1933 Act File No. 33-50773
1940 Act File No. 811-7115
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
Pre-Effective Amendment No.
Post-Effective Amendment No. 1 X
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
Amendment No. 3 X
INSIGHT INSTITUTIONAL SERIES, INC.
(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)
X on May 30, 1994 pursuant to paragraph (b)
60 days after filing pursuant to paragraph (a)
on pursuant to paragraph (a) of Rule 485.
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
X intends to file the Notice required by that Rule on or about November
15, 1994; 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:
Thomas J. Donnelly, Esquire Charles H. Morin, Esquire
Houston, Houston & Donnelly Dickstein, Shapiro & Morin
2510 Centre City Tower 2101 L Street, N.W.
650 Smithfield Street Washington, D.C. 20037
Pittsburgh, Pennsylvania 15222
CROSS REFERENCE SHEET
This Amendment to the Registration Statement of Insight Institutional
Series, Inc., which consists of four portfolios: (1) Insight Adjustable
Rate Mortgage Fund, (2) Insight Limited Term Income Fund, (3) Insight
Limited Term Municipal Fund, and (4) Insight
U.S. Government Fund, refers only to Insight Adjustable Rate Mortgage Fund.
PART A. INFORMATION REQUIRED IN A PROSPECTUS.
Prospectus Heading
(Rule 404(c) Cross Reference)
Item 1. Cover Page (1-4) Cover Page.
Item 2. Synopsis (1-4) Summary of Fund Expenses.
Item 3. Condensed Financial
Information (1-4) Financial Highlights;
(1-4) Performance Information.
Item 4. General Description of
Registrant (1-4) General Information;
(1-4) Investment Information;
(1-4) Investment Objective;
(1-4) Investment Policies;
(3) Investment Risks;
(1-4) Investment Limitations.
Item 5. Management of the Fund (1-4) Insight Institutional Series,
Inc. Information;
(1-4) Management of the Corporation;
(1-4) Distribution of Fund Shares;
(1-4) Administration of the Fund;
(1-4) Expenses of the Fund.
Item 6. Capital Stock and Other
Securities (1-4) Dividends and Distributions;
(1-4) Shareholder Information;
(1-4) Voting Rights;
(1-4) Tax Information; (1-4) Federal
Income Tax; (1-4)
Pennsylvania Corporate and Personal
Property Taxes.
Item 7. Purchase of Securities Being
Offered (1-4) Net Asset Value;
(1-4) Investing in the Fund;
(1-4) Share Purchases; (1-4)
Minimum Investment Required; (1-4)
What Shares Cost.
Item 8. Redemption or Repurchase (1-4) Redeeming Shares;
(1-4) Through a Financial
Institution; (1-4) Directly by
Mail; (1-4) Receive Payment;
(1-4) Account with Low Balances.
Item 9. Pending Legal Proceedings None.
PART B. INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION.
Item 10. Cover Page (1-4) Cover Page.
Item 11. Table of Contents (1-4) Table of Contents.
Item 12. General Information and
History (1-4) General Information About the
Fund.
Item 13. Investment Objectives and
Policies (1-4) Investment Objective and
Policies; (1-4) Types of
Investments; (1-4)
Portfolio Turnover; (1-4)
Investment Limitations.
Item 14. Management of the Fund (1-4) Insight Institutional Series,
Inc. Management.
Item 15. Control Persons and Principal
Holders of Securities (1-4) Fund Ownership.
Item 16. Investment Advisory and Other
Services (1-4) Investment Advisory Services;
(1-4) Administrative Services;
(1-4) Shareholder Services Plan.
Item 17. Brokerage Allocation (1-4) Brokerage Transactions.
Item 18. Capital Stock and Other
Securities Not Applicable.
Item 19. Purchase, Redemption and Pricing
of Securities Being Offered (1-4) Purchasing Shares;
(1-4) Determining Net Asset Value.
Item 20. Tax Status (1-4) Tax Status.
Item 21. Underwriters Not Applicable.
Item 22. Calculation of Performance
Data (1-4) Total Return; (1-4) Yield;
(3) Tax Equivalent Yield;
(1-4) Performance Comparisons.
Item 23. Financial Statements Included in Part A.
INSIGHT
ADJUSTABLE
RATE
MORTGAGE
FUND
SEMI-ANNUAL REPORT AND
SUPPLEMENT TO PROSPECTUS
DATED JANUARY 19, 1994
MAY 30, 1994
[LOGO] FEDERATED SECURITIES CORP.
--------------------------
Distributor
A subsidiary of Federated Investors
Federated Investors Tower
Pittsburgh, PA 15222-3779
4041803 (5/94)
A. Please insert the following "Financial Highlights" table as page 2 of the
prospectus following the "Summary of Fund Expenses" and before the section
entitled "General Information." In addition, please add the heading
"Financial Highlights" to the Table of Contents page after the heading
"Summary of Fund Expenses."
INSIGHT ADJUSTABLE RATE MORTGAGE FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
PERIOD ENDED
MARCH 31, 1994*
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.02
- ---------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------------------------------------------------------------------
Net investment income 0.07
- ---------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments (0.05)
- --------------------------------------------------------------------------------------------- -------------------
Total from investment operations 0.02
- ---------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
- ---------------------------------------------------------------------------------------------
Dividends to shareholders from net investment income (0.07)
- --------------------------------------------------------------------------------------------- -------------------
NET ASSET VALUE, END OF PERIOD $ 9.97
- --------------------------------------------------------------------------------------------- -------------------
TOTAL RETURN** 0.16%
- ---------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ---------------------------------------------------------------------------------------------
Expenses 0.35%(b)
- ---------------------------------------------------------------------------------------------
Net investment income 4.29%(b)
- ---------------------------------------------------------------------------------------------
Expense waiver/reimbursement (a) 0.70%(b)
- ---------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- ---------------------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $1,760
- ---------------------------------------------------------------------------------------------
Portfolio turnover rate 5%
- ---------------------------------------------------------------------------------------------
</TABLE>
* Reflects operations for the period from February 2, 1994 (date of initial
public investment) to March 31, 1994 (unaudited).
**Based on net asset value, which does not reflect the sales load or contingent
deferred sales charge, if applicable.
(a) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above (Note 4).
(b) Computed on an annualized basis.
(See Notes which are an integral part of the Financial Statements)
B. Please delete the section entitled "Redemption Before Purchase Instruments
Clear" on page 10 of the prospectus.
C. Please insert the following after the section entitled "Portfolio
Manager's Background" on page 11 of the prospectus. In addition, please
add the heading "Other Payments to Financial Institutions" to the Table of
Contents page after the heading "Portfolio Manager's Background."
"OTHER PAYMENTS TO FINANCIAL INSTITUTIONS. In addition to periodic payments to
financial institutions under the Plan, Federated Securities Corp. will pay
financial institutions an amount equal to 1% of the net asset value of shares
purchased by their clients or customers at the time of purchase (except for
participants in the Liberty Family Retirement Program). Furthermore, the Adviser
or its affiliates may offer to pay a fee from their own assets to financial
institutions as financial assistance for providing substantial marketing, sales
and operational support to the distributor. The support may include
participating in sales, educational and training seminars at recreational type
facilities, providing sales literature, and engineering computer software
programs that emphasize the attributes of the Fund. Such assistance will be
predicated upon the amount of shares the financial institution sells or may
sell, and/or upon the type and nature of sales or operational support furnished
by the financial institutions."
D. Please replace the section entitled "Administrative Services" on page 12
of the prospectus with the following:
"ADMINISTRATIVE SERVICES. Federated Administrative Services, a subsidiary of
Federated Investors, provides administrative personnel and services (including
certain legal and financial reporting services) necessary to operate the Fund.
Federated Administrative Services provides these at an annual rate which relates
to the average aggregate daily net assets of all funds advised by subsidiaries
of Federated Investors ("Federated Funds") as specified below:
<TABLE>
<CAPTION>
AVERAGE AGGREGATE DAILY NET ASSETS
MAXIMUM ADMINISTRATIVE FEE OF THE FEDERATED FUNDS
<S> <C>
0.15 of 1% on the first $250 million
0.125 of 1% on the next $250 million
0.10 of 1% on the next $250 million
0.075 of 1% on assets in excess of $750 million
</TABLE>
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 Administrative Services may choose voluntarily to waive a portion of
its fee."
E. Please replace the section entitled "Shareholder Services Plan" on page 12
of the prospectus with the following:
"SHAREHOLDER SERVICES PLAN. The Fund has adopted a Shareholder Services Plan
(the "Services Plan") under which it may make payments up to 0.25 of 1% of the
average daily net asset value of the Fund to obtain certain personal services
for shareholders and the maintenance of shareholder accounts ("shareholder
services"). The Fund has entered into a Shareholder Services Agreement with
Federated Shareholder Services, a subsidiary of Federated Investors, under which
Federated Shareholder Services will either perform shareholder services directly
or will select financial institutions to perform shareholder services. Financial
institutions will receive fees based upon shares owned by their clients or
customers. The schedules of such fees and the basis upon which such fees will be
paid will be determined from time to time by the Fund and Federated Shareholder
Services."
F. Please insert the following financial statements beginning as page 15 of
the prospectus. In addition, please add the heading "Financial Statements"
to the Table of Contents page immediately before "Addresses."
INSIGHT ADJUSTABLE RATE MORTGAGE FUND
PORTFOLIO OF INVESTMENTS
MARCH 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ----------- -------------------------------------------------------------------------------------- -------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION--96.2%
- ---------------------------------------------------------------------------------------------------
$ 800,000 5.43%, 3/1/2023 $ 821,698
--------------------------------------------------------------------------------------
853,437 4.00%, 9/1/2023 870,992
-------------------------------------------------------------------------------------- -------------
TOTAL (IDENTIFIED COST, $1,696,773) 1,692,690
-------------------------------------------------------------------------------------- -------------
*REPURCHASE AGREEMENT--2.6%
- ---------------------------------------------------------------------------------------------------
45,000 J.P. Morgan Securities, Inc., 3.59%, dated 3/31/94, due 4/4/94 (Note 2B) 45,000
-------------------------------------------------------------------------------------- -------------
TOTAL INVESTMENTS (IDENTIFIED COST, $1,741,773) $ 1,737,690\
-------------------------------------------------------------------------------------- -------------
</TABLE>
*The repurchase agreement is fully collateralized by U.S. government and/or
agency obligations based on market prices at the date of the portfolio.
\The cost of investments for federal tax purposes amounts to $1,741,773. The net
unrealized depreciation of investments on a federal tax basis amounts to
$4,083.
Note: The categories of investments are shown as a percentage of net assets of
($1,759,845) at March 31, 1994.
(See Notes which are an integral part of the Financial Statements)
INSIGHT ADJUSTABLE RATE MORTGAGE FUND
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- ----------------------------------------------------------------------------------------------------
Investments, at value (Notes 2A and 2B) (identified and tax cost; $1,741,773) $ 1,737,690
- ----------------------------------------------------------------------------------------------------
Cash 3,444
- ----------------------------------------------------------------------------------------------------
Receivable from Adviser (Note 4) 12,827
- ----------------------------------------------------------------------------------------------------
Interest receivable 6,470
- ----------------------------------------------------------------------------------------------------
Receivable for Fund shares sold 5,902
- ---------------------------------------------------------------------------------------------------- -------------
Total assets 1,766,333
- ----------------------------------------------------------------------------------------------------
LIABILITIES:
- ----------------------------------------------------------------------------------------------------
Dividends payable $ 6,121
- -----------------------------------------------------------------------------------------
Accrued expenses and other liabilities 367
- ----------------------------------------------------------------------------------------- ---------
Total liabilities 6,488
- ---------------------------------------------------------------------------------------------------- -------------
NET ASSETS for 176,573 shares of capital stock outstanding $ 1,759,845
- ---------------------------------------------------------------------------------------------------- -------------
NET ASSETS CONSIST OF:
- ----------------------------------------------------------------------------------------------------
Paid-in capital $ 1,766,012
- ----------------------------------------------------------------------------------------------------
Unrealized depreciation of investments (4,083)
- ----------------------------------------------------------------------------------------------------
Accumulated net realized loss on investments (2,084)
- ---------------------------------------------------------------------------------------------------- -------------
Total $ 1,759,845
- ---------------------------------------------------------------------------------------------------- -------------
NET ASSET VALUE, Offering Price, and Redemption Proceeds Per Share
($1,759,845 / 176,573 shares of capital stock outstanding) $9.97
- ---------------------------------------------------------------------------------------------------- -------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
INSIGHT ADJUSTABLE RATE MORTGAGE FUND
STATEMENT OF OPERATIONS
PERIOD ENDED MARCH 31, 1994*
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- -------------------------------------------------------------------------------------------------------
Interest income (Note 2C) $ 13,438
- -------------------------------------------------------------------------------------------------------
EXPENSES:
- -------------------------------------------------------------------------------------------------------
Investment advisory fee (Note 4) $ 2,027
- --------------------------------------------------------------------------------------------
Custodian and recordkeeping fees and expenses 290
- --------------------------------------------------------------------------------------------
Shareholder servicing fee (Note 4) 724
- -------------------------------------------------------------------------------------------- ---------
Total expenses 3,041
- --------------------------------------------------------------------------------------------
Deduct--Waiver of investment advisory fee (Note 4) 2,027
- -------------------------------------------------------------------------------------------- ---------
Net expenses 1,014
- ------------------------------------------------------------------------------------------------------- ---------
Net investment income 12,424
- ------------------------------------------------------------------------------------------------------- ---------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
- -------------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments (identified cost basis) (2,084)
- -------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) on investments (4,083)
- ------------------------------------------------------------------------------------------------------- ---------
Net realized and unrealized gain (loss) on investments (6,167)
- ------------------------------------------------------------------------------------------------------- ---------
Change in net assets resulting from operations $ 6,257
- ------------------------------------------------------------------------------------------------------- ---------
</TABLE>
*Reflects operations for the period from February 2, 1994 (date of initial
public investment) to
March 31, 1994 (unaudited).
(See Notes which are an integral part of the Financial Statements)
INSIGHT ADJUSTABLE RATE MORTGAGE FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERIOD
ENDED
MARCH 31,
1994*
<S> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ---------------------------------------------------------------------------------------------------
OPERATIONS--
- ---------------------------------------------------------------------------------------------------
Net investment income $ 12,424
- ---------------------------------------------------------------------------------------------------
Net realized gain (loss) on investment transactions
($2,084 net loss as computed for federal tax purposes) (2,084)
- ---------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) on investments (4,083)
- --------------------------------------------------------------------------------------------------- -------------
Change in net assets resulting from operations 6,257
- --------------------------------------------------------------------------------------------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 2C)--
- ---------------------------------------------------------------------------------------------------
Dividends to shareholders from net investment income (12,424)
- --------------------------------------------------------------------------------------------------- -------------
CAPITAL STOCK TRANSACTIONS (NOTE 3)--
- ---------------------------------------------------------------------------------------------------
Proceeds from sale of shares 1,965,475
- ---------------------------------------------------------------------------------------------------
Net asset value of shares issued to shareholders in
payment of dividends declared 190
- ---------------------------------------------------------------------------------------------------
Cost of shares redeemed (199,653)
- --------------------------------------------------------------------------------------------------- -------------
Change in net assets resulting from capital stock transactions 1,766,012
- --------------------------------------------------------------------------------------------------- -------------
Change in net assets 1,759,845
- ---------------------------------------------------------------------------------------------------
NET ASSETS:
- ---------------------------------------------------------------------------------------------------
Beginning of period --
- --------------------------------------------------------------------------------------------------- -------------
End of period $ 1,759,845
- --------------------------------------------------------------------------------------------------- -------------
</TABLE>
*Reflects operations for the period from February 2, 1994 (date of initial
public investment) to
March 31, 1994 (unaudited).
