1933 Act File No. 33-52149
1940 Act File No. 811-07141
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
WORLD INVESTMENT 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 July 31, 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
January 15, 1995; 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,
L.L.P.
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 World
Investment Series, Inc., which consists of one portfolio,
World Utility Fund, consisting of two classes of shares (a)
Class A Shares, and (b) Fortress Shares, relates to both Class
A Shares and Fortress Shares, and is comprised of the
following:
PART A. INFORMATION REQUIRED IN A PROSPECTUS.
Prospectus Heading
(Rule 404(c) Cross Reference)
Item 1. Cover Page Cover Page (a,b).
Item 2. Synopsis Summary of Fund Expenses (a,b).
Item 3. Condensed Financial
Information Performance Information (a,b).
Financial Highlights (a,b).
Item 4. General Description
of Registrant General Information (a,b);
Liberty Family of Funds (a);
Fortress Investment Program
(b); Investment Information
(a,b); Investment Objective
(a,b); Investment Policies
(a,b); Investment Limitations
(a,b); Other Classes of Shares
(a,b).
Item 5. Management of the Fund World Investment Series, Inc.
Information (a,b); Management
of the Corporation (a,b);
Distribution of Class A Shares
(a); Distribution of Fortress
Shares (b); Administration of
the Fund (a,b); Expenses of the
Fund and Class A Shares (a);
Expenses of the Fund and
Fortress Shares (b); Brokerage
Transactions (a,b).
Item 6. Capital Stock and
Other Securities Dividends and Distributions (a,
b); Shareholder Information
(a,b); Voting Rights (a,b); Tax
Information (a,b); Federal
Income Tax (a,b); Pennsylvania
Corporate and Personal Property
Taxes (a,b).
Item 7. Purchase of Securities Being
Offered Net Asset Value (a,b);
Investing in Class A Shares
(a); Investing in Fortress
Shares (b); Share Purchases
(a,b); Minimum Investment
Required (a,b); What Shares
Cost (a,b); Reducing the Sales
Charge (a); Eliminating the
Sales Charge (b); Systematic
Investment Program (a,b);
Exchanging Securities for Fund
Shares (a, b); Certificates and
Confirmations (a,b); Retirement
Plans (a); Exchange Privileges
(b); Exchange Privilege (a);
Reduced Sales Charge (a);
Requirements for Exchange (a);
Tax Consequences (a); Making an
Exchange (a).
Item 8. Redemption or Repurchase Redeeming Class A Shares (a);
Redeeming Fortress Shares (b);
Through a Financial Institution
(a,b); Directly From the Fund
(a); Directly by Mail (b);
Contingent Deferred Sales
Charge (b); Systematic
Withdrawal Program (a,b);
Accounts With Low Balances
(a,b).
Item 9. Pending Legal Proceedings None
PART B. INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL
INFORMATION.
Item 10. Cover Page Cover Page (a,b).
Item 11. Table of Contents. Table of Contents (a,b).
Item 12. General Information
and History. General Information About the
Fund (a,b).
Item 13. Investment Objectives
and Policies. Investment Objective and
Policies (a,b).
Item 14. Management of the Corporation.See Part A - Management of
the Corporation (a,b).
Item 15. Control Persons and Principal
Holders of Securities. The Funds (a,b).
Item 16. Investment Advisory and Other
Services. Investment Advisory Services
(a,b); Administrative Services
(a,b).
Item 17. Brokerage Allocation. Brokerage Transactions (a,b).
Item 18. Capital Stock and Other
Securities. Not applicable.
Item 19. Purchase, Redemption
and Pricing of Securities
Being Offered. Purchasing Shares (a,b);
Determining Net Asset Value
(a,b); Exchange Privilege
(Fortress Shares Only) (b);
Redeeming Shares (a,b).
Item 20. Tax Status. Tax Status (a,b).
Item 21. Underwriters. See Part A - Distribution of
(Class A , or Fortress) Shares
(a,b).
Item 22. Calculation of
Performance Data. Total Return (a,b); Yield
(a,b); Performance Comparisons
(a,b);
Item 23. Financial Statements. (Filed in Part A-Supplement to
Prospectus).
- --------------------------------------------------------------------------------
WORLD
- --------------------------------------------------------------------------------
UTILITY
- --------------------------------------------------------------------------------
FUND
- --------------------------------------------------------------------------------
CLASS A SHARES
(A Portfolio of World Investment Series, Inc.)
SEMI-ANNUAL REPORT AND
SUPPLEMENT TO PROSPECTUS
DATED APRIL 15, 1994
JULY 31, 1994
FEDERATED SECURITIES CORP.
(LOGO)
- ---------------------------------------------
Distributor
A subsidiary of FEDERATED INVESTORS
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
981487101 (7/94)
G00259-03-A
--------------------------------------------------------
--------------------------------------------------------
--------------------------------------------------------
--------------------------------------------------------
A. Please insert the following "Financial Highlights--Class A Shares" table as
page 2 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 on page I following the
heading "Summary of Fund Expenses."
WORLD UTILITY FUND
FINANCIAL HIGHLIGHTS--CLASS A SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
PERIOD ENDED
MAY 31,
1994**
-------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.03
- ------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ------------------------------------------------------------------------------------
Net investment income 0.07
- ------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments 0.06
- ------------------------------------------------------------------------------------ ---------
Total from investment operations 0.13
- ------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
- ------------------------------------------------------------------------------------
Dividends to shareholders from net investment income --
- ------------------------------------------------------------------------------------
Distributions to shareholders from net realized gain on investment transactions --
- ------------------------------------------------------------------------------------ ---------
TOTAL DISTRIBUTIONS --
- ------------------------------------------------------------------------------------ ---------
NET ASSET VALUE, END OF PERIOD $10.16
- ------------------------------------------------------------------------------------ ---------
TOTAL RETURN* 1.30%
- ------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ------------------------------------------------------------------------------------
Expenses 0.25%(b)
- ------------------------------------------------------------------------------------
Net investment income 9.66%(b)
- ------------------------------------------------------------------------------------
Expense waiver/reimbursement(a) 14.21%(b)
- ------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $1,361
- ------------------------------------------------------------------------------------
Portfolio turnover rate 0%
- ------------------------------------------------------------------------------------
</TABLE>
* Based on net asset value, which does not reflect the sales load or contingent
deferred sales charge, if applicable.
** Reflects operations for the period from April 14, 1994 (date of initial
public investment) to May 31, 1994 (unaudited).
(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 "Liberty Family of Funds" on page 2 of the
prospectus and replace it with the following section entitled "Liberty Family
of Funds."
LIBERTY FAMILY OF FUNDS
- --------------------------------------------------------------------------------
This Fund is a member of a family of mutual funds, collectively known as the
Liberty Family of Funds. The other funds in the Liberty Family of Funds are:
- American Leaders Fund, Inc., providing growth of capital and income
through high-quality stocks;
- Capital Growth Fund, providing appreciation of capital primarily through
equity securities;
- Fund for U.S. Government Securities, Inc., providing current income
through long-term U.S. government securities;
- International Equity Fund, providing long-term capital growth and income
through international securities;
- International Income Fund, providing a high level of current income
consistent with prudent investment risk through high-quality debt
securities denominated primarily in foreign currencies;
- Liberty Equity Income Fund, Inc., providing above-average income and
capital appreciation through income producing equity securities;
- Liberty High Income Bond Fund, Inc., providing high current income
through high-yielding lower-rated corporate bonds;
- Liberty U.S. Government Money Market Trust, providing current income
consistent with stability of principal through high-quality U.S.
government securities;
- Liberty Utility Fund, Inc., providing current income and long-term growth
of income, primarily through electric, gas, and communications utilities;
- Limited Term Fund, providing a high level of current income consistent
with minimum fluctuation in principal value through investment grade
securities;
- Limited Term Municipal Fund, providing a high level of current income
exempt from federal regular income tax consistent with the preservation
of principal, primarily limited to municipal securities;
- Michigan Intermediate Municipal Trust, providing current income exempt
from federal regular income tax and the personal income taxes imposed by
the state of Michigan and Michigan municipalities, primarily through
Michigan municipal securities;
- Pennsylvania Municipal Income Fund, providing current income exempt from
federal regular income tax and the personal income taxes imposed by the
Commonwealth of Pennsylvania, primarily through Pennsylvania municipal
securities;
- Strategic Income Fund, providing a high level of current income,
primarily through domestic and foreign corporate debt obligations;
- Tax-Free Instruments Trust, providing current income consistent with
stability of principal and exempt from federal income tax, through
high-quality, short-term municipal securities; and
- World Utility Fund, providing total return through securities issued by
domestic and foreign companies in the utilities industries.
Prospectuses for these funds are available by writing to Federated Securities
Corp.
Each of the funds may also invest in certain other types of securities as
described in each fund's prospectus.
The Liberty Family of Funds provides flexibility and diversification for an
investor's long-term investment planning. It enables an investor to meet the
challenges of changing market conditions by offering convenient exchange
privileges which give access to various investment vehicles and by providing the
investment services of a proven, professional investment adviser.
Shareholders of Class A Shares participating in The Liberty Account, are
designated as Liberty Life Members. Liberty Life Members are exempt from sales
charges on future purchases in and exchanges between the Class A Shares of any
funds in the Liberty Family of Funds, as long as they maintain a $500 balance in
one of the Liberty Funds.
C. Please insert the following "Financial Highlights--Fortress Shares" table on
page 25 of the prospectus immediately following the section entitled "Other
Classes of Shares." In addition, please add the heading "Financial
Highlights--Fortress Shares," to the Table of Contents on Page I after the
heading "Other Classes of Shares."
WORLD UTILITY FUND
FINANCIAL HIGHLIGHTS--FORTRESS SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
PERIOD ENDED
MAY 31,
1994**
-------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.01
- -------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS(C)
- -------------------------------------------------------------------------------------
Net investment income 0.05
- -------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments 0.09
- ------------------------------------------------------------------------------------- ---------
Total from investment operations 0.14
- -------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
- -------------------------------------------------------------------------------------
Dividends to shareholders from net investment income --
- -------------------------------------------------------------------------------------
Distributions to shareholders from realized gain on investment transactions --
- ------------------------------------------------------------------------------------- ---------
TOTAL DISTRIBUTIONS --
- ------------------------------------------------------------------------------------- ---------
NET ASSET VALUE, END OF PERIOD $10.15
- ------------------------------------------------------------------------------------- ---------
TOTAL RETURN* 1.40%
- -------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- -------------------------------------------------------------------------------------
Expenses 0.50%(b)
- -------------------------------------------------------------------------------------
Net investment income 6.65%(b)
- -------------------------------------------------------------------------------------
Expense waiver/reimbursement(a) 14.21%(b)
- -------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- -------------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $449
- -------------------------------------------------------------------------------------
Portfolio turnover rate 0%
- -------------------------------------------------------------------------------------
</TABLE>
* Based on net asset value which does not reflect the sales load or contingent
deferred sales charge, if applicable.
** For the period from April 12, 1994 (date of initial public offering) to May
31, 1994 (unaudited).
(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.
(c) Per share information presented is based upon the monthly average number of
shares outstanding due to large fluctuations in the number of shares
outstanding during the period.
(See Notes which are an integral part of the financial statements)
D. Please delete the "Statement of Assets and Liabilities" and the "Report of
Ernst & Young, Independent Auditors" that appear on page 26 and 27,
respectively, and replace with the following financial statements. In
addition, please delete the heading "Statement of Assets and Liabilities" and
"Report of Ernst & Young, Independent Auditors" in the Table of Contents on
page I and insert the heading "Financial Statements."
WORLD UTILITY FUND
PORTFOLIO OF INVESTMENTS
MAY 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- -------- --------------------------------------------------------------------- ----------
<C> <C> <S> <C>
COMMON STOCK--59.3%
- -----------------------------------------------------------------------------------
UTILITY--50.8%
---------------------------------------------------------------------
700 Ameritech Corp. $ 27,388
---------------------------------------------------------------------
800 AT & T Corp. 43,600
---------------------------------------------------------------------
1,000 BCE, Inc. 35,375
---------------------------------------------------------------------
1,000 British Telecommunications 46,500
---------------------------------------------------------------------
6,500 China Lighting & Power, Ltd. 36,176
---------------------------------------------------------------------
1,500 Cincinnati Gas & Electric Co. 33,938
---------------------------------------------------------------------
1,400 DPL, Inc. 28,175
---------------------------------------------------------------------
1,000 DQE, Inc. 31,750
---------------------------------------------------------------------
1,000 Duke Power Co. 36,000
---------------------------------------------------------------------
1,500 Empresa Nacional 71,325
---------------------------------------------------------------------
1,500 Entergy Corp. 43,312
---------------------------------------------------------------------
1,000 Florida Power & Light Group, Inc. 31,750
---------------------------------------------------------------------
1,500 GTE Corp. 46,313
---------------------------------------------------------------------
500 Hong Kong Telecommunications 29,187
---------------------------------------------------------------------
4,600 National Power 29,258
---------------------------------------------------------------------
1,000 Nipsco Industries, Inc. 30,750
---------------------------------------------------------------------
2,000 Pacific Enterprises 41,250
---------------------------------------------------------------------
2,000 Pacificorp 35,250
---------------------------------------------------------------------
2,000 Pinnacle West Corp. 34,731
---------------------------------------------------------------------
</TABLE>
WORLD UTILITY FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- -------- --------------------------------------------------------------------- ----------
<C> <C> <S> <C>
COMMON STOCK--CONTINUED
- -----------------------------------------------------------------------------------
UTILITY--CONTINUED
---------------------------------------------------------------------
9,600 Societa Finanziaria Telecommunications $ 32,834
---------------------------------------------------------------------
1,000 Sonat, Inc. 28,500
---------------------------------------------------------------------
2,000 Southern Co. 37,000
---------------------------------------------------------------------
500 Telefonos De Mexico 31,063
---------------------------------------------------------------------
1,500 Utilicorp., Inc. 43,312
---------------------------------------------------------------------
2,000 Westcoast Energy, Inc. 34,750
--------------------------------------------------------------------- ----------
Total 919,487
--------------------------------------------------------------------- ----------
NON UTILITY--8.5%
---------------------------------------------------------------------
600 Bankers Trust NY Corp. 42,225
---------------------------------------------------------------------
1,000 Meditrust 34,750
---------------------------------------------------------------------
400 Royal Dutch Petetroleum Co. 42,750
---------------------------------------------------------------------
1,300 YPF Sociedad Anonima 34,288
--------------------------------------------------------------------- ----------
Total 154,013
--------------------------------------------------------------------- ----------
TOTAL COMMON STOCK (IDENTIFIED COST, $1,111,922) 1,073,500
--------------------------------------------------------------------- ----------
CONVERTIBLES--16.8%
- -----------------------------------------------------------------------------------
600 Cointel/Telefonia De Argentina, 7.00% (a) 42,290
---------------------------------------------------------------------
2,000 Kaufman & Broad Home Corp., 8.75% 35,500
---------------------------------------------------------------------
800 Philippine Long Distance, 5.75% (a) 33,034
---------------------------------------------------------------------
5,000 RJR Nabisco Holdings, 9.25% 31,875
---------------------------------------------------------------------
500 Reynolds Metals Co., 7.25% 24,438
---------------------------------------------------------------------
1,000 Sears, Roebuck & Co., 8.72% 55,625
---------------------------------------------------------------------
1,000 Tenneco, Inc., 9.50% 40,125
---------------------------------------------------------------------
3,000 Westinghouse Electric Corp., 9.25% (a) 41,586
--------------------------------------------------------------------- ----------
TOTAL CONVERTIBLES (IDENTIFIED COST, $258,539) 304,473
--------------------------------------------------------------------- ----------
</TABLE>
WORLD UTILITY FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- --------- --------------------------------------------------------------------- ----------
<C> <C> <S> <C>
*REPURCHASE AGREEMENT--29.6%
- ------------------------------------------------------------------------------------
$535,000 J.P. Morgan, 4.27%, dated 5/31/94, due 6/1/94 (at amortized cost) $ 535,000
--------------------------------------------------------------------- ----------
TOTAL INVESTMENTS (IDENTIFIED COST, $1,905,461), (NOTES 2A AND 2B) $1,912,973+
--------------------------------------------------------------------- ----------
</TABLE>
(a) Restricted securities--Investments in securities not registered under the
Securities Act of 1933. At the end of the period, these securities amounted
to 6.5% of net assets (Note 2H).
+ The cost of investments for federal tax purposes amounts to $1,905,461. The
net unrealized appreciation on a federal tax cost basis amounts to $7,512 and
is comprised of $27,689 appreciation and $20,177 depreciation at May 31, 1994.
* The repurchase agreement is fully collateralized by U.S. government and/or
agency obligations. The investment in the repurchase agreement is through
participation in joint accounts with other Federated funds.
Note: The categories of investments are shown as a percentage of net assets
($1,810,005) at
May 31, 1994.
(See Notes which are an integral part of the Financial Statements)
WORLD UTILITY FUND
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- -------------------------------------------------------------------------------------------------
Investments in repurchase agreements $ 535,000
- ------------------------------------------------------------------------------------
Investments in securities 1,377,973
- ------------------------------------------------------------------------------------ ---------
Total investments in securities, at value (Notes 2A and 2B)
(identified and tax cost $1,905,461) $1,912,973
- -------------------------------------------------------------------------------------------------
Cash 6,964
- -------------------------------------------------------------------------------------------------
Receivable for capital stock sold 261,141
- -------------------------------------------------------------------------------------------------
Receivable from adviser (Note 4) 7,500
- -------------------------------------------------------------------------------------------------
Dividend and Interest Receivable 6,198
- ------------------------------------------------------------------------------------------------- ---------
Total assets 2,194,776
- -------------------------------------------------------------------------------------------------
LIABILITIES:
- ------------------------------------------------------------------------------------
Payable for investments purchased 369,334
- ------------------------------------------------------------------------------------
Payable for capital stock redeemed 18
- ------------------------------------------------------------------------------------
Accrued expenses 15,419
- ------------------------------------------------------------------------------------ ---------
Total liabilities 384,771
- ------------------------------------------------------------------------------------------------- ---------
NET ASSETS 178,236 shares of capital stock outstanding $1,810,005
- ------------------------------------------------------------------------------------------------- ---------
NET ASSETS CONSIST OF:
- -------------------------------------------------------------------------------------------------
Paid-in capital $1,791,957
- -------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments 7,512
- -------------------------------------------------------------------------------------------------
Accumulated undistributed net realized gain (loss) on investments --
- -------------------------------------------------------------------------------------------------
Undistributed net investment income 10,536
- ------------------------------------------------------------------------------------------------- ---------
Total Net Assets $1,810,005
- ------------------------------------------------------------------------------------------------- ---------
NET ASSET VALUE PER SHARE:
- -------------------------------------------------------------------------------------------------
Class A ($1,360,520 / 133,947 shares of capital stock) $ 10.16
- ------------------------------------------------------------------------------------------------- ---------
Fortress Shares ($449,485 / 44,289 shares of capital stock) $ 10.15
- ------------------------------------------------------------------------------------------------- ---------
OFFERING PRICE PER SHARE:*
- -------------------------------------------------------------------------------------------------
Class A (100/95.5 of $10.16) $ 10.64
- ------------------------------------------------------------------------------------------------- ---------
Fortress Shares (100/99 of $10.15) $ 10.25
- ------------------------------------------------------------------------------------------------- ---------
REDEMPTION PROCEEDS PER SHARE:**
- -------------------------------------------------------------------------------------------------
Class A $ 10.16
- ------------------------------------------------------------------------------------------------- ---------
Fortress Shares (99/100 of $10.15) $ 10.05
- ------------------------------------------------------------------------------------------------- ---------
</TABLE>
* See "What Shares Cost" in the prospectus.
** See "Contingent Deferred Sales Charge" in the prospectus.
(See Notes which are an integral part of the Financial Statements)
WORLD UTILITY FUND
STATEMENT OF OPERATIONS
FOR THE PERIOD FROM MARCH 17, 1994 (START OF BUSINESS) TO MAY 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME--
- --------------------------------------------------------------------------------------
Dividend income (net of foreign taxes withheld of $98.92) (Note 2E) $ 7,888
- --------------------------------------------------------------------------------------
Interest income 2,968
- -------------------------------------------------------------------------------------- -------
Total investment income (Note 2C) $10,856
- --------------------------------------------------------------------------------------
EXPENSES--
- --------------------------------------------------------------------------------------
Investment advisory fee (Note 4) $ 1,135
- ---------------------------------------------------------------------------
Distribution service fees--Fortress Shares (Note 4) 36
- ---------------------------------------------------------------------------
Custodian and portfolio accounting fees 12,000
- ---------------------------------------------------------------------------
Transfer agent and dividend disbursing agent fees and expenses (Note 4) 1,000
- ---------------------------------------------------------------------------
Legal fees 400
- ---------------------------------------------------------------------------
Printing and postage 400
- ---------------------------------------------------------------------------
Registration fees 800
- ---------------------------------------------------------------------------
Shareholder services fees--Class A Shares (Note 4) 248
- ---------------------------------------------------------------------------
Shareholder services fees--Fortress Shares (Note 4) 36
- ---------------------------------------------------------------------------
Miscellaneous 400
- --------------------------------------------------------------------------- -------
Total expenses 16,455
- ---------------------------------------------------------------------------
Deduct--
- ---------------------------------------------------------------------------
Waiver of investment advisory fee (Note 4) $ 1,135
- -----------------------------------------------------------------
Reimbursement of other operating expenses (Note 4) 15,000 16,135
- ----------------------------------------------------------------- ------- -------
Net expenses 320
- -------------------------------------------------------------------------------------- -------
Net investment income 10,536
- -------------------------------------------------------------------------------------- -------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
- --------------------------------------------------------------------------------------
Net realized gain (loss) on investments (identified cost basis) --
- --------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) on investments 7,512
- -------------------------------------------------------------------------------------- -------
Net realized and unrealized gain (loss) on investments 7,512
- -------------------------------------------------------------------------------------- -------
Change in net assets resulting from operations $18,048
- -------------------------------------------------------------------------------------- -------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
WORLD UTILITY FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERIOD ENDED
MAY 31, 1994*
(UNAUDITED)
---------------
<S> <C>
INCREASE (DECREASE) IN NET ASSETS:
- -------------------------------------------------------------------------
OPERATIONS--
- -------------------------------------------------------------------------
Net investment income $ 10,536
- -------------------------------------------------------------------------
Net realized gain (loss) on investments ($0 net gain computed for federal
tax purposes) --
- -------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) on investments 7,512
- ------------------------------------------------------------------------- --------------
Change in net assets resulting from operations 18,048
- ------------------------------------------------------------------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 2C)--
- -------------------------------------------------------------------------
Dividends to shareholders from net investment income:
- -------------------------------------------------------------------------
Class A Shares --
- -------------------------------------------------------------------------
Fortress Shares --
- ------------------------------------------------------------------------- --------------
Change in net assets resulting from distributions to shareholders --
- ------------------------------------------------------------------------- --------------
CAPITAL STOCK TRANSACTIONS (NOTE 3)--
- -------------------------------------------------------------------------
Proceeds from sale of shares 2,700,247
- -------------------------------------------------------------------------
Net asset value of shares issued to shareholders electing to receive
payment of dividends declared --
- -------------------------------------------------------------------------
Cost of shares redeemed (1,008,290)
- ------------------------------------------------------------------------- --------------
Change in net assets from capital stock transactions 1,691,957
- ------------------------------------------------------------------------- --------------
Change in net assets 1,710,005
- -------------------------------------------------------------------------
NET ASSETS:
- -------------------------------------------------------------------------
Beginning of period 100,000
- ------------------------------------------------------------------------- --------------
End of period (including undistributed net investment income of $10,536) $ 1,810,005
- ------------------------------------------------------------------------- --------------
</TABLE>
* For the period from March 17, 1994 (start of business) to May 31, 1994.
(See Notes which are an integral part of the financial statements)
WORLD UTILITY FUND
NOTES TO FINANCIAL STATEMENTS
MAY 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
(1) ORGANIZATION
World Investment Series, Inc. (the "Corporation") is registered under the
Investment Company Act of 1940, as amended, as an open-end management investment
company. The Corporation consists of one diversified portfolio, World Utility
Fund (the "Fund").
The Fund provides two classes of shares: Class A Shares and Fortress Shares.
Fortress Shares are identical in all respects to Class A Shares except that
Fortress Shares will be sold pursuant to a distribution plan (the "Plan")
adopted in accordance with Investment Company Act Rule 12b-1. Class A Shares and
Fortress Shares are also subject to certain sales and contingent deferred sales
charges. Both classes of shares went effective April 12, 1994.
(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.
<TABLE>
<S> <C>
A. INVESTMENT VALUATIONS--Listed equity securities are valued at the last sales price
reported on national securities exchanges. Unlisted securities and short-term
obligations (and private placement securities) are generally valued at the prices
provided by an independent pricing service. Short-term securities with remaining
maturities of sixty days or less at the time of purchase 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
agreement's 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 ("the
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.
</TABLE>
WORLD UTILITY FUND
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
C. INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Dividend income and distributions to
shareholders are recorded on the ex-dividend date. Interest income and expenses are
accrued daily. Bond premium and discount if applicable, are amortized as required by the
Internal Revenue Code, as amended ("the Code").
D. FOREIGN CURRENCY TRANSLATION--The accounting records of the Fund are maintained in U.S.
dollars. All assets and liabilities denominated in foreign currencies are translated
into U.S. dollars based on the rate of exchange of such currencies against U.S. dollars
on the date of valuation. Purchases and sales of securities, income and expenses are
translated at the rate of exchange quoted on the respective date that such transactions
are recorded. Differences between income and expense amounts recorded and collected or
paid are adjusted when reported by the custodian bank.
E. 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. However, federal taxes may be imposed on the Fund upon the disposition of
certain investments in Passive Foreign Investment Companies. Withholding taxes on
foreign dividends have been provided for in accordance with the Fund's understanding of
the applicable country's tax rules and rates.
F. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in when-issued or
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.
G. CONCENTRATION OF CREDIT RISK--The Fund invests in equity and fixed income securities of
non-U.S. issuers. Although the Fund maintains a diversified investment portfolio, the
political or economic developments within a particular country or region may have an
adverse effect on the ability of domiciled issuers to meet their obligations.
Additionally, political or economic developments may have an effect on the liquidity and
volatility of portfolio securities and currency holdings.
At May 31, 1994 the portfolio was diversified within the following countries:
Italy 1.7%
United Kingdom 1.5%
</TABLE>
WORLD UTILITY FUND
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
H. RESTRICTED SECURITIES--Restricted securities are securities that may only be resold upon
registration under Federal securities laws or in transactions exempt from such
registration. In some cases, the issuer of restricted securities has agreed to register
such securities for resale, at the issuer's expense either upon demand by the Fund or in
connection with another registered offering of the securities. Many restricted
securities may be resold in the secondary market in transactions exempt from
registration. Such restricted securities may be determined to be liquid under criteria
established by the Board of Directors. The Fund will not incur any registration costs
upon such resales. The Fund's restricted securities are valued at the price provided by
an independent pricing service, at bid or asked prices provided by dealers in the
secondary market or, if no market prices are available, at the fair value as determined
by the Fund's pricing committee. Additional information on each restricted security held
at May 31, 1994 is as follows:
</TABLE>
<TABLE>
<CAPTION>
ACQUISITION ACQUISITION
SECURITY DATE COST
-------------------------------------------------------- ---------------- ------------
<S> <C> <C>
Cointel/Telefonica De Argentina 4/15/94, 4/26/94 $ 37,700
--------------------------------------------------------
Philippine Long Distance 4/15/94 29,544
--------------------------------------------------------
Westinghouse Electric Corp. 4/15/94, 5/26/94 40,750
--------------------------------------------------------
I. OTHER--Investment transactions are accounted for on the trade date.
</TABLE>
(3) CAPITAL STOCK
At May 31, 1994, there were 1,000,000,000 shares of $0.001 par value capital
stock authorized for Class A Shares and Fortress Shares, respectively.
Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
PERIOD ENDED
MAY 31, 1994*
-----------------------
CLASS A SHARES SHARES AMOUNT
- --------------------------------------------------------------------- ------- -----------
<S> <C> <C>
Shares sold 233,764 $ 2,253,843
- ---------------------------------------------------------------------
Shares issued to shareholders in payment of dividends declared -- --
- ---------------------------------------------------------------------
Shares redeemed (99,817) (1,008,253)
- --------------------------------------------------------------------- ------- -----------
Net change resulting from capital stock transactions 133,947 $ 1,245,590
- --------------------------------------------------------------------- ------- -----------
</TABLE>
* For the period from March 17, 1994 (start of business) to May 31, 1994.
WORLD UTILITY FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERIOD ENDED
MAY 31, 1994
----------------------
FORTRESS SHARES SHARES AMOUNT
- -------------------------------------------------------------------- ------ --------
<S> <C> <C>
Shares sold 44,293 $446,404
- --------------------------------------------------------------------
Shares issued to shareholders in payment of dividends declared -- --
- --------------------------------------------------------------------
Shares redeemed (4 ) (37)
- -------------------------------------------------------------------- ----- --------
Net change resulting from capital stock transactions 44,289 $446,367
- -------------------------------------------------------------------- ----- --------
</TABLE>
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Federated Management, the Fund's investment adviser
("Adviser") receives for its services an annual investment advisory fee equal to
1.00% of the Fund's average daily net assets. Adviser may voluntarily choose to
waive its fee and reimburse certain operating expenses of the Fund. Adviser can
modify or terminate this voluntary waiver and reimbursement at any time at its
sole discretion.
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS") provides the Fund
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.
DISTRIBUTION AND SHAREHOLDER SERVICES FEE--The Fund has adopted a Distribution
Plan (the "Plan") pursuant to Rule 12b-1 under the Investment Company Act of
1940. Under the terms of the Plan, the Fund will compensate Federated Securities
Corp. ("FSC"), the principal distributor, from the net assets of the Fund to
finance activities intended to result in the sale of the Fund's Fortress Shares.
The Plan provides that the Fund may incur distribution expenses of up to 0.25 of
1% of the average daily net assets of the Fortress Shares, annually, to
compensate FSC.
Under the terms of a shareholder services 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 personal services for
shareholders and the maintenance of shareholder accounts.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES--Federated Services Company
("FServ") serves as transfer and dividend disbursing agent for the Fund. The fee
is based on the size, type, and number of accounts and transactions made by
shareholders.
ORGANIZATIONAL EXPENSES--Organizational expenses and start-up administrative
service expenses incurred by the Fund will be borne initially by the
Administrator and are estimated at $34,100 and $31,164, respectively. The Fund
has agreed to reimburse the Administrator for the organizational expenses and
start-up administrative expenses during the five year period following April 12,
1994 (date the Fund first became effective).
WORLD UTILITY FUND
- --------------------------------------------------------------------------------
Certain of the Officers and Directors of the Fund are Officers and Directors or
Trustees of the above companies.
(5) INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the
period ended May 31, 1994 were as follows:
<TABLE>
<S> <C>
- --------------------------------------------------------------------------------
PURCHASES $1,370,461
- -------------------------------------------------------------------------------- ----------
SALES $ 0
- -------------------------------------------------------------------------------- ----------
</TABLE>
WORLD UTILITY FUND
(A PORTFOLIO OF WORLD INVESTMENT SERIES, INC.)
CLASS A SHARES
PROSPECTUS
The Class A Shares of World Utility Fund (the "Fund") offered by this prospectus
represent interests in the Fund, which is a diversified investment portfolio in
World Investment Series, Inc. (the "Corporation"), an open-end, management
investment company (a mutual fund).
The Fund's investment objective is to provide total return. The Fund invests
primarily in securities issued by domestic and foreign companies in the
utilities industries.
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 INVESTMENTS RISKS,
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
This prospectus contains the information you should read and know before you
invest in Class A Shares of the Fund. Keep this prospectus for future reference.
