1933 Act File No. 33-69268
1940 Act File No. 811-8042
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
Pre-Effective Amendment No. ..........
Post-Effective Amendment No. 12 .............. X
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
Amendment No. 13 ........................ X
FEDERATED INSURANCE SERIES
(Exact Name of Registrant as Specified in Charter)
Federated Investors Tower, Pittsburgh, Pennsylvania 15222-3779
(Address of Principal Executive Offices)
(412) 288-1900
(Registrant's Telephone Number)
John W. McGonigle, Esquire,
Federated Investors Tower,
Pittsburgh, Pennsylvania 15222-3779
(Name and Address of Agent for Service)
It is proposed that this filing will become effective:
immediately upon filing pursuant to paragraph (b)
-
on , pursuant to paragraph (b)
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X 60 days after filing pursuant to paragraph (a) (i)
on pursuant to paragraph (a) (i)
75 days after filing pursuant to paragraph (a)(ii)
on pursuant to paragraph (a)(ii) of Rule 485.
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If appropriate, check the following box:
This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Registrant has filed with the Securities and Exchange Commission a
declaration pursuant to Rule 24f-2 under the Investment Company Act of
1940, and:
filed the Notice required by that Rule on ; or
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X intends to file the Notice required by that Rule on or about February
14, 1997; or
during the most recent fiscal year did not sell any securities pursuant
to Rule 24f-2 under the Investment Company Act of 1940, and, pursuant to
Rule 24f-2(b)(2), need not file the Notice.
Copies To:
Matthew G. Maloney, Esquire
Dickstein Shapiro Morin Oshinsky LLP
2101 L Street, N.W.
Washington, D.C. 20037
CROSS REFERENCE SHEET
This Amendment to the Registration Statement of Federated Insurance
Series (formerly, Insurance Management Series), which consists of eight
portfolios: (1) Federated American Leaders Fund II, (2) Federated Utility
Fund II, (3) Federated Fund for U.S. Government Securities II, (4)
Federated High Income Bond Fund II, (5) Federated Prime Money Fund II, (6)
Federated International Equity Fund II, (7) Federated Growth Stategies Fund
II and (8) Federated Equity Income Fund II, relates only to Federated
Utility Fund II, and is comprised of the following:
PART A. INFORMATION REQUIRED IN A PROSPECTUS.
Prospectus Heading
(Rule 404(c) Cross Reference)
Item 1. Cover Page...............(1-8) Cover Page.
Item 2. Synopsis.................Not applicable.
Item 3. Condensed Financial
Information.............(1-7) Financial Highlights; (1-8)
Performance Information.
Item 4. General Description of
Registrant..............(1-8) General Information; (1-8)
Investment Information; (1-8) Investment Objectives; (1-8) Investment
Policies; (4,5) Investment Risks; (1-8) Investment Limitations.
Item 5. Management of the Fund...(1-8) Fund Information; (1-8) Management
of the Fund; (1-8) Distribution of Fund Shares; (8) Distribution Plan;(1-8)
Administration of the Fund; (3,4,5, 8) Brokerage Transactions.
Item 6. Capital Stock and Other
Securities..............(1-8) Dividends; (1-8) Shareholder
Information; (1-8) Tax Information; (1-8) Federal Taxes; (1-8) State and
Local Taxes; (1-8) Voting Rights.
Item 7. Purchase of Securities Being
Offered.................(1-8) Net Asset Value; (1-8) Investing
in the Fund; (1-8) Purchases and Redemptions; (1-8) What Shares Cost.
Item 8. Redemption or Repurchase.(1-8) Purchases and Redemptions.
Item 9. Pending Legal Proceedings None.
PART B.INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION.
Item 10. Cover Page...............(1-8) Cover Page.
Item 11. Table of Contents........(1-8) Table of Contents.
Item 12. General Information and
History.................Not Applicable.
Item 13. Investment Objectives and
Policies................(1-8) Investment Objectives and
Policies; (1-8) Investment Limitations. (5) Regulatory Compliance.
Item 14. Management of the Fund...(1-8) Federated Insurance Series
Management; Trustees' Compensation;
Item 15. Control Persons and Principal
Holders of Securities...(1-8) Fund Ownership.
Item 16. Investment Advisory and Other
Services................(1-8) Investment Advisory Services; (8)
Distribution Plan;(1-8) Other Services;(1-8) Fund Administration; (1-8)
Custodian and Portfolio Accountant; (1-5,8) Transfer Agent; (6,7) Transfer
Agent and Dividend Disbursing Agent; (1-8) Independent Auditors.
Item 17. Brokerage Allocation.....(1-8) Brokerage Transactions.
Item 18. Capital Stock and Other
Securities..............Not Applicable.
Item 19. Purchase, Redemption and Pricing
of Securities Being Offered (1-8) Purchasing Shares; (1-8)
Determining Net Asset Value.
Item 20. Tax Status...............(1-8) Tax Status.
Item 21. Underwriters.............Not Applicable.
Item 22. Calculation of Performance
Data....................(1-4,6-8) Total Return; (1-8) Yield; (5)
Effective Yield; (1-8) Performance Comparisons.
Item 23. Financial Statements.....(1-7) Incorporated by reference to the
Annual Report of Registrant dated December 31, 1995, filed with the
Commission on February 16, 1996 (File Nos. 33-69268 and 811-8042); (8) to
be filed by amendment.
This prospectus offers shares of Federated Utility Fund II (the "Fund"),
which is a diversified investment portfolio in the Federated Insurance
Series (the "Trust"), an open-end, diversified management investment
company. The Fund invests in equity and debt securities of utility
companies to achieve high current income and moderate capital appreciation.
Shares of the Fund may be sold only to separate accounts of insurance
companies to serve as the investment medium for variable life insurance
policies and variable annuity contracts issued by insurance companies.
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 the Fund through the variable annuity contracts and variable
life insurance policies offered by the insurance companies which provide
for investment in the Fund. Keep this prospectus for future reference.
The Fund has also filed a Statement of Additional Information dated April
, 1996, with the Securities and Exchange Commission. The information
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contained in the Statement of Additional Information is incorporated by
reference into this prospectus. You may request a copy of the Statement of
Additional Information, or a paper copy of this prospectus, if you have
received your prospectus electronically, 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.
FUND SHARES ARE AVAILABLE EXCLUSIVELY AS FUNDING VEHICLES FOR LIFE
INSURANCE COMPANIES WRITING VARIABLE ANNUITY CONTRACTS AND VARIABLE LIFE
INSURANCE POLICIES. THIS PROSPECTUS SHOULD BE ACCOMPANIED BY THE PROSPECTUS
FOR SUCH CONTRACTS.
Prospectus dated April , 1996
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Table of Contents will be generated when document is complete.
GENERAL INFORMATION
The Fund is a portfolio of Federated Insurance Series, which was
established as Insurance Management Series, a Massachusetts business trust,
under a Declaration of Trust dated September 15, 1993. At a meeting of the
Board of Trustees (the `Trustees'') held on November 14, 1995, the
Trustees approved an amendment to the Declaration of Trust to change the
name of the Trust from Insurance Management Series to Federated Insurance
Series. At a meeting of the Trustees held on February 26, 1996, the
Trustees approved an amendment to the Declaration of Trust to change the
name of the Fund from Utility Fund to Federated Utility Fund II. The
Declaration of Trust permits the Trust to offer separate series of shares
of beneficial interest in separate portfolios of securities, including the
Fund. The shares in any one portfolio may be offered in separate classes.
As of the date of this prospectus, the Trustees have not established
separate classes of shares.
Shares of the Fund are sold only to insurance companies as funding vehicles
for variable annuity contracts and variable life insurance policies issued
by the insurance companies. Shares of the Fund are sold at net asset value
as described in the section entitled "What Shares Cost." Shares of the Fund
are redeemed at net asset value.
INVESTMENT INFORMATION
INVESTMENT OBJECTIVE
The investment objective of the Fund is to achieve high current income and
moderate capital appreciation. The investment objective cannot be changed
without approval of shareholders. While there is no assurance that the Fund
will achieve its investment objective, it endeavors to do so by following
the policies described in this prospectus.
INVESTMENT POLICIES
The Fund endeavors to achieve its objective by investing primarily in a
professionally managed, diversified portfolio of equity and debt securities
of utility companies. Unless indicated otherwise, the investment policies
may be changed by the Trustees without shareholder approval. Shareholders
will be notified before any material change in these policies becomes
effective.
ACCEPTABLE INVESTMENTS. The Fund's investment approach is based on the
conviction that over the long term, the economy will continue to expand and
develop and that this economic growth will be reflected in the growth of
the revenues and earnings of utility companies. The Fund intends to achieve
its investment objective by investing in equity and debt securities of
utility companies that produce, transmit, or distribute gas and electric
energy as well as those companies that provide communications facilities,
such as telephone and telegraph companies. Under normal market conditions,
the Fund will invest at least 65% of its total assets in securities of
utility companies. The prices of fixed income securities fluctuate
inversely to the direction of interest rates.
COMMON STOCKS. The Fund invests primarily in common stocks of utility
companies selected by the Fund's investment adviser on the basis of
traditional research techniques, including assessment of earnings and
dividend growth prospects and of the risk and volatility of the company's
industry. However, other factors, such as product position, market share,
or profitability will also be considered by the Fund's investment adviser.
SECURITIES OF FOREIGN ISSUERS. 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.
The Fund will take advantage of the unusual opportunities for higher
returns available from investing in developing countries and may invest up
to 10% of its total assets in the utility securities of such countries.
These investments carry considerably more volatility and risk because they
are associated with less mature economies and less stable political
systems.
RISK CONSIDERATIONS IN DEVELOPING COUNTRIES. Securities prices in
developing countries can be significantly more volatile than in developed
countries, reflecting the greater uncertainties of investing in lesser
developed markets and economies. In particular, developing countries may
have relatively unstable governments, and may present the risk of
nationalization of businesses, expropriation, confiscatory taxation or, in
certain instances, reversion to closed market, centrally planned economies.
Such countries may also have restrictions on foreign ownership or
prohibitions on the repatriation of assets, and may have less protection of
property rights than developed countries.
The economies of developing countries may be predominantly based on only a
few industries or dependent on revenues from particular commodities or on
international aid or development assistance, may be highly vulnerable to
changes in local or global trade conditions, and may suffer from extreme
and volatile debt burdens or inflation rates. In addition, securities
markets in developing countries may trade a small number of securities and
may be unable to respond effectively to increase in trading volume,
potentially resulting in a lack of liquidity and in volatility in the price
of securities traded on those markets. Also, securities markets in
developing countries typically offer less regulatory protection for
investors.
CONVERTIBLE SECURITIES. The Fund may invest in convertible securities of
companies. Convertible securities are fixed income securities which may be
exchanged or converted into a predetermined number of the issuer's
underlying common stock at the option of the holder during a specified time
period. Convertible securities may take the form of convertible preferred
stock, convertible bonds or debentures, units consisting of `usable''
bonds and warrants or a combination of the features of several of these
securities. The Fund invests in convertible bonds rated `B'' or higher by
Standard & Poor's Ratings Group (`S&P'') or Moody's Investors Service,
Inc. (`Moody's'') at the time of investment or, if unrated, of comparable
quality. If a convertible bond is rated below `B'' according to the
characteristics set forth hereafter after the Fund has purchased it, the
Fund is not required to drop the convertible bond from the portfolio but
will consider appropriate action. The investment characteristics of each
convertible security vary widely, which allows convertible securities to be
employed for different investment objectives.
Bonds rated `BBB'' or lower by S&P or ``Baa'' or lower by Moody's have
speculative characteristics. Changes in economic conditions or other
circumstances are more likely to lead to weakened capacity to make
principal and interest payments than higher rated bonds.