(See Notes which are an integral part of the Financial Statements)
INSIGHT ADJUSTABLE RATE MORTGAGE FUND
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
(1) ORGANIZATION
Insight Institutional Series, Inc. (the "Corporation") is registered under the
Investment Company Act of 1940, as amended, as an open-end, management
investment company. The Trust consists of four diversified investment
portfolios. The financial statements included herein present only those of
Insight Adjustable Rate Mortgage Fund (the "Fund"). The financial statements of
the other portfolios are presented seperately. The assets of each portfolio are
segregated and a shareholders interest is limited to the portfolio in which
shares are held.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles (GAAP).
A. INVESTMENT VALUATIONS--U.S. government obligations are generally valued at
the mean between the over-the-counter bid and asked prices as furnished by
an independent pricing service. Short-term securities with remaining
maturities of sixty days or less may be stated at amortized cost, which
approximates value.
B. REPURCHASE AGREEMENTS--It is the policy of the Fund to require the
custodian bank to take possession, to have legally segregated in the
Federal Reserve Book Entry System or to have segregated within the
custodian bank's vault, all securities held as collateral in support of
repurchase agreement investments. Additionally, procedures have been
established by the Fund to monitor on a daily basis, the market value of
each repurchase agreements underlying collateral to ensure the value at
least equals the principal amount of the repurchase agreement, including
accrued interest.
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 Board of Directors ("Directors"). Risks may arise from the potential
inability of counterparties to honor the terms of the repurchase agreement.
Accordingly, the Fund could receive less than the repurchase price on the
sale of collateral securities.
C. INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and expenses
are accrued daily. Bond premium and discount are amortized as required by
the Internal Revenue Code, as amended ("Code"). Distributions to
shareholders are recorded on the ex-dividend date.
D. FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the
Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of its taxable income.
Accordingly, no provisions for federal tax are necessary.
E. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in
when-issued and delayed delivery transactions. The Fund records when-issued
securities on the trade date and maintains security positions such that
sufficient liquid assets will be available to make payment for the
securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
F. OTHER--Investment transactions are accounted for on the trade date.
(3) CAPITAL STOCK
At March 31, 1994, there were 2,000,000,000 shares of $0.001 per share par value
capital stock authorized. Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
PERIOD
ENDED
MARCH 31,
1994*
<S> <C>
Shares outstanding, beginning of period --
- ----------------------------------------------------------------------------------------------------
Shares sold 196,559
- ----------------------------------------------------------------------------------------------------
Shares issued to shareholders in payment of dividends declared 19
- ----------------------------------------------------------------------------------------------------
Shares redeemed (20,005)
- ---------------------------------------------------------------------------------------------------- ------------
Shares outstanding, end of period 176,573
- ---------------------------------------------------------------------------------------------------- ------------
</TABLE>
*For the period from February 2, 1994 (date of initial public investment) to
March 31, 1994.
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Federated Advisers, the Funds investment adviser
("Adviser"), receives for its services an annual investment advisory fee equal
to 0.70 of 1% of the Fund's average daily net assets. Adviser may voluntarily
choose to waive a portion of its fee. Adviser can modify or terminate this
voluntary waiver at any time at its sole discretion.
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS") provides
administrative personnel and services. Prior to March 1, 1994, these services
were provided at approximate cost. Effective March 1, 1994, the fee is based on
the level of average aggregate daily net assets of all funds advised by
subsidiaries of Federated Investors for the period. 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.
SHAREHOLDER SERVICE PLAN--Under the terms of a shareholder service agreement
with Federated Shareholder Services ("FSS") the Fund will pay FSS up to 0.25 of
1% of average net assets for the Fund for the period. This fee is to obtain
certain personnel services for shareholders and the maintenance of shareholder
accounts.
ORGANIZATIONAL EXPENSES--Organizational expenses and start-up administrative
service expenses incurred by the Fund will be borne initially by Adviser and are
estimated at $34,100 and $30,822, respectively. The Fund has agreed to reimburse
the Adviser for the organizational expenses and start-up administrative expenses
initially borne by the Adviser during the five-year period following January 19,
1994 (date the Fund first became effective).
TRANSFER AND DIVIDEND DISBURSING AGENT FEES--Federated Services Company
("FServ") serves as transfer agent and dividend disbursing agent for the Fund.
The fee is based on the size, type, and number of accounts and transactions made
by shareholders.
Certain of the Officers and Directors of the Corporation are Officers and
Trustees of the above companies.
(5) INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the
period ended March 31, 1994 were as follows:
<TABLE>
<S> <C>
- ---------------------------------------------------------------------------------------------------
PURCHASES $ 1,824,594
- --------------------------------------------------------------------------------------------------- -------------
SALES $ 85,355
- --------------------------------------------------------------------------------------------------- -------------
</TABLE>
INSIGHT ADJUSTABLE RATE MORTGAGE FUND
(A PORTFOLIO OF INSIGHT INSTITUTIONAL SERIES, INC.)
PROSPECTUS
The shares offered by this prospectus represent interests in Insight Adjustable
Rate Mortgage Fund (the "Fund"), a diversified investment portfolio of Insight
Institutional Series, Inc. (the "Corporation"), an open-end, management
investment company (a mutual fund).
The investment objective of the Fund is to provide current income consistent
with minimum fluctuation in principal value. The Fund pursues this objective by
investing primarily in a diversified portfolio of adjustable and floating rate
mortgage securities that are issued or guaranteed by the U.S. government, its
agencies or instrumentalities.
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 shares of the Fund. Keep this prospectus for future reference.
The Fund has also filed a Statement of Additional Information dated January 19,
1994, with the Securities and Exchange Commission. The information contained
into the Statement of Additional Information is incorporated by reference in
this prospectus. You may request a copy of the Statement of Additional
Information free of charge by calling 1-800-235-4669. To obtain other
information or to make inquiries about the Fund, contact your financial
institution.
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.
Prospectus dated January 19, 1994
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
SUMMARY OF FUND EXPENSES 1
- ------------------------------------------------------
GENERAL INFORMATION 2
- ------------------------------------------------------
INVESTMENT INFORMATION 2
- ------------------------------------------------------
Investment Objective 2
Investment Policies 2
Acceptable Investments 3
Adjustable Rate Mortgage Securities
("ARMS") 3
Collateralized Mortgage Obligations
("CMOs") 4
Real Estate Mortgage Investment
Conduits ("REMICs") 4
Resets of Interest 5
Caps and Floors 5
Dollar Roll Transactions 5
Temporary Investments 6
Repurchase Agreements 6
Lending of Portfolio Securities 6
When-Issued and Delayed Delivery
Transactions 6
Portfolio Turnover 6
Investment Limitations 6
NET ASSET VALUE 7
- ------------------------------------------------------
INVESTING IN THE FUND 7
- ------------------------------------------------------
Share Purchases 7
Through a Financial Institution 7
Directly by Mail 7
Conversion to Federal Funds 7
Directly by Wire 8
Minimum Investment Required 8
What Shares Cost 8
Certificates and Confirmations 8
Dividends and Distributions 8
REDEEMING SHARES 9
- ------------------------------------------------------
Through a Financial Institution 9
Directly by Mail 9
Signatures 9
Receiving Payment 10
By Check 10
By Wire 10
Redemption Before Purchase
Instruments Clear 10
Accounts with Low Balances 10
INSIGHT INSTITUTIONAL SERIES, INC.
INFORMATION 10
- ------------------------------------------------------
Management of the Corporation 10
Board of Directors 10
Investment Adviser 11
Advisory Fees 11
Adviser's Background 11
Portfolio Managers' Background 11
Distribution of Fund Shares 12
Administration of the Fund 12
Administrative Services 12
Shareholder Services Plan 12
Administrative Arrangements 12
Custodian 12
Transfer Agent and Dividend
Disbursing Agent 12
Legal Counsel 12
Independent Public Accountants 12
Expenses of the Fund 13
SHAREHOLDER INFORMATION 13
- ------------------------------------------------------
Voting Rights 13
TAX INFORMATION 13
- ------------------------------------------------------
Federal Income Tax 13
Pennsylvania Corporate and Personal
Property Taxes 14
PERFORMANCE INFORMATION 14
- ------------------------------------------------------
ADDRESSES Inside Back Cover
- ------------------------------------------------------
SUMMARY OF FUND EXPENSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)........................................................ None
Maximum Sales Load Imposed on Reinvested Dividends
(as a percentage of offering price)........................................................ None
Deferred Sales Load (as a percentage of original
purchase price or redemption proceeds, as applicable)...................................... None
Redemption Fee (as a percentage of amount redeemed, if applicable)........................... None
Exchange Fee................................................................................. None
ANNUAL FUND OPERATING EXPENSES*
(As a percentage of projected average net assets)
Management Fee (after waiver) (1)............................................................ 0.12%
12b-1 Fee.................................................................................... None
Total Other Expenses......................................................................... 0.73%
Shareholder Servicing Fee................................................................ 0.25%
Total Fund Operating Expenses (2)................................................... 0.85%
</TABLE>
(1) The estimated management fee has been reduced to reflect the anticipated
voluntary waiver of a portion of the management fee. The adviser can
terminate this voluntary waiver at any time at its sole discretion. The
maximum management fee is 0.70%.
(2) The Total Fund Operating Expenses are estimated to be 1.43% absent the
anticipated voluntary waiver of a portion of the management fee.
* Total Fund Operating Expenses are estimated based on average expenses expected
to be incurred during the period ending September 30, 1994. During the course
of this period, expenses may be more or less than the average amount shown.
THE PURPOSE OF THIS TABLE IS TO ASSIST AN INVESTOR IN UNDERSTANDING THE
VARIOUS COSTS AND EXPENSES THAT A SHAREHOLDER OF THE FUND WILL BEAR, EITHER
DIRECTLY OR INDIRECTLY. FOR MORE COMPLETE DESCRIPTIONS OF THE VARIOUS COSTS AND
EXPENSES, SEE "INVESTING IN THE FUND" AND "INSIGHT INSTITUTIONAL SERIES, INC.
INFORMATION." Wire-transferred redemptions of less than $5,000 may be subject to
additional fees.
<TABLE>
<CAPTION>
EXAMPLE 1 year 3 years
<S> <C> <C>
You would pay the following expenses on a $1,000 investment assuming (1) 5% annual return and
(2) redemption at the end of each time period. As noted in the table above, shares are not
subject to a redemption fee.................................................................. $9 $27
</TABLE>
THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. THIS
EXAMPLE IS BASED ON ESTIMATED DATA FOR THE FUND'S FISCAL YEAR ENDING SEPTEMBER
30, 1994.
GENERAL INFORMATION
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The Corporation was incorporated under the laws of the State of Maryland on
October 11, 1993. The Articles of Incorporation permit the Corporation to offer
separate portfolios and classes of shares. As of the date of this prospectus,
the Board of Directors (the "Directors") has established four separate
portfolios: Insight U.S. Government Fund, Insight Limited Term Municipal Fund,
Insight Limited Term Income Fund and Insight Adjustable Rate Mortgage Fund. This
prospectus relates only to the shares of Insight Adjustable Rate Mortgage Fund.
The Fund is designed for institutions seeking current income consistent with
minimum fluctuation in principal value through a professionally managed,
diversified portfolio of adjustable and floating rate mortgage securities which
are issued or guaranteed by the U.S. government, its agencies or
instrumentalities. A minimum initial investment of $1 million is required.
Fund shares are sold and redeemed at net asset value without a sales charge
imposed by the Fund.
INVESTMENT INFORMATION
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INVESTMENT OBJECTIVE
The investment objective of the Fund is to provide current income consistent
with minimum fluctuation in principal value. 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 investment policies described in this prospectus.
INVESTMENT POLICIES
Except as otherwise noted, the investment policies described below may not be
changed by the Directors without shareholder approval.
The Fund will limit its investments to those that are permitted for purchase by
federally chartered savings associations pursuant to applicable rules,
regulations or interpretations of the Office of Thrift Supervision and by
federal credit unions under the Federal Credit Union Act and the rules,
regulations and interpretations of the National Credit Union Administration.
Should additional permitted investments be allowed as a result of future changes
in applicable regulations or federal laws, the Fund reserves the right, without
shareholder approval, to make such investments consistent with the Fund's
investment objective, policies and limitations. Further, should existing
statutes or regulations change so as to cause any securities held by the Fund to
become ineligible for purchase by federally chartered savings associations or
federal credit unions, the Fund will dispose of those securities at times
advantageous to the Fund.
As operated within the limitations applicable to investments by federally
chartered savings associations and federal credit unions, and pursuant to
current interpretation by the Office of the Comptroller of the Currency, the
Fund will also serve as an appropriate vehicle for a national bank as an
investment for its own account.
ACCEPTABLE INVESTMENTS. The Fund pursues its investment objective by investing
primarily in adjustable and floating rate mortgage securities. Under normal
circumstances, the Fund will invest at least 65% of the value of its total
assets in adjustable and floating rate mortgage securities that are issued or
guaranteed by the U.S. government, its agencies or instrumentalities. By
investing primarily in these securities, the Fund should tend to have a lower
degree of fluctuation in principal value than a fund that invests, for example,
primarily in a non-diversified portfolio of fixed rate securities.
The types of mortgage securities in which the Fund invests principally are:
adjustable rate mortgage securities;
collateralized mortgage obligations;
real estate mortgage investment conduits; and
other securities collateralized by or representing an interest in real
estate mortgages whose interest rates reset at periodic intervals and are
issued or guaranteed by the U.S. government, its agencies or
instrumentalities.
In addition to the securities described above, the Fund may also invest in the
following:
direct obligations of the U.S. Treasury, such as U.S. Treasury bills,
notes and bonds; and
notes, bonds, and discount notes of U.S. government agencies or
instrumentalities, such as Federal Home Loan Banks, Federal National
Mortgage Association, Government National Mortgage Association, Banks for
Cooperatives (including Central Bank for Cooperatives), Federal Land
Banks, Federal Intermediate Credit Banks, Federal Farm Credit Banks,
Tennessee Valley Authority, Export-Import Bank of the United States,
Commodity Credit Corporation, Federal Financing Bank, Student Loan
Marketing Association, Federal Home Loan Mortgage Corporation, or National
Credit Union Administration.
