01% 1.00% 1.00% 1.00% 1.00%
- -----------------------------
Net investment income 0.13% 0.69% 0.78% 1.39% 1.04% 1.43% 0.93% 0.34% 1.30%
- -----------------------------
Expense waiver/
reimbursement(c) 0.01% 0.02% 0.30% 0.25% 0.46% 0.28% 0.17% 0.19% 0.50%
- -----------------------------
Supplemental Data
- -----------------------------
Net assets, end of period
(000 omitted) $192,860 $106,937 $101,980 $82,541 $65,560 $68,922 $85,860 $106,257 $34,209
- -----------------------------
Portfolio turnover rate*** 74% 91% 84% 114% 85% 98% 130% 70% 61%
- -----------------------------

<CAPTION>
<S> <C>
1984**
Net asset value, beginning of
period $ 10.00
- -----------------------------
Income from investment
operations
- -----------------------------
Net investment income 0.02
- -----------------------------
Net realized and unrealized
gain (loss) on investments (0.52)
- ----------------------------- -----------
Total from investment
operations (0.50)
- -----------------------------
Less distributions
- -----------------------------
Dividends to shareholders
from net investment income --
- -----------------------------
Distributions for
shareholders from net
realized gain on investment
transactions --
- -----------------------------
Distributions in excess of
net investment income
- ----------------------------- -----------
Total distributions --
- ----------------------------- -----------
Net asset value, end of
period $ 9.50
- ----------------------------- -----------
Total return* (2.86)%
- -----------------------------
Ratios to average net assets
- -----------------------------
Expenses 0.56%(a)
- -----------------------------
Net investment income 2.89%(a)
- -----------------------------
Expense waiver/
reimbursement(c) 0.74%(a)
- -----------------------------
Supplemental Data
- -----------------------------
Net assets, end of period
(000 omitted) $6,439
- -----------------------------
Portfolio turnover rate*** 6%
- -----------------------------
</TABLE>

* Based on net asset value, which does not reflect the sales load or redemption
fee, if applicable.

** Reflects operations from August 17, 1984 to November 30, 1984. For the
period from the start of business, March 12, 1984 to August 16, 1984, net
investment income aggregating $0.274 per share ($27,229) was distributed to
the Fund's former sub-adviser. Such distribution represented substantially
all of the net income of the Fund prior to the initial public offering of
Fund shares which commenced on August 17, 1984.

*** Represents portfolio turnover rate for the entire fund.

(a) Computed on an annualized basis.

(b) Distributions in excess of net investment income for the year ended
November 30, 1993, were a result of certain book and tax timing
differences. These distributions do not represent a return of capital for
federal income tax purposes.

General Information
- --------------------------------------------------------------------------------

The Corporation was established as FT International Trust, a Massachusetts
business trust, on March 9, 1984, and reorganized as a corporation under the
laws of the state of Maryland on February 11, 1991. At a special meeting of
shareholders held on March 15, 1994, the shareholders of the Corporation
approved an amendment to the Articles of Incorporation to change the name of the
Corporation to International Series, Inc. The Corporation's address is Liberty
Center, Federated Investors Tower, Pittsburgh, Pennsylvania 15222-3779. The
Articles of Incorporation permit the Corporation to offer separate series of
shares representing interests in separate portfolios of securities. The shares
in any one portfolio may be offered in separate classes. With respect to this
Fund, as of the date of this prospectus, the Board of Directors ("Directors")
has established two classes of shares known as Class A Shares and Class C
Shares. This prospectus relates only to Class A Shares ("Shares") of the
Corporation's portfolio known as International Equity Fund.

In general, Shares are sold at net asset value plus an applicable sales charge
and are redeemed at net asset value. For a more complete description, see
"Redeeming Class A Shares."

The Fund's current net asset value and offering price can be found in the mutual
funds section of local newspapers under "Liberty Family Funds."

Liberty Family of Funds
- --------------------------------------------------------------------------------

This Fund is a member of a family of mutual funds, collectively known as the
Liberty Family of Funds. The other funds in the Liberty Family of Funds are:

American Leaders Fund, Inc., providing growth of capital and income
through high quality stocks;

Capital Growth Fund, providing appreciation of capital primarily through
equity securities;

Fund for U.S. government Securities, Inc., providing current income
through long-term U.S. government securities;

International Income Fund, providing a high level of current income
consistent with prudent investment risk through high-quality debt
securities denominated primarily in foreign currencies;

Liberty Equity Income Fund, Inc., providing above-average income and
capital appreciation through income producing equity securities;

Liberty High Income Bond Fund, Inc., providing high current income through
high-yielding, lower-rated, corporate bonds;

Liberty Municipal Securities Fund, Inc., providing a high level of current
income exempt from federal regular income tax through municipal bonds;

Liberty U.S. Government Money Market Trust, providing current income
consistent with stability of principal through high-quality U.S.
government securities;

Liberty Utility Fund, Inc., providing current income and long-term growth
of income, primarily through electric, gas, and communication utilities;

Stock and Bond Fund, Inc. (Class C Shares), providing relative safety of
capital with the possibility of long-term growth of capital and income
through equity securities, convertible securities, debt securities, and
short-term obligations; and

Tax-Free Instruments Trust, providing current income consistent with
stability of principal and exempt from federal income tax, through
high-quality, short-term municipal securities.

Prospectuses for these funds are available by writing to Federated Securities
Corp.

Each of the funds may also invest in certain other types of securities as
described in each fund's prospectus. The Liberty Family of Funds provides
flexibility and diversification for an investor's long-term investment planning.
It enables an investor to meet the challenges of changing market conditions by
offering convenient exchange privileges which give access to various investment
vehicles and by providing the investment services of proven, professional
investment advisers.

Shareholders of Class A Shares participating in the Liberty Account are
designated as Liberty Life Members. Liberty Life Members are exempt from sales
charges on future purchases in and exchanges between the Class A Shares of any
funds in the Liberty Family of Funds, as long as they maintain a $500 balance in
one of the Liberty Funds.

Liberty Family Retirement Program
- --------------------------------------------------------------------------------

The Fund is also a member of the Liberty Family Retirement Program ("Program"),
an integrated program of investment options, plan recordkeeping, and
consultation services for 401(k) and other participant-directed benefit and
savings plans. Under the Program, employers or plan trustees may select a group
of investment options to be offered in a plan which also uses the Program for
Recordkeeping and administrative services. Additional fees are charged to the
plan for these services. As part of the Program, exchanges may readily be made
between investment options selected by the employer or a plan trustee.

The other funds participating in the Liberty Family Retirement Program are:
American Leaders Fund, Inc.; Capital Growth Fund; Fund for U.S. Government
Securities, Inc.; International Income Fund; Liberty Equity Income Fund, Inc.;
Liberty High Income Bond Fund, Inc.; Liberty Utility Fund, Inc.; Prime Cash
Series; and Stock and Bond Fund, Inc.

Investment Information
- --------------------------------------------------------------------------------

Investment Objective

The Fund's objective is to obtain a total return on its assets from a
combination of long-term capital growth and income through a diversified
portfolio primarily invested in equity securities of non-U.S. issuers. The
objective is based on the premise that investing in non-U.S. securities provides
three potential benefits over investing solely in U.S. securities:

the opportunity to invest in non-U.S. companies believed to have superior
growth potential;

the opportunity to invest in foreign countries with economic policies or
business cycles different from those of the United States; and

the opportunity to reduce portfolio volatility to the extent that
securities markets inside and outside the United States do not move in
harmony.

While there is no assurance that the Fund will achieve its investment objective,
it endeavors to do so by following the investment policies described in this
prospectus. The investment objective and policies may be changed by the
Directors without shareholder approval. Shareholders will be notified before any
material change in the objective or policies becomes effective.

Investment Policies

Acceptable Investments. The Fund invests primarily in non-U.S. securities. A
substantial portion of these will be equity securities of established companies
in economically developed countries. The Fund will invest at least 65%, and
under normal market conditions substantially all of its total assets, in equity
securities denominated in foreign currencies of issuers located in at least
three countries outside of the United States. The Fund may also purchase
corporate and government fixed income securities denominated in currencies other
than U.S. dollars; enter into forward commitments, repurchase agreements, and
foreign currency transactions; maintain reserves in foreign or U.S. money market
instruments; and purchase options and financial futures contracts.

Equity and Fixed Income Securities. At the date of this prospectus, the
Fund has committed its assets primarily to dividend-paying equity
securities of established companies that appear to have growth potential.
However, as a temporary defensive position, the Fund may shift its emphasis
to fixed income securities, warrants, or other obligations of foreign
companies or governments, if they appear to offer potential higher return.
Fixed income securities include preferred stock, convertible securities,
bonds, notes, or other debt securities which are investment grade or
higher.

The high-quality debt securities in which the Fund will invest will possess
a minimum credit rating of A as assigned by Standard & Poor's Corporation
("S&P") or A by Moody's Investors Service, Inc. ("Moody's"), or, if
unrated, will be judged by Fiduciary International, Inc., the investment
adviser to the Fund, to be of comparable quality. Because the average
quality of the Fund's portfolio investments should remain constantly
between A and AAA, the Fund will seek to avoid the adverse consequences
that may arise for some debt securities in difficult economic
circumstances. Downgraded securities will be evaluated on a case by case
basis by the adviser.

The adviser will determine whether or not the security continues to be an
acceptable investment. If not, the security will be sold.

Forward Commitments. Forward commitments are contracts to purchase
securities for a fixed price at a date beyond customary settlement time.
The Fund may enter into these contracts if liquid securities in amounts
sufficient to meet the purchase price are segregated on the Fund's records
at the trade date and maintained until the transaction has been settled.
Risk is involved if the value of the security declines before settlement.
Although the Fund enters into forward commitments with the intention of
acquiring the security, it may dispose of the commitment prior to
settlement and realize short-term profit or loss.

Money Market Instruments. The Fund may invest in U.S. and foreign
short-term money market instruments, including interest-bearing call
deposits with banks, government obligations, certificates of deposit,
bankers' acceptances, commercial paper, short-term corporate debt
securities, and repurchase agreements. These investments may be used to
temporarily invest cash received from the sale of Fund Shares, to establish
and maintain reserves for temporary defensive purposes, or to take
advantage of market opportunities. Investments in the World Bank, Asian
Development Bank, or Inter-American Development Bank are not anticipated.