Convertible bonds and convertible preferred stocks are fixed income
securities that generally retain the investment characteristics of fixed
income securities until they have been converted but also react to
movements in the underlying equity securities. The holder is entitled to
receive the fixed income of a bond or the dividend preference of a
preferred stock until the holder elects to exercise the conversion
privilege. Usable bonds are corporate bonds that can be used in whole or in
part, customarily at full face value, in lieu of cash to purchase the
issuer's common stock. When owned as part of a unit along with warrants,
which are options to buy the common stock, they function as convertible
bonds, except that the warrants generally will expire before the bond's
maturity. Convertible securities are senior to equity securities and,
therefore, have a claim to assets of the corporation prior to the holders
of common stock in the case of liquidation. However, convertible securities
are generally subordinated to similar nonconvertible securities of the same
company. The interest income and dividends from convertible bonds and
preferred stocks provide a stable stream of income with generally higher
yields than common stocks, but lower than nonconvertible securities of
similar quality. The Fund will exchange or convert the convertible
securities held in its portfolio into shares of the underlying common stock
in instances in which, in the investment adviser's opinion, the investment
characteristics of the underlying common shares will assist the Fund in
achieving its investment objective. Otherwise, the Fund will hold or trade
the convertible securities. In selecting convertible securities for the
Fund, the Fund's adviser evaluates the investment characteristics of the
convertible security as a fixed income instrument and the investment
potential of the underlying equity security for capital appreciation. In
evaluating these matters with respect to a particular convertible security,
the Fund's adviser considers numerous factors, including the economic and
political outlook, the value of the security relative to other investment
alternatives, trends in the determinants of the issuer's profits, and the
issuer's management capability and practices.
In general, the market value of a convertible security is at least the
higher of its `investment value'' (i.e, its value as a fixed income
security) or its `conversion value'' (i.e., its value upon conversion into
its underlying common stock). As a fixed income security, a convertible
security tends to increase in market value when interest rates decline and
tends to decrease in value when interest rates rise. However, the price of
a convertible security is also influenced by the market value of the
security's underlying common stock. The price of a convertible security
tends to increase as the market value of the underlying stock rises,
whereas it tends to decrease as the market value of the underlying stock
declines. While no securities investment is without some risk, investments
in convertible securities generally entail less risk than investments in
the common stock of the same issuer.
OTHER SECURITIES. The Fund may invest in preferred stocks, corporate
bonds, notes, and warrants of these companies and in cash, U.S. government
securities, and money market instruments in proportions determined by its
investment adviser.
RESTRICTED AND ILLIQUID SECURITIES. The Fund may invest up to 15% of its
total assets in restricted securities. This restriction is not applicable
to commercial paper issued under Section 4(2) of the Securities Act of
1933. Restricted securities are any securities in which the Fund may
otherwise invest pursuant to its investment objective and policies, but
which are subject to restriction on resale under federal securities law. To
the extent restricted securities are deemed to be illiquid, the Fund will
limit their purchase, including non-negotiable time deposits, repurchase
agreements providing for settlement in more than seven days after notice,
over-the-counter options, and certain restricted securities determined by
the Trustees not to be liquid, to 15% of its net assets.
TEMPORARY INVESTMENTS. The Fund may also invest temporarily in cash, cash
items, and short-term instruments, including notes and commercial paper,
for liquidity and during times of unusual market conditions for defensive
purposes. Cash items may include obligations such as:
o certificates of deposit (including those issued by domestic and
foreign branches of FDIC insured banks);
o obligations issued or guaranteed as to principal and interest by the
U.S. government or any of its agencies or instrumentalities;
o and repurchase agreements.
LENDING OF PORTFOLIO SECURITIES. In order to generate additional income,
the Fund may lend its portfolio securities on a short-term or long-term
basis, or both, up to one-third of the value of its total assets to
broker/dealers, banks, or other institutional borrowers of securities. This
is a fundamental policy which may not be changed without the approval of
shareholders. The Fund will only enter into loan arrangements with
broker/dealers, banks, or other institutions which the investment adviser
has determined are creditworthy under guidelines established by the
Trustees and will receive collateral equal to at least 100% of the value of
the securities loaned at all times. There is the risk that when lending
portfolio securities, the securities may not be available to the Fund on a
timely basis and the Fund may, therefore, lose the opportunity to sell the
securities at a desirable price. In addition, in the event that a borrower
of securities would file for bankruptcy or become insolvent, disposition of
the securities may be delayed pending court action.
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 seller's failure to complete the
transaction may cause the Fund to miss a price or yield considered to be
advantageous. Settlement dates may be a month or more after entering into
these transactions, and the market values of the securities purchased may
vary from the purchase prices. Accordingly, the Fund may pay more/less than
the market value of the securities on the settlement date.
The Fund may dispose of a commitment prior to settlement if the adviser
deems it appropriate to do so. In addition, the Fund may enter into
transactions to sell its purchase commitments to third parties at current
market values and simultaneously acquire other commitments to purchase
similar securities at later dates. The Fund may realize short-term profits
or losses upon the sale of such commitments.
PUT AND CALL OPTIONS. The Fund may purchase put options on its portfolio
securities. These options will be used as a hedge to attempt to protect
securities which the Fund holds against decreases in value. The Fund will
only purchase puts on portfolio securities which are traded on a recognized
exchange.
The Fund may also write call options on all or any portion of its portfolio
to generate income for the Fund. The Fund will write call options on
securities either held in its portfolio or for 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. The call
options which the Fund writes must be listed on a recognized options
exchange. Although the Fund reserves the right to write covered call
options on its entire portfolio, it will not write such options on more
than 25% of its total assets unless a higher limit is authorized by its
Trustees.
FINANCIAL FUTURES AND OPTIONS ON FUTURES. The Fund may purchase and sell
financial futures contracts to hedge all or a portion of its portfolio of
long-term debt securities against changes in interest rates. Financial
futures contracts call for the delivery of particular debt instruments
issued or guaranteed by the U.S. Treasury or by specified agencies or
instrumentalities of the U.S. government 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.
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. When the Fund writes a call option on
a futures contract, it is undertaking the obligation of selling a futures
contract at a fixed price at any time during a specified period if the
option is exercised. Conversely, as purchaser of a put option on a futures
contract, the Fund is entitled (but not obligated) to sell a futures
contract at the fixed price during the life of the option.
The Fund may not purchase or sell futures contracts or related options if
immediately thereafter the sum of the amount of margin deposits on the
Fund's existing futures positions and premiums paid for related options
would exceed 5% of the market value of the Fund's total assets. When the
Fund purchases futures contracts, an amount of cash and cash equivalents,
equal to the underlying commodity value of the futures contracts (less any
related margin deposits), will be deposited in a segregated account with
the Fund's custodian (or the broker, if legally permitted) to collateralize
the position and thereby insure that the use of such futures contracts is
unleveraged.
RISKS. When the Fund uses financial futures and options on financial
futures as hedging devices, there is a risk that the prices of the
securities subject to the futures contracts may not correlate perfectly
with the prices of the securities in the Fund's portfolio. This may cause
the futures contract and any related options to react differently than the
portfolio securities to market changes. In addition, the Fund's investment
adviser could be incorrect in its expectations about the direction or
extent of market factors such as interest rate movements. In these events,
the Fund may lose money on the futures contract or option.
It is not certain that a secondary market for positions in futures
contracts or for options will exist at all times. Although the investment
adviser will consider liquidity before entering into futures and options
transactions, there is no assurance that a liquid secondary market on an
exchange will exist for any particular futures contract or option at any
particular time. The Fund's ability to establish and close out futures and
options positions depends on this secondary market.
VARIABLE ASSET REGULATIONS. The Fund is also subject to variable contract
asset regulations prescribed by the U.S. Treasury Department under Section
817(h) of the Internal Revenue Code. After a one year start-up period, the
regulations generally require that, as of the end of each calendar quarter
or within 30 days thereafter, no more than 55% of the total assets of the
Fund may be represented by any one investment, no more than 70% of the
total assets of the Fund may be represented by any two investments, no more
than 80% of the total assets of the Fund may be represented by any three
investments, and no more than 90% of the total assets of the Fund may be
represented by any four investments. In applying these diversification
rules, all securities of the same issuer, all interests in the same real
property project, and all interests in the same commodity are each treated
as a single investment. In the case of government securities, each
government agency or instrumentality shall be treated as a separate issuer.
If the Fund fails to achieve the diversification required by the
regulations, unless relief is obtained from the Internal Revenue Service,
the contracts invested in the Fund will not be treated as annuity,
endowment, or life insurance contracts.
The Fund will be operated at all times so as to comply with the foregoing
diversification requirements.
STATE INSURANCE REGULATIONS. The Fund is intended to be a funding vehicle
for variable annuity contracts and variable life insurance policies offered
by certain insurance companies. The contracts will seek to be offered in as
many jurisdictions as possible. Certain states have regulations concerning,
among other things, the concentration of investments, sales and purchases
of futures contracts, and short sales of securities. If applicable, the
Fund may be limited in its ability to engage in such investments and to
manage its portfolio with desired flexibility. The Fund will operate in
material compliance with the applicable insurance laws and regulations of
each jurisdiction in which contracts will be offered by the insurance
companies which invest in the Fund.
INVESTMENT LIMITATIONS
The Fund will not:
o borrow money directly or through reverse repurchase agreements
(arrangements in which the Fund sells a portfolio instrument for a
percentage of its cash value with an agreement to buy it back on a set
date), or pledge securities except, under certain circumstances, the Fund
o may borrow money and engage in reverse repurchase agreements in
amounts 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.
The above investment limitations cannot be changed without shareholder
approval.
NET ASSET VALUE
The net asset value per share of the Fund fluctuates. It is determined by
dividing the sum of the market value of all securities and other assets of
the Fund, less liabilities, by the number of shares outstanding.
INVESTING IN THE FUND
PURCHASES AND REDEMPTIONS
Shares of the Fund are not sold directly to the general public. The Fund's
shares are used solely as the investment vehicle for separate accounts of
insurance companies offering variable annuity contracts and variable life
insurance policies. The use of Fund shares as investments for both variable
annuity contracts and variable life insurance policies is referred to as
"mixed funding." The use of Fund shares as investments by separate accounts
of unaffiliated life insurance companies is referred to as "shared
funding."
The Fund intends to engage in mixed funding and shared funding in the
future. Although the Fund does not currently foresee any disadvantage to
contract owners due to differences in redemption rates, tax treatment, or
other considerations resulting from mixed funding or shared funding, the
Trustees will closely monitor the operation of mixed funding and shared
funding and will consider appropriate action to avoid material conflicts
and take appropriate action in response to any material conflict which
occur. Such action could result in one or more participating insurance
companies withdrawing their investment in the Fund.
Shares of the Fund are purchased or redeemed on behalf of participating
insurance companies at the next computed net asset value after an order is
received on days on which the New York Stock Exchange is open.
WHAT SHARES COST
The net asset value is determined as of the close of trading (normally 4:00
p.m., Eastern time) on 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 such 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; and (iii) the
following holidays: New Year's Day, Presidents' Day, Good Friday, Memorial
Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day.
Purchase orders from separate accounts investing in the Fund which are
received by the insurance companies by 4:00 p.m. (Eastern time), will be
computed at the net asset value of the Fund determined on that day, as long
as such purchase orders are received by the Fund in proper form and in
accordance with applicable procedures by 8:00 a.m. (Eastern time) on the
next business day and as long as federal funds in the amount of such orders
are received by the Fund on the next business day. It is the responsibility
of each insurance company which invests in the Fund to properly transmit
purchase orders and federal funds in accordance with the procedures
described above.
DIVIDENDS
Dividends on shares of the Fund are declared and paid monthly.
Shares of the Fund will begin earning dividends if owned on the record
date. Dividends of the Fund are automatically reinvested in additional
shares of the Fund on payment dates at the ex-dividend date net asset
value.
FUND INFORMATION
MANAGEMENT OF THE FUND
BOARD OF TRUSTEES. The Trust is managed by a Board of Trustees. The
Trustees are responsible for managing the business affairs of the Trust and
for exercising all of the Trust's powers except those reserved for the
shareholders. The Executive Committee of the Board of Trustees handles the
Board's responsibilities between meetings of the Board.
INVESTMENT ADVISER. Pursuant to an investment advisory contract with the
Trust, investment decisions for the Fund are made by Federated Advisers,
the Fund's investment adviser, subject to direction by the Trustees. The
adviser continually conducts investment research and supervision for the
Fund and is responsible for the purchase and sale of portfolio instruments,
for which it receives an annual fee from the Fund.