The government securities in which the Fund may invest are backed in a variety
of ways by the U.S. government or its agencies or instrumentalities. Some of
these securities, such as Government National Mortgage Association
mortgage-backed securities, are backed by the full faith and credit of the U.S.
government. Other securities, such as obligations of the Federal National
Mortgage Association or Federal Home Loan Mortgage Corporation, are backed by
the credit of the agency or instrumentality issuing the obligations but not the
full faith and credit of the U.S. government.
The Fund also may acquire up to 3% of the outstanding securities of closed-end
funds in open-market transactions involving only customary broker's commissions.
The Fund will indirectly bear its proportionate share of any fees and expenses
paid by such closed-end funds in addition to the fees and expenses payable
directly by the Fund.
ADJUSTABLE RATE MORTGAGE SECURITIES ("ARMS"). ARMS are pass-through
mortgage securities representing interests in adjustable rather than fixed
interest rate mortgages. The ARMS in which the Fund invests are issued by
the Government National Mortgage Association ("GNMA"), the Federal National
Mortgage Association ("FNMA"), and the Federal Home Loan Mortgage
Corporation ("FHLMC") and are actively traded. The underlying mortgages
which collateralize ARMS issued by GNMA are fully guaranteed by the Federal
Housing Administration ("FHA") or Veterans Administration ("VA"), while
those collateralizing ARMS issued by FHLMC
or FNMA are typically conventional residential mortgages conforming to
strict underwriting size and maturity constraints.
Unlike conventional bonds, ARMS pay back principal over the life of the
ARMS rather than at maturity. Thus, a holder of the ARMS, such as the Fund,
would receive monthly scheduled payments of principal and interest, and may
receive unscheduled principal payments representing payments on the
underlying mortgages. At the time that a holder of the ARMS reinvests the
payments and any unscheduled prepayments of principal that it receives, the
holder may receive a rate of interest which is actually lower than the rate
of interest paid on the existing ARMS. As a consequence, ARMS may be a less
effective means of "locking in" long-term interest rates than other types
of U.S. government securities.
Not unlike other U.S. government securities, the market value of ARMS will
generally vary inversely with changes in market interest rates. Thus, the
market value of ARMS generally declines when interest rates rise and
generally rises when interest rates decline.
While ARMS generally entail less risk of a decline during periods of
rapidly rising rates, ARMS may also have less potential for capital
appreciation than other similar investments (e.g., investments with
comparable maturities) because as interest rates decline, the likelihood
increases that mortgages will be prepaid. Furthermore, if ARMS are
purchased at a premium, mortgage foreclosures and unscheduled principal
payments may result in some loss of a holder's principal investment to the
extent of the premium paid. Conversely, if ARMS are purchased at a
discount, both a scheduled payment of principal and an unscheduled
prepayment of principal would increase current and total returns and would
accelerate the recognition of income, which would be taxed as ordinary
income when distributed to shareholders.
COLLATERALIZED MORTGAGE OBLIGATIONS ("CMOS"). CMOs are bonds issued by
single-purpose, stand-alone finance subsidiaries or trusts of financial
institutions, government agencies, investment bankers, or companies related
to the construction industry. CMOs purchased by the Fund may be:
collateralized by pools of mortgages in which each mortgage is
guaranteed as to payment of principal and interest by an agency or
instrumentality of the U.S. government;
collateralized by pools of mortgages in which payment of principal and
interest is guaranteed by the issuer and such guarantee is
collateralized by U.S. government securities; or
securities in which the proceeds of the issuance are invested in
mortgage securities and payment of the principal and interest is
supported by the credit of an agency or instrumentality of the U.S.
government.
All privately issued CMOs purchased by the Fund are investment grade, as
rated by a nationally recognized statistical rating organization.
REAL ESTATE MORTGAGE INVESTMENT CONDUITS ("REMICS"). REMICs are offerings
of multiple class real estate mortgage-backed securities which qualify and
elect treatment as such under provisions of the Internal Revenue Code.
Issuers of REMICs may take several forms, such as trusts, partnerships,
corporations, associations, or segregated pools of mortgages. Once REMIC
status is elected and obtained, the entity is not subject to federal income
taxation. Instead, income
is passed through the entity and is taxed to the person or persons who hold
interests in the REMIC. A REMIC interest must consist of one or more
classes of "regular interests," some of which may offer adjustable rates of
interest (the type in which the Fund primarily invests), and a single class
of "residual interests." To qualify as a REMIC, substantially all the
assets of the entity must be in assets directly or indirectly secured
principally by real property.
RESETS OF INTEREST. The interest rates paid on the ARMS, CMOs, and REMICs in
which the Fund invests generally are readjusted at intervals of one year or less
to an increment over some predetermined interest rate index. There are two main
categories of indices: those based on U.S. Treasury securities and those derived
from a calculated measure, such as a cost of funds index or a moving average of
mortgage rates. Commonly utilized indices include the one-year and five-year
constant maturity Treasury Note rates, the three-month Treasury Bill rate, the
six-month Treasury Bill rate, rates on longer-term Treasury securities, the
National Median Cost of Funds, the one-month or three-month London Interbank
Offered Rate (LIBOR) or the prime rate of a specific bank. Some indices, such as
the one-year constant maturity Treasury Note rate, closely mirror changes in
market interest rate levels.
To the extent that the adjusted interest rate on the mortgage security reflects
current market rates, the market value of an adjustable rate mortgage security
will tend to be less sensitive to interest rate changes than a fixed rate debt
security of the same stated maturity. Hence, ARMS which use indices that lag
changes in market rates should experience greater price volatility than
adjustable rate mortgage securities that closely mirror the market.
CAPS AND FLOORS. The underlying mortgages which collateralize the ARMS, CMOs,
and REMICs in which the Fund invests will frequently have caps and floors which
limit the maximum amount by which the loan rate to the residential borrower may
change up or down: (1) per reset or adjustment interval, and (2) over the life
of the loan. Some residential mortgage loans restrict periodic adjustments by
limiting changes in the borrower's monthly principal and interest payments
rather than limiting interest rate changes. These payment caps may result in
negative amortization.
The value of mortgage securities in which the Fund invests may be affected if
market interest rates rise or fall faster and farther than the allowable caps or
floors on the underlying residential mortgage loans. Additionally, even though
the interest rates on the underlying residential mortgages are adjustable,
amortization and prepayments may occur, thereby causing the effective maturities
of the mortgage securities in which the Fund invests to be shorter than the
maturities stated in the underlying mortgages.
DOLLAR ROLL TRANSACTIONS. In order to enhance portfolio returns and manage
prepayment risks, the Fund may engage in dollar roll transactions with respect
to mortgage securities issued by GNMA, FNMA, and FHLMC. In a dollar roll
transaction, the Fund sells a mortgage security to a financial institution, such
as a bank or broker/dealer, and simultaneously agrees to repurchase a
substantially similar (i.e., same type, coupon, and maturity) security from the
institution at a later date at an agreed upon price. The mortgage securities
that are repurchased will bear the same interest rate as those sold, but
generally will be collateralized by different pools of mortgages with different
prepayment histories. During the period between the same and repurchase, the
Fund will not be entitled to receive interest and principal payments on the
securities sold. Proceeds of the sale will be invested in short-term
instruments, and the income from these investments, together with any additional
fee income received
on the sale, will generate income for the Fund exceeding the yield. When the
Fund enters into a dollar roll transaction, liquid assets of the Fund, in a
dollar amount sufficient to make payment for the obligations to be repurchased,
are segregated at the trade date. These securities are marked to market daily
and are maintained until the transaction is settled.
TEMPORARY INVESTMENTS. The Fund may invest temporarily in cash and cash items
during times of unusual market conditions for defensive purposes and to maintain
liquidity in anticipation of favorable investment opportunities. The Fund
considers cash items to mean time deposits (including savings deposits and
certificates of deposit) and bankers acceptances issued by a U.S. branch of a
domestic bank or savings association having capital, surplus and undivided
profits in excess of $100 million at the time of 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.
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.
LENDING OF PORTFOLIO SECURITIES. In order to generate additional income, the
Fund may lend portfolio securities on a short-term or a long-term basis up to
one-third of the value of its total assets to broker/dealers, banks, or other
institutional borrowers of securities. 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 Directors. In these loan arrangements, the Fund will receive collateral
in the form of cash or U.S. government securities equal to at least 100% of the
value of the securities loaned.
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. In when-issued and delayed delivery transactions, the Fund relies
on the seller to complete the transaction. The seller's failure to complete the
transaction may cause the Fund to miss a price or yield considered to be
advantageous.
PORTFOLIO TURNOVER. The Fund may trade or dispose of portfolio securities as
considered necessary to meet its investment objective.
INVESTMENT LIMITATIONS
The Fund will not:
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 arrangement to buy it back on a set
date) or pledge securities except, under certain circumstances, the Fund
may borrow 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;
invest more than 10% of the value of its net assets in securities subject
to restrictions on resale under the Securities Act of 1933 except for
certain restricted securities that meet the criteria for liquidity as
established by the Directors;
invest more than 15% of the value of its net assets in securities that are
not readily marketable or that are otherwise considered illiquid,
including repurchase agreements providing for settlement in more than
seven days after notice; or
invest more than 5% of the value of its total assets in securities of
issuers that have records of less than three years of continuous
operations including the operation of any predecessor. (This limitation
does not apply to issuers of CMOs or REMICs that are collateralized by
securities or mortgages issued or guaranteed as to prompt payment of
principal and interest by an agency of the U.S. government.)
NET ASSET VALUE
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The Fund's net asset value per share fluctuates. It is determined by dividing
the sum of the market value of all securities and all other assets, less
liabilities, by the number of shares outstanding.
INVESTING IN THE FUND
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SHARE PURCHASES
Fund shares are sold on days on which the New York Stock Exchange is open.
Shares may be purchased through a financial institution (such as a bank or
investment dealer) who has a sales agreement with the distributor, Federated
Securities Corp., or once an account has been established, directly from
Federated Securities Corp. either by mail or wire. The Fund reserves the right
to reject any purchase request.
THROUGH A FINANCIAL INSTITUTION. An investor may call his financial institution
to place an order to purchase shares of the Fund. Orders through a financial
institution are considered received when the Fund is notified of the purchase
order. Purchase orders must be received by the financial institution and
transmitted to the Fund before 4:00 p.m. (Boston time) in order for shares to be
purchased at that day's price. It is the financial institution's responsibility
to transmit orders promptly. Purchase orders through a registered broker/dealer
must be received by the broker before 4:00 p.m. (Boston time) and must be
transmitted by the broker to the Fund before 5:00 p.m. (Boston time) in order
for shares to be purchased at that day's price.
DIRECTLY BY MAIL. An investor may place an order to purchase shares of the Fund
by mail directly from Federated Securities Corp. once an account has been
established. To purchase shares of the Fund by mail, send a check made payable
to Insight Adjustable Rate Mortgage Fund to the Fund's transfer agent, Federated
Services Company, c/o State Street Bank and Trust Company, P.O. Box 8604,
Boston, Massachusetts 02266-8604.
CONVERSION TO FEDERAL FUNDS. It is the Fund's policy to be as fully invested as
possible so that maximum interest may be earned. To this end, all payments from
shareholders must be in federal funds or be converted into federal funds before
shareholders begin to earn dividends. State Street Bank and Trust Company
("State Street Bank") acts as the shareholder's agent in depositing checks and
converting them to federal funds.
DIRECTLY BY WIRE. To purchase shares of the Fund directly from Federated
Securities Corp. by Federal Reserve wire once an account has been established,
call the Fund. All information needed will be taken over the telephone, and the
order is considered received when State Street Bank receives payment by wire.
MINIMUM INVESTMENT REQUIRED
The minimum initial investment in the Fund is $1 million.
WHAT SHARES COST
Fund shares are sold at their net asset value next determined after an order is
received. There is no sales charge imposed by the Fund. However, certain
unaffiliated financial institutions may charge fees for services provided which
may relate to ownership of shares. This prospectus should, therefore, be read
together with any agreement between the customer and the institution with regard
to services provided and the fees charged for these services.
The net asset value is determined at 4:00 p.m. (Boston time), Monday through
Friday, except on: (i) days on which there are not sufficient changes in the
value of the Fund's portfolio securities 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.
CERTIFICATES AND CONFIRMATIONS
As transfer agent for the Fund, Federated Services Company maintains a share
account for each shareholder. Share certificates are not issued unless requested
on the application or by contacting the Fund.
Detailed confirmations of each purchase or redemption are sent to each
shareholder. Monthly statements are sent to report dividends paid during the
month.
DIVIDENDS AND DISTRIBUTIONS
Dividends are declared daily and paid monthly. Distributions of any net realized
long-term capital gains will be made at least once every twelve months.
Dividends and distributions are automatically reinvested in additional shares of
the Fund on payment dates at net asset value, unless cash payments are requested
by shareholders on the application or by writing to Federated Securities Corp.
Dividends are declared just prior to determining net asset value. If an order
for shares is placed on the preceding business day, shares purchased by wire
begin earning dividends on the business day wire payment is received by State
Street Bank. If the order for shares and payment by wire are received on the
same day, shares begin earning dividends on the next business day. Shares
purchased by check begin earning dividends on the business day after the check
is converted, upon instruction of the transfer agent, into federal funds.
Shares earn dividends through the business day that proper written redemption
instructions are received by State Street Bank.
REDEEMING SHARES
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The Fund redeems shares at their net asset value next determined after State
Street Bank receives the redemption request. Redemptions will be made on days on
which the Fund computes its net asset value. Redemption requests must be
received in proper form and can be made through a financial institution, or
directly from the Fund by written request.
THROUGH A FINANCIAL INSTITUTION
A shareholder may redeem shares of the Fund by calling his financial institution
(such as a bank or an investment dealer) to request the redemption. Shares will
be redeemed at the net asset value next determined after the Fund receives the
redemption request from the financial institution. Redemption requests must be
received by the financial institution and transmitted to the Fund before 4:00
p.m. (Boston time) in order for shares to be redeemed at that day's net asset
value. The financial institution is responsible for promptly submitting
redemption requests and providing proper written redemption instructions to the
Fund. The financial institution may charge customary fees and commissions for
this service. Redemption requests through a registered broker/dealer must be
received by the broker before 4:00 p.m. (Boston time) and must be transmitted by
the broker to the Fund before 5:00 p.m. (Boston time) in order for shares to be
redeemed at that day's net asset value. If at any time the Fund shall determine
it necessary to terminate or modify this method of redemption, shareholders will
be promptly notified.
Before a financial institution may request redemption by telephone on behalf of
a shareholder, an authorization form permitting the Fund to accept redemption
requests by telephone must first be completed. Telephone redemption instructions
may be recorded. If reasonable procedures are not followed by the Fund, it may
be liable for losses due to unauthorized or fraudulent telephone instructions.
