SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934
Filed by the Registrant [ X ] Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Sec. 240.14a-11(c) or
Sec. 240.14a-12
INVESTMENT SERIES FUNDS, INC.
(Name of Registrant as Specified In Its Charter)
Federated Investors
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X ]No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1. Title of each class of securities to which transaction applies:
2. Aggregate number of securities to which transaction applies:
3. Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
4. Proposed maximum aggregate value of transaction:
5. Total fee paid:
[ ] Fee paid previously with preliminary proxy materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
---------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
---------------------------------------------------------------
3) Filing Party:
---------------------------------------------------------------
4) Date Filed:
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KNOW ALL PERSONS BY THESE PRESENTS that the undersigned Shareholders of
Federated Bond Fund, a portfolio of Investment Series Funds, Inc., hereby
appoint Matthew S. Hardin, Patricia F. Conner, Catherine C. Ryan, Carol B.
Kayworth, and Elisabeth A. Miller, or any one of them, true and lawful
attorneys, with the power of substitution of each, to vote all Shares of
Federated Bond Fund which the undersigned is entitled to vote at the Special
Meeting of Shareholders to be held on April 28, 1998, at Federated Investors
Tower, Pittsburgh, Pennsylvania, at 2:00 p.m., and at any adjournment thereof.
The attorneys named will vote the Shares represented by this proxy in accordance
with the choices made on this ballot. If no choice is indicated as to the item,
this proxy will be voted affirmatively on the matters. Discretionary authority
is hereby conferred as to all other matters as may properly come before the
Special Meeting or any adjournment thereof.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF FEDERATED BOND
FUND. THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED "FOR" THE PROPOSALS.
PROPOSAL 1 TO ELECT THOMAS G. BIGLEY, JOHN E. MURRAY, JR., AND
NICHOLAS P. CONSTANTAKIS AS DIRECTORS OF THE FUND
FOR [ ]
AGAINST [ ]
WITHHOLD AUTHORITY
TO VOTE [ ]
FOR ALL EXCEPT [ ]
If you do not wish your Shares to be voted "FOR" a particular
nominee, mark the "For All Except" box and strike a line
through the nominee(s') name. Your Shares will be voted for
the remaining nominees.
PROPOSAL 2 TO APPROVE OR DISAPPROVE AN AMENDMENT TO THE FUND'S FUNDAMENTAL
INVESTMENT POLICY ON DIVERSIFICATION OF ITS
INVESTMENTS
FOR [ ]
AGAINST [ ]
ABSTAIN [ ]
PROPOSAL 3 TO APPROVE OR DISAPPROVE CHANGING FROM FUNDAMENTAL TO AN OPERATING
POLICY THE FUND'S POLICY REGARDING INVEST
IN ILLIQUID SECURITIES
FOR [ ]
AGAINST [ ]
ABSTAIN [ ]
PROPOSAL 4 TO APPROVE OR DISAPPROVE CHANGING FROM FUNDAMENTAL TO AN OPERATING
POLICY THE FUND'S ABILITY TO INVEST IN
RESTRICTED SECURITIES
FOR [ ]
AGAINST [ ]
ABSTAIN [ ]
<PAGE>
YOUR VOTE IS IMPORTANT
Please complete, sign and return _____________________
this card as soon as possible. Date
Mark with an X in the box. _____________________
Signature
------------------------
Signature (Joint Owners)
Please sign this proxy exactly as your name appears on the books of the Fund.
Joint owners should each sign personally. Directors and other fiduciaries should
indicate the capacity in which they sign, and where more than one name appears,
a majority must sign. If a corporation, this signature should be that of an
authorized officer who should state his or her title.
PRELIMINARY PROXY STATEMENT
INVESTMENT SERIES FUNDS, INC.
FEDERATED BOND FUND
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 28, 1998
A special meeting of the shareholders of Federated Bond Fund (the "Fund"),
a portfolio of Investment Series Funds, Inc. (the "Corporation") will be held at
Federated Investors Tower, 19th Floor, 1001 Liberty Avenue, Pittsburgh,
Pennsylvania 15222-3779, at 2:00 p.m.
(Eastern time), on April 28, 1998, for the following purposes:
(1) TO ELECT THREE DIRECTORS.
(2) TO MAKE CHANGES TO THE FUND'S FUNDAMENTAL INVESTMENT POLICIES:
(A) TO AMEND THE FUND'S FUNDAMENTAL INVESTMENT POLICY ON
DIVERSIFICATION OF ITS INVESTMENTS;
(B) TO CHANGE FROM A FUNDAMENTAL TO AN OPERATING POLICY THE
FUND'S POLICY ON INVESTING IN ILLIQUID SECURITIES; AND
(C) TO AMEND AND TO CHANGE FROM A FUNDAMENTAL TO AN OPERATING
POLICY THE FUND'S ABILITY TO INVEST IN RESTRICTED SECURITIES.
(3) TO TRANSACT SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE
THE MEETING OR ANY ADJOURNMENT THEREOF.
The Board of Directors has fixed February 26, 1998, as the record date for
determination of shareholders entitled to vote at the meeting.
