INTERNATIONAL SERIES, INC.
Federated International Equity Fund
Federated International Income Fund
Supplement to Prospectuses Dated January 31, 1999
I. At a special meeting of shareholders to be held on November 30,
1999, shareholders of the above-named Funds will be asked to vote
on the changes described below. If approved by shareholders, these
changes will take effect on or after December 1, 1999.
Shareholders will be notified if any of these changes are not
approved at the special meeting or any adjournment thereof. Please
keep this supplement for your records.
Shareholders will be asked to consider the following proposals:
(1) To elect seven Directors.
(2) To make changes to the fundamental investment policies of each
Fund (except as otherwise noted):
(a) To amend Federated International Equity Fund's fundamental
investment policy regarding diversification to read as
follows (for Federated International Equity Fund only):
"With respect to securities comprising 75% of the value of
its total assets, the Fund will not purchase securities of
any one issuer (other than cash; cash items; securities
issued or guaranteed by the government of the United
States or its agencies or instrumentalities and repurchase
agreements collateralized by such U.S. government
securities; and securities of other investment companies)
if, as a result, more than 5% of the value of its total
assets would be invested in the securities of that issuer,
or the Fund would own more than 10% of the outstanding
voting securities of that issuer."
(b) To amend the Funds' fundamental investment policies
regarding borrowing money and issuing senior securities to
read as follows:
"The Fund may borrow money, directly or indirectly, and
issue senior securities to the maximum extent permitted
under the 1940 Act."
(c) To amend the Funds' fundamental investment policies
regarding investments in real estate to read as follows:
"The Fund may not purchase or sell real estate, provided
that this restriction does not prevent the Fund from
investing in issuers which invest, deal, or otherwise
engage in transactions in real estate or interests
therein, or investing in securities that are secured by
real estate or interests therein. The Fund may exercise
its rights under agreements relating to such securities,
including the right to enforce security interests and to
hold real estate acquired by reason of such enforcement
until that real estate can be liquidated in an orderly
manner."
(d) To amend the Funds' fundamental investment policies
regarding investments in commodities to read as follows:
"The Fund may not purchase or sell physical commodities,
provided that the Fund may purchase securities of
companies that deal in commodities."
(e) To amend the Funds' fundamental investment policies
regarding underwriting securities to read as follows:
"The Fund may not underwrite the securities of other
issuers, except that the Fund may engage in transactions
involving the acquisition, disposition or resale of its
portfolio securities, under circumstances where it may be
considered to be an underwriter under the Securities Act
of 1933."
(f) To amend the Funds' fundamental investment policies
regarding lending by the Funds to read as follows:
"The Fund may not make loans, provided that this
restriction does not prevent the Fund from purchasing debt
obligations, entering into repurchase agreements, lending
its assets to broker/dealers or institutional investors
and investing in loans, including assignments and
participation interests."
(g) To amend the Funds' fundamental investment policies
regarding concentration of the Funds' investments in the
securities of companies in the same industry to read as
follows:
"The Fund will not make investments that will result in
the concentration of its investments in the securities of
issuers primarily engaged in the same industry. Government
securities, municipal securities and bank instruments will
not be deemed to constitute an industry."
(h) To amend, and to make non-fundamental, the Funds'
fundamental investment policies regarding buying
securities on margin to read as follows:
"The Fund will not purchase securities on margin, provided
that the Fund may obtain short-term credits necessary for
the clearance of purchases and sales of securities, and
further provided that the Fund may make margin deposits in
connection with its use of financial options and futures,
forward and spot currency contracts, swap transactions and
other financial contracts or derivative instruments."
(i) To amend, and to make non-fundamental, the Funds'
fundamental investment policies regarding pledging assets
to read as follows:
"The Fund will not mortgage, pledge, or hypothecate any of
its assets, provided that this shall not apply to the
transfer of securities in connection with any permissible
borrowing or to collateral arrangements in connection with
permissible activities."
