LIBERTY UTILITY FUND, INC.
Class A Shares
- --------------------------------------------------------------------------------
SUPPLEMENT TO PROSPECTUS DATED APRIL 30, 1994
1. On the cover page of the prospectus, please delete the first sentence of
the fifth paragraph and insert the following:
"The Fund has also filed a Combined Statement of Additional Information
for Class A Shares, Class B Shares, and Class C Shares, dated September
27, 1994, with the Securities and Exchange Commission."
2. On page 1 of the prospectus, please delete the "SUMMARY OF FUND
EXPENSES--CLASS A SHARES" and replace it with the following:
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).............................................. 5.50%
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 appli-
cable)........................................................ None
Exchange Fee.................................................. None
ANNUAL CLASS A SHARES OPERATING EXPENSES
(As a percentage of average net assets)
Management Fee (after waiver) (1)............................. 0.58%
12b-1 Fee..................................................... None
Total Other Expenses.......................................... 0.54%
Shareholder Services Fee.................................... 0.25%
Total Class A Shares Operating Expenses (2)............... 1.12%
</TABLE>
(1) The management fee has been reduced to reflect the voluntary waiver
of a portion of the management fee. The adviser can terminate this
voluntary waiver at any time at its sole discretion. The maximum
management fee is 0.75%.
(2) The total Class A Shares operating expenses would have been 1.29%
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 WILL
BEAR, EITHER DIRECTLY OR INDIRECTLY. FOR MORE COMPLETE DESCRIPTIONS OF
THE VARIOUS COSTS AND EXPENSES, SEE "INVESTING IN CLASS A SHARES" AND
"FUND 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........................... $66 $89 $113 $184
</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 two additional
classes of shares called Class B Shares and Class C Shares. Class A
Shares, Class B Shares, and Class C Shares are subject to certain of the
same expenses. However, Class B Shares are subject to a 12b-1 fee of up
to 0.75% and a maximum contingent deferred sales charge of 5.50%, but
are not subject to a sales load. Class C Shares are subject to a 12b-1
fee of 0.75% and a maximum contingent deferred sales charge of 1.00%,
but are not subject to a sales load. See "Other Classes of Shares."
3. On page 3 of the prospectus, please delete the next to last sentence of
the first paragraph under the section entitled "GENERAL INFORMATION" and
replace it with the following:
"With respect to the Fund, as of the date of this prospectus, the Board
of Directors (the "Directors") has established three classes of shares
known as Class A Shares, Class B Shares, and Class C Shares."
4. On page 8 of the prospectus, please delete the next to last sentence of
the first paragraph under the section entitled "NET ASSET VALUE" and
replace it with the following:
"The net asset value for Class A Shares may differ from that of Class B
Shares and Class C Shares due to the variance in daily net income
realized by each class."
5. Please delete the table in the section entitled "WHAT SHARES COST" on
page 9 and insert the following table in its place:
<TABLE>
<CAPTION>
SALES LOAD AS SALES LOAD AS A DEALER CONCESSION
AMOUNT OF A PERCENTAGE OF PERCENTAGE OF NET AS A PERCENTAGE OF
TRANSACTION PUBLIC OFFERING PRICE AMOUNT INVESTED PUBLIC OFFERING PRICE
----------- --------------------- ----------------- ---------------------
<S> <C> <C> <C>
Less than
$50,000 5.50% 5.82% 5.00%
$50,000 but
less than
$100,000 4.50% 4.71% 4.00%
$100,000 but
less than
$250,000 3.75% 3.90% 3.25%
$250,000 but
less than
$500,000 2.50% 2.56% 2.25%
$500,000 but
less than
$1,000,000 2.00% 2.04% 1.80%
$1,000,000 or
greater 0.00% 0.00% 0.25%*
</TABLE>
*See sub-section entitled "Dealer Concession" below.
In addition, on page 10 of the prospectus, please delete the fourth
paragraph of the same section and replace it with the following
information:
"No sales load is imposed for Shares purchased through bank trust
departments or investment advisers registered under the Investment
Advisers Act of 1940, as amended, or retirement plans where the third
party administrator has entered into certain arrangements with Federated
Securities Corp. or its affiliates. However, investors who purchase
Shares through a trust department or investment adviser may be charged
an additional service fee by that institution."
6. On page 10 of the prospectus, please delete the first three sentences of
the sub-section entitled "DEALER CONCESSION" and insert the following as
the first sentence:
"In addition to the dealer concession as noted in the table above, 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."
Under the same sub-section, please add the following information to the
first paragraph:
"On purchases of $1 million or more, the investor pays no sales load;
however, the distributor will make twelve monthly payments to the dealer
totaling 0.25% of the public offering price over the first year
following the purchase. Such payments are based on the original purchase
price of Shares outstanding at each month end."