Both the Trust and the adviser have adopted strict codes of ethics
governing the conduct of all employees who manage the Fund and its
portfolio securities. These codes recognize that such persons owe a
fiduciary duty to the Fund's shareholders and must place the interests of
shareholders ahead of the employees' own interest. Among other things, the
codes: require preclearance and periodic reporting of personal securities
transactions; prohibit personal transactions in securities being purchased
or sold, or being considered for purchase or sale, by the Fund; prohibit
purchasing securities in initial public offerings; and prohibit taking
profits on securities held for less than sixty days. Violations of these
codes are subject to review by the Trustees, and could result in severe
penalties.
ADVISORY FEES. The Fund's adviser receives an annual investment advisory
fee equal to .75 of 1% of the Fund's average daily net assets. The adviser
may voluntarily choose to waive a portion of its fees or reimburse the Fund
for certain operating expenses. The adviser can terminate this voluntary
waiver and reimbursement of expenses at any time at its sole discretion.
ADVISER'S BACKGROUND. Federated Advisers, 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.
Federated Advisers 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. With over $80 billion invested across
more than 250 funds under management and/or administration by its
subsidiaries, as of December 31, 1995, Federated Investors is one of the
largest mutual fund investment managers in the United States. With more
than 1,800 employees, Federated contintues to be led by the management who
founded the company in 1955. Federated funds are presently at work in and
through 4,000 financial institutions nationwide. More than 100,000
investment professionals have selected Federated funds for their clients.
Linda A. Duessel has been the Fund's portfolio manager since April 1995.
Ms. Duessel joined Federated Investors in 1991 and has been a Vice
President of the Fund's investment adviser since 1995. Ms. Duessel was an
Assistant Vice President of the Fund's investment adviser from 1991 until
1995. Ms. Duessel is a Chartered Financial Analyst and received her M.S.
in Industrial Administration from Carnegie Mellon University.
DISTRIBUTION OF FUND 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.
State securities laws may require certain financial institutions such as
depository institutions to register as dealers.
ADMINISTRATION OF THE FUND
ADMINISTRATIVE SERVICES. Federated Services Company, a subsidiary of
Federated Investors, provides administrative personnel and services
(including certain legal and financial reporting services) necessary to
operate the Fund. Federated Services Company provides these at an annual
rate as specified below:
Maximum
Administrative Fee Average Aggregate Daily Net Assets
.15 of 1% on the first $250 million
.125 of 1% on the next $250 million
.10 of 1% on the next $250 million
.075 of 1% on assets in excess of $750 million
The administrative fee received during any fiscal year shall be at least
$125,000 per portfolio and $30,000 per each additional class of shares.
Federated Services Company may choose voluntarily to waive a portion of its
fee.
BROKERAGE TRANSACTIONS
When selecting brokers and dealers to handle the purchase and sale of
portfolio instruments, the adviser looks for prompt execution of the order
at a favorable price. In working with dealers, the 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 these criteria, the
adviser may give consideration to those firms which have sold or are
selling shares of the other funds distributed by Federated Securities Corp.
The adviser makes decisions on portfolio transactions and selects brokers
and dealers subject to review by the Trustees.
SHAREHOLDER INFORMATION
VOTING RIGHTS
The insurance company separate accounts, as shareholders of the Fund, will
vote the Fund shares held in their separate accounts at meetings of the
shareholders. Voting will be in accordance with instructions received from
contract owners of the separate accounts, as more fully outlined in the
prospectus of the separate account. As of February 7, 1997, Life of Virgina
and Aetna Retirement Services owned 34.92% and 26.64%, respectively, of the
voting securities of the Fund, and, therefore, may for certain purposes be
deemed to control the Fund and be able to affect the outcome of certain
matters presented for a vote of shareholders.
Each share of the Fund gives the shareholder one vote in Trustee elections
and other matters submitted to shareholders for vote. All shares of each
portfolio in the Trust have equal voting rights except that only shares of
the Fund are entitled to vote on matters affecting only the Fund. As a
Massachusetts business trust, the Trust is not required to hold annual
shareholder meetings. Shareholder approval will be sought only for certain
changes in the Trust's or the Fund's operations and for the election of
Trustees in certain circumstances.
Trustees may be removed by the Trustees or by shareholders at a special
meeting. A special meeting of shareholders shall be called by the Trustees
upon the written request of shareholders owning at least 10% of the
outstanding shares of all series of the Trust.
TAX INFORMATION
FEDERAL TAXES
The Fund will pay no federal income tax because the Fund expects to meet
requirements of the Internal Revenue Code applicable to regulated
investment companies and to receive the special tax treatment afforded to
such companies.
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 Trust's other portfolios will not be combined for tax purposes with
those realized by the Fund.
The Fund intends to comply with the variable asset diversification
regulations which are described earlier in this prospectus. If the Fund
fails to comply with these regulations, contracts invested in the Fund
shall not be treated as annuity, endowment, or life insurance contracts
under the Internal Revenue Code.
Contract owners should review the applicable contract prospectus for
information concerning the federal income tax treatment of their contracts
and distributions from the Fund to the separate accounts.
STATE AND LOCAL TAXES
Contract owners are urged to consult their own tax advisers regarding the
status of their contracts under state and local tax laws.
PERFORMANCE INFORMATION
From time to time the Fund advertises total return and yield.
Total return represents the change, over a specific period of time, in the
value of an investment in the Fund 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 yield of the Fund is calculated by dividing the net investment income
per share (as defined by the Securities and Exchange Commission) earned by
the Fund over a thirty-day period by the offering price per share of the
Fund on the last day of the period. This number is then annualized using
semi-annual compounding. The yield does not necessarily reflect income
actually earned by the Fund and, therefore, may not correlate to the
dividends or other distributions paid to shareholders.
Performance information will not reflect the charges and expenses of a
variable annuity or variable life insurance contract. Because shares of the
Fund can only be purchased by a separate account of an insurance company
offering such a contract, you should review the performance figures of the
contract in which you are invested, which performance figures will
accompany any advertisement of the Fund's performance.
From time to time, advertisements for the Fund may refer to ratings,
rankings, and other information in certain financial publications and/or
compare the Fund's performance to certain indices.
ADDRESSES
Federated Insurance Series
FederatedUtility Fund II Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
Distributor
Federated Securities Corp. Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
Investment Adviser
Federated Advisers Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
Custodian
State Street Bank and P.O. Box 8600
Trust Company Boston, Massachusetts 02266-8600
Transfer Agent and Dividend
Disbursing Agent
Federated Shareholder Services P.O. Box 8600
Company Boston, Massachusetts 02266-8600
Independent Auditors
Deloitte & Touche LLP 2500 One PPG Place
Pittsburgh, Pennsylvania 15222-5401
Federated Utility Fund II
(formerly, Utility Fund)
Prospectus
A Diversified Portfolio of
Federated Insurance Series
An Open-End, Management
Investment Company
April , 1997
--
[LOGO] FEDERATED INVESTORS
Federated Investors Tower
Pittsburgh, PA 15222-3779
Federated Securities Corp. is the distributor of the fund
and is a subsidary of Federated Investors
Cusip 458043205
3113008A (4/97)
FEDERATED UTILITY FUND II
(A PORTFOLIO OF FEDERATED INSURANCE SERIES)
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information should be read with the prospectus
of Federated Utility Fund II (the `Fund'') dated April , 1997. This
---
Statement is not a prospectus itself. You may request a copy of a
prospectus or a paper copy of this Statement, if you have received it
electronically, free of charge by calling 1-800-235-4669.
FEDERATED INVESTORS TOWER
PITTSBURGH, PENNSYLVANIA 15222-3779
Statement dated April , 1997
---
FEDERATED INVESTORS
Federated Investors Tower
Pittsburgh, PA 15222-3779
Federated Securities Corp. is the distributor of the Fund
and is a subsidiary of Federated Investors.
Cusip 313916108
3113008B (4/97)
GENERAL INFORMATION
The Fund is a portfolio of Federated Insurance Series (the `Trust''),
which was established as Insurance Management Series, a Massachusetts
business trust, under a Declaration of Trust dated September 15, 1993. At a
meeting of the Board of Trustees (the `Trustees'') held on November 14,
1995, the Trustees approved an amendment to the Declaration of Trust to
change the name of the Trust from Insurance Management Series to Federated
Insurance Series. At a meeting of the Trustees held on February 26, 1996,
the Trustees approved an amendment to the Declaration of Trust to change
the name of the Fund from Utility Fund to Federated Utility Fund II. The
Declaration of Trust permits the Trust to offer separate series of shares
of beneficial interest in separate portfolios of securities, including the
Fund. The shares in any one portfolio may be offered in separate classes.
As of the date of this prospectus, the Trustees have not established
separate classes of shares.
INVESTMENT OBJECTIVE AND POLICIES
The Fund's investment objective is to achieve high current income and
moderate capital appreciation. The investment objective cannot be changed
without approval of shareholders. The Fund endeavors to achieve its
investment objective by investing primarily in a professionally managed,
diversified portfolio of equity and debt securities of utility companies.
U.S. GOVERNMENT OBLIGATIONS
The Fund may also invest in U.S. government obligations which generally
include direct obligations of the U.S. Treasury (such as U.S. Treasury
bills, notes, and bonds) and obligations issued and/or guaranteed by U.S.
government agencies or instrumentalities. These securities are backed by:
o the full faith and credit of the U.S. Treasury;
o the issuer's right to borrow an amount limited to a specific line of
credit from the U.S. Treasury;
o the discretionary authority of the U.S. government to purchase certain
obligations of agencies or instrumentalities; or
o the credit of the agency or instrumentality issuing the obligations.
Examples of agencies and instrumentalities which may not always receive
financial support from the U.S. government are:
o Farm Credit System, including the National Bank for Cooperatives,
Farm Credit Banks, and Banks for Cooperatives;
o Federal Home Loan Banks;
o Federal Home Loan Mortgage Corporation;
o Federal National Mortgage Association; and
o Student Loan Marketing Association.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
These transactions are made to secure what is considered to be an
advantageous price or yield for the Fund. No fees or other expenses, other
than normal transaction costs, are incurred. However, liquid assets of the
Fund sufficient to make payment for the securities to be purchased are
segregated on a Fund's records at the trade date. These assets are marked
to market daily and are maintained until the transaction has been settled.
The Fund does not intend to engage in when-issued and delayed delivery
transactions to an extent that would cause the segregation of more than 20%
of the total value of its assets.
LENDING OF PORTFOLIO SECURITIES
In order to generate additional income, the Fund may lend its portfolio
securities, up to one-third of the value of its total assets, to
broker/dealers, banks, or other institutional borrowers of securities.
The collateral received when the Fund lends portfolio securities must be
valued daily and, should the market value of the loaned securities
increase, the borrower must furnish additional collateral to the Fund.
During the time portfolio securities are on loan, the borrower pays the
Fund any dividends or interest paid on such securities. Loans are subject
to termination at the option of the Fund or the borrower. The Fund may pay
reasonable administrative and custodial fees in connection with a loan and
may pay a negotiated portion of the interest earned on the cash or
equivalent collateral to the borrower or placing broker. The Fund does not
have the right to vote securities on loan, but would terminate the loan and
regain the right to vote if that were considered important with respect to
the investment.
REPURCHASE AGREEMENTS
Repurchase agreements are arrangements in which banks, broker/dealers, and
other recognized financial institutions sell U.S. government securities or
other securities to the Fund and agree at the time of sale to repurchase
them at a mutually agreed upon time and price. The Fund or its custodian
will take possession of the securities subject to repurchase agreements and
these securities will be marked to market daily. 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. In the event that such a defaulting seller filed for bankruptcy
or became insolvent, disposition of such securities by the Fund might be
delayed pending court action. The Fund believes that under the regular
procedures normally in effect for custody of the Fund's portfolio
securities subject to repurchase agreements, a court of competent
jurisdiction would rule in favor of the Fund and allow retention or
disposition of such securities. The Fund will only enter into repurchase
agreements with banks and other recognized financial institutions, such as
broker/dealers, which are deemed by the Fund's adviser to be creditworthy
pursuant to guidelines established by the Trustees.