By Order of the Directors
John W. McGonigle
Secretary
March 12, 1998
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SIGN, DATE AND RETURN THE ENCLOSED PROXY PROMPTLY TO AVOID ADDITIONAL EXPENSE.
YOU CAN HELP THE FUND AVOID THE NECESSITY AND EXPENSE OF SENDING
FOLLOW-UP LETTERS TO ENSURE A QUORUM BY PROMPTLY RETURNING THE
ENCLOSED PROXY. IF YOU ARE UNABLE TO ATTEND THE MEETING, PLEASE
MARK, SIGN, DATE AND RETURN THE ENCLOSED PROXY SO THAT THE NECESSARY
QUORUM MAY BE REPRESENTED AT THE SPECIAL MEETING. THE ENCLOSED
ENVELOPE REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
<PAGE>
PRELIMINARY PROXY STATEMENT
INVESTMENT SERIES FUNDS, INC.
FEDERATED BOND FUND
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
ABOUT THE PROXY SOLICITATION AND THE SPECIAL MEETING
The enclosed proxy is solicited on behalf of the Board of Directors of the Fund
(the "Board" or "Directors"). The proxies will be voted at the special meeting
of shareholders of the Fund to be held on April 28, 1998, at Federated Investors
Tower, 19th Floor, 1001 Liberty Avenue, Pittsburgh, Pennsylvania 15222-3779, at
2:00 p.m. (such special meeting and any adjournment or postponement thereof are
referred to as the "Special Meeting").
The cost of the solicitation, including the printing and mailing of proxy
materials, will be borne by the Fund. In addition to solicitations through the
mails, proxies may be solicited by officers, employees, and agents of the Fund
or, if necessary, a communications firm retained for this purpose. Such
solicitations may be by telephone, telegraph, or otherwise. Any telephonic
solicitations will follow procedures designed to ensure accuracy and prevent
fraud, including requiring identifying shareholder information, recording the
shareholder's instructions, and confirming to the shareholder after the fact.
Shareholders who communicate proxies by telephone or by other electronic means
have the same power and authority to issue, revoke, or otherwise change their
voting instruction as currently exists for instructions communicated in written
form. The Fund will reimburse custodians, nominees, and fiduciaries for the
reasonable costs incurred by them in connection with forwarding solicitation
materials to the beneficial owners of Shares held of record by such persons.
At its meeting on November 20, 1997, the Board reviewed both the Articles of
Incorporation and the investment policies of the Fund and approved changes to
them, subject to shareholder approval. The purposes of the Special Meeting are
set forth in the accompanying Notice. The Directors know of no business other
than that mentioned in the Notice that will be presented for consideration at
the Special Meeting. Should other business properly be brought before the
Special Meeting, proxies will be voted in accordance with the best judgment of
the persons named as proxies. This proxy statement and the enclosed proxy card
are expected to be mailed on or about March 12, 1998, to shareholders of record
at the close of business on February 26, 1998 (the "Record Date"). On the Record
Date, the Fund had outstanding _________ Class A Shares, ________Class B Shares,
________ Class C Shares and ________ Class F Shares ("Shares") of common stock.
The Fund's annual report, which includes audited financial statements for
the fiscal year ended October 31, 1997, was previously mailed to shareholders.
Requests for a report or other information may be made in writing to the Fund's
principal executive offices located at Federated Investors Funds, 5800 Corporate
Drive, Pittsburgh, Pennsylvania 15237-7000 or by calling toll-free
1-800-341-7400.
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ELECTION OF THREE DIRECTORS
The persons named as proxies intend to vote in favor of the election of
Thomas G. Bigley, John E. Murray, Jr., and Nicholas P. Constantakis as Directors
of the Fund. All of the nominees are presently serving as Directors. Please see
"Information about the Fund" for current biographical information about Messrs.
Bigley, Murray, and Constantakis.
Messrs. Bigley and Murray were appointed Directors on October 1, 1995 and
February 14, 1995, respectively, to fill vacancies resulting from the decision
to expand the size of the Board. Mr. Constantakis was appointed a Director on
February 23, 1998, to fill the vacancy created by the death of Mr. Gregor Meyer
on November 2, 1997.
All Nominees have consented to continue to serve if elected. If elected,
the Directors will hold office without limit in time until death, resignation,
retirement, or removal or until the next meeting of shareholders to elect
Directors and the election and qualification of their successors. Election of a
Director requires the affirmative vote of a majority of the votes cast at the
Special Meeting. A majority is defined as more than 50% of the outstanding
Shares of the Corporation on the record date.
If any nominee for election as a Director named above shall by reason of
death or for any other reason become unavailable as a candidate at the Special
Meeting, votes pursuant to the enclosed proxy will be cast for a substitute
candidate by the proxies named on the proxy card, or their substitutes, present
and acting at the Special Meeting. Any such substitute candidate for election as
an interested Director shall be nominated by the Executive Committee. The
selection of any substitute candidate for election as a Director who is not an
interested person shall be made by a majority of the Directors who are not
interested persons of the Fund. The Board has no reason to believe that any
nominee will become unavailable for election as a Director.