Repurchase Agreements. Repurchase agreements are arrangements in which
banks, broker/ dealers, and other recognized financial institutions sell
securities to the Fund and agree at the time of sale to repurchase them at
a mutually agreed upon time and price. To the extent that the original
seller does not repurchase the securities from the Fund, the Fund could
receive less than the repurchase price on any sale of such securities.

Options and Financial Futures Contracts. The Fund may purchase put and
call options, financial futures contracts, and options on financial futures
contracts. In addition, the Fund may write (sell) put and call options with
respect to securities in the Fund's portfolio.

When-Issued and Delayed Delivery Transactions. The Fund may purchase securities
on a when-issued or delayed delivery basis. These transactions are arrangements
in which the Fund purchases securities with payment and delivery scheduled for a
future time. The Fund engages in when-issued and delayed delivery transactions
only for the purpose of acquiring portfolio securities consistent with the
Fund's investment objective and policies, not for investment leverage. These
transactions are made to secure what is considered to be an advantageous price
and yield for the Fund. Settlement dates may be a month or more after entering
into these transactions, and the market values of the securities may vary from
the purchase price. In when-issued and delayed delivery transactions, the Fund
relies on the seller to complete the transaction. The seller's failure to
complete the transaction may cause the Fund to miss a price or yield considered
to be advantageous. No fees or other expenses, other than normal transaction
costs, are incurred. However, assets of the Fund sufficient to make payment for
the securities to be purchased are segregated on the Fund's records at the trade
date and are maintained until the transaction is settled.

Foreign Currency Transactions. The Fund will enter into foreign currency
transactions to obtain the necessary currencies to settle securities
transactions. Currency transactions may be conducted either on a spot or cash
basis at prevailing rates or through forward foreign currency exchange
contracts.

The Fund may also enter into foreign currency transactions to protect Fund
assets against adverse changes in foreign currency exchange rates or exchange
control regulations. Such changes could unfavorably affect the value of Fund
assets which are denominated in foreign currencies, such as foreign securities
or funds deposited in foreign banks, as measured in U.S. dollars. Although
foreign currency exchanges may be used by the Fund to protect against a decline
in the value of one or more currencies, such efforts may also limit any
potential gain that might result from a relative increase in the value of such
currencies and might, in certain cases, result in losses to the Fund.

Forward Foreign Currency Exchange Contracts. A forward foreign currency
exchange contract ("forward contract") is an obligation to purchase or sell an
amount of a particular currency at a specific price and on a future date agreed
upon by the parties.

Generally, no commission charges or deposits are involved. At the time the Fund
enters into a forward contract, Fund assets with a value equal to the Fund's
obligation under the forward contract are segregated on the Fund's records and
are maintained until the contract has been settled. The Fund will not enter into
a forward contract with a term of more than one year. The Fund will generally
enter into a forward contract to provide the proper currency to settle a
securities transaction at the time the transaction occurs ("trade date"). The
period between the trade date and settlement date will vary between 24 hours and
30 days, depending upon local custom.

The Fund may also protect against the decline of a particular foreign currency
by entering into a forward contract to sell an amount of that currency
approximating the value of all or a portion of the Fund's assets denominated in
that currency ("hedging"). The success of this type of short-term hedging
strategy is highly uncertain due to the difficulties of predicting short-term
currency market movements and of precisely matching forward contract amounts and
the constantly changing value of the securities involved. Although the adviser
will consider the likelihood of changes in currency values when making
investment decisions, the adviser believes that it is important to be able to
enter into forward contracts when it believes the interests of the Fund will be
served. The Fund will not enter into forward contracts for hedging purposes in a
particular currency in an amount in excess of the Fund's assets denominated in
that currency. No more than 30% of the Fund's assets will be committed to
forward contracts for hedging purposes at any time. (This restriction does not
include forward contracts entered into to settle securities transactions.)

Put and Call Options with Respect to Equity Securities

The Equity Fund may purchase put and call options on its portfolio of
securities. Put and call options will be used as a hedge to attempt to protect
securities which the Fund holds, or will be purchasing, against decreases or
increases in value. The Fund is also authorized to write (sell) put and call
options on all or any portion of its portfolio of securities to generate income.
The Fund may write call options on securities either held in its portfolio or
which it has the right to obtain without payment of further consideration or for
which it has segregated cash in the amount of any additional consideration. In
the case of put options written by the Fund, the Corporation's custodian will
segregate cash, U.S. Treasury obligations, or highly liquid debt securities with
a value equal to or greater than the exercise price of the underlying
securities.

The Fund is authorized to invest in put and call options that are traded on
securities exchanges. The Fund may also purchase and write over-the-counter
options on portfolio securities in negotiated transactions with the buyers or
writers of the options since options on some of the portfolio securities held by
the Fund are not traded on an exchange. The Fund will purchase and write
over-the-counter options only with investment dealers and other financial
institutions (such as commercial banks or savings and loan associations) deemed
creditworthy by Federated Management and Fiduciary International, Inc., the
Fund's investment adviser and sub-adviser.

Over-the-counter options are two-party contracts with price and terms negotiated
between buyer and seller. In contrast, exchange-traded options are third-party
contracts with standardized strike prices and expiration dates and are purchased
from a clearing corporation. Exchange-traded options have a continuous liquid
market while over-the-counter options may not. Prior to exercise or expiration,
an option position can only be terminated by entering into a closing purchase or
sale transaction. This requires a secondary market on an exchange which may or
may not exist for any particular call or put option at any specific time. The
absence of a liquid secondary market also may limit the Fund's ability to
dispose of the securities underlying an option. The inability to close options
also could have an adverse impact on the Fund's ability to effectively hedge its
portfolio.

Financial Futures and Options on Financial Futures

The Fund may purchase and sell financial futures contracts to hedge all or a
portion of its portfolio securities against changes in interest rates or
securities prices. Financial futures contracts on securities call for the
delivery of particular securities at a certain time in the future. The seller of
the contract agrees to make delivery of the type of instrument called for in the
contract, and the buyer agrees to take delivery of the instrument at the
specified future time. A financial futures contract on a securities index does
not involve the actual delivery of securities, but merely requires the payment
of a cash settlement based on changes in the securities index.

The Fund may also write call options and purchase put options on financial
futures contracts as a hedge to attempt to protect securities in its portfolio
against decreases in value resulting from anticipated increases in market
interest rates or broad declines in securities prices. When the Fund writes a
call option on a financial futures contract, it is undertaking the obligation of
selling the financial futures contract at a fixed price at any time during a
specified period if the option is exercised. Conversely, as a purchaser of a put
option on a financial futures contract, the Fund is entitled (but not obligated)
to sell a financial futures contract at the fixed price during the life of the
option.

The Fund may also write put options and purchase call options on financial
futures contracts as a hedge against rising purchase prices of securities
eligible for purchase by the Fund. The Fund will use these transactions to
attempt to protect its ability to purchase securities in the future at price
levels existing at the time it enters into the transactions. When the Fund
writes a put option on a futures contract, it is undertaking to buy a particular
futures contract at a fixed price at any time during a specified period if the
option is exercised. As a purchaser of a call option on a futures contract, the
Fund is entitled (but not obligated) to purchase a futures contract at a fixed
price at any time during the life of the option.

The Fund may not purchase or sell financial futures contracts or options on
financial futures contracts if, immediately thereafter, the sum of the amount of
initial margin deposits on the Fund's existing financial futures positions and
premiums paid for related options would exceed 5% of the fair market value of
the Fund's total assets, after taking into account the unrealized profits and
losses on those contracts it has entered into. When the Fund purchases financial
futures contracts, an amount of cash and cash equivalents, equal to the
underlying commodity value of the financial futures contracts (less any related
margin deposits), will be deposited in a segregated account with the Fund's
custodian to collateralize the position and, thereby, insure that the use of
such financial futures contracts is unleveraged.

Portfolio Turnover. Portfolio securities will be sold when the Fund's adviser
or sub-adviser believes it is appropriate, regardless of how long those
securities have been held.

Risk Considerations. Investing in non-U.S. securities carries substantial risks
in addition to those associated with domestic investments. In an attempt to
reduce some of these risks, the Fund diversifies its investments broadly among
foreign countries, including both developed and developing countries. At least
three different countries will always be represented. As of November 30, 1993,
the portfolio contained securities from issuers located primarily in Japan, the
United Kingdom, France, Hong Kong, Switzerland, and Mexico. There are also
investments in several other countries.

The Fund occasionally takes advantage of the unusual opportunities for higher
returns available from investing in developing countries. These investments,
however, carry considerably more volatility and risk because they are associated
with less mature economies and less stable political systems.

Exchange Rates. Foreign securities are denominated in foreign currencies.
Therefore, the value in U.S. dollars of the Fund's assets and income may be
affected by changes in exchange rates and regulations.

Although the Fund values its assets daily in U.S. dollars, it will not
convert its holding of foreign currencies to U.S. dollars daily.

When the Fund converts its holdings to another currency, it may incur
conversion costs. Foreign exchange dealers realize a profit on the
difference between the prices at which they buy and sell currencies.

Foreign Companies. Other differences between investing in foreign and U.S.
companies include:

less publicly available information about foreign companies;

the lack of uniform financial accounting standards applicable to foreign
companies;

less readily available market quotations on foreign companies;

differences in government regulation and supervision of foreign stock
exchanges, brokers, listed companies, and banks;

differences in legal systems which may affect the ability to enforce
contractual obligations or obtain court judgments;

generally lower foreign stock market volume;

the likelihood that foreign securities may be less liquid or more
volatile;

foreign brokerage commissions may be higher;

unreliable mail service between countries; and

political or financial changes which adversely affect investments in some
countries.

U.S. Government Policies. In the past, U.S. government policies have
discouraged or restricted certain investments abroad by investors such as
the Fund. Investors are advised that when such policies are instituted, the
Fund will abide by them.

Short Sales. The Fund intends to sell securities short from time to time,
subject to certain restrictions. A short sale occurs when a borrowed
security is sold in anticipation of a decline in its price. If the decline
occurs, shares equal in number to those sold short can be purchased at the
lower price. If the price increases, the higher price must be paid. The
purchased shares are then returned to the original lender. Risk arises
because no loss limit can be placed on the transaction. When the Fund
enters into a short sale, assets, equal to the market price of the
securities sold short or any lesser price at which the Fund can obtain such
securities, are segregated on the Fund's records and maintained until the
Fund meets its obligations under the short sale.