(3) To eliminate certain fundamental investment policies of the
Funds:
(a) To remove the Funds' fundamental investment policies
prohibiting selling securities short;
(b) To remove the Funds' fundamental investment policies
prohibiting investing in oil, gas and minerals;
(c) To remove the Funds' fundamental investment policies
prohibiting purchasing securities of Fiduciary Trust
Company International; and
(d) To remove Federated International Income Fund's
fundamental investment policy prohibiting purchasing and
selling options (for Federated International Income Fund
only).
(4) To approve an amendment to the Articles of Incorporation of
International Series, Inc. to permit the Board of Directors to
liquidate assets of a series or class without seeking
shareholder approval to the extent permitted under Maryland
law.
II. The following actions have been taken by the Board of Directors
with regard to certain non-fundamental investment policies and
limitations of the Funds:
(1) Approved the elimination of the following non-fundamental
investment limitations of the Funds:
(a) Removed the Funds' non-fundamental investment policies
regarding investing for control or management; and
(b) Removed the Fund's non-fundamental investment policy
regarding engaging in options (for Federated International
Equity Fund only).
(2) Approved revisions to the Funds' non-fundamental investment
policies regarding investments in illiquid securities to read
as follows:
"The Fund will not purchase securities for which there is no
readily available market, or enter into repurchase agreements
or purchase time deposits maturing in more than seven days, if
immediately after and as a result, the value of such
securities would exceed, in the aggregate, 15% of the Fund's
net assets."
(3) Approved the adoption of the following non-fundamental
investment policies for the Funds:
(a) Adopted a policy regarding investing in other investment
companies that states:
"The Fund may invest its assets in securities of other
investment companies, including securities of affiliated
investment companies, as an efficient means of carrying
out its investment policies and managing its uninvested
cash."
(b) Adopted a policy providing that Federated International
Equity Fund may invest its assets in convertible
securities (for Federated International Equity Fund only).
(4) Approved the elimination of the following undertakings for the
Funds:
For Federated International Equity Fund:
"The Fund has no present intent to borrow money or pledge
securities in excess of 5% of the value of its total assets
during the coming fiscal year."
For Federated International Income Fund:
"The Fund has no present intent to borrow money, invest in
reverse repurchase agreements or pledge securities in excess
of 5% of the value of its total assets or sell securities in
an amount exceeding 5% of its net assets during the current
fiscal year."
(5) Approved the adoption of the following non-fundamental
investment limitations pertaining to concentration by the
Funds:
"(a) utility companies will be divided according to their
services (for example, gas, gas transmission, electric and
telephone will be considered a separate industry); (b)
financial service companies will be classified according to
the end users of their services (for example, automobile
finance, bank finance and diversified finance will each be
considered a separate industry); and (c) asset-backed
securities will be classified according to the underlying
assets securing such securities. To conform to the current
view of the SEC staff that only domestic bank instruments may
be excluded from industry concentration limitations, as a
matter of non-fundamental policy, the Fund will not exclude
foreign bank instruments from industry concentration
limitation tests so long as the policy of the SEC remains in
effect. In addition, investments in bank instruments, and
investments in certain industrial development bonds funded by
activities in a single industry, will be deemed to constitute
investment in an industry, except when held for temporary
defensive purposes. The investment of more than 25% of the
value of the Fund's total assets in any one industry will
constitute "concentration.'"
(6) Approved the adoption of the following non-fundamental
investment limitation for each Fund when applying its
commodities restriction:
"As a matter of non-fundamental operating policy, for purposes
of the commodities policy, investments in transactions
involving futures contracts and options, forward currency
contracts, swap transactions and other financial contracts
that settle by payment of cash are not deemed to be
investments in commodities."
September 24, 1999
Federated Investors
Federated Securities Corp., Distributor
Federated Investors, Inc.
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Cusip 46031P308 Cusip 46031P605 Cusip 46031P407 Cusip 46031P100 Cusip 46031P506
Cusip 46031P209