The Fund has also filed a Combined Statement of Additional Information for Class
A Shares and Fortress Shares dated April 15, 1994, with the Securities and
Exchange Commission. The information contained in the Combined Statement of
Additional Information is incorporated by reference into this prospectus. You
may request a copy of the Combined Statement of Additional Information free of
charge by calling 1-800-235-4669. To obtain other information or 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 April 15, 1994
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
SUMMARY OF FUND EXPENSES 1
- ------------------------------------------------------
GENERAL INFORMATION 2
- ------------------------------------------------------
LIBERTY FAMILY OF FUNDS 2
- ------------------------------------------------------
INVESTMENT INFORMATION 3
- ------------------------------------------------------
Investment Objective 3
Investment Policies 3
Risk Factors and Investment Considerations 5
Considerations of Utility Securities 5
Electric 6
Telecommunications 6
Gas 6
Water 6
Exchange Rates 6
Foreign Companies 7
U.S. Government Policies 7
Other Investment Practices 7
Foreign Currency Transactions 7
Forward Foreign Currency Exchange
Contracts 7
Repurchase Agreements 8
Lending of Portfolio Securities 8
Restricted and Illiquid Securities 8
When-Issued and Delayed Delivery
Transactions 8
Covered Call Options 8
Investment Limitations 9
NET ASSET VALUE 9
- ------------------------------------------------------
INVESTING IN CLASS A SHARES 9
- ------------------------------------------------------
Share Purchases 9
Through a Financial Institution 9
Directly by Mail 10
Directly by Wire 10
Minimum Investment Required 10
What Shares Cost 10
Dealer Concession 11
Reducing or Eliminating the Sales Charge 11
Quantity Discounts and Accumulated
Purchases 11
Letter of Intent 12
Reinvestment Privilege 12
Purchases with Proceeds from Redemptions
of Unaffiliated Mutual Fund Shares 12
Concurrent Purchases 12
Systematic Investment Program 12
Exchanging Securities for Fund Shares 13
Certificates and Confirmations 13
Dividends and Distributions 13
Retirement Plans 13
EXCHANGE PRIVILEGE 13
- ------------------------------------------------------
Reduced Sales Charge 14
Requirements for Exchange 14
Tax Consequences 14
Making an Exchange 14
Telephone Instructions 14
REDEEMING CLASS A SHARES 15
- ------------------------------------------------------
Through a Financial Institution 15
Directly from the Fund 15
By Telephone 15
By Mail 15
Signatures 16
Systematic Withdrawal Program 16
Accounts with Low Balances 16
WORLD INVESTMENT SERIES, INC. INFORMATION 17
- ------------------------------------------------------
Management of the Corporation 17
Board of Directors 17
Officers and Directors 17
Investment Adviser 20
Advisory Fees 21
Adviser's Background 21
Distribution of Class A Shares 21
Other Payments to Financial Institutions 21
Administration of the Fund 21
Administrative Services 21
Shareholder Services Plan 22
Custodian 22
Transfer Agent and Dividend
Disbursing Agent 22
Legal Counsel 22
Independent Auditors 23
Brokerage Transactions 23
Expenses of the Fund and Class A Shares 23
SHAREHOLDER INFORMATION 23
- ------------------------------------------------------
Voting Rights 23
TAX INFORMATION 24
- ------------------------------------------------------
Federal Income Tax 24
Pennsylvania Corporate and
Personal Property Taxes 25
OTHER CLASSES OF SHARES 25
- ------------------------------------------------------
PERFORMANCE INFORMATION 25
- ------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES 26
- ------------------------------------------------------
REPORT OF ERNST & YOUNG, INDEPENDENT AUDITORS 27
- ------------------------------------------------------
ADDRESSES Inside Back Cover
- ------------------------------------------------------
SUMMARY OF FUND EXPENSES
- --------------------------------------------------------------------------------
CLASS A SHARES
SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
<S> <C>
Maximum Sales Load Imposed on Purchases (as a percentage of offering price).............. 4.50%
Maximum Sales Load Imposed on Reinvested Dividends (as a percentage of offering price)... None
Contingent Deferred Sales Charge (as a percentage of original purchase price or
redemption proceeds as applicable)..................................................... None
Redemption Fee (as a percentage of amount redeemed, if applicable)....................... None
Exchange Fee............................................................................. None
ANNUAL CLASS A SHARES OPERATING EXPENSES*
(As a percentage of projected average net assets)
Management Fee (after waiver)(1)......................................................... 0.39%
12b-1 Fee................................................................................ None
Total Other Expenses..................................................................... 0.60%
Shareholder Servicing Fee....................................................... 0.25%
Total Class A Shares Operating Expenses(2)........................................... 0.99%
</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 1.00%.
(2) The Total Class A Shares Operating Expenses are estimated to be 1.60% absent
the anticipated voluntary waiver of a portion of the management fee.
* TOTAL CLASS A SHARES OPERATING EXPENSES ARE ESTIMATED BASED ON AVERAGE
EXPENSES EXPECTED TO BE INCURRED DURING THE PERIOD ENDING NOVEMBER 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 CLASS A SHARES OF THE FUND WILL
BEAR, EITHER DIRECTLY OR INDIRECTLY. FOR MORE COMPLETE DESCRIPTIONS OF THE
VARIOUS COSTS AND EXPENSES, SEE "INVESTING IN CLASS A SHARES" AND "WORLD
INVESTMENT 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.............. $ 55 $75
</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 NOVEMBER
30, 1994.
The information set forth in the foregoing table and example relates only to
Class A Shares of the Fund. The Fund also offers another class of shares called
Fortress Shares. Class A Shares and Fortress Shares are subject to certain of
the same expenses; however, Fortress Shares are subject to a maximum sales load
of 1.00%, a contingent deferred sales charge of 1.00%, and a 12b-1 fee of 0.25%.
See "Other Classes of Shares."
GENERAL INFORMATION
- --------------------------------------------------------------------------------
The Corporation was established as a corporation under the laws of the state of
Maryland on January 25, 1994. The Corporation's address is Liberty Center,
Federated Investors Tower, Pittsburgh, Pennsylvania 15222-3779. The Articles of
Incorporation permit the Corporation to offer separate series of shares
representing interests in separate portfolios of securities. The shares in any
one portfolio may be offered in separate classes. With respect to this Fund, as
of the date of this prospectus, the Board of Directors ("Directors") have
established two classes of shares, known as Class A Shares and Fortress Shares.
This prospectus relates only to Class A Shares ("Shares") of the Corporation's
portfolio known as World Utility Fund.
Shares of the Fund are designed to give institutions and individuals a
convenient means of seeking total return without undue risk through a
professionally managed, diversified portfolio comprised primarily of foreign and
domestic utility securities. The Fund is not intended to provide a complete
investment program for an investor. A minimum initial investment of $500 is
required, unless the investment is in a retirement account, in which case the
minimum investment is $50.
In general, Shares are sold at net asset value plus an applicable sales charge
and are redeemed at net asset value. However, a contingent deferred sales charge
is imposed on certain Shares. For a more complete description, see "Redeeming
Class A Shares."
The Fund's current net asset value and offering price can be found in the mutual
funds section of local newspapers under "Liberty Family Funds."
LIBERTY FAMILY OF FUNDS
- --------------------------------------------------------------------------------
This class of shares is a member of a family of mutual funds, collectively known
as the Liberty Family of Funds. The other funds in the Liberty Family of Funds
are:
AMERICAN LEADERS FUND, INC., providing growth of capital and income through
high quality stocks;
CAPITAL GROWTH FUND ( LIBERTY SHARES ONLY), providing appreciation of
capital primarily through equity securities;
FUND FOR U.S. GOVERNMENT SECURITIES, INC., providing current income through
long-term U.S. government securities;
INTERNATIONAL EQUITY FUND, providing long-term capital growth and income
through international securities;
INTERNATIONAL INCOME FUND, providing a high level of current income
consistent with prudent investment risk through high-quality debt
securities denominated primarily in foreign currencies;
LIBERTY EQUITY INCOME FUND, INC., an equity fund investing primarily in
stocks which have a history of regular dividends;
LIBERTY HIGH INCOME BOND FUND, INC., providing high current income through
high-yielding, lower-rated, corporate bonds;
LIBERTY MUNICIPAL SECURITIES FUND, INC., providing a high level of current
income exempt from federal regular income tax through municipal bonds;
LIBERTY U.S. GOVERNMENT MONEY MARKET TRUST, providing current income
consistent with stability of principal through high-quality U.S. government
securities;
LIBERTY UTILITY FUND, INC., providing current income and long-term growth
of income, primarily through electric, gas, and communication utilities;
and
TAX-FREE INSTRUMENTS TRUST, providing current income consistent with
stability of principal and exempt from federal income tax, through
high-quality, short-term municipal securities.
Prospectuses for these funds are available by writing to Federated Securities
Corp.
Each of the funds may also invest in certain other types of securities as
described in each fund's prospectus.
The Liberty Family of Funds provides flexibility and diversification for an
investor's long-term investment planning. It enables an investor to meet the
challenges of changing market conditions by offering convenient exchange
privileges which give access to various investment vehicles and by providing the
investment services of proven, professional investment advisers.
Shareholders of Class A Shares participating in the Liberty Account are
designated as Liberty Life Members. Liberty Life Members are exempt from sales
charges on future purchases in and exchanges between the Class A Shares of any
funds in the Liberty Family of Funds, as long as they maintain a $500 balance in
one of the Liberty Funds.
INVESTMENT INFORMATION
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE
The investment objective of the Fund is to provide total return. The investment
objective may be changed by the Directors without the approval of shareholders.
Shareholders will be notified in writing at least 30 days prior to any change in
the investment objective. Any such change may result in the Fund having an
investment objective different from the investment objective which a shareholder
considered appropriate at the time of investment in the Fund. While there is no
assurance that the Fund will achieve its investment objective, it endeavors to
do so by following the policies described in this prospectus. Unless indicated
otherwise, the policies may be changed by the Directors without the approval of
shareholders. Shareholders will be notified before any material changes in these
policies become effective.
INVESTMENT POLICIES
The Fund will seek to achieve its investment objective by investing at least 65%
of its total assets in securities issued by domestic and foreign companies in
the utilities industries. For these purposes, companies will be considered to be
in the utilities industries if, in the opinion of Federated Management ("the
Investment Adviser"), they are primarily engaged in the ownership or operation
of facilities used to generate, transmit, or distribute electricity, telephone
communications, cable and other pay television services, radio-telephone
communications, gas, or water.
The Fund's portfolio will at all times include issuers located in at least three
countries, although the Investment Adviser expects to invest in more than three
countries. It is expected that, under normal circumstances, the assets of the
Fund invested in U.S. securities will be higher than that invested in securities
of any other single country. At times, the Fund may have more than 65% of its
total assets invested in foreign securities.
The Fund may invest up to 35% of its total assets in securities of issuers that
are outside the utilities industries. Such investments may consist of common
stocks, debt securities, preferred stocks, or other securities issued by either
U.S. or foreign companies, governments, or governmental instrumentalities. Some
of these issuers may be in industries related to the utilities industries and,
therefore, may be subject to similar considerations. The prices of fixed income
securities fluctuate inversely in relation to the direction of interest rates.
The prices of longer term bonds fluctuate more widely in response to market
interest rate changes.
Debt obligations in the portfolio, at the time they are purchased, generally
will be limited to those which fall in one of the following categories: (i)
rated BBB or better by Standard & Poor's Corporation or Baa by Moody's Investors
Service, Inc., or (ii) determined by the Investment Adviser to be of investment
grade and not rated by either of the aforementioned rating services. However,
the Fund may invest up to 35% of the value of its total assets in lower-rated
convertible and non-convertible debt obligations that are not investment grade
bonds, but are rated CCC or better by Standard & Poor's Corporation or Caa or
better by Moody's Investors Service, Inc., or are not rated but are determined
by the Fund's investment adviser to be of comparable quality. Securities rated
BB, B and, CCC by Standard & Poor's Corporation or Ba, B, and Caa by Moody's
Investors Service, Inc. either have speculative characteristics or are
predominantly speculative with respect to capacity to pay interest and repay
principal in accordance with the terms of the obligations. Debt obligations that
are not determined to be investment grade are high-yield high-risk bonds,
typically subject to greater market fluctuations, and securities in the lowest
rating category may be in danger of loss of income and principal due to an
issuer's default. To a greater extent than investment grade bonds, the value of
lower-rated bonds tends to reflect short-term corporate, economic and market
developments, as well as investor perceptions of the issuer's credit quality. In
addition, lower rated bonds may be more difficult to dispose of or to value than
high-rated, lower-yielding bonds. The Investment Adviser attempts to reduce the
risks described above through diversification of the portfolio and by credit
analysis of each issuer as well as by monitoring broad economic trends and
corporate and legislative developments. In the event the rating on an issue held
in the Fund's portfolio is changed by the ratings services (or, for an unrated
issue, in the determination of the Investment Adviser), such event will be
considered by the Investment Adviser in its evaluation of the overall investment
merits of that security, but will not necessarily result in the automatic sale
of the security. A description of the rating categories is contained in the
Appendix to the Combined Statement of Additional Information.
For temporary defensive purposes and to maintain liquidity in anticipation of
favorable investment opportunities, the Fund may invest in short-term money
market instruments including securities of other investment companies,
certificates of deposit, obligations issued or guaranteed by the United States
government or its agencies or instrumentalities, commercial paper rated not
lower than A-1 by Standard & Poor's Corporation, Prime-1 by Moody's Investors
Service, Inc. or repurchase agreements.
RISK FACTORS AND INVESTMENT CONSIDERATIONS
The Fund will attempt to meet its investment objective by being at least 65%
invested in securities issued by companies in the domestic and foreign utilities
industries. There exist certain risks associated with the utilities industries
and with foreign securities of which investors in the Fund should be aware.
CONSIDERATIONS OF UTILITY SECURITIES. There are certain risks and
considerations affecting utility companies, and the holders of utility company
securities, which an investor should take into account when investing in those
securities. Factors which may adversely affect utility companies include:
difficulty in financing large construction programs during inflationary periods;
technological innovations which may cause existing plants, equipment, or
products to become less competitive or obsolete; the impact of natural or
man-made disasters (especially on regional utilities); increased costs or
reductions in production due to the unavailability of appropriate types of fuel;
seasonally or occasionally reduced availability or higher cost of natural gas;
and reduced demand due to energy conservation among consumers. Furthermore, the
revenues of domestic and foreign utility companies generally reflect the
economic growth and developments in the geographic areas in which they do
business.
In addition, most utility companies in the United States and in foreign
countries are subject to government regulation. Generally, the purpose of such
regulation is to ensure desirable levels of service and adequate capacity to
meet public demand. To this end, prices are often regulated to enable consumers
to obtain service at what is perceived to be a fair price, while attempting to
provide utility companies with a rate of return sufficient to attract capital
investment necessary for continued operation and necessary growth. Recently,
utility regulators have permitted utilities to diversify outside of their
original geographic regions and their traditional lines of business. While the
Investment Adviser believes that these opportunities will permit certain utility
companies to earn more than their traditional regulated rates of return, other
companies may be forced to defend their core businesses and may be less
profitable. Of course, there can be no assurance that all of the regulatory
policies described in this paragraph will continue in the future.
In addition to the effects of regulation described in the previous paragraph,
utility companies may also be adversely affected by the following regulatory
considerations: the development and implementation of a national energy policy;
the differences between regulatory policies of different jurisdictions (or
different regulators which have concurrent jurisdiction); shifts in regulatory
policies; adequacy of rate increases; and future regulatory legislation.
Foreign utility companies may encounter different risks and opportunities than
those located in the United States. Foreign utility companies may be more
heavily regulated than their United States counterparts. Many foreign utility
companies currently use fuels which cause more pollution than fuels used by
United States utilities; in the future, it may be necessary for such foreign
utility companies to invest heavily in pollution control equipment or otherwise
meet pollution restrictions. Rapid growth in certain foreign economies may
encourage the growth of utility industries in those countries. Although many
foreign utility companies are currently government-owned, the Investment Adviser
believes that it is likely that some foreign governments will seek to
"privatize" their utility companies, i.e., transfer ownership to private
investors.
In addition to the foregoing considerations which affect most utility companies,
there are specific considerations which affect specific utility industries:
ELECTRIC. The electric utility industry is made up of companies that are
engaged in the generation, transmission, and sale of electric energy.
Domestic electric utility companies have generally been favorably affected
by lower fuel and financing costs and the completion of major construction
programs. Some electric utilities are able to sell power outside of their
traditional geographic areas. Electric utility companies have historically
been subject to increases in fuel and other operating costs, high interest
costs on borrowings needed for capital construction programs, compliance
with environmental and safety regulations, and changes in the regulatory
climate.
In the United States, the construction and operation of nuclear power
facilities is subject to a high degree of regulatory oversight by the
Nuclear Regulatory Commission and state agencies with concurrent
jurisdiction. In addition, the design, construction, licensing, and
operation of nuclear power facilities have been subject to lengthy delays
and unanticipated costs due to changes in regulatory policy, regional
political actions, and lawsuits. Furthermore, during rate authorizations,
utility regulators may disallow the inclusion in electric rates of the
higher operating costs and capital expenditures resulting from these delays
and unanticipated costs, including the costs of a nuclear facility which a
utility company may never be able to use.
TELECOMMUNICATIONS. The telephone industry is large and highly
concentrated. The greatest portion of this segment is comprised of
companies which distribute telephone services and provide access to the
telephone networks. While many telephone utility companies have diversified
into other businesses in recent years, the profitability of telephone
utility companies could be adversely affected by increasing competition,
technological innovations, and other structural changes in the industry.
Cable television companies are typically local monopolies, subject to
scrutiny by both utility regulators and municipal governments. Emerging
technologies and legislation encouraging local competition are combining to
threaten these monopolies and may slow future growth rates of these
companies. The radio telecommunications segment of this industry, including
cellular telephone, is in its early developmental phases and is
characterized by emerging, rapidly growing companies.
GAS. Gas transmission and distribution companies are undergoing
significant changes. In the United States, the Federal Energy Regulatory
Commission is reducing its regulation of interstate transmission of gas.
While gas utility companies have in the recent past been adversely affected
by disruptions in the oil industry, increased concentration, and increased
competition, the Investment Adviser believes that environmental
considerations should benefit the gas industry in the future.
WATER. Water utility companies purify, distribute, and sell water. This
industry is highly fragmented because most of the water supplies are owned
by local authorities. Water utility companies are generally mature and are
experiencing little or no per capita volume growth. The Investment Adviser
believes that favorable investment opportunities may result if anticipated
consolidation and foreign participation in this industry occur.
The Fund occasionally takes advantage of the unusual opportunities for higher
returns available from investing in developing countries. These investments,
however, carry considerably more volatility and risk because they are associated
with less mature economies and less stable political systems.
EXCHANGE RATES. Foreign securities are denominated in foreign currencies.
Therefore, the value in U.S. dollars of the Fund's assets and income may be
affected by changes in exchange rates and
regulations. Although the Fund values its assets daily in U.S. dollars, it will
not convert its holding of foreign currencies to U.S. dollars daily. When the
Fund converts its holdings to another currency, it may incur conversion costs.
Foreign exchange dealers realize a profit on the difference between the prices
at which they buy and sell currencies.
FOREIGN COMPANIES. Other differences between investing in foreign and U.S.
companies include: less publicly available information about foreign companies;
the lack of uniform financial accounting standards applicable to foreign
companies; less readily available market quotations on foreign companies;
differences in government regulation and supervision of foreign stock exchanges,
brokers, listed companies, and banks; generally lower foreign stock market
volume; the likelihood that foreign securities may be less liquid or more
volatile; foreign brokerage commissions may be higher; unreliable mail service
between countries; political or financial changes which adversely affect
investments in some countries; and difficulties which may be encountered in
obtaining or enforcing a court judgment abroad.
U.S. GOVERNMENT POLICIES. In the past, U.S. government policies have
discouraged or restricted certain investments abroad by investors such as the
Fund. Although the Fund is unaware of any current restrictions, investors are
advised that these policies could be reinstituted.
OTHER INVESTMENT PRACTICES
FOREIGN CURRENCY TRANSACTIONS. The Fund will enter into foreign currency
transactions to obtain the necessary currencies to settle securities
transactions. Currency transactions may be conducted either on a spot or cash
basis at prevailing rates or through forward foreign currency exchange
contracts.
The Fund may also enter into foreign currency transactions to protect Fund
assets against adverse changes in foreign currency exchange rates or exchange
control regulations. Such changes could unfavorably affect the value of Fund
assets which are denominated in foreign currencies, such as foreign securities
or funds deposited in foreign banks, as measured in U.S. dollars. Although
foreign currency transactions may be used by the Fund to protect against a
decline in the value of one or more currencies, such efforts may also limit any
potential gain that might result from a relative increase in the value of such
currencies and might, in certain cases, result in losses to the Fund.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS. A forward foreign currency
exchange contract ("forward contract") is an obligation to purchase or sell an
amount of a particular currency at a specific price and on a future date agreed
upon by the parties.
Generally, no commission charges or deposits are involved. At the time the Fund
enters into a forward contract, Fund assets with a value equal to the Fund's
obligation under the forward contract are segregated on the Fund's records and
are maintained until the contract has been settled. The Fund will generally
enter into a forward contract to provide the proper currency to settle a
securities transaction at the time the transaction occurs ("trade date"). The
period between trade date and settlement date will vary between twenty-four
hours and thirty days, depending upon local custom.
The Fund may also protect against the decline of a particular foreign currency
by entering into a forward contract to sell an amount of that currency
approximating the value of all or a portion of the Fund's assets denominated in
that currency ("hedging"). The success of this type of short-term hedging
strategy is highly uncertain due to the difficulties of predicting short-term
currency market
movements and of precisely matching forward contract amounts and the constantly
changing value of the securities involved. Although the Investment Adviser will
consider the likelihood of changes in currency values when making investment
decisions, the Investment Adviser believes that it is important to be able to
enter into forward contracts when it believes the interests of the Fund will be
served. The Fund will not enter into forward contracts for hedging purposes in a
particular currency in an amount in excess of the Fund's assets denominated in
that currency. No more than 30% of the Fund's assets will be committed to
forward contracts for hedging purposes at any time. (This restriction does not
include forward contracts entered into to settle securities transactions.)
REPURCHASE AGREEMENTS. Certain securities in which the Fund invests may be
purchased pursuant to 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 its portfolio securities to broker/dealers, banks, or other
institutional borrowers of securities. The Fund will limit the amount of
portfolio securities it may lend to not more than one-third of its total assets.
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 Fund's Board of Directors and will receive
collateral in cash or United States government securities that will be
maintained in an amount equal to at least 100% of the current market value of
the securities loaned.
RESTRICTED AND ILLIQUID SECURITIES. The Fund may invest in restricted
securities. Restricted securities are any securities in which the Fund may
otherwise invest pursuant to its investment objective and policies but which are
subject to restriction on resale under federal securities law. To the extent
these securities are deemed to be illiquid, the Fund will limit its purchases
together with other securities considered to be illiquid to 15% of its net
assets.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS. The Fund may purchase securities
on a when-issued or delayed delivery basis. In when-issued and delayed delivery
transactions, the Fund relies on the seller to complete the transaction. The
seller's failure may cause the Fund to miss a price or yield considered to be
advantageous.
COVERED CALL OPTIONS. The Fund may also write call options on all or any
portion of its portfolio to generate income for the Fund. Call options written
by the Fund give the holder the right to buy the underlying securities of the
Fund at the stated exercise price. The Fund will write call options only on
securities either held in its portfolio or for which it has the right to obtain
without payment of further consideration or for which it has segregated cash in
the amount of any additional consideration. The call options which the Fund
writes and sells must be listed on a recognized options exchange. The Fund's
investment in call options shall not exceed 5% of the Fund's total assets.
INVESTMENT LIMITATIONS
The Fund will not:
- with respect to 75% of its total assets, invest more than 5% of its total
assets in the securities of any one issuer, except that this restriction
does not apply to cash and cash items, repurchase agreements, and
securities issued or guaranteed by the United States government or its
agencies or instrumentalities, or acquire more than 10% of the
outstanding voting securities of any one issuer;
- borrow money, issue senior securities, or pledge assets, except that
under certain circumstances the Fund may borrow money and engage in
reverse repurchase transactions in amounts up to one-third of the value
of its total assets, including the amounts borrowed, and pledge up to 10%
of the value of those assets to secure such borrowings.
The above investment limitations cannot be changed without shareholder approval.
The following limitations, however, may be changed by the Directors without the
approval of shareholders. Shareholders will be notified before any material
change in this limitation becomes effective.
The Fund will not invest more than 25% of its total assets in securities of
companies engaged principally in any one industry other than the utilities
industry, except that this restriction does not apply to cash or cash items and
securities issued or guaranteed by the United States government or its agencies
or instrumentalities.
NET ASSET VALUE
- --------------------------------------------------------------------------------
The Fund's net asset value per Share fluctuates. The net asset value for Shares
is determined by adding the interest of the Class A Shares in the market value
of all securities and other assets of the Fund, subtracting the interest of the
Class A Shares in the liabilities of the Fund and those attributable to the
Class A Shares, and dividing the remainder by the number of Class A Shares
outstanding. The net asset value for Class A Shares may differ from that of
Fortress Shares due to the variance in daily net income realized by each class.
Such variance will reflect only accrued net income to which the shareholders of
a particular class are entitled.
INVESTING IN CLASS A SHARES
- --------------------------------------------------------------------------------
SHARE PURCHASES
Shares are sold on days on which the New York Stock Exchange is open. Shares may
be purchased through a financial institution which has a sales agreement with
the distributor or directly from the distributor, Federated Securities Corp.
once an account has been established. In connection with the sale of Shares,
Federated Securities Corp. may from time to time offer certain items of nominal
value to any shareholder or investor. The Fund reserves the right to reject any
purchase request.
THROUGH A FINANCIAL INSTITUTION. An investor may call his financial institution
(such as a bank or an investment dealer) to place an order to purchase Shares.
Orders through a financial institution are considered received when the Fund is
notified of the purchase order. 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. (Eastern time) and
must be transmitted by the broker to the Fund before 5:00 P.M. (Eastern time) in
order for Shares to be purchased at that day's price. Purchase orders through
other financial institutions must be received by the financial institution and
transmitted to the Fund before 4:00 P.M. (Eastern 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 directly
from the distributor once an account has been established. To do so, mail a
check made payable to World Utility Fund - Class A Shares to Federated Services
Company, c/o State Street Bank and Trust Company, P.O. Box 8604, Boston, MA
02266-8604.
Orders by mail are considered received after payment by check is converted by
State Street Bank and Trust Company ("State Street Bank") into federal funds.
This is generally the next business day after State Street Bank receives the
check.
DIRECTLY BY WIRE. To purchase Shares directly from the distributor by 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. Federal funds should be wired as follows: State
Street Bank and Trust Company, Boston, Massachusetts 02105; Attention: EDGEWIRE;
For Credit to: World Utility Fund - Class A Shares; Fund Number (this number can
be found on the account statement or by contacting the Fund); Group Number or
Order Number; Nominee or Institution Name; ABA Number 011000028. Shares cannot
be purchased by wire on Columbus Day, Veterans' Day, or Martin Luther King Day.
MINIMUM INVESTMENT REQUIRED
The minimum initial investment in Shares is $500 unless the investment is in a
retirement plan, in which case the minimum initial investment is $50. Subsequent
investments must be in amounts of at least $100, except for retirement plans,
which must be in amounts of at least $50.
WHAT SHARES COST
Shares are sold at their net asset value next determined after an order is
received, plus a sales charge as follows:
<TABLE>
<CAPTION>
SALES CHARGE AS SALES CHARGE AS
A PERCENTAGE OF A PERCENTAGE OF
AMOUNT OF TRANSACTION PUBLIC OFFERING PRICE NET AMOUNT INVESTED
- -------------------------------------------- ----------------------- --------------------
<S> <C> <C>
Less than $100,000.......................... 4.50% 4.71%
$100,000 but less than $250,000............. 3.75% 3.90%
$250,000 but less than $500,000............. 2.50% 2.56%
$500,000 but less than $750,000............. 2.00% 2.04%
$750,000 but less than $1 million........... 1.00% 1.01%
$1 million or more.......................... 0.00% 0.00%
</TABLE>
The net asset value is determined at 4:00 P.M. (Eastern time) or at the close of
the New York Stock Exchange, Monday through Friday, except on: (i) days on which
there are not sufficient changes in the value of the Fund's portfolio securities
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; or (iii) the following holidays: New Year's Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day, and Christmas Day.
Shareholders designated as Liberty Life Members are exempt from sales charges.
No sales charge is imposed for Shares purchased through bank trust departments
or investment advisers registered under the Investment Advisers Act of 1940. In
addition, certain institutions such as insurance companies and certain
associations, are exempt from the sales charge for purchases of Shares. However,
investors who purchase Shares through a trust department or investment adviser
may be charged an additional service fee by that institution.
DEALER CONCESSION. For sales of Shares, a dealer will normally receive up to
90% of the applicable sales charge. Any portion of the sales charge which is not
paid to a dealer will be retained by the distributor. However, the distributor,
in its sole discretion, may uniformly offer to pay all dealers selling Shares,
all or a portion the sales charge it normally retains or any other source
available to it. Such additional payments, if accepted by the dealer, may be in
the form of cash or promotional incentives, and will be predicated upon the
amount of Shares or of the Liberty Family of Funds sold by the dealer.
The sales charge for Shares sold other than through registered broker/dealers
will be retained by Federated Securities Corp. Federated Securities Corp. may
pay fees to banks out of the sales charge in exchange for sales and/or
administrative services performed on behalf of the bank's customers in
connection with the initiation of customer accounts and purchases of Shares.
REDUCING OR ELIMINATING THE SALES CHARGE
The sales charge can be reduced on the purchase of Shares through:
- quantity discounts and accumulated purchases;
- signing a 13-month letter of intent;
- using the reinvestment privilege;
- purchases with proceeds from redemptions of unaffiliated mutual fund
shares; or
- concurrent purchases.
QUANTITY DISCOUNTS AND ACCUMULATED PURCHASES. As shown in the table above,
larger purchases reduce the sales charge paid. The Fund will combine purchases
of Shares made on the same day by the investor, the investor's spouse, and the
investor's children under age 21 when it calculates the sales charge. In
addition, the sales charge, if applicable, is reduced for purchases made at one
time by a trustee or fiduciary for a single trust estate or a single fiduciary
account.
If an additional purchase of Shares is made, the Fund will consider the previous
purchases still invested in the Fund. For example, if a shareholder already owns
Shares having a current value at the public offering price of $90,000 and he
purchases $10,000 more at the current public offering price, the sales charge on
the additional purchase according to the schedule now in effect would be 3.75%,
not 4.50%.
To receive the sales charge reduction, Federated Securities Corp. must be
notified by the shareholder in writing or by his financial institution at the
time the purchase is made that Shares are already owned or
that purchases are being combined. The Fund will reduce the sales charge after
it confirms the purchases.
LETTER OF INTENT. If a shareholder intends to purchase at least $100,000 of
shares of funds in the Liberty Family of Funds over the next 13 months, the
sales charge may be reduced by signing a letter of intent to that effect. This
letter of intent includes a provision for a sales charge adjustment depending on
the amount actually purchased within the 13-month period and a provision for the
custodian to hold 4.5% of the total amount intended to be purchased in escrow
(in Shares) until such purchase is completed.
The 4.5% held in escrow will be applied to the shareholder's account at the end
of the 13-month period unless the amount specified in the letter of intent is
not purchased. In this event, an appropriate number of escrowed Shares may be
redeemed in order to realize the difference in the sales charge.
This letter of intent will not obligate the shareholder to purchase Shares, but
if he does, each purchase during the period will be at the sales charge
applicable to the total amount intended to be purchased. This letter may be
dated as of a prior date to include any purchases made within the past 90 days
toward the dollar fulfillment of the letter of intent. Prior trade prices will
not be adjusted.
REINVESTMENT PRIVILEGE. If Shares in the Fund have been redeemed, the
shareholder has a one-time right, within 120 days, to reinvest the redemption
proceeds at the next-determined net asset value without any sales charge.
Federated Securities Corp. must be notified by the shareholder in writing or by
his financial institution of the reinvestment in order to eliminate a sales
charge. If the shareholder redeems his Shares in the Fund, there may be tax
consequences.
PURCHASES WITH PROCEEDS FROM REDEMPTIONS OF UNAFFILIATED MUTUAL FUND SHARES.
Investors may purchase Shares at net asset value, without a sales charge, with
the proceeds from the redemption of shares of a mutual fund which was sold with
a sales charge or commission and was not distributed by Federated Securities
Corp. (This does not include shares which were or would be subject to a
contingent deferred sales charge upon redemption.) The purchase must be made
within 60 days of the redemption, and Federated Securities Corp. must be
notified by the investor in writing, or by his financial institution, at the
time the purchase is made.
CONCURRENT PURCHASES. For purposes of qualifying for a sales charge reduction,
a shareholder has the privilege of combining concurrent purchases of two or more
funds in the Liberty Family of Funds, the purchase price of which includes a
sales charge. For example, if a shareholder concurrently invested $30,000 in one
of the other Liberty Funds with a sales charge, and $70,000 in this Fund, the
sales charge would be reduced.
To receive this sales charge reduction, Federated Securities Corp. must be
notified by the shareholder in writing or by his financial institution at the
time the concurrent purchases are made. The Fund will reduce the sales charge
after it confirms the purchases.
SYSTEMATIC INVESTMENT PROGRAM
Once a Fund account has been opened, shareholders may add to their investment on
a regular basis in a minimum amount of $100. Under this program, funds may be
automatically withdrawn periodically from the shareholder's checking account and
invested in Shares at the net asset value next determined
after an order is received by State Street Bank, plus the applicable sales
charge. A shareholder may apply for participation in this program through his
financial institution or directly through the Fund.
EXCHANGING SECURITIES FOR FUND SHARES
Investors may exchange certain securities or a combination of securities and
cash for Shares. The securities and any cash must have a market value of at
least $25,000. From time to time the Fund will prepare a list of securities
which may be eligible for acceptance and furnish this list to brokers upon
request. Securities accepted by the Fund are valued in the same manner as the
Fund values its portfolio securities. Investors wishing to exchange securities
should first contact their investment broker, who will contact Federated
Securities Corp.
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 and redemption are sent to each
shareholder. Quarterly statements are sent to report dividends paid during the
year.
DIVIDENDS AND DISTRIBUTIONS
Dividends are declared and paid quarterly to all shareholders invested in the
Fund on the record date. Distributions of any net realized capital gains will be
made at least once every twelve months. Dividends and distributions are
automatically reinvested in additional Shares on the payment date, at the
ex-dividend date net asset value without a sales charge, unless shareholders
request cash payments on the new account form or by writing to the transfer
agent. All shareholders on the record date are entitled to the dividend. If
Shares are redeemed or exchanged prior to the record date or purchased after the
record date, those Shares are not entitled to that quarter's dividend.
RETIREMENT PLANS
Shares of the Fund can be purchased as an investment for retirement plans or for
IRA accounts. For further details, including prototype retirement plans, contact
the Fund and consult a tax adviser.
EXCHANGE PRIVILEGE
- --------------------------------------------------------------------------------
Class A shareholders may exchange all or some of their Shares for Class A Shares
in other funds in the Liberty Family of Funds. Shareholders of Class A Shares
may also exchange into certain Federated Funds which are sold with a sales
charge different from that of Shares or with no sales charge and which are
advised by subsidiaries or affiliates of Federated Investors. These exchanges
are made at net asset value plus the difference between Shares' sales charge
already paid and any sales charge of the fund into which the Shares are to be
exchanged, if higher. Neither the Fund nor any of the funds in the Liberty
Family of Funds imposes any additional fees on exchanges.
REDUCED SALES CHARGE
If a shareholder making such an exchange qualifies for a reduction of the sales
charge, Federated Securities Corp. must be notified in writing by the
shareholder or by his financial institution.