Risks Associated with Financial Futures Contracts
and Options on Financial Futures Contracts

Financial futures contracts and options on financial futures contracts can be
highly volatile and could result in a reduction of the Fund's total return. The
Fund's attempt to use such investment devices for hedging purposes may not be
successful. Successful futures strategies require the ability to predict future
movements in securities prices, interest rates and other economic factors. When
the Fund uses financial futures contracts and options on financial futures
contracts as hedging devices, there is a risk that the prices of the securities
subject to the financial futures contracts and options on financial futures
contracts may not correlate perfectly with the prices of the securities in the
Fund. This may cause the financial futures contract and any related options to
react to market changes differently than the portfolio securities. In addition,
the investment adviser or sub-adviser could be incorrect in its expectations
about the direction or extent of market factors, such as interest rate,
securities price movements, and other economic factors. In these events, the
Fund may lose money on the financial futures contract or the options on
financial futures contracts. It is not certain that a secondary market for
positions in financial futures contracts or for options on financial futures
contracts will exist at all times. Although the investment adviser or
sub-adviser will consider liquidity before entering into financial futures
contracts or options on financial futures contracts transactions, there is no
assurance that a liquid secondary market on an exchange will exist for any
particular financial futures contract or option on a financial futures contract
at any particular time. The Fund's ability to establish and close out financial
futures contracts and options on financial futures contract positions depends on
this secondary market. If the Fund is unable to close out its position due to
disruptions in the market or lack of liquidity, the losses to the Fund could be
significant.

Investment Limitations

The Fund will not:

with respect to 75% of the value of its total assets, invest more than 5%
of the value of its total assets in the securities (other than securities
issued or guaranteed by the government of the United States or its
agencies or instrumentalities) of any one issuer;

acquire more than 10% of the outstanding voting securities of any one
issuer, or acquire any securities of Fiduciary Trust Company International
or its affiliates;

borrow money or pledge securities except, under certain circumstances, the
Fund may borrow up to one-third of the value of its total assets and
pledge up to 15% of the value of those assets to secure such borrowings;
or

permit margin deposits for financial futures contracts held by the Fund,
plus premiums paid by it for open options on financial futures contracts,
to exceed 5% of the fair market value of the Fund's total assets, after
taking into account the unrealized profits and losses on those contracts.

The above investment limitations cannot be changed without shareholder approval.
The following limitations, however, may be changed by the Directors without
shareholder approval. Shareholders will be notified before any material change
in these limitations becomes effective.

The Fund will not:

invest more than 5% of its assets in warrants;

own securities of open-end or closed-end investment companies, except
under certain circumstances and subject to certain limitations not
exceeding 10% of its total assets;

invest more than 5% of its total assets in securities of issuers that have
records of less than three years of continuous operations;

invest more than 15% of the value of its net assets in illiquid
securities, including securities not determined by the Board of Directors
to be liquid, including repurchase agreements with maturities longer than
seven days after notice and certain OTC options;

sell securities short except under strict limitations;

write call options or put options on securities, except that the Fund may
write covered call options and secured put options on all or any portion
of its portfolio, provided the securities are held in the Fund's portfolio
or the Fund is entitled to them in deliverable form without further
payment or the Fund has segregated cash in the amount of any further
payments; or

purchase put options on securities unless the securities or an offsetting
call option is held in the Fund's portfolio.

Net Asset Value
- --------------------------------------------------------------------------------

The Fund's net asset value per Share fluctuates. The net asset value for Shares
is determined by adding the interest of the Class A Shares in the market value
of all securities and other assets of the Fund, subtracting the interest of the
Class A Shares in the liabilities of the Fund and those attributable to the
Class A Shares, and dividing the remainder by the number of Class A Shares
outstanding. The net asset value for Class A Shares may differ from that of
Class C Shares due to the variance in daily net income realized by each class.
Such variance will reflect only accrued net income to which the shareholders of
a particular class are entitled.

Investing in Class A Shares
- --------------------------------------------------------------------------------

Share Purchases

Shares are sold on days on which the New York Stock Exchange is open. Shares may
be purchased through a financial institution which has a sales agreement with
the distributor or directly from the distributor, Federated Securities Corp.,
once an account has been established. In connection with the sale of Shares,
Federated Securities Corp., may, from time to time, offer certain items of
nominal value to any shareholder or investor. The Fund reserves the right to
reject any purchase request.

Participants in plans under the Liberty Family Retirement Program shall purchase
Shares in accordance with the requirements of their respective plans.

Through a Financial Institution. An investor may call his financial institution
(such as a bank or an investment dealer) to place an order to purchase Shares.
Orders through a financial institution are considered received when the Fund is
notified of the purchase order. It is the financial institution's responsibility
to transmit orders promptly. Purchase orders through a registered broker/dealer
must be received by the broker before 4:00 P.M. (Eastern time) and must be
transmitted by the broker to the Fund before 5:00 P.M. (Eastern time) in order
for Shares to be purchased at that day's price. Purchase orders through other
financial institutions must be received by the financial institution and
transmitted to the Fund before 4:00 P.M. (Eastern time) in order for Shares to
be purchased at that day's price.

Directly from the Distributor. An investor may place an order to purchase
Shares directly from the distributor once an account has been established.
To do so:

complete and sign the new account form available from the Fund;

enclose a check made payable to International Equity Fund--Class A Shares;
and

mail both to International Equity Fund, P.O. Box 8604, Boston, MA
02266-8604.

Orders by mail are considered received after payment by check is converted
by the transfer agent's bank, State Street Bank and Trust Company ("State
Street Bank"), into federal funds. This is generally the next business day
after State Street Bank receives the check.

By Wire. To purchase Shares directly from the distributor by wire, call
the Fund. All information needed will be taken over the telephone, and the
order is considered received when the transfer agent's bank, State Street
Bank, receives payment by wire. Federal funds should be wired as follows:
State Street Bank and Trust Company, Boston, Massachusetts; Attention:
Mutual Fund Servicing Division; For Credit to: International Equity
Fund--Class A Shares; Fund Number (this number can be found on the account
statement or by contacting the Fund); Group Number or Order Number; Nominee
or Institution Name; ABA Number 011000028. Shares cannot be purchased by
wire on Columbus Day, Veterans' Day, or Martin Luther King Day.

Minimum Investment Required

The minimum initial investment in Shares is $500 unless the investment is in a
retirement plan, in which case the minimum initial investment is $50. Subsequent
investments must be in amounts of at least $100, except for retirement plans,
which must be in amounts of at least $50. (Other minimum investment requirements
may apply to investments through the Liberty Family Retirement Program.)

What Shares Cost

Shares are sold at their net asset value next determined after an order is
received, plus a sales charge as follows:

<TABLE>
<CAPTION>
Sales Charge as Sales Charge as
a Percentage a Percentage
of Public of Net Amount
Amount of Transaction Offering Price Invested
<S> <C> <C>
Less than $100,000 4.50% 4.71%
$100,000 but less than $250,000 3.75% 3.90%
$250,000 but less than $500,000 2.50% 2.56%
$500,000 but less than $750,000 2.00% 2.04%
$750,000 but less than $1 million 1.00% 1.01%
$1 million or more 0.00% 0.00%
</TABLE>

The net asset value is determined at 4:00 P.M. (Eastern time) or at the close of
the New York Stock Exchange, Monday through Friday, except on: (i) days on which
there are not sufficient changes in the value of the Fund's portfolio securities
that its net asset value might be materially affected; (ii) days during which no
Shares are tendered for redemption and no orders to purchase Shares are
received; or (iii) the following holidays: New Year's Day, Presidents' Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day, and
Christmas Day.

Shareholders designated as Liberty Life Members are exempt from sales charges.

No sales charge is imposed for Shares purchased through bank trust departments
or investment advisers registered under the Investment Advisers Act of 1940. In
addition, certain institutions such as insurance companies and certain
associations are exempt from the sales charge for purchases of Shares. However,
investors who purchase Shares through a trust department or investment adviser
may be charged an additional service fee by that institution.

Shareholders of record in the Fund on September 30, 1989, may purchase
additional Shares at net asset value, without a sales charge, except that a
sales charge will be imposed when the Shares are acquired in exchange for shares
of another fund in the Liberty Family of Funds.

No sales charge is imposed on purchases made by qualified retirement plans with
over $1 million invested in funds available in the Liberty Family Retirement
Program.

Dealer Concession. For sales of Shares, a dealer will normally receive up
to 90% of the applicable sales charge. Any portion of the sales charge
which is not paid to a dealer will be retained by the distributor. However,
the distributor, in its sole discretion, may uniformly offer to pay all
dealers selling Shares additional amounts, all or a portion of which may be
paid from the sales charge it normally retains or any other source
available to it. Such additional payments, if accepted by the dealer, may
be in the form of cash or promotional incentives, and will be predicated
upon the amount of Shares or of the Liberty Family of Funds sold by the
dealer.

The sales charge for Shares sold other than through registered
broker/dealers will be retained by Federated Securities Corp. Federated
Securities Corp. may pay fees to banks out of the sales charge in
exchange for sales and/or administrative services performed on behalf of
the bank's customers in connection with the initiation of customer
accounts and purchases of Shares.

Subaccounting Services

Institutions are encouraged to open single master accounts. However, certain
institutions may wish to use the transfer agent's subaccounting system to
minimize their internal recordkeeping requirements. Institutions holding Shares
in a fiduciary, agency, custodial, or similar capacity may charge or pass
through subaccounting fees as part of or in addition to normal trust or agency
account fees. They may also charge fees for other services provided which may be
related to the ownership of Shares. This prospectus should, therefore, be read
together with any agreement between the customer and the institution with regard
to the services provided, the fees charged for those services, and any
restrictions and limitations imposed.

Reducing the Sales Charge

The sales charge can be reduced on the purchase of Shares through:

quantity discounts and accumulated purchases;

signing a 13-month letter of intent;

using the reinvestment privilege;

purchases with proceeds from redemptions of unaffiliated mutual fund
shares; or

concurrent purchases.

Quantity Discounts and Accumulated Purchases. As shown in the table above,
larger purchases reduce the sales charge paid. The Fund will combine purchases
of Shares made on the same day by the investor, the investor's spouse, and the
investor's children under age 21 when it calculates the sales charge. In
addition, the sales charge, if applicable, is reduced for purchases made at one
time by a trustee or fiduciary for a single trust estate or a single fiduciary
account.