7. Please delete the first two paragraphs of the sub-section entitled
"LETTER OF INTENT" on page 11 and insert the following:
"If a shareholder intends to purchase at least $50,000 of shares in the
Funds in the Liberty Family of Funds over the next 13 months, the sales
load may be reduced by signing a letter of intent to that effect. This
letter of intent includes a provision for a sales load adjustment
depending on the amount actually purchased within the 13-month period
and a provision for the custodian to hold 5.50% of the total amount
intended to be purchased in escrow (in shares) until such purchase is
completed.
The 5.50% 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 load."
8. Please delete the second sentence of the first paragraph in the sub-
section entitled "CONCURRENT PURCHASES" on page 11 and replace it with
the following:
"For example, if a shareholder concurrently invested $30,000 in one of
the other Liberty Funds with a sales load, and $20,000 in this Fund, the
sales load would be reduced."
9. On page 17 of the prospectus, please delete the first sentence under the
subheading entitled "SHAREHOLDER SERVICES PLANS" and insert the
following information:
"The Fund has adopted a Shareholder Services Plan (the "Services Plan")
with respect to Class A Shares."
10. On page 20 of the prospectus, please delete the fifth paragraph under
the section entitled "PERFORMANCE INFORMATION" and replace it with the
following:
"Total return and yield will be calculated separately for Class A Shares,
Class B Shares, and Class C Shares. Because Class B Shares and Class C
Shares are subject to a Rule 12b-1 fee, the yield for Class A Shares, for
the same period, may exceed that of Class B Shares and Class C Shares.
Because Class A Shares are subject to a front-end sales load, the total
return for Class B Shares and Class C Shares, for the same period, may
exceed that of Class A Shares. Depending on the dollar amount invested
and the time period for which any class of shares is held, the total
return for any particular class may exceed that of another."
11. On page 21 of the prospectus, please delete the first sentence of the
first paragraph of the section entitled "OTHER CLASSES OF SHARES" and
insert the following information as the first paragraph:
"Class B Shares are sold primarily to customers of financial
institutions, subject to a maximum contingent deferred sales charge of
5.50%. The Fund has also adopted a Rule 12b-1 plan whereby the
distributor is paid a fee of up to .75 of 1% and a Shareholder Services
fee of up to .25 of 1% of the Class B Shares' average daily net assets
with respect to Class B Shares. Investments in Class B 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."
In addition, please delete the second paragraph of the same section and
replace it with the following:
"The amount of dividends payable to Class A Shares will generally exceed
that payable to Class B Shares and Class C Shares by the difference
between Class Expenses and distribution and shareholder service expenses
borne by shares of each respective class."
September 30, 1994
[LOGO] FEDERATED SECURITIES CORP.
-----------------------------------------------------------------------
Distributor
531545101
G00671-12 (9/94)
INTERNATIONAL EQUITY FUND
Class C Shares
LIBERTY EQUITY INCOME FUND, INC.
Class C Shares, Fortress Shares
LIBERTY UTILITY FUND, INC.
Class C Shares
Supplement to Prospectuses dated March 29, 1994, May 31, 1994
and April 30, 1994, respectively.
1. Effective September 27, 1994, International Equity Fund,
Liberty Equity Income Fund, Inc., and Liberty Utility Fund,
Inc. are offered in Class B Shares.
2. On the cover page of Liberty Equity Income Fund, Inc. -
Class C Shares and Liberty Equity Income Fund, Inc. -
Fortress Shares, please delete the first sentence of the
fourth paragraph and insert the following:
"The Fund has also filed a Combined Statement of Additional
Information for Class C Shares, Class B Shares, Class A
Shares, and Fortress Shares dated September 27, 1994, with
the Securities and Exchange Commission."
3. On the cover page of Liberty Utility Fund, Inc. - Class C
Shares and International Equity Fund - Class C Shares,
please delete the first sentence of the fifth paragraph and
insert the following:
"The Fund has also filed a Combined Statement of Additional
Information for Class C Shares, Class B Shares, and Class A
Shares, dated September 27, 1994, with the Securities and
Exchange Commission."
4.For International Equity Fund - Class C Shares and Liberty
Utility Fund, Inc. - Class C Shares, please delete the last
paragraph of the "Summary of Fund Expenses" and replace it
with the following information:
"The information set forth in the foregoing table and example
relates only to Class C Shares of the Fund. The Fund also
offers Class A Shares and Class B Shares. Class A Shares,
Class B 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 5.50%, but are not subject to a
12b-1 fee or a contingent deferred sales charge. Class B
Shares are subject to a 12b-1 fee of up to 0.75% and a
maximum contingent deferred sales charge of 5.50% but are
not subject to a sales load. See "Other Classes of
Shares.""