REQUIREMENTS FOR EXCHANGE
Shareholders using this privilege must exchange Shares having a net asset value
which at least meets the minimum investment required for the fund into which the
exchange is being made. Before the exchange, the shareholder must receive a
prospectus of the fund for which the exchange is being made.
This privilege is available to shareholders resident in any state in which the
fund Shares being acquired may be sold. Upon receipt of proper instructions and
required supporting documents, Shares submitted for exchange are redeemed and
the proceeds invested in Class A shares of the other fund. The exchange
privilege may be modified or terminated at any time. Shareholders will be
notified of the modification or termination of the exchange privilege.
Further information on the exchange privilege and prospectuses for the Liberty
Family of Funds or certain Federated Funds are available by contacting the Fund.
TAX CONSEQUENCES
An exercise of the exchange privilege is treated as a sale for federal income
tax purposes. Depending on the circumstances, a short-term or long-term capital
gain or loss may be realized.
MAKING AN EXCHANGE
Instructions for exchanges for the Liberty Family of Funds and certain Federated
Funds may be given in writing or by telephone. Telephone exchange 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.
Written instructions may require a signature guarantee. Shareholders of the Fund
may have difficulty in making exchanges by telephone through brokers and other
financial institutions during times of drastic economic or market changes. If a
shareholder cannot contact his broker or financial institution by telephone, it
is recommended that an exchange request be made in writing and sent by overnight
mail to Federated Services Company, Two Heritage Drive, North Quincy,
Massachusetts 02171.
TELEPHONE INSTRUCTIONS. Shares may be exchanged between two funds by telephone
only if the two funds have identical shareholder registrations.
Any Shares held in certificate form cannot be exchanged by telephone but must be
forwarded to Federated Services Company, in care of State Street Bank and
deposited to the shareholder's account before being exchanged. Telephone
exchange instructions are recorded and will be binding upon the shareholder.
Such instructions will be processed as of 4:00 P.M. (Eastern time) and must be
received by State Street Bank before that time for Shares to be exchanged the
same day. Shareholders exchanging into a fund will not receive any dividend that
is payable to shareholders of record on that date. This privilege may be
modified or terminated at any time.
REDEEMING CLASS A SHARES
- --------------------------------------------------------------------------------
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. Redemptions can be made through a
financial institution or directly from the Fund by written request. Redemption
requests must be received in proper form.
THROUGH A FINANCIAL INSTITUTION
A shareholder may redeem Shares 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 less any applicable contingent deferred
sales charge. Redemption requests through a registered broker/dealer must be
received by the broker before 4:00 P.M. (Eastern time) and must be transmitted
by the broker to the Fund before 5:00 P.M. (Eastern time) in order for Shares to
be redeemed at that day's net asset value. Redemption requests through other
financial institutions must be received by the financial institution and
transmitted to the Fund before 4:00 P.M. (Eastern 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.
DIRECTLY FROM THE FUND
BY TELEPHONE. Shareholders who have not purchased through a financial
institution may redeem their Shares by telephoning the Fund. The proceeds will
be mailed to the shareholder's address of record or wire transferred to the
shareholder's account at a domestic commercial bank that is a member of the
Federal Reserve System, normally within one business day, but in no event longer
than seven days after the request. The minimum amount for a wire transfer is
$1,000. If at any time the Fund shall determine it necessary to terminate or
modify this method of redemption, shareholders would be promptly notified.
An authorization form permitting State Street Bank to accept telephone requests
must first be completed. Authorization forms and information on this service are
available from Federated Securities Corp. 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 redeeming by mail, should be considered.
BY MAIL. Any shareholder may redeem Shares by sending a written request to
Federated Services Company, P.O. Box 8604, Boston, MA 02266-8604. The written
request should include the shareholder's name, the Fund name and class of shares
name, the account number, and the Share or dollar amount requested and should be
signed exactly as the Shares are registered.
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 should 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
Exchanges;
- 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.
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.
SYSTEMATIC WITHDRAWAL PROGRAM
Shareholders who desire to receive payments of a predetermined amount not less
than $100 may take advantage of the Systematic Withdrawal Program. Under this
program, Shares are redeemed to provide for periodic withdrawal payments in an
amount directed by the shareholder. Depending upon the amount of the withdrawal
payments, the amount of dividends paid and capital gains distributions with
respect to Shares, and the fluctuation of the net asset value of Shares redeemed
under this program, redemptions may reduce, and eventually deplete, the
shareholder's investment in Shares. For this reason, payments under this program
should not be considered as yield or income on the shareholder's investment in
Shares. To be eligible to participate in this program, a shareholder must have
an account value of at least $10,000. A shareholder may apply for participation
in this program through his financial institution. Due to the fact that Shares
are sold with a sales charge, it is not advisable for shareholders to be
purchasing Shares while participating in this program.
ACCOUNTS WITH LOW BALANCES
Due to the high cost of maintaining accounts with low balances, the Fund may
redeem Shares in any account, except retirement plans, and pay the proceeds to
the shareholder if the account balance falls below the required minimum value of
$500. This requirement does not apply, however, if the balance falls below $500
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.
WORLD INVESTMENT SERIES, INC. INFORMATION
- --------------------------------------------------------------------------------
MANAGEMENT OF THE CORPORATION
BOARD OF DIRECTORS. The Corporation 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. An Executive Committee of the Board of Directors handles the
Board's responsibilities between meetings of the Board.
OFFICERS AND DIRECTORS. Officers and Directors are listed with their addresses,
principal occupations and present positions, including any affiliation with
Federated Investors, Federated Management, Federated Securities Corp., Federated
Administrative Services, and the Funds described in the Statement of Additional
Information.
<TABLE>
<CAPTION>
POSITION WITH PRINCIPAL OCCUPATION
NAME AND ADDRESS THE CORPORATION DURING PAST FIVE YEARS
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
John F. Donahue+* Chairman and Chairman and Trustee, Federated Investors; Chairman and Trustee, Federated
Federated Investors Director Advisers, Federated Management, and Federated Research; Director, AEtna Life
Tower and Casualty Company; Chief Executive Officer and Director,Trustee, or
Pittsburgh, PA 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 Vice-President, John R.
Wood/IPC Commercial Wood and Associates, Inc., Realtors; President, Northgate Village
Department and Associates, Development Corporation; John R. Wood Partner or Trustee in private real
Inc., Realtors estate ventures in Southwest Florida; Director, Trustee, or Managing General
3255 Tamiami Trail North Partner of the Funds; formerly, President, Naples Property Management, Inc.
Naples, FL
- ------------------------------------------------------------------------------------------------------------------
William J. Copeland Director Director and Member of the Executive Committee, Michael Baker, Inc.;
One PNC Plaza Director, Trustee, or Managing General Partner of the Funds; formerly, Vice
23rd Floor Chairman and Director, PNC Bank, N.A. and PNC Financial Corp and Director,
Pittsburgh, PA Ryan Homes, Inc.
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
POSITION WITH PRINCIPAL OCCUPATION
NAME AND ADDRESS THE CORPORATION DURING PAST FIVE YEARS
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
James E. Dowd Director Attorney-at-law; Director, The Emerging Germany Fund, Inc.; Director,
571 Hayward Mill Road Trustee, or Managing General Partner of the Funds; formerly, Director, Blue
Concord, MA Cross of Massachusetts, Inc.
- ------------------------------------------------------------------------------------------------------------------
Lawrence D. Ellis, M.D. Director Hematologist, Oncologist, and Internist, Presbyterian and Montefiore
3471 Fifth Avenue Hospitals; Clinical Professor of Medicine and Trustee University of
Suite 1111 Pittsburgh; Director Trustee, or Managing General Partner of the Funds.
- ------------------------------------------------------------------------------------------------------------------
Edward L. Flaherty, Jr.+ Director Attorney-at-law; Partner, Meyer and Flaherty; Director, Eat'N Park
5916 Penn Mall Restaurants, Inc., and Statewide Settlement Agency, Inc.; Director, Trustee,
Pittsburgh, PA 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; Director,
225 Franklin Street Trustee, or Managing General Partner of the Funds; formerly, President,
Boston, MA 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, Inc.;
5916 Penn Mall Director, Trustee, or Managing General Partner of the Funds; formerly, Vice
Pittsburgh, PA Chairman, Horizon Financial, F.A.
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
POSITION WITH PRINCIPAL OCCUPATION
NAME AND ADDRESS THE CORPORATION DURING PAST FIVE YEARS
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
Wesley W. Posvar Director Professor, Foreign Policy and Management Consultant; Trustee, Carnegie
1202 Cathedral of Learning Endowment for International Peace, RAND Corporation, Online Computer Library
University of Pittsburgh Center, Inc., and U.S. Space Foundation; Chairman, National Advisory Council
Pittsburgh, PA for Environmental Policy and Technology; 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 Managing
4905 Bayard Street General
Pittsburgh, PA Partner of the Funds.
- ------------------------------------------------------------------------------------------------------------------
Richard B. Fisher President and Executive Vice President and Trustee, Federated Investors; Chairman and
Federated Investors Director Director, Federated Securities Corp.; President or Vice President of the
Tower Funds; Director or Trustee of some of the Funds.
Pittsburgh, PA
- ------------------------------------------------------------------------------------------------------------------
J. Christopher Donahue Vice President President and Trustee, Federated Investors; Trustee, Federated Advisers,
Federated Investors Federated Management and Federated Research; President and Director,
Tower Federated Administrative Services; 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.
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
POSITION WITH PRINCIPAL OCCUPATION
NAME AND ADDRESS THE CORPORATION DURING PAST FIVE YEARS
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
Edward C. Gonzales Vice President Vice President, Treasurer, and Trustee, Federated Investors; Vice President
Federated Investors and Treasurer and Treasurer, Federated Advisers, Federated Management, and Federated
Tower Research; Executive Vice President, Treasurer, and Director, Federated
Pittsburgh, PA Securities Corp.; Chairman, Treasurer, and Director, Federated
Administrative Services. 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 and Secretary Investors; Vice President, Secretary, and Trustee, Federated Advisers,
Tower Federated Management, and Federated Research; Executive Vice President,
Pittsburgh, PA Secretary, and Director, Federated Administrative Services; 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 President,
Federated Investors Federated Securities Corp.; President and Trustee, Federated Advisers,
Tower Federated Management, and Federated Research; Vice President of the Funds,
Pittsburgh, PA Director, Trustee, or Managing General Partner 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 Corporation as
defined in the Investment Company Act of 1940.
+ Members of the Corporation's Executive Committee. The Executive Committee of
the Board of Directors handles the responsibilities of the Board of Directors
between meetings of the Board.
Officers and Directors own less than 1% of the Fund's outstanding shares.
INVESTMENT ADVISER. Under the terms of an Advisory Agreement between the
Corporation and Federated Management, Federated Management will furnish to the
Fund such investment advice, statistical and other factual information as may
from time to time be reasonably requested by the Fund.
ADVISORY FEES. The Fund's adviser receives an annual investment advisory
fee equal to 1.00% of average daily net assets of the Fund. The fee paid by
the Fund, while higher than the advisory fee paid by other mutual funds in
general, is comparable to fees paid by other mutual funds with similar
objectives and policies. The adviser may voluntarily choose to waive a
portion of its fee or reimburse the Fund for certain operating expenses.
The adviser can terminate this voluntary reimbursement of expenses 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 Management, 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 Management and other subsidiaries of Federated Investors serve as
investment advisers to a number of investment companies and private accounts
with combined assets of approximately $75 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.
Christopher H. Wiles has been the Fund's portfolio manager since its inception.
Mr. Wiles joined Federated Investors in 1990 and has been a Vice President of
the Investment Adviser since 1992. Mr. Wiles served as Assistant Vice President
of the Investment Adviser from 1990 until 1992. Mr. Wiles was a portfolio
manager at Mellon Bank from 1986 until 1990. Mr. Wiles is a Chartered Financial
Analyst and received his M.B.A. in Finance from Cleveland State University.
DISTRIBUTION OF CLASS A SHARES
Federated Securities Corp. is the principal distributor for Shares. Federated
Securities Corp. is located at Federated Investors Tower, Pittsburgh,
Pennsylvania 15222-3779. It is a Pennsylvania corporation organized on November
14, 1969, and is the principal distributor for a number of investment companies.
Federated Securities Corp. is a subsidiary of Federated Investors.
OTHER PAYMENTS TO FINANCIAL INSTITUTIONS. In addition to periodic payments to
financial institutions under the Shareholder Services Plan, certain financial
institutions may be compensated by the adviser or its affiliates for the
continuing investment of customers' assets in certain funds, including the Fund,
advised by those entities. These payments will be made directly by the
distributor or adviser from their assets, and will not be made from the assets
of the Fund by the assessment of a sales charge on Shares.
ADMINISTRATION OF THE FUND
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>
MAXIMUM AVERAGE AGGREGATE DAILY
ADMINISTRATIVE FEE NET ASSETS 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.
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 Shares 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.
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 administrative capacities
described above or should Congress relax current restrictions on depository
institutions, the Board of 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, P.O. Box 8604, Boston,
Massachusetts 02266-8604, is custodian for the securities and cash of the Fund.
Foreign instruments purchased by the Fund are held by foreign banks
participating in a network coordinated by State Street Bank.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT. Federated Services Company,
Federated Investors Tower, Pittsburgh, Pennsylvania, 15222-3779, is transfer
agent for Shares and dividend disbursing agent for the Fund.
LEGAL COUNSEL. Legal counsel is provided by Houston, Houston & Donnelly, 2510
Centre City Tower, Pittsburgh, Pennsylvania 15222, and Dickstein, Shapiro &
Morin, 2101 L Street, N.W., Washington, D.C. 20037.
INDEPENDENT AUDITORS. The independent auditors for the Fund are Ernst & Young,
One Oxford Centre, Pittsburgh, Pennsylvania 15219.
BROKERAGE TRANSACTIONS
When selecting brokers and dealers to handle the purchase and sale of portfolio
instruments, the Investment Adviser looks for prompt execution of the order at a
favorable price. In working with dealers, the adviser will generally utilize
those who are recognized dealers in specific portfolio instruments, except when
a better price and execution of the order can be obtained elsewhere. In
selecting among firms believed to meet this criteria, the adviser may give
consideration to those firms which have sold or are selling Shares of the Fund
and other funds distributed by Federated Securities Corp. The adviser makes
decisions on portfolio transactions and selects brokers and dealers subject to
review by the Board of Directors.
EXPENSES OF THE FUND AND CLASS A SHARES
Holders of each class of shares pay their allocable portion of Fund and
Corporation expenses.
The Corporation expenses for which holders of Shares 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; the cost of 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 holders of Shares pay their allocable portion
include, but are not limited to: registering the Fund and Shares of the Fund;
investment advisory services; taxes and commissions; custodian fees; insurance
premiums; auditors' fees; and such non-recurring and extraordinary items as may
arise from time to time.
At present, the only expenses which are allocated specifically to Shares as a
class are expenses under the Services Plan. However, the Directors reserve the
right to allocate certain other expenses to holders of Shares as it deems
appropriate ("Class Expenses"). In any case, Class Expenses would be limited to:
distribution fees; transfer agent fees as identified by the transfer agent as
attributable to holders of Shares; fees under the Services Plan; printing and
postage expenses related to preparing and distributing materials such as
shareholder reports, prospectuses and proxies to current shareholders;
registration fees paid to the Securities and Exchange Commission and
registration fees paid to state securities commissions; expenses related to
administrative personnel and services as required to support holders of Shares;
legal fees relating solely to Shares; and Directors' fees incurred as a result
of issues relating solely to Shares.
SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------
VOTING RIGHTS
Each Share gives the shareholder one vote in Director elections and other
matters submitted to shareholders for vote. All shares of each portfolio or
class in the Corporation have equal voting rights,
except that only shares of that particular Fund or class are entitled to vote in
matters affecting that Fund or class.
As a Maryland corporation, the Corporation 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 two-thirds vote of the number of Directors prior
to such removal or by a two-thirds vote of the shareholders at a special
meeting. The Directors shall call a Special Meeting of Shareholders upon the
written request of shareholders owning at least 10% of the Corporation's
outstanding shares 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, as amended, applicable to regulated investment
companies and to receive the special tax treatment afforded to such companies.
However, the Fund may invest in the stock of certain foreign corporations which
would constitute a Passive Foreign Investment Company (PFIC). Federal income
taxes may be imposed on the Fund upon disposition of PFIC investments.
The Fund will be treated as a single, separate entity for federal income tax
purposes so that income (including capital gains) and losses realized by the
Corporation's other portfolios, if any, will not be combined for tax purposes
with those realized by the Fund.
Investment income received by the Fund from sources within foreign countries may
be subject to foreign taxes withheld at the source. The United States has
entered into tax treaties with many foreign countries that entitle the Fund to
reduced tax rates or exemptions on this income. The effective rate of foreign
tax cannot be predicted since the amount of Fund assets to be invested within
various countries is unknown. However, the Fund intends to operate so as to
qualify for treaty-reduced tax rates where applicable.
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.
If more than 50% of the value of the Fund's assets at the end of the tax year is
represented by stock or securities of foreign corporations, the Fund intends to
qualify for certain Internal Revenue Code stipulations that would allow
shareholders to claim a foreign tax credit or deduction on their U.S. income tax
returns. The Internal Revenue Code may limit a shareholder's ability to claim a
foreign tax credit. Furthermore, shareholders who elect to deduct their portion
of the Fund's foreign taxes rather than take the foreign tax credit must itemize
deductions on their income tax returns.
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.
OTHER CLASSES OF SHARES
- --------------------------------------------------------------------------------
Fortress Shares, the other class of shares offered by the Fund, are sold
primarily to customers of financial institutions with an initial sales charge of
1.00%. Fortress Shares are distributed pursuant to a Rule 12b-1 Plan adopted by
the Fund whereby the distributor is paid a fee of up to .25 of 1% and a
shareholder servicing fee of .25 of 1% of the Fortress Shares' average daily net
assets. Fortress Shares are subject to a contingent deferred sales charge of up
to 1.00% under certain circumstances. Investments in Fortress Shares are subject
to a minimum initial investment of $1,500, unless the investment is in a
retirement account, in which case the minimum investment is $50.
The amount of dividends payable to Class A Shares will generally exceed that of
Fortress Shares by the difference between Class Expenses and distribution
expenses borne by shares of each respective class.
The stated advisory fee is the same for both classes of shares.
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
From time to time the Fund advertises the total return for Class A Shares.
Total return represents the change, over a specified period of time, in the
value of an investment in Shares after reinvesting all income and capital gain
distributions. It is calculated by dividing that change by the initial
investment and is expressed as a percentage.
The performance information reflects the effect of the maximum sales load and
other similar non-recurring charges which, if excluded, would increase the total
return.
From time to time, the Fund may advertise the performance of Class A Shares
using certain financial publications and/or compare its performance to certain
indices.
Total return will be calculated separately for Class A Shares and Fortress
Shares. Because Fortress Shares are subject to Rule 12b-1 fees, the total return
for Class A Shares, for the same period may exceed that of Fortress Shares.
WORLD UTILITY FUND
(A PORTFOLIO OF WORLD INVESTMENT SERIES, INC.)
STATEMENT OF ASSETS AND LIABILITIES
MARCH 17, 1994
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
- ----------------------------------------------------------------------------------
Cash $100,000
- ---------------------------------------------------------------------------------- --------
LIABILITIES: --
- ---------------------------------------------------------------------------------- --------
NET ASSETS for 10,000 Class A Shares of beneficial interest outstanding $100,000
- ---------------------------------------------------------------------------------- --------
NET ASSET VALUE, and Redemption Price Per Share: ($100,000 / 10,000 Class A Shares
of beneficial interest outstanding) $ 10.00
- ---------------------------------------------------------------------------------- --------
Computation of Offering Price: Offering Price per Class A Share (100/95.5 of
$10.00)* $ 10.47
- ---------------------------------------------------------------------------------- --------
</TABLE>
* See "What Shares Cost" in the prospectus.
(1) World Investment Series, Inc. (the "Corporation") was established as a
Maryland corporation under Articles of Incorporation dated January 25, 1994.
The Corporation has had no operations since that date other than those
relating to organizational matters, including the issuance on March 17, 1994
of 10,000 Class A Shares of the World Utility Fund at $10.00 per share to
Federated Administrative Services, the Administrator to the Fund. Expenses
of organization incurred by the Corporation, $35,000, were borne initially
by the Administrator. The Corporation has agreed to reimburse the
Administrator for organizational expenses initially borne by the
Administrator during the five year period following the date the
Corporation's registration statement first became effective.
REPORT OF ERNST & YOUNG, INDEPENDENT AUDITORS
- --------------------------------------------------------------------------------
To the Board of Trustees and Shareholders of
WORLD INVESTMENT SERIES, INC.:
We have audited the accompanying statement of assets and liabilities of World
Utility Fund as of March 17, 1994. This statement of assets and liabilities is
the responsibility of the Corporation's management. Our responsibility is to
express an opinion on this statement of assets and liabilities based on our
audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the statement of assets and liabilities is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the statement of assets and
liabilities. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
statement of assets and liabilities presentation. We believe that our audit
provides a reasonable basis for our opinion.
In our opinion, the statement of assets and liabilities presents fairly, in all
material respects, the net assets of the World Utility Fund as of March 17, 1994
in conformity with generally accepted accounting principles.
ERNST & YOUNG
Pittsburgh, Pennsylvania
March 18, 1994
ADDRESSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
World Utility Fund Federated Investors Tower
Class A Shares Pittsburgh, Pennsylvania 15222-3779
- ------------------------------------------------------------------------------------------------
Distributor
Federated Securities Corp. Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- ------------------------------------------------------------------------------------------------
Investment Adviser
Federated Management 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 Auditors
Ernst & Young One Oxford Centre
Pittsburgh, Pennsylvania 15219
- ------------------------------------------------------------------------------------------------
</TABLE>
WORLD UTILITY FUND
CLASS A SHARES
PROSPECTUS
A Diversified Portfolio of
World Investment Series, Inc.,
An Open-End,
Management Investment Company
April 15, 1994
FEDERATED SECURITIES CORP.
(LOGO)
---------------------------------------------------
Distributor
A subsidiary of FEDERATED INVESTORS
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
4021404A-A (4/94)
- --------------------------------------------------------------------------------
WORLD
- --------------------------------------------------------------------------------
UTILITY
- --------------------------------------------------------------------------------
FUND
- --------------------------------------------------------------------------------
FORTRESS SHARES
(A Portfolio of World Investment Series, Inc.)
SEMI-ANNUAL REPORT AND
SUPPLEMENT TO PROSPECTUS
DATED APRIL 15, 1994
JULY 31, 1994
FEDERATED SECURITIES CORP.
(LOGO)
- ---------------------------------------------
Distributor
A subsidiary of FEDERATED INVESTORS
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
981487200 (7/94)
G00259-04-FS
--------------------------------------------------------
--------------------------------------------------------
--------------------------------------------------------
--------------------------------------------------------
A. Please insert the following "Financial Highlights-Fortress Shares" table as
page 2 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 on page I following the
heading "Summary of Fund Expenses."
WORLD UTILITY FUND
FINANCIAL HIGHLIGHTS-FORTRESS SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
PERIOD ENDED
MAY 31, 1994**
---------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.01
- -----------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS (C)
- -----------------------------------------------------------------------------------
Net investment income 0.05
- -----------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments 0.09
- ----------------------------------------------------------------------------------- ----------
Total from investment operations 0.14
- -----------------------------------------------------------------------------------
LESS DISTRIBUTIONS
- -----------------------------------------------------------------------------------
Dividends to shareholders from net investment income --
- -----------------------------------------------------------------------------------
Distributions to shareholders from realized gain on investment transactions --
- ----------------------------------------------------------------------------------- ----------
TOTAL DISTRIBUTIONS --
- ----------------------------------------------------------------------------------- ----------
NET ASSET VALUE, END OF PERIOD $10.15
- ----------------------------------------------------------------------------------- ----------
TOTAL RETURN* 1.40%
- -----------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- -----------------------------------------------------------------------------------
Expenses 0.50%(b)
- -----------------------------------------------------------------------------------
Net investment income 6.65%(b)
- -----------------------------------------------------------------------------------
Expense waiver/reimbursement (a) 14.21%(b)
- -----------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $449
- -----------------------------------------------------------------------------------
Portfolio turnover rate 0%
- -----------------------------------------------------------------------------------
</TABLE>
* Based on net asset value which does not reflect the sales load or contingent
deferred sales charge, if applicable.
** For the period from April 12, 1994 (date of initial public offering) to May
31, 1994 (unaudited).
(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.
(c) Per share information presented is based upon the monthly average number of
shares outstanding due to large fluctuations in the number of shares
outstanding during the period.
(See Notes which are an integral part of the financial statements)
B. Please insert the following "Financial Highlights-Class A Shares" table on
page 25 of the prospectus immediately following the section entitled "Other
Classes of Shares." In addition, please add the heading "Financial
Highlights-Class A Shares" to the Table of Contents on page I after the
heading "Other Classes of Shares."
WORLD UTILITY FUND
FINANCIAL HIGHLIGHTS-CLASS A SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
PERIOD ENDED
MAY 31, 1994**
---------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.03
- -----------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- -----------------------------------------------------------------------------------
Net investment income 0.07
- -----------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments 0.06
- ----------------------------------------------------------------------------------- ----------
Total from investment operations 0.13
- -----------------------------------------------------------------------------------
LESS DISTRIBUTIONS
- -----------------------------------------------------------------------------------
Dividends to shareholders from net investment income --
- -----------------------------------------------------------------------------------
Distributions to shareholders from net realized gain on investment transactions --
- ----------------------------------------------------------------------------------- ----------
TOTAL DISTRIBUTIONS --
- ----------------------------------------------------------------------------------- ----------
NET ASSET VALUE, END OF PERIOD $10.16
- ----------------------------------------------------------------------------------- ----------
TOTAL RETURN* 1.30%
- -----------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- -----------------------------------------------------------------------------------
Expenses 0.25%(b)
- -----------------------------------------------------------------------------------
Net investment income 9.66%(b)
- -----------------------------------------------------------------------------------
Expense waiver/reimbursement (a) 14.21%(b)
- -----------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $1,361
- -----------------------------------------------------------------------------------
Portfolio turnover rate 0%
- -----------------------------------------------------------------------------------
</TABLE>
* Based on net asset value, which does not reflect the sales load or contingent
deferred sales charge, if applicable.
** Reflects operations for the period from April 14, 1994 (date of initial
public offering) to May 31, 1994 (unaudited).
(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)
C. Please insert the following financial statements at the end of the prospectus
beginning as page 26. In addition, please add the heading "Financial
Statements" to the Table of Contents on page I, immediately before
"Addresses."
WORLD UTILITY FUND
PORTFOLIO OF INVESTMENTS
MAY 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- -------- --------------------------------------------------------------------- ----------
<C> <C> <S> <C>
COMMON STOCK--59.3%
- -----------------------------------------------------------------------------------
UTILITY--50.8%
---------------------------------------------------------------------
700 Ameritech Corp. $ 27,388
---------------------------------------------------------------------
800 AT & T Corp. 43,600
---------------------------------------------------------------------
1,000 BCE, Inc. 35,375
---------------------------------------------------------------------
1,000 British Telecommunications 46,500
---------------------------------------------------------------------
6,500 China Lighting & Power, Ltd. 36,176
---------------------------------------------------------------------
1,500 Cincinnati Gas & Electric Co. 33,938
---------------------------------------------------------------------
1,400 DPL, Inc. 28,175
---------------------------------------------------------------------
1,000 DQE, Inc. 31,750
---------------------------------------------------------------------
1,000 Duke Power Co. 36,000
---------------------------------------------------------------------
1,500 Empresa Nacional 71,325
---------------------------------------------------------------------
1,500 Entergy Corp. 43,312
---------------------------------------------------------------------
1,000 Florida Power & Light Group, Inc. 31,750
---------------------------------------------------------------------
1,500 GTE Corp. 46,313
---------------------------------------------------------------------
500 Hong Kong Telecommunications 29,187
---------------------------------------------------------------------
4,600 National Power 29,258
---------------------------------------------------------------------
1,000 Nipsco Industries, Inc. 30,750
---------------------------------------------------------------------
2,000 Pacific Enterprises 41,250
---------------------------------------------------------------------
2,000 Pacificorp 35,250
---------------------------------------------------------------------
</TABLE>
WORLD UTILITY FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- -------- --------------------------------------------------------------------- ----------
<C> <C> <S> <C>
COMMON STOCK--CONTINUED
- -----------------------------------------------------------------------------------
UTILITY--CONTINUED
---------------------------------------------------------------------
2,000 Pinnacle West Corp. $ 34,731
---------------------------------------------------------------------
9,600 Societa Finanziaria Telecommunications 32,834
---------------------------------------------------------------------
1,000 Sonat, Inc. 28,500
---------------------------------------------------------------------
2,000 Southern Co. 37,000
---------------------------------------------------------------------
500 Telefonos De Mexico 31,063
---------------------------------------------------------------------
1,500 Utilicorp., Inc. 43,312
---------------------------------------------------------------------
2,000 Westcoast Energy, Inc. 34,750
--------------------------------------------------------------------- ----------
Total 919,487
--------------------------------------------------------------------- ----------
NON UTILITY--8.5%
---------------------------------------------------------------------
600 Bankers Trust NY Corp. 42,225
---------------------------------------------------------------------
1,000 Meditrust 34,750
---------------------------------------------------------------------
400 Royal Dutch Petroleum Co. 42,750
---------------------------------------------------------------------
1,300 YPF Sociedad Anonima 34,288
--------------------------------------------------------------------- ----------
Total 154,013
--------------------------------------------------------------------- ----------
TOTAL COMMON STOCK (IDENTIFIED COST, $1,111,922) 1,073,500
--------------------------------------------------------------------- ----------
CONVERTIBLES--16.8%
- -----------------------------------------------------------------------------------
600 Cointel/Telefonia De Argentina, 7.00% (a) 42,290
---------------------------------------------------------------------
2,000 Kaufman & Broad Home Corp., 8.75% 35,500
---------------------------------------------------------------------
800 Philippine Long Distance, 5.75% (a) 33,034
---------------------------------------------------------------------
5,000 RJR Nabisco Holdings, 9.25% 31,875
---------------------------------------------------------------------
500 Reynolds Metals Co., 7.25% 24,438
---------------------------------------------------------------------
1,000 Sears, Roebuck & Co., 8.72% 55,625
---------------------------------------------------------------------
1,000 Tenneco, Inc., 9.50% 40,125
---------------------------------------------------------------------
3,000 Westinghouse Electric Corp., 9.25% (a) 41,586
--------------------------------------------------------------------- ----------
TOTAL CONVERTIBLES (IDENTIFIED COST, $258,539) 304,473
--------------------------------------------------------------------- ----------
</TABLE>
WORLD UTILITY FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- --------- --------------------------------------------------------------------- ----------
<C> <C> <S> <C>
*REPURCHASE AGREEMENT--29.6%
- ------------------------------------------------------------------------------------
$535,000 J.P. Morgan, 4.27%, dated 5/31/94, due 6/1/94 (at amortized cost) $ 535,000
--------------------------------------------------------------------- ----------
TOTAL INVESTMENTS (IDENTIFIED COST, $1,905,461), (NOTES 2A AND 2B) $1,912,973+
--------------------------------------------------------------------- ----------
</TABLE>
(a) Restricted securities--Investments in securities not registered under the
Securities Act of 1933. At the end of the period, these securities amounted
to 6.5% of net assets (Note 2H).
+ The cost of investments for federal tax purposes amounts to $1,905,461. The
net unrealized appreciation on a federal tax cost basis amounts to $7,512 and
is comprised of $27,689 appreciation and $20,177 depreciation at May 31, 1994.
* The repurchase agreement is fully collateralized by U.S. government and/or
agency obligations. The investment in the repurchase agreement is through
participation in joint accounts with other Federated funds.
Note: The categories of investments are shown as a percentage of net assets
($1,810,005) at
May 31, 1994.
(See Notes which are an integral part of the Financial Statements)
WORLD UTILITY FUND
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- -------------------------------------------------------------------------------------------------
Investments in repurchase agreements $ 535,000
- ------------------------------------------------------------------------------------
Investments in securities 1,377,973
- ------------------------------------------------------------------------------------ ---------
Total investments in securities, at value (Notes 2A and 2B)
(identified and tax cost $1,905,461) $1,912,973
- -------------------------------------------------------------------------------------------------
Cash 6,964
- -------------------------------------------------------------------------------------------------
Receivable for capital stock sold 261,141
- -------------------------------------------------------------------------------------------------
Receivable from adviser (Note 4) 7,500
- -------------------------------------------------------------------------------------------------
Dividend and Interest Receivable 6,198
- ------------------------------------------------------------------------------------------------- ---------
Total assets 2,194,776
- -------------------------------------------------------------------------------------------------
LIABILITIES:
- ------------------------------------------------------------------------------------
Payable for investments purchased 369,334
- ------------------------------------------------------------------------------------
Payable for capital stock redeemed 18
- ------------------------------------------------------------------------------------
Accrued expenses 15,419
- ------------------------------------------------------------------------------------ ---------
Total liabilities 384,771
- ------------------------------------------------------------------------------------------------- ---------
NET ASSETS 178,236 shares of capital stock outstanding $1,810,005
- ------------------------------------------------------------------------------------------------- ---------
NET ASSETS CONSIST OF:
- -------------------------------------------------------------------------------------------------
Paid-in capital $1,791,957
- -------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments 7,512
- -------------------------------------------------------------------------------------------------
Accumulated undistributed net realized gain (loss) on investments --
- -------------------------------------------------------------------------------------------------
Undistributed net investment income 10,536
- ------------------------------------------------------------------------------------------------- ---------
Total Net Assets $1,810,005
- ------------------------------------------------------------------------------------------------- ---------
NET ASSET VALUE PER SHARE:
- -------------------------------------------------------------------------------------------------
Class A ($1,360,520 / 133,947 shares of capital stock) $ 10.16
- ------------------------------------------------------------------------------------------------- ---------
Fortress Shares ($449,485 / 44,289 shares of capital stock) $ 10.15
- ------------------------------------------------------------------------------------------------- ---------
OFFERING PRICE PER SHARE:*
- -------------------------------------------------------------------------------------------------
Class A (100/95.5 of $10.16) $ 10.64
- ------------------------------------------------------------------------------------------------- ---------
Fortress Shares (100/99 of $10.15) $ 10.25
- ------------------------------------------------------------------------------------------------- ---------
REDEMPTION PROCEEDS PER SHARE:**
- -------------------------------------------------------------------------------------------------
Class A $ 10.16
- ------------------------------------------------------------------------------------------------- ---------
Fortress Shares (99/100 of $10.15) $ 10.05
- ------------------------------------------------------------------------------------------------- ---------
</TABLE>
* See "What Shares Cost" in the prospectus.