If an additional purchase of Shares is made, the Fund will consider the previous
purchases still invested in the Fund. For example, if a shareholder already owns
Shares having a current value at the public offering price of $90,000 and he
purchases $10,000 more at the current public offering price, the sales charge on
the additional purchase according to the schedule now in effect would be 3.75%,
not 4.50%.

To receive the sales charge reduction, Federated Securities Corp. must be
notified by the shareholder in writing or by his financial institution at the
time the purchase is made that Shares are already owned or that purchases are
being combined. The Fund will reduce the sales charge after it confirms the
purchases.

Letter of Intent. If a shareholder intends to purchase at least $100,000 of
shares in the funds in the Liberty Family of Funds over the next 13 months, the
sales charge may be reduced by signing a letter of intent to that effect. This
letter of intent includes a provision for a sales charge adjustment depending on
the amount actually purchased within the 13-month period, and a provision for
the custodian to hold 4.50% of the total amount intended to be purchased in
escrow (in Shares) until such purchase is completed.

The 4.50% held in escrow will be applied to the shareholder's account at the end
of the 13-month period unless the amount specified in the letter of intent is
not purchased. In this event, an appropriate number of escrowed Shares may be
redeemed in order to realize the difference in the sales charge.

This letter of intent will not obligate the shareholder to purchase Shares, but
if he does, each purchase during the period will be at the sales charge
applicable to the total amount intended to be purchased. This letter may be
dated as of a prior date to include any purchases made within the past 90 days
toward the dollar fulfillment of the letter of intent. Prior trade prices will
not be adjusted.

Reinvestment Privilege. If Shares in the Fund have been redeemed, the
shareholder has a one-time right, within 120 days, to reinvest the redemption
proceeds at the next-determined net asset value without any sales charge.
Federated Securities Corp. must be notified by the shareholder in writing or by
his financial institution of the reinvestment in order to eliminate a sales
charge. If the shareholder redeems his Shares in the Fund, there may be tax
consequences.

Purchases with Proceeds from Redemptions of Unaffiliated Mutual Fund Shares.
Investors may purchase Shares at net asset value, without a sales charge, with
the proceeds from the redemption of shares of a mutual fund which was sold with
a sales charge or commission and was not distributed by Federated Securities
Corp. (This does not include shares which were or would be subject to a
contingent deferred sales charge upon redemption.) The purchase must be made
within 60 days of the redemption, and Federated Securities Corp. must be
notified by the investor in writing or by his financial institution at the time
the purchase is made.

Concurrent Purchases. For purposes of qualifying for a sales charge reduction,
a shareholder has the privilege of combining concurrent purchases of two or more
funds in the Liberty Family of Funds, the purchase price of which includes a
sales charge. For example, if a shareholder concurrently invested $30,000 in one
of the other Liberty Funds with a sales charge, and $70,000 in this Fund, the
sales charge would be reduced.

To receive this sales charge reduction, Federated Securities Corp. must be
notified by the shareholder in writing or by his financial institution at the
time the concurrent purchases are made. The Fund will reduce the sales charge
after it confirms the purchases.

Systematic Investment Program

Once a Fund account has been opened, shareholders may add to their investment on
a regular basis in a minimum amount of $100. Under this program, funds may be
automatically withdrawn periodically from the shareholder's checking account and
invested in Shares at the net asset value next determined after an order is
received by the transfer agent, plus the applicable sales charge. A shareholder
may apply for participation in this program through his financial institution or
directly through the Fund.

Certificates and Confirmations

As transfer agent for the Fund, Federated Services Company maintains a Share
account for each shareholder. Share certificates are not issued unless requested
in writing to Federated Services Company.

Detailed confirmations of each purchase and redemption are sent to each
shareholder. Annual confirmations are sent to report dividends paid during the
year.

Dividends

Dividends are declared and paid annually to all shareholders invested in the
Fund on the record date. Dividends are automatically reinvested in additional
Shares on the payment date, at the ex-dividend date net asset value without a
sales charge, unless shareholders request cash payments on the new account form
or by writing to the transfer agent. All shareholders on the record date are
entitled to the dividend. If Shares are redeemed or exchanged prior to the
record date or purchased after the record date, those Shares are not entitled to
that year's dividend.

Capital Gains

Capital gains realized by the Fund, if any, will be distributed at least once
every twelve months.

Retirement Plans

Shares of the Fund can be purchased as an investment for retirement plans or for
IRA accounts. For further details, including prototype retirement plans, contact
the Fund and consult a tax adviser.

Exchange Privilege
- --------------------------------------------------------------------------------

In order to provide greater flexibility to Fund shareholders whose investment
objectives have changed, Class A shareholders may exchange all or some of their
Shares for Class A Shares in other funds in the Liberty Family of Funds.
Shareholders of Class A Shares may also exchange into certain other funds for
which affiliates of Federated Investors serve as investment adviser or principal
underwriter ("Federated Funds") which are sold with a sales charge different
from that of the Fund's or with no sales charge, and which are advised by
subsidiaries or affiliates of Federated Investors. These exchanges are made at
net asset value plus the difference between the Fund's sales charge and any
sales charge of the fund into which the Shares are to be exchanged, if higher.
Neither the Fund nor any of the funds in the Liberty Family of Funds imposes any
additional fees on exchanges. Participants in a plan under the Liberty Family
Retirement Program may exchange all or some of their Shares for Class A Shares
of other funds offered under the plan at net asset value.

Reduced Sales Charge

If a shareholder making such an exchange qualifies for a reduction of the sales
charge, Federated Securities Corp. must be notified in writing by the
shareholder or by his financial institution.

Requirements for Exchange

Shareholders using this privilege must exchange Shares having a net asset value
of at least $500. Before the exchange, the shareholder must receive a prospectus
of the fund for which the exchange is being made.

This privilege is available to shareholders resident in any state in which the
fund shares being acquired may be sold. Upon receipt of proper instructions and
required supporting documents, Shares submitted for exchange are redeemed and
the proceeds invested in shares of the other fund. The exchange privilege may be
modified or terminated at any time. Shareholders will be notified of the
modification or termination of the exchange privilege.

Further information on the exchange privilege and prospectuses for the Liberty
Family of Funds or certain Federated Funds are available by contacting the Fund.

Tax Consequences

An exercise of the exchange privilege is treated as a sale for federal income
tax purposes. Depending on the circumstances, a short-term or long-term capital
gain or loss may be realized.

Making an Exchange

Instructions for exchanges for the Liberty Family of Funds and certain Federated
Funds may be given in writing or by telephone. Written instructions may require
a signature guarantee. Shareholders of the Fund may have difficulty in making
exchanges by telephone through brokers and other financial institutions during
times of drastic economic or market changes. If a shareholder cannot contact his
broker or financial institution by telephone, it is recommended that an exchange
request be made in writing and sent by overnight mail to Federated Services
Company, P.O. Box 8604, Boston, Massachusetts 02266-8604.

Instructions for exchanges for the Liberty Family Retirement Program should be
given to the plan administrator.

Telephone Instructions. Telephone instructions made by the investor may be
carried out only if a telephone authorization form completed by the investor is
on file with the transfer agent. If the instructions are given by a broker, a
telephone authorization form completed by the broker must be on file with the
transfer agent. Shares may be exchanged between two funds by telephone only if
the two funds have identical shareholder registrations.

Any Shares held in certificate form cannot be exchanged by telephone but must be
forwarded to Federated Services Company, P.O. Box 8604, Boston, Massachusetts
02266-8604, and deposited to the shareholder's account before being exchanged.
Telephone exchange instructions may be recorded and will be binding upon the
shareholder. Such instructions will be processed as of 4:00 P.M. (Eastern time)
and must be received by the transfer agent before that time for Shares to be
exchanged the same day. Shareholders exchanging into a fund will not receive any
dividend that is payable to shareholders of record on that date. This privilege
may be modified or terminated at any time.

If reasonable procedures are not followed by the Fund, it may be liable for
losses due to unauthorized or fraudulent telephone instructions.

Redeeming Class A Shares
- --------------------------------------------------------------------------------

The Fund redeems Shares at their net asset value next determined after the
transfer agent receives the redemption request. Redemptions will be made on days
on which the Fund computes its net asset value. Redemptions can be made through
a financial institution or directly from the Fund. Redemption requests must be
received in proper form. Redemptions of Shares held through the Liberty Family
Retirement Program will be governed by the requirements of the respective plans.

Through a Financial Institution

A shareholder may redeem Shares by calling his financial institution (such as a
bank or an investment dealer) to request the redemption. Shares will be redeemed
at the net asset value next determined after the Fund receives the redemption
request from the financial institution. Redemption requests through a registered
broker/dealer must be received by the broker before 4:00 P.M. (Eastern time) and
must be transmitted by the broker to the Fund before 5:00 P.M. (Eastern time) in
order for Shares to be redeemed at that day's net asset value. Redemption
requests through other financial institutions must be received by the financial
institution and transmitted to the Fund before 4:00 P.M. (Eastern time) in order
for Shares to be redeemed at that day's net asset value. The financial
institution is responsible for promptly submitting redemption requests and
providing proper written redemption instructions to the Fund. The financial
institution may charge customary fees and commissions for this service.

Directly from the Fund

By Telephone. Shareholders who have not purchased through a financial
institution may redeem their Shares by telephoning the Fund. The proceeds will
be mailed to the shareholder's address of record or wire transferred to the
shareholder's account at a domestic commercial bank that is a member of the
Federal Reserve System, normally within one business day, but in no event longer
than seven days after the request. The minimum amount for a wire transfer is
$1,000. If at any time the Fund shall determine it necessary to terminate or
modify this method of redemption, shareholders would be promptly notified.

An authorization form permitting the Fund to accept telephone requests must
first be completed. Authorization forms and information on this service are
available from Federated Securities Corp. Telephone redemption instructions may
be recorded.

In the event of drastic economic or market changes, a shareholder may experience
difficulty in redeeming by telephone. If such a case should occur, another
method of redemption, such as redeeming by mail, should be considered.

If reasonable procedures are not followed by the Fund, it may be liable for
losses due to unauthorized or fraudulent telephone instructions.