In the event of drastic economic or market changes, a shareholder may experience
difficulty in redeeming by telephone. If such a case should occur, another
method of redemption, such as "Directly by Mail," should be considered.
DIRECTLY BY MAIL
Shareholders may also redeem shares by sending a written request to Federated
Services Company, c/ o State Street Bank and Trust Company, P.O. Box 8604,
Boston, Massachusetts 02266-8604. This written request must include the
shareholder's name, the Fund name, the Fund account number, and the share or
dollar amount to be redeemed. Shares will be redeemed at their net asset value
next determined after State Street Bank receives the redemption request.
If share certificates have been issued, they must be properly endorsed and
should be sent by registered or certified mail with the written request.
Shareholders may call the Fund for assistance in redeeming by mail.
SIGNATURES. Shareholders requesting a redemption of $50,000 or more, a
redemption of any amount to be sent to an address other than that on record with
the Fund, or a redemption payable other than to the shareholder of record must
have signatures on written redemption requests guaranteed by:
a trust company or commercial bank whose deposits are insured by the Bank
Insurance Fund ("BIF"), which is administered by the Federal Deposit
Insurance Corporation ("FDIC");
a member of the New York, American, Boston, Midwest, or Pacific Stock
Exchange;
a savings bank or savings and loan association whose deposits are insured
by the Savings Association Insurance Fund ("SAIF"), which is administered
by the FDIC; or
any other "eligible guarantor institution," as defined in the Securities
Exchange Act of 1934.
The Fund does not accept signatures guaranteed by a notary public.
The Fund and its transfer agent have adopted standards for accepting signature
guarantees from the above institutions. The Fund may elect in the future to
limit eligible signature guarantors to institutions that are members of a
signature guarantee program. The Fund and its transfer agent reserve the right
to amend these standards at any time without notice.
RECEIVING PAYMENT
BY CHECK. Normally, a check for the proceeds is mailed within one business day,
but in no event more than seven days, after receipt of a proper written
redemption request provided State Street Bank has received payment for shares
from the shareholder.
BY WIRE. Normally redemption proceeds will be wired the following business day,
but in no event more than seven days, after receipt of the redemption request.
REDEMPTION BEFORE PURCHASE INSTRUMENTS CLEAR
When shares are purchased by check, or through Automated Clearing House ("ACH"),
the proceeds from the redemption of those shares are not available, and the
shares may not be exchanged, until the Fund or its agents are reasonably certain
that the purchase check has cleared, which could take up to ten calendar days.
ACCOUNTS WITH LOW BALANCES
Due to the high cost of maintaining accounts with low balances, the Fund may
redeem shares in any account, and pay the proceeds to the shareholder, if the
account balance falls below a required minimum value of $1 million due to
shareholder redemptions. This requirement does not apply, however, if the
balance falls below $1 million because of changes in the Fund's net asset value.
Before shares are redeemed to close an account, the shareholder is notified in
writing and allowed 30 days to purchase additional shares to meet the minimum
requirement.
INSIGHT INSTITUTIONAL SERIES, INC. INFORMATION
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MANAGEMENT OF THE CORPORATION
BOARD OF DIRECTORS. The Fund is managed by a Board of Directors. The Directors
are responsible for managing the Corporation's business affairs and for
exercising all the Corporation's powers except those reserved for the
shareholders. The Executive Committee of the Board of Directors handles the
Directors' responsibilities between meetings of the Directors.
INVESTMENT ADVISER. Investment decisions for the Fund are made by Federated
Advisers, the Fund's investment adviser, subject to direction by the Directors.
The adviser continually conducts investment research and supervision for the
Fund and is responsible for the purchase or sale of portfolio instruments, for
which it receives an annual fee from the Fund.
ADVISORY FEES. The Fund's adviser receives an annual investment advisory
fee equal to 0.70 of 1% of the Fund's average daily net assets. Under the
investment advisory contract, which provides for voluntary waivers of
expenses by the adviser, the adviser may voluntarily waive some or all of
its fee. The adviser can terminate this voluntary waiver of some or all of
its advisory fee at any time at its sole discretion. The adviser has also
undertaken to reimburse the Fund for operating expenses in excess of
limitations established by certain states.
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. Total assets under management or
administration by these and other subsidiaries of Federated Investors are
approximately $76 billion. Federated Investors, which was founded in 1956
as Federated Investors, Inc., develops and manages mutual funds primarily
for the financial industry. Federated Investors' track record of
competitive performance and its disciplined, risk averse investment
philosophy serve approximately 3,500 client institutions nationwide.
Through these same client institutions, individual shareholders also have
access to this same level of investment expertise.
PORTFOLIO MANAGERS' BACKGROUND. Gary J. Madich, Kathleen M. Foody-Malus and
Susan M. Nason have been the Fund's portfolio managers since its inception.
Mr. Madich joined Federated Investors in 1984 and has been a Senior Vice
President of the Fund's investment adviser since 1993. Mr. Madich served as
a Vice President of the Fund's investment adviser from 1988 until 1993. Mr.
Madich is a Chartered Financial Analyst and received his M.B.A. in Public
Finance from the University of Pittsburgh. Ms. Foody-Malus joined Federated
Investors in 1983 and has been a Vice President of the Fund's investment
adviser since 1993. Ms. Foody-Malus served as an Assistant Vice President
of the Fund's investment adviser from 1990 until 1993, and from 1986 until
1990 she acted as an investment analyst. Ms. Foody-Malus received her
M.B.A. in Accounting/Finance from the University of Pittsburgh. Ms. Nason
joined Federated Investors in 1987 and has been a Vice President of the
Fund's investment adviser since 1993. Ms. Nason served as an Assistant Vice
President of the investment adviser from 1990 until 1993, and from 1987
until 1990 she acted as an investment analyst. Ms. Nason is a Chartered
Financial Analyst and received her M.B.A. in Finance from Carnegie Mellon
University.
DISTRIBUTION OF FUND SHARES
Federated Securities Corp. is the principal distributor for shares of the Fund.
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.
ADMINISTRATION OF THE FUND
ADMINISTRATIVE SERVICES. Federated Administrative Services, Inc., which is a
subsidiary of Federated Investors, provides the Fund with the administrative
personnel and services necessary to operate the Fund. Such services include
shareholder servicing and certain legal and accounting services. Federated
Administrative Services, Inc. provides these at approximate cost.
SHAREHOLDER SERVICES PLAN. The Fund has adopted a Shareholder Services Plan (the
"Services Plan"). Under the Services Plan, financial institutions will enter
into shareholder service agreements with the Fund to provide administrative
support services to their customers who from time to time may be owners of
record or beneficial owners of shares. In return for providing these support
services, a financial institution may receive payments from the Fund at a rate
not exceeding 0.25 of 1% of the average daily net assets of the shares
beneficially owned by the financial institution's customers for whom it is
holder of record or with whom it has a servicing relationship. These
administrative services may include, but not are not limited to, the provision
of personal services and maintenance of shareholder accounts.
ADMINISTRATIVE ARRANGEMENTS. The distributor may also pay financial institutions
a fee based upon the net asset value of the Fund shares beneficially owned by
the financial institution's clients or customers. This fee is in addition to
amounts paid under the Shareholder Services Plan and will be reimbursed by the
adviser.
The Glass-Steagall Act limits the ability of a depository institution (such as a
commercial bank or a savings and loan association) to become an underwriter or
distributor of securities. In the event the Glass-Steagall Act is deemed to
prohibit depository institutions from acting in the capacities described in this
prospectus or should Congress relax current restrictions on depository
institutions, the Directors will consider appropriate changes in the
administrative services.
State securities laws governing the ability of depository institutions to act as
underwriters or distributors of securities may differ from interpretations given
to the Glass-Steagall Act and, therefore, banks and financial institutions may
be required to register as dealers pursuant to state law.
CUSTODIAN. State Street Bank and Trust Company, Boston, Massachusetts, is
custodian for the securities and cash of the Fund.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT. Federated Services Company,
Pittsburgh, Pennsylvania, is transfer agent for the shares of the Fund and
dividend disbursing agent for the Fund.
LEGAL COUNSEL. Legal counsel is provided by Houston, Houston & Donnelly,
Pittsburgh, Pennsylvania, and Dickstein, Shapiro & Morin, Washington, D.C.
INDEPENDENT PUBLIC ACCOUNTANTS. The independent public accountants for the Fund
are Arthur Andersen & Co., Pittsburgh, Pennsylvania.
EXPENSES OF THE FUND
Shareholders of the Fund pay their allocable portion of Fund and Corporation
expenses.
The Corporation expenses for which shareholders pay their allocable portion
include, but are not limited to, the cost of: organizing the Corporation and
continuing its existence; registering the Corporation with federal and state
securities authorities; Directors' fees; auditors' fees; meetings of Directors;
legal fees of the Corporation; association membership dues and such
non-recurring and extraordinary items as may arise from time to time.
The Fund expenses for which shareholders pay their allocable portion include,
but are not limited to, the cost of: investment advisory and administrative
services; printing prospectuses and other Fund documents for shareholders;
registering the Fund and shares of the Fund with federal and state securities
commissions; taxes and commissions; issuing, purchasing, repurchasing and
redeeming shares; fees for custodians, transfer agents, dividend disbursing
agents, shareholder servicing agents and registrars; printing, mailing,
auditing, accounting and legal expenses; reports to shareholders and
governmental agencies; meetings of shareholders and proxy solicitations
therefor; insurance premiums; and such non-recurring and extraordinary items as
may arise from time to time.
SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------
VOTING RIGHTS
Each share of the Fund is entitled to one vote at all meetings of shareholders.
All shares of all portfolios in the Corporation have equal voting rights except
that in matters affecting only a particular portfolio, only shares of that
portfolio are entitled to vote.
As a Maryland corporation, the Fund is not required to hold annual shareholder
meetings. Shareholder approval will be sought only for certain changes in the
Fund's operation and for the election of Directors under certain circumstances.
Directors may be removed by a majority vote of the shareholders at a special
meeting. A special meeting of shareholders shall be called by the Directors upon
the request of shareholders owning at least 10% of the Fund's outstanding shares
of all series entitled to vote.
TAX INFORMATION
- --------------------------------------------------------------------------------
FEDERAL INCOME TAX
The Fund will pay no federal income tax because it 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.
Unless otherwise exempt, shareholders are required to pay federal income tax on
any dividends and other distributions, including capital gains distributions,
received. This applies whether dividends and distributions are received in cash
or as additional shares. Distributions representing long-term capital gains, if
any, will be taxable to shareholders as long-term capital gains no matter how
long the
shareholders have held their shares. Information on the tax status of dividends
and distributions is provided annually.
PENNSYLVANIA CORPORATE AND PERSONAL PROPERTY TAXES
In the opinion of Houston, Houston & Donnelly, counsel to the Fund:
the Fund is subject to the Pennsylvania corporate franchise tax; and
Fund shares are exempt from personal property taxes imposed by counties,
municipalities and school districts in Pennsylvania.
Shareholders are urged to consult their own tax advisers regarding the status of
their accounts under state and local tax laws.
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
From time to time the Fund advertises its total return and yield.
Total return represents the change, over a specified period of time, in the
value of an investment in the Fund after reinvesting all income and capital
gains 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.
From time to time, the Fund may advertise its performance using certain
financial publications and/or compare its performance to certain indices.
ADDRESSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Insight Adjustable Rate Mortgage Fund 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 8604
Trust Company Boston, Massachusetts 02266-8604
- -------------------------------------------------------------------------------------------------------------------
Transfer Agent and Dividend Disbursing Agent
Federated Services Company Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- -------------------------------------------------------------------------------------------------------------------
Legal Counsel
Houston, Houston & Donnelly 2510 Centre City Tower
Pittsburgh, Pennsylvania 15222
- -------------------------------------------------------------------------------------------------------------------
Legal Counsel
Dickstein, Shapiro & Morin 2101 L Street, N.W.
Washington, D.C. 20037
- -------------------------------------------------------------------------------------------------------------------
Independent Public Accountants
Arthur Andersen & Co. 2100 One PPG Place
Pittsburgh, Pennsylvania 15222
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
INSIGHT ADJUSTABLE
RATE MORTGAGE FUND
PROSPECTUS
A Diversified Portfolio of
Insight Institutional Series, Inc.,
an Open-End, Management
Investment Company
January 19, 1994
3112404A (1/94)
INSIGHT ADJUSTABLE RATE MORTGAGE FUND
(A PORTFOLIO OF INSIGHT INSTITUTIONAL FUNDS)
Supplement to Statement of Additional Information dated January 19, 1994
A. Delete the second sentence under the section entitled "Portfolio
Turnover" on page 2 and replace it with the following:
"During the period from January 19, 1994 (effective date of
the Fund), through March 31, 1994, the Fund's portfolio
turnover rate was 5%."
B. Insert the following information as a second paragraph under the section
entitled "Fund Ownership" on
page 7:
"As of May 9, 1994, Merrill Lynch Pierce Fenner & Smith (as
record owner holding shares for its clients), Jacksonville,
Florida, owned approximately 136,776 shares (99.99%) of the
Fund."
C. Insert the following as the second paragraph in the section entitled
"Advisory Fees" on page 7:
"During the period from February 2, 1994 (date of initial
public investment), through March 31, 1994, the adviser
earned $2,027, all of which was voluntarily waived."
D. Replace the section entitled "Shareholder Servicing" on page 8
with the following:
"Shareholder Services Plan
This arrangement permits the payment of fees to Federated
Shareholder Services and, indirectly, to financial
institutions to cause services to be provided to
shareholders by a representative who has knowledge of the
shareholder's particular circumstances and goals. These
activities and services may include, but are not limited to,
providing office space, equipment, telephone facilities, and
various clerical, supervisory, computer, and other personnel
as necessary or beneficial to establish and maintain
shareholder accounts and records; processing purchase and
redemption transactions and automatic investments of client
account cash balances; answering routine client inquiries;
and assisting clients in changing dividend options, account
designations, and addresses.
For the period ending March 31, 1994, payments in the amount
of $724 were made pursuant to the Shareholder Services
Plan."
E. Replace the section entitled "Administrative Services" on page 8 with
the following:
"Administrative Services
Federated Administrative Services, a subsidiary of Federated
Investors, provides administrative personnel and services to
the Fund for a fee as described in the prospectus. For the
period from February 2, 1994 (date of initial public
investment) to March 31, 1994, there were no administrative
fees. John A. Staley, IV, an officer of the Corporation and
Dr. Henry J. Gailliot, an officer of Federated Advisers, the
adviser to the Fund, each hold approximately 15% and 20%,
respectively, of the outstanding common stock and serve as
directors of Commercial Data Services, Inc., a company which
provides computer processing services to Federated
Administrative Services, Inc. , and Federated Administrative
Services. For the year ended December 31, 1993, Federated
Administrative Services, Inc. paid approximately $162,309
for services provided by Commercial Data Services, Inc. to
the Funds. "
F. Insert the following information as the first paragraph under the section
entitled "Total Return" on
page 9:
"The Fund's cumulative total return from February 2, 1994
(date of initial public investment) to March 31, 1994, was
0.16%. Cumulative total return reflects the Fund's total
performance over a specific period of time. This total
return assumes and is reduced by the payment of the maximum
sales load. The Fund's total return is representative of
only two months of fund activity since the Fund' s effective
date."