APPROVAL OR DISAPPROVAL OF CHANGES TO THE FUND'S
FUNDAMENTAL INVESTMENT POLICIES
The Investment Company Act of 1940 (the 1940 Act") requires investment
companies such as the Fund to adopt certain specific investment policies that
can be changed only by shareholder vote. An investment company may also elect to
designate other policies that may be changed only by shareholder vote. Both
types of policies are often referred to as "fundamental policies." Certain of
the Fund's fundamental policies have been adopted in the past to reflect
regulatory, business or industry conditions that are no longer in effect.
Accordingly, the Directors have approved, and have authorized the submission to
the Fund's shareholders for their approval, the removal, amendment, and/or
reclassification of certain of the Fund's fundamental policies.
The proposed amendments would:
(i) simplify and modernize the policies that are required to be
fundamental by the 1940 Act;
(ii) reclassify as operating policies those fundamental policies that are
not required to be fundamental by the 1940 Act; and
(iii) remove those fundamental policies which are no longer required by
the securities laws of individual states as a result of the National
Securities Markets Improvement Act ("NSMIA"), dated October 11,
1996.
By reducing to a minimum those policies that can be changed only by
shareholder vote, the Directors believe that the Fund would be able to minimize
the costs and delay associated with holding frequent shareholder meetings. The
Directors also believe that the investment adviser's ability to manage the
Fund's assets in a changing investment environment will be enhanced and that
investment management opportunities will be increased by these changes.
TO AMEND THE FUND'S FUNDAMENTAL INVESTMENT POLICY ON
DIVERSIFICATION OF ITS INVESTMENTS
The Fund's current fundamental investment policy on diversification of its
investments is as follows:
"With respect to securities comprising 75% of the value of its total
assets, the Fund will not purchase securities issued by any one issuer
(other than cash, cash items or securities issued or guaranteed by the
government of the United States or its agencies or instrumentalities and
repurchase agreements collateralized by such securities) if as a result
more than 5% of the value of its total assets would be invested in the
securities of that issuer."
When the current policy was adopted, the Trust was subject to the laws of
certain states which required this specific policy on investments despite the
fact that the Investment Company Act of 1940 ("1940 Act") had, and continues to
have, a less restrictive standard. Since the enactment of NSMIA, the states no
longer have jurisdiction over the Trust's diversification policy.
In order to afford the Trust's investment adviser maximum flexibility in
managing the Trust's assets, the Trustees propose to amend the Trust's
diversification policy to be consistent with the definition of a diversified
investment company under the 1940 Act. Such amendment would, consistent with the
definition of a diversified company under the 1940 Act, specifically add
securities of other investment companies to the list of issuers which are
excluded from the 5% limitation. .
Upon approval of the Trust's shareholders, the fundamental investment
policy governing diversification will be amended as follows:
"With respect to securities comprising 75% of the value of its total
assets, the Trust 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
<PAGE>
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 would own more than
10% of the outstanding voting securities of that issuer."
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS
VOTE FOR THE PROPOSAL
TO CHANGE FROM FUNDAMENTAL TO AN OPERATING POLICY THE FUND'S
POLICY ON INVESTING IN ILLIQUID SECURITIES
Investment companies, such as the Fund, are required to meet a
shareholder's redemption request at the current net asset value within seven
days of receiving the request for redemption. In order to do this, some portion
of the securities in the Fund's portfolio must be "liquid" so that the
securities can be sold in sufficient time to obtain the necessary cash to meet
redemption requests. The Securities and Exchange Commission has taken the
position that money market funds, such as the Fund, must have 90% of their
portfolios in liquid securities in order to ensure that redemptions can be
honored within the necessary time frame.
The Fund's policy on illiquid securities currently reads:
"The Fund will not invest more than 15% of its net assets in securities
which are illiquid, including repurchase agreements providing for
settlement in more than seven days after notice."
When the Fund's policy was adopted, it was classified as fundamental
although there was no requirement to do so. A few years ago, the Securities and
Exchange Commission changed its position regarding liquidity for non-money
market funds and allowed up to 15% of their assets to be invested in illiquid
securities. There is no indication that the Commission intends to change its
position regarding money market funds (now permitted to invest up to 10% in
illiquid securities), but should it do so, the Directors believe they should
have the flexibility to make such a change immediately, without having to incur
the delay and expense of a shareholder meeting.
As stated in its current policy, the Fund will continue to limit its
investments in illiquid securities to 10% of net assets. If there are future
regulatory changes, the Directors will determine whether it is in the best
interest of shareholders and, in keeping with the Fund's investment objective,
to permit the Fund to invest a higher percentage of its assets in illiquid
securities.
The Directors are recommending that shareholders approve a proposal to
make the Fund's current policy on investing in illiquid securities an operating
policy which can be changed by the Directors without shareholder approval.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS
VOTE FOR THE PROPOSAL
TO AMEND AND TO CHANGE FROM FUNDAMENTAL TO AN OPERATING POLICY THE FUND'S
ABILITY TO INVEST IN RESTRICTED SECURITIES
The Fund's current policy on restricted securities reads as follows:
"The Fund will not invest more than 10% of its total assets in securities
subject to restrictions on resale under the federal securities laws (except for
commercial paper issued under Section 4(2) of the Securities Act of 1933)."