By Mail. Any shareholder may redeem Shares by sending a written request to
Federated Services Company, P.O. Box 8604, Boston, Massachusetts 02266-8604. The
written request should include the shareholder's name, the Fund name and class
of Shares' name, the account number, and the Share or dollar amount requested
and should be signed exactly as the Shares are registered.

If Share certificates have been issued, they must be properly endorsed and
should be sent by registered or certified mail with the written request.
Shareholders should call the Fund for assistance in redeeming by mail.

Signatures. Shareholders requesting a redemption of $50,000 or more, a
redemption of any amount to be sent to an address other than that on record with
the Fund, or a redemption payable other than to the shareholder of record must
have signatures on written redemption requests guaranteed by:

a trust company or commercial bank whose deposits are insured by the Bank
Insurance Fund ("BIF"), which is administered by the Federal Deposit
Insurance Corporation ("FDIC");

a member of the New York, American, Boston, Midwest, or Pacific Stock
Exchange;

a savings bank or savings and loan association whose deposits are insured
by the Savings Association Insurance Fund ("SAIF"), which is administered
by the FDIC; or

any other "eligible guarantor institution," as defined in the Securities
Exchange Act of 1934.

The Fund does not accept signatures guaranteed by a notary public.

The Fund and its transfer agent have adopted standards for accepting signature
guarantees from the above institutions. The Fund may elect in the future to
limit eligible signature guarantors to institutions that are members of a
signature guarantee program. The Fund and its transfer agent reserve the right
to amend these standards at any time without notice.

Normally, a check for the proceeds is mailed within one business day, but in no
event more than seven days, after receipt of a proper written redemption
request.

Systematic Withdrawal Program

Shareholders who desire to receive payments of a predetermined amount not less
than $100 may take advantage of the Systematic Withdrawal Program. Under this
program, Shares are redeemed to provide for periodic withdrawal payments in an
amount directed by the shareholder. Depending upon the amount of the withdrawal
payments, the amount of dividends paid and capital gains distributions with
respect to Shares, and the fluctuation of the net asset value of Shares redeemed
under this program, redemptions may reduce, and eventually deplete, the
shareholder's investment in Shares. For this reason, payments under this program
should not be considered as yield or income on the shareholder's investment in
Shares. To be eligible to participate in this program, a shareholder must have
an account value of at least $10,000. A shareholder may apply for participation
in this program through his financial institution. Due to the fact that Shares
are sold with a sales charge, it is not advisable for shareholders to be
purchasing Shares while participating in this program.

Accounts with Low Balances

Due to the high cost of maintaining accounts with low balances, the Fund may
redeem Shares in any account, except retirement plans, and pay the proceeds to
the shareholder if the account balance falls below the required minimum value of
$500. This requirement does not apply, however, if the balance falls below $500
because of changes in the Fund's net asset value.

Before Shares are redeemed to close an account, the shareholder is notified in
writing and allowed 30 days to purchase additional Shares to meet the minimum
requirement.

Redemption in Kind

The Fund is obligated to redeem Shares solely in cash up to $250,000 or 1% of
the Fund's net asset value, whichever is less, for any one shareholder within a
90-day period.

Any redemption beyond this amount will also be in cash unless the Directors
determine that further cash payments will have a materially adverse effect on
remaining shareholders. In such a case, the Fund will pay all or a portion of
the remainder of the redemption in portfolio instruments, valued in the same way
as the Fund determines net asset value. The portfolio instruments will be
selected in a manner that the Directors deem fair and equitable.

Redemption in kind is not as liquid as a cash redemption. If redemption is made
in kind, shareholders receiving their securities and selling them could receive
less than the redemption value of their securities and could incur certain
transaction costs.

International Series, Inc. Information
- --------------------------------------------------------------------------------

Management of the Corporation

Board of Directors. The Corporation is managed by a Board of Directors. The
Directors are responsible for managing the Corporation's business affairs and
for exercising all the Corporation's powers except those reserved for the
shareholders. An Executive Committee of the Board of Directors handles the
Board's responsibilities between meetings of the Board.

Officers and Directors. Officers and Directors are listed with their addresses,
principal occupations and present positions, including any affiliation with
Federated Investors, Federated Management, Federated Securities Corp., Federated
Administrative Services, Federated Services Company, and the Funds described in
the Combined Statement of Additional Information.

<TABLE>
<CAPTION>
Position with Principal Occupation
Name and Address the Corporation During Past Five Years
<S> <C> <C>

John F. Donahue\* Chairman and Chairman and Trustee, Federated Investors; Chairman and
Federated Investors Tower Director Trustee, Federated Advisers, Federated Management, and
Pittsburgh, PA Federated Research; Director, AEtna Life and Casualty
Company; Chief Executive Officer and Director, Trustee, or
Managing General Partner of the Funds; formerly, Director,
The Standard Fire Insurance Company. Mr. Donahue is the
father of J. Christopher Donahue, Vice-President of the
Corporation.

John T. Conroy, Jr. Director President, Investment Properties Corporation; Senior
Wood/ IPC Commercial Vice-President, John R. Wood and Associates,
Department Inc., Realtors; President, Northgate Village Develop-
John R. Wood and ment Corporation; General Partner or Trustee in
Associates, Inc., Realtors private real estate ventures in Southwest Florida;
3255 Tamiami Trail North Director, Trustee, or Managing General Partner of
Naples, FL the Funds; formerly, President, Naples Property
Management, Inc.

William J. Copeland Director Director and Member of the Executive Committee, Michael
One PNC Plaza-- Baker, Inc.; Director, Trustee, or Managing General Partner
23rd Floor of the Funds; formerly, Vice Chairman and Director, PNC
Pittsburgh, PA Bank, N.A., and PNC Bank Corp. and Director, Ryan Homes,
Inc.

James E. Dowd Director Attorney-at-law; Director, The Emerging Germany Fund, Inc.;
571 Hayward Mill Road Director, Trustee, or Managing General Partner of the Funds;
Concord, MA formerly, Director, Blue Cross of Massachusetts, Inc.

Lawrence D. Ellis, M.D. Director Hematologist, Oncologist, and Internist, Presbyterian and
3471 Fifth Avenue Montefiore Hospitals; Clinical Professor of Medicine and
Suite 1111 Trustee, University of Pittsburgh; Director, Trustee, or
Pittsburgh, PA Managing General Partner of the Funds.

Edward L. Flaherty, Jr.\ Director Attorney-at-law; Partner, Meyer and Flaherty; Director,
5916 Penn Mall Eat'N Park Restaurants, Inc., and Statewide Settlement
Pittsburgh, PA Agency, Inc.; Director, Trustee, or Managing General Partner
of the Funds; formerly, Counsel, Horizon Financial, F.A.,
Western Region.

Peter E. Madden Director Consultant; State Representative, Commonwealth of
225 Franklin Street Massachusetts; Director, Trustee, or Managing General
Boston, MA Partner of the Funds; formerly, President, State Street Bank
and Trust Company and State Street Boston Corporation and
Trustee, Lahey Clinic Foundation, Inc.

Gregor F. Meyer Director Attorney-at-law; Partner, Meyer and Flaherty; Chairman,
5916 Penn Mall Meritcare, Inc.; Director, Eat'N Park Restaurants, Inc.;
Pittsburgh, PA Director, Trustee, or Managing General Partner of the Funds;
formerly, Vice Chairman, Horizon Financial, F.A.

Wesley W. Posvar Director Professor, Foreign Policy and Management Consultant;
1202 Cathedral of Trustee, Carnegie Endowment for International Peace, RAND
Learning Corporation, Online Computer Library Center, Inc., and U.S.
University of Pittsburgh Space Foundation; Chairman, Czecho Slovak Management Center;
Pittsburgh, PA Director, Trustee, or Managing General Partner of the Funds;
President Emeritus, University of Pittsburgh; formerly,
Chairman, National Advisory Council for Environmental Policy
and Technology.

Marjorie P. Smuts Director Public relations/marketing consultant; Director, Trustee, or
4905 Bayard Street Managing General Partner of the Funds.
Pittsburgh, PA

Glen R. Johnson President Trustee, Federated Investors; President and/or Trustee of
Federated Investors Tower some of the Funds; staff member, Federated Securities Corp.
Pittsburgh, PA and Federated Administrative Services.

J. Christopher Donahue Vice President President and Trustee, Federated Investors; Trustee,
Federated Investors Tower Federated Advisers, Federated Management and Federated
Pittsburgh, PA Research; Trustee, Federated Administrative Services;
Trustee, Federated Services Company; President or Vice
President of the Funds; Director, Trustee, or Managing
General Partner of some of the Funds. Mr. Donahue is the son
of John F. Donahue, Chairman and Director of the
Corporation.

Richard B. Fisher Vice President Executive Vice President and Trustee, Federated Investors;
Federated Investors Tower President and Director, Federated Securities Corp.;
Pittsburgh, PA President or Vice President of the Funds; Director or
Trustee of some of the Funds.

Edward C. Gonzales Vice President Vice President, Treasurer, and Trustee, Federated In-
Federated Investors Tower and Treasurer vestors; Vice President and Treasurer, Federated Advisers,
Pittsburgh, PA Federated Management, and Federated Research; Executive Vice
President, Treasurer, and Director, Federated Securities
Corp.; Trustee, Federated Services Company; Chairman,
Treasurer, and Trustee, Federated Administrative Services;
Trustee or Director of some of the Funds; Vice President and
Treasurer of the Fund.

John W. McGonigle Vice President Vice President, Secretary, General Counsel, and Trustee,
Federated Investors Tower and Secretary Federated Investors; Vice President, Secretary, and Trustee,
Pittsburgh, PA Federated Advisers, Federated Management, and Federated
Research; Trustee, Federated Services Company; Executive
Vice President, Secretary, and Trustee, Federated
Administrative Services; Director and Executive Vice
President, Federated Securities Corp.; Vice President and
Secretary of the Funds.

John A. Staley, IV Vice President Vice President and Trustee, Federated Investors; Executive
Federated Investors Tower Vice President, Federated Securities Corp.; President and
Pittsburgh, PA Trustee, Federated Advisers, Federated Management, and
Federated Research; Vice President of the Funds; Director,
Trustee, or Managing General Partner of the Funds; formerly,
Vice President, The Standard Fire Insurance Company and
President of its Federated Research Division.
</TABLE>

*This Director is deemed to be an "interested person" of the Corporation as
defined in the Investment Company Act of 1940.