5.For Liberty Equity Income Fund, Inc. - Class C Shares, please
delete the last paragraph of the "Summary of Fund Expenses"
and replace it with the following information:
"The information set forth in the foregoing table and example
relates only to Class C Shares of the Fund. The Fund also
offers three additional classes of shares called Class A
Shares, Class B Shares, and Fortress Shares. Class A
Shares, Class B Shares, Class C Shares, and Fortress Shares
are all subject to certain of the same expenses; however,
Class A Shares are subject to a maximum sales load of 5.50%
and may be subject to a 12b-1 fee of up to 0.50% but are
not subject to a contingent deferred sales charge. Class B
Shares are subject to a 12b-1 fee of up to 0.75% and a
contingent deferred sales charge of 5.50% but are not
subject to a sales load. Fortress Shares are subject to a
12b-1 fee of 0.25%, a contingent deferred sales charge of
1.00%, and a maximum sales load of 1.00%. See "Other
Classes of Shares.""
6.For Liberty Equity Income Fund, Inc. - Fortress Shares, please
delete the last paragraph of the "Summary of Fund Expenses"
and replace it with the following information:
"The information set forth in the foregoing table and example
relates only to Fortress Shares of the Fund. The Fund also
offers three additional classes of shares called Class A
Shares, Class B Shares, and Class C Shares. Class A
Shares, Class B Shares, Class C Shares, and Fortress Shares
are all subject to certain of the same expenses; however,
Class A Shares are subject to a maximum sales load of 5.50%
and may be subject to a 12b-1 fee of up to 0.50% but are
not subject to a contingent deferred sales charge. Class B
Shares are subject to a 12b-1 fee of up to 0.75% and a
contingent deferred sales charge of 5.50% but are not
subject to a sales load. 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.""
7. On page 3 of International Equity Fund - Class C Shares
and Liberty Utility Fund, Inc. - Class C Shares, please
delete the next to last sentence of the first paragraph
under the section entitled "General Information" and
replace it with the following:
"With respect to the Fund, as of the date of this
prospectus, the Board of Directors (the "Directors") has
established three classes of shares, known as Class A
Shares, Class B Shares, and Class C Shares."
8. On page 3 of Liberty Equity Income Fund, Inc. - Class C
Shares and Liberty Equity Income Fund, Inc. - Fortress
Shares, please delete the next to last sentence of the
first paragraph under the section entitled "General
Information" and replace it with the following:
"With respect to the Fund, as of the date of this
prospectus, the Board of Directors (the "Directors") has
established four classes of shares, known as Class A
Shares, Class B Shares, Class C Shares, and Fortress
Shares."
9. On page 8 of Liberty Utility Fund, Inc. - Class C Shares
and page 11 of International Equity Fund - Class C Shares,
please delete the next to last sentence of the first
paragraph under the section entitled "Net Asset Value" and
replace it with the following:
"The net asset value for Class A Shares may differ from
that of Class B Shares and Class C Shares due to the
variance in daily net income realized by each class."
10. On page 10 of Liberty Equity Income Fund, Inc. - Class C
Shares and Liberty Equity Income Fund, Inc. - Fortress
Shares, please delete the next to last sentence of the
first paragraph under the section entitled "Net Asset
Value" and replace it with the following:
"The net asset value for Class A Shares may differ from
that of Class B Shares, Class C Shares, and Fortress Shares
due to the variance in daily net income realized by each
class."
11. On page 16 of Liberty Utility Fund, Inc. - Class C Shares,
please delete the first sentence of the third paragraph
under the subheading entitled "Distribution and Shareholder
Services Plans" and insert the following information:
"In addition, the Fund has adopted a Shareholder Services
Plan (the "Services Plan") with respect to Class C Shares
under which it may make payments up to 0.25% of 1% of the
average daily net asset value for each respective class of
shares to obtain certain personal services for shareholders
and for the maintenance of shareholder accounts
("shareholder services")."
12. On page 24 of International Equity Fund - Class C Shares,
please delete the first sentence under the subheading
entitled "Shareholder Services Plans" and insert the
following information:
"The Fund has adopted a Shareholder Services Plan (the
"Services Plan") with respect to Class C Shares."
13. On page 19 of Liberty Utility Fund, Inc. - Class C Shares,
please delete the fifth paragraph under the section
entitled "Performance Information" and replace it with the
following:
"Total return and yield will be calculated separately for
Class A Shares, Class B Shares, and Class C Shares. Because
Class B Shares and Class C Shares are subject to a Rule 12b-
1 fee, the yield for Class A Shares, for the same period,
may exceed that of Class B Shares and Class C Shares.