REVERSE REPURCHASE AGREEMENTS
The Fund may also enter into reverse repurchase agreements. These
transactions are similar to borrowing cash. In a reverse repurchase
agreement, the Fund transfers possession of a portfolio instrument to
another person, such as a financial institution, broker, or dealer, in
return for a percentage of the instrument's market value in cash, and
agrees that on a stipulated date in the future the Fund will repurchase the
portfolio instrument by remitting the original consideration plus interest
at an agreed upon rate.
When effecting reverse repurchase agreements, liquid assets of the Fund, in
a dollar amount sufficient to make payment for the obligations to be
purchased, are segregated at the trade date. These securities are marked to
market daily and maintained until the transaction is settled.
RESTRICTED AND ILLIQUID SECURITIES
The Fund may invest in commercial paper issued in reliance on the exemption
from registration afforded by Section 4(2) of the Securities Act of 1933.
Section 4(2) commercial paper is restricted as to disposition under federal
securities law and is generally sold to institutional investors, such as
the Fund, who agree that they are purchasing the paper for investment
purposes and not with a view to public distribution. Any resale by the
purchaser must be in an exempt transaction. Section 4(2) commercial paper
is normally resold to other institutional investors like the Fund through
or with the assistance of the issuer or investment dealers who make a
market in Section 4(2) commercial paper, thus providing liquidity.
The ability of the Trustees to determine the liquidity of certain
restricted securities is permitted under a Securities and Exchange
Commission (`SEC'') Staff position set forth in the adopting release for
Rule 144A under the Securities Act of 1933 (the `Rule''). The Rule is a
non-exclusive safe-harbor for certain secondary market transactions
involving securities subject to restrictions on resale under federal
securities laws. The Rule provides an exemption from registration for
resales of otherwise restricted securities to qualified institutional
buyers. The Rule was expected to further enhance the liquidity of the
secondary market for securities eligible for resale under the Rule. The
Fund believes that the Staff of the SEC has left the question of
determining the liquidity of all restricted securities to the Trustees. The
Trustees may consider the following criteria in determining the liquidity
of certain restricted securities:
o the frequency of trades and quotes for the security;
o the number of dealers willing to purchase or sell the security and the
number of other potential buyers;
o dealer undertakings to make a market in the security; and
o the nature of the security and the nature of the marketplace trades.
PORTFOLIO TURNOVER
Securities in the Fund's portfolio will be sold whenever the Fund's
investment adviser believes it is appropriate to do so in light of the
Fund's investment objective, without regard to the length of time a
particular security may have been held. Any such trading will increase the
Fund's portfolio turnover rate and transaction costs. The adviser to the
Fund does not anticipate that portfolio turnover will result in adverse tax
consequences.
For the fiscal year ended December 31, 1995, and for the period from April
14, 1994 (date of initial public investment) to December 31, 1994, the
portfolio turnover rates for the Fund were 62% and 73%, respectively.
INVESTMENT LIMITATIONS
SELLING SHORT AND BUYING ON MARGIN
The Fund will not sell any securities short or purchase any securities on
margin, but may obtain such short-term credits as may be necessary for
clearance of purchases and sales of portfolio securities. The deposit or
payment by the Fund of initial or variation margin in connection with
futures contracts or related options transactions is not considered the
purchase of a security on margin.
ISSUING SENIOR SECURITIES AND BORROWING MONEY
The Fund will not issue senior securities except that the Fund may borrow
money directly or through reverse repurchase agreements as a temporary,
extraordinary, or emergency measure to facilitate management of the
portfolio by enabling the Fund to meet redemption requests when the
liquidation of portfolio securities is deemed to be inconvenient or
disadvantageous, and then only in amounts not in excess of one-third of the
value of its total assets; provided that, while borrowings and reverse
repurchase agreements outstanding exceed 5% of the Fund's total assets, any
such borrowings will be repaid before additional investments are made. The
Fund will not borrow money or engage in reverse repurchase agreements for
investment leverage purposes.
PLEDGING ASSETS
The Fund will not mortgage, pledge, or hypothecate any assets except to
secure permitted borrowings. In those cases, it may mortgage, pledge or
hypothecate assets having a market value not exceeding the lesser of the
dollar amounts borrowed or 15% of the value of its total assets at the time
of borrowing. For purposes of this limitation, the following are not deemed
to be pledges: margin deposits for the purchase and sale of futures
contracts and related options, any segregation or collateral arrangements
made in connection with options activities or the purchase of securities on
a when-issued basis.
CONCENTRATION OF INVESTMENTS
The Fund will not purchase securities, if, as a result of such purchase,
25% or more of its total assets would be invested in securities of
companies engaged principally in any one industry other than the utilities
industry. However, the Fund may at any time invest 25% or more of its total
assets in cash or cash items and securities issued and/or guaranteed by the
U.S. government, its agencies or instrumentalities.
INVESTING IN COMMODITIES
The Fund will not purchase or sell commodities, commodity contracts, or
commodity futures contracts except that the Fund may purchase and sell
futures and stock index futures contracts and related options.
INVESTING IN REAL ESTATE
The Fund will not purchase or sell real estate, including limited
partnership interests in real estate, although it may invest in securities
of companies whose business involves the purchase or sale of real estate or
in securities secured by real estate or interests in real estate.
LENDING CASH OR SECURITIES
The Fund will not lend any of its assets, except portfolio securities up to
one-third of its total assets. This shall not prevent the Fund from
purchasing or holding corporate or U.S. government bonds, debentures,
notes, certificates of indebtedness or other debt securities of an issuer,
entering into repurchase agreements, or engaging in other transactions
which are permitted by the Fund's investment objective and policies or the
Trust's Declaration of Trust.
UNDERWRITING
The Fund will not underwrite any issue of securities, except as it may be
deemed to be an underwriter under the Securities Act of 1933 in connection
with the sale of securities in accordance with its investment objective,
policies, and limitations.
DIVERSIFICATION OF INVESTMENTS
With respect to 75% of its total assets, the Fund will not purchase the
securities of any one issuer (other than cash, cash items, or securities
issued and/or guaranteed by the U.S. government, its agencies or
instrumentalities, and repurchase agreements collateralized by such
securities) if, as a result, more than 5% of its total assets would be
invested in the securities of that issuer. Also, the Fund will not purchase
more than 10% of any class of the outstanding voting securities of any one
issuer. For these purposes, the Fund considers common stock and all
preferred stock of an issuer each as a single class, regardless of
priorities, series, designations, or other differences.
The above investment limitations cannot be changed without shareholder
approval. The following limitations, however, may be changed by the
Trustees without shareholder approval. Shareholders will be notified before
any material changes in these limitations become effective.
INVESTING IN RESTRICTED SECURITIES
The Fund will not invest more than 15% of its total assets in securities
subject to restrictions on resale under the Securities Act of 1933, except
for commercial paper issued under Section 4(2) of the Securities Act of
1933 and certain other restricted securities which meet the criteria for
liquidity as established by the Trustees.
INVESTING IN ILLIQUID SECURITIES
The Fund will not invest more than 15% of its net assets in illiquid
securities, including, among others, repurchase agreements providing for
settlement more than seven days after notice, over-the-counter options, and
certain restricted securities not determined by the Trustees to be liquid.
INVESTING IN PUT OPTIONS
The Fund will not purchase put options on securities, unless the securities
are held in the Fund's portfolio and not more than 5% of the Fund's total
assets would be invested in premiums on open put option positions.
WRITING COVERED CALL OPTIONS
The Fund will not write call options on securities unless the securities
are held in the Fund's portfolio or unless the Fund is entitled to them in
deliverable form without further payment or after segregating cash in the
amount of any further payment.
Except with respect to borrowing money, if a percentage limitation is
adhered to at the time of investment, a later increase or decrease in
percentage resulting from any change in value of total or net assets will
not result in a violation of such restriction.
The Fund has no present intention to borrow money in excess of 5% of the
value of its net assets during the coming fiscal year.
For purposes of its policies and limitations, the Fund considers
certificates of deposit and demand and time deposits issued by a U.S.
branch of a domestic bank or savings association having capital, surplus,
and undivided profits in excess of $100,000,000 at the time of investment
to be `cash items.''
FEDERATED INSURANCE SERIES MANAGEMENT
Officers and Trustees are listed with their addresses, birthdates, present
positions with Federated Insurance Series, and principal occupations.
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, President of
the Trust .
Thomas G. Bigley
28th Floor, One Oxford Centre
Pittsburgh, PA
Birthdate: February 3, 1934
Trustee
Director, Oberg Manufacturing Co.; Chairman of the Board, Children's
Hospital of Pittsburgh; Director or Trustee of the Funds; formerly, Senior
Partner, Ernst & Young LLP.
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
Trustee
President, Investment Properties Corporation; Senior Vice-President, John
R. Wood and Associates, Inc., Realtors; President, Northgate Village
Development Corporation; Partner or Trustee in private real estate ventures
in Southwest Florida; Director or Trustee of the Funds; formerly,
President, Naples Property Management, Inc.
William J. Copeland
One PNC Plaza - 23rd Floor
Pittsburgh, PA
Birthdate: July 4, 1918
Trustee
Director and Member of the Executive Committee, Michael Baker, Inc.;
Director or Trustee of the Funds; formerly, Vice Chairman and Director, PNC
Bank, N.A., and PNC Bank Corp. and Director, Ryan Homes, Inc.
J. Christopher Donahue *
Federated Investors Tower
Pittsburgh, PA
Birthdate: April 11, 1949
President and Trustee
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 of
the Trust.
James E. Dowd
571 Hayward Mill Road
Concord, MA
Birthdate: May 18, 1922
Trustee
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
Trustee
Professor of Medicine and Member, Board of Trustees, 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.@
Henny, Kochuba, Meyer and Flaherty
Two Gateway Center - Suite 674
Pittsburgh, PA
Birthdate: June 18, 1924
Trustee
Attorney-at-law; Shareholder, Henny, Kochuba, Meyer and Flaherty; Director,
Eat'N Park Restaurants, Inc., and Statewide Settlement Agency, Inc.;
Director or Trustee of the Funds; formerly, Counsel, Horizon Financial,
F.A., Western Region.
Peter E. Madden
Seacliff
562 Bellevue Avenue
Newport, RI
Birthdate: March 16, 1942
Trustee
Consultant; State Representative, Commonwealth of Massachusetts; Director
or Trustee of the Funds; formerly, President, State Street Bank and Trust
Company and State Street Boston Corporation.
Gregor F. Meyer
Henny, Kochuba, Meyer and Flaherty
Two Gateway Center - Suite 674
Pittsburgh, PA
Birthdate: October 6, 1926
Trustee
Attorney-at-law; Shareholder, Henny, Kochuba, Meyer and Flaherty; Chairman,
Meritcare, Inc.; Director, Eat'N Park Restaurants, Inc.; Director or
Trustee of the Funds.
John E. Murray, Jr., J.D., S.J.D.
President, Duquesne University
Pittsburgh, PA
Birthdate: December 20, 1932
Trustee
President, Law Professor, Duquesne University; Consulting Partner, Mollica,
Murray and Hogue; Director or Trustee of the Funds.
Wesley W. Posvar
1202 Cathedral of Learning
University of Pittsburgh
Pittsburgh, PA
Birthdate: September 14, 1925
Trustee
Professor, International Politics and Management Consultant; Trustee,
Carnegie Endowment for International Peace, RAND Corporation, Online
Computer Library Center, Inc., and U.S. Space Foundation; Chairman, Czecho
Management Center; Director or Trustee of the Funds; President Emeritus,
University of Pittsburgh; founding Chairman, National Advisory Council for
Environmental Policy and Technology and Federal Emergency Management
Advisory Board.
Marjorie P. Smuts
4905 Bayard Street
Pittsburgh, PA
Birthdate: June 21, 1935
Trustee
Public relations/marketing consultant; Conference Coordinator, Non-profit
entities; Director or Trustee of the Funds.
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 and Secretary
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.
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.