This policy was adopted because historically, restricted securities were
viewed as illiquid since they could not be sold within seven days. Investment
companies, such as the Fund, are required to meet a shareholder's redemption
request at the current net asset value within seven days of receiving the
request for redemption. In order to do this, some portion of the securities in
the Fund's portfolio must be "liquid" so that the securities can be sold in
sufficient time to obtain the necessary cash to meet redemption requests. It is
important to note that many restricted securities are, in fact, quite LIQUID,
and can be purchased without jeopardizing the liquidity of the Fund's portfolio.
Certain state securities regulators previously required mutual funds to
have a fundamental policy limiting investment in restricted securities. Since
the enactment of NSMIA, states no longer have such jurisdiction. Futhermore,
rules adopted by the Securities and Exchange Commission have substantially
increased the number of restricted securities that can now be considered liquid
and, in addition, have given to the Directors the ability to determine, under
specific guidelines, that a security is liquid. The Directors may delegate this
duty to the investment adviser provided the Adviser's determination of liquidity
is made in accordance with the guidelines established and monitored by the
Directors.
The Fund's current policy prevents the Fund from acquiring a restricted
security that may be viewed by the adviser as liquid, other than Section 4(2)
commercial paper. If this proposal is approved, the Fund will be able to invest
to an unlimited extent in restricted securities as long as they meet the
Directors' guidelines for liquidity and the Fund's operating policy on
restricted securities would read substantially as follows:
"The Fund may invest in restricted securities. Restricted securities are
any securities in which the Fund may invest pursuant to its investment
objective and policies but which are subject to restrictions on resale
under federal securities law. Under criteria established by the Directors
certain restricted securities are determined to be liquid. To the extent
that restricted securities are not determined to be liquid the Fund will
limit their purchase, together with other illiquid securities, to 10% of
its net assets."
If a restricted security is determined not to be liquid, the purchase of that
security, together with other illiquid securities, may not exceed 10% of the
Fund's net assets in accordance with the Fund's current policy on investing in
illiquid securities.
If shareholders do not approve the removal of the policy on restricted
securities, the Fund will continue to invest no more than 10% of the value of
its total assets in restricted securities of any kind, except Section 4(2)
commercial paper.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS
VOTE FOR THE PROPOSAL
INFORMATION ABOUT THE FUND
PROXIES, QUORUM AND VOTING AT THE SPECIAL MEETING
The favorable vote of: (a) the holders of 67% or more of the outstanding
voting securities present at the meeting, if the holders of 50% or more of the
outstanding voting securities of the Fund are present or represented by proxy;
or (b) the vote of the holders of more than 50% of the outstanding voting
securities, whichever is less, is required to approve all of the proposals
except for the election of Directors.
Only shareholders of record on the Record Date will be entitled to vote at
the Special Meeting. Each Share of the Fund is entitled to one vote. Fractional
Shares are entitled to proportionate Shares of one vote.
Any person giving a proxy has the power to revoke it any time prior to its
exercise by executing a superseding proxy or by submitting a written notice of
revocation to the Secretary of the Fund. In addition, although mere attendance
at the Special Meeting will not revoke a proxy, a shareholder present at the
Special Meeting may withdraw his or her proxy and vote in person. All properly
executed and unrevoked proxies received in time for the Special Meeting will be
voted in accordance with the instructions contained in the proxies. IF NO
INSTRUCTION IS GIVEN ON THE PROXY, THE PERSONS NAMED AS PROXIES WILL VOTE THE
SHARES REPRESENTED THEREBY IN FAVOR OF THE MATTERS SET FORTH IN THE ATTACHED
NOTICE.
In order to hold the Special Meeting, a "quorum" of shareholders must be
present. Holders of one-third of the total number of outstanding Shares of the
Fund, present in person or by proxy, shall be required to constitute a quorum
for the purpose of voting on the proposals made.
For purposes of determining a quorum for transacting business at the
Special Meeting, abstentions and broker "non-votes" (that is, proxies from
brokers or nominees indicating that such persons have not received instructions
from the beneficial owner or other persons entitled to vote Shares on a
particular matter with respect to which the brokers or nominees do not have
discretionary power) will be treated as Shares that are PRESENT but which have
not been VOTED. For this reason, abstentions and broker non-votes will have the
effect of a "no" vote for purposes of obtaining the requisite approval of the
proposals.
If a quorum is present, the persons named as proxies will vote those
proxies which they are entitled to vote FOR the proposal in favor of such an
adjournment, and will vote those proxies required to be voted AGAINST the
proposal against any adjournment. If a quorum is not present, or in the event
that a quorum is present but sufficient votes to approve the proposals are not
received, the persons named as proxies may propose one or more adjournments of
the Special Meeting to permit further solicitation of proxies. Any such
adjournment will require the affirmative vote of a plurality of those Shares
affected by the adjournment represented at the Special Meeting in person or by
proxy. A shareholder vote may be taken on the proposals in this proxy statement
prior to any such adjournment if sufficient votes have been received for
approval.