Because Class A Shares are subject to a front-end sales
load, the total return for Class B Shares and Class C
Shares, for the same period, may exceed that of Class A
Shares. Depending on the dollar amount invested and the
time period for which any class of shares is held, the
total return for any particular class may exceed that of
another."
14. On page 24 of Liberty Equity Income Fund, Inc. - Class C
Shares and page 25 of Liberty Equity Income Fund, Inc. -
Fortress Shares, please delete the fifth and sixth
paragraphs under the section entitled "Performance
Information" and replace them with the following:
"Total return and yield will be calculated separately for
Class A Shares, Class B Shares, Class C Shares, and
Fortress Shares. Because Fortress Shares and Class A Shares
may be subject to lower 12b-1 fees, the yield for Fortress
Shares and Class A Shares, for the same period, may exceed
that of Class B Shares and Class C Shares. Because Class A
Shares are subject to a higher maximum sales load, the
total return for Class B Shares, Class C Shares, and
Fortress Shares, for the same period, may exceed that of
Class A Shares. Depending on the dollar amount invested
and the time period for which any class of shares is held,
the total return for any particular class may exceed that
of another.
From time to time the Fund may advertise the performance of Class A
Shares, Class B Shares, Class C Shares and Fortress Shares using
certain financial publications and/or compare the
performance of Class A Shares, Class B Shares, Class C
Shares and Fortress Shares to certain indexes."
15. On page 27 of International Equity Fund - Class C Shares,
please delete the fourth paragraph under the section
entitled "Performance Information" and replace it with the
following:
"Total return will be calculated separately for Class A
Shares, Class B Shares, and Class C Shares. Because Class
A Shares are subject to a front-end sales load, the total
return for Class B Shares and Class C Shares, for the same
period, may exceed that of Class A Shares. Depending on
the dollar amount invested and the time period for which
any class of shares is held, the total return for any
particular class may exceed that of another."
16. Please delete the first and second sentences of the first
paragraph under the section entitled "Other Classes of
Shares" on page 19 of Liberty Utility Fund, Inc. - Class C
Shares and page 28 of International Equity Fund - Class C
Shares and insert the following:
"Class A Shares offered by the Fund are sold to customers
of financial institutions subject to a front-end sales load
of up to 5.50% and certain contingent deferred sales
charges."
Under the same section, please delete the second paragraph and
insert the following:
"Class B Shares are sold primarily to customers of
financial institutions, subject to a maximum contingent
deferred sales charge of 5.50%. The Fund has also adopted a
Rule 12b-1 plan whereby the distributor is paid a fee of up
to .75 of 1% and a Shareholder Services fee of up to .25 of
1% of the Class B Shares' average daily net assets with
respect to Class B Shares. Investments in Class B 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 payable to Class B Shares and Class C
Shares by the difference between Class Expenses and
distribution and shareholder service expenses borne by
shares of each respective class."
17. Please delete the first and second sentences of the first
paragraph under the section entitled "Other Classes of
Shares" on page 24 of Liberty Equity Income Fund, Inc. -
Class C Shares and page 26 of Liberty Equity Income Fund,
Inc. - Fortress Shares and insert the following:
"Class A Shares offered by the Fund are sold to customers
of financial institutions subject to a front-end sales load
of up to 5.50% and certain contingent deferred sales
charges."
Under the same section, please add the following as the
second paragraph of Liberty Equity Income Fund, Inc. -
Class C Shares and as the fifth sentence of Liberty Equity
Income Fund, Inc. - Fortress Shares:
"Class B Shares are sold primarily to customers of
financial institutions, subject to a maximum contingent
deferred sales charge of 5.50%. The Fund has also adopted a
Rule 12b-1 plan whereby the distributor is paid a fee of up
to .75 of 1% and a Shareholder Services fee of up to .25 of
1% of the Class B Shares' average daily net assets with
respect to Class B Shares. Investments in Class B 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."
Under the same section, please delete the third paragraph
of Liberty Equity Income Fund, Inc. - Class C Shares and
second paragraph of Liberty Equity Income Fund, Inc. -
Fortress Shares and insert the following:
"The amount of dividends payable to Class A Shares will
generally exceed that of Class B Shares, Class C Shares,
and Fortress Shares by the difference between Class
Expenses and distribution and shareholder service expenses
borne by shares of each respective class."
September 30, 1994
FEDERATED SECURITIES CORP.
Distributor
A subsidiary of Federated
Investors
Federated Investors Tower
Pittsburgh, PA 15222-3779
46031P407
530461201
530461300
531545200
G00671-05
G00671-11
G00671-12 (9/94)