G. Insert the following information as the first paragraph under the section
entitled "Yield" on page 10:
"The Fund's yield for the thirty-day period ended March 31,
1994, was 3.99%."
May 31, 1994
FEDERATED SECURITIES CORP.
Distributor
4041803B(5/94)
INSIGHT ADJUSTABLE RATE MORTGAGE FUND
(A PORTFOLIO OF INSIGHT INSTITUTIONAL SERIES, INC.)
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information should be read with the
prospectus of Insight Adjustable Rate Mortgage Fund (the "Fund") dated
January 19, 1994. This Statement is not a prospectus itself. To
receive a copy of the prospectus, write or call the Fund.
FEDERATED INVESTORS TOWER
PITTSBURGH, PENNSYLVANIA 15222-3779
Statement dated January 19, 1994
[LOGO] FEDERATED SECURITIES CORP.
---------------------------------------------------------
Distributor
A subsidiary of FEDERATED INVESTORS
A subsidiary of FEDERATED INVESTORS
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
GENERAL INFORMATION ABOUT THE FUND 1
- ---------------------------------------------------------------
INVESTMENT OBJECTIVE AND POLICIES 1
- ---------------------------------------------------------------
Types of Investments 1
Caps and Floors 1
When-Issued and Delayed Delivery Transactions 1
Lending of Portfolio Securities 2
Repurchase Agreements 2
Reverse Repurchase Agreements 2
Restricted and Illiquid Securities 2
Portfolio Turnover 2
INVESTMENT LIMITATIONS 3
- ---------------------------------------------------------------
INSIGHT INSTITUTIONAL SERIES, INC. MANAGEMENT 4
- ---------------------------------------------------------------
Officers and Directors 4
The Funds 6
Fund Ownership 7
Director Liability 7
INVESTMENT ADVISORY SERVICES 7
- ---------------------------------------------------------------
Adviser to the Fund 7
Advisory Fees 7
SHAREHOLDER SERVICING 8
- ---------------------------------------------------------------
ADMINISTRATIVE SERVICES 8
- ---------------------------------------------------------------
BROKERAGE TRANSACTIONS 8
- ---------------------------------------------------------------
PURCHASING SHARES 8
- ---------------------------------------------------------------
DETERMINING NET ASSET VALUE 8
- ---------------------------------------------------------------
Determining Market Value of Securities 8
REDEEMING SHARES 9
- ---------------------------------------------------------------
Redemption in Kind 9
TAX STATUS 9
- ---------------------------------------------------------------
The Fund's Tax Status 9
Shareholders' Tax Status 9
TOTAL RETURN 9
- ---------------------------------------------------------------
YIELD 10
- ---------------------------------------------------------------
PERFORMANCE COMPARISONS 10
- ---------------------------------------------------------------
GENERAL INFORMATION ABOUT THE FUND
- --------------------------------------------------------------------------------
The Fund is a portfolio of Insight Institutional Series, Inc. (the
"Corporation"). The Corporation was incorporated under the laws of the State of
Maryland on October 11, 1993.
INVESTMENT OBJECTIVE AND POLICIES
- --------------------------------------------------------------------------------
The investment objective of the Fund is to provide current income consistent
with minimum fluctuation in principal value. The investment objective stated
above cannot be changed without approval of shareholders. Unless indicated
otherwise herein or in the Fund's prospectus, the investment policies stated
below may not be changed by the Board of Directors (the "Directors") without
shareholder approval. Shareholders will be notified before any material change
in the investment policies becomes effective.
TYPES OF INVESTMENTS
The Fund invests primarily in adjustable and floating rate mortgage securities
that are issued or guaranteed by the U.S. government, its agencies or
instrumentalities. These securities are backed by:
. the full faith and credit of the U.S. Treasury;
. the issuer's right to borrow from the U.S. Treasury;
. the discretionary authority of the U.S. government to purchase certain
obligations of agencies or instrumentalities; or
. the credit of the agency or instrumentality issuing such obligations.
Examples of agencies and instrumentalities that may not always receive financial
support from the U.S. government are:
. Federal Land Banks;
. Banks for Cooperatives;
. Federal Intermediate Credit Banks;
. Federal Home Loan Banks;
. Farmers Home Administration;
. Federal National Mortgage Association;
. Federal Home Loan Mortgage Corporation; and
. Student Loan Marketing Association.
CAPS AND FLOORS
The value of mortgage securities in which the Fund invests may be affected if
market interest rates rise or fall faster and farther than the allowable caps or
floors on the underlying residential mortgage loans. For example, consider a
residential mortgage loan with a rate which adjusts annually, an initial
interest rate of 4%, a 2% per annum interest rate cap, and a 6% life of loan
interest rate cap. If the index against which the underlying interest rate on
the residential mortgage loan is compared--such as the one-year Treasury--moves
up by 3%, the residential mortgage loan rate may not increase by more than 2% to
6% the first year. As one of the underlying residential mortgages for the
securities in which the Fund invests, the residential mortgage would depress the
value of the securities and, therefore, the net asset value of the Fund. If the
index against which the interest rate on the underlying residential mortgage
loan is compared moves up no faster or farther than the cap on the underlying
mortgage loan allows, or if the index moves down as fast or faster than the
floor on the underlying mortgage loan allows, the mortgage would maintain or
improve the value of the securities in which the Fund invests and, therefore,
the net asset value of the Fund.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
These transactions are arrangements in which the Fund purchases securities with
payment and delivery scheduled for a future time. The Fund engages in
when-issued and delayed delivery transactions only for the purpose of acquiring
portfolio securities consistent with the Fund's investment objective and
policies, and not for investment leverage.
These transactions are made to secure what is considered to be an advantageous
price and yield for the Fund. 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.
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 at the trade date. These securities are marked to
market daily and are maintained until the transaction is settled. The Fund may
engage in these transactions to an extent that would cause the segregation of an
amount up to 20% of the total value of its assets.
- --------------------------------------------------------------------------------
LENDING OF PORTFOLIO 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.
REPURCHASE AGREEMENTS
The Fund requires its custodian to take possession of the securities subject to
repurchase agreements, and these securities are 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 a defaulting seller files for bankruptcy or
becomes insolvent, disposition of 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 Directors.
REVERSE REPURCHASE AGREEMENTS
The Fund may also enter into reverse repurchase agreements. A reverse repurchase
transaction is 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. The use of reverse
repurchase agreements may enable the Fund to avoid selling portfolio instruments
at a time when a sale may be deemed to be disadvantageous, but the ability to
enter into reverse repurchase agreements does not ensure that the Fund will be
able to avoid selling portfolio instruments at a disadvantageous time.
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 are maintained until the transaction is settled.
RESTRICTED AND ILLIQUID SECURITIES
The ability of the Directors to determine the liquidity of certain restricted
securities is permitted under the 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 Rule
144A. The Fund believes that the Staff of the SEC has left the question of
determining the liquidity of all restricted securities to the Directors. The
Directors consider the following criteria in determining the liquidity of
certain restricted securities:
. the frequency of trades and quotes for the security;
. the number of dealers willing to purchase or sell the security and the number
of other potential buyers;
. dealer undertakings to make a market in the security; and
. the nature of the security and the nature of the marketplace trades.
PORTFOLIO TURNOVER
The Fund will not attempt to set or meet a portfolio turnover rate since any
turnover would be incidental to transactions undertaken in an attempt to achieve
the Fund's investment objective. It is not anticipated that the portfolio
trading engaged in by the Fund will result in its annual rate of portfolio
turnover exceeding 100%.
INVESTMENT LIMITATIONS
- --------------------------------------------------------------------------------
The Fund may not change any of the investment limitations described below
without approval of shareholders.
SELLING SHORT AND BUYING ON MARGIN
The Fund will not sell securities short or purchase securities on margin,
but may obtain such short-term credits as are necessary for clearance of
transactions.
ISSUING SENIOR SECURITIES AND BORROWING MONEY
The Fund will not issue senior securities except that the Fund may borrow
money and engage in reverse repurchase agreements in amounts up to
one-third of the value of its total assets, including the amounts
borrowed. The Fund will not borrow money or engage in reverse repurchase
agreements for investment leverage, but rather as a temporary,
extraordinary, or emergency measure or 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. The Fund will not purchase any securities while
borrowings in excess of 5% of its total assets are outstanding.
PLEDGING ASSETS
The Fund will not mortgage, pledge, or hypothecate any assets except to
secure permitted borrowings. In those cases, it may pledge assets having
a market value not exceeding the lesser of the dollar amounts borrowed or
15% of the value of total assets at the time of the borrowing.
DIVERSIFICATION OF INVESTMENTS
With respect to securities comprising 75% of the value of its total
assets, the Fund will not purchase securities of any one issuer other
than cash, cash items (including time deposits (including savings
deposits and certificates of deposit) and bankers acceptances 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) or securities issued or guaranteed by the government of the
United States or its agencies or instrumentalities and repurchase
agreements collateralized by U.S. government securities if as a result
more than 5% of the value of its total assets would be invested in the
securities of that issuer or the Fund would own more than 10% of the
outstanding voting securities of that issuer.
CONCENTRATION OF INVESTMENTS
The Fund will not invest 25% or more of the value of its total assets in
any one industry, except it may invest 25% or more of the value of its
total assets in securities issued or guaranteed by the U.S. government,
its agencies or instrumentalities.
INVESTING IN REAL ESTATE
The Fund will not buy 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 which are secured by real estate or interests in real
estate.
INVESTING IN COMMODITIES
The Fund will not purchase or sell commodities.
INVESTING IN RESTRICTED SECURITIES
The Fund will not invest more than 10% of the value of its total assets
in securities subject to restrictions on resale under the Securities Act
of 1933, except for certain restricted securities which meet the criteria
for liquidity as established by the Directors.
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 restricted securities which the Fund may
purchase pursuant to its investment objective, policies, and limitations.
LENDING CASH OR SECURITIES
The Fund will not lend any of its assets, except portfolio securities up
to one-third of the value of its total assets. This shall not prevent the
Fund from purchasing or holding U.S. government obligations, money market
instruments, variable rate demand notes, bonds, debentures, notes,
certificates of indebtedness, or other debt securities, entering into
repurchase agreements, or engaging in other transactions where permitted
by the Fund's investment objective, policies and limitations.
- --------------------------------------------------------------------------------
INVESTING IN NEW ISSUERS
The Fund will not invest more than 5% of the value of its total assets in
securities of issuers that have records of less than three years of
continuous operations including the operation of any predecessor. (This
limitation does not apply to issuers of CMOs or REMICs which are
collateralized by securities or mortgages issued or guaranteed as to
prompt payment of principal and interest by an agency or instrumentality
of the U.S. government.)
INVESTING IN MINERALS
The Fund will not purchase or sell oil, gas, or other mineral exploration
or development programs or leases, although it may purchase the
securities of issuers which invest in or sponsor such programs.
INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES
The Fund may not own securities of open-end investment companies. The
Fund can acquire up to 3% of the total outstanding stock of closed-end
investment companies. The Fund will not be subject to any other
limitations with regard to the acquisition of securities of closed-end
investment companies so long as the public offering price of the Fund's
shares does not include a sales load exceeding 1-1/2 percent. The Fund
will purchase securities of closed-end investment companies only in
open-market transactions involving only customary broker's commissions.
However, these limitations are not applicable if the securities are
acquired in a merger, consolidation, reorganization or other acquisition.
Except with respect to borrowing money, if a percentage limitation is adhered to
at the time of the investment, a later increase or decrease in percentage
resulting from any change in value or net assets will not result in a violation
of such restriction.
The Fund does not expect to borrow money or pledge securities during the coming
fiscal year.
INSIGHT INSTITUTIONAL SERIES, INC. MANAGEMENT
- --------------------------------------------------------------------------------
OFFICERS AND DIRECTORS
Officers and Directors are listed with their addresses, principal occupations,
and present positions, including any affiliation with Federated Advisers,
Federated Investors, Federated Securities Corp., Federated Services Company,
Federated Administrative Services, Inc., and the Funds (as defined below).
<TABLE>
<CAPTION>
POSITIONS WITH PRINCIPAL OCCUPATIONS
NAME AND ADDRESS THE CORPORATION DURING PAST FIVE YEARS
<S> <C> <C>
John F. Donahue*\ Chairman and Chairman and Trustee, Federated Investors; Chairman and Trustee,
Federated Investors Tower Director Federated Advisers, Federated Management, and Federated Research;
Pittsburgh, PA Director, AEtna Life and Casualty Company; Chief Executive Officer
and Director, Trustee, or Managing General Partner of the Funds;
formerly, Director, The Standard Fire Insurance Company. Mr.
Donahue is the father of J. Christopher Donahue, Vice President of
the Corporation.
John T. Conroy, Jr. Director President, Investment Properties Corporation; Senior
Wood/IPC Commercial Vice-President, John R. Wood and Associates, Inc., Realtors;
Department President, Northgate Village Development Corporation and
John R. Wood and Investment Properties Corporation; General Partner or Trustee in
Associates, Inc., private real estate ventures in Southwest Florida; Director,
Realtors Trustee, or Managing General Partner of the Funds; formerly,
3255 Tamiami Trail North President, Naples Property Management, Inc.
Naples, FL
William J. Copeland Director Director and Member of the Executive Committee, Michael Baker,
One PNC Plaza - Inc.; Director, Trustee, or Managing General Partner of the Funds;
23rd Floor formerly, Vice Chairman and Director, PNC Bank, N.A. and PNC Bank
Pittsburgh, PA Corp. and Director, Ryan Homes, Inc.
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
POSITIONS WITH PRINCIPAL OCCUPATIONS
NAME AND ADDRESS THE CORPORATION DURING PAST FIVE YEARS
<S> <C> <C>
James E. Dowd Director Attorney-at-law; Director, The Emerging Germany Fund, Inc.;
571 Hayward Mill Road Director, Trustee, or Managing General Partner of the Funds;
Concord, MA formerly, Director, Blue Cross of Massachusetts, Inc.
Lawrence D. Ellis, M.D. Director Hematologist, Oncologist, and Internist, Presbyterian and
3471 Fifth Avenue Montefiore Hospitals; Clinical Professor of Medicine and Trustee,
Suite 1111 University of Pittsburgh; Director, Trustee, or Managing General
Pittsburgh, PA Partner of the Funds.
Richard B. Fisher* President and Executive Vice President and Trustee, Federated Investors;
Federated Investors Tower Director Chairman, Federated Securities Corp.; President or Vice President
Pittsburgh, PA of the Funds; Director or Trustee of some of the Funds.