ABOUT THE ELECTION OF DIRECTORS
When elected, the Directors will hold office without limit in time until
death, resignation, retirement, or removal or until the next meeting of
shareholders to elect Directors and the election and qualification of their
successors. Election of a Director requires the affirmative vote of a majority
of the votes cast by shareholders of the Fund at the Special Meeting.
Directors standing for election and Directors previously elected are
listed below with their addresses, birthdates, present positions with the Fund,
and principal occupations during the past five years.
DIRECTORS STANDING FOR ELECTION
THOMAS G. BIGLEY
15 Old Timber Trail
Pittsburgh, PA
Birthdate: February 3, 1934
Director
Chairman of the Board, Children's Hospital of Pittsburgh; formerly, Senior
Partner, Ernst & Young LLP; Director, MED 3000 Group, Inc.; Director, Member of
Executive Committee, University of Pittsburgh; Trustee or Director of the Funds.
NICHOLAS P. CONSTANTAKIS
175 Woodshire Drive
Pittsburgh, PA
Birthdate: September 3, 1939
Director
Formerly, Partner, Andersen Worldwide SC; Director or Trustee of the Funds.
<PAGE>
JOHN E. MURRAY, JR., J.D., S.J.D.
President, Duquesne University
Pittsburgh, PA
Birthdate: December 20, 1932
Director
President, Law Professor, Duquesne University; Consulting Partner, Mollica &
Murray; Director or Trustee of the Funds.
PREVIOUSLY ELECTED DIRECTORS
JOHN F. DONAHUE#*
Federated Investors Tower
Pittsburgh, PA
Birthdate: July 28, 1924
Chairman and Trustee
Chairman and Trustee, Federated Investors, Federated Advisers, Federated
Management, and Federated Research; Chairman and Director, Federated Research
Corp. and Federated Global Research Corp.; Chairman, Passport Research, Ltd.;
Chief Executive Officer and Director or Trustee of the Funds. Mr. Donahue is the
father of J. Christopher Donahue, Executive Vice President of the Company.
JOHN T. CONROY, JR.
Wood/IPC Commercial Department
John R. Wood and Associates, Inc., Realtors
3255 Tamiami Trail North
Naples, FL
Birthdate: June 23, 1937
Director
President, Investment Properties Corporation; Senior Vice-President, John
R. Wood and Associates, Inc., Realtors; Partner or Trustee in private real
estate ventures in Southwest Florida; formerly, President, Naples Property
Management, Inc. and Northgate Village Development Corporation; Director or
Trustee of the Funds.
WILLIAM J. COPELAND
One PNC Plaza - 23rd Floor
Pittsburgh, PA
Birthdate: July 4, 1918
Director
Director and Member of the Executive Committee, Michael Baker, Inc.; formerly,
Vice Chairman and Director, PNC Bank, N.A., and PNC Bank Corp.; Director, Ryan
Homes, Inc.; Director or Trustee of the Funds.
<PAGE>
J. CHRISTOPHER DONAHUE*
Federated Investors Tower
Pittsburgh, PA
Birthdate: April 11, 1949
President and Director
President and Trustee, Federated Investors, Federated Advisers, Federated
Management, and Federated Research; President and Director, Federated Research
Corp. and Federated Global Research Corp.; President, Passport Research, Ltd.;
Trustee, Federated Shareholder Services Company, and Federated Shareholder
Services; Director, Federated Services Company; President or Executive Vice
President of the Funds; Director or Trustee of some of the Funds. Mr. Donahue is
the son of John F. Donahue, Chairman and Director of the Company.
JAMES E. DOWD
571 Hayward Mill Road
Concord, MA
Birthdate: May 18, 1922
Director
Attorney-at-law; Director, The Emerging Germany Fund, Inc.; Director or
Trustee of the Funds.
LAWRENCE D. ELLIS, M.D.*
3471 Fifth Avenue, Suite 1111
Pittsburgh, PA
Birthdate: October 11, 1932
Director
Professor of Medicine, University of Pittsburgh; Medical Director, University of
Pittsburgh Medical Center--Downtown; Member, Board of Directors, University of
Pittsburgh Medical Center; formerly, Hematologist, Oncologist, and Internist,
Presbyterian and Montefiore Hospitals; Director or Trustee of the Funds.
EDWARD L. FLAHERTY, JR.#
Miller, Ament, Henny & Kochuba
205 Ross Street
Pittsburgh, PA
Birthdate: June 18, 1924
Trustee
Attorney of Counsel, Miller, Ament, Henny & Kochuba; Director, Eat'N Park
Restaurants, Inc.; formerly, Counsel, Horizon Financial, F.A., Western Region;
Director or Trustee of the Funds.
