CAPITAL GROWTH FUND
(A Portfolio of Investment Series Funds, Inc.)
Class A Shares
Supplement to Prospectus dated December 31, 1993
1. Please delete the second sentence and list of funds in the section
entitled "Liberty Family of Funds," which appears on pages three and four of
the prospectus, and substitute it with the following:
"The other funds in the Liberty Family of Funds are the Class A Shares of:
o American Leaders Fund, Inc., providing growth of capital and income
through high-quality stocks;
o Fund for U.S. Government Securities, Inc., providing current income
through long-term U.S. government securities;
o International Equity Fund, providing long-term capital growth and
income through international securities;
o 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;
o Liberty Equity Income Fund, Inc., providing above-average income and
capital appreciation through income producing equity securities;
o Liberty High Income Bond Fund, Inc., providing high current income
through high-yielding, lower-rated corporate bonds;
o Liberty Municipal Securities Fund, Inc., providing a high level of
current income exempt from federal regular income tax through municipal
bonds;
o Liberty U.S. Government Money Market Trust, providing current income
consistent with stability of principal through high-quality U.S.
government securities;
o Liberty Utility Fund, Inc., providing current income and long-term
growth of income, primarily through electric, gas, and communications
utilities;
o Limited Term Fund, providing a high level of current income consistent
with minimum fluctuation in principal value through investment grade
securities;
o Limited Term Municipal Fund, providing a high level of current income
exempt from federal regular income tax consistent with the preservation
of principal, primarily limited to municipal securities;
o Michigan Intermediate Municipal Trust, providing current income exempt
from federal regular income tax and the personal income taxes imposed by
the State of Michigan and Michigan municipalities, primarily through
Michigan municipal securities;
o Pennsylvania Municipal Income Fund, providing current income exempt
from federal regular income tax and the personal income taxes imposed by
the Commonwealth of Pennsylvania, primarily through Pennsylvania
municipal securities;
o Strategic Income Fund, providing a high level of current income,
primarily through domestic and foreign corporate debt obligations;
o Tax-Free Instruments Trust, providing current income consistent with
stability of principal and exempt from federal regular income tax,
through high-quality, short-term municipal securities; and
o World Utility Fund, providing total return through securities issued by
domestic and foreign companies in the utilities industries."
2. Please delete the first paragraph of the section entitled "Dealer
Concession," which appears on page 17 of the prospectus, and substitute it
with the following:
"For sales of Shares, a dealer will normally receive up to 90% of the
applicable sales load. Any portion of the sales load which is not paid
to the dealer will be retained by the distributor. However, the
distributor may offer to pay dealers up to one-hundred percent of the
sales load retained by it. Such payments may take the form of cash or
promotional incentives, such as payment of certain expenses of qualified
employees and their spouses to attend informational meetings about the
Fund or other special events at recreational-type facilities, or of
items of material value. In some instances, these incentives will be
made available only to dealers whose employees have sold or may sell
significant amount of Shares."
3. Please delete the last sentence of the section entitled "Purchases With
Proceeds From Redemptions of Unaffiliated Mutual Fund Shares," which appears
on page 18 of the prospectus, which states: "Federated Securities Corp. will
offer to pay dealers an amount equal to .50 of 1% of the net asset value of
Shares purchased by their clients or customers in this manner."
4. Please delete the first sentence of the first paragraph of the section
entitled "Redemption Fee," which appears on page 22 of the prospectus, and
substitute it with the
following:
"Shareholders who purchased Shares prior to June 1, 1994, with the
proceeds of a redemption of shares of a mutual fund sold with a sales
load and not distributed by Federated Securities Corp.will be charged a
redemption fee by the Fund's distributor of .50 of 1% for redemptions
made within one year of purchase. Purchases under the program made
after that date will not be subject to any type of redemption fee."
May 31, 1994
FEDERATED SECURITIES CORP.
Distributor
G00163 (5/94)