** See "Contingent Deferred Sales Charge" in the prospectus.
(See Notes which are an integral part of the Financial Statements)
WORLD UTILITY FUND
STATEMENT OF OPERATIONS
FOR THE PERIOD FROM MARCH 17, 1994 (START OF BUSINESS) TO MAY 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME--
- --------------------------------------------------------------------------------------
Dividend income (net of foreign taxes withheld of $98.92) (Note 2E) $ 7,888
- --------------------------------------------------------------------------------------
Interest income 2,968
- -------------------------------------------------------------------------------------- -------
Total investment income (Note 2C) $10,856
- --------------------------------------------------------------------------------------
EXPENSES--
- --------------------------------------------------------------------------------------
Investment advisory fee (Note 4) $ 1,135
- ---------------------------------------------------------------------------
Distribution service fees--Fortress Shares (Note 4) 36
- ---------------------------------------------------------------------------
Custodian and portfolio accounting fees 12,000
- ---------------------------------------------------------------------------
Transfer agent and dividend disbursing agent fees and expenses (Note 4) 1,000
- ---------------------------------------------------------------------------
Legal fees 400
- ---------------------------------------------------------------------------
Printing and postage 400
- ---------------------------------------------------------------------------
Registration fees 800
- ---------------------------------------------------------------------------
Shareholder services fees--Class A Shares (Note 4) 248
- ---------------------------------------------------------------------------
Shareholder services fees--Fortress Shares (Note 4) 36
- ---------------------------------------------------------------------------
Miscellaneous 400
- --------------------------------------------------------------------------- -------
Total expenses 16,455
- ---------------------------------------------------------------------------
Deduct--
- ---------------------------------------------------------------------------
Waiver of investment advisory fee (Note 4) $ 1,135
- -----------------------------------------------------------------
Reimbursement of other operating expenses (Note 4) 15,000 16,135
- ----------------------------------------------------------------- ------- -------
Net expenses 320
- -------------------------------------------------------------------------------------- -------
Net investment income 10,536
- -------------------------------------------------------------------------------------- -------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
- --------------------------------------------------------------------------------------
Net realized gain (loss) on investments (identified cost basis) --
- --------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) on investments 7,512
- -------------------------------------------------------------------------------------- -------
Net realized and unrealized gain (loss) on investments 7,512
- -------------------------------------------------------------------------------------- -------
Change in net assets resulting from operations $18,048
- -------------------------------------------------------------------------------------- -------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
WORLD UTILITY FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERIOD ENDED
MAY 31, 1994*
(UNAUDITED)
--------------
<S> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ---------------------------------------------------------------------------
OPERATIONS--
- ---------------------------------------------------------------------------
Net investment income $ 10,536
- ---------------------------------------------------------------------------
Net realized gain (loss) on investments ($0 net gain computed for federal
tax purposes) --
- ---------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) on investments 7,512
- --------------------------------------------------------------------------- -------------
Change in net assets resulting from operations 18,048
- --------------------------------------------------------------------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 2C)--
- ---------------------------------------------------------------------------
Dividends to shareholders from net investment income:
- ---------------------------------------------------------------------------
Class A Shares --
- ---------------------------------------------------------------------------
Fortress Shares --
- --------------------------------------------------------------------------- -------------
Change in net assets resulting from distributions to shareholders --
- --------------------------------------------------------------------------- -------------
CAPITAL STOCK TRANSACTIONS (NOTE 3)--
- ---------------------------------------------------------------------------
Proceeds from sale of shares 2,700,247
- ---------------------------------------------------------------------------
Net asset value of shares issued to shareholders electing to receive
payment of dividends declared --
- ---------------------------------------------------------------------------
Cost of shares redeemed (1,008,290)
- --------------------------------------------------------------------------- -------------
Change in net assets from capital stock transactions 1,691,957
- --------------------------------------------------------------------------- -------------
Change in net assets 1,710,005
- ---------------------------------------------------------------------------
NET ASSETS:
- ---------------------------------------------------------------------------
Beginning of period 100,000
- --------------------------------------------------------------------------- -------------
End of period (including undistributed net investment income of $10,536) $ 1,810,005
- --------------------------------------------------------------------------- -------------
</TABLE>
* For the period from March 17, 1994 (start of business) to May 31, 1994.
(See Notes which are an integral part of the financial statements)
WORLD UTILITY FUND
NOTES TO FINANCIAL STATEMENTS
MAY 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
(1) ORGANIZATION
World Investment Series, Inc. (the "Corporation") is registered under the
Investment Company Act of 1940, as amended, as an open-end management investment
company. The Corporation consists of one diversified portfolio, World Utility
Fund (the "Fund").
The Fund provides two classes of shares: Class A Shares and Fortress Shares.
Fortress Shares are identical in all respects to Class A Shares except that
Fortress Shares will be sold pursuant to a distribution plan (the "Plan")
adopted in accordance with Investment Company Act Rule 12b-1. Class A Shares and
Fortress Shares are also subject to certain sales and contingent deferred sales
charges. Both classes of shares went effective April 12, 1994.
(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.
<TABLE>
<S> <C>
A. INVESTMENT VALUATIONS--Listed equity securities are valued at the last sales price
reported on national securities exchanges. Unlisted securities and short-term
obligations (and private placement securities) are generally valued at the prices
provided by an independent pricing service. Short-term securities with remaining
maturities of sixty days or less at the time of purchase 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
agreement's 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 ("the
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.
</TABLE>
WORLD UTILITY FUND
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
C. INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Dividend income and distributions to
shareholders are recorded on the ex-dividend date. Interest income and expenses are
accrued daily. Bond premium and discount if applicable, are amortized as required by the
Internal Revenue Code, as amended ("the Code").
D. FOREIGN CURRENCY TRANSLATION--The accounting records of the Fund are maintained in U.S.
dollars. All assets and liabilities denominated in foreign currencies are translated
into U.S. dollars based on the rate of exchange of such currencies against U.S. dollars
on the date of valuation. Purchases and sales of securities, income and expenses are
translated at the rate of exchange quoted on the respective date that such transactions
are recorded. Differences between income and expense amounts recorded and collected or
paid are adjusted when reported by the custodian bank.
E. 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. However, federal taxes may be imposed on the Fund upon the disposition of
certain investments in Passive Foreign Investment Companies. Withholding taxes on
foreign dividends have been provided for in accordance with the Fund's understanding of
the applicable country's tax rules and rates.
F. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in when-issued or
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.
G. CONCENTRATION OF CREDIT RISK--The Fund invests in equity and fixed income securities of
non-U.S. issuers. Although the Fund maintains a diversified investment portfolio, the
political or economic developments within a particular country or region may have an
adverse effect on the ability of domiciled issuers to meet their obligations.
Additionally, political or economic developments may have an effect on the liquidity and
volatility of portfolio securities and currency holdings.
At May 31, 1994 the portfolio was diversified within the following countries:
Italy 1.7%
United Kingdom 1.5%
</TABLE>
WORLD UTILITY FUND
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
H. RESTRICTED SECURITIES--Restricted securities are securities that may only be resold upon
registration under Federal securities laws or in transactions exempt from such
registration. In some cases, the issuer of restricted securities has agreed to register
such securities for resale, at the issuer's expense either upon demand by the Fund or in
connection with another registered offering of the securities. Many restricted
securities may be resold in the secondary market in transactions exempt from
registration. Such restricted securities may be determined to be liquid under criteria
established by the Board of Directors. The Fund will not incur any registration costs
upon such resales. The Fund's restricted securities are valued at the price provided by
an independent pricing service, at bid or asked prices provided by dealers in the
secondary market or, if no market prices are available, at the fair value as determined
by the Fund's pricing committee. Additional information on each restricted security held
at May 31, 1994 is as follows:
</TABLE>
<TABLE>
<CAPTION>
ACQUISITION ACQUISITION
SECURITY DATE COST
-------------------------------------------------------- ---------------- ------------
<S> <C> <C>
Cointel/Telefonica De Argentina 4/15/94, 4/26/94 $ 37,700
--------------------------------------------------------
Philippine Long Distance 4/15/94 29,544
--------------------------------------------------------
Westinghouse Electric Corp. 4/15/94, 5/26/94 40,750
--------------------------------------------------------
I. OTHER--Investment transactions are accounted for on the trade date.
</TABLE>
(3) CAPITAL STOCK
At May 31, 1994, there were 1,000,000,000 shares of $0.001 par value capital
stock authorized for Class A Shares and Fortress Shares, respectively.
Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
PERIOD ENDED
MAY 31, 1994*
-----------------------
CLASS A SHARES SHARES AMOUNT
- --------------------------------------------------------------------- ------- -----------
<S> <C> <C>
Shares sold 233,764 $ 2,253,843
- ---------------------------------------------------------------------
Shares issued to shareholders in payment of dividends declared -- --
- ---------------------------------------------------------------------
Shares redeemed (99,817) (1,008,253)
- --------------------------------------------------------------------- ------- -----------
Net change resulting from capital stock transactions 133,947 $ 1,245,590
- --------------------------------------------------------------------- ------- -----------
</TABLE>
* For the period from March 17, 1994 (start of business) to May 31, 1994.
WORLD UTILITY FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERIOD ENDED
MAY 31, 1994
----------------------
FORTRESS SHARES SHARES AMOUNT
- -------------------------------------------------------------------- ------ --------
<S> <C> <C>
Shares sold 44,293 $446,404
- --------------------------------------------------------------------
Shares issued to shareholders in payment of dividends declared -- --
- --------------------------------------------------------------------
Shares redeemed (4 ) (37)
- -------------------------------------------------------------------- ----- --------
Net change resulting from capital stock transactions 44,289 $446,367
- -------------------------------------------------------------------- ----- --------
</TABLE>
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Federated Management, the Fund's investment adviser
("Adviser") receives for its services an annual investment advisory fee equal to
1.00% of the Fund's average daily net assets. Adviser may voluntarily choose to
waive its fee and reimburse certain operating expenses of the Fund. Adviser can
modify or terminate this voluntary waiver and reimbursement at any time at its
sole discretion.
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS") provides the Fund
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.
DISTRIBUTION AND SHAREHOLDER SERVICES FEE--The Fund has adopted a Distribution
Plan (the "Plan") pursuant to Rule 12b-1 under the Investment Company Act of
1940. Under the terms of the Plan, the Fund will compensate Federated Securities
Corp. ("FSC"), the principal distributor, from the net assets of the Fund to
finance activities intended to result in the sale of the Fund's Fortress Shares.
The Plan provides that the Fund may incur distribution expenses of up to 0.25 of
1% of the average daily net assets of the Fortress Shares, annually, to
compensate FSC.
Under the terms of a shareholder services 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 personal services for
shareholders and the maintenance of shareholder accounts.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES--Federated Services Company
("FServ") serves as transfer and dividend disbursing agent for the Fund. The fee
is based on the size, type, and number of accounts and transactions made by
shareholders.
ORGANIZATIONAL EXPENSES--Organizational expenses and start-up administrative
service expenses incurred by the Fund will be borne initially by the
Administrator and are estimated at $34,100 and $31,164, respectively. The Fund
has agreed to reimburse the Administrator for the organizational expenses and
start-up administrative expenses during the five year period following April 12,
1994 (date the Fund first became effective).
WORLD UTILITY FUND
- --------------------------------------------------------------------------------
Certain of the Officers and Directors of the Fund are Officers and Directors or
Trustees of the above companies.
(5) INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the
period ended May 31, 1994 were as follows:
<TABLE>
<S> <C>
- --------------------------------------------------------------------------------
PURCHASES $1,370,461
- -------------------------------------------------------------------------------- ----------
SALES $ 0
- -------------------------------------------------------------------------------- ----------
</TABLE>
WORLD UTILITY FUND
(A PORTFOLIO OF WORLD INVESTMENT SERIES, INC.)
FORTRESS SHARES
PROSPECTUS
The Fortress Shares of World Utility Fund (the "Fund") offered by this
prospectus represent interests in the Fund, which is a diversified investment
portfolio in World Investment Series, Inc. (the "Corporation"), an open-end,
management investment company (a mutual fund).
The Fund's investment objective is to provide total return. The Fund invests
primarily in securities issued by domestic and foreign companies in the
utilities industries.
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 INVESTMENTS RISKS,
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
This prospectus contains the information you should read and know before you
invest in Fortress Shares of the Fund. Keep this prospectus for future
reference.
The Fund has also filed a Combined Statement of Additional Information for
Fortress Shares and Class A Shares dated April 15, 1994, with the Securities and
Exchange Commission. The information contained in the Combined Statement of
Additional Information is incorporated by reference into this prospectus. You
may request a copy of the Combined Statement of Additional Information free of
charge by calling 1-800-235-4669. To obtain other information or 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 April 15, 1994
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
SUMMARY OF FUND EXPENSES 1
- ------------------------------------------------------
GENERAL INFORMATION 2
- ------------------------------------------------------
FORTRESS INVESTMENT PROGRAM 2
- ------------------------------------------------------
INVESTMENT INFORMATION 3
- ------------------------------------------------------
Investment Objective 3
Investment Policies 3
Risk Factors and Investment Considerations 5
Considerations of Utility Securities 5
Electric 6
Telecommunications 6
Gas 6
Water 6
Exchange Rates 6
Foreign Companies 7
U.S. Government Policies 7
Other Investment Practices 7
Foreign Currency Transactions 7
Forward Foreign Currency Exchange
Contracts 7
Repurchase Agreements 8
Lending of Portfolio Securities 8
Restricted and Illiquid Securities 8
When-Issued and Delayed Delivery
Transactions 8
Covered Call Options 8
Investment Limitations 9
NET ASSET VALUE 9
- ------------------------------------------------------
INVESTING IN FORTRESS SHARES 9
- ------------------------------------------------------
Share Purchases 9
Through a Financial Institution 9
Directly By Mail 10
By Wire 10
Minimum Investment Required 10
What Shares Cost 10
Dealer Concession 11
Eliminating the Sales Charge 11
Quantity Discounts and Accumulated
Purchases 11
Letter of Intent 12
Reinvestment Privilege 12
Concurrent Purchases 12
Systematic Investment Program 12
Exchanging Securities for Fund Shares 12
Exchange Privileges 13
Certificates and Confirmations 13
Dividends and Distributions 13
REDEEMING FORTRESS SHARES 13
- ------------------------------------------------------
Through a Financial Institution 13
Directly by Mail 14
Signatures 14
Receiving Payment 15
Contingent Deferred Sales Charge 15
Systematic Withdrawal Program 15
Accounts with Low Balances 16
WORLD INVESTMENT SERIES, INC. INFORMATION 16
- ------------------------------------------------------
Management of the Corporation 16
Board of Directors 16
Officers and Directors 16
Investment Adviser 20
Advisory Fees 20
Adviser's Background 20
Distribution of Fortress Shares 21
Distribution and Shareholder Services Plans 21
Other Payments to Financial Institutions 21
Administration of the Fund 22
Administrative Services 22
Custodian 22
Transfer Agent and Dividend
Disbursing Agent 22
Legal Counsel 22
Independent Auditors 22
Brokerage Transactions 22
Expenses of the Fund and Fortress Shares 23
SHAREHOLDER INFORMATION 23
- ------------------------------------------------------
Voting Rights 23
TAX INFORMATION 24
- ------------------------------------------------------
Federal Income Tax 24
Pennsylvania Corporate and Personal
Property Taxes 24
OTHER CLASSES OF SHARES 25
- ------------------------------------------------------
PERFORMANCE INFORMATION 25
- ------------------------------------------------------
ADDRESSES Inside Back Cover
- ------------------------------------------------------
SUMMARY OF FUND EXPENSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
FORTRESS SHARES
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases (as a percentage of offering price)................... 1.00%
Maximum Sales Load Imposed on Reinvested Dividends
(as a percentage of offering price)......................................................... None
Contingent Deferred Sales Charge (as a percentage of original
purchase price or redemption proceeds, as applicable)(1).................................... 1.00%
Redemption Fee (as a percentage of amount redeemed, if applicable)............................ None
Exchange Fee.................................................................................. None
ANNUAL FORTRESS SHARES OPERATING EXPENSES*
(As a percentage of projected average net assets)
Management Fee (after waiver)(2).............................................................. 0.39%
12b-1 Fee..................................................................................... 0.25%
Total Other Expenses.......................................................................... 0.60%
Shareholder Servicing Fee.......................................................... 0.25%
Total Fortress Shares Operating Expenses(3).......................................... 1.24%
</TABLE>
(1) The contingent deferred sales charge assessed is 1.00% of the lesser of the
original purchase price or the net asset value of shares redeemed within four
years of their purchase date.
(2) 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 1.00%.
(3) The Total Fortress Shares Operating Expenses are estimated to be 1.85%
absent the anticipated voluntary waiver of a portion of the management fee.
* TOTAL FORTRESS SHARES OPERATING EXPENSES ARE ESTIMATED BASED ON AVERAGE
EXPENSES EXPECTED TO BE INCURRED DURING THE PERIOD ENDING NOVEMBER 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 FORTRESS SHARES OF THE FUND
WILL BEAR, EITHER DIRECTLY OR INDIRECTLY. FOR MORE COMPLETE DESCRIPTIONS OF THE
VARIOUS COSTS AND EXPENSES, SEE "INVESTING IN FORTRESS SHARES" AND "WORLD
INVESTMENT SERIES, INC. INFORMATION." WIRE-TRANSFERRED REDEMPTIONS OF LESS THAN
$5,000 MAY BE SUBJECT TO ADDITIONAL FEES.
LONG-TERM SHAREHOLDERS MAY PAY MORE THAN THE ECONOMIC EQUIVALENT OF THE
MAXIMUM FRONT-END SALES CHARGE PERMITTED UNDER THE RULES OF THE NATIONAL
ASSOCIATION OF SECURITIES DEALERS, INC.
<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............. $ 33 $60
You would pay the following expenses on the same investment, assuming no
redemption......................................................................... $ 23 $49
</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 NOVEMBER
30, 1994.
The information set forth in the foregoing table and example relates only to
Fortress Shares of the Fund. The Fund also offers another class of shares called
Class A Shares. Fortress Shares and Class A Shares are subject to certain of the
same expenses; however, Class A Shares are subject to a maximum sales load of
4.50%, but are not subject to a 12b-1 fee or a contingent deferred sales charge.
See "Other Classes of Shares".
GENERAL INFORMATION
- --------------------------------------------------------------------------------
The Corporation was established as a corporation under the laws of the state of
Maryland on January 25, 1994. The Corporation's address is Liberty Center,
Federated Investors Tower, Pittsburgh, Pennsylvania 15222-3779. The Articles of
Incorporation permit the Corporation to offer separate series of shares
representing interests in separate portfolios of securities. The shares in any
one portfolio may be offered in separate classes. With respect to this Fund, as
of the date of this prospectus, the Board of Directors ("Directors") have
established two classes of shares, known as Fortress Shares and Class A Shares.
This prospectus relates only to Fortress Shares ("Shares") of the Corporation's
portfolio known as World Utility Fund.
Shares of the Fund are designed to give institutions and individuals a
convenient means of seeking total return without undue risk through a
professionally managed, diversified portfolio comprised primarily of foreign and
domestic utility securities. The Fund is not intended to provide a complete
investment program for an investor. A minimum initial investment of $1,500 is
required, unless the investment is in a retirement account, in which case the
minimum investment is $50.
In general, Shares are sold at net asset value plus an applicable sales charge
and are redeemed at net asset value. However, a contingent deferred sales charge
is imposed on Shares, other than Shares purchased through reinvestment of
dividends, which are redeemed within one to four years of their purchase date.
For a more complete description, see "Redeeming Fortress Shares."
FORTRESS INVESTMENT PROGRAM
- --------------------------------------------------------------------------------
This class of shares is a member of a family of funds, collectively known as the
Fortress Investment Program. The other funds in the Program are:
AMERICAN LEADERS FUND, INC. (FORTRESS SHARES ONLY), providing growth of
capital and income through high-quality stocks;
CALIFORNIA MUNICIPAL INCOME FUND (FORTRESS SHARES ONLY), providing current
income exempt from federal regular income tax and California personal
income taxes;
FORTRESS ADJUSTABLE RATE U.S. GOVERNMENT FUND, INC., providing current
income consistent with lower volatility of principal through a diversified
portfolio of adjustable and floating rate mortgage securities which are
issued or guaranteed by the U.S. government, its agencies or
instrumentalities;
FORTRESS BOND FUND, providing current income primarily through high-quality
corporate debt;
FORTRESS MUNICIPAL INCOME FUND, providing a high level of current income
generally exempt from federal regular income tax by investing primarily in
a diversified portfolio of municipal bonds;
FORTRESS UTILITY FUND, providing high current income and moderate
appreciation primarily through equity and debt securities of utility
companies;
GOVERNMENT INCOME SECURITIES, INC., providing current income through
long-term U.S. government securities;
LIBERTY EQUITY INCOME FUND, INC. (FORTRESS SHARES ONLY), an equity fund
investing primarily in stocks which have a history of regular dividends;
LIMITED TERM FUND (FORTRESS SHARES ONLY), providing a high level of current
income consistent with minimum fluctuation in principal value;
LIMITED TERM MUNICIPAL FUND (FORTRESS SHARES ONLY), providing a high level
of current income which is exempt from federal regular income tax
consistent with the preservation of capital;
MONEY MARKET MANAGEMENT, INC., providing current income consistent with
stability of principal through high-quality money market instruments;
NEW YORK MUNICIPAL INCOME FUND (FORTRESS SHARES ONLY), providing current
income exempt from federal regular income tax, New York personal income
taxes, and New York City income taxes; and
OHIO MUNICIPAL INCOME FUND (FORTRESS SHARES ONLY), providing current income
exempt from federal regular income tax and Ohio personal taxes.
STRATEGIC INCOME FUND (FORTRESS SHARES ONLY), a fund providing high current
income through investing in domestic corporate debt obligations, U.S.
government securities, and foreign government and corporate debt
obligations.
Each of the funds may also invest in certain other types of securities as
described in each fund's prospectus.
The Fortress Investment Program provides flexibility and diversification for
investor's long-term investment planning. It enables an investor to meet the
challenges of changing market conditions by offering convenient exchange
privileges which give access to various investment vehicles, and by providing
the investment services of proven, professional investment advisers.
INVESTMENT INFORMATION
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INVESTMENT OBJECTIVE
The investment objective of the Fund is to provide total return. The investment
objective may be changed by the Directors without the approval of shareholders.
Shareholders will be notified in writing at least 30 days prior to any change in
the investment objective. Any such change may result in the Fund having an
investment objective different from the investment objective which a shareholder
considered appropriate at the time of investment in the Fund. While there is no
assurance that the Fund will achieve its investment objective, it endeavors to
do so by following the policies described in this prospectus. Unless indicated
otherwise, the policies may be changed by the Directors without the approval of
shareholders. Shareholders will be notified before any material changes in these
policies become effective.
INVESTMENT POLICIES
The Fund will seek to achieve its investment objective by investing at least 65%
of its total assets in securities issued by domestic and foreign companies in
the utilities industries. For these purposes, companies will be considered to be
in the utilities industries if, in the opinion of Federated Management ("the
Investment Adviser"), they are primarily engaged in the ownership or operation
of facilities used to generate, transmit, or distribute electricity, telephone
communications, cable and other pay television services, radio-telephone
communications, gas, or water.
The Fund's portfolio will at all times include issuers located in at least three
countries, although the Investment Adviser expects to invest in more than three
countries. It is expected that, under normal circumstances, the assets of the
Fund invested in U.S. securities will be higher than that invested in securities
of any other single country. At times, the Fund may have more than 65% of its
total assets invested in foreign securities.
The Fund may invest up to 35% of its total assets in securities of issuers that
are outside the utilities industries. Such investments may consist of common
stocks, debt securities, preferred stocks, or other securities issued by either
U.S. or foreign companies, governments, or governmental instrumentalities. Some
of these issuers may be in industries related to the utilities industries and,
therefore, may be subject to similar considerations. The prices of fixed income
securities fluctuate inversely in relation to the direction of interest rates.
The prices of longer term bonds fluctuate more widely in response to market
interest rate changes.
Debt obligations in the portfolio, at the time they are purchased, generally
will be limited to those which fall in one of the following categories: (i)
rated BBB or better by Standard & Poor's Corporation or Baa by Moody's Investors
Service, Inc., or (ii) determined by the Investment Adviser to be of investment
grade and not rated by either of the aforementioned rating services. However,
the Fund may invest up to 35% of the value of its total assets in lower-rated
convertible and non-convertible debt obligations that are not investment grade
bonds, but are rated CCC or better by Standard & Poor's Corporation or Caa or
better by Moody's Investors Service, Inc., or are not rated but are determined
by the Investment Adviser to be of comparable quality. Securities rated BB, B,
and CCC by Standard & Poor's Corporation or Ba, B, and Caa by Moody's Investors
Service, Inc. either have speculative characteristics or are predominantly
speculative with respect to capacity to pay interest and repay principal in
accordance with the terms of the obligations. Debt obligations that are not
determined to be investment grade are high-yield high-risk bonds, typically
subject to greater market fluctuations, and securities in the lowest rating
category may be in danger of loss of income and principal due to an issuer's
default. To a greater extent than investment grade bonds, the value of
lower-rated bonds tends to reflect short-term corporate, economic, and market
developments, as well as investor perceptions of the issuer's credit quality. In
addition, lower rated bonds may be more difficult to dispose of or to value than
high-rated, lower-yielding bonds. The Investment Adviser attempts to reduce the
risks described above through diversification of the portfolio and by credit
analysis of each issuer as well as by monitoring broad economic trends and
corporate and legislative developments. In the event the rating on an issue held
in the Fund's portfolio is changed by the ratings services (or, for an unrated
issue, in the determination of the Investment Adviser), such event will be
considered by the Investment Adviser in its evaluation of the overall investment
merits of that security, but will not necessarily result in the automatic sale
of the security. A description of the rating categories is contained in the
Appendix to the Combined Statement of Additional Information.
For temporary defensive purposes and to maintain liquidity in anticipation of
favorable investment opportunities, the Fund may invest in short-term money
market instruments including securities of other investment companies,
certificates of deposit, obligations issued or guaranteed by the United States
government or its agencies or instrumentalities, commercial paper rated not
lower than A-1 by Standard & Poor's Corporation or Prime-1 by Moody's Investors
Service, Inc. or repurchase agreements.
RISK FACTORS AND INVESTMENT CONSIDERATIONS
The Fund will attempt to meet its investment objective by being at least 65%
invested in securities issued by companies in the domestic and foreign utilities
industries. There exist certain risks associated with the utilities industries
and with foreign securities of which investors in the Fund should be aware.
CONSIDERATIONS OF UTILITY SECURITIES. There are certain risks and
considerations affecting utility companies, and the holders of utility company
securities, which an investor should take into account when investing in those
securities. Factors which may adversely affect utility companies include:
difficulty in financing large construction programs during inflationary periods;
technological innovations which may cause existing plants, equipment, or
products to become less competitive or obsolete; the impact of natural or
man-made disasters (especially on regional utilities); increased costs or
reductions in production due to the unavailability of appropriate types of fuel;
seasonally or occasionally reduced availability or higher cost of natural gas;
and reduced demand due to energy conservation among consumers. Furthermore, the
revenues of domestic and foreign utility companies generally reflect the
economic growth and developments in the geographic areas in which they do
business.
In addition, most utility companies in the United States and in foreign
countries are subject to government regulation. Generally, the purpose of such
regulation is to ensure desirable levels of service and adequate capacity to
meet public demand. To this end, prices are often regulated to enable consumers
to obtain service at what is perceived to be a fair price, while attempting to
provide utility companies with a rate of return sufficient to attract capital
investment necessary for continued operation and necessary growth. Recently,
utility regulators have permitted utilities to diversify outside of their
original geographic regions and their traditional lines of business. While the
Investment Adviser believes that these opportunities will permit certain utility
companies to earn more than their traditional regulated rates of return, other
companies may be forced to defend their core businesses and may be less
profitable. Of course, there can be no assurance that all of the regulatory
policies described in this paragraph will continue in the future.
In addition to the effects of regulation described in the previous paragraph,
utility companies may also be adversely affected by the following regulatory
considerations: the development and implementation of a national energy policy;
the differences between regulatory policies of different jurisdictions (or
different regulators which have concurrent jurisdiction); shifts in regulatory
policies; adequacy of rate increases; and future regulatory legislation.
Foreign utility companies may encounter different risks and opportunities than
those located in the United States. Foreign utility companies may be more
heavily regulated than their United States counterparts. Many foreign utility
companies currently use fuels which cause more pollution than fuels used by
United States utilities; in the future, it may be necessary for such foreign
utility companies to invest heavily in pollution control equipment or otherwise
meet pollution restrictions. Rapid growth in certain foreign economies may
encourage the growth of utility industries in those countries. Although many
foreign utility companies are currently government-owned, the Investment Adviser
believes that it is likely that some foreign governments will seek to
"privatize" their utility companies, i.e., transfer ownership to private
investors.
In addition to the foregoing considerations which affect most utility companies,
there are specific considerations which affect specific utility industries:
ELECTRIC. The electric utility industry is made up of companies that are
engaged in the generation, transmission, and sale of electric energy.
Domestic electric utility companies have generally been favorably affected
by lower fuel and financing costs and the completion of major construction
programs. Some electric utilities are able to sell power outside of their
traditional geographic areas. Electric utility companies have historically
been subject to increases in fuel and other operating costs, high interest
costs on borrowings needed for capital construction programs, compliance
with environmental and safety regulations, and changes in the regulatory
climate.
In the United States, the construction and operation of nuclear power
facilities is subject to a high degree of regulatory oversight by the
Nuclear Regulatory Commission and state agencies with concurrent
jurisdiction. In addition, the design, construction, licensing, and
operation of nuclear power facilities have been subject to lengthy delays
and unanticipated costs due to changes in regulatory policy, regional
political actions, and lawsuits. Furthermore, during rate authorizations,
utility regulators may disallow the inclusion in electric rates of the
higher operating costs and capital expenditures resulting from these delays
and unanticipated costs, including the costs of a nuclear facility which a
utility company may never be able to use.
TELECOMMUNICATIONS. The telephone industry is large and highly
concentrated. The greatest portion of this segment is comprised of
companies which distribute telephone services and provide access to the
telephone networks. While many telephone utility companies have diversified
into other businesses in recent years, the profitability of telephone
utility companies could be adversely affected by increasing competition,
technological innovations, and other structural changes in the industry.
Cable television companies are typically local monopolies, subject to
scrutiny by both utility regulators and municipal governments. Emerging
technologies and legislation encouraging local competition are combining to
threaten these monopolies and may slow future growth rates of these
companies. The radio telecommunications segment of this industry, including
cellular telephone, is in its early developmental phases and is
characterized by emerging, rapidly growing companies.
GAS. Gas transmission and distribution companies are undergoing
significant changes. In the United States, the Federal Energy Regulatory
Commission is reducing its regulation of interstate transmission of gas.
While gas utility companies have in the recent past been adversely affected
by disruptions in the oil industry, increased concentration, and increased
competition, the Investment Adviser believes that environmental
considerations should benefit the gas industry in the future.
WATER. Water utility companies purify, distribute, and sell water. This
industry is highly fragmented because most of the water supplies are owned
by local authorities. Water utility companies are generally mature and are
experiencing little or no per capita volume growth. The Investment Adviser
believes that favorable investment opportunities may result if anticipated
consolidation and foreign participation in this industry occur.
The Fund occasionally takes advantage of the unusual opportunities for higher
returns available from investing in developing countries. These investments,
however, carry considerably more volatility and risk because they are associated
with less mature economies and less stable political systems.
EXCHANGE RATES. Foreign securities are denominated in foreign currencies.
Therefore, the value in U.S. dollars of the Fund's assets and income may be
affected by changes in exchange rates and
regulations. Although the Fund values its assets daily in U.S. dollars, it will
not convert its holding of foreign currencies to U.S. dollars daily. When the
Fund converts its holdings to another currency, it may incur conversion costs.
Foreign exchange dealers realize a profit on the difference between the prices
at which they buy and sell currencies.
FOREIGN COMPANIES. Other differences between investing in foreign and U.S.
companies include: less publicly available information about foreign companies;
the lack of uniform financial accounting standards applicable to foreign
companies; less readily available market quotations on foreign companies;
differences in government regulation and supervision of foreign stock exchanges,
brokers, listed companies, and banks; generally lower foreign stock market
volume; the likelihood that foreign securities may be less liquid or more
volatile; foreign brokerage commissions may be higher; unreliable mail service
between countries; political or financial changes which adversely affect
investments in some countries; and difficulties which may be encountered in
obtaining or enforcing a court judgment abroad.
U.S. GOVERNMENT POLICIES. In the past, U.S. government policies have
discouraged or restricted certain investments abroad by investors such as the
Fund. Although the Fund is unaware of any current restrictions, investors are
advised that these policies could be reinstituted.
OTHER INVESTMENT PRACTICES
FOREIGN CURRENCY TRANSACTIONS. The Fund will enter into foreign currency
transactions to obtain the necessary currencies to settle securities
transactions. Currency transactions may be conducted either on a spot or cash
basis at prevailing rates or through forward foreign currency exchange
contracts.