\Members of the Corporation's Executive Committee. The Executive Committee of
the Board of Directors handles the responsibilities of the Board of Directors
between meetings of the Board.

Investment Adviser. Investment decisions for the Fund are made by Federated
Management, the Fund's investment adviser (the "Adviser"), subject to direction
by the Board of Directors. The Adviser continually conducts investment research
and supervision for the Fund and is responsible for the purchase or sale of
portfolio instruments, for which it receives an annual fee from the Fund.

Advisory Fees. The Adviser receives an annual investment advisory fee
equal to 1.00% of the Fund's average daily net assets. The fee paid by the
Fund, while higher than the advisory fee paid by other mutual funds in
general, is comparable to fees paid by many mutual funds with similar
objectives and policies. The Adviser may voluntarily waive a portion of
its fee. The Adviser can terminate this voluntary waiver at any time at
its sole discretion. The Adviser has also undertaken to reimburse the
Fund for operating expenses in excess of limitations established by
certain states.

Adviser's Background. Federated Management, a Delaware business trust
organized on April 11, 1989, is a registered investment adviser under the
Investment Advisers Act of 1940. It is a subsidiary of Federated Investors.
All of the Class A (voting) shares of Federated Investors are owned by a
trust, the trustees of which are John F. Donahue, Chairman and Trustee of
Federated Investors, Mr. Donahue's wife, and Mr. Donahue's son, J.
Christopher Donahue, who is President and Trustee of Federated Investors.

Randall S. Bauer is the Fund's portfolio manager. He has contributed toward
the management of the Fund's portfolio of investments since December 1,
1990, when Federated Management became the Fund's sub-adviser, and has
continued in that capacity through March 15, 1994, when, pursuant to
shareholder approval, Federated Management became the Fund's investment
adviser. Mr. Bauer joined Federated Investors in 1989 as an Assistant Vice
President of Federated Management. Mr. Bauer was an Assistant Vice
President of the International Banking Division at Pittsburgh National Bank
from 1982 until 1989. Mr. Bauer is a Chartered Financial Analyst and
received his M.B.A. in Finance from Pennsylvania State University.

Federated Management and other subsidiaries of Federated Investors serve as
investment advisers to a number of investment companies and private
accounts. Certain other subsidiaries also provide administrative services
to a number of investment companies. Total assets under management or
administration by these and other subsidiaries of Federated Investors is
approximately $70 billion. Federated Investors, which was founded in 1956
as Federated Investors, Inc., develops and manages mutual funds primarily
for the financial industry. Federated Investors' track record of
competitive performance and its disciplined, risk averse investment
philosophy serve approximately 3,500 client institutions nationwide.
Through these same client institutions, individual shareholders also have
access to this same level of investment expertise.

Sub-Adviser. Under the terms of a Sub-Advisory Agreement between Federated
Management and Fiduciary International, Inc., Fiduciary International, Inc. will
furnish to Federated Management such investment advice, statistical and other
factual information as may, from time to time, be reasonably requested by
Federated Management.

Sub-Advisory Fees. For its services under the Sub-Advisory Agreement,
Fiduciary International, Inc. ("Fiduciary") receives an annual fee from
Federated Management equal to .50 of 1% of average daily net assets of the
Fund. The sub-advisory fee is accrued and paid daily. In the event that the
fee due from the Fund to Federated Management is reduced in order to meet
expense limitations imposed on the Fund by state securities laws or
regulations, the sub-advisory fee will be reduced by one-half of said
reduction in the fee due from the Fund to Federated Management.
Notwithstanding any other provision in the Sub-Advisory Agreement,
Fiduciary International, Inc. may, from time to time, and for such periods
as it deems appropriate, reduce its compensation (and, if appropriate,
assume expenses of the Fund) to the extent that the Fund's expenses exceed
such lower expense limitations as Fiduciary International, Inc. may, by
notice to the Fund, voluntarily declare to be effective.

Sub-Adviser's Background. Fiduciary International, Inc. is a New York
corporation that was organized in 1982 as Fir Tree Advisers, Inc. Fiduciary
International, Inc. is a wholly-owned subsidiary of Fiduciary Investment
Corporation, which, in turn, is a wholly-owned subsidiary of Fiduciary
Trust Company International. Fiduciary Trust Company International has more
than 30 years of experience in managing funds which invest in the
international markets.

Margaret Lindsay has been the Fund's portfolio manager since mid-1992, when
Fiduciary International, Inc. was the Fund's investment adviser. Ms.
Lindsay joined Fiduciary International, Inc. in 1991 as a Vice President.
From 1987 through 1991, Ms. Lindsay worked in international strategy,
analysis, and sales at S.G. Warburg Securities.

Fiduciary International, Inc. is a registered investment adviser under the
Investment Advisers Act of 1940. The Adviser and sub-adviser, their
officers, affiliates, and employees may act as investment managers for
parties other than the Fund, including other investment companies.

Distribution of Class A Shares

Federated Securities Corp. is the principal distributor for Shares of the Fund.
Federated Securities Corp. is located at Federated Investors Tower, Pittsburgh,
Pennsylvania 15222-3779. It is a Pennsylvania corporation organized on November
14, 1969, and is the principal distributor for a number of investment companies.
Federated Securities Corp. is a subsidiary of Federated Investors.

Other Payments to Financial Institutions. Federated Securities Corp. will pay
dealers an amount equal to 0.50 of 1% of the net asset value of Shares purchased
by their clients or customers under the Liberty Family Retirement Program. (Such
payments are subject to a reclaim from the dealer should the assets leave the
Program within 12 months after purchase.) These payments will be made directly
by the distributor and will not be made from the assets of the Fund or by the
assessment of a sales charge on Shares.

Administration of the Fund

Administrative Services. Federated Administrative Services, which is a
subsidiary of Federated Investors, provides the Fund with the administrative
personnel and services necessary to operate the Fund. Such services include
shareholder servicing and certain legal and accounting services. Federated
Administrative Services provides these at an annual rate as specified below:

<TABLE>
<CAPTION>
Average Aggregate Daily
Administrative Fee Net Assets of the Corporation
<C> <S>
0.150% on the first $250 million
0.125% on the next $250 million
0.100% on the next $250 million
0.075% on average aggregate daily net assets
in excess of $750 million
</TABLE>

The administrative fee received during any fiscal year shall be at least $50,000
per Fund. Federated Administrative Services may voluntarily waive a portion of
its fee.

Shareholder Services Plan

The Fund has adopted a Shareholder Services Plan (the "Services Plan") with
respect to Class A Shares and Class C Shares. Under the Services Plan, financial
institutions will enter into shareholder service agreements with the Fund to
provide administrative support services to their customers who, from time to
time, may be owners of record or beneficial owners of Class A Shares. In return
for providing these support services, a financial institution may receive
payments from the Fund at a rate not exceeding .25% of the average daily net
assets of the Class A Shares beneficially owned by the financial institution's
customers for whom it is holder of record or with whom it has a servicing
relationship. These administrative services may include, but are not limited to,
the following functions: providing office space, equipment, telephone
facilities, and various personnel including clerical, supervisory, and computer,
as necessary or beneficial to establish and maintain shareholder accounts and
records; processing purchase and redemption transactions and automatic
investments of client account cash balances; answering routine client inquiries
regarding the Fund; assisting clients in changing dividend options, account
designations, and addresses; and providing such other services as the Fund
reasonably requests.

In addition to receiving payments under the Services Plan, financial
institutions may be compensated by the distributor, or affiliates thereof, for
providing administrative support services to holders of Shares. These payments
will be made directly by the distributor and will not be made from the assets of
the Fund.

The Glass-Steagall Act prohibits a depository institution (such as a commercial
bank or a savings and loan association) from being an underwriter or distributor
of most securities. In the event the Glass-Steagall Act is deemed to prohibit
depository institutions from acting in the administrative capacities described
above or should Congress relax current restrictions on depository institutions,
the Board of Directors will consider appropriate changes in the services.

State securities laws governing the ability of depository institutions to act as
underwriters or distributors of securities may differ from interpretations given
to the Glass-Steagall Act and, therefore, banks and financial institutions may
be required to register as dealers pursuant to state laws.

Custodian. State Street Bank and Trust Company, P.O. Box 8604, Boston,
Massachusetts 02266-8604, is custodian for the securities and cash of the Fund.
Foreign instruments purchased by the Fund are held by foreign banks
participating in a network coordinated by State Street Bank.

Transfer Agent and Dividend Disbursing Agent. Federated Services Company,
Pittsburgh, Pennsylvania, with offices in Boston, Massachusetts, is transfer
agent for the Shares of the Fund and dividend disbursing agent for the Fund.

Legal Counsel. Legal counsel is provided by Houston, Houston & Donnelly, 2510
Centre City Tower, Pittsburgh, Pennsylvania 15222 and Dickstein, Shapiro &
Morin, 2101 L Street, N.W., Washington, D.C. 20037.

Independent Public Accountants. The independent public accountants for the Fund
are Arthur Andersen & Co., 2100 One PPG Place, Pittsburgh, Pennsylvania 15222.

Brokerage Transactions

When selecting brokers and dealers to handle the purchase and sale of portfolio
instruments, the Adviser and sub-adviser look for prompt execution of the order
at a favorable price. In working with dealers, the Adviser and sub-adviser will
generally utilize those who are recognized dealers in specific portfolio
instruments, except when a better price and execution of the order can be
obtained elsewhere. In selecting among firms believed to meet this criteria, the
Adviser and sub-adviser may give consideration to those firms which have sold or
are selling Shares of the Fund and other funds distributed by Federated
Securities Corp. The Adviser and sub-adviser make decisions on portfolio
transactions and select brokers and dealers subject to review by the Board of
Directors.

Expenses of the Fund and Class A Shares

Holders of each class of shares pay their allocable portion of Fund and
Corporation expenses.

The Fund expenses for which holders of Shares pay their allocable portion
include, but are not limited to: registering the Fund and Shares of the Fund;
investment advisory services; taxes and commissions; custodian fees; insurance
premiums; auditors' fees; and such non-recurring and extraordinary items as may
arise from time to time.