David M. Taylor
Federated Investors Tower
Pittsburgh, PA
Birthdate: January 13, 1947
Treasurer
Senior Vice President and Trustee, Federated Investors; Vice President,
Federated Shareholder Services; Executive Vice President, Federated
Securities Corp.; Treasurer of some of the Funds.
* This Trustee is deemed to be an `interested person'' as defined in
the Investment Company Act of 1940.
@ Member of the Executive Committee. The Executive Committee of the
Board of Trustees handles the responsibilities of the Board of Trustees
between meetings of the Board.
As used in the table above, "The Funds" and "Funds" mean the following
investment companies: 111 Corcoran Funds; Annuity Management Series; 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 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; 3-5 Years; Federated U.S.
Government Securities Fund; 5-10 Years; Federated Utility Fund, Inc.; First
Priority Funds; Fixed Income Securities, Inc.; Fortress Utility Fund, Inc.;
High Yield Cash Trust; Insurance Management Series; 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
Trust; Municipal Securities Income Trust; Newpoint Funds; Peachtree Funds;
RIMCO Monument Funds; Targeted Duration Trust; Tax-Free Instruments Trust;
The Planters Funds; The Starburst Funds; The Starburst Funds II; 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; and World Investment Series, Inc.
FUND OWNERSHIP
Officers and Trustees own less than 1% of the Fund's outstanding shares.
As of February 7, 1997, the following shareholders of record owned 5% or
more of the outstanding shares of the Fund: Life of Virginia, Richmond,
Virginia owned approximately 1,905,999 shares (34.92%); Lincoln Benefit
Life Co., Lincoln, Nebraska, owned approximately 343,406 shares (6.29%);
and Aetna Retirement Services, Hartford, Connecticut, acting in numerous
capacities for various accounts, owned approximately 2,634,154 shares
(58.26%).
TRUSTEES COMPENSATION
AGGREGATE
NAME , COMPENSATION
POSITION WITH FROM TOTAL COMPENSATION PAID
TRUST TRUST*# FROM FUND COMPLEX +
JOHN F. DONAHUE $0 $0 FOR THE TRUST AND
CHAIRMAN AND TRUSTEE 59 OTHER INVESTMENT COMPANIES IN
THE FUND COMPLEX
THOMAS G. BIGLEY++ $1,016 $86,331 FOR THE TRUST AND
TRUSTEE 54 OTHER INVESTMENT COMPANIES IN
THE FUND COMPLEX
JOHN T. CONROY, JR. $1,116 $115,760 FOR THE TRUST AND
TRUSTEE 54 OTHER INVESTMENT COMPANIES IN
THE FUND COMPLEX
WILLIAM J. COPELAND $1,116 $115,760 FOR THE TRUST AND
TRUSTEE 54 OTHER INVESTMENT COMPANIES IN
THE FUND COMPLEX
J. CHRISTOPHER DONAHUE, $0 $0 FOR THE TRUST AND
PRESIDENT AND TRUSTEE 15 OTHER INVESTMENT COMPANIES IN
THE FUND COMPLEX
JAMES E. DOWD $1,116 $115,760 FOR THE TRUST AND
TRUSTEE 54 OTHER INVESTMENT COMPANIES IN
THE FUND COMPLEX
LAWRENCE D. ELLIS, M.D. $1,016 $104,898 FOR THE TRUST
AND
TRUSTEE 54 OTHER INVESTMENT COMPANIES IN
THE FUND COMPLEX
EDWARD L. FLAHERTY, JR. $1,116 $115,760 FOR THE TRUST
AND
TRUSTEE 54 OTHER INVESTMENT COMPANIES IN
THE FUND COMPLEX
PETER E. MADDEN $1,016 $104,898 FOR THE TRUST AND
TRUSTEE 54 OTHER INVESTMENT COMPANIES IN
THE FUND COMPLEX
GREGOR F. MEYER $1,016 $104,898 FOR THE TRUST AND
TRUSTEE 54 OTHER INVESTMENT COMPANIES IN
THE FUND COMPLEX
JOHN E. MURRAY, JR., $1,016 $104,898 FOR THE TRUST AND
TRUSTEE 54 OTHER INVESTMENT COMPANIES IN
THE FUND COMPLEX
WESLEY W. POSVAR $1,016 $104,898 FOR THE TRUST AND
TRUSTEE 54 OTHER INVESTMENT COMPANIES IN
THE FUND COMPLEX
MARJORIE P. SMUTS $1,016 $104,898 FOR THE TRUST AND
TRUSTEE 54 OTHER INVESTMENT COMPANIES IN
THE FUND COMPLEX
*Information is furnished for the fiscal year ended December 31, 1995.
#The aggregate compensation is provided for the Trust which is comprised of
seven portfolios.
+The information is provided for the last calendar year.
++Mr. Bigley served on 39 investment companies in the Federated Funds
Complex from January 1 through September 30, 1995. On October 1, 1995, he
was appointed a Trustee on 15 additional Federated Funds.
TRUSTEE LIABILITY
The Trust's Declaration of Trust provides that the Trustees will not be
liable for errors of judgment or mistakes of fact or law. However, they are
not protected against any liability to which they would otherwise be
subject by reason of willful misfeasance, bad faith, gross negligence, or
reckless disregard of the duties involved in the conduct of their office.
INVESTMENT ADVISORY SERVICES
ADVISER TO THE FUND
The Fund's investment adviser is Federated Advisers. It is a subsidiary of
Federated Investors. All voting securities of Federated Investors are owned
by a trust, the trustees of which are John F. Donahue, his wife and his
son, J. Christopher Donahue.
The adviser shall not be liable to the Fund or any shareholder for any
losses that may be sustained in the purchase, holding, or sale of any
security or for anything done or omitted by it, except acts or omissions
involving willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties imposed upon it by its contract with the Trust.
ADVISORY FEES
For its advisory services, Federated Advisers receives an annual investment
advisory fee as described in the prospectus.
For the fiscal year ended December 31, 1995, and for the period from
December 9, 1993 (start of business) to December 31, 1994, the adviser
earned advisory fees of $89,752 and $2,077, respectively, all of which were
waived.
BROKERAGE TRANSACTIONS
The Adviser may select brokers and dealers who offer brokerage and research
services. These services may be furnished directly to the Fund or to the
Adviser and may include: advice as to the advisability of investing in
securities; security analysis and reports; economic studies; industry
studies; receipt of quotations for portfolio evaluations; and similar
services. Research services provided by brokers and dealers may be used by
the Adviser or its affiliates in advising the Fund and other accounts. To
the extent that receipt of these services may supplant services for which
the Adviser or its affiliates might otherwise have paid, it would tend to
reduce their expenses. The Adviser and its affiliates exercise reasonable
business judgment in selecting brokers who offer brokerage and research
services to execute securities transactions. They determine in good faith
that commissions charged by such persons are reasonable in relationship to
the value of the brokerage and research services provided. For the fiscal
year ended December 31, 1995, and for the period from December 9, 1993
(start of business) to December 31, 1994, the Fund paid $59,746 and $476,
respectively, in brokerage commissions on brokerage transactions.
Although investment decisions for the Fund are made independently from
those of any other accounts managed by the Adviser, investments of the type
the Fund may make may also be made by those other accounts. When the Fund
and one or more other accounts managed by the Adviser are prepared to
invest in, or desire to dispose of, the same security, available
investments or opportunities for sales will be allocated in a manner
believed by the Adviser to be equitable to each. In some cases, this
procedure may adversely affect the price paid or received by the Fund or
the size of the position obtained or disposed of by the Fund. In other
cases, however, it is believed that coordination and the ability to
participate in volume transactions will be to the benefit of the Fund.
OTHER SERVICES
FUND ADMINISTRATION
Federated Services Company, a subsidiary of Federated Investors, provides
administrative personnel and services to the Fund for a fee as described in
the prospectus. From March 1, 1994, to March 1, 1996, Federated
Administrative Services served as the Fund's Administrator. Prior to March
1, 1994, Federated Administrative Services, Inc. served as the Fund's
Administrator. Both former Administrators are subsidiaries of Federated
Investors. For purposes of this Statement of Additional Information,
Federated Services Company, Federated Administrative Services, and
Federated Administrative Services, Inc. may hereinafter collectively be
referred to as the "Administrators". For the fiscal year ended December 31,
1995, and for the period from December 9, 1993 (start of business) to
December 31, 1994, the Administrators earned $125,000 and $73,289,
respectively. Dr. Henry J. Gailliot, an officer of Federated Advisers, the
adviser to the Fund, holds approximately 20% of the outstanding common
stock and serves as director of Commercial Data Services, Inc., a company
which provides computer processing services to Federated Services Company.
CUSTODIAN AND PORTFOLIO ACCOUNTANT
State Street Bank and Trust Company, Boston, MA, is custodian for the
securities and cash of the Fund. Federated Services Company, Pittsburgh,
PA, provides certain accounting and recordkeeping services with respect to
the Fund's portfolio investments. The fee paid for this service is based
upon the level of the Fund's average net assets for the period plus out-of-
pocket expenses.
TRANSFER AGENT
Federated Services Company, through it registered transfer agent, Federated
Shareholder Services Company, maintains all necessary shareholder records.
For its services, the transfer agent receives a fee based on the size, type
and number of accounts and transactions made by shareholders.
INDEPENDENT AUDITORS
The independent auditors for the Fund are Deloitte & Touche LLP,
Pittsburgh, PA.
PURCHASING SHARES
Shares of the Fund are sold at their net asset value without a sales charge
on days the New York Stock Exchange is open for business. The procedure for
purchasing shares of the Fund is explained in the prospectus under
`Purchases and Redemptions'' and ``What Shares Cost.''
DETERMINING NET ASSET VALUE
Net asset value generally changes each day. The days on which net asset
value is calculated by the Fund are described in the prospectus.
DETERMINING VALUE OF SECURITIES
The values of the Fund's portfolio securities are determined as follows:
o for equity securities and bonds and other fixed income securities,
according to the last sale price on a national securities exchange, if
available;
o in the absence of recorded sales for equity securities, according to
the mean between the last closing bid and asked prices;
o for bonds and other fixed income securities, at the last sale price on
a national securities exchange, if available; otherwise, as determined by
an independent pricing service;
o for unlisted equity securities, the latest mean prices;
o for short-term obligations, according to the mean between bid and
asked prices as furnished by an independent pricing service; or
o for all other securities, at fair value as determined in good faith by
the Trustees.
MASSACHUSETTS PARTNERSHIP LAW
Under certain circumstances, shareholders may be held personally liable as
partners under Massachusetts law for obligations of the Trust. To protect
its shareholders, the Trust has filed legal documents with Massachusetts
that expressly disclaim the liability of its shareholders for acts or
obligations of the Trust. These documents require notice of this disclaimer
to be given in each agreement, obligation, or instrument the Trust or its
Trustees enter into or sign.
In the unlikely event a shareholder is held personally liable for the
Trust's obligations, the Trust is required by the Declaration of Trust to
use its property to protect or compensate the shareholder. On request, the
Trust will defend any claim made and pay any judgment against a shareholder
for any act or obligation of the Trust. Therefore, financial loss resulting
from liability as a shareholder will occur only if the Trust itself cannot
meet its obligations to indemnify shareholders and pay judgments against
them.
TAX STATUS
THE FUND'S TAX STATUS
The Fund will pay no federal income tax because it expects to meet the
requirements of Subchapter M of the Internal Revenue Code applicable to
regulated investment companies and to receive the special tax treatment
afforded to such companies. To qualify for this treatment, the Fund must,
among other requirements:
o derive at least 90% of its gross income from dividends, interest, and
gains from the sale of securities;
o derive less than 30% of its gross income from the sale of securities
held less than three months;
o invest in securities within certain statutory limits; and
o distribute to its shareholders at least 90% of its net income earned
during the year.
SHAREHOLDER'S TAX STATUS
The Fund intends to comply with the variable asset diversification
regulations which are described in the prospectus and this Statement. If
the Fund fails to comply with these regulations, contracts invested in the
Fund shall not be treated as annuity, endowment, or life insurance
contracts under the Internal Revenue Code.
Contract owners should review the contract prospectus for information
concerning the federal income tax treatment of their contracts and
distributions from the Fund to the separate accounts.