The Fund may also enter into foreign currency transactions to protect Fund
assets against adverse changes in foreign currency exchange rates or exchange
control regulations. Such changes could unfavorably affect the value of Fund
assets which are denominated in foreign currencies, such as foreign securities
or funds deposited in foreign banks, as measured in U.S. dollars. Although
foreign currency transactions may be used by the Fund to protect against a
decline in the value of one or more currencies, such efforts may also limit any
potential gain that might result from a relative increase in the value of such
currencies and might, in certain cases, result in losses to the Fund.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS. A forward foreign currency
exchange contract ("forward contract") is an obligation to purchase or sell an
amount of a particular currency at a specific price and on a future date agreed
upon by the parties.
Generally, no commission charges or deposits are involved. At the time the Fund
enters into a forward contract, Fund assets with a value equal to the Fund's
obligation under the forward contract are segregated on the Fund's records and
are maintained until the contract has been settled. The Fund will generally
enter into a forward contract to provide the proper currency to settle a
securities transaction at the time the transaction occurs ("trade date"). The
period between trade date and settlement date will vary between twenty-four
hours and thirty days, depending upon local custom.
The Fund may also protect against the decline of a particular foreign currency
by entering into a forward contract to sell an amount of that currency
approximating the value of all or a portion of the Fund's assets denominated in
that currency ("hedging"). The success of this type of short-term
hedging strategy is highly uncertain due to the difficulties of predicting
short-term currency market movements and of precisely matching forward contract
amounts and the constantly changing value of the securities involved. Although
the Investment Adviser will consider the likelihood of changes in currency
values when making investment decisions, the Investment Adviser believes that it
is important to be able to enter into forward contracts when it believes the
interests of the Fund will be served. The Fund will not enter into forward
contracts for hedging purposes in a particular currency in an amount in excess
of the Fund's assets denominated in that currency. No more than 30% of the
Fund's assets will be committed to forward contracts for hedging purposes at any
time. (This restriction does not include forward contracts entered into to
settle securities transactions.)
REPURCHASE AGREEMENTS. Certain securities in which the Fund invests may be
purchased pursuant to 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 its portfolio securities to broker/dealers, banks, or other
institutional borrowers of securities. The Fund will limit the amount of
portfolio securities it may lend to not more than one-third of its total assets.
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 Fund's Board of Directors and will receive
collateral in cash or United States government securities that will be
maintained in an amount equal to at least 100% of the current market value of
the securities loaned.
RESTRICTED AND ILLIQUID SECURITIES. The Fund may invest in restricted
securities. Restricted securities are any securities in which the Fund may
otherwise invest pursuant to its investment objective and policies but which are
subject to restriction on resale under federal securities law. To the extent
these securities are deemed to be illiquid, the Fund will limit its purchases
together with other securities considered to be illiquid to 15% of its net
assets.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS. The Fund may purchase securities
on a when-issued or delayed delivery basis. In when-issued and delayed delivery
transactions, the Fund relies on the seller to complete the transaction. The
seller's failure may cause the Fund to miss a price or yield considered to be
advantageous.
COVERED CALL OPTIONS. The Fund may also write call options on all or any
portion of its portfolio to generate income for the Fund. Call options written
by the Fund give the holder the right to buy the underlying securities of the
Fund at the stated exercise price. The Fund will write call options only on
securities either held in its portfolio or for which it has the right to obtain
without payment of further consideration or for which it has segregated cash in
the amount of any additional consideration. The call options which the Fund
writes and sells must be listed on a recognized options exchange. The Fund's
investment in call options shall not exceed 5% of the Fund's total assets.
INVESTMENT LIMITATIONS
The Fund will not:
- with respect to 75% of its total assets, invest more than 5% of its total
assets in the securities of any one issuer, except that this restriction
does not apply to cash and cash items, repurchase agreements, and
securities issued or guaranteed by the United States government or its
agencies or instrumentalities, or acquire more than 10% of the
outstanding voting securities of any one issuer;
- borrow money, issue senior securities, or pledge assets, except that
under certain circumstances the Fund may borrow money and engage in
reverse repurchase transactions in amounts up to one-third of the value
of its total assets, including the amounts borrowed, and pledge up to 10%
of the value of those assets to secure such borrowings.
The above investment limitations cannot be changed without shareholder approval.
The following limitations, however, may be changed by the Directors without the
approval of shareholders. Shareholders will be notified before any material
change in this limitation becomes effective.
The Fund will not invest more than 25% of its total assets in securities of
companies engaged principally in any one industry other than the utilities
industry, except that this restriction does not apply to cash or cash items and
securities issued or guaranteed by the United States government or its agencies
or instrumentalities.
NET ASSET VALUE
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The Fund's net asset value per Share fluctuates. The net asset value for Shares
is determined by adding the interest of the Fortress Shares in the market value
of all securities and other assets of the Fund, subtracting the interest of the
Fortress Shares in the liabilities of the Fund and those attributable to the
Fortress Shares, and dividing the remainder by the number of Fortress Shares
outstanding. The net asset value for Fortress Shares may differ from that of
Class A Shares due to the variance in daily net income realized by each class.
Such variance will reflect only accrued net income to which the shareholders of
a particular class are entitled.
INVESTING IN FORTRESS SHARES
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SHARE PURCHASES
Shares are sold on days on which the New York Stock Exchange is open. Shares may
be purchased through a financial institution who has a sales agreement with the
distributor or directly from the distributor, Federated Securities Corp. either
by mail or by wire once an account has been established. The Fund reserves the
right to reject any purchase request.
THROUGH A FINANCIAL INSTITUTION. An investor may call his financial institution
(such as a bank or an investment dealer) to place an order to purchase Shares.
Orders through a financial institution are considered received when the Fund is
notified of the purchase order. 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. (Eastern time) and must be transmitted
by the broker to the Fund before 5:00 P.M. (Eastern time) in order for Shares to
be purchased at that day's price. Purchase orders through other financial
institutions must be received by the financial institution and transmitted to
the Fund before 4:00 P.M. (Eastern time) in order for Shares to be purchased at
that day's price.
The financial institution which maintains investor accounts with the Fund must
do so on a fully disclosed basis unless it accounts for share ownership periods
used in calculating the contingent deferred sales charge (see "Contingent
Deferred Sales Charge"). In addition, advance payments made to financial
institutions may be subject to reclaim by the distributor for accounts
transferred to financial institutions which do not maintain investor accounts on
a fully disclosed basis and do not account for share ownership periods (see
"Other Payments to Financial Institutions").
DIRECTLY BY MAIL. An investor may place an order to purchase Shares directly by
mail from the distributor once an account has been established. To do so, mail a
check made payable to World Utility Fund-Fortress Shares to Federated Services
Company, c/o State Street Bank and Trust Company, P.O. Box 8604, Boston, MA
02266-8604.
Purchases by mail are considered received after payment by check is converted by
State Street Bank and Trust Company ("State Street Bank") into federal funds.
This is generally the next business day after State Street Bank receives the
check.
BY WIRE. To purchase Shares directly from the distributor by 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. Federal funds should be wired as
follows: State Street Bank and Trust Company, Boston, Massachusetts 02105;
Attention: EDGEWIRE; For Credit to: World Utility Fund--Fortress Shares;
Fund Number (this number can be found on the account statement or by
contacting the Fund); Group Number or Order Number; Nominee or Institution
Name; ABA Number 011000028. Shares cannot be purchased by wire on Columbus
Day, Veteran's Day, or Martin Luther King Day.
MINIMUM INVESTMENT REQUIRED
The minimum initial investment in Shares is $1,500 unless the investment is in a
retirement plan, in which case the minimum initial investment is $50. Subsequent
investments must be in amounts of at least $100, except for retirement plans,
which must be in amounts of at least $50.
WHAT SHARES COST
Shares are sold at their net asset value next determined after an order is
received, plus a sales charge of 1% of the offering price (which is 1.01% of the
net amount invested). There is no sales charge for purchases of $1 million or
more. In addition, no sales charge is imposed for Shares purchased through bank
trust departments or investment advisers registered under the Investment
Advisers Act of 1940 purchasing on behalf of their clients, or by sales
representatives, Directors, and employees of the Fund, Federated Management, and
Federated Securities Corp., or their affiliates, or any investment dealer who
has a sales agreement with Federated Securities Corp., their spouses and
children under age 21, or any trusts or pension or profit-sharing plans for
these persons. Unaffiliated institutions through whom Shares are purchased may
charge fees for services provided which may be related to the ownership of Fund
Shares. This prospectus should, therefore, be read together with any agreement
between the
customer and the institution with regard to services provided, the fees charges
for these services, and any restriction and limitation imposed.
The net asset value is determined at 4:00 p.m. (Eastern 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; or (iii) the following
holidays: New Year's Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day, and Christmas Day.
Under certain circumstances, described under "Redeeming Fortress Shares,"
shareholders may be charged a contingent deferred sales charge by the
distributor at the time Shares are redeemed.
DEALER CONCESSION. For sales of Shares, broker/dealers will normally receive
100% of the applicable sales charge. Any portion of the sales charge which is
not paid to a broker/dealer will be retained by the distributor. However, from
time to time, and at the sole discretion of the distributor, all or a part of
that portion may be paid to a dealer. The sales charge for Shares sold other
than through registered broker/dealers will be retained by Federated Securities
Corp. Federated Securities Corp. may pay fees to banks out of the sales charge
in exchange for sales and/or administrative services performed on behalf of the
bank's customers in connection with the initiation of customer accounts and
purchases of Shares.
ELIMINATING THE SALES CHARGE
The sales charge can be eliminated on the purchase of Shares through:
- quantity discounts and accumulated purchases;
- signing a 13-month letter of intent;
- using the reinvestment privilege; or
- concurrent purchases
QUANTITY DISCOUNTS AND ACCUMULATED PURCHASES. There is no sales charge for
purchases of $1 million or more. The Fund will combine purchases of Shares made
on the same day by the investor, the investor's spouse, and the investor's
children under age 21 when it calculates the sales charge.
If an additional purchase of Shares is made, the Fund will consider the previous
purchases still invested in the Fund. For example, if a shareholder already owns
Shares having a current value at the public offering price of $900,000 and he
purchases $100,000 more at the current public offering price, there will be no
charge on the additional purchase. The Fund will also combine purchases for the
purpose of reducing the contingent deferred sales charge imposed on some Shares
redemptions. For example, if a shareholder already owns Shares having a current
value at public offering price of $1 million and purchases an additional $1
million at the current public offering price, the applicable contingent deferred
sales charge would be reduced to 0.50% of those additional Shares. For more
information on the levels of contingent deferred sales charges and holding
periods, see the section entitled "Contingent Deferred Sales Charge."
To receive the sales charge elimination and/or the contingent deferred sales
charge reduction, Federated Securities Corp. must be notified by the shareholder
in writing or by his financial institution
at the time the purchase is made that Shares are already owned or that purchases
are being combined. The Fund will eliminate the sales charge after it confirms
the purchases.
LETTER OF INTENT. If a shareholder intends to purchase at least $1 million of
Shares over the next 13 months, the sales charge may be eliminated by signing a
letter of intent to that effect. This letter of intent includes a provision for
a sales charge elimination depending on the amount actually purchased within the
13-month period and a provision for the Fund's custodian to hold 1.00% of the
total amount intended to be purchased in escrow (in Shares) until such purchase
is completed.
The 1.00% held in escrow will be applied to the shareholder's account at the end
of the 13-month period unless the amount specified in the letter of intent,
which must be $1 million or more Shares, is not purchased. In this event, an
appropriate number of escrowed Shares may be redeemed in order to realize the
1.00% sales charge.
This letter of intent will not obligate the shareholder to purchase Shares. This
letter may be dated as of a prior date to include any purchases made within the
past 90 days (purchases within the prior 90 days may be used to fulfill the
requirements of the letter of intent; however, the sales charge on such
purchases will not be adjusted to reflect a lower sales charge).
REINVESTMENT PRIVILEGE. If Shares in the Fund have been redeemed, the
shareholder has a one-time right, within 120 days, to reinvest the redemption
proceeds at the next-determined net asset value without any sales charge.
Federated Securities Corp. must be notified by the shareholder in writing or by
his financial institution of the reinvestment in order to receive this
elimination of the sales charge. If the shareholder redeems his Shares in the
Fund, there may be tax consequences.
CONCURRENT PURCHASES. For purposes of qualifying for a sales charge
elimination, a shareholder has the privilege of combining concurrent purchases
of two or more funds in the Fortress Investment Program, the purchase price of
which includes a sales charge. For example, if a shareholder concurrently
invested $400,000 in one of the other Fortress Funds, and $600,000 in Shares,
the sales charge would be eliminated.
To receive this sales charge elimination, Federated Securities Corp. must be
notified by the shareholder in writing or by his financial institution at the
time the concurrent purchases are made. The Fund will reduce the sales charge
after it confirms the purchases.
SYSTEMATIC INVESTMENT PROGRAM
Once a Fund account has been opened, shareholders may add to their investment on
a regular basis. Under this program, funds may be automatically withdrawn
periodically from the shareholder's checking account and invested in Shares at
the net asset value next determined after an order is received by State Street
Bank, plus the 1.00% sales charge for purchases under $1 million. A shareholder
may apply for participation in this program through Federated Securities Corp.
or his financial institution.
EXCHANGING SECURITIES FOR FUND SHARES
Investors may exchange certain securities or a combination of securities and
cash for Shares. The securities and any cash must have a market value of at
least $25,000. From time to time the Fund will prepare a list of securities
which may be eligible for acceptance and furnish this list to brokers upon
request. Securities accepted by the Fund are valued in the same manner as the
Fund values its portfolio securities. Investors wishing to exchange securities
should first contact their investment broker, who will contact Federated
Securities Corp.
EXCHANGE PRIVILEGES
Shares may be exchanged for shares in other Fortress Funds at net asset value
without a sales charge or a contingent deferred sales charge.
Shares may also be exchanged for shares in other Federated Funds which are
advised by subsidiaries or affiliates of Federated Investors. With the exception
of exchanges into other Fortress Funds, such exchanges will be subject to a
contingent deferred sales charge and possibly a sales charge.
Shareholders using this privilege must exchange Shares having a net asset value
which at least meets the minimum investment required for the fund into which the
exchange is being made. A shareholder may obtain information on the exchange
privilege, and may obtain prospectuses for other Fortress Funds and Federated
Funds by calling Federated Securities Corp. or his financial institution.
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. Quarterly statements are sent to report dividends paid during the
quarter.
DIVIDENDS AND DISTRIBUTIONS
Dividends are declared and paid quarterly to all shareholders invested in the
Fund on the record date. Distributions of any net realized capital gains will be
made at least once every twelve months. Dividends and distributions are
automatically reinvested in additional Shares on the payment date, at the
ex-dividend date net asset value without a sales charge, unless shareholders
request cash payments on the new account form or by writing to the transfer
agent. All shareholders on the record date are entitled to the dividend. If
Shares are redeemed or exchanged prior to the record date or purchased after the
record date, those Shares are not entitled to that quarter's dividend.
REDEEMING FORTRESS SHARES
- --------------------------------------------------------------------------------
The Fund redeems Shares at their net asset value, less any applicable contingent
deferred sales charge, 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 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, less any applicable contingent deferred sales charge,
next determined after the Fund receives the redemption request from
the financial institution. Redemption requests through a registered
broker/dealer must be received by the broker before 4:00 P.M. (Eastern time) and
must be transmitted by the broker to the Fund before 5:00 P.M. (Eastern time) in
order for Shares to be redeemed at that day's net asset value. Redemption
requests through other financial institutions must be received by the financial
institution and transmitted to the Fund before 4:00 P.M. (Eastern 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. 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 telephone
requests 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, P.O. Box 8604, Boston, MA 02266-8604.
The written request must include the shareholder's name, the Fund name and class
of shares name, the account number, the Share or dollar amount to be redeemed,
and should be signed exactly as Shares are registered.
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 should 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
Exchanges;
- 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. 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.
CONTINGENT DEFERRED SALES CHARGE
Shareholders redeeming Shares from their Fund accounts within certain time
periods from the purchase dates of those Shares will be charged a contingent
deferred sales charge by the Fund's distributor of the lesser of the original
purchase price or the net asset value of the Shares redeemed as follows:
<TABLE>
<CAPTION>
CONTINGENT DEFERRED
AMOUNT OF PURCHASE SHARES HELD SALES CHARGE
- ------------------------- ------------------ -------------------
<S> <C> <C>
Up to $1,999,999 less than 4 years 1%
$2,000,000 to $4,999,999 less than 2 years .50%
$5,000,000 or more less than 1 year .25%
</TABLE>
In instances in which Shares have been acquired in exchange for shares in other
Fortress Funds, (i) the purchase price of the shares when originally purchased
and (ii) the time period which the shares are held will run from the date of the
original purchase. The contingent deferred sales charge will not be imposed on
Shares acquired through the reinvestment of dividends or distributions of
short-term or long-term capital gains. In computing the amount of contingent
deferred sales charge for accounts with shares subject to a single holding
period, if any, redemptions are deemed to have occurred in the following order:
1) first of Shares acquired through the reinvestment of dividends and long-term
capital gains, 2) second of purchases of Shares occurring prior to the number of
years necessary to satisfy the applicable holding period, and 3) finally of
purchases of Shares occurring within the current holding period.
The contingent deferred sales charge will not be imposed when a redemption
results from a tax-free return under the following circumstances: (i) a total or
partial distribution from a qualified plan, other than an IRA, Keogh Plan, or a
custodial account, following retirement; (ii) a total or partial distribution
from an IRA, Keogh Plan, or a custodial account, after the beneficial owner
attains age 59 1/2; or (iii) from the death or total and permanent disability of
the beneficial owner. The exemption from the contingent deferred sales charge
for qualified plans, an IRA, Keogh Plan or a custodial account does not extend
to account transfers, rollovers, and other redemptions made for purposes of
reinvestment. Contingent deferred sales charges are not charges in connection
with exchanges of Shares for shares in other Fortress Funds, or in connection
with redemptions by the Fund of accounts with low balances. Shares of the Fund
originally purchased through a bank trust department or investment adviser
registered under the Investment Advisers Act of 1940 are not subject to the
contingent deferred sales charge, to the extent that no payment was advanced for
purchases made by such entities. For more information, see "Administrative
Arrangements."
SYSTEMATIC WITHDRAWAL PROGRAM
Shareholders who desire to receive monthly or quarterly payments of a
predetermined amount may take advantage of the Systematic Withdrawal Program.
Under this program, Shares are redeemed to provide for periodic withdrawal
payments in an amount directed by the shareholder; the minimum withdrawal amount
is $100. Depending upon the amount of the withdrawal payments, the amount of
dividends paid and capital gains distributions with respect to Shares, and the
fluctuation of the net asset value of Shares redeemed under this program,
redemptions may reduce, and eventually deplete, the shareholder's investment in
Shares. For this reason, payments under this program should not be considered as
yield or income on the shareholder's investment in Shares. To be eligible to
participate in this program, a shareholder must have an account value of at
least $10,000 at current offering price.
A shareholder may apply for participation in this program through Federated
Securities Corp. Due to the fact that Shares are sold with a sales charge, it is
not advisable for shareholders to be purchasing Shares while participating in
this program.
Contingent deferred sales charges are charged for Shares redeemed through this
program within four years of their purchase dates.
ACCOUNTS WITH LOW BALANCES
Due to the high cost of maintaining accounts with low balances, the Fund may
redeem Shares in any account, except retirement plans, and pay the proceeds to
the shareholder if the account balance falls below the required minimum value of
$1,500. This requirement does not apply, however, if the balance falls below
$500 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.
WORLD INVESTMENT SERIES, INC. INFORMATION
- --------------------------------------------------------------------------------
MANAGEMENT OF THE CORPORATION
BOARD OF DIRECTORS. The Corporation 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. An Executive Committee of the Board of Directors handles the
Board's responsibilities between meetings of the Board.
OFFICERS AND DIRECTORS. Officers and Directors are listed with their addresses,
principal occupations and present positions, including any affiliation with
Federated Investors, Federated Management,
Federated Securities Corp., Federated Administrative Services, and the Funds
described in the Statement of Additional Information.
<TABLE>
<CAPTION>
POSITION WITH PRINCIPAL OCCUPATION
NAME AND ADDRESS THE CORPORATION DURING PAST FIVE YEARS
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
John F. Donahue+* Chairman and Chairman and Trustee, Federated Investors; Chairman and Trustee, Federated
Federated Investors Director Advisers, Federated Management, and Federated Research; Director, AEtna Life
Tower and Casualty Company; Chief Executive Officer and Director, Trustee, or
Pittsburgh, PA 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 Vice-President, John R.
Wood/IPC Commercial Wood and Associates, Inc., Realtors; President, Northgate Village Department
Department and Corporation; John R. Wood Partner or Trustee in private real estate ventures
Associates, Inc., Realtors; in Southwest Florida; Director, Trustee, or Managing General Partner of the
3255 Tamiami Trail North Funds; formerly, President, Naples Property Management, Inc.
Naples, FL
- ------------------------------------------------------------------------------------------------------------------
William J. Copeland Director Director and Member of the Executive Committee, Michael Baker, Inc.;
One PNC Plaza-- Director, Trustee, or Managing General Partner of the Funds; formerly, Vice
23rd Floor Chairman and Director, PNC Bank, N.A. and PNC Financial Corp and Director,
Pittsburgh, PA Ryan Homes, Inc.
- ------------------------------------------------------------------------------------------------------------------
James E. Dowd Director Attorney-at-law; Director, The Emerging Germany Fund, Inc.; Director,
571 Hayward Mill Road Trustee, or Managing General Partner of the Funds; formerly, Director, Blue
Concord, MA Cross of Massachusetts, Inc.
- ------------------------------------------------------------------------------------------------------------------
Lawrence D. Ellis, M.D. Director Hematologist, Oncologist, and Internist, Presbyterian and Montefiore
3471 Fifth Avenue Hospitals; Clinical Professor of Medicine and Trustee University of
Suite 1111 Pittsburgh; Director Trustee, or Managing General Partner of the Funds.
Pittsburgh, PA
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
POSITION WITH PRINCIPAL OCCUPATION
NAME AND ADDRESS THE CORPORATION DURING PAST FIVE YEARS
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
Edward L. Flaherty, Jr.+ Director Attorney-at-law; Partner, Meyer and Flaherty; Director, Eat'N Park
5916 Penn Mall Restaurants, Inc., and Statewide Settlement Agency, Inc.; Director, Trustee,
Pittsburgh, PA 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; Director,
225 Franklin Street Trustee, or Managing General Partner of the Funds; formerly, President,
Boston, MA 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, Inc.;
5916 Penn Mall Director, Trustee, or Managing General Partner of the Funds; formerly, Vice
Pittsburgh, PA Chairman, Horizon Financial, F.A.
- ------------------------------------------------------------------------------------------------------------------
Wesley W. Posvar Director Professor, Foreign Policy and Management Consultant; Trustee, Carnegie
1202 Cathedral of Endowment
Learning for International Peace, RAND Corporation, Online Computer Library Center,
University of Pittsburgh Inc., and U.S. Space Foundation; Chairman, National Advisory Council for
Pittsburgh, PA Environmental Policy and Technology; 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 Managing
4905 Bayard Street General Partner of the Funds.
Pittsburgh, PA
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
POSITION WITH PRINCIPAL OCCUPATION
NAME AND ADDRESS THE CORPORATION DURING PAST FIVE YEARS
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
Richard B. Fisher President and Executive Vice President and Trustee, Federated Investors; Chairman and
Federated Investors Director Director, Federated Securities Corp.; President or Vice President of the
Tower Funds; Director or Trustee of some of the Funds.
Pittsburgh, PA
- ------------------------------------------------------------------------------------------------------------------
J. Christopher Donahue Vice President President and Trustee, Federated Investors; Trustee, Federated Advisers,
Federated Investors Federated Management and Federated Research; President and Director,
Tower Federated Administrative Services; President or Vice President of the Funds;
Pittsburgh, PA 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 and Vice President, Treasurer, and Trustee, Federated Investors; Vice President
Federated Investors Treasurer and Treasurer, Federated Advisers, Federated Management, and Federated
Tower Research; Executive Vice President, Treasurer, and Director, Federated
Pittsburgh, PA Securities Corp.; Chairman, Treasurer, and Director, Federated
Administrative Services; Trustee or Director of some of the Funds; Vice
President and Treasurer of the Funds.
- ------------------------------------------------------------------------------------------------------------------
John W. McGonigle Vice President and Vice President, Secretary, General Counsel, and Trustee, Federated
Federated Investors Secretary Investors; Vice President, Secretary, and Trustee, Federated Advisers,
Tower Federated Management, and Federated Research; Executive Vice President,
Pittsburgh, PA Secretary, and Director, Federated Administrative Services; Director and
Executive Vice President, Federated Securities Corp.; Vice President and
Secretary of the Funds.
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
POSITION WITH PRINCIPAL OCCUPATION
NAME AND ADDRESS THE CORPORATION DURING PAST FIVE YEARS
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
John A. Staley, IV Vice President Vice President and Trustee, Federated Investors; Executive Vice President,
Federated Investors Federated Securities Corp.; President and Trustee, Federated Advisers,
Tower Federated Management, and Federated Research; Vice President of the Funds,
Pittsburgh, PA Director, Trustee, or Managing General Partner 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 Corporation as
defined in the Investment Company Act of 1940.
+ Members of the Corporation's Executive Committee. The Executive Committee of
the Board of Directors handles the responsibilities of the Board of Directors
between meetings of the Board.
Officers and Directors own less than 1% of the Fund's outstanding shares.
INVESTMENT ADVISER. Under the terms of an Advisory Agreement between the
Corporation and Federated Management, Federated Management will furnish to the
Fund such investment advice, statistical and other factual information as may
from time to time be reasonably requested by the Fund.
ADVISORY FEES. The Fund's adviser receives an annual investment advisory
fee equal to 1.00% of average daily net assets of the Fund. The fee paid by
the Fund, while higher than the advisory fee paid by other mutual funds in
general, is comparable to fees paid by other mutual funds with similar
objectives and policies. The adviser may voluntarily choose to waive a
portion of its fee or reimburse the Fund for certain operating expenses.
The adviser can terminate this voluntary reimbursement of expenses 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 Management, 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 Management and other subsidiaries of Federated Investors serve as
investment advisers to a number of investment companies and private
accounts with combined assets of approximately $75 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.
Christopher H. Wiles has been the Fund's portfolio manager since its
inception. Mr. Wiles joined Federated Investors in 1990 and has been a Vice
President of the Investment Adviser since 1992. Mr. Wiles served as
Assistant Vice President of the Fund's investment adviser from 1990 until
1992. Mr. Wiles was a portfolio manager at Mellon Bank from 1986 until
1990. Mr. Wiles is a Chartered Financial Analyst and received his M.B.A. in
Finance from Cleveland State University.
DISTRIBUTION OF FORTRESS SHARES
Federated Securities Corp. is the principal distributor for Shares. Federated
Securities Corp. is located at Federated Investors Tower, Pittsburgh,
Pennsylvania 15222-3779. It is a Pennsylvania corporation organized on November
14, 1969, and is the principal distributor for a number of investment companies.
Federated Securities Corp. is a subsidiary of Federated Investors.
DISTRIBUTION AND SHAREHOLDER SERVICES PLANS. Under a distribution plan adopted
in accordance with Investment Company Act Rule 12b-1 (the "Distribution Plan"),
the Fund may pay to the distributor an amount, computed at an annual rate of
0.25 of 1% of the average daily net asset value of Shares to finance any
activity which is principally intended to result in the sale of shares subject
to the Distribution Plan. The distributor may select Financial Institutions such
as banks, fiduciaries, custodians for public funds, investment advisers, and
broker/dealers to provide sales support services as agents for their clients or
customers.
The Distribution Plan is a compensation-type plan. As such, the Fund makes no
payments to the distributor except as described above. Therefore, the Fund does
not pay for unreimbursed expenses of the distributor, including amounts expended
by the distributor in excess of amounts received by it from the Fund, interest,
carrying or other financing charges in connection with excess amounts expended,
or the distributor's overhead expenses. However, the distributor may be able to
recover such amount or may earn a profit from future payments made by the Fund
under the Distribution Plan.
In addition, 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 Shares 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.
OTHER PAYMENTS TO FINANCIAL INSTITUTIONS. In addition, the distributor will pay
financial institutions, for distribution and/or administrative services, an
amount equal to 1.00% of the offering price of the Shares acquired by their
clients or customers on purchases up to $1,999,999, .50% of the offering price
on purchases of $2,000,000 to $4,999,999, and .25% of the offering price on
purchases of $5,000,000 or more. (This fee is in addition to the 1.00% sales
charge on purchases of less than $1 million.) The financial institutions may
elect to receive amounts less than those stated, which would reduce the stated
contingent deferred sales charge and/or the holding period used to calculate the
fee.
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 administrative capacities
described above or should Congress relax current restrictions on depository
institutions, the Board of 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.
ADMINISTRATION OF THE FUND
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>
MAXIMUM AVERAGE AGGREGATE DAILY
ADMINISTRATIVE FEE NET ASSETS 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.
CUSTODIAN. State Street Bank and Trust Company, P.O. Box 8604, Boston,
Massachusetts 02266-8604, is custodian for the securities and cash of the Fund.
Foreign instruments purchased by the Fund are held by foreign banks
participating in a network coordinated by State Street Bank.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT. Federated Services Company,
Federated Investors Tower, Pittsburgh, Pennsylvania, 15222-3779, is transfer
agent for Shares and dividend disbursing agent for the Fund.
LEGAL COUNSEL. Legal counsel is provided by Houston, Houston & Donnelly, 2510
Centre City Tower, Pittsburgh, Pennsylvania 15222, and Dickstein, Shapiro &
Morin, 2101 L Street, N.W., Washington, D.C. 20037.
INDEPENDENT AUDITORS. The independent auditors for the Fund are Ernst & Young,
One Oxford Centre, Pittsburgh, Pennsylvania 15219.
BROKERAGE TRANSACTIONS
When selecting brokers and dealers to handle the purchase and sale of portfolio
instruments, the Investment Adviser looks for prompt execution of the order at a
favorable price. In working with
dealers, the adviser will generally utilize those who are recognized dealers in
specific portfolio instruments, except when a better price and execution of the
order can be obtained elsewhere. In selecting among firms believed to meet this
criteria, the adviser may give consideration to those firms which have sold or
are selling Shares of the Fund and other funds distributed by Federated
Securities Corp. The adviser makes decisions on portfolio transactions and
selects brokers and dealers subject to review by the Board of Directors.
EXPENSES OF THE FUND AND FORTRESS SHARES
Holders of each class of shares pay their allocable portion of Fund and
Corporation expenses.
The Corporation expenses for which holders of Shares 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; the cost of 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 holders of Shares pay their allocable portion
include, but are not limited to: registering the Fund and Shares of the Fund;
investment advisory services; taxes and commissions; custodian fees; insurance
premiums; auditors' fees; and such non-recurring and extraordinary items as may
arise from time to time.
At present, the only expenses which are allocated specifically to Shares as a
class are expenses under the Services Plan and Distribution Plan. However, the
Directors reserve the right to allocate certain other expenses to holders of
Shares as it deems appropriate ("Class Expenses"). In any case, Class Expenses
would be limited to: distribution fees; transfer agent fees as identified by the
transfer agent as attributable to holders of Shares; fees under the Services
Plan; printing and postage expenses related to preparing and distributing
materials such as shareholder reports, prospectuses and proxies to current
shareholders; registration fees paid to the Securities and Exchange Commission
and registration fees paid to state securities commissions; expenses related to
administrative personnel and services as required to support holders of Shares;
legal fees relating solely to Shares; and Directors' fees incurred as a result
of issues relating solely to Shares.
SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------
VOTING RIGHTS
Each Share gives the shareholder one vote in Director elections and other
matters submitted to shareholders for vote. All shares of each portfolio or
class in the Corporation have equal voting rights, except that only shares of
that particular Fund or class are entitled to vote in matters affecting that
Fund or class.
As a Maryland corporation, the Corporation 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 two-thirds vote of the number of Directors prior
to such removal or by a two-thirds vote of the shareholders at a special
meeting. The Directors shall call a Special Meeting of Shareholders upon the
written request of shareholders owning at least 10% of the Corporation's
outstanding shares 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, as amended, applicable to regulated investment
companies and to receive the special tax treatment afforded to such companies.
However, the Fund may invest in the stock of certain foreign corporations which
would constitute a Passive Foreign Investment Company (PFIC). Federal income
taxes may be imposed on the Fund upon disposition of PFIC investments.
The Fund will be treated as a single, separate entity for federal income tax
purposes so that income (including capital gains) and losses realized by the
Corporation's other portfolios, if any, will not be combined for tax purposes
with those realized by the Fund.
Investment income received by the Fund from sources within foreign countries may
be subject to foreign taxes withheld at the source. The United States has
entered into tax treaties with many foreign countries that entitle the Fund to
reduced tax rates or exemptions on this income. The effective rate of foreign
tax cannot be predicted since the amount of Fund assets to be invested within
various countries is unknown. However, the Fund intends to operate so as to
qualify for treaty-reduced tax rates where applicable.
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.
If more than 50% of the value of the Fund's assets at the end of the tax year is
represented by stock or securities of foreign corporations, the Fund intends to
qualify for certain Internal Revenue Code stipulations that would allow
shareholders to claim a foreign tax credit or deduction on their U.S. income tax
returns. The Internal Revenue Code may limit a shareholder's ability to claim a
foreign tax credit. Furthermore, shareholders who elect to deduct their portion
of the Fund's foreign taxes rather than take the foreign tax credit must itemize
deductions on their income tax returns.
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.
OTHER CLASSES OF SHARES
- --------------------------------------------------------------------------------
Class A Shares, the other class of shares offered by the Fund, are sold
primarily to customers of financial institutions with a maximum sales charge of
4.50%. Investments in Class A Shares are subject to a minimum initial investment
of $500, unless the investment is in a retirement account, in which case the
minimum investment is $50.