PETER E. MADDEN
One Royal Palm Way
100 Royal Palm Way
Palm Beach, FL
Birthdate: March 16, 1942
Director
Consultant; Former State Representative, Commonwealth of Massachusetts;
formerly, President, State Street Bank and Trust Company and State Street Boston
Corporation; Director or Trustee of the Funds.
WESLEY W. POSVAR
1202 Cathedral of Learning
University of Pittsburgh
Pittsburgh, PA
Birthdate: September 14, 1925
Director
Professor, International Politics; Management Consultant; Trustee, Carnegie
Endowment for International Peace, RAND Corporation, Online Computer Library
Center, Inc., National Defense University and U.S. Space Foundation; President
Emeritus, University of Pittsburgh; Founding Chairman, National Advisory Council
for Environmental Policy and Technology, Federal Emergency Management Advisory
Board and Czech Management Center, Prague; Director or Trustee of the Funds.
MARJORIE P. SMUTS
4905 Bayard Street
Pittsburgh, PA
Birthdate: June 21, 1935
Director
Public Relations/Marketing/Conference Planning; Director or Trustee of the
Funds.
* This Director is deemed to be an "interested person" as defined in the
1940 Act.
# Member of the Executive Committee. The Executive Committee of the Board of
Directors handles the responsibilities of the Board between meetings of the
Board.
As referred to in the preceding table, "The Funds" or "Funds" includes the
following investment companies: 111 Corcoran Funds; Arrow Funds; Automated
Government Money Trust; Blanchard Funds; Blanchard Precious Metals Fund, Inc.;
Cash Trust Series II; Cash Trust Series, Inc.; DG Investor Series; Edward D.
Jones & Co. Daily Passport Cash Trust; Federated Adjustable Rate U.S. Government
Fund, Inc.; Federated American Leaders Fund, Inc.; Federated ARMs Fund;
Federated Equity Funds; Federated Equity Income Fund, Inc.; Federated Fund for
U.S. Government Securities, Inc.; Federated GNMA Trust; Federated Government
Income Securities, Inc.; Federated Government Trust; Federated High Income Bond
Fund, Inc.; Federated High Yield Trust; Federated Income Securities Trust;
Federated Income Trust; Federated Index Trust; Federated Institutional Trust;
Federated Insurance Series; Federated Investment Portfolios; Federated
Investment Trust; Federated Master Trust; Federated Municipal Opportunities
Fund, Inc.; Federated Municipal Securities Fund, Inc.; Federated Municipal
Trust; Federated Short-Term Municipal Trust; Federated Short-Term U.S.
Government Trust; Federated Stock and Bond Fund, Inc.; Federated Stock Trust;
Federated Tax-Free Trust; Federated Total Return Series, Inc.; Federated U.S.
Government Bond Fund; Federated U.S. Government Securities Fund: 1-3 Years;
Federated U.S. Government Securities Fund: 2-5 Years; Federated U.S. Government
Securities Fund: 5-10 Years; Federated Utility Fund, Inc.; First Priority Funds;
Fixed Income Securities, Inc.; High Yield Cash Trust; Intermediate Municipal
Trust; International Series, Inc.; Investment Series Funds, Inc.; Investment
Series Trust; Liberty Term Trust, Inc. - 1999; Liberty U.S. Government Money
Market Trust; Liquid Cash Trust; Managed Series Trust; Money Market Management,
Inc.; Money Market Obligations Trust; Money Market Obligations Trust II; Money
Market Trust; Municipal Securities Income Trust; Newpoint Funds; RIMCO Monument
Funds; Targeted Duration Trust; Tax-Free Instruments Trust; The Planters Funds;
The Virtus Funds; Trust for Financial Institutions; Trust for Government Cash
Reserves; Trust for Short-Term U.S. Government Securities; Trust for U.S.
Treasury Obligations; Wesmark Funds; and World Investment Series, Inc.
SHARE OWNERSHIP OF THE FUND
Officers and Directors of the Fund own less than 1% of the Fund's outstanding
Shares.
At the close of business on the Record Date, the following persons owned, to the
knowledge of management, more than 5% of the outstanding Shares of the Fund:
Class A Shares:
Class B Shares:
Class C Shares:
Class F Shares:
DIRECTOR COMPENSATION
<TABLE>
<CAPTION>
AGGREGATE
NAME , COMPENSATION
POSITION WITH FROM TOTAL COMPENSATION PAID
FUND CORPORATION*# FROM FUND COMPLEX
<S> <C> <C>
John F. Donahue $ -0- $-0- for the Fund and
Chairman and Director 56 other investment companies in the Fund Complex
J. Christopher Donahue $ -0- $-0- for the Fund and
President and Director 18 other investment companies in the Fund Complex
Thomas G. Bigley $1,384 $111,222 for the Fund and
Director 56 other investment companies in the Fund Complex
John T. Conroy, Jr. $1,523 $122,362 for the Fund and
Director 56 other investment companies in the Fund Complex
Nicholas P. Constantakis $ -0- $0 for the Fund and
Director 56 other investment companies in the Fund Complex
William J. Copeland $1,523 $122,362 for the Fund and
Director 56 other investment companies in the Fund Complex
James E. Dowd $1,523 $122,362 for the Fund and
Director 56 other investment companies in the Fund Complex
Lawrence D. Ellis, M.D. $1,384 $111,222 for the Fund and
Director 56 other investment companies in the Fund Complex
Edward L. Flaherty, Jr. $1,523 $122,362 for the Fund and
Director 56 other investment companies in the Fund Complex
Peter E. Madden $1,384 $111,222 for the Fund and
Director 56 other investment companies in the Fund Complex
John E. Murray, Jr. $1,384 $111,222 for the Fund and
Director 56 other investment companies in the Fund Complex
Wesley W. Posvar $1,384 $111,222 for the Fund and
Director 56 other investment companies in the Fund Complex
Marjorie P. Smuts $1,384 $111,222 for the Fund and
Director 56 other investment companies in the Fund Complex * Information is
furnished for the fiscal year ended October 31, 1997.