TOTAL RETURN
For the fiscal year ended December 31, 1995, and for the period from April
14, 1994 (date of initial public investment) to December 31, 1995 , the
average annual total returns for the Fund were 24.18% and 1.12%,
respectively.
The average annual total return for the Fund is the average compounded rate
of return for a given period that would equate a $1,000 initial investment
to the ending redeemable value of that investment. The ending redeemable
value is computed by multiplying the number of shares owned at the end of
the period by the offering price per share at the end of the period. The
number of shares owned at the end of the period is based on the number of
shares purchased at the beginning of the period with $1,000, adjusted over
the period by any additional shares, assuming the monthly reinvestment of
all dividends and distributions. You should review the performance figures
for your insurance contract, which figures reflect the applicable charges
and expenses of the contract. Such performance figures will accompany any
advertisement of the Fund's performance.
YIELD
The Fund's 30-day yield for the thirty day period ended December 31, 1995
was 3.84%.
The yield for the Fund is determined by dividing the net investment income
per share (as defined by the Securities and Exchange Commission) earned by
the Fund over a thirty-day period by the offering price per share of the
Fund on the last day of the period. This value is then annualized using
semi-annual compounding. This means that the amount of income generated
during the thirty-day period is assumed to be generated each month over a
twelve month period and is reinvested every six months. The yield does not
necessarily reflect income actually earned by the Fund because of certain
adjustments required by the Securities and Exchange Commission and,
therefore, may not correlate to the dividends or other distributions paid
to shareholders. Also, the yield does not reflect the charges and expenses
of an insurance contract. You should review the performance figures for
your insurance contract, which figures reflect the applicable charges and
expenses of the contract. Such performance figures will accompany any
advertisement of the Fund's performance.
PERFORMANCE COMPARISONS
The Fund's performance depends upon such variables as:
o portfolio quality;
o average portfolio maturity;
o type of instruments in which the portfolio is invested;
o changes in interest rates and market value of portfolio securities;
o changes in Fund expenses; and
o the relative amount of the Fund's cash flow.
The Fund's performance fluctuates on a daily basis largely because net
earnings and offering price per share fluctuate daily. Both net earnings
and offering price per share are factors in the computation of yield and
total return.
Investors may use financial publications and/or indices to obtain a more
complete view of the Fund's performance. When comparing performance,
investors should consider all relevant factors such as the composition of
any index used, prevailing market conditions, portfolio compositions of
other funds, and methods used to value portfolio securities and compute
offering price. The financial publications and/or indices which the Fund
uses in advertising may include:
o LIPPER ANALYTICAL SERVICES, INC., ranks funds in various fund
categories by making comparative calculations using total return. Total
return assumes the reinvestment of all income dividends and capital gains
distributions, if any. From time to time, the Fund will quote its Lipper
ranking in the `utility funds'' category in advertising and sales
literature.
o LIPPER UTILITY FUND AVERAGE is composed of approximately 87 funds
which invest 65% of their equity portfolio in utility stocks. From time to
time, the Trust/Fund will compare its total return to the average total
return of the funds comprising the average for the same calculation period.
o DOW JONES INDUSTRIAL AVERAGE (`DJIA'') is an unmanaged index
representing share prices of major industrial corporations, public
utilities, and transportation companies. Produced by the Dow Jones &
Company, it is cited as a principal indicator of market conditions.
o STANDARD & POOR'S RATINGS GROUP (`S&P'') DAILY STOCK PRICE INDEX OF
500 COMMON STOCKS, a composite index of common stocks in industry,
transportation, financial, and public utility companies, can be used to
compare the total returns of funds whose portfolios are invested primarily
in common stocks. In addition, the S&P index assumes reinvestment of all
dividends paid by stocks listed on its index. Taxes due on any of these
distributions are not included, nor are brokerage or other fees calculated
in S&P figures.
o STANDARD & POOR'S RATINGS GROUP UTILITY INDEX is an unmanaged index of
common stocks from forty different utilities. This index indicates daily
changes in the price of the stocks. The index also provides figures for
changes in price from the beginning of the year to date, and for a twelve
month period.
o DOW JONES UTILITY INDEX is an unmanaged index comprised of fifteen
utility stocks that tracks changes in price daily and over a six month
period. The index also provides the highs and lows for each of the past
five years.
o MORNINGSTAR, INC., an independent rating service, is the publisher of
the bi-weekly Mutual Fund Values. Mutual Fund Values rates more than 1,000
NASDAQ-listed mutual funds of all types, according to their risk-adjusted
returns. The maximum rating is five stars, and ratings are effective for
two weeks.
Advertisements and other sales literature for the Fund may quote total
returns, which are calculated on non-standardized base periods. These total
returns also represent the historic change in the value of an investment in
the Fund based on monthly reinvestment of dividends over a specified period
of time.
From time to time as it deems appropriate, the Fund may advertise its
performance using charts, graphs and descriptions compared to federally
insured bank products, including certificates of deposit and time deposits,
and to money market funds using the Lipper Analytical Services money market
average.
ABOUT FEDERATED INVESTORS
Federated Investors is dedicated to meeting investor needs which is
reflected in its investment decision making-structured, straightforward,
and consistent. This has resulted in a history of competitive performance
with a range of competitive investment products that have gained the
confidence of thousands of clients and their customers.
The company's disciplined security selection process is firmly rooted in
sound methodologies backed by fundamental and technical research.
Investment decisions are made and executed by teams of portfolio managers,
analysts, and traders dedicated to specific market sectors.
J. Thomas Madden, Executive Vice President, oversees Federated Investors'
equity and high yield corporate bond management while William D. Dawson,
Executive Vice President, oversees Federated Investors' domestic fixed
income management. Henry A. Frantzen, Executive Vice President, oversees
the management of Federated Investors' international portfolios.
MUTUAL FUND MARKET
Twenty-seven percent of American households are pursuing their financial
goals through mutual funds. These investors, as well as businesses and
institutions, have entrusted over $2 trillion to the more than 5,500 funds
available.*
Federated Investors, through its subsidiaries, distributes mutual funds for
a variety of investment applications. Specific markets include:
INSTITUTIONAL CLIENTS
Federated Investors meets the needs of more than 4,000 institutional
clients nationwide by managing and servicing separate accounts and mutual
funds for a variety of applications, including defined benefit and defined
contribution programs, cash management, and asset/liability management.
Institutional clients include corporations, pension funds, tax-exempt
entities, foundations/endowments, insurance companies, and investment and
financial advisors. The marketing effort to these institutional clients is
headed by John B. Fisher, President, Institutional Sales Division.
TRUST ORGANIZATIONS
Other institutional clients include close relationships with more than
1,500 banks and trust organizations. Virtually all of the trust divisions
of the top 100 bank holding companies use Federated funds in their clients'
portfolios. The marketing effort to trust clients is headed by Mark R.
Gensheimer, Executive Vice President, Bank Marketing & Sales.
BROKER/DEALERS AND BANK BROKER/DEALER SUBSIDIARIES
Federated funds are available to consumers through major brokerage firms
nationwide--including 200 New York Stock Exchange firms--supported by more
wholesalers than any other mutual fund distributor. The marketing effort to
these firms is headed by James F. Getz, President, Broker/Dealer Division.
FINANCIAL STATEMENTS
The Fund's Financial Statements for the fiscal year ended December 31,
1995, are incorporated herein by reference to the Annual Report of the Fund
dated December 31, 1995 (File Nos. 33-69268 and 811-8042). A copy of the
Report may be obtained without charge by contacting the Fund.
*Source: Investment Company Institute
APPENDIX
Standard & Poor's Ratings Group Corporate Bond Ratings
AAA--Debt rated `AAA'' has the highest rating assigned by S&P. Capacity to
pay interest and repay principal is extremely strong.
AA--Debt rated `AA'' has a very strong capacity to pay interest and repay
principal and differs from the higher rated issues only in small degree.
A--Debt rated `A'' has a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the adverse effects
of changes in circumstances and economic conditions than debt in higher
rated categories.
BBB--Debt rated "BBB" is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for debt in this category than in higher rated
categories.
BB, B--Debt rated "BB" and "B" is regarded, on balance as predominantly
speculative with respect to capacity to pay interest and repay principal in
accordance with the terms of the obligation. "B" indicates the highest
degree of speculation. While such debt will likely have some quality and
protective characteristics, these are outweighed by large uncertainties of
major risk exposures to adverse conditions.
Moody's Investors Service, Inc. Corporate Bond Ratings
AAA--Bonds which are rated `Aaa'' are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally
referred to as `gilt edged.'' Interest payments are protected by a large
or by an exceptionally stable margin and principal is secure. While the
various protective elements are likely to change, such changes as can be
visualized are most unlikely to impair the fundamentally strong position of
such issues.
AA--Bonds which are rated `Aa'' are judged to be of high quality by all
standards. Together with the `Aaa'' group, they comprise what are
generally known as high grade Bonds. They are rated lower than the best
bonds because margins of protection may not be as large as in `Aaa''
securities or fluctuation of protective elements may be of greater
amplitude or there may be other elements present which make the long-term
risks appear somewhat larger than in `Aaa'' securities.
A--Bonds which are rated `A'' possess many favorable investment attributes
and are to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate but elements may
be present which suggest a susceptibility to impairment sometime in the
future.
BAA--Bonds which are rated "Baa" are considered as medium grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present
but certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding
investment characteristics and in fact have speculative characteristics as
well.
BA--Bonds which are rate "Ba" are judged to have speculative elements;
their future cannot be considered as well-assured. Often the protection of
interest and principal payments may be very moderate and thereby not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.
B--Bonds which are rated "B" generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may
be small.
PART C. OTHER INFORMATION.
Item 24. Financial Statements and Exhibits:
(a) Financial Statements: (1-7) incorporated by
reference from the Funds'
annual reports dated December
31, 1996 (File No. 811-8042O)
(8) to be filed by amendment.
(b) Exhibits:
(1) Conformed copy of Amended and Restated Declaration
of Trust; (3)
(i) Conformed copy of Amendment #5 to the Declaration
of Trust; (10)
(ii) Conformed copy of Amendment #6 to the Declaration
of Trust; (11)
(2) Copy of By-Laws; (2)
(3) Not Applicable;
(4) (i) Copy of Specimen Certificate for Shares of
Beneficial Interest of Equity Growth and
Income Fund; (2)
(ii) Copy of Specimen Certificate for Shares of
Beneficial Interest of Utility Fund; (2)
(iii) Copy of Specimen Certificate for Shares of
Beneficial Interest of U.S. Government Bond
Fund;(2)
(iv) Copy of Specimen Certificate for Shares of
Beneficial Interest of Corporate Bond Fund; (2)
(v) Copy of Specimen Certificate for Shares of
Beneficial Interest of Prime Money Fund; (2)
(vi) Copy of Specimen Certificate for Shares of
Beneficial Interest of International Stock
Fund; (4)
(vii) Copy of Specimen Certificate for Shares of
Beneficial Interest of Growth Stock
Fund; (10)
(5) Conformed copy of Investment Advisory Contract;(3)
(i) Conformed copy of Exhibit A to Investment Advisory
Contract; (3)
(ii) Conformed copy of Exhibit B to Investment Advisory
Contract; (3)
(iii) Conformed copy of Exhibit C to Investment
Adivsory Contract; (3)
(iv) Conformed copy of Exhibit D to Investment
Adivsory Contract; (3)
(v) Conformed copy of Exhibit E to Investment
Adivsory Contract; (3)
(vi) Conformed copy of Exhibit F to Investment
Advisory Contract; (6)
+ All exhibits have been filed electronically.
(2) Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 1 on Form N-1A filed April 29, 1994. (File Nos. 33-69268 and
811-8042).
(3) Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 2 on Form N-1A filed August 23, 1994. (File Nos. 33-69268 and
811-8042).
(4) Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 3 on Form N-1A filed January 19, 1995. (File Nos. 33-69268
and 811-8042O).
(10) Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 9 on Form N-1A filed February 16, 1996. (File Nos. 33-69268
and 811-8042O).