The amount of dividends payable to Class A Shares will generally exceed that of
Fortress Shares by the difference between Class Expenses and distribution
expenses borne by shares of each respective class.
The stated advisory fee is the same for both classes of shares.
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
From time to time the Fund advertises the total return for Fortress Shares.
Total return represents the change, over a specified period of time, in the
value of an investment in Shares after reinvesting all income and capital gain
distributions. It is calculated by dividing that change by the initial
investment and is expressed as a percentage.
The performance information reflects the effect of the maximum sales load and
other similar non-recurring charges, such as the contingent deferred sales
charge, which, if excluded, would increase the total return.
From time to time, the Fund may advertise the performance of Fortress Shares
using certain financial publications and/or compare its performance to certain
indices.
Total return will be calculated separately for Fortress Shares and Class A
Shares. Because Fortress Shares are subject to Rule 12b-1 fees, the total return
for Class A Shares, for the same period may exceed that of Fortress Shares.
ADDRESSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
World Utility Fund Federated Investors Tower
Fortress Shares Pittsburgh, Pennsylvania 15222-3779
- ----------------------------------------------------------------------------------------------------
Distributor
Federated Securities Corp. Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- ----------------------------------------------------------------------------------------------------
Investment Adviser
Federated Management 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 Auditors
Ernst & Young One Oxford Centre
Pittsburgh, Pennsylvania 15219
- ----------------------------------------------------------------------------------------------------
</TABLE>
WORLD UTILITY FUND
FORTRESS SHARES
PROSPECTUS
A Diversified Portfolio of
World Investment Series, Inc.,
An Open-End, Management
Investment Company
April 15, 1994
FEDERATED SECURITIES CORP.
(LOGO)
---------------------------------------------------
Distributor
A subsidiary of FEDERATED INVESTORS
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
4021404A-FS (4/94)
WORLD UTILITY FUND
(A PORTFOLIO OF WORLD INVESTMENT SERIES, INC.)
CLASS A SHARES AND FORTRESS SHARES
- --------------------------------------------------------------------------------
SUPPLEMENT TO COMBINED STATEMENT OF ADDITIONAL INFORMATION DATED APRIL 15,
1994
A. Please insert the following information as the final sentence under the
section entitled "Portfolio Turnover" on page 1:
"During the period from April 14, 1994 (date of initial public
investment) through May 31, 1994, the Fund's portfolio turnover rate was
0% for Class A Shares, and during the period from April 12, 1994 (date
of initial public offering) through May 31, 1994, the Fund's portfolio
turnover rate was 0% for Fortress Shares."
B. Please insert the following section entitled "Fund Ownership" on page 4
following the section entitled "The Funds." In addition, please add the
heading "Fund Ownership" to the Table of Contents on page I after the
heading "The Funds."
"As of July 3, 1994, the following shareholder of record owned 5% or
more of the outstanding Class A Shares of the Fund: Merrill Lynch Pierce
Fenner & Smith (as record owner holding Class A Shares for its clients),
Jacksonville, Florida, owned approximately 24,838 Shares (10.6%).
"As of July 3, 1994, the following shareholder of record owned 5% or
more of the outstanding Fortress Shares of the Fund: Merrill Lynch
Pierce Fenner & Smith (as record owner holding Fortress Shares for its
clients), Jacksonville, Florida, owned approximately 164,205 Shares
(69%).
C. Please insert the following as the second paragraph in the sub-section
entitled "Advisory Fees" under the main section entitled "Investment
Advisory Services" on page 5:
"During the period from March 17, 1994, (start of business) through May
31, 1994, the adviser earned $1,135, all of which was voluntarily
waived."
D. Please insert the following information as the second sentence under the
section entitled "Administrative Services" on page 5:
"During the period from March 17, 1994, (start of business) through May
31, 1994, the Fund incurred administrative service costs of $0."
E. Please insert the following information as a final paragraph under the
sub-section entitled "Distribution and Shareholder Services Plans" which
begins on page 5:
"For the fiscal period ended May 31, 1994, payments in the amount of $36
for Fortress Shares were made pursuant to the Distribution Plan, all of
which was paid to Financial Institutions. In addition, for this period,
payments in the amount of $248 for Class A Shares and $36 for Fortress
Shares, respectively, were made pursuant to the Shareholder Services
Plan."
F. Please insert the following information as the first paragraph under the
section entitled "Total Return" on page 9:
"The Fund's cumulative total return from April 14, 1994 (date of initial
public investment) to May 31, 1994 was (4.42%) for Class A Shares. The
cumulative total return from April 12, 1994 (date of initial public
offering) to May 31, 1994 for Fortress Shares was (1.86%). 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
approximately 1 1/2 months of fund activity since the Fund's effective
date."
G. Please insert the following information as the first paragraph under the
section entitled "Yield" on page 9:
"For the period ended May 31, 1994, the thirty-day yields for Class A
Shares and Fortress Shares were 6.67% and 6.69%, respectively."
July 31, 1994
FEDERATED SECURITIES CORP.
(LOGO)
- --------------------------------------------------------------------------------
Distributor
981487101
981487200
G00259-02-A
WORLD UTILITY FUND
(A PORTFOLIO OF WORLD INVESTMENT SERIES, INC.)
CLASS A SHARES
FORTRESS SHARES
COMBINED STATEMENT OF ADDITIONAL INFORMATION
This Combined Statement of Additional Information should be read with the
respective prospectuses for Class A Shares and Fortress Shares of World Utility
Fund (the "Fund") dated April 15, 1994. This Combined Statement is not a
prospectus itself. To receive a copy of either prospectus, write or call the
Fund.
FEDERATED INVESTORS TOWER
PITTSBURGH, PENNSYLVANIA 15222-3776
Statement dated April 15, 1994
FEDERATED SECURITIES CORP.
(LOGO)
- ---------------------------------------------
Distributor
A subsidiary of FEDERATED INVESTORS
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
GENERAL INFORMATION ABOUT THE FUND 1
- ----------------------------------------------------------------
INVESTMENT OBJECTIVE AND POLICIES 1
- ----------------------------------------------------------------
Types of Investments 1
When-Issued and Delayed
Delivery Transactions 1
Repurchase Agreements 1
Lending Portfolio Securities 1
Portfolio Turnover 1
Investment Limitations 2
THE FUNDS 4
- ----------------------------------------------------------------
INVESTMENT ADVISORY SERVICES 4
- ----------------------------------------------------------------
Adviser to the Fund 4
Advisory Fees 5
ADMINISTRATIVE SERVICES 5
- ----------------------------------------------------------------
BROKERAGE TRANSACTIONS 5
- ----------------------------------------------------------------
PURCHASING SHARES 5
- ----------------------------------------------------------------
Distribution of Shares 5
Distribution and Shareholder Services Plans 5
Conversion to Federal Funds 6
Purchases by Sales Representatives, Directors
of the Corporation, and Employees 6
Exchanging Securities for Fund Shares 6
Tax Consequences 6
DETERMINING NET ASSET VALUE 6
- ----------------------------------------------------------------
Determining Market Value of Securities 7
Trading in Foreign Securities 7
EXCHANGE PRIVILEGE (FORTRESS SHARES ONLY) 7
- ----------------------------------------------------------------
Reduced Sales Charge 7
Requirements for Exchange 7
Tax Consequences 8
Making an Exchange 8
REDEEMING SHARES 8
- ----------------------------------------------------------------
Redemption in Kind 8
TAX STATUS 8
- ----------------------------------------------------------------
The Fund's Tax Status 8
Shareholders' Tax Status 9
TOTAL RETURN 9
- ----------------------------------------------------------------
YIELD 9
- ----------------------------------------------------------------
PERFORMANCE COMPARISONS 9
- ----------------------------------------------------------------
APPENDIX 11
- ----------------------------------------------------------------
GENERAL INFORMATION ABOUT THE FUND
- --------------------------------------------------------------------------------
The Fund is a portfolio in World Investment Series, Inc. (the "Corporation")
which was established as a corporation under the laws of the state of Maryland
on January 25, 1994.
Shares of the Fund are offered in two classes, known as Class A Shares and
Fortress Shares (individually and collectively referred to as "Shares," as the
context may require). This combined statement of additional information relates
to both classes of the above mentioned Shares.
INVESTMENT OBJECTIVE AND POLICIES
- --------------------------------------------------------------------------------
The Fund's investment objective is to provide total return.
TYPES OF INVESTMENTS
The Fund will seek to achieve its investment objective by investing at least 65%
of its total assets in securities issued by domestic and foreign companies in
the utilities industries. The Fund may also purchase fixed income securities and
foreign government securities; enter into forward commitments, repurchase
agreements, and, without limit, foreign currency transactions; and maintain
reserves in foreign or U.S. money market instruments.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
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 on the Fund's records at the trade date. These
assets are marked to market daily and maintained until the transaction is
settled. As a matter of policy, the Fund does not intend to engage in
when-issued and delayed delivery transactions to an extent that would cause the
segregation of more than 20% of the total value of its assets.
REPURCHASE AGREEMENTS
The Fund or its custodian will take possession of the securities subject to
repurchase agreements, and these securities will be marked to market daily. To
the extent that the original seller does not repurchase the securities from the
Fund, the Fund could receive less than the repurchase price on any sale of such
securities. In the event that such a defaulting seller filed for bankruptcy or
became insolvent, disposition of such securities by the Fund might be delayed
pending court action. The Fund believes that under the regular procedures
normally in effect for custody of the Fund's portfolio securities subject to
repurchase agreements, a court of competent jurisdiction would rule in favor of
the Fund and allow retention or disposition of such securities. The Fund will
only enter into repurchase agreements with banks and other recognized financial
institutions, such as broker/dealers which are deemed by the Fund's adviser or
sub-adviser to be creditworthy.
LENDING PORTFOLIO SECURITIES
In order to generate additional income, the Fund may lend its portfolio
securities 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 or sub-adviser have
determined are creditworthy under guidelines established by the Corporation's
Board of Directors and will receive collateral equal to at least 100% of the
value of the securities loaned. The Fund does not intend to lend portfolio
securities in the current fiscal year.
The collateral received when the Fund lends portfolio securities must be valued
daily and, should the market value of the loaned securities increase, the
borrower must furnish additional collateral to the Fund. During the time
portfolio securities are on loan, the borrower pays the Fund any dividends or
interest paid on such securities. Loans are subject to termination at the option
of the Fund or the borrower. The Fund may pay reasonable administrative and
custodial fees in connection with a loan and may pay a negotiated portion of the
interest earned on the cash or equivalent collateral to the borrower or placing
broker. The Fund does not have the right to vote securities on loan, but would
terminate the loan and regain the right to vote if that were considered
important with respect to the investment.
PORTFOLIO TURNOVER
It is not anticipated that the portfolio trading engaged in by the Fund will
result in its annual rate of portfolio turnover exceeding 100%. The Fund's
Investment Adviser does not anticipate that portfolio turnover will result in
adverse tax consequences. However, relatively high portfolio turnover may result
in high transaction costs to the Fund.
- --------------------------------------------------------------------------------
INVESTMENT 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
purchase or holding of corporate bonds, debentures, notes, certificates
of indebtedness or other debt securities of an issuer, repurchase
agreements, or other transactions which are permitted by the Fund's
investment objective and policies.
DIVERSIFICATION OF INVESTMENTS
With respect to 75% of the value of its total assets, the Fund will not
purchase securities of any one issuer (other than cash, cash items, or
securities issued or guaranteed by the government of the United States or
its agencies or instrumentalities) if as a result more than 5% of the
value of its total assets would be invested in the securities of that
issuer, and the Fund will not acquire more than 10% of the outstanding
voting securities of any one issuer.
CONCENTRATION OF INVESTMENTS
The Fund will not invest more than 25% of its total assets in securities
of issuers having their principal business activities in one industry,
except the utilities industry.
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 amount
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 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 exceed 5% of the value of its total assets are outstanding.
PLEDGING SECURITIES
The Fund will not mortgage, pledge, or hypothecate securities, except
when necessary for permissible borrowings. In those cases, it may pledge
assets having a value of 15% of its assets taken at cost.
BUYING ON MARGIN
The Fund will not purchase any securities on margin but may obtain such
short-term credits as may be necessary for clearance of purchases and
sales of securities.
UNDERWRITING
The Fund will not underwrite or participate in the marketing of
securities of other issuers, except as it may be deemed to be an
underwriter under federal securities law in connection with the
disposition of its portfolio securities.
INVESTING IN REAL ESTATE
The Fund will not invest in real estate or real estate limited
partnerships, although it may invest in securities secured by real estate
or interests in real estate or issued by companies, including real estate
investment trusts, which invest in real estate or interests therein.
INVESTING IN COMMODITIES
The Fund will not purchase or sell commodities, commodity contracts, or
commodity futures contracts except that the Fund may purchase or sell
forward contracts with respect to foreign securities or currencies.
LENDING CASH OR SECURITIES
The Fund will not lend any assets except portfolio securities in an
amount up to one-third of the value of its total assets. This shall not
prevent the purchase or holding of bonds, debentures, notes, certificates
of indebtedness, or other debt securities of an issuer, repurchase
agreements or other transactions which are permitted by the Fund's
investment objective and policies or its Articles of Incorporation.
- --------------------------------------------------------------------------------
Except as noted, the above investment limitations cannot be changed without
shareholder approval. The following limitations, however, may be changed by the
Directors without shareholder approval. Except as noted, shareholders will be
notified before any material change in these limitations becomes effective.
INVESTING IN MINERALS
The Fund will not invest in interests in oil, gas, or other mineral
exploration or development programs or leases, other than debentures or
equity stock interests.
PURCHASING SECURITIES TO EXERCISE CONTROL
The Fund will not purchase securities of a company for purpose of
exercising control or management.
INVESTING IN WARRANTS
The Fund will not invest more than 5% of its assets in warrants,
including those acquired in units or attached to other securities. To
comply with certain state restrictions, the Fund will limit its
investment in such warrants not listed on recognized stock exchanges to
2% of its total assets. (If state restrictions change, this latter
restriction may be revised without notice to shareholders.) For purposes
of this investment restriction, warrants acquired by the Fund in units or
attached to securities may be deemed to be without value.
INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES
The Fund will not own more than 3% of the total outstanding voting stock
of any investment company, invest more than 5% of its total assets in any
investment company, or invest more than 10% of its total assets in
investment companies in general. 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 acquisition of assets.
The Fund will limit its investment in other investment companies to those
with a sales charge of less than 1% that have investment objectives and
policies similar to its own. While it is the Fund's policy to waive its
investment advisory fee on assets invested in securities of open-end
investment companies, it should be noted that investment companies incur
certain expenses such as custodian and transfer agent fees, and,
therefore, any investment by the Fund in shares of another investment
company would be subject to such duplicate expenses.
INVESTING IN NEW ISSUERS
The Fund will not invest more than 5% of the value of its total assets in
securities of issuers which have records of less than three years of
continuous operations, including the operation of any predecessor.
INVESTING IN ILLIQUID SECURITIES
The Fund will not invest more than 15% of the value of its net assets in
illiquid securities, including securities not determined by the Board of
Directors to be liquid, and repurchase agreements with maturities longer
than seven days after notice.
INVESTING IN RESTRICTED SECURITIES
The Fund will not invest more than 5% of its net assets in securities
subject to restriction on resale under federal securities law, except for
Section 4(2) commercial paper and other restricted securities deemed to
be liquid under criteria established by the Board of Directors.
PUTS AND CALLS
The Fund will not write call options on securities unless the securities
are held in the Fund's portfolio or unless the Fund is entitled to them
in deliverable form without further payment or after segregating cash in
the amount of any further payment. The Fund's investment in put or call
options, straddles, spreads, or any combination thereof shall not exceed
5% of the Fund's total assets.
INVESTING IN ISSUERS WHOSE SECURITIES ARE OWNED BY OFFICERS AND DIRECTORS OF
THE CORPORATION
The Fund will not purchase or retain the securities of any issuer if the
officers and Directors of the Corporation or its investment adviser
owning individually more than 1/2 of 1% of the issuer's securities
together own more than 5% of the issuer's securities.
- --------------------------------------------------------------------------------
Except with respect to borrowing money, if a percentage limitation is adhered to
at the time of investment, a later increase or decrease in percentage resulting
from any change in value or net assets will not result in a violation of such
restriction. For purposes of its policies and limitations, the Fund considers
certificates of deposit and demand and time deposits issued by a U.S. branch of
a domestic bank or savings and loan having capital, surplus, and individual
profits in excess of $100,000,000 at the time of investment to be "cash items."
The Fund does not intend to borrow money, pledge securities, or invest in
securities of other investment companies in excess of 5% of the value of its
total assets during the coming fiscal year. In addition, in order to comply with
investment restrictions of certain states, the Fund will not invest more than
10% of its total assets in the securities of one or more real estate investment
trusts.
The Fund reserves the right to convert to a master/feeder arrangement. The
Fund's portfolio may, notwithstanding any investment policy or limitation,
invest all of its assets in the securities of a single open-end management
investment company with substantially the same investment objectives, policies
and limitations as the Fund.
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 II; Cash Trust Series, Inc.; 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; Insight Institutional Series, Inc.;
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
U.S. Government Money Market Trust; Liberty Term Trust, Inc.-1999; 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; 111 Corcoran Funds; 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; Trust for U.S. Treasury Obligations.
INVESTMENT ADVISORY SERVICES
- --------------------------------------------------------------------------------
ADVISER TO THE FUND
The Fund's investment adviser is Federated Management. 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, his wife, and
his son, J. Christopher Donahue. John F. Donahue, is Chairman and Trustee,
Federated Management, Chairman and Trustee, Federated Investors, and Chairman
and Director of the Corporation. John A. Staley, IV, is President and Trustee,
Federated Management, Vice President and Trustee, Federated Investors, Executive
Vice President, Federated Securities Corp., and Vice President of the
Corporation. J. Christopher Donahue, is Trustee, Federated Management, President
and Trustee, Federated Investors, President and Director, Federated
Administrative Services, and Vice President of the Corporation. John W.
McGonigle, is Vice President, Secretary, and Trustee, Federated Management, Vice
President, Secretary, General Counsel, and Trustee, Federated Investors,
Executive Vice President, Secretary, and Director, Federated Administrative
Services, Executive Vice President and Director, Federated Securities Corp., and
Vice President and Secretary of the Corporation.
The adviser shall not be liable to the Fund, the Corporation or any shareholder
of the Fund 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
Corporation.
- --------------------------------------------------------------------------------
ADVISORY FEES
For its advisory services, Federated Management 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
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 reimbursed by the adviser will
be limited, in any fiscal year, by the amount of the in investment
advisory fee.
This arrangement is not part of the advisory contract and may be amended
or rescinded in the future.
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. John A. Staley, IV, an officer of the Corporation and Dr. Henry J.
Gailliot, an officer of Federated Management, 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.
BROKERAGE TRANSACTIONS
- --------------------------------------------------------------------------------
The adviser may select brokers and dealers who offer brokerage and research
services. These services may be furnished directly to the Fund or to the adviser
and may include:
- - advice as to the advisability of investing in securities;
- - security analysis and reports;
- - economic studies;
- - industry studies;
- - receipt of quotations for portfolio evaluations; and
- - similar services.
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 person 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 plus a sales charge on days the New York Stock Exchange
is open for business. The procedure for purchasing Shares is explained in the
respective prospectus under "Investing in Class A Shares" or "Investing in
Fortress Shares."
DISTRIBUTION OF SHARES
Federated Securities Corp. is the principal distributor for Shares of the Fund.
DISTRIBUTION AND SHAREHOLDER SERVICES PLANS
These arrangements permit the payment of fees to Financial Institutions, the
distributor, and Federated Shareholder Services, to stimulate distribution
activities and 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, marketing efforts; 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.
With respect to Fortress Shares of the Fund, by adopting the Distribution Plan,
the Board of Directors expects that the Fund will be able to achieve a more
predictable flow of cash for investment purposes and to meet redemptions. This
will facilitate more efficient portfolio management and assist the Fund in
pursuing its investment objectives. By identifying potential investors whose
needs are served by the Fund's objectives, and properly servicing these
accounts, it may be possible to curb sharp fluctuations in rates of redemptions
and sales.
Other benefits, which may be realized under either arrangement, may include: (1)
providing personal services to shareholders; (2) investing shareholder assets
with a minimum of delay and administrative detail; and (3) enhancing shareholder
recordkeeping systems; and (4) responding promptly to shareholders' requests and
inquiries concerning their accounts.
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 acts as the shareholder's agent in depositing
checks and converting them to federal funds.
PURCHASES BY SALES REPRESENTATIVES, DIRECTORS OF THE CORPORATION, AND EMPLOYEES
Directors, employees, and sales representatives of the Fund, Federated
Management, and Federated Securities Corp. or their affiliates, or any
investment dealer who has a sales agreement with Federated Securities Corp., and
their spouses and children under 21, may buy Shares at net asset value without a
sales charge or redemption fees. Shares may also be sold without a sales charge
to trusts or pension or profit-sharing plans for these persons.
These sales are made with the purchaser's written assurance that the purchase is
for investment purposes and that the securities will not be resold except
through redemption by the Fund.
EXCHANGING SECURITIES FOR FUND SHARES
Investors may exchange securities they already own for Shares, or they may
exchange a combination of securities and cash for Shares. Any securities to be
exchanged must meet the investment objective and policies of the Fund, must have
readily ascertainable market value, must be liquid, and must not be subject to
restrictions on resale.
The Fund will prepare a list of securities which are eligible for acceptance and
furnish this list to brokers upon request. The Fund reserves the right to reject
any security, even though it appears on the list, and the right to amend the
list of acceptable securities at any time without notice to brokers or
investors.
An investment broker acting for an investor should forward the securities in
negotiable form with an authorized letter of transmittal to Federated Securities
Corp. Federated Securities Corp. will determine that transmittal papers are in
good order and forward to the Fund's custodian, State Street Bank. The Fund will
notify the broker of its acceptance and valuation of the securities within five
business days of their receipt by State Street Bank.
The Fund values such securities in the same manner as the Fund values its
portfolio securities. The basis of the exchange will depend upon the net asset
value of Shares on the day the securities are valued. One Share will be issued
for each equivalent amount of securities accepted.
Any interest earned on the securities prior to the exchange will be considered
in valuing the securities. All interest, dividends, subscription, conversion, or
other rights attached to the securities become the property of the Fund, along
with the securities.
TAX CONSEQUENCES
Exercise of this exchange privilege is treated as a sale for federal income tax
purposes. Depending upon the cost basis of the securities exchanged for Shares,
a gain or loss may be realized by the investor.
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 respective prospectuses.
- --------------------------------------------------------------------------------
DETERMINING MARKET VALUE OF SECURITIES
Market or fair values of the Fund's portfolio securities are determined as
follows:
- - according to the last reported sale price on a recognized securities exchange,
if available. (If a security is traded on more than one exchange, the price on
the primary market for that security, as determined by the adviser, is used.);
- - according to the last reported bid price, if no sale on the recognized
exchange is reported or if the security is traded over-the-counter;
- - at fair value as determined in good faith by the Corporation's Board of
Directors; or
- - for short-term obligations with remaining maturities of less than 60 days at
the time of purchase, at amortized cost, which approximates value.
Prices provided by independent pricing services may be determined without
relying exclusively on quoted prices and may consider: institutional trading in
similar groups of securities; yield; quality; coupon rate; maturity; type of
issue; trading characteristics; and other market data.
TRADING IN FOREIGN SECURITIES
Trading in foreign securities may be completed at times which vary from the
closing of the New York Stock Exchange. In computing the net asset value, the
Fund values foreign securities at the latest closing price on the exchange on
which they are traded immediately prior to the closing of the New York Stock
Exchange. Certain foreign currency exchange rates may also be determined at the
latest rate prior to the closing of the New York Stock Exchange. Foreign
securities quoted in foreign currencies are translated into U.S. dollars at
current rates. Occasionally, events that affect these values and exchange rates
may occur between the times at which they are determined and the closing of the
New York Stock Exchange. If such events materially affect the value of portfolio
securities, these securities may be valued at their fair value as determined in
good faith by the Board of Directors, although the actual calculation may be
done by others.
EXCHANGE PRIVILEGE (FORTRESS SHARES ONLY)
- --------------------------------------------------------------------------------
This section relates only to Fortress Shares of the Fund. For information
regarding the Exchange Privilege for Class A Shares of the Fund, please see the
prospectus for Class A Shares.
The Securities and Exchange Commission has issued an order exempting the Fund
from certain provisions of the Investment Company Act of 1940. As a result, Fund
shareholders are allowed to exchange all or some of their shares for shares in
other Fortress Funds or certain Federated Funds which are sold with a sales
charge different from that of the fund or with no sales charge and which are
advised by subsidiaries or affiliates of Federated Investors. These exchanges
are made at net asset value plus the difference between the Fund's sales charge
already paid and any sales charge of the fund into which the Shares are to be
exchanged, if higher.
The order also allows certain other funds, including funds that are not advised
by subsidiaries or affiliates of Federated Investors, which do not have a sales
charge, to exchange their shares for Shares on a basis other than the current
offering price. These exchanges may be made to the extent that such shares were
acquired in a prior exchange, at net asset value, for shares of a Federated Fund
carrying a sales charge.
REDUCED SALES CHARGE
If a shareholder making such an exchange qualifies for a reduction or
elimination of the sales charge, the shareholder must notify Federated
Securities Corp.
REQUIREMENTS FOR EXCHANGE
Shareholders using this privilege must exchange Shares having a net asset value
which at least meets the minimum investment required for the fund into which the
exchange is being made. Before the exchange, the shareholder must receive a
prospectus of the fund for which the exchange is being made.
This privilege is available to shareholders resident in any state in which the
fund shares being acquired may be sold. Upon receipt of proper instructions and
required supporting documents, Shares submitted for exchange are redeemed and
the proceeds invested in shares of the other fund.
Further information on the exchange privilege and prospectuses for Fortress
Funds or certain Federated Funds are available by calling the Fund.
- --------------------------------------------------------------------------------
TAX CONSEQUENCES
Exercise of this exchange privilege is treated as a sale for federal income tax
purposes. Depending on the circumstances, a short-term or long-term capital gain
or loss may be realized.
MAKING AN EXCHANGE
Instructions for exchanges for Fortress Funds or certain Federated Funds may be
given in writing or by telephone. Written instructions may require a signature
guarantee.
REDEEMING SHARES
- --------------------------------------------------------------------------------
The Fund redeems Shares at the next computed net asset value after the Fund
receives the redemption request. Shareholder redemptions may be subject to a
contingent deferred sales charge. Redemption procedures are explained in the
respective prospectuses under "Redeeming Class A Shares" and "Redeeming Fortress
Shares." Although the transfer agent 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.
Since portfolio securities of the Fund may be traded on foreign exchanges which
trade on Saturdays or on holidays on which the Fund will not make redemptions,
the net asset value each class of Shares of the Fund may be significantly
affected on days when shareholders do not have an opportunity to redeem their
Shares.
Fortress Shares redeemed within one to four years of purchase may be subject to
a contingent deferred sales charge. The amount of the contingent deferred sales
charge is based upon the amount of the administrative fee paid at the time of
purchase by the distributor to the financial institution for services rendered,
and the length of time the investor remains a shareholder in the Fund. Should
financial institutions elect to receive an amount less than the administrative
fee that is stated in the prospectus for servicing a particular shareholder, the
contingent deferred sales charge and/or holding period for that particular
shareholder will be reduced accordingly.
REDEMPTION IN KIND
Although the Corporation intends to redeem Shares in cash, it reserves the right
under certain circumstances to pay the redemption price in whole or in part by a
distribution of securities from the Fund's portfolio.
Redemption in kind will be made in conformity with applicable Securities and
Exchange Commission rules, taking such securities at the same value employed in
determining net asset value and selecting the securities in a manner the
Directors determine to be fair and equitable.
The Corporation has elected to be governed by Rule 18f-1 of the Investment
Company Act of 1940 under which the Corporation is obligated to redeem Shares
for any one shareholder in cash only up to the lesser of $250,000 or 1% of the
Corporation's net asset value during any 90-day period.
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.
However, the Fund may invest in the stock of certain foreign corporations which
would constitute a Passive Foreign Investment Company (PFIC). Federal income
taxes may be imposed on the Fund upon disposition of PFIC investments.
UNITED KINGDOM TAXES
The adviser currently understands that an investment company such as the
Fund is not taxable under the laws of the United Kingdom as long as the
adviser follows certain operating procedures. To comply with these
procedures, the adviser will make all investment decisions for the Fund
and execute all portfolio transactions outside the United Kingdom.
- --------------------------------------------------------------------------------
SHAREHOLDERS' TAX STATUS
Shareholders are subject to federal income tax on dividends and capital gains
received as cash or additional Shares. The Fund's dividends, and any short-term
capital gains, are taxable as ordinary income.
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 both classes of shares of 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 net asset value 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, less any applicable sales
load, adjusted over the period by any additional Shares, assuming the annual
reinvestment of all dividends and distributions. Any applicable contingent
deferred sales charge is deducted from the ending value of the investment based
on the lesser of the original purchase price or the net asset value of Shares
redeemed. Occasionally, total return which does not reflect the effect of the
sales load may be quoted in advertising.
YIELD
- --------------------------------------------------------------------------------
The yield for both classes of Shares of the Fund is determined each day by
dividing the net investment income per share (as defined by the Securities and
Exchange Commission) earned by either class of Shares over a thirty-day period
by the maximum offering price per share of the respective class on the last day
of the period. This value is then annualized using semi-annual compounding. This
means that the amount of income generated during the thirty-day period is
assumed to be generated each month over 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 the shareholders.
To the extent that financial institutions and broker/dealers charge fees in
connection with services provided in conjunction with an investment in either
class of Shares, the performance will be reduced for those shareholders paying
those fees.
PERFORMANCE COMPARISONS
- --------------------------------------------------------------------------------
The Fund's performance of both classes of Shares depends upon such variables as:
- - portfolio quality;
- - average portfolio maturity;
- - type of instruments in which the portfolio is invested;
- - changes in interest rates on money market instruments;
- - changes in the Fund's or either class of Shares' expenses; and
- - various other factors.
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 comparisons of other funds, and methods
used to value portfolio securities and compute net asset value. The financial
publications and/or indices which the Fund uses in advertising may include:
- - 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 net asset value over a specific period of time.
- - EUROPE, AUSTRALIA, AND FAR EAST (EAFE) is a market capitalization weighted
foreign securities index, which is widely used to measure the performance of
European, Australian, New Zealand and Far Eastern stock markets. The index
covers approximately 1,020 companies drawn from 18 countries in the above
regions. The index values its securities daily in both U.S. dollars and local
currency and calculates total returns monthly. EAFE U.S. dollar total return
is a net dividend figure less Luxembourg withholding tax. The EAFE is
monitored by Capital International, S.A., Geneva, Switzerland.
- --------------------------------------------------------------------------------
- - STANDARD & POOR'S DAILY STOCK PRICE INDEX OF 500 COMMON STOCKS, a composite
index of common stocks in industry, transportation, and financial and public
utility companies, can be used to compare to the total returns of funds whose
portfolios are invested primarily in common stocks. In addition, the Standard
& Poor's index assumes reinvestments of all dividends paid by stocks listed on
its index. Taxes due on any of these distributions are not included, nor are
brokerage or other fees calculated in Standard & Poor's figures.
- - MORNINGSTAR, INC., an independent rating service, is the publisher of the
bi-weekly Mutual Fund Values. Mutual Fund Values rates more than 1,000
NASDQ-listed mutual funds of all types according to their risk-adjusted
returns. The maximum rating is five stars, and ratings are effective for two
weeks.
- - DOW JONES COMPOSITE AVERAGE or its component averages--an unmanaged index
composed of 30 blue-chip industrial corporation stocks (Dow Jones Industrial
Average), 15 utilities company stocks (Dow Jones Utilities Average), and 20
transportation company stocks. Comparisons of performance assume reinvestment
of dividends.
- - DOW JONES WORLD INDUSTRY INDEX or its component indices, including, among
others, the utility sector.
- - STANDARD & POOR'S 500 STOCK INDEX or its component indices--an unmanaged index
composed of 400 industrial stocks, 40 financial stocks, 40 utilities stocks,
and 20 transportation stocks. Comparisons of performance assume reinvestment
of dividends.
- - THE NEW YORK STOCK EXCHANGE composite or component indices--unmanaged indices
of all industrial, utilities, transportation, and finance stocks listed on the
New York Stock Exchange.
- - FINANCIAL TIMES ACTUARIES INDICES--including the FTA-World Index (and
components thereof), which are based on stocks in major world equity markets.
- - LIPPER-MUTUAL FUND PERFORMANCE ANALYSIS AND LIPPER-FIXED INCOME FUND
PERFORMANCE ANALYSIS--measure of total return and average current yield for
the mutual fund industry. Rank individual mutual fund performance over
specified time periods, assuming reinvestment of all distributions, exclusive
of any applicable sales charges.
- - VALUE LINE MUTUAL FUND SURVEY, published by Value Line Publishing,
Inc.--analyzes price, yield, risk, and total return for equity and fixed
income mutual funds.
- - MUTUAL FUND SOURCE BOOK, published by Morningstar, Inc.--analyzes price,
yield, risk, and total return for equity and fixed income funds.
- - CDA MUTUAL FUND REPORT, published by CDA Investment Technologies,
Inc.--analyzes price, current yield, risk, total return, and average rate of
return (average annual compounded growth rate) over specified time periods for
the mutual fund industry.
- - VALUE LINE INDEX--an unmanaged index which follows the stocks of approximately
1,700 companies.
- - WILSHIRE 5000 EQUITY INDEX--represents the return on the market value of all
common equity securities for which daily pricing is available. Comparisons of
performance assume reinvestment of dividends.
- - HISTORICAL DATA supplied by the research departments of First Boston
Corporation, the J. P. Morgan companies, Salomon Brothers, Merrill Lynch,
Pierce, Fenner & Smith, Smith Barney Shearson and Bloomberg L.P.