Edward L. Flaherty, Jr.\ Director Attorney-at-law; Partner, Meyer and Flaherty; Director,
5916 Penn Mall Eat'N Park Restaurants, Inc., and Statewide Settlement Agency,
Pittsburgh, PA Inc.; Director, Trustee, or Managing General Partner of the Funds;
formerly, Counsel, Horizon Financial, F.A., Western Region.
Peter E. Madden Director Consultant; State Representative, Commonwealth of Massachusetts;
225 Franklin Street Director, Trustee, or Managing General Partner of the Funds;
Boston, MA formerly, President, State Street Bank and Trust Company and State
Street Boston Corporation and Trustee, Lahey Clinic Foundation,
Inc.
Gregor F. Meyer Director Attorney-at-law; Partner, Meyer and Flaherty; Chairman, Meritcare,
5916 Penn Mall Inc.; Director, Eat'N Park Restaurants, Inc.; Director, Trustee,
Pittsburgh, PA or Managing General Partner of the Funds; formerly, Vice Chairman,
Horizon Financial, F.A.
Wesley W. Posvar Director Professor, Foreign Policy and Management Consultant; Trustee,
1202 Cathedral of Learning Carnegie Endowment for International Peace, RAND Corporation,
University of Pittsburgh Online Computer Library Center, Inc., and U.S. Space Foundation;
Pittsburgh, PA Chairman, Czecho Slovak Management Center; Director, Trustee, or
Managing General Partner of the Funds; President Emeritus,
University of Pittsburgh; formerly, Chairman, National Advisory
Council for Environmental Policy and Technology.
Marjorie P. Smuts Director Public relations/marketing consultant; Director, Trustee, or
4905 Bayard Street Managing General Partner of the Funds.
Pittsburgh, PA
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
POSITIONS WITH PRINCIPAL OCCUPATIONS
NAME AND ADDRESS THE CORPORATION DURING PAST FIVE YEARS
<S> <C> <C>
J. Christopher Donahue Vice President President and Trustee, Federated Investors; Trustee, Federated
Federated Investors Tower Advisers, Federated Management, and Federated Research; Trustee,
Pittsburgh, PA Federated Services Company; President and Director, Federated
Administrative Services, Inc.; President or Vice President of the
Funds; Director, Trustee, or Managing General Partner of some of
the Funds. Mr. Donahue is the son of John F. Donahue, Chairman and
Director of the Corporation.
Edward C. Gonzales Vice President Vice President, Treasurer and Trustee, Federated Investors; Vice
Federated Investors Tower and Treasurer President and Treasurer, Federated Advisers, Federated Management,
Pittsburgh, PA and Federated Research; Executive Vice President, Treasurer, and
Director, Federated Securities Corp.; Trustee, Federated Services
Company; Chairman, Treasurer, and Director, Federated
Administrative Services, Inc.; Trustee or Director of some of the
Funds; Vice President and Treasurer of the Funds.
John W. McGonigle Vice President Vice President, Secretary, General Counsel, and Trustee, Federated
Federated Investors Tower and Secretary Investors; Vice President, Secretary, and Trustee, Federated
Pittsburgh, PA Advisers, Federated Management, and Federated Research; Trustee,
Federated Services Company; Executive Vice President, Secretary,
and Director, Federated Administrative Services, Inc.; Director
and Executive Vice President, Federated Securities Corp.; Vice
President and Secretary of the Funds.
John A. Staley, IV Vice President Vice President and Trustee, Federated Investors; Executive Vice
Federated Investors Tower President, Federated Securities Corp.; President and Trustee,
Pittsburgh, PA Federated Advisers, Federated Management, and Federated Research;
Vice President of the Funds; Director, Trustee, or Managing
General Partner of some of the Funds; formerly, Vice President,
The Standard Fire Insurance Company and President of its Federated
Research Division.
</TABLE>
*This Director is deemed to be an "interested person" of the Fund as defined in
the Investment Company Act of 1940.
\Member of the Corporation's Executive Committee. The Executive Committee of the
Board of Directors handles the Directors' responsibilities between meetings of
the Directors.
THE FUNDS
"The Funds" and "Funds" mean the following investment companies: A.T. Ohio
Tax-Free Money Fund; American Leaders Fund, Inc.; Annuity Management Series;
Automated Cash Management Trust; Automated Government Money Trust; BankSouth
Select Funds; The Boulevard Funds; California Municipal Cash Trust; Cash Trust
Series, Inc.; Cash Trust Series II; 111 Corcoran Funds; DG Investor Series;
Edward D. Jones & Co. Daily Passport Cash Trust; FT Series, Inc.; Federated ARMs
Fund; Federated Exchange Fund, Ltd.; Federated GNMA Trust; Federated Government
Trust; Federated Growth Trust; Federated High Yield Trust; Federated Income
Securities Trust; Federated Income Trust; Federated Index Trust; Federated
Intermediate Government Trust; Federated Master Trust; Federated Municipal
Trust; Federated Short-Intermediate Government Trust; Federated Short-Term U.S.
Government Trust; Federated Stock Trust; Federated Tax-Free Trust; Federated
U.S. Government Bond Fund; First Priority Funds; Fixed Income Securities, Inc.;
Fortress Adjustable Rate U.S. Government Fund, Inc.; Fortress Municipal Income
Fund, Inc.; Fortress Utility Fund, Inc.; Fund for U.S. Government Securities,
Inc.; Government Income
- --------------------------------------------------------------------------------
Securities, Inc.; High Yield Cash Trust; Insurance Management Series;
Intermediate Municipal Trust; Investment Series Funds, Inc.; Investment Series
Trust; Liberty Equity Income Fund, Inc.; Liberty High Income Bond Fund, Inc.;
Liberty Municipal Securities Fund, Inc.; Liberty Term Trust, Inc.-1999; Liberty
U.S. Government Money Market Trust; Liberty Utility Fund, Inc.; Liquid Cash
Trust; Mark Twain Funds; Money Market Management, Inc.; Money Market Obligations
Trust; Money Market Trust; Municipal Securities Income Trust; New York Municipal
Cash Trust; The Planters Funds; Portage Funds; RIMCO Monument Funds; The Shawmut
Funds; Short-Term Municipal Trust; Signet Select Funds; Star Funds; The
Starburst Funds; The Starburst Funds II; Stock and Bond Fund, Inc.; Sunburst
Funds; Targeted Duration Trust; Tax-Free Instruments Trust; Trademark Funds;
Trust for Financial Institutions; Trust for Government Cash Reserves; Trust for
Short-Term U.S. Government Securities; and Trust for U.S. Treasury Obligations.
FUND OWNERSHIP
Officers and Directors own less than 1% of the outstanding shares of the Fund.
DIRECTOR LIABILITY
The Corporation's Articles of Incorporation provide that the Directors 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 (the "Adviser"). It is a
subsidiary of Federated Investors. All of the 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. John F. Donahue, Chairman and Trustee
of Federated Advisers, is Chairman and Trustee of Federated Investors, and
Chairman and Director of the Fund. John A. Staley, IV, President and Trustee of
Federated Advisers, is Vice President and Trustee of Federated Investors,
Executive Vice President of Federated Securities Corp., and Vice President of
the Fund. J. Christopher Donahue, Trustee of Federated Advisers, is President
and Trustee of Federated Investors, Trustee of Federated Services Company,
President and Director of Federated Administrative Services, Inc. and Vice
President of the Fund. John W. McGonigle, Vice President, Secretary and Trustee
of Federated Advisers, is Trustee, Vice President, Secretary and General Counsel
of Federated Investors, Trustee of Federated Services Company, Executive Vice
President, Secretary and Director of Federated Administrative Services, Inc.,
Executive Vice President and Director of Federated Securities Corp., and Vice
President and Secretary of the Fund. 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 Fund.
ADVISORY FEES
For its advisory services, Federated Advisers receives an annual investment
advisory fee as described in the prospectus.
STATE EXPENSE LIMITATION
The Adviser has undertaken to comply with the expense limitation
established by certain states for investment companies whose shares are
registered for sale in those states. If the Fund's normal operating
expenses (including the investment advisory fee, but not including
brokerage commissions, interest, taxes, and extraordinary expenses)
exceed 2-1/2% per year of the first $30 million of average net assets, 2%
per year of the next $70 million of average net assets, and 1-1/2% per
year of the remaining average net assets, the Adviser will reimburse the
Fund for its expenses over the limitation.
If the Fund's monthly projected operating expenses exceed this expense
limitation, the investment advisory fee paid will be reduced by the
amount of the excess, subject to an annual adjustment. If the expense
limitation is exceeded, the amount to be waived by the Adviser will be
limited, in any single fiscal year, by the amount of the investment
advisory fee.
This arrangement is not part of the advisory contract and may be amended
or rescinded in the future.
SHAREHOLDER SERVICING
- --------------------------------------------------------------------------------
In return for providing shareholder servicing to its customers who from time to
time may be owners of record or beneficial owners of shares of the Fund, a
financial institution may receive payments from the Fund at a rate not exceeding
0.25 of 1% of the average daily net assets of the shares beneficially owned by
the financial institution's customers for whom it is holder of record or with
whom it has a servicing relationship. These services may include, but not are
not limited to, the provision of personal services and maintenance of
shareholder accounts.
Federated Securities Corp. may also pay financial institutions a fee based upon
the net asset value of the Fund shares beneficially owned by the financial
institution's clients or customers. This fee is in addition to amounts paid
under the Shareholder Services Plan and will be reimbursed by the Adviser.
ADMINISTRATIVE SERVICES
- --------------------------------------------------------------------------------
Federated Administrative Services, Inc., a subsidiary of Federated Investors,
provides administrative personnel and services to the Fund at approximate cost.
John A. Staley, IV, an officer of the Fund, and Dr. Henry J. Gailliot, an
officer of Federated Advisers, the Adviser to the Fund, each hold approximately
15% and 20%, respectively, of the outstanding common stock and serve as
directors of Commercial Data Services, Inc., a company which provides computer
processing services to Federated Administrative Services, Inc.
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 use those who are
recognized dealers in specific portfolio instruments, except when a better price
and execution of the order can be obtained elsewhere. The Adviser makes
decisions on portfolio transactions and selects brokers and dealers subject to
review by the Directors.
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.
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.
Research services provided by brokers may be used by the Adviser or by
affiliates of Federated Investors in advising Federated funds 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.
PURCHASING SHARES
- --------------------------------------------------------------------------------
Except under certain circumstances described in the prospectus, shares are sold
at their net asset value 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 "Investing in the Fund."
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 MARKET VALUE OF SECURITIES
Market values of the Fund's securities are determined as follows:
. as provided by an independent pricing service;
. for short-term obligations, according to the mean bid and asked prices, as
furnished by an independent pricing service, or for short-term obligations
with maturities of less than 60 days, at amortized cost unless the Directors
determine this is not fair value; or
. at fair value as determined in good faith by the Directors.
- --------------------------------------------------------------------------------
Prices provided by independent pricing services may be determined without
relying exclusively on quoted prices. Pricing services may consider:
. yield;
. quality;
. coupon rate;
. maturity;
. type of issue;
. trading characteristics; and
. other market data.
REDEEMING SHARES
- --------------------------------------------------------------------------------
The Fund redeems shares at the next computed net asset value after the Fund
receives the redemption request. Redemption procedures are explained in the
prospectus under "Redeeming Shares." Although State Street Bank does not charge
for telephone redemptions, it reserves the right to charge a fee for the cost of
wire-transferred redemptions of less than $5,000.
REDEMPTION IN KIND
The Corporation is obligated to redeem shares solely in cash up to $250,000 or
1% of the Fund's net asset value, whichever is less, for any one shareholder
within a 90-day period.
Any redemption beyond this amount will also be in cash unless the Directors
determine that payments should be in kind. In such a case, the Fund will pay all
or a portion of the remainder of the redemption in portfolio instruments, valued
in the same way that net asset value is determined. The portfolio instruments
will be selected in a manner that the Directors deem fair and equitable.
Redemption in kind is not as liquid as a cash redemption. If redemption is made
in kind, shareholders receiving their securities and selling them before their
maturity could receive less than the redemption value of their securities and
could incur certain transaction costs.
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:
. derive at least 90% of its gross income from dividends, interest, and gains
from the sale of securities;
. derive less than 30% of its gross income from the sale of securities held less
than three months;
. invest in securities within certain statutory limits; and
. distribute to its shareholders at least 90% of its net income earned during
the year.
SHAREHOLDERS' TAX STATUS
Shareholders are subject to federal income tax on dividends and capital gains
received as cash or additional shares. No portion of any income dividend paid by
the Fund is eligible for the dividends received deduction available to
corporations.
CAPITAL GAINS
Shareholders will pay federal tax at capital gains rates on long-term
capital gains distributed to them regardless of how long they have held
the Fund shares.
TOTAL RETURN
- --------------------------------------------------------------------------------
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.
YIELD
- --------------------------------------------------------------------------------
The yield of 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 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 12-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. To the extent that financial institutions
and broker/dealers charge fees in connection with services provided in
conjunction with an investment in the Fund, performance will be reduced for
those shareholders paying those fees.
PERFORMANCE COMPARISONS
- --------------------------------------------------------------------------------
The Fund's performance depends upon such variables as:
. portfolio quality;
. average portfolio maturity;
. type of instruments in which the portfolio is invested;
. changes in interest rates and market value of portfolio securities;
. changes in the Fund expenses; and
. various other factors.
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:
. LEHMAN ADJUSTABLE RATE MORTGAGE INDEX.
. LIPPER ANALYTICAL SERVICES, INC., ranks funds in various fund categories by
making comparative calculations using total return. Total return assumes the
reinvestment of all capital gains distributions and income dividends and takes
into account any change in offering price over a specific period of time. From
time to time, the Fund will quote its Lipper ranking in the "Adjustable Rate
Mortgage Funds" category in advertising and sales literature.
Advertisements and other sales literature for the Fund may quote total returns
which are calculated on non-standardized base periods. These total returns
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.
3112404B (1/94)
PART C. OTHER INFORMATION.
Item 24. Financial Statements and Exhibits:
(a) Financial Statements (Filed in Part A)
(b) Exhibits:
(1)(i) Conformed copy of Articles of
Incorporation (1);
(ii) Conformed copy of Articles of Amendment
of Articles of Incorporation (2);
(2) Copy of By-Laws (1);
(3) Not Applicable;
(4) Copy of Specimen Certificates for Shares of
Beneficial Interest for Insight Adjustable
Rate Mortgage Fund, Insight Limited Term
Municipal Fund, Insight Limited Term Income
Fund, and Insight U.S. Government Fund (1);
(5) Copy of Investment Advisory Contract and
conformed copies of Exhibits A, B, C, and D
of Investment Advisory Contract (3);
(6) Copy of Distributor's Contract and
Conformed copies of Exhibits A, B, C, and D to
Distributor's Contract; +
(7) Not Applicable;
(8) Form of the Custodian Agreement (3);
(9)(i) Form of Transfer Agency and Service
Agreement (3);
(ii) Form of Administrative Agreement (1);
(iii)Conformed copy of Shareholder Services Plan and
Conformed copies of Exhibits A, B, C, and D to
Shareholder Services Plan; +
(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 (3);
(14) Not Applicable;
(15) Not Applicable;
(16) Schedules for Computation of Fund Performance
Data for Insight Adjustable Rate Mortgage Fund;+
(17) Conformed copy of Power of Attorney (1);
(18) Conformed copy of Opinion and Consent of
Counsel as to Availability of Rule 485(b). +
+ All exhibits have been filed electronically.