(11) Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 10 on Form N-1A filed March 28, 1996. (File Nos. 33-69268 and
811-8042O).
(vii) Conformed copy of Exhibit G to the Trust's
present investment advisory contract to
add Growth Stock Fund; (10)
(viii) Conformed copy of Exhibit H to the Trust's
present investment advisory contract to
add Growth Stock Fund; +
(5a) Copy of Investment Advisory Contract; (10)
(i) Conformed copy of Exhibit A to Investment
Advisory Contract; (10)
(6) Conformed copy of Distributor's Contract; (3)
(i) Conformed copy of Exhibit A to
Distributor's Contract; (3)
(ii) Conformed copy of Exhibit B to
Distributor's Contract; (3)
(iii) Conformed copy of Exhibit C to
Distributor's Contract; (3)
(iv) Conformed copy of Exhibit D to
Distributor's Contract; (3)
(v) Conformed copy of Exhibit E to
Distributor's Contract; (3)
(vi) Conformed copy of Exhibit F to
Distributor's Contract; (7)
(vii) Conformed copy of Exhibit G to
Distributor's Contract; (10)
(viii) Conformed copy of Exhibit H to
Distributor's Contract; +
(7) Not Applicable;
(8) Conformed copy of Custodian Contract; (7)
(9) (i) Conformed copy of Administrative Services
Agreement; (7)
(ii) Conformed copy of Agreement for Fund
Accounting Services, Aministrative Services,
Transfer Agency Services, and Custody Services
Procurement; (11)
(10) Conformed copy of Opinion and Consent of Counsel
as to legality of shares being registered; (2)
(11) Not applicable;
(12) Not Applicable;
(13) Conformed copy of Initial Capital Understanding;(2)
(14) Not Applicable;
(15) Conformed Copy of Distribution Plan;+
(16) (i) Copy of Equity Growth and Income Fund
Schedule for Computation of Fund Performance
Data; (3)
(ii) Copy of Utility Fund Schedule for
Computation of Fund Performance Data; (3)
(iii) Copy of U.S. Government Bond Fund Schedule
for Computation of Fund Performance Data;(3)
(iv) Copy of Corporate Bond Fund Schedule for
Computation of Fund Performance Data; (2)
+ All exhibits have been filed electronically.
(2) Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 1 on Form N-1A filed April 29, 1994. (File Nos. 33-69268 and
811-8042).
(3) Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 2 on Form N-1A filed August 23, 1994. (File Nos. 33-69268 and
811-8042).
(6) Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 5 on Form N-1A filed April 3, 1995. (File Nos. 33-69268 and
811-80420).
(7) Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 6 on Form N-1A filed April 21, 1995. (File Nos. 33-69268 and
811-80420).
(10) Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 9 on Form N-1A filed February 16, 1996. (File Nos. 33-69268
and 811-8042O).
(11) Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 10 on Form N-1A filed March 28, 1996. (File Nos. 33-69268 and
811-8042O).
(v) Copy of Prime Money Fund Schedule for
Computation of Fund Performance Data; (9)
(vi) Copy of International Stock Fund Schedule
for Computation of Fund Performance
Data; (10)
(vii) Copy of Growth Stock Fund Schedule
for Computation of Fund Performance
Data; (10)
(17) Copy of Financial Data Schedules;+
(18) Not applicable
(19) Conformed copy of Power of Attorney; (12)
Item 25. Persons Controlled by or Under Common Control with Registrant:
None
Item 26. Number of Holders of Securities:
Number of Record Holders
Title of Class as of February 7, 1997
Shares of beneficial interest
(no par value)
Federated American Leaders Fund II 15
Federated Growth Strategies Fund II 7
Federated Utility Fund II 17
Federated Prime Money Fund II 15
Federated Fund for U.S. Government
Securities II 18
Federated High Income Bond Fund II 20
Federated International Equity Fund II 8
Federated Equity Income Fund II 8
Item 27. Indemnification: (1)
Item 28. Business and Other Connections of Investment Adviser:
For a description of the other business of Federated Advisers,
the investment adviser to all of the investment portfolios of the Trust,
except for International Stock Fund, see the section entitled `Fund
Information - Management of the Fund''in Part A. The affiliations with
the Registrant of three of the Trustees and one of the Officers of the
investment adviser are included in Part B of this Registration Statement
under `Insurance Management Series Management.'' The remaining Trustee of
the investment adviser, his position with the investment adviser, and, in
parentheses, his principal occupation is: Mark D. Olson (Partner, Wilson,
Holbrook and Bayard), 107 W. Market Street, Georgetown, Delaware 19447.
+ All exhibits have been filed electronically.
(1) Response is incorported by reference to Registrant's Pre-Effective
Amendment No. 1 on Form N-1A filed December 10, 1993. (File Nos. 33-69268
and 811-80420).
(9) Response is incorported by reference to Registrant's Post-Effective
Amendment No. 7 on Form N-1A filed August 28, 1995. (File Nos. 33-69268 and
811-80420).
(10) Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 9 on Form N-1A filed February 16, 1996. (File Nos. 33-69268
and 811-8042O).
(11) Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 10 on Form N-1A filed March 28, 1996. (File Nos. 33-69268 and
811-8042O).
(12) Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 11 on Form N-1A filed November 15, 1996. (File Nos. 33-69268
and 811-8042O).
The remaining Officers of the investment adviser are: William D.
Dawson, III, Henry A. Frantzen, J. Thomas Madden, and Mark L. Mallon,
Executive Vice Presidents; Henry J. Gailliot, Senior Vice President-
Economist; Peter R. Anderson, Drew J.Collins, Jonathan C.Conley, and J.
Alan Minteer, Senior Vice Presidents; J. Scott Albrecht, Joseph M.
Balestrino, Randall S. Bauer, David A. Briggs, Deborah A. Cunningham,
Michael P. Donnelly, Mark E. Durbiano, Kathleen M. Foody-Malus, Thomas M.
Franks, Edward C. Gonzales, Timothy E. Keefe, Stephen A. Keen, Mark S.
Kopinski, Jeff A. Kozemchak, Marian R. Marinack, Susan M. Nason, Mary Jo
Ochson, Robert J. Ostrowski, Frederick L. Plautz, Jr., Charles A. Ritter,
James D. Roberge, Frank Semack, William F. Stolz, Sandra L. Weber and
Christopher H. Wiles, Vice Presidents; Thomas R. Donahue, Treasurer; and
Stephen A. Keen, Secretary. The business address of each of the Officers
of the investment adviser is Federated Investors Tower, Pittsburgh, PA
15222-3779. These individuals are also officers of a majority of the
investment advisers to the Funds listed in Part B of this Registration
Statement.
For information as to the business, profession, vocation, and employment of
a substantial nature of directors and officers of Federated Globl Research
Corp., the investment adviser to International Stock Fund, reference is
made to Federated Globl Research Corp's current Form ADV (File No. 801-
49470) filed under the Investment Advisers Act of 1940, as amended, which
is incorporated herein by reference.
Item 29. Principal Underwriters:
(a) 111 Corcoran Funds; Arrow Funds; Automated Government Money Trust;
BayFunds; 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; Independence One Mutual Funds;
Intermediate Municipal Trust; International Series, Inc.; Investment Series
Funds, Inc.; Investment Series Trust; Liberty U.S. Government Money Market
Trust; Liquid Cash Trust; Managed Series Trust; Marshall Funds, Inc.; Money
Market Management, Inc.; Money Market Obligations Trust; Money Market
Trust; Municipal Securities Income Trust; Newpoint Funds; Peachtree Funds;
RIMCO Monument Funds; SouthTrust Vulcan Funds; Star Funds; Targeted
Duration Trust; Tax-Free Instruments Trust; The Biltmore Funds; The
Biltmore Municipal Funds; The Monitor Funds; The Planters Funds; The
Starburst Funds; The Starburst Funds II; The Virtus Funds; Tower Mutual
Funds; Trust for Financial Institutions; Trust for Government Cash
Reserves; Trust for Short-Term U.S. Government Securities; Trust for U.S.
Treasury Obligations; Vision Group of Funds, Inc.; andWorld Investment
Series, Inc.
Federated Securities Corp. also acts as principal underwriter for the
following closed-end investment company: Liberty Term Trust, Inc.- 1999.
(b)
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Underwriter With Registrant
Richard B. Fisher Director, Chairman, Chief Vice President
Federated Investors Tower Executive Officer, Chief
Pittsburgh, PA 15222-3779 Operating Officer, Asst.
Secretary, and Asst.
Treasurer, Federated
Securities Corp.
Edward C. Gonzales Director, Executive ViceExecutive Vice
Federated Investors Tower President, Federated, President
Pittsburgh, PA 15222-3779 Securities Corp.
Thomas R. Donahue Director, Assistant Secretary,
Federated Investors Tower Assistant Treasurer
Pittsburgh, PA 15222-3779 Federated Securities Corp
John B. Fisher President-Institutional Sales, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
James F. Getz President-Broker/Dealer, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Mark R. Gensheimer Executive Vice President of --
Federated Investors Tower Bank/Trust, Federated
Pittsburgh, PA 15222-3779 Securities Corp.
Mark W. Bloss Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard W. Boyd Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Theodore Fadool, Jr. Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Bryant R. Fisher Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Christopher T. Fives Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
James S. Hamilton Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
James M. Heaton Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Keith Nixon Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Solon A. Person, IV Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Timothy C. Pillion Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Thomas E. Territ Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
John B. Bohnet Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Byron F. Bowman Vice President, Secretary, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Jane E. Broeren-Lambesis Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Dale R. Browne Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Mary J. Combs Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
R. Edmond Connell, Jr. Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
R. Leonard Corton, Jr. Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Kevin J. Crenny Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Daniel T. Culbertson Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
G. Michael Cullen Vice President, --
Federated Investors Tower Federated Securites Corp.
Pittsburgh, PA 15222-3779
Laura M. Deger Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Jill Ehrenfeld Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Mark D. Fisher Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Joseph D. Gibbons Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
John K. Goettlicher Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Craig S. Gonzales Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard C. Gonzales Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
James E. Hickey Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
H. Joseph Kennedy Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Steven A. La Versa Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Mark J. Miehl Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard C. Mihm Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
J. Michael Miller Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Michael P. O'Brien Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Robert D. Oehlschlager Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Thomas A. Peters III Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Robert F. Phillips Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Eugene B. Reed Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Paul V. Riordan Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Edward L. Smith Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
David W. Spears Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Jeffrey A. Stewart Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard Suder Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Jamie M. Teschner Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
William C. Tustin Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Paul A. Uhlman Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Miles J. Wallace Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard B. Watts Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Edward J. Wojnarowski Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Michael P. Wolff Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Edward R. Bozek Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Charlene H. Jennings Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
J. Timothy Radcliff Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Denis McAuley Treasurer, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Leslie K. Platt Assistant Secretary, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
(c) Not applicable
Item 30. Location of Accounts and Records:
All accounts and records required to be maintained by Section 31(a) of
the Investment Company Act of 1940 and Rules 31a-1 through 31a-3
promulgated thereunder are maintained at one of the following locations:
Registrant Federated Investors Tower
Pittsburgh, PA 15222-3779
Federated Shareholder Services
Company P.O. Box 8600
Transfer Agent, Dividend Boston, MA 02266-8600
Disbursing Agent and
Portfolio Recordkeeper
Federated Services Federated Investors Tower
Company Pittsburgh, PA 15222-3779
Administrator
Federated Advisers Federated Investors Tower
Investment Adviser Pittsburgh, PA 15222-3779
Federated Global Research 175 Water Street
Corp. New York, NY 10038-4965
Investment Adviser
State Street Bank and P.O. Box 8600
Trust Company Boston, MA 02266-8600
Custodian
Item 31. Management Services: Not applicable.
Item 32. Undertakings:
Registrant hereby undertakes to comply with the provisions of
Section 16(c) of the 1940 Act with respect to the removal of Trustees and
the calling of special shareholder meetings by shareholders.
Registrant hereby undertakes to furnish each person to whom a
prospectus is delivered, a copy of the Registrant's latest annual report to
shareholders, upon request and without charge.
Registrant hereby undertakes to file a post-effective amendment
on behalf of Federated Equity Income Fund II, using financial statements
for Federated Equity Income Fund II, which need not be certified, within
four to six months from the effective date of Post-Effective Amendment No.