- - FINANCIAL PUBLICATIONS: The Wall Street Journal, Business Week, Changing
Times, Financial World, Forbes, Fortune and Money magazines, among
others--provide performance statistics over specified time periods.
- - MORGAN STANLEY CAPITAL INTERNATIONAL WORLD INDICES, including, among others,
the Morgan Stanley Capital International Europe, Australia, Far East Index
("EAFE Index"). The EAFE index is an unmanaged index of more than 1,000
companies of Europe, Australia and the Far East.
- - CONSUMER PRICE INDEX (OR COST OF LIVING INDEX), published by the U.S. Bureau
of Labor Statistics--a statistical measure of change, over time, in the price
of goods and services in major expenditure groups.
Advertisements and sales literature for both classes of shares may quote total
returns which are calculated on non-standardized base periods. These total
returns also represent the historic change in the value of an investment in
either class of shares based on annual reinvestment of dividends over a
specified period of time.
Advertisements may quote performance information which does reflect the effect
of the sales load.
APPENDIX
- --------------------------------------------------------------------------------
STANDARD & POOR'S CORPORATION ("STANDARD & POOR'S") CORPORATE BOND RATINGS
DEFINITIONS
AAA--Debt rated AAA has the highest rating assigned by Standard & Poor's.
Capacity to pay interest and repay principal is extremely strong.
AA--Debt rated AA has a very strong capacity to pay interest and repay principal
and differs from the higher rated issues only in small degree.
A--Debt rated A has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.
BBB--Debt rated BBB is regarded as having an adequate capacity to pay interest
and repay principal. Whereas it normally exhibits adequate protections
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.
BB, B, CCC--Debt rated BB, B, and CCC is regarded, on balance, as predominantly
speculative with respect to capacity to pay interest and repay principal in
accordance with the terms of the obligation. BB indicates the lowest degree of
speculation and CCC the highest degree of speculation. While such debt will
likely have some quality and protective characteristics, they are outweighed by
large uncertainties of major risk exposures to adverse conditions.
MOODY'S INVESTORS SERVICE, INC. ("MOODY'S") CORPORATE BOND RATINGS
AAA--Bonds which are rated Aaa are judged to be of best quality. They carry the
smallest degree of investment risk and are generally referred to as "gilt edge."
Interest payments are protected by a large or by an exceptionally stable margin
and principal is secure. While the various protective elements are likely to
change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
AA--Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large as in Aaa securities or fluctuations of protective elements
may be of greater amplitude or there may be other elements present which make
the long term risks appear somewhat larger than in Aaa securities.
A--Bonds which are rated A possess many favorable investment attributes and are
considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment sometime in the future.
BAA--Bonds which are rated Baa are considered as medium grade obligations, i.e.,
they are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
BA--Bonds which are rated Ba are judged top have speculative elements; their
future cannot be considered as well-assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B--Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
CAA--Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
STANDARD & POOR'S COMMERCIAL PAPER RATINGS
A-1--This designation indicates that the degree of safety regarding timely
payment is either overwhelming or very strong. Those issues determined to
possess overwhelming safety characteristics are denoted with a plus (+) sign
designation.
MOODY'S COMMERCIAL PAPER RATINGS
P-1--Issuers rated Prime-1 (or related supporting institutions) have a superior
capacity for repayment of short-term promissory obligations. Prime-1 repayment
capacity will normally be evidenced by the following characteristics:
conservative capitalization structures with moderate reliance on debt and ample
asset protection; broad margins in earning coverage of fixed financial changes
and high internal cash generation; well-established access to a range of
financial markets and assured sources of alternate liquidity.
4021404B (4/94)
PART C. OTHER INFORMATION.
Item 24. Financial Statements and Exhibits:
(a) Financial Statements (Filed in Part A-Supplement
to Prospectus)
(b) Exhibits:
(1) Copy of Articles of Incorporation of the
Registrant; (1)
(2) Copy of By-Laws of the Registrant; (1)
(3) Not applicable;
(4) Copy of Specimen Certificate for Shares of
Capital Stock of the Registrant; (2)
(5) Copy of Investment Advisory Contract of the
Registrant; (2)
(6) Copy of Distributor's Contract of the
Registrant; (2)
(7) Not applicable;
(8) Copy of Custodian Agreement of the
Registrant;+
(9) (i) Conformed copy of Fund Accounting,
Shareholder Recordkeeping, and Custody
Services Procurement Agreement of the
Registrant; +
(ii) Conformed copy of Administratrive
Services Agreement;+
(iii) Conformed copy of Shareholder Services
Plan;+
(iv) Conformed copy of Shareholder Services
Agreement;+
(v) Form of Shareholder Services Sub-
Contract;+
(10) Copy of Opinion and Consent of Counsel
as to legality of shares being
registered; (2)
(11) Conformed copy of Consent of Independent
Auditors;+
(12) Not applicable;
(13) Copy of Initial Capital Understanding;
(2)
(14) Not applicable;
(15) (i)Copy of Distribution Plan; (2)
(ii) Form of Dealer Agreement;+
(16) Schedule for Computation of Fund
Performance Data;+
(17) 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
Intitial Registration Statement on Form N-1A filed February
4, 1994. (File Nos. 33-52149 and 811-7141).
2. Response is incorporated by reference to Registrant's
Pre-Effective Amendment No.1 on Form N-1A filed March 24,
1994. (File Nos. 33-52149 and 811-7141).
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 July 3, 1994
Shares of capital stock
Fortress Shares 101
Class A Shares 236
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 "World
Investment 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 A of this Registration Statement under "Management
of the Corporation- 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, Halbrook & Bayard, 107 West Market
Street, Georgetown, Delaware 19947.
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 Durbiano, Roger A. Early,
Kathleen M. Foody-Malus, David C. Francis, Thomas M.
Franks, Edward C. Gonzales, Jeff A. Kozemchak, Marian
Marinack, Gregory M. Melvin, Susan M. Nason, Mary Jo
Ochson, Robert J. Ostrowski, Charles A. Ritter,
Christopher Wiles and John W. McGonigle, Vice
Presidents; Edward C. Gonzales, Treasurer, and John W.
McGonigle, Secretary. The business address of each of
the Officers of the Federated Research Division 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."
1. Response is incorporated by reference to Registrant's
Intitial Registration Statement on Form N-1A filed February
4, 1994. (File Nos. 33-52149 and 811-7141).
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: 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; 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.; Insurance Management
Series; 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 and
Federated Investors Tower Executive Officer, Chief Director
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 --
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
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
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
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.
World Utility Fund Federated Investors Tower
Pittsburgh, PA 15222-3779
Federated Services Company Federated Investors Tower
Transfer Agent, Dividend
Disbursing Agent and
Shareholder Servicing Agent
Federated Administrative
Services Federated Investors Tower
Administrator Pittsburgh, PA 15222-3779
Federated Management Federated Investors Tower
Adviser Pittsburgh, PA 15222-3779
State Street Bank and
Trust Company P.O. Box 8604
Custodian Boston, MA 02266-8604
Item 31. Management Services: Not applicable.
Item 32. Undertakings:
Registrant hereby undertakes to furnish each person to
whom a prospectus is delivered with a copy of the
Registrant's latest annual report to shareholders, upon
request and without charge.
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.
SIGNATURES
Pursuant to the requirements of the Securities Act of
1933 and the Investment Company Act of 1940, the Registrant,
WORLD INVESTMENT SERIES, INC. 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 22nd
day of July, 1994.
WORLD INVESTMENT SERIES, INC.
BY: /s/Byron F. Bowman
Byron F. Bowman, Assistant Secretary
Attorney in Fact for John F. Donahue
July 22, 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/Byron F. Bowman
Byron F. Bowman Attorney In Fact July 22, 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 (11) under N-1A
Exhibit 23 under 601/Reg SK
CONSENT OF ERNST & YOUNG, INDEPENDENT AUDITORS
We consent to the use of our report dated March 18, 1994 on
the statement of assets and liabilities in Post-Effective
Amendment Number 1 to the Registration Statement (Form N-1A
No. 33-52149) and the related Prospectus and the Supplement to
Combined Statement of Additional Information of World Utility
Fund (a Portfolio of World Investment Series, Inc.)
Ernst & Young
July 21, 1994
Exhibit 18 under Form N-1A
Exhibit 5 under Item 601/Reg S-K
HOUSTON, HOUSTON & DONNELLY
ATTORNEYS AT LAW
2510 CENTRE CITY TOWER
WILLIAM McC. HOUSTONPITTSBURGH, 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
July 21, 1994
World Investment Series, Inc.
Federated Investors Tower
Pittsburgh, PA 15222-3779
Gentlemen:
As counsel to World Investment 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-
52149). The subject Post-effective Amendment will be filed
pursuant to Paragraph (b) of Rule 485 and become effective
pursuant to said Rule on July 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: Thomas J. Donnelly
TJD:heh
Exhibit 8 under Form N-1A
Exhibit 10 under Item 601/RegS-K
CUSTODIAN CONTRACT
Between
FEDERATED INVESTMENT COMPANIES
and
STATE STREET BANK AND TRUST COMPANY
and
FEDERATED SERVICES COMPANY
TABLE OF CONTENTS
Page
1. Employment of Custodian and Property to be Held by It 1
2. Duties of the Custodian With Respect to Property
of the Funds Held by the Custodian 2
2.1 Holding Securities 2
2.2 Delivery of Securities 2
2.3 Registration of Securities 5
2.4 Bank Accounts 6
2.5 Payments for Shares 7
2.6 Availability of Federal Funds 7
2.7 Collection of Income 7
2.8 Payment of Fund Moneys 8
2.9 Liability for Payment in Advance of
Receipt of Securities Purchased. 9
2.10 Payments for Repurchases or Redemptions
of Shares of a Fund 9
2.11 Appointment of Agents 10
2.12 Deposit of Fund Assets in Securities System 10
2.13 Segregated Account 12
2.14 Joint Repurchase Agreements 13
2.15 Ownership Certificates for Tax Purposes 13
2.16 Proxies 13
2.17 Communications Relating to Fund Portfolio
Securities 13
2.18 Proper Instructions 14
2.19 Actions Permitted Without Express Authority 14
2.20 Evidence of Authority 15
2.21 Notice to Trust by Custodian Regarding Cash
Movement. 15
3. Duties of Custodian With Respect to the Books of
Account and Calculation of Net Asset Value and
Net Income 15
4. Records 16
5. Opinion of Funds' Independent Public
Accountants/Auditors 16
6. Reports to Trust by Independent Public
Accountants/Auditors 17
7. Compensation of Custodian 17
8. Responsibility of Custodian 17
9. Effective Period, Termination and Amendment 19
10. Successor Custodian 20
11. Interpretive and Additional Provisions 21
12. Massachusetts Law to Apply 22
13. Notices 22
14. Counterparts 22
15. Limitations of Liability 22
CUSTODIAN CONTRACT
This Contract between those INVESTMENT COMPANIES listed on
Exhibit 1, as it may be amended from time to time, (the
"Trust"), which may be Massachusetts business trusts or
Maryland corporations or have such other form of
organization as may be indicated, on behalf of the
portfolios (hereinafter collectively called the "Funds" and
individually referred to as a "Fund") of the Trust, having
its principal place of business at Federated Investors
Tower, Pittsburgh, Pennsylvania, 15222-3779, and STATE
STREET BANK AND TRUST COMPANY, a Massachusetts trust
company, having its principal place of business at 225
Franklin Street, Boston, Massachusetts, 02110, hereinafter
called the "Custodian", and FEDERATED SERVICES COMPANY, a
Delaware Business trust company, having its principal place
of business at Federated Investors Tower, Pittsburgh,
Pennsylvania, 15222-3779, hereinafter called ("Company").
WITNESSETH: That in consideration of the mutual covenants a
nd agreements hereinafter contained, the parties hereto
agree as follows:
1. Employment of Custodian and Property to be Held by It
The Trust hereby employs the Custodian as the custodian
of the assets of each of the Funds of the Trust. Except
as otherwise expressly provided herein, the securities
and other assets of each of the Funds shall be segregated
from the assets of each of the other Funds and from all
other persons and entities. The Trust will deliver to
the Custodian all securities and cash owned by the Funds
and all payments of income, payments of principal or
capital distributions received by them with respect to
all securities owned by the Funds from time to time, and
the cash consideration received by them for shares
("Shares") of beneficial interest/capital stock of the
Funds as may be issued or sold from time to time. The
Custodian shall not be responsible for any property of
the Funds held or received by the Funds and not delivered
to the Custodian.
Upon receipt of "Proper Instructions" (within the meaning
of Section 2.18), the Custodian shall from time to time
employ one or more sub-custodians upon the terms
specified in the Proper Instructions, provided that the
Custodian shall have no more or less responsibility or
liability to the Trust or any of the Funds on account of
any actions or omissions of any sub-custodian so employed
than any such sub-custodian has to the Custodian.
2.Duties of the Custodian With Respect to Property of the Funds
Held by the Custodian
2.1Holding Securities. The Custodian shall hold and phys
ically segregate for the account of each Fund all non-
cash property, including all securities owned by each
Fund, other than securities which are maintained
pursuant to Section 2.12 in a clearing agency which
acts as a securities depository or in a book-entry
system authorized by the U.S. Department of the
Treasury, collectively referred to herein as
"Securities System", or securities which are subject
to a joint repurchase agreement with affiliated funds
pursuant to Section 2.14. The Custodian shall
maintain records of all receipts, deliveries and
locations of such securities, together with a current
inventory thereof, and shall conduct periodic
physical inspections of certificates representing
stocks, bonds and other securities held by it under
this Contract in such manner as the Custodian shall
determine from time to time to be advisable in order
to verify the accuracy of such inventory. With
respect to securities held by any agent appointed
pursuant to Section 2.11 hereof, and with respect to
securities held by any sub-custodian appointed
pursuant to Section 1 hereof, the Custodian may rely
upon certificates from such agent as to the holdings
of such agent and from such sub-custodian as to the
holdings of such sub-custodian, it being understood
that such reliance in no way relieves the Custodian
of its responsibilities under this Contract. The
Custodian will promptly report to the Trust the
results of such inspections, indicating any shortages
or discrepancies uncovered thereby, and take
appropriate action to remedy any such shortages or
discrepancies.
2.2Delivery of Securities. The Custodian shall release and
deliver securities owned by a Fund held by the
Custodian or in a Securities System account of the
Custodian only upon receipt of Proper Instructions,
which may be continuing instructions when deemed
appropriate by the parties, and only in the following
cases:
(1)Upon sale of such securities for the account of a
Fund and receipt of payment therefor;
(2)Upon the receipt of payment in connection with any
repurchase agreement related to such securities
entered into by the Trust;
(3)In the case of a sale effected through a Securities
System, in accordance with the provisions of
Section 2.12 hereof;
(4)To the depository agent in connection with tender
or other similar offers for portfolio securities
of a Fund, in accordance with the provisions of
Section 2.17 hereof;
(5)To the issuer thereof or its agent when such securities
are called, redeemed, retired or otherwise
become payable; provided that, in any such case,
the cash or other consideration is to be
delivered to the Custodian;
(6)To the issuer thereof, or its agent, for transfer
into the name of a Fund or into the name of any
nominee or nominees of the Custodian or into the
name or nominee name of any agent appointed
pursuant to Section 2.11 or into the name or
nominee name of any sub-custodian appointed
pursuant to Section 1; or for exchange for a
different number of bonds, certificates or other
evidence representing the same aggregate face
amount or number of units; provided that, in any
such case, the new securities are to be delivered
to the Custodian;
(7)Upon the sale of such securities for the account of a
Fund, to the broker or its clearing agent,
against a receipt, for examination in accordance
with "street delivery custom"; provided that in
any such case, the Custodian shall have no
responsibility or liability for any loss arising
from the delivery of such securities prior to
receiving payment for such securities except as
may arise from the Custodian's own failure to act
in accordance with the standard of reasonable
care or any higher standard of care imposed upon
the Custodian by any applicable law or regulation
if such above-stated standard of reasonable care
were not part of this Contract;
(8)For exchange or conversion pursuant to any plan of
merger, consolidation, recapitalization,
reorganization or readjustment of the securities
of the issuer of such securities, or pursuant to
provisions for conversion contained in such
securities, or pursuant to any deposit agreement;
provided that, in any such case, the new
securities and cash, if any, are to be delivered
to the Custodian;
(9)In the case of warrants, rights or similar securities,
the surrender thereof in the exercise of
such warrants, rights or similar securities or
the surrender of interim receipts or temporary
securities for definitive securities; provided
that, in any such case, the new securities and
cash, if any, are to be delivered to the
Custodian;
(10)For delivery in connection with any loans of port
folio securities of a Fund, but only against
receipt of adequate collateral in the form of (a)
cash, in an amount specified by the Trust, (b)
certificated securities of a description
specified by the Trust, registered in the name of
the Fund or in the name of a nominee of the
Custodian referred to in Section 2.3 hereof or in
proper form for transfer, or (c) securities of a
description specified by the Trust, transferred
through a Securities System in accordance with
Section 2.12 hereof;
(11)For delivery as security in connection with any
borrowings requiring a pledge of assets by a Fund,
but only against receipt of amounts borrowed,
except that in cases where additional collateral
is required to secure a borrowing already made,
further securities may be released for the
purpose;
(12)For delivery in accordance with the provisions of
any agreement among the Trust or a Fund, the
Custodian and a broker-dealer registered under
the Securities Exchange Act of 1934, as amended,
(the "Exchange Act") and a member of The National
Association of Securities Dealers, Inc. ("NASD"),
relating to compliance with the rules of The
Options Clearing Corporation and of any
registered national securities exchange, or of
any similar organization or organizations,
regarding escrow or other arrangements in
connection with transactions for a Fund;
(13)For delivery in accordance with the provisions of
any agreement among the Trust or a Fund, the
Custodian, and a Futures Commission Merchant
registered under the Commodity Exchange Act,
relating to compliance with the rules of the
Commodity Futures Trading Commission and/or any
Contract Market, or any similar organization or
organizations, regarding account deposits in
connection with transaction for a Fund;
(14)Upon receipt of instructions from the transfer
agent ("Transfer Agent") for a Fund, for delivery
to such Transfer Agent or to the holders of
shares in connection with distributions in kind,
in satisfaction of requests by holders of Shares
for repurchase or redemption; and
(15)For any other proper corporate purpose, but only
upon receipt of, in addition to Proper
Instructions, a certified copy of a resolution of
the Executive Committee of the Trust on behalf of
a Fund signed by an officer of the Trust and
certified by its Secretary or an Assistant
Secretary, specifying the securities to be
delivered, setting forth the purpose for which
such delivery is to be made, declaring such
purpose to be a proper corporate purpose, and
naming the person or persons to whom delivery of
such securities shall be made.
2.3 Registration of Securities. Securities held by the
Custodian (other than bearer securities) shall be
registered in the name of a particular Fund or in the
name of any nominee of the Fund or of any nominee of
the Custodian which nominee shall be assigned
exclusively to the Fund, unless the Trust has
authorized in writing the appointment of a nominee to
be used in common with other registered investment
companies affiliated with the Fund, or in the name or
nominee name of any agent appointed pursuant to
Section 2.11 or in the name or nominee name of any
sub-custodian appointed pursuant to Section 1. All
securities accepted by the Custodian on behalf of a
Fund under the terms of this Contract shall be in
"street name" or other good delivery form.
2.4 Bank Accounts. The Custodian shall open and maintain
a separate bank account or accounts in the name of
each Fund, subject only to draft or order by the
Custodian acting pursuant to the terms of this
Contract, and shall hold in such account or accounts,
subject to the provisions hereof, all cash received
by it from or for the account of each Fund, other
than cash maintained in a joint repurchase account
with other affiliated funds pursuant to Section 2.14
of this Contract or by a particular Fund in a bank
account established and used in accordance with
Rule 17f-3 under the Investment Company Act of 1940,
as amended, (the "1940 Act"). Funds held by the
Custodian for a Fund may be deposited by it to its
credit as Custodian in the Banking Department of the
Custodian or in such other banks or trust companies
as it may in its discretion deem necessary or
desirable; provided, however, that every such bank or
trust company shall be qualified to act as a
custodian under the 1940 Act and that each such bank
or trust company and the funds to be deposited with
each such bank or trust company shall be approved by
vote of a majority of the Board of Trustees/Directors
("Board") of the Trust. Such funds shall be
deposited by the Custodian in its capacity as
Custodian for the Fund and shall be withdrawable by
the Custodian only in that capacity. If requested by
the Trust, the Custodian shall furnish the Trust, not
later than twenty (20) days after the last business
day of each month, an internal reconciliation of the
closing balance as of that day in all accounts
described in this section to the balance shown on the
daily cash report for that day rendered to the Trust.
2.5Payments for Shares. The Custodian shall make such
arrangements with the Transfer Agent of each Fund, as
will enable the Custodian to receive the cash
consideration due to each Fund and will deposit into
each Fund's account such payments as are received
from the Transfer Agent. The Custodian will provide
timely notification to the Trust and the Transfer
Agent of any receipt by it of payments for Shares of
the respective Fund.
2.6Availability of Federal Funds. Upon mutual agreement
between the Trust and the Custodian, the Custodian
shall make federal funds available to the Funds as of
specified times agreed upon from time to time by the
Trust and the Custodian in the amount of checks,
clearing house funds, and other non-federal funds
received in payment for Shares of the Funds which are
deposited into the Funds' accounts.
2.7 Collection of Income.
(1)The Custodian shall collect on a timely basis all
income and other payments with respect to
registered securities held hereunder to which
each Fund shall be entitled either by law or
pursuant to custom in the securities business,
and shall collect on a timely basis all income
and other payments with respect to bearer
securities if, on the date of payment by the
issuer, such securities are held by the Custodian
or its agent thereof and shall credit such
income, as collected, to each Fund's custodian
account. Without limiting the generality of the
foregoing, the Custodian shall detach and present
for payment all coupons and other income items
requiring presentation as and when they become
due and shall collect interest when due on
securities held hereunder. The collection of
income due the Funds on securities loaned
pursuant to the provisions of Section 2.2 (10)
shall be the responsibility of the Trust. The
Custodian will have no duty or responsibility in
connection therewith, other than to provide the
Trust with such information or data as may be
necessary to assist the Trust in arranging for
the timely delivery to the Custodian of the
income to which each Fund is properly entitled.
(2)The Custodian shall promptly notify the Trust whenever
income due on securities is not collected in
due course and will provide the Trust with
monthly reports of the status of past due income
unless the parties otherwise agree.
2.8Payment of Fund Moneys. Upon receipt of Proper Instructions,
which may be continuing instructions when
deemed appropriate by the parties, the Custodian
shall pay out moneys of each Fund in the following
cases only:
(1)Upon the purchase of securities, futures contracts
or options on futures contracts for the account
of a Fund but only (a) against the delivery of
such securities, or evidence of title to futures
contracts, to the Custodian (or any bank, banking
firm or trust company doing business in the
United States or abroad which is qualified under
the 1940 Act to act as a custodian and has been
designated by the Custodian as its agent for this
purpose) registered in the name of the Fund or in
the name of a nominee of the Custodian referred
to in Section 2.3 hereof or in proper form for
transfer, (b) in the case of a purchase effected
through a Securities System, in accordance with
the conditions set forth in Section 2.12 hereof
or (c) in the case of repurchase agreements
entered into between the Trust and any other
party, (i) against delivery of the securities
either in certificate form or through an entry
crediting the Custodian's account at the Federal
Reserve Bank with such securities or (ii) against
delivery of the receipt evidencing purchase for
the account of the Fund of securities owned by
the Custodian along with written evidence of the
agreement by the Custodian to repurchase such
securities from the Fund;
(2)In connection with conversion, exchange or surrender
of securities owned by a Fund as set forth in
Section 2.2 hereof;
(3)For the redemption or repurchase of Shares of a
Fund issued by the Trust as set forth in Section
2.10 hereof;
(4)For the payment of any expense or liability incurred
by a Fund, including but not limited to the
following payments for the account of the Fund:
interest; taxes; management, accounting, transfer
agent and legal fees; and operating expenses of
the Fund, whether or not such expenses are to be
in whole or part capitalized or treated as
deferred expenses;
(5)For the payment of any dividends on Shares of a Fund
declared pursuant to the governing documents
of the Trust;
(6)For payment of the amount of dividends received in
respect of securities sold short;
(7)For any other proper purpose, but only upon receipt
of, in addition to Proper Instructions, a
certified copy of a resolution of the Executive
Committee of the Trust on behalf of a Fund
signed by an officer of the Trust and certified
by its Secretary or an Assistant Secretary,
specifying the amount of such payment, setting
forth the purpose for which such payment is to be
made, declaring such purpose to be a proper
purpose, and naming the person or persons to whom
such payment is to be made.
2.9Liability for Payment in Advance of Receipt of Securities
Purchased. In any and every case where payment
for purchase of securities for the account of a Fund
is made by the Custodian in advance of receipt of the
securities purchased, in the absence of specific
written instructions from the Trust to so pay in
advance, the Custodian shall be absolutely liable to
the Fund for such securities to the same extent as if
the securities had been received by the Custodian.
2.10Payments for Repurchases or Redemptions of Shares of
a Fund. From such funds as may be available for the
purpose of repurchasing or redeeming Shares of a
Fund, but subject to the limitations of the
Declaration of Trust/Articles of Incorporation and
any applicable votes of the Board of the Trust
pursuant thereto, the Custodian shall, upon receipt
of instructions from the Transfer Agent, make funds
available for payment to holders of shares of such
Fund who have delivered to the Transfer Agent a
request for redemption or repurchase of their shares
including without limitation through bank drafts,
automated clearinghouse facilities, or by other
means. In connection with the redemption or
repurchase of Shares of the Funds, the Custodian is
authorized upon receipt of instructions from the
Transfer Agent to wire funds to or through a
commercial bank designated by the redeeming
shareholders.
2.11Appointment of Agents. The Custodian may at any time
or times in its discretion appoint (and may at any
time remove) any other bank or trust company which is
itself qualified under the 1940 Act and any
applicable state law or regulation, to act as a
custodian, as its agent to carry out such of the
provisions of this Section 2 as the Custodian may
from time to time direct; provided, however, that the
appointment of any agent shall not relieve the
Custodian of its responsibilities or liabilities
hereunder.
2.12Deposit of Fund Assets in Securities System. The
Custodian may deposit and/or maintain securities owned
by the Funds in a clearing agency registered with the
Securities and Exchange Commission ("SEC") under
Section 17A of the Exchange Act, which acts as a
securities depository, or in the book-entry system
authorized by the U.S. Department of the Treasury and
certain federal agencies, collectively referred to
herein as "Securities System" in accordance with
applicable Federal Reserve Board and SEC rules and
regulations, if any, and subject to the following
provisions:
(1)The Custodian may keep securities of each Fund in a Securities System
provided that such securities are represented in an account ("Account")
of the Custodian in the Securities System which shall not include any
assets of the Custodian other than assets held as a fiduciary,
custodian or otherwise for customers;
(2)The records of the Custodian with respect to securities of the Funds
which are maintained in a Securities System shall identify by book-
entry those securities belonging to each Fund;
(3)The Custodian shall pay for securities purchased for the account of
each Fund upon (i) receipt of advice from the Securities System that
such securities have been transferred to the Account, and (ii) the
making of
an entry on the records of the Custodian to reflect such payment and
transfer for the account of the Fund. The Custodian shall transfer
securities sold for the account of a Fund upon (i) receipt of advice
from the Securities System that payment for such securities has been
transferred to the Account, and (ii) the making of an entry on the
records of the Custodian to reflect such transfer and payment for the
account of the Fund. Copies of all advices from the Securities System
of transfers of securities for the account of a Fund shall identify the
Fund, be maintained for the Fund by the Custodian and be provided to
the Trust at its request. Upon request, the Custodian shall furnish
the Trust confirmation of each transfer to or from the account of a
Fund in the form of a written advice or notice and shall furnish to the
Trust copies of daily transaction sheets reflecting each day's
transactions in the Securities System for the account of a Fund.
(4)The Custodian shall provide the Trust with any report obtained by the
Custodian on the Securities System's accounting system, internal
accounting control and procedures for safeguarding securities deposited
in the Securities System;
(5)The Custodian shall have received the initial certificate, required by
Section 9 hereof;
(6)Anything to the contrary in this Contract notwithstanding, the
Custodian shall be liable to the Trust for any loss or damage to
a Fund resulting from use of the Securities System by reason of any
negligence,
misfeasance or misconduct of the Custodian or any of its agents or of
any of its or their employees or from failure of the Custodian or any
such agent to enforce effectively such rights as it may have against
the Securities System; at the election of the Trust, it shall be
entitled to be subrogated to the rights of the Custodian with respect
to any claim against the Securities System or any other person which
the Custodian may have as a consequence of any such loss or damage if
and to the extent that a Fund has not been made whole for any such
loss or damage.
(7)The authorization contained in this Section 2.12 shall not relieve the
Custodian from using reasonable care and diligence in making use of any
Securities System.
2.13Segregated Account. The Custodian shall upon receipt
of Proper Instructions establish and maintain a
segregated account or accounts for and on behalf of
each Fund, into which account or accounts may be
transferred cash and/or securities, including
securities maintained in an account by the Custodian
pursuant to Section 2.12 hereof, (i) in accordance
with the provisions of any agreement among the Trust,
the Custodian and a broker-dealer registered under
the Exchange Act and a member of the NASD (or any
futures commission merchant registered under the
Commodity Exchange Act), relating to compliance with
the rules of The Options Clearing Corporation and of
any registered national securities exchange (or the
Commodity Futures Trading Commission or any
registered contract market), or of any similar
organization or organizations, regarding escrow or
other arrangements in connection with transactions
for a Fund, (ii) for purpose of segregating cash or
government securities in connection with options
purchased, sold or written for a Fund or commodity
futures contracts or options thereon purchased or
sold for a Fund, (iii) for the purpose of compliance
by the Trust or a Fund with the procedures required
by any release or releases of the SEC relating to the
maintenance of segregated accounts by registered
investment companies and (iv) for other proper
corporate purposes, but only, in the case of clause
(iv), upon receipt of, in addition to Proper
Instructions, a certified copy of a resolution of the
Board or of the Executive Committee signed by an
officer of the Trust and certified by the Secretary
or an Assistant Secretary, setting forth the purpose
or purposes of such segregated account and declaring
such purposes to be proper corporate purposes.
2.14Joint Repurchase Agreements. Upon the receipt of Proper
Instructions, the Custodian shall deposit and/or
maintain any assets of a Fund and any affiliated
funds which are subject to joint repurchase
transactions in an account established solely for
such transactions for the Fund and its affiliated
funds. For purposes of this Section 2.14,
"affiliated funds" shall include all investment
companies and their portfolios for which subsidiaries
or affiliates of Federated Investors serve as
investment advisers, distributors or administrators
in accordance with applicable exemptive orders from
the SEC. The requirements of segregation set forth
in Section 2.1 shall be deemed to be waived with
respect to such assets.
2.15Ownership Certificates for Tax Purposes. The Custodian
shall execute ownership and other certificates and
affidavits for all federal and state tax purposes in
connection with receipt of income or other payments
with respect to securities of a Fund held by it and
in connection with transfers of securities.
2.16Proxies. The Custodian shall, with respect to the
securities held hereunder, cause to be promptly
executed by the registered holder of such securities,
if the securities are registered otherwise than in
the name of a Fund or a nominee of a Fund, all
proxies, without indication of the manner in which
such proxies are to be voted, and shall promptly
deliver to the Trust such proxies, all proxy
soliciting materials and all notices relating to such
securities.
2.17Communications Relating to Fund Portfolio Securities.
The Custodian shall transmit promptly to the Trust
all written information (including, without
limitation, pendency of calls and maturities of
securities and expirations of rights in connection
therewith and notices of exercise of call and put
options written by the Fund and the maturity of
futures contracts purchased or sold by the Fund)
received by the Custodian from issuers of the
securities being held for the Fund. With respect to
tender or exchange offers, the Custodian shall
transmit promptly to the Trust all written
information received by the Custodian from issuers of
the securities whose tender or exchange is sought and
from the party (or his agents) making the tender or
exchange offer. If the Trust desires to take action
with respect to any tender offer, exchange offer or
any other similar transaction, the Trust shall notify
the Custodian in writing at least three business days
prior to the date on which the Custodian is to take
such action. However, the Custodian shall
nevertheless exercise its best efforts to take such
action in the event that notification is received
three business days or less prior to the date on
which action is required.
2.18Proper Instructions. Proper Instructions as used
throughout this Section 2 means a writing signed or
initialed by one or more person or persons as the
Board shall have from time to time authorized. Each
such writing shall set forth the specific transaction
or type of transaction involved. Oral instructions
will be deemed to be Proper Instructions if (a) the
Custodian reasonably believes them to have been given
by a person previously authorized in Proper
Instructions to give such instructions with respect
to the transaction involved, and (b) the Trust
promptly causes such oral instructions to be
confirmed in writing. Upon receipt of a certificate
of the Secretary or an Assistant Secretary as to the
authorization by the Board of the Trust accompanied
by a detailed description of procedures approved by
the Board, Proper Instructions may include
communications effected directly between electro-
mechanical or electronic devices provided that the
Board and the Custodian are satisfied that such
procedures afford adequate safeguards for a Fund's
assets.
2.19Actions Permitted Without Express Authority. The
Custodian may in its discretion, without express
authority from the Trust:
(1)make payments to itself or others for minor expenses
of handling securities or other similar items
relating to its duties under this Contract,
provided that all such payments shall be
accounted for to the Trust in such form that it
may be allocated to the affected Fund;
(2)surrender securities in temporary form for
securities in definitive form;
(3)endorse for collection, in the name of a Fund,
checks, drafts and other negotiable instruments; and
(4)in general, attend to all non-discretionary details
in connection with the sale, exchange,
substitution, purchase, transfer and other
dealings with the securities and property of each
Fund except as otherwise directed by the Trust.