</TABLE>
# The aggregate compensation is provided for the Corporation which is
comprised of one portfolio.
The information is provided for the last calendar year.
During the fiscal year ended October 31, 1997, there were four meetings of
the Board of Directors. The interested Directors, other than Dr. Ellis, do not
receive fees from the Corporation. Dr. Ellis is an interested person by reason
of the employment of his son-in-law by Federated Securities Corp. All Directors
were reimbursed for expenses for attendance at Board of Directors meetings.
Other than its Executive Committee, the Corporation has one Board
committee, the Audit Committee. Generally, the function of the Audit Committee
is to assist the Board of Directors in fulfilling its duties relating to the
Fund's accounting and financial reporting practices and to serve as a direct
line of communication between the Board of Directors and the independent
auditors. The specific functions of the Audit Committee include recommending the
engagement or retention of the independent auditors, reviewing with the
independent auditors the plan and the results of the auditing engagement,
approving professional services provided by the independent auditors prior to
the performance of such services, considering the range of audit and non-audit
fees, reviewing the independence of the independent auditors, reviewing the
scope and results of the Fund's procedures for internal auditing, and reviewing
the Fund's system of internal accounting controls.
Messrs. Flaherty, Conroy, Copeland, and Dowd serve on the Audit Committee.
These Directors are not interested Directors of the Fund. During the fiscal year
ended October 31, 1997, there were four meetings of the Audit Committee. All of
the members of the Audit Committee were present for each meeting. Each member of
the Audit Committee receives an annual fee of $100 plus $25 for attendance at
each meeting and is reimbursed for expenses of attendance.
OFFICERS OF THE FUND
The executive officers of the Fund are elected annually by the Board of
Directors. Each officer holds the office until qualification of his successor.
The names and birthdates of the executive officers of the Fund and their
principal occupations during the last five years are as follows:
<PAGE>
J. CHRISTOPHER DONAHUE
Federated Investors Tower
Pittsburgh, PA
Birthdate: April 11, 1949
President
President and Trustee, Federated Investors, Federated Advisers, Federated
Management, and Federated Research; President and Director, Federated Research
Corp. and Federated Global Research Corp.; President, Passport Research, Ltd.;
Trustee, Federated Shareholder Services Company and Federated Shareholder
Services; Director, Federated Services Company; President or Executive Vice
President of the Funds; Director or Trustee of some of the Funds. Mr. Donahue is
the son of John F. Donahue, Chairman and Trustee of the Company.
EDWARD C. GONZALES
Federated Investors Tower
Pittsburgh, PA
Birthdate: October 22, 1930
Executive Vice President
Vice Chairman, Treasurer, and Trustee, Federated Investors; Vice President,
Federated Advisers, Federated Management, Federated Research, Federated Research
Corp., Federated Global Research Corp. and Passport Research, Ltd.; Executive
Vice President and Director, Federated Securities Corp.; Trustee, Federated
Shareholder Services Company; Trustee or Director of some of the Funds;
President, Executive Vice President and Treasurer of some of the Funds.
JOHN W. MCGONIGLE
Federated Investors Tower
Pittsburgh, PA
Birthdate: October 26, 1938
Executive Vice President, Secretary, and Treasurer
Executive Vice President, Secretary, and Trustee, Federated Investors; Trustee,
Federated Advisers, Federated Management, and Federated Research; Director,
Federated Research Corp. and Federated Global Research Corp.; Trustee, Federated
Shareholder Services Company; Director, Federated Services Company; President
and Trustee, Federated Shareholder Services; Director, Federated Securities
Corp.; Executive Vice President and Secretary of the Funds; Treasurer of some of
the Funds.
RICHARD B. FISHER
Federated Investors Tower
Pittsburgh, PA
Birthdate: May 17, 1923
Vice President
Executive Vice President and Trustee, Federated Investors; Chairman and
Director, Federated Securities Corp.; President or Vice President of some of the
Funds; Director or Trustee of some of the Funds.
None of the Officers of the Fund received salaries from the Fund during the
fiscal year ended October 31, 1997.
Officers and Directors own less than 1% of the Fund's outstanding Shares.