11.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant, FEDERATED INSURANCE SERIES,
certifies that it meets all of the requirements for effectiveness of this
Amendment to its Registration Statement pursuant to Rule 485(a) under the
Securities Act of 1933 and has duly caused this Amendment to its
Registration Statement to be signed on its behalf by the undersigned,
thereto duly authorized, in the City of Pittsburgh and Commonwealth of
Pennsylvania, on the 13th day of February, 1997.
FEDERATED INSURANCE SERIES
BY: /s/ S. Elliott Cohan
S. Elliott Cohan, Assistant Secretary
Attorney in Fact for John F. Donahue
February 13, 1997
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to its Registration Statement has been signed below by the
following person in the capacity and on the date indicated:
NAME TITLE DATE
By:/s/ S. Elliott Cohan
S. Elliott Cohan Attorney In Fact February 13, 1997
ASSISTANT SECRETARY For the Persons
Listed Below
NAME TITLE
John F. Donahue* Chairman and Trustee
(Chief Executive Officer)
J. Christopher Donahue* President and Trustee
John W. McGonigle* Executive Vice President,
Secretary and Treasurer
(Principal Financial and
Accounting Officer)
Thomas G. Bigley* Trustee
John T. Conroy, Jr.* Trustee
William J. Copeland* Trustee
James E. Dowd* Trustee
Lawrence D. Ellis, M.D.* Trustee
Edward L. Flaherty, Jr.* Trustee
Peter E. Madden* Trustee
Gregor F. Meyer* Trustee
John E. Murray, Jr.* Trustee
Wesley W. Posvar* Trustee
Marjorie P. Smuts* Trustee
* By Power of Attorney
Exhibit 5(viii) under Form N-1A
Exhibit 10 under Item 601/Reg. S-K
EXHIBIT H
to the
Investment Advisory Contract
FEDERATED INSURANCE SERIES
Federated Equity Income Fund II
For all services rendered by Adviser hereunder, the above-named Fund
of the Trust shall pay to Adviser and Adviser agrees to accept as full
compensation for all services rendered hereunder, an annual investment
advisory fee equal to 0.75 of 1% of the average daily net assets of the
Fund.
The portion of the fee based upon the average daily net assets of the
Fund shall be accrued daily at the rate of 1/365th of 0.75 of 1% applied to
the daily net assets of the Fund.
The advisory fee so accrued shall be paid to Adviser daily.
Witness the due execution hereof this 1st day of December, 1996.
Attest: Federated Advisers
/s/ Christina Ita McGonigle By:/s/ Stephen A. Keen
Assistant Secretary Vice President
Attest: Federated Insurance Series
/s/ John W. McGonigle By:/s/ Edward C. Gonzales
Secretary Executive Vice President
Exhibit 6(viii) under Form N-1A
Exhibit 1 under Item 601/Reg. S-K
Exhibit H
to the
Distributor's Contract
FEDERATED INSURANCE SERIES
Federated Equity Income Fund II
The following provisions are hereby incorporated and made part of the
Distributor's Contract dated December 1, 1993, between Federated Insurance
Series and Federated Securities Corp. with respect to the Class of shares
set forth above.
1. The Trust hereby appoints FSC to engage in activities principally
intended to result in the sale of shares of the above-listed Class
("Shares"). Pursuant to this appointment, FSC is authorized to select
a group of financial institutions ("Financial Institutions") to sell
Shares at the current offering price thereof as described and set
forth in the respective prospectuses of the Trust.
2. During the term of this Agreement, the Trust will pay FSC for services
pursuant to this Agreement, a monthly fee computed at the annual rate
of .25% of the average aggregate net asset value of the Shares held
during the month. For the month in which this Agreement becomes
effective or terminates, there shall be an appropriate proration of
any fee payable on the basis of the number of days that the Agreement
is in effect during the month.
3. FSC may from time-to-time and for such periods as it deems appropriate
reduce its compensation to the extent any Class' expenses exceed such
lower expense limitation as FSC may, by notice to the Trust,
voluntarily declare to be effective.
4. FSC will enter into separate written agreements with various firms to
provide certain of the services set forth in Paragraph 1 herein. FSC,
in its sole discretion, may pay Financial Institutions a periodic fee
in respect of Shares owned from time to time by their clients or
customers. The schedules of such fees and the basis upon which such
fees will be paid shall be determined from time to time by FSC in its
sole discretion.
5. FSC will prepare reports to the Board of Trustees of the Trust on a
quarterly basis showing amounts expended hereunder including amounts paid
to Financial Institutions and the purpose for such expenditures.
In consideration of the mutual covenants set forth in the
Distributor's Contract dated December 1, 1993 between Federated Insurance
Series and Federated Securities Corp., Federated Insurance Series executes
and delivers this Exhibit on behalf of Federated Equity Income Fund II,
first set forth in this Exhibit.
Witness the due execution hereof this 1st day of December, 1996.
ATTEST: Federated Insurance Series
/s/ John W. McGonigle By: /s/ J. Christopher Donahue
Secretary President
(SEAL)
ATTEST: FEDERATED SECURITIES CORP.
/s/ Byron F. Bowman By:/s/ Richard B Fisher
Secretary Executive Vice President
(SEAL)
Exhibit 15 under Form N-1A
Exhibit 1 under Item 601/Reg. S-K
Federated Insurance Series
DISTRIBUTION PLAN
This Distribution Plan ("Plan") is adopted as of November 12, 1996,
by the Board of Trustees of between Federated Insurance Series (the
"Trust"), a Massachusetts business trust with respect to certain
classes of shares ("Classes") of the portfolios of the Trust (the
"Funds") set forth in exhibits hereto.
1. This Plan is adopted pursuant to Rule 12b-1 under the Investment
Company Act of 1940, as amended ("Act"), so as to allow the Trust to
make payments as contemplated herein, in conjunction with the
distribution of Classes of the Funds ("Shares").
2. This Plan is designed to finance activities of Federated Securities
Corp. ("FSC") principally intended to result in the sale of Shares
to include: (a) providing incentives to financial institutions
("Financial Institutions") to sell Shares; (b) advertising and
marketing of Shares to include preparing, printing and distributing
prospectuses and sales literature to prospective shareholders and
with Financial Institutions; and (c) implementing and operating the
Plan. In compensation for services provided pursuant to this Plan,
FSC will be paid a fee in respect of the following Classes set forth
on the applicable exhibit.
3. Any payment to FSC in accordance with this Plan will be made
pursuant to the "Distributor's Contract" entered into by the Trust
and FSC. Any payments made by FSC to Financial Institutions with
funds received as compensation under this Plan will be made pursuant
to the "Financial Institution Agreement" entered into by FSC and the
Institution.
4. FSC has the right (i) to select, in its sole discretion, the
Financial Institutions to participate in the Plan and (ii) to
terminate without cause and in its sole discretion any Financial
Institution Agreement.
5. Quarterly in each year that this Plan remains in effect, FSC shall
prepare and furnish to the Board of Trustees of the Trust, and the
Board of Trustees shall review, a written report of the amounts
expended under the Plan and the purpose for which such expenditures
were made.
6. This Plan shall become effective with respect to each Class
(i) after approval by majority votes of: (a) the Trust's Board of
Trustees; (b) the members of the Board of the Trust who are not
interested persons of the Trust and have no direct or indirect
financial interest in the operation of the Trust Plan or in any
related documents to the Plan ("Disinterested Trustees"), cast in
person at a meeting called for the purpose of voting on the Plan;
and (c) the outstanding voting securities of the particular Class,
as defined in Section 2(a)(42) of the Act and (ii) upon execution of
an exhibit adopting this Plan with respect to such Class.
7. This Plan shall remain in effect with respect to each Class
presently set forth on an exhibit and any subsequent Classes added
pursuant to an exhibit during the initial year of this Plan for the
period of one year from the date set forth above and may be
continued thereafter if this Plan is approved with respect to each
Class at least annually by a majority of the TrustBoard of Trustees
and a majority of the Disinterested Trustees, cast in person at a
meeting called for the purpose of voting on such Plan. If this Plan
is adopted with respect to a Class after the first annual approval
by the Trustees as described above, this Plan will be effective as
to that Class upon execution of the applicable exhibit pursuant to
the provisions of paragraph 6(ii) above and will continue in effect
until the next annual approval of this Plan by the Trustees and
thereafter for successive periods of one year subject to approval as
described above.
8. All material amendments to this Plan must be approved by a vote of
the Board of Trustees of the Trust and of the Disinterested
Trustees, cast in person at a meeting called for the purpose of
voting on it.
9. This Plan may not be amended in order to increase materially the
costs which the Classes may bear for distribution pursuant to the
Plan without being approved by a majority vote of the outstanding
voting securities of the Classes as defined in Section 2(a)(42) of
the Act.
10. This Plan may be terminated with respect to a particular Class at
any time by: (a) a majority vote of the Disinterested Trustees; or
(b) a vote of a majority of the outstanding voting securities of the
particular Class as defined in Section 2(a)(42) of the Act; or (c)
by FSC on 60 days' notice to the Trust.
11. While this Plan shall be in effect, the selection and nomination of
Disinterested Trusteesof the Trust shall be committed to the
discretion of the Disinterested Trustees then in office.
12. All agreements with any person relating to the implementation of
this Plan shall be in writing and any agreement related to this Plan
shall be subject to termination, without penalty, pursuant to the
provisions of Paragraph 10 herein.
13. This Plan shall be construed in accordance with and governed by the
laws of the Commonwealth of Pennsylvania.
EXHIBIT A
to the
Distribution Plan
Federated Insurance Series
Federated Equity Income Fund II
This Distribution Plan is adopted by between Federated Insurance
Series with respect to the Class of Shares of the Federated Equity
Income Fund II set forth above.
In compensation for the services provided pursuant to this Plan,
FSC will be paid a monthly fee computed at the annual rate of .25% of
the average aggregate net asset value of Federated Equity Income Fund
II held during the month.
Witness the due execution hereof this 1st day of December, 1996.
Federated Insurance Series
By: /s/ J. Christopher Donahue
President
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 02
<NAME> Federated Insurance Series
Federated Utility Fund II
<PERIOD-TYPE> 6-Mos
<FISCAL-YEAR-END> Dec-31-1996
<PERIOD-END> Jun-30-1996
<INVESTMENTS-AT-COST> 47,388,910
<INVESTMENTS-AT-VALUE> 50,489,695
<RECEIVABLES> 252,496
<ASSETS-OTHER> 3,319
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 50,745,510
<PAYABLE-FOR-SECURITIES> 49,936
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 11,736
<TOTAL-LIABILITIES> 61,672
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 47,043,278
<SHARES-COMMON-STOCK> 4,488,533
<SHARES-COMMON-PRIOR> 2,691,470
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 6,732
<ACCUMULATED-NET-GAINS> 546,466
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 3,100,828
<NET-ASSETS> 50,683,838
<DIVIDEND-INCOME> 724,137
<INTEREST-INCOME> 106,257
<OTHER-INCOME> 0
<EXPENSES-NET> 172,393
<NET-INVESTMENT-INCOME> 658,001
<REALIZED-GAINS-CURRENT> 554,276
<APPREC-INCREASE-CURRENT> 827,398
<NET-CHANGE-FROM-OPS> 2,039,675
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 670,369
<DISTRIBUTIONS-OF-GAINS> 192,047
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,937,559
<NUMBER-OF-SHARES-REDEEMED> 218,700
<SHARES-REINVESTED> 78,204
<NET-CHANGE-IN-ASSETS> 21,004,432
<ACCUMULATED-NII-PRIOR> 5,636
<ACCUMULATED-GAINS-PRIOR> 184,237
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 151,328
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 300,076
<AVERAGE-NET-ASSETS> 40,626,437
<PER-SHARE-NAV-BEGIN> 11.030
<PER-SHARE-NII> 0.180
<PER-SHARE-GAIN-APPREC> 0.310
<PER-SHARE-DIVIDEND> 0.180
<PER-SHARE-DISTRIBUTIONS> 0.050
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 11.290
<EXPENSE-RATIO> 0.85
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