(1) Response is incorporated by reference to Registrant's Initial
Registration Statement on Form N-1A filed October 25, 1993. (File No. 33-
50773)
(2) Response is incorporated by reference to Registrant's Pre-Effective
Amendment No. 1 on Form N-1A filed December 21, 1993. (File No. 33-
50773)
(3) Response is incorporated by reference to Registrant's Pre-Effective
Amendment No. 2 on Form N-1A filed January 13, 1994. (File No. 33-50773)
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 May 9, 1994
Shares of capital stock
($0.001 per Share par value)
Insight Adjustable Rate Mortgage Fund 6
Insight Limited Term Municipal Fund 5
Insight Limited Term Income Fund 5
Insight U.S. Government Fund 5
Item 27. Indemnification: (1)
Item 28. Business and Other Connections of Investment Adviser:
For a description of the other business of the investment adviser,
see the section entitled "Insight Institutional Series, Inc.
Information - Management of the Corporation" in Part A. The
affiliations with the Registrant of four of the Trustees and one
of the Officers of the investment adviser are included in Part B
of this Registration Statement under "Trust Management - Officers
and Directors." 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, Deleware 19447.
The remaining Officers of the investment adviser are: William D.
Dawson, III, J. Thomas Madden, and Mark L. Mallon, Executive Vice
Presidents; Henry J. Gailliot, Senior Vice President-Economist;
Peter R. Anderson, Gary J. Madich, and J. Alan Minteer, Senior
Vice Presidents; Randall A. Bauer, Jonathan C. Conley, Deborah A.
Cunningham, Mark E. Durbiano, Roger A. Early, Kathleen M. Foody-
Malus, David C. Francis, Thomas M. Franks, Edward C. Gonzales,
Jeff A. Kozemchak, Marian R. Marinack, John W. McGonigle, Gregory
M. Melvin, Susan M. Nason, Mary Jo Ochson, Robert J. Ostrowski,
Charles A. Ritter, and Christopher H. Wiles, Vice Presidents;
Edward C. Gonzales, Treasurer; and John W. McGonigle, 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 under "The Funds."
Item 29. Principal Underwriters:
(a) Federated Securities Corp., the Distributor for shares of the
Registrant, also acts as principal underwriter for the
following open-end investment companies: A.T. Ohio Municipal
Money Fund; Alexander Hamilton Funds; American Leaders Fund,
Inc.; Annuity Management Series; Automated Cash Management
Trust; Automated Government Money Trust; BayFunds; The
Biltmore Funds; The Biltmore Municipal Funds; The Boulevard
Funds; California Municipal Cash Trust; Cambridge Series
Trust; Cash Trust Series, Inc.; Cash Trust Series II; DG
Investor Series; Edward D. Jones & Co. Daily Passport Cash
Trust; Federated ARMs Fund; Federated Exchange Fund, Ltd.;
Federated GNMA Trust; Federated Government Trust; Federated
Growth Trust; Federated High Yield Trust; Federated Income
Securities Trust; Federated Income Trust; Federated Index
Trust; Federated Intermediate Government Trust; Federated
Master Trust; Federated Municipal Trust; Federated Short-
Intermediate Government Trust; Federated Short-Term U.S.
Government Trust; Federated Stock Trust; Federated Tax-Free
Trust; Federated U.S. Government Bond Fund; Financial
Reserves Fund; First Priority Funds; First Union Funds; Fixed
Income Securities, Inc.; Fortress Adjustable Rate U.S.
Government Fund, Inc.; Fortress Municipal Income Fund, Inc.;
Fortress Utility Fund, Inc.; Fountain Square Funds; Fund for
U.S. Government Securities, Inc.; Government Income
Securities, Inc.; High Yield Cash Trust; Independence One
Mutual Funds; Insight Institutional Series, Inc.;
Intermediate Municipal Trust; International Series, Inc.;
Investment Series Funds, Inc.; Investment Series Trust;
Liberty Equity Income Fund, Inc.; Liberty High Income Bond
Fund, Inc.; Liberty Municipal Securities Fund, Inc.; Liberty
U.S. Government Money Market Trust; Liberty Utility Fund,
Inc.; Liquid Cash Trust; Managed Series Trust; Mark Twain
Funds; Marshall Funds, Inc.; Money Market Management, Inc.;
Money Market Obligations Trust; Money Market Trust; The
Monitor Funds; Municipal Securities Income Trust; New York
Municipal Cash Trust; 111 Corcoran Funds; Peachtree Funds;
The Planters Funds; Portage Funds; RIMCO Monument Funds; The
Shawmut Funds; Short-Term Municipal Trust; Signet Select
Funds; SouthTrust Vulcan Funds; Star Funds; The Starburst
Funds; The Starburst Funds II; Stock and Bond Fund, Inc.;
Sunburst Funds; Targeted Duration Trust; Tax-Free Instruments
Trust; Tower Mutual Funds; Trademark 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 Fiduciary Funds, Inc.;
Vision Group of Funds, Inc.; and World 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 President
Federated Investors Tower Executive Officer, Chief
Pittsburgh, PA 15222-3779 Operating Officer, and
Asst. Treasurer, Federated
Securities Corp.
Edward C. Gonzales Director, Executive Vice Vice President and
Federated Investors Tower President, and Treasurer, Treasurer
Pittsburgh, PA 15222-3779 Federated Securities
Corp.
John W. McGonigle Director, Executive Vice Vice President and
Federated Investors Tower President, and Assistant Secretary
Pittsburgh, PA 15222-3779 Secretary, Federated
Securities Corp.
John A. Staley, IV Executive Vice President Vice President
Federated Investors Tower and Assistant Secretary,
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
Pittsburgh, PA 15222-3779 Federated Securities Corp.
Mark W. Bloss 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
Name and Principal Positions and Offices Positions and Offices
Business Address With Underwriter With Registrant
H. Joseph Kennedy 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
Timothy C. Pillion Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
James R. Ball Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard W. Boyd Vice President, --
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
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
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
David C. Glabicki 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
Scott A. Hutton Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Name and Principal Positions and Offices Positions and Offices
Business Address With Underwriter With Registrant
William J. Kerns Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
William E. Kugler Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Dennis M. Laffey Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Francis J. Matten, Jr. 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
J. Michael Miller Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
R. Jeffrey Niss 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
Solon A. Person, IV 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
Charles A. Robison 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
Name and Principal Positions and Offices Positions and Offices
Business Address With Underwriter With Registrant
Thomas E. Territ 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
Richard B. Watts Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Philip C. Hetzel Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Ernest L. Linane Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
S. Elliott Cohan Secretary, Federated Assistant
Federated Investors Tower Securities Corp. Secretary
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 Services Company Federated Investors Tower
Transfer Agent, Dividend Pittsburgh, PA 15222-3779
Disbursing Agent and
Portfolio Recordkeeper
Federated Administrative Federated Investors Tower
Services Pittsburgh, PA 15222-3779
Administrator
Federated Advisers Federated Investors Tower
Investment Adviser Pittsburgh, PA 15222-3779
State Street Bank and P.O. Box 8604
Trust Company Boston, Massachusetts 02266
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
Directors 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.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant, Insight Institutional Series,
Inc., certifies that it meets all of the requirements for effectiveness of
this Amendment to its Registration Statement pursuant to Rule 485(b) 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,
thereunto duly authorized, all in the City of Pittsburgh and Commonwealth of
Pennsylvania, on the 27th day of May, 1994.
INSIGHT INSTITUTIONAL SERIES, INC.
BY: Charles H. Field
Charles H. Field, Assistant Secretary
Attorney in Fact for John F. Donahue
May 27, 1994
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/Charles H. Field
Charles H. Field Attorney In Fact May 27, 1994
ASSISTANT SECRETARY For the Persons
Listed Below
NAME TITLE
John F. Donahue* Chairman and Director
(Chief Executive Officer)
Richard B. Fisher* President and Director
Edward C. Gonzales* Vice President and Treasurer
(Principal Financial and
Accounting Officer)
John T. Conroy, Jr.* Director
William J. Copeland* Director
James E. Dowd* Director
Lawrence D. Ellis, M.D.* Director
Edward L. Flaherty, Jr.* Director
Peter E. Madden* Director
Gregor F. Meyer* Director
Wesley W. Posvar* Director
Marjorie P. Smuts* Director
* By Power of Attorney
Exhibit 18 under Form N-1A
Exhibit 99 under Item 601/Reg S-K
HOUSTON, HOUSTON & DONNELLY
ATTORNEYS AT LAW
2510 CENTRE CITY TOWER
WILLIAM McC. HOUSTON PITTSBURGH, PA. 15222
FRED CHALMERS HOUSTON, JR. __________
THOMAS J. DONNELLY
JOHN F. MECK (412) 471-5828 FRED CHALMERS HOUSTON
FAX (412) 471-0736 (1914 - 1971)
MARIO SANTILLI, JR.
THEODORE M. HAMMER
May 13, 1994
Insight Institutional Series, Inc.
Federated Investors Tower
Pittsburgh, PA 15222-3779
Gentlemen:
As counsel to Insight Institutional Series, Inc. ("Fund") we have
reviewed Post-effective Amendment No. 1 to the Fund's Registration Statement
to be filed with the Securities and Exchange Commission under the Securities
Act of 1933 (File No. 33-50773). The subject Post-effective Amendment will be
filed pursuant to Paragraph (b) of Rule 485 and become effective pursuant to
said Rule on May 31, 1994.
Our review also included an examination of other relevant portions of
the amended 1933 Act Registration Statement of the Fund and such other
documents and records deemed appropriate. On the basis of this review we are
of the opinion that Post-effective Amendment No. 1 does not contain
disclosures which would render it ineligible to become effective pursuant to
Paragraph (b) of Rule 485.
We hereby consent to the filing of this representation letter as a part
of the Fund's Registration Statement filed with the Securities and Exchange
Commission under the Securities Act of 1933 and as part of any application or
registration statement filed under the Securities Laws of the States of the
United States.
Very truly yours,
Houston, Houston & Donnelly
By: /s/Thomas J. Donnelly
TJD:heh
-1-
Exhibit 6 under Form N-1A
Exhibit 1 under Item 601/Reg.S-K
INSIGHT INSTITUTIONAL SERIES, INC.
DISTRIBUTOR'S CONTRACT
AGREEMENT made this 1st day of December, 1993, by and between
INSIGHT INSTITUTIONAL SERIES, INC. (the "Corporation"), a Maryland
Corporation, and FEDERATED SECURITIES CORP. ("FSC"), a Pennsylvania
Corporation.
In consideration of the mutual covenants hereinafter contained, it
is hereby agreed by and between the parties hereto as follows:
1. The Corporation hereby appoints FSC as its agent to sell and
distribute shares of the Corporation which may be offered in one or more
series (the "Funds") consisting of one or more classes (the "Classes")
of shares (the "Shares"), as described and set forth on one or more
exhibits to this Agreement, at the current offering price thereof as
described and set forth in the current Prospectuses of the Corporation.
FSC hereby accepts such appointment and agrees to provide such other
services for the Corporation, if any, and accept such compensation from
the Corporation, if any, as set forth in the applicable exhibit to this
Agreement.
2. The sale of any Shares may be suspended without prior notice
whenever in the judgment of the Corporation it is in its best interest
to do so.
3. Neither FSC nor any other person is authorized by the
Corporation to give any information or to make any representation
relative to any Shares other than those contained in the Registration
Statement, Prospectuses, or Statements of Additional Information
("SAIs") filed with the Securities and Exchange Commission, as the same
may be amended from time to time, or in any supplemental information to
said Prospectuses or SAIs approved by the Corporation. FSC agrees that
any other information or representations other than those specified
above which it or any dealer or other person who purchases Shares
through FSC may make in connection with the offer or sale of Shares,
shall be made entirely without liability on the part of the Corporation.
No person or dealer, other than FSC, is authorized to act as agent for
the Corporation for any purpose. FSC agrees that in offering or selling
Shares as agent of the Corporation, it will, in all respects, duly
conform to all applicable state and federal laws and the rules and
regulations of the National Association of Securities Dealers, Inc.,
including its Rules of Fair Practice. FSC will submit to the
Corporation copies of all sales literature before using the same and
will not use such sales literature if disapproved by the Corporation.
4. This Agreement is effective with respect to each Class as of
the date of execution of the applicable exhibit and shall continue 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
term of this Agreement for one year from the date set forth above, and
thereafter for successive periods of one year if such continuance is
approved at least annually by the Directors of the Corporation including
a majority of the members of the Board of Directors of the Corporation
who are not interested persons of the Corporation and have no direct or
indirect financial interest in the operation of any Distribution Plan
relating to the Corporation or in any related documents to such Plan
(Directors) cast in person at a meeting called for that purpose. If a
Class is added after the first annual approval by the Directors as
described above, this Agreement will be effective as to that Class upon
execution of the applicable exhibit and will continue in effect until
the next annual approval of this Agreement by the Directors and
thereafter for successive periods of one year, subject to approval as
described above.
5. This Agreement may be terminated with regard to a particular
Fund or Class at any time, without the payment of any penalty, by the
vote of a majority of the Disinterested Directors or by a majority of
the outstanding voting securities of the particular Fund or Class on not
more than sixty (60) days' written notice to any other party to this
Agreement. This Agreement may be terminated with regard to a particular
Fund or Class by FSC on sixty (60) days' written notice to the
Corporation.
6. This Agreement may not be assigned by FSC and shall
automatically terminate in the event of an assignment by FSC as defined
in the Investment Company Act of 1940, as amended, provided, however,
that FSC may employ such other person, persons, corporation or
corporations as it shall determine in order to assist it in carrying out
its duties under this Agreement.
7. FSC shall not be liable to the Corporation 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 by this Agreement.
8. This Agreement may be amended at any time by mutual
agreement in writing of all the parties hereto, provided that such
amendment is approved by the Directors of the Corporation including a
majority of the Disinterested Directors of the Corporation cast in
person at a meeting called for that purpose.
9. This Agreement shall be construed in accordance with and
governed by the laws of the Commonwealth of Pennsylvania.