Federated Services Company, a subsidiary of Federated Investors, is the
Fund's administrator and provides administrative personnel and services to the
Fund for a fee as described in the prospectuses of the Fund. For the fiscal year
ended October 31, 1997, Federated Services Company earned $415,495.
OTHER MATTERS AND DISCRETION OF ATTORNEYS NAMED IN THE PROXY
The Fund is not required, and does not intend, to hold annual meetings of
shareholders. Shareholders wishing to submit proposals for consideration for
inclusion in a proxy statement for the next meeting of shareholders should send
their written proposals to Investment Series Funds, Inc., Federated Investors
Funds, 5800 Corporate Drive, Pittsburgh, Pennsylvania 15237-7000, so that they
are received within a reasonable time before any such meeting.
No business other than the matter described above is expected to come
before the Special Meeting, but should any other matter requiring a vote of
shareholders arise, including any question as to an adjournment or postponement
of the Special Meeting, the persons named on the enclosed proxy card will vote
on such matters according to their best judgment in the interests of the Fund.
SHAREHOLDERS ARE REQUESTED TO
COMPLETE, DATE AND SIGN
THE ENCLOSED PROXY CARD
AND RETURN IT IN THE
ENCLOSED ENVELOPE, WHICH
NEEDS NO POSTAGE IF
MAILED IN THE UNITED
STATES.
By Order of the Directors
John W. McGonigle
Secretary
March 12, 1998
Cusip 461444507
Cusip 461444606
Cusip 461444705
Cusip 461444309
___________________ (3/98)
INVESTMENT SERIES FUNDS, INC.
FEDERATED BOND FUND
IMPORTANT INFORMATION
FOR FEDERATED SHAREHOLDERS
Dear Fellow Shareholder:
Federated Bond Fund will hold a special meeting of shareholders on April 28,
1998. It is important for you to vote on the issues described in this Proxy
Statement. We recommend that you read the Proxy in its entirety; the
explanations it includes will help you decide upon the issues.
YOUR PARTICIPATION IN THIS PROCESS IS IMPORTANT! BE SURE TO COMPLETE AND RETURN
YOUR PROXY CARD PROMPTLY.
WHY AM I BEING ASKED TO VOTE?
Mutual funds are required to obtain shareholders' votes for certain types of
changes, like those included in this Proxy. You have a right to vote on these
changes.
WHAT ISSUES AM I BEING ASKED TO VOTE ON?
The proposals include the election of Directors and changes to the Fund's
fundamental investment policies.
WHY ARE INDIVIDUALS RECOMMENDED FOR ELECTION TO THE BOARD OF DIRECTORS?
The Fund is devoted to serving the needs of its shareholders, and the Board is
responsible for managing the Fund's business affairs to meet those needs. The
Board represents the shareholders of the Fund and can exercise all of the Fund's
powers, except those reserved only for shareholders.
Directors are selected on the basis of their education and professional
experience. As candidates for election, individuals are chosen who have a
distinct interest in, and capacity for understanding the complexities of, the
operation of a mutual fund. These individuals bring considerable experience to
the impartial oversight of a fund's operation, with the best interest of the
Fund's shareholders in mind.
The Proxy includes a brief description of each nominee's background and current
position with the fund.
WHY ARE THE FUND'S "FUNDAMENTAL POLICIES" BEING CHANGED OR REMOVED?
Every mutual fund has certain investment policies that can be changed only with
the approval of its shareholders. These are referred to as "fundamental"
investment policies.
In the past, these policies were adopted to reflect regulatory, business, or
industry conditions that no longer exist or no longer are necessary.
By reducing the number of "fundamental policies," the Fund may be able to
minimize the costs and delays associated with frequent shareholder meetings.
Also, the investment adviser's ability to manage the Fund's assets can be
enhanced and investment opportunities increased.
The proposed amendments will:
i. simplify and modernize the policies that are required to be
"fundamental" by the Investment Company Act of 1940;
ii.reclassify fundamental policies no longer required by the 1940 Act as
operating policies, which do not require a vote of shareholders to change;
and
iii. remove any fundamental policies that are no longer required by the
securities laws of individual states.
Federated is a conservative money manager. Our highly trained professionals are
dedicated to making investment decisions in the best interest of the Fund and
its shareholders.
WHY ARE SOME "FUNDAMENTAL POLICIES" BEING CHANGED TO "OPERATING" POLICIES?
Operating policies do not require shareholder approval to be changed. This
permits the Fund's Board additional flexibility in determining whether to
participate in new investment opportunities and to meet industry changes
promptly.
HOW DO I VOTE MY SHARES?
You may vote in person at the special meeting of shareholders or, if you are
unable to attend, simply vote, sign, and return the enclosed Proxy Card. It is
important that your vote be received by DATE.
WHOM DO I CALL IF I HAVE QUESTIONS ABOUT THE PROXY STATEMENT? Call your
Fund Representative or a Federated Client Service Representative. The toll-free
number is 1-800-341-7400.
After careful consideration, the Board of Directors has unanimously
approved these proposals. The Board recommends that you read the enclosed
materials carefully and vote FOR all proposals.