At present, the only expenses which are allocated specifically to Shares as a
class are expenses under the Fund's Shareholder Services Plan. However, the
Directors reserve the right to allocate certain other expenses to holders of
Shares as they deem appropriate ("Class Expenses"). In any case, Class Expenses
would be limited to: transfer agent fees as identified by the transfer agent as
attributable to holders of Shares; fees under the Fund's Shareholder Services
Plan; printing and postage expenses related to preparing and distributing
materials such as shareholder reports, prospectuses, and proxies to current
shareholders; registration fees paid to the Securities and Exchange Commission
and to state securities commissions; expenses related to administrative
personnel and services as required to support holders of Shares; legal fees
relating solely to Shares; and Directors' fees incurred as a result of issues
relating solely to Shares.

Shareholder Information
- --------------------------------------------------------------------------------

Voting Rights

Each Share gives the shareholder one vote in Director elections and other
matters submitted to shareholders for vote. All shares of
each portfolio or class in the Corporation have equal voting rights, except
that in matters affecting only a particular Fund or
class, only shares of that particular Fund or class are entitled to vote.

As a Maryland corporation, the Corporation is not required to hold annual
shareholder meetings. Shareholder approval will be sought only for certain
changes in the Fund's operation and for the election of Directors under certain
circumstances.

Directors may be removed by a two-thirds vote of the number of Directors prior
to such removal or by a two-thirds vote of the shareholders at a special
meeting. The Directors shall call a special meeting of shareholders upon the
written request of shareholders owning at least 10% of the Corporation's
outstanding shares entitled to vote.

Tax Information
- --------------------------------------------------------------------------------

Federal Income Tax

The Fund will pay no federal income tax because it expects to meet requirements
of the Internal Revenue Code, as amended, applicable to regulated investment
companies and to receive the special tax treatment afforded to such companies.
However, the Fund may invest in the stock of certain foreign corporations which
would constitute a Passive Foreign Investment Company (PFIC). Federal income
taxes may be imposed on the Fund upon disposition of PFIC investments.

The Fund will be treated as a single, separate entity for federal income tax
purposes so that income (including capital gains) and losses realized by the
Corporation's other portfolios, if any, will not be combined for tax purposes
with those realized by the Fund.

Investment income received by the Fund from sources within foreign countries may
be subject to foreign taxes withheld at the source. The United States has
entered into tax treaties with many foreign countries that entitle the Fund to
reduced tax rates or exemptions on this income. The effective rate of foreign
tax cannot be predicted since the amount of Fund assets to be invested within
various countries is unknown. However, the Fund intends to operate so as to
qualify for treaty-reduced tax rates where applicable.

Unless otherwise exempt, shareholders are required to pay federal income tax on
any dividends and other distributions, including capital gains distributions,
received. This applies whether dividends and distributions are received in cash
or as additional Shares. Distributions representing long-term capital gains, if
any, will be taxable to shareholders as long-term capital gains no matter how
long the shareholders have held the Shares. No federal income tax is due on any
dividend earned in an IRA or qualified retirement plan until distributed.

If more than 50% of the value of the Fund's assets at the end of the tax year is
represented by stock or securities of foreign corporations, the Fund intends to
qualify for certain Internal Revenue Code stipulations that would allow
shareholders to claim a foreign tax credit or deduction on their U.S. income tax
returns. The Internal Revenue Code, as amended, may limit a shareholder's
ability to claim a foreign tax credit. Furthermore, shareholders who elect to
deduct their portion of the Fund's foreign taxes rather than take the foreign
tax credit must itemize deductions on their income tax returns.

Pennsylvania Corporate and Personal Property Taxes

In the opinion of Houston, Houston & Donnelly, counsel to the Fund:

the Fund is subject to the Pennsylvania corporate franchise tax; and

Fund shares are exempt from personal property taxes imposed by counties,
municipalities, and school districts in Pennsylvania.

Shareholders are urged to consult their own tax advisers regarding the status of
their accounts under state and local tax laws.

Performance Information
- --------------------------------------------------------------------------------

From time to time the Fund advertises the total return for Class A Shares.

Total return represents the change, over a specified period of time, in the
value of an investment in Class A Shares after reinvesting all income and
capital gain distributions. It is calculated by dividing that change by the
initial investment and is expressed as a percentage.

The performance information reflects the effect of the maximum sales load,
which, if excluded, would increase the total return.

Total return will be calculated separately for Class A Shares and Class C
Shares. Because Class C Shares are subject to a Rule 12b-1 fee, the total return
for Class A Shares for the same period will exceed that of Class C Shares.

From time to time, the Fund may advertise the performance of Class A Shares
using certain financial publications and/or compare the performance of Class A
Shares to certain indices.

Other Classes of Shares
- --------------------------------------------------------------------------------

The Fund does not presently offer Class B Shares. Class C Shares, the other
class of shares offered by the Fund, are sold primarily to customers of
financial institutions at net asset value with no initial sales charge. Class C
Shares are distributed pursuant to a Rule 12b-1 Plan adopted by the Fund,
whereby, the distributor is paid a fee of up to .75 of 1%, in addition to a
shareholder services fee of .25 of 1% of the Class C Shares' average daily net
assets. Class C Shares are subject to a minimum initial investment of $1,500,
unless the investment is in a retirement account, in which case the minimum
investment is $50.

The amount of dividends payable to Class A Shares will generally exceed that of
Class C Shares by the difference between Class Expenses borne by shares of each
respective class.

The stated advisory fee is the same for both classes of shares.

International Equity Fund
Class C Shares
Financial Highlights
- --------------------------------------------------------------------------------
(For a share outstanding throughout the period)

The following table has been audited by Arthur Andersen & Co., the Fund's
independent public accountants. Their report dated January 21, 1994, is included
in the annual report, which is incorporated by reference. This table should be
read in conjunction with the Fund's financial statements and notes thereto,
which may be obtained from the Fund.

<TABLE>
<CAPTION>
Year Ended
November 30,
1993**
<S> <C>
Net asset value, beginning of period $14.88
- -----------------------------------------------------------------------------------------------
Income from investment operations
- -----------------------------------------------------------------------------------------------
Net investment income
- ----------------------------------------------------------------------------------------------- (0.04)
Net realized and unrealized gain (loss) on investments 1.57
- ----------------------------------------------------------------------------------------------- -----------------
Total from investment operations 1.53
- -----------------------------------------------------------------------------------------------
Less distributions
- -----------------------------------------------------------------------------------------------
Dividends to shareholders from net investment income --
- -----------------------------------------------------------------------------------------------
Distributions for shareholders from net realized gain on investment transactions --
- ----------------------------------------------------------------------------------------------- -----------------
Total distributions --
- ----------------------------------------------------------------------------------------------- -----------------
Net asset value, end of period $16.41
- ----------------------------------------------------------------------------------------------- -----------------
Total return* 10.28%
- -----------------------------------------------------------------------------------------------
Ratios to average net assets
- -----------------------------------------------------------------------------------------------
Expenses 2.57%(b)
- -----------------------------------------------------------------------------------------------
Net investment income (1.10%)(b)
- -----------------------------------------------------------------------------------------------
Expense waiver/reimbursement(a) .01%(b)
- -----------------------------------------------------------------------------------------------
Supplemental Data
- -----------------------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $2,852
- -----------------------------------------------------------------------------------------------
Portfolio turnover rate*** 74%
- -----------------------------------------------------------------------------------------------
</TABLE>

* Based on net asset value, which does not reflect the sales load or
redemption fee, if applicable.

** Reflects operations for the period from March 31, 1993 (date of initial
public offering) to November 30, 1993.

*** Represents portfolio turnover rate for the entire fund.

(a) Increase/decrease in above expense/income ratios due to waivers or
reimbursements of expenses (Note 4).

(b) Computed on an annualized basis.

Financial Statements
- --------------------------------------------------------------------------------

The financial statements for the fiscal year ended November 30, 1993, are
incorporated herein by reference to the Annual Report of the Fund dated November
30, 1993, which was filed with the Securities and Exchange Commission on
February 2, 1994.

Addresses
- --------------------------------------------------------------------------------

<TABLE>
<S> <C> <C>
International Equity Fund Federated Investors Tower
Class A Shares Pittsburgh, Pennsylvania 15222-3779
- -------------------------------------------------------------------------------------------------------------------

Distributor
Federated Securities Corp. Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- -------------------------------------------------------------------------------------------------------------------

Investment Adviser
Federated Management Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- -------------------------------------------------------------------------------------------------------------------

Sub-Adviser
Fiduciary International, Inc. Two World Trade Center
New York, New York 10048
- -------------------------------------------------------------------------------------------------------------------

Custodian
State Street Bank and P.O. Box 8604
Trust Company Boston, Massachusetts 02266-8604
- -------------------------------------------------------------------------------------------------------------------

Transfer Agent and Dividend Disbursing Agent
Federated Services Company Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- -------------------------------------------------------------------------------------------------------------------

Legal Counsel
Houston, Houston & Donnelly 2510 Centre City Tower
Pittsburgh, Pennsylvania 15222
- -------------------------------------------------------------------------------------------------------------------

Legal Counsel
Dickstein, Shapiro & Morin 2101 L Street, N.W.
Washington, D.C. 20037
- -------------------------------------------------------------------------------------------------------------------

Independent Public Accountants
Arthur Andersen & Co. 2100 One PPG Place
Pittsburgh, Pennsylvania 15222
- -------------------------------------------------------------------------------------------------------------------
</TABLE>

International Equity Fund
Class A Shares
Prospectus

A Diversified Portfolio
of International Series, Inc.
(formerly, FT Series, Inc.),
An Open-End, Management
Investment Company

March 29, 1994
Established 1984

[LOGO] Federated Securities Corp.
--------------------------
Distributor

A subsidiary of Federated Investors

Federated Investors Tower
Pittsburgh, PA 15222-3779

1010302A-A (3/94)

International Equity Fund
A Portfolio of International Series, Inc.
(formerly, FT Series, Inc.)
Class C Shares
Prospectus

The Class C Shares of International Equity Fund (the "Fund") offered by this
prospectus represent interests in the Fund, which is a diversified investment
portfolio in International Series, Inc. (formerly, FT Series, Inc.) (the
"Corporation"), an open-end, management investment company (a mutual fund).

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 by the
Federal Deposit Insurance Corporation, the Federal Reserve Board, or any other
government agency. Investment in these shares involves investment risks
including the possible loss of principal.

This prospectus contains the information you should read and know before you
invest in Class C Shares of the Fund. Keep this prospectus for future reference.