10. (a) Subject to the conditions set forth below, the
Corporation agrees to indemnify and hold harmless FSC and each person,
if any, who controls FSC within the meaning of Section 15 of the
Securities Act of 1933 and Section 20 of the Securities Act of 1934, as
amended, against any and all loss, liability, claim, damage and expense
whatsoever (including but not limited to any and all expenses whatsoever
reasonably incurred in investigating, preparing or defending against any
litigation, commenced or threatened, or any claim whatsoever) arising
out of or based upon any untrue statement or alleged untrue statement of
a material fact contained in the Registration Statement, any
Prospectuses or SAIs (as from time to time amended and supplemented) or
the omission or alleged omission therefrom of a material fact required
to be stated therein or necessary to make the statements therein not
misleading, unless such statement or omission was made in reliance upon
and in conformity with written information furnished to the Corporation
about FSC by or on behalf of FSC expressly for use in the Registration
Statement, any Prospectuses and SAIs or any amendment or supplement
thereof.
If any action is brought against FSC or any controlling
person thereof with respect to which indemnity may be sought against the
Corporation pursuant to the foregoing paragraph, FSC shall promptly
notify the Corporation in writing of the institution of such action and
the Corporation shall assume the defense of such action, including the
employment of counsel selected by the Corporation and payment of
expenses. FSC or any such controlling person thereof shall have the
right to employ separate counsel in any such case, but the fees and
expenses of such counsel shall be at the expense of FSC or such
controlling person unless the employment of such counsel shall have been
authorized in writing by the Corporation in connection with the defense
of such action or the Corporation shall not have employed counsel to
have charge of the defense of such action, in any of which events such
fees and expenses shall be borne by the Corporation. Anything in this
paragraph to the contrary notwithstanding, the Corporation shall not be
liable for any settlement of any such claim of action effected without
its written consent. The Corporation agrees promptly to notify FSC of
the commencement of any litigation or proceedings against the
Corporation or any of its officers or Directors or controlling persons
in connection with the issue and sale of Shares or in connection with
the Registration Statement, Prospectuses, or SAIs.
(b) FSC agrees to indemnify and hold harmless the
Corporation, each of its Directors, each of its officers who have signed
the Registration Statement and each other person, if any, who controls
the Corporation within the meaning of Section 15 of the Securities Act
of 1933, but only with respect to statements or omissions, if any, made
in the Registration Statement or any Prospectus, SAI, or any amendment
or supplement thereof in reliance upon, and in conformity with,
information furnished to the Corporation about FSC by or on behalf of
FSC expressly for use in the Registration Statement or any Prospectus,
SAI, or any amendment or supplement thereof. In case any action shall
be brought against the Corporation or any other person so indemnified
based on the Registration Statement or any Prospectus, SAI, or any
amendment or supplement thereof, and with respect to which indemnity may
be sought against FSC, FSC shall have the rights and duties given to the
Corporation, and the Corporation and each other person so indemnified
shall have the rights and duties given to FSC by the provisions of
subsection (a) above.
(c) Nothing herein contained shall be deemed to
protect any person against liability to the Corporation or its
shareholders to which such person would otherwise be subject by reason
of willful misfeasance, bad faith or gross negligence in the performance
of the duties of such person or by reason of the reckless disregard by
such person of the obligations and duties of such person under this
Agreement.
(d) Insofar as indemnification for liabilities may
be permitted pursuant to Section 17 of the Investment Company Act of
1940, as amended, for Directors, officers, FSC and controlling persons
of the Corporation by the Corporation pursuant to this Agreement, the
Corporation is aware of the position of the Securities and Exchange
Commission as set forth in the Investment Company Act Release No. IC-
11330. Therefore, the Corporation undertakes that in addition to
complying with the applicable provisions of this Agreement, in the
absence of a final decision on the merits by a court or other body
before which the proceeding was brought, that an indemnification payment
will not be made unless in the absence of such a decision, a reasonable
determination based upon factual review has been made (i) by a majority
vote of a quorum of non-party Disinterested Directors, or (ii) by
independent legal counsel in a written opinion that the indemnitee was
not liable for an act of willful misfeasance, bad faith, gross
negligence or reckless disregard of duties. The Corporation further
undertakes that advancement of expenses incurred in the defense of a
proceeding (upon undertaking for repayment unless it is ultimately
determined that indemnification is appropriate) against an officer,
Trustee/Director, FSC or controlling person of the Corporation will not
be made absent the fulfillment of at least one of the following
conditions: (i) the indemnitee provides security for his undertaking;
(ii) the Corporation is insured against losses arising by reason of any
lawful advances; or (iii) a majority of a quorum of non-party
Disinterested Directors or independent legal counsel in a written
opinion makes a factual determination that there is reason to believe
the indemnitee will be entitled to indemnification.
11. If at any time the Shares of any Fund are offered in two or
more Classes, FSC agrees to adopt compliance standards as to when a
class of shares may be sold to particular investors.
12.This Agreement will become binding on the parties hereto upon
the execution of the attached exhibits to the Agreement.
Exhibit A
to the
Distributor's Contract
Insight Institutional Series, Inc.
Insight Limited Term Income Fund
In consideration of the mutual covenants set forth in the
Distributor's Contract dated December 1, 1993, between Insight
Institutional Series, Inc. and Federated Securities Corp., Insight
Institutional Series, Inc. executes and delivers this Exhibit on behalf
of the Funds, first set forth in this Exhibit.
Witness the due execution hereof this 1st day of December, 1993.
ATTEST: INSIGHT INSTITUTIONAL SERIES, INC.
/s/ John W. McGonigle By:/s/ Richard B. Fisher
Secretary President
(SEAL)
ATTEST: FEDERATED SECURITIES CORP.
/s/ S. Elliott Cohan By:/s/ Edward C. Gonzales
Secretary Executive Vice President
(SEAL)
Exhibit B
to the
Distributor's Contract
Insight Institutional Series, Inc.
Insight U.S. Government Fund
In consideration of the mutual covenants set forth in the
Distributor's Contract dated December 1, 1993, between Insight
Institutional Series, Inc. and Federated Securities Corp., Insight
Institutional Series, Inc. executes and delivers this Exhibit on behalf
of the Fund, first set forth in this Exhibit.
Witness the due execution hereof this 1st day of December, 1993.
ATTEST: INSIGHT INSTITUTIONAL SERIES, INC.
/s/ John W. McGonigle By:/s/ Richard B. Fisher
Secretary President
(SEAL)
ATTEST: FEDERATED SECURITIES CORP.
/s/ S. Elliott Cohan By:/s/ Edward C. Gonzales
Secretary Executive Vice President
(SEAL)
Exhibit C
to the
Distributor's Contract
Insight Institutional Series, Inc.
Insight Limited Term Municipal Fund
In consideration of the mutual covenants set forth in the
Distributor's Contract dated December 1, 1993, between Insight
Institutional Series, Inc. and Federated Securities Corp., Insight
Institutional Series, Inc. executes and delivers this Exhibit on behalf
of the Funds, first set forth in this Exhibit.
Witness the due execution hereof this 1st day December, 1993.
ATTEST: INSIGHT INSTITUTIONAL SERIES, INC.
/s/ John W. McGonigle By:/s/ Richard B. Fisher
Secretary President
(SEAL)
ATTEST: FEDERATED SECURITIES CORP.
/s/ S. Elliott Cohan By:/s/ Edward C. Gonzales
Secretary Executive Vice President
(SEAL)
Exhibit D
to the
Distributor's Contract
Insight Institutional Series, Inc.
Insight Adjustable Rate Mortgage Fund
In consideration of the mutual covenants set forth in the
Distributor's Contract dated December 1, 1993, between Insight
Institutional Series, Inc. and Federated Securities Corp., Insight
Institutional Series, Inc. executes and delivers this Exhibit on behalf
of the Funds, first set forth in this Exhibit.
Witness the due execution hereof this 1st day of December, 1993.
ATTEST: INSIGHT INSTITUTIONAL SERIES, INC.
/s/ John W. McGonigle By:/s/ Richard B. Fisher
Secretary President
(SEAL)
ATTEST: FEDERATED SECURITIES CORP.
/s/ S. Elliott Cohan By:/s/ Edward C. Gonzales
Secretary Executive Vice President
(SEAL)
-1-
Exhibit 9(iii) under Form N-1A
Exhibit 10 under Item 601/Reg. S-K
INSIGHT INSTITUTIONAL SERIES, INC.
SHAREHOLDER SERVICES PLAN
This Shareholder Services Plan ("Plan") is adopted as of this 1st
day of December, 1993, by the Board of Directors of INSIGHT
INSTITUTIONAL SERIES, INC. (the "Fund"), a Maryland corporation with
respect to certain classes of shares ("Classes") of the portfolios of
the Corporation ("the Portfolios") set forth in exhibits hereto.
1. This Plan is adopted to allow the Fund to make payments as
contemplated herein to obtain certain personal services for shareholders
and/or the maintenance of shareholder accounts ("Services").
2. This Plan is designed to compensate broker/dealers and other
participating financial institutions and other persons ("Providers") for
providing services to the Fund and its shareholders. The Plan will be
administered by Federated Administrative Services, Inc. ("FAS"). In
compensation for the services provided pursuant to this Plan, Providers
will be paid a monthly fee computed at the annual rate not to exceed .25
of 1% of the average aggregate net asset value of the shares of the Fund
held during the month.
3. Any payments made by the Portfolios to any Provider pursuant
to this Plan will be made pursuant to the "Shareholder Services
Agreement" entered into by FAS on behalf of the Fund and the Provider.
Providers which have previously entered into "Administrative Agreements"
or "Rule 12b-1 Agreements" with Federated Securities Corp. may be
compensated under this Plan for Services performed pursuant to those
Agreements until the Providers have executed a "Shareholder Services
Agreement" hereunder.
4. The Fund has the right (i) to select, in its sole
discretion, the Providers to participate in the Plan and (ii) to
terminate without cause and in its sole discretion any Shareholder
Services Agreement.
5. Quarterly in each year that this Plan remains in effect, FAS
shall prepare and furnish to the Board of Directors of the Fund, and the
Board of Directors shall review, a written report of the amounts
expended under the Plan.
6. This Plan shall become effective (i) after approval by
majority votes of: (a) the Fund's Board of Directors; and (b) the
members of the Board of the Corporation who are not interested persons
of the Corporation and have no direct or indirect financial interest in
the operation of the Corporation's Plan or in any related documents to
the Plan ("Disinterested Directors"), cast in person at a meeting called
for the purpose of voting on the Plan; and (ii) upon execution of an
exhibit adopting this Plan.
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 Corporation's Board of Directors and a
majority of the Disinterested Directors, 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 Directors
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 Directors 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 Directors of the Fund and of the Disinterested
Directors, cast in person at a meeting called for the purpose of voting
on it.
9. This Plan may be terminated at any time by: (a) a majority
vote of the Disinterested Directors; or (b) a vote of a majority of the
outstanding voting securities of the Fund as defined in Section 2(a)(42)
of the Act.
10. While this Plan shall be in effect, the selection and
nomination of Disinterested Directors of the Fund shall be committed to
the discretion of the Disinterested Directors then in office.
11. 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 9 herein.
12. This Plan shall be construed in accordance with and governed
by the laws of the Commonwealth of Pennsylvania.
Witness the due execution hereof this 1st day of December, 1993.
INSIGHT INSTITUTIONAL SERIES, INC.
By:/s/ Richard B. Fisher
President
EXHIBIT A
to the
Shareholder Services Plan
INSIGHT INSTITUTIONAL SERIES, INC.
Insight Limited Term Income Fund
This Plan is adopted by Insight Institutional Series, Inc. with
respect to the Portfolio of the Corporation set forth above.
In compensation for the services provided pursuant to this Plan,
Providers will be paid a monthly fee computed at the annual rate of .25
of 1% of the average aggregate net asset value of the Insight Limited
Term Income Fund held during the month.
Witness the due execution hereof this 1st day of December, 1993.
INSIGHT INSTITUTIONAL SERIES, INC.
By:/s/ Richard B. Fisher
President
EXHIBIT B
to the
Shareholder Services Plan
INSIGHT INSTITUTIONAL SERIES, INC.
Insight U.S. Government Fund
This Plan is adopted by Insight Institutional Series, Inc. with
respect to the Portfolio of the Corporation set forth above.
In compensation for the services provided pursuant to this Plan,
Providers will be paid a monthly fee computed at the annual rate of .25
of 1% of the average aggregate net asset value of the Insight U.S.
Government Fund held during the month.
Witness the due execution hereof this 1st day of December, 1993.
INSIGHT INSTITUTIONAL SERIES, INC.
By:/s/ Richard B. Fisher
President
EXHIBIT C
to the
Shareholder Services Plan
INSIGHT INSTITUTIONAL SERIES, INC.
Insight Limited Term Municipal Fund
This Plan is adopted by Insight Institutional Series, Inc. with
respect to the Portfolio of the Corporation set forth above.
In compensation for the services provided pursuant to this Plan,
Providers will be paid a monthly fee computed at the annual rate of .25
of 1% of the average aggregate net asset value of the Insight Limited
Term Municipal Fund held during the month.
Witness the due execution hereof this 1st day of December, 1993.
INSIGHT INSTITUTIONAL SERIES, INC.
By:/s/ Richard B. Fisher
President
EXHIBIT D
to the
Shareholder Services Plan
INSIGHT INSTITUTIONAL SERIES, INC.
Insight Adjustable Rate Mortgage Fund
This Plan is adopted by Insight Institutional Series, Inc. with
respect to the Portfolio of the Corporation set forth above.
In compensation for the services provided pursuant to this Plan,
Providers will be paid a monthly fee computed at the annual rate of .25
of 1% of the average aggregate net asset value of the Insight Adjustable
Rate Mortgage Fund held during the month.
Witness the due execution hereof this 1st day of December, 1993.
INSIGHT INSTITUTIONAL SERIES, INC.
By:/s/ Richard B. Fisher
President
Schedule for Computation Initial
of Fund Performance Data Invest of: $1,000 Exhibit 16
Offering Exhibit 99
Insight Adj. Rate Mortgage Fund Price/
Share= $10.02
Return Since Inception
ending 3/31/94 NAV= $9.97
FYE: September 30
<TABLE>
<S> <C> <C>
Begin Capital Reinvest Ending Total
DECLARED: DAILY Reinvest Period Dividend Gain Price Period Ending Invest
PAID: MONTHLY Dates Shares /Share /Share /Share Shares Price Value
2/28/94 99.800 0.032572858 0.00000 $10.00 100.125 $10.00 $1,001.2
3/31/94 100.125 0.033806572 0.00000 $9.97 100.465 $9.97 $1,001.6
$1,000 (1+T) = End Value
T = 0.16%
</TABLE>
<TABLE>
<S> <C> <C>
Insight Adj. Rate Mtg Fund Yield = 2{( $6,528.53 - $524.72 )+1)^6-1}=
Computation of SEC Yield 182,821 * $9.97 - 0.00000 )
As of: March 31, 1994
SEC Yield = 3.99%
Dividend and/or Interest
Inc for the 30 days ended $6,528.53
Net Expenses for $524.72
the Period
Avg Daily Shares
Outstanding and entitled
to receive dividends 182,821
Maxium offering price $9.97
per share as of 3-31-94
Undistributed net income 0.00000
</TABLE>