The Fund has also filed a Combined Statement of Additional Information for Class
C Shares and Class A Shares dated March 29, 1994, with the Securities and
Exchange Commission. The information contained in the Combined Statement of
Additional Information is incorporated by reference into this prospectus. You
may request a copy of the Combined Statement of Additional Information free of
charge by calling 1-800-235-4669. To obtain other information or to make
inquiries about the Fund, contact the Fund at the address listed in the back of
this prospectus.

Prospectus dated March 29, 1994

Table of Contents
- --------------------------------------------------------------------------------

Summary of Fund Expenses 1
- ------------------------------------------------------

Financial Highlights--Class C Shares 2
- ------------------------------------------------------

General Information 3
- ------------------------------------------------------

Liberty Family of Funds 3
- ------------------------------------------------------

Liberty Family Retirement Program 4
- ------------------------------------------------------

Investment Information 5
- ------------------------------------------------------

Investment Objective 5
Investment Policies 5
Acceptable Investments 5
Equity and Fixed Income Securities 5
Forward Commitments 6
Money Market Instruments 6
Repurchase Agreements 6
Options and Financial Futures Contracts 6
When-Issued and Delayed Delivery Transactions 6
Foreign Currency Transactions 6
Forward Foreign Currency Exchange Contracts 7
Put and Call Options with Respect to
Equity Securities 7
Financial Futures and Options on Financial
Futures 8
Portfolio Turnover 9
Risk Considerations 9
Exchange Rates 9
Foreign Companies 9
U.S. Government Policies 10
Short Sales 10
Risks Associated with Financial Futures
Contracts and Options on Financial
Futures Contracts 10
Investment Limitations 10

Net Asset Value 11
- ------------------------------------------------------

Investing in Class C Shares 12
- ------------------------------------------------------

Share Purchases 12
Through a Financial Institution 12
Directly from the Distributor 12
By Wire 12
Minimum Investment Required 12
What Shares Cost 13
Systematic Investment Program 13
Certificates and Confirmations 13
Dividends 13
Capital Gains 13
Retirement Plans 13

Exchange Privilege 14
- ------------------------------------------------------

Requirements for Exchange 14
Tax Consequences 14
Making an Exchange 14
Telephone Instructions 14

Redeeming Class C Shares 15
- ------------------------------------------------------

Through a Financial Institution 15
Directly from the Fund 15
By Telephone 15
By Mail 16
Signatures 16
Contingent Deferred Sales Charge 16

Systematic Withdrawal Program 17

Accounts with Low Balances 17
Redemption in Kind 18

International Series, Inc. Information 18
- ------------------------------------------------------

Management of the Corporation 18
Board of Directors 18
Officers and Directors 18
Investment Adviser 21
Advisory Fees 21
Adviser's Background 22
Sub-Adviser 22
Sub-Advisory Fees 22
Sub-Adviser's Background 23
Distribution of Class C Shares 23
Distribution Plan 23
Other Payments to Financial Institutions 24
Administration of the Fund 24
Administrative Services 24
Shareholder Services Plan 24
Custodian 25
Transfer Agent and Dividend Disbursing Agent 25
Legal Counsel 25
Independent Public Accountants 25
Brokerage Transactions 25
Expenses of the Fund and Class C Shares 25

Shareholder Information 26
- ------------------------------------------------------

Voting Rights 26

Tax Information 26
- ------------------------------------------------------

Federal Income Tax 26
Pennsylvania Corporate and
Personal Property Taxes 27

Performance Information 27
- ------------------------------------------------------

Other Classes of Shares 28
- ------------------------------------------------------

Financial Highlights--Class A Shares 29
- ------------------------------------------------------

Financial Statements 30
- ------------------------------------------------------

Addresses Inside Back Cover
- ------------------------------------------------------

Summary of Fund Expenses--Class C Shares
- --------------------------------------------------------------------------------

<TABLE>
<S> <C> <C>
Shareholder Transaction Expenses
Maximum Sales Load Imposed on Purchases (as a percentage of offering price)..................... None
Maximum Sales Load Imposed on Reinvested Dividends
(as a percentage of offering price)........................................................... None
Contingent Deferred Sales Charge (as a percentage of original
purchase price or redemption proceeds as applicable) (1)...................................... 1.00%
Redemption Fee (as a percentage of amount redeemed, if applicable).............................. None
Exchange Fee.................................................................................... None
Annual Class C Shares Operating Expenses
(As a percentage of average net assets)
Management Fee (after waiver) (2)............................................................... 0.99%
12b-1 Fee....................................................................................... 0.75%
Total Other Expenses............................................................................ 0.83%
Shareholder Servicing Fee....................................................................... 0.25%
Total Class C Shares Operating Expenses (3)..................................................... 2.57%
</TABLE>

(1) The contingent deferred sales charge assessed is 1.00% of the lesser of the
original purchase price or the net asset value of shares redeemed within one
year of their purchase date. For a more complete description, see "Redeeming
Class C Shares."

(2) The management fee has been reduced to reflect the voluntary waiver of a
portion of the management fee. The maximum management fee is 1.00%.

(3) The Total Class C Shares Operating Expenses would have been 2.58% absent the
voluntary waiver of a portion of the management fee.

The purpose of this table is to assist an investor in understanding the
various costs and expenses that a holder of Class C Shares of the fund will
bear, either directly or indirectly. For more complete descriptions of the
various costs and expenses, see "Investing in Class C Shares" and "International
Series, Inc., Information." Wire-transferred redemptions of less than $5,000 may
be subject to additional fees.

Long term shareholders may pay more than the economic equivalent of the
maximum front end sales charges permitted under the rules of the National
Association of Securities Dealers, Inc.

<TABLE>
<CAPTION>
EXAMPLE 1 year 3 years
<S> <C> <C>
You would pay the following expenses on a $1,000 investment assuming
(1) 5% annual return and (2) redemption at the end of each time period........................ $36 $80
You would pay the following expenses on the same investment, assuming
no redemption................................................................................. $26 $80
</TABLE>

The above example should not be considered a representation of past or
future expenses. Actual expenses may be greater or less than those shown.

The information set forth in the foregoing table and examples relates only
to Class C Shares of the Fund. The Fund also offers another class of shares
called Class A Shares. Class A Shares and Class C Shares are subject to certain
of the same expenses; however, Class A Shares are subject to a maximum sales
load of 4.50% but are not subject to a 12b-1 fee or a contingent deferred sales
charge. See "Other Classes of Shares."

International Equity Fund
Class C Shares
Financial Highlights
- --------------------------------------------------------------------------------
(For a share outstanding throughout the period)

<TABLE>
<CAPTION>
Year Ended
November 30,
1993**
<S> <C>
Net asset value, beginning of period $14.88
- -----------------------------------------------------------------------------------------------
Income from investment operations
- -----------------------------------------------------------------------------------------------
Net investment income (0.04)
- -----------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments 1.57
- ----------------------------------------------------------------------------------------------- -----------------
Total from investment operations 1.53
- -----------------------------------------------------------------------------------------------
Less distributions
- -----------------------------------------------------------------------------------------------
Dividends to shareholders from net investment income --
- -----------------------------------------------------------------------------------------------
Distributions for shareholders from net realized gain on investment transactions --
- ----------------------------------------------------------------------------------------------- -----------------
Total distributions --
- ----------------------------------------------------------------------------------------------- -----------------
Net asset value, end of period $16.41
- ----------------------------------------------------------------------------------------------- -----------------
Total return* 10.28%
- -----------------------------------------------------------------------------------------------
Ratios to average net assets
- -----------------------------------------------------------------------------------------------
Expenses 2.57%(b)
- -----------------------------------------------------------------------------------------------
Net investment income (1.10%)(b)
- -----------------------------------------------------------------------------------------------
Expense waiver/reimbursement(a) .01%(b)
- -----------------------------------------------------------------------------------------------
Supplemental Data
- -----------------------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $2,852
- -----------------------------------------------------------------------------------------------
Portfolio turnover rate*** 74%
- -----------------------------------------------------------------------------------------------
</TABLE>

* Based on net asset value, which does not reflect the sales load or
redemption fee, if applicable.

** Reflects operations for the period from March 31, 1993 (date of initial
public offering) to November 30, 1993.

*** Represents portfolio turnover rate for the entire fund.

(a) Increase/decrease in above expense/income ratios due to waivers or
reimbursements of expenses.

(b) Computed on an annualized basis.

General Information
- --------------------------------------------------------------------------------

The Corporation was established as FT International Trust, a Massachusetts
business trust, on March 9, 1984, and reorganized as a corporation under the
laws of the state of Maryland on February 11, 1991. At a special meeting of
shareholders held on March 15, 1994, the shareholders of the Corporation
approved an amendment to the Articles of Incorporation to change the name of the
Corporation to International Series, Inc. The Corporation's address is Liberty
Center, Federated Investors Tower, Pittsburgh, Pennsylvania 15222-3779. The
Articles of Incorporation permit the Corporation to offer separate series of
shares representing interests in separate portfolios of securities. The shares
in any one portfolio may be offered in separate classes. With respect to this
Fund, as of the date of this prospectus, the Board of Directors ("Directors")
has established two classes of shares known as Class A Shares and Class C
Shares. This prospectus relates only to Class C Shares ("Shares ") of the
Corporation's portfolio known as International Equity Fund.

Shares of the Fund are designed for investors who wish to spread their
investments beyond the United States and who are prepared to accept the
particular risks associated with these investments. It is not intended to
provide a complete investment program for an investor. Shares are sold at net
asset value and are redeemed at net asset value. However, a contingent deferred
sales charge ("CDSC") of 1.00% will be charged on assets redeemed within the
first twelve months following purchase. A minimum initial investment of $1,500
is required, unless the investment is in a retirement account, in which case the
minimum investment is $50.

The Fund's current net asset value can be found in the mutual funds section of
local newspapers under "Liberty Family Funds."

Liberty Family of Funds
- --------------------------------------------------------------------------------

This Fund is a member of a family of mutual funds, collectively known as the
Liberty Family of Funds. The other funds in the Liberty Family of Funds are:

American Leaders Fund, Inc., providing growth of capital and income
through high quality stocks;

Capital Growth Fund, providing appreciation of capital primarily through
equity securities;

Fund for U.S. Government Securities, Inc., providing current income
through long-term U.S. government securities;