2.20Evidence of Authority. The Custodian shall be protected
in acting upon any instructions, notice, request,
consent, certificate or other instrument or paper
reasonably believed by it to be genuine and to have
been properly executed on behalf of a Fund. The
Custodian may receive and accept a certified copy of
a vote of the Board of the Trust as conclusive
evidence (a) of the authority of any person to act in
accordance with such vote or (b) of any determination
of or any action by the Board pursuant to the
Declaration of Trust/Articles of Incorporation as
described in such vote, and such vote may be
considered as in full force and effect until receipt
by the Custodian of written notice to the contrary.
2.21Notice to Trust by Custodian Regarding Cash Movement.
The Custodian will provide timely notification to the
Trust of any receipt of cash, income or payments to
the Trust and the release of cash or payment by the
Trust.
3.Duties of Custodian With Respect to the Books of Account and
Calculation of Net Asset Value and Net Income.
The Custodian shall cooperate with and supply necessary
information to the entity or entities appointed by the Board
of the Trust to keep the books of account of each Fund
and/or compute the net asset value per share of the
outstanding Shares of each Fund or, if directed in
writing to do so by the Trust, shall itself keep such
books of account and/or compute such net asset value per
share. If so directed, the Custodian shall also
calculate daily the net income of a Fund as described in
the Fund's currently effective prospectus and Statement
of Additional Information ("Prospectus") and shall advise
the Trust and the Transfer Agent daily of the total
amounts of such net income and, if instructed in writing
by an officer of the Trust to do so, shall advise the
Transfer Agent periodically of the division of such net
income among its various components. The calculations of
the net asset value per share and the daily income of a
Fund shall be made at the time or times described from
time to time in the Fund's currently effective
Prospectus.
4. Records.
The Custodian shall create and maintain all records
relating to its activities and obligations under this
Contract in such manner as will meet the obligations of
the Trust and the Funds under the 1940 Act, with
particular attention to Section 31 thereof and Rules 31a-
1 and 31a-2 thereunder, and specifically including
identified cost records used for tax purposes. All such
records shall be the property of the Trust and shall at
all times during the regular business hours of the
Custodian be open for inspection by duly authorized
officers, employees or agents of the Trust and employees
and agents of the SEC. In the event of termination of
this Contract, the Custodian will deliver all such
records to the Trust, to a successor Custodian, or to
such other person as the Trust may direct. The Custodian
shall supply daily to the Trust a tabulation of
securities owned by a Fund and held by the Custodian and
shall, when requested to do so by the Trust and for such
compensation as shall be agreed upon between the Trust
and the Custodian, include certificate numbers in such
tabulations.
5. Opinion of Funds' Independent Public
Accountants/Auditors.
The Custodian shall take all reasonable action, as the
Trust may from time to time request, to obtain from year
to year favorable opinions from each Fund's independent
public accountants/auditors with respect to its
activities hereunder in connection with the preparation
of the Fund's registration statement, periodic reports,
or any other reports to the SEC and with respect to any
other requirements of such Commission.
6. Reports to Trust by Independent Public
Accountants/Auditors.
The Custodian shall provide the Trust, at such times as
the Trust may reasonably require, with reports by
independent public accountants/auditors for each Fund on
the accounting system, internal accounting control and
procedures for safeguarding securities, futures contracts
and options on futures contracts, including securities
deposited and/or maintained in a Securities System,
relating to the services provided by the Custodian for
the Fund under this Contract; such reports shall be of
sufficient scope and in sufficient detail, as may
reasonably be required by the Trust, to provide
reasonable assurance that any material inadequacies would
be disclosed by such examination and, if there are no
such inadequacies, the reports shall so state.
7. Compensation of Custodian.
The Custodian shall be entitled to reasonable
compensation for its services and expenses as Custodian,
as agreed upon from time to time between Company and the
Custodian.
8. Responsibility of Custodian.
The Custodian shall be held to a standard of reasonable
care in carrying out the provisions of this Contract;
provided, however, that the Custodian shall be held to
any higher standard of care which would be imposed upon
the Custodian by any applicable law or regulation if such
above stated standard of reasonable care was not part of
this Contract. The Custodian shall be entitled to rely
on and may act upon advice of counsel (who may be counsel
for the Trust) on all matters, and shall be without
liability for any action reasonably taken or omitted
pursuant to such advice, provided that such action is not
in violation of applicable federal or state laws or
regulations, and is in good faith and without negligence.
Subject to the limitations set forth in Section 15
hereof, the Custodian shall be kept indemnified by the
Trust but only from the assets of the Fund involved in
the issue at hand and be without liability for any action
taken or thing done by it in carrying out the terms and
provisions of this Contract in accordance with the above
standards.
In order that the indemnification provisions contained in
this Section 8 shall apply, however, it is understood
that if in any case the Trust may be asked to indemnify
or save the Custodian harmless, the Trust shall be fully
and promptly advised of all pertinent facts concerning
the situation in question, and it is further understood
that the Custodian will use all reasonable care to
identify and notify the Trust promptly concerning any
situation which presents or appears likely to present the
probability of such a claim for indemnification. The
Trust shall have the option to defend the Custodian
against any claim which may be the subject of this
indemnification, and in the event that the Trust so
elects it will so notify the Custodian and thereupon the
Trust shall take over complete defense of the claim, and
the Custodian shall in such situation initiate no further
legal or other expenses for which it shall seek
indemnification under this Section. The Custodian shall
in no case confess any claim or make any compromise in
any case in which the Trust will be asked to indemnify
the Custodian except with the Trust's prior written
consent.
Notwithstanding the foregoing, the responsibility of the
Custodian with respect to redemptions effected by check
shall be in accordance with a separate Agreement entered
into between the Custodian and the Trust.
If the Trust requires the Custodian to take any action
with respect to securities, which action involves the
payment of money or which action may, in the reasonable
opinion of the Custodian, result in the Custodian or its
nominee assigned to a Fund being liable for the payment
of money or incurring liability of some other form, the
Custodian may request the Trust, as a prerequisite to
requiring the Custodian to take such action, to provide
indemnity to the Custodian in an amount and form
satisfactory to the Custodian.
Subject to the limitations set forth in Section 15
hereof, the Trust agrees to indemnify and hold harmless
the Custodian and its nominee from and against all taxes,
charges, expenses, assessments, claims and liabilities
(including counsel fees) (referred to herein as
authorized charges) incurred or assessed against it or
its nominee in connection with the performance of this
Contract, except such as may arise from it or its
nominee's own failure to act in accordance with the
standard of reasonable care or any higher standard of
care which would be imposed upon the Custodian by any
applicable law or regulation if such above-stated
standard of reasonable care were not part of this
Contract. To secure any authorized charges and any
advances of cash or securities made by the Custodian to
or for the benefit of a Fund for any purpose which
results in the Fund incurring an overdraft at the end of
any business day or for extraordinary or emergency
purposes during any business day, the Trust hereby grants
to the Custodian a security interest in and pledges to
the Custodian securities held for the Fund by the
Custodian, in an amount not to exceed 10 percent of the
Fund's gross assets, the specific securities to be
designated in writing from time to time by the Trust or
the Fund's investment adviser. Should the Trust fail to
make such designation, or should it instruct the
Custodian to make advances exceeding the percentage
amount set forth above and should the Custodian do so,
the Trust hereby agrees that the Custodian shall have a
security interest in all securities or other property
purchased for a Fund with the advances by the Custodian,
which securities or property shall be deemed to be
pledged to the Custodian, and the written instructions of
the Trust instructing their purchase shall be considered
the requisite description and designation of the property
so pledged for purposes of the requirements of the
Uniform Commercial Code. Should the Trust fail to cause
a Fund to repay promptly any authorized charges or
advances of cash or securities, subject to the provision
of the second paragraph of this Section 8 regarding
indemnification, the Custodian shall be entitled to use
available cash and to dispose of pledged securities and
property as is necessary to repay any such advances.
9. Effective Period, Termination and Amendment.
This Contract shall become effective as of its execution,
shall continue in full force and effect until terminated
as hereinafter provided, may be amended at any time by
mutual agreement of the parties hereto and may be
terminated by either party by an instrument in writing
delivered or mailed, postage prepaid to the other party,
such termination to take effect not sooner than sixty
(60) days after the date of such delivery or mailing;
provided, however that the Custodian shall not act under
Section 2.12 hereof in the absence of receipt of an
initial certificate of the Secretary or an Assistant
Secretary that the Board of the Trust has approved the
initial use of a particular Securities System as required
in each case by Rule 17f-4 under the 1940 Act; provided
further, however, that the Trust shall not amend or
terminate this Contract in contravention of any
applicable federal or state regulations, or any provision
of the Declaration of Trust/Articles of Incorporation,
and further provided, that the Trust may at any time by
action of its Board (i) substitute another bank or trust
company for the Custodian by giving notice as described
above to the Custodian, or (ii) immediately terminate
this Contract in the event of the appointment of a
conservator or receiver for the Custodian by the
appropriate banking regulatory agency or upon the
happening of a like event at the direction of an
appropriate regulatory agency or court of competent
jurisdiction.
Upon termination of the Contract, the Trust shall pay to
the Custodian such compensation as may be due as of the
date of such termination and shall likewise reimburse the
Custodian for its costs, expenses and disbursements.
10. Successor Custodian.
If a successor custodian shall be appointed by the Board
of the Trust, the Custodian shall, upon termination,
deliver to such successor custodian at the office of the
Custodian, duly endorsed and in the form for transfer,
all securities then held by it hereunder for each Fund
and shall transfer to separate accounts of the successor
custodian all of each Fund's securities held in a
Securities System.
If no such successor custodian shall be appointed, the
Custodian shall, in like manner, upon receipt of a
certified copy of a vote of the Board of the Trust,
deliver at the office of the Custodian and transfer such
securities, funds and other properties in accordance with
such vote.
In the event that no written order designating a
successor custodian or certified copy of a vote of the
Board shall have been delivered to the Custodian on or
before the date when such termination shall become
effective, then the Custodian shall have the right to
deliver to a bank or trust company, which is a "bank" as
defined in the 1940 Act, (delete "doing business ...
Massachusetts" unless SSBT is the Custodian) doing
business in Boston, Massachusetts, of its own selection,
having an aggregate capital, surplus, and undivided
profits, as shown by its last published report, of not
less than $100,000,000, all securities, funds and other
properties held by the Custodian and all instruments held
by the Custodian relative thereto and all other property
held by it under this Contract for each Fund and to
transfer to separate accounts of such successor
custodian all of each Fund's securities held in any
Securities System. Thereafter, such bank or trust
company shall be the successor of the Custodian under
this Contract.
In the event that securities, funds and other properties
remain in the possession of the Custodian after the date
of termination hereof owing to failure of the Trust to
procure the certified copy of the vote referred to or of
the Board to appoint a successor custodian, the Custodian
shall be entitled to fair compensation for its services
during such period as the Custodian retains possession of
such securities, funds and other properties and the
provisions of this Contract relating to the duties and
obligations of the Custodian shall remain in full force
and effect.
11.Interpretive and Additional Provisions.
In connection with the operation of this Contract, the
Custodian and the Trust may from time to time agree on
such provisions interpretive of or in addition to the
provisions of this Contract as may in their joint opinion
be consistent with the general tenor of this Contract.
Any such interpretive or additional provisions shall be
in a writing signed by both parties and shall be annexed
hereto, provided that no such interpretive or additional
provisions shall contravene any applicable federal or
state regulations or any provision of the Declaration of
Trust/Articles of Incorporation. No interpretive or
additional provisions made as provided in the preceding
sentence shall be deemed to be an amendment of this
Contract.
12.Massachusetts Law to Apply.
This Contract shall be construed and the provisions
thereof interpreted under and in accordance with laws of
The Commonwealth of Massachusetts.
13. Notices.
Except as otherwise specifically provided herein, Notices
and other writings delivered or mailed postage prepaid to
the Trust at Federated Investors Tower, Pittsburgh,
Pennsylvania, 15222-3779, or to the Custodian at address
for SSBT only: 225 Franklin Street, Boston,
Massachusetts, 02110, or to such other address as the
Trust or the Custodian may hereafter specify, shall be
deemed to have been properly delivered or given hereunder
to the respective address.
14.Counterparts.
This Contract may be executed simultaneously in two or
more counterparts, each of which shall be deemed an
original.
15.Limitations of Liability.
The Custodian is expressly put on notice of the
limitation of liability as set forth in Article XI of the
Declaration of Trust of those Trusts which are business
trusts and agrees that the obligations and liabilities
assumed by the Trust and any Fund pursuant to this
Contract, including, without limitation, any obligation
or liability to indemnify the Custodian pursuant to
Section 8 hereof, shall be limited in any case to the
relevant Fund and its assets and that the Custodian shall
not seek satisfaction of any such obligation from the
shareholders of the relevant Fund, from any other Fund or
its shareholders or from the Trustees, Officers,
employees or agents of the Trust, or any of them. In
addition, in connection with the discharge and
satisfaction of any claim made by the Custodian against
the Trust, for whatever reasons, involving more than one
Fund, the Trust shall have the exclusive right to
determine the appropriate allocations of liability for
any such claim between or among the Funds.
IN WITNESS WHEREOF, each of the parties has caused this
instrument to be executed in its name and behalf by its duly
authorized representative and its seal to be hereunder
affixed effective as of the 1st day of December, 1993.
ATTEST: INVESTMENT COMPANIES (Except those
listed below)
/s/John G. McGonigle_________ By /s/John G. Donahue_____________
John G. McGonigle John F. Donahue
Secretary Chairman
ATTEST: STATE STREET BANK AND TRUST
COMPANY
/s/ Ed McKenzie______________ By /s/ F. J. Sidoti, Jr._________________
(Assistant) Secretary Typed Name: Frank J. Sidoti, Jr.
Typed Name: Ed McKenzie Title: Vice President
ATTEST: FEDERATED SERVICES COMPANY
/s/ Jeannette Fisher-Garber______ By /s/ James J. Dolan________________
Jeannette Fisher-Garber James J. Dolan
Secretary President
EXHIBIT 1
CONTRACT
DATE INVESTMENT COMPANY
2/24/94 World Investment Series, Inc.
2/24/94 World Utility Fund
2/24/94 Class A Shares
2/24/94 Fortress Shares
Exhibit 9 under Form N-1A
Exhibit 10 under Item 601/Reg. S-K
AGREEMENT
for
FUND ACCOUNTING,
SHAREHOLDER RECORDKEEPING,
and
CUSTODY SERVICES PROCUREMENT
AGREEMENT made as of the 1st day of December, 1993, by and between
those investment companies listed on Exhibit 1 as may be amended from
time to time, having their principal office and place of business at
Federated Investors Tower, Pittsburgh, PA 15222-3779 (the "Trust"), on
behalf of the portfolios (individually referred to herein as a "Fund" and
collectively as "Funds") of the Trust, and FEDERATED SERVICES COMPANY, a
Delaware business trust, having its principal office and place of
business at Federated Investors Tower, Pittsburgh, Pennsylvania 15222-
3779 (the "Company").
WHEREAS, the Trust is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended
(the "1940 Act"), with authorized and issued shares of capital stock or
beneficial interest ("Shares"); and
WHEREAS, the Trust wishes to retain the Company to provide certain
pricing, accounting and recordkeeping services for each of the Funds,
including any classes of shares issued by any Fund ("Classes"), and the
Company is willing to furnish such services; and
WHEREAS, the Trust desires to appoint the Company as its transfer
agent, dividend disbursing agent, and agent in connection with certain
other activities, and the Company desires to accept such appointment; and
WHEREAS, the Trust desires to appoint the Company as its agent to
select, negotiate and subcontract for custodian services from an approved
list of qualified banks and the Company desires to accept such
appointment; and
WHEREAS, from time to time the Trust may desire and may instruct the
Company to subcontract for the performance of certain of its duties and
responsibilities hereunder to State Street Bank and Trust Company or
another agent (the "Agent"); and
WHEREAS, the words Trust and Fund may be used interchangeably for
those investment companies consisting of only one portfolio;
NOW THEREFORE, in consideration of the premises and mutual covenants
herein contained, and intending to be legally bound hereby, the parties
hereto agree as follows:
SECTION ONE: Fund Accounting.
Article 1. Appointment.
The Trust hereby appoints the Company to provide certain pricing and
accounting services to the Funds, and/or the Classes, for the period and
on the terms set forth in this Agreement. The Company accepts such
appointment and agrees to furnish the services herein set forth in return
for the compensation as provided in Article 3 of this Section.
Article 2. The Company and Duties.
Subject to the supervision and control of the Trust's Board of
Trustees or Directors ("Board"), the Company will assist the Trust with
regard to fund accounting for the Trust, and/or the Funds, and/or the
Classes, and in connection therewith undertakes to perform the following
specific services;
A. Value the assets of the Funds and determine the net asset value per
share of each Fund and/or Class, at the time and in the manner from
time to time determined by the Board and as set forth in the
Prospectus and Statement of Additional Information ("Prospectus")
of each Fund;
B. Calculate the net income of each of the Funds, if any;
C. Calculate capital gains or losses of each of the Funds resulting
from sale or disposition of assets, if any;
D. Maintain the general ledger and other accounts, books and financial
records of the Trust, including for each Fund, and/or Class, as
required under Section 31(a) of the 1940 Act and the Rules
thereunder in connection with the services provided by the Company;
E. Preserve for the periods prescribed by Rule 31a-2 under the 1940
Act the records to be maintained by Rule 31a-1 under the 1940 Act
in connection with the services provided by the Company. The
Company further agrees that all such records it maintains for the
Trust are the property of the Trust and further agrees to surrender
promptly to the Trust such records upon the Trust's request;
F. At the request of the Trust, prepare various reports or other
financial documents required by federal, state and other applicable
laws and regulations; and
G. Such other similar services as may be reasonably requested by the
Trust.
Article 3. Compensation and Allocation of Expenses.
A. The Funds will compensate the Company for its services rendered
pursuant to Section One of this Agreement in accordance with the
fees set forth on Fee Schedules A ("A1, A2, A3 etc..."), annexed
hereto and incorporated herein, as may be added or amended from
time to time. Such fees do not include out-of-pocket disbursements
of the Company for which the Funds shall reimburse the Company upon
receipt of a separate invoice. Out-of-pocket disbursements shall
include, but shall not be limited to, the items specified in
Schedules B ("B1, B2, B3, etc..."), annexed hereto and incorporated
herein, as may be added or amended from time to time. Schedules B
may be modified by the Company upon not less than thirty days'
prior written notice to the Trust.
B. The Fund and/or the Class, and not the Company, shall bear the cost
of: custodial expenses; membership dues in the Investment Company
Institute or any similar organization; transfer agency expenses;
investment advisory expenses; costs of printing and mailing stock
certificates, Prospectuses, reports and notices; administrative
expenses; interest on borrowed money; brokerage commissions; taxes
and fees payable to federal, state and other governmental agencies;
fees of Trustees or Directors of the Trust; independent auditors
expenses; Federated Administrative Services and/or Federated
Administrative Services, Inc. legal and audit department expenses
billed to Federated Services Company for work performed related to
the Trust, the Funds, or the Classes; law firm expenses; or other
expenses not specified in this Article 3 which may be properly
payable by the Funds and/or classes.
C. The Company will send an invoice to each of the Funds as soon as
practicable after the end of each month. Each invoice will provide
detailed information about the compensation and out-of-pocket
expenses in accordance with Schedules A and Schedules B. The Funds
and or the Classes will pay to the Company the amount of such
invoice within 30 days of receipt of the invoices.
D. Any compensation agreed to hereunder may be adjusted from time to
time by attaching to Schedules A revised Schedules dated and signed
by a duly authorized officer of the Trust and/or the Funds and a
duly authorized officer of the Company.
E. The fee for the period from the effective date of this Agreement
with respect to a Fund or a Class to the end of the initial month
shall be prorated according to the proportion that such period
bears to the full month period. Upon any termination of this
Agreement before the end of any month, the fee for such period
shall be prorated according to the proportion which such period
bears to the full month period. For purposes of determining fees
payable to the Company, the value of the Fund's net assets shall be
computed at the time and in the manner specified in the Fund's
Prospectus.
F. The Company, in its sole discretion, may from time to time
subcontract to, employ or associate with itself such person or
persons as the Company may believe to be particularly suited to
assist it in performing services under this Section One. Such
person or persons may be third-party service providers, or they may
be officers and employees who are employed by both the Company and
the Funds. The compensation of such person or persons shall be
paid by the Company and no obligation shall be incurred on behalf
of the Trust, the Funds, or the Classes in such respect.
SECTION TWO: Shareholder Recordkeeping.
Article 4. Terms of Appointment.
Subject to the terms and conditions set forth in this Agreement, the
Trust hereby appoints the Company to act as, and the Company agrees to
act as, transfer agent and dividend disbursing agent for each Fund's
Shares, and agent in connection with any accumulation, open-account or
similar plans provided to the shareholders of any Fund
("Shareholder(s)"), including without limitation any periodic investment
plan or periodic withdrawal program.
As used throughout this Agreement, a "Proper Instruction" means a
writing signed or initialed by one or more person or persons as the Board
shall have from time to time authorized. Each such writing shall set
forth the specific transaction or type of transaction involved. Oral
instructions will be deemed to be Proper Instructions if (a) the Company
reasonably believes them to have been given by a person previously
authorized in Proper Instructions to give such instructions with respect
to the transaction involved, and (b) the Trust, or the Fund, and the
Company promptly cause such oral instructions to be confirmed in writing.
Proper Instructions may include communications effected directly between
electro-mechanical or electronic devices provided that the Trust, or the
Fund, and the Company are satisfied that such procedures afford adequate
safeguards for the Fund's assets. Proper Instructions may only be
amended in writing.
Article 5. Duties of the Company.
The Company shall perform the following services in accordance with
Proper Instructions as may be provided from time to time by the Trust as
to any Fund:
A. Purchases
(1) The Company shall receive orders and payment for the purchase
of shares and promptly deliver payment and appropriate
documentation therefore to the custodian of the relevant Fund,
(the "Custodian"). The Company shall notify the Fund and the
Custodian on a daily basis of the total amount of orders and
payments so delivered.
(2) Pursuant to purchase orders and in accordance with the Fund's
current Prospectus, the Company shall compute and issue the
appropriate number of Shares of each Fund and/or Class and
hold such Shares in the appropriate Shareholder accounts.
(3) For certificated Funds and/or Classes, if a Shareholder or its
agent requests a certificate, the Company, as Transfer Agent,
shall countersign and mail by first class mail, a certificate
to the Shareholder at its address as set forth on the transfer
books of the Funds, and/or Classes, subject to any Proper
Instructions regarding the delivery of certificates.
(4) In the event that any check or other order for the purchase of
Shares of the Fund and/or Class is returned unpaid for any
reason, the Company shall debit the Share account of the
Shareholder by the number of Shares that had been credited to
its account upon receipt of the check or other order, promptly
mail a debit advice to the Shareholder, and notify the Fund
and/or Class of its action. In the event that the amount paid
for such Shares exceeds proceeds of the redemption of such
Shares plus the amount of any dividends paid with respect to
such Shares, the Fund and/the Class or its distributor will
reimburse the Company on the amount of such excess.
B. Distribution
(1) Upon notification by the Funds of the declaration of any
distribution to Shareholders, the Company shall act as
Dividend Disbursing Agent for the Funds in accordance with the
provisions of its governing document and the then-current
Prospectus of the Fund. The Company shall prepare and mail or
credit income, capital gain, or any other payments to
Shareholders. As the Dividend Disbursing Agent, the Company
shall, on or before the payment date of any such distribution,
notify the Custodian of the estimated amount required to pay
any portion of said distribution which is payable in cash and
request the Custodian to make available sufficient funds for
the cash amount to be paid out. The Company shall reconcile
the amounts so requested and the amounts actually received
with the Custodian on a daily basis. If a Shareholder is
entitled to receive additional Shares by virtue of any such
distribution or dividend, appropriate credits shall be made to
the Shareholder's account, for certificated Funds and/or
Classes, delivered where requested; and
(2) The Company shall maintain records of account for each Fund
and Class and advise the Trust, each Fund and Class and its
Shareholders as to the foregoing.
C. Redemptions and Transfers
(1) The Company shall receive redemption requests and redemption
directions and, if such redemption requests comply with the
procedures as may be described in the Fund Prospectus or set
forth in Proper Instructions, deliver the appropriate
instructions therefor to the Custodian. The Company shall
notify the Funds on a daily basis of the total amount of
redemption requests processed and monies paid to the Company
by the Custodian for redemptions.
(2) At the appropriate time upon receiving redemption proceeds
from the Custodian with respect to any redemption, the Company
shall pay or cause to be paid the redemption proceeds in the
manner instructed by the redeeming Shareholders, pursuant to
procedures described in the then-current Prospectus of the
Fund.
(3) If any certificate returned for redemption or other request
for redemption does not comply with the procedures for
redemption approved by the Fund, the Company shall promptly
notify the Shareholder of such fact, together with the reason
therefor, and shall effect such redemption at the price
applicable to the date and time of receipt of documents
complying with said procedures.
(4) The Company shall effect transfers of Shares by the registered
owners thereof.
(5) The Company shall identify and process abandoned accounts and
uncashed checks for state escheat requirements on an annual
basis and report such actions to the Fund.
D. Recordkeeping
(1) The Company shall record the issuance of Shares of each Fund,
and/or Class, and maintain pursuant to applicable rules of the
Securities and Exchange Commission ("SEC") a record of the
total number of Shares of the Fund and/or Class which are
authorized, based upon data provided to it by the Fund, and
issued and outstanding. The Company shall also provide the
Fund on a regular basis or upon reasonable request with the
total number of Shares which are authorized and issued and
outstanding, but shall have no obligation when recording the
issuance of Shares, except as otherwise set forth herein, to
monitor the issuance of such Shares or to take cognizance of
any laws relating to the issue or sale of such Shares, which
functions shall be the sole responsibility of the Funds.
(2) The Company shall establish and maintain records pursuant to
applicable rules of the SEC relating to the services to be
performed hereunder in the form and manner as agreed to by the
Trust or the Fund to include a record for each Shareholder's
account of the following:
(a) Name, address and tax identification number (and whether
such number has been certified);
(b) Number of Shares held;
(c) Historical information regarding the account, including
dividends paid and date and price for all transactions;
(d) Any stop or restraining order placed against the account;
(e) Information with respect to withholding in the case of a
foreign account or an account for which withholding is
required by the Internal Revenue Code;
(f) Any dividend reinvestment order, plan application,
dividend address and correspondence relating to the
current maintenance of the account;
(g) Certificate numbers and denominations for any Shareholder
holding certificates;
(h) Any information required in order for the Company to
perform the calculations contemplated or required by this
Agreement.
(3) The Company shall preserve any such records required to be
maintained pursuant to the rules of the SEC for the periods
prescribed in said rules as specifically noted below. Such
record retention shall be at the expense of the Company, and
such records may be inspected by the Fund at reasonable times.
The Company may, at its option at any time, and shall
forthwith upon the Fund's demand, turn over to the Fund and
cease to retain in the Company's files, records and documents
created and maintained by the Company pursuant to this
Agreement, which are no longer needed by the Company in
performance of its services or for its protection. If not so
turned over to the Fund, such records and documents will be
retained by the Company for six years from the year of
creation, during the first two of which such documents will be
in readily accessible form. At the end of the six year
period, such records and documents will either be turned over
to the Fund or destroyed in accordance with Proper
Instructions.
E. Confirmations/Reports
(1) The Company shall furnish to the Fund periodically the
following information:
(a) A copy of the transaction register;
(b) Dividend and reinvestment blotters;
(c) The total number of Shares issued and outstanding in each
state for "blue sky" purposes as determined according to
Proper Instructions delivered from time to time by the
Fund to the Company;
(d) Shareholder lists and statistical information;
(e) Payments to third parties relating to distribution
agreements, allocations of sales loads, redemption fees,
or other transaction- or sales-related payments;
(f) Such other information as may be agreed upon from time to
time.
(2) The Company shall prepare in the appropriate form, file with
the Internal Revenue Service and appropriate state agencies,
and, if required, mail to Shareholders, such notices for
reporting dividends and distributions paid as are required to
be so filed and mailed and shall withhold such sums as are
required to be withheld under applicable federal and state
income tax laws, rules and regulations.
(3) In addition to and not in lieu of the services set forth
above, the Company shall:
(a) Perform all of the customary services of a transfer
agent, dividend disbursing agent and, as relevant, agent
in connection with accumulation, open-account or similar
plans (including without limitation any periodic
investment plan or periodic withdrawal program),
including but not limited to: maintaining all
Shareholder accounts, mailing Shareholder reports and
Prospectuses to current Shareholders, withholding taxes
on accounts subject to back-up or other withholding
(including non-resident alien accounts), preparing and
filing reports on U.S. Treasury Department Form 1099 and
other appropriate forms required with respect to
dividends and distributions by federal authorities for
all Shareholders, preparing and mailing confirmation
forms and statements of account to Shareholders for all
purchases and redemptions of Shares and other confirmable
transactions in Shareholder accounts, preparing and
mailing activity statements for Shareholders, and
providing Shareholder account information; and
(b) provide a system which will enable the Fund to monitor
the total number of Shares of each Fund and/or Class sold
in each state ("blue sky reporting"). The Fund shall by
Proper Instructions (i) identify to the Company those
transactions and assets to be treated as exempt from the
blue sky reporting for each state and (ii) verify the
classification of transactions for each state on the
system prior to activation and thereafter monitor the
daily activity for each state. The responsibility of the
Company for each Fund's and/or Class's state blue sky
registration status is limited solely to the recording of
the initial classification of transactions or accounts
with regard to blue sky compliance and the reporting of
such transactions and accounts to the Fund as provided
above.
F. Other Duties
(1) The Company shall answer correspondence from Shareholders
relating to their Share accounts and such other correspondence
as may from time to time be addressed to the Company;
(2) The Company shall prepare Shareholder meeting lists, mail
proxy cards and other material supplied to it by the Fund in
connection with Shareholder Meetings of each Fund; receive,
examine and tabulate returned proxies, and certify the vote of
the Shareholders;
(3) The Company shall establish and maintain facilities and
procedures for safekeeping of stock certificates, check forms
and facsimile signature imprinting devices, if any; and for
the preparation or use, and for keeping account of, such
certificates, forms and devices.
Article 6. Duties of the Trust.
A. Compliance
The Trust or Fund assume full responsibility for the preparation,
contents and distribution of their own and/or their classes'
Prospectus and for complying with all applicable requirements of
the Securities Act of 1933, as amended (the "1933 Act"), the 1940
Act and any laws, rules and regulations of government authorities
having jurisdiction.
B. Share Certificates
The Trust shall supply the Company with a sufficient supply of
blank Share certificates and from time to time shall renew such
supply upon request of the Company. Such blank Share certificates
shall be properly signed, manually or by facsimile, if authorized
by the Trust and shall bear the seal of the Trust or facsimile
thereof; and notwithstanding the death, resignation or removal of
any officer of the Trust authorized to sign certificates, the
Company may continue to countersign certificates which bear the
manual or facsimile signature of such officer until otherwise
directed by the Trust.
C. Distributions
The Fund shall promptly inform the Company of the declaration of
any dividend or distribution on account of any Fund's shares.
Article 7. Compensation and Expenses.
A. Annual Fee
For performance by the Company pursuant to Section Two of this
Agreement, the Trust and/or the Fund agree to pay the Company an
annual maintenance fee for each Shareholder account as set out in
Schedules C ("C1, C2, C3 etc..."), attached hereto, as may be added
or amended from time to time. Such fees may be changed from time
to time subject to written agreement between the Trust and the
Company. Pursuant to information in the Fund Prospectus or other
information or instructions from the Fund, the Company may sub-
divide any Fund into Classes or other sub-components for
recordkeeping purposes. The Company will charge the Fund the fees
set forth on Schedule C for each such Class or sub-component the
same as if each were a Fund.
B. Reimbursements
In addition to the fee paid under Article 7A above, the Trust
and/or Fund agree to reimburse the Company for out-of-pocket
expenses or advances incurred by the Company for the items set out
in Schedules D ("D1, D2, D3 etc..."), attached hereto, as may be
added or amended from time to time. In addition, any other
expenses incurred by the Company at the request or with the consent
of the Trust and/or the Fund, will be reimbursed by the appropriate
Fund.
C. Payment
The Company shall send an invoice with respect to fees and
reimbursable expenses to the Trust or each of the Funds as soon as
practicable at the end of each month. Each invoice will provide
detailed information about the Compensation and out-of-pocket
expenses in accordance with Schedules C and Schedules D. The Trust
or the Funds will pay to the Company the amount of such invoice
within 30 days following the receipt of the invoices.
Article 8. Assignment of Shareholder Recordkeeping.
Except as provided below, no right or obligation under this Section
Two may be assigned by either party without the written consent of
the other party.
(1) This Agreement shall inure to the benefit of and be binding
upon the parties and their respective permitted successors and
assigns.
(2) The Company may without further consent on the part of the
Trust subcontract for the performance hereof with (A) State
Street Bank and its subsidiary, Boston Financial Data
Services, Inc., a Massachusetts Trust ("BFDS"), which is duly
registered as a transfer agent pursuant to Section 17A(c)(1)
of the Securities Exchange Act of 1934, as amended, or any
succeeding statute ("Section 17A(c)(1)"), or (B) a BFDS
subsidiary duly registered as a transfer agent pursuant to
Section 17A(c)(1), or (C) a BFDS affiliate, or (D) such other
provider of services duly registered as a transfer agent under
Section 17A(c)(1) as Company shall select; provided, however,
that the Company shall be as fully responsible to the Trust
for the acts and omissions of any subcontractor as it is for
its own acts and omissions; or
(3) The Company shall upon instruction from the Trust subcontract
for the performance hereof with an Agent selected by the
Trust, other than BFDS or a provider of services selected by
Company, as described in (2) above; provided, however, that
the Company shall in no way be responsible to the Trust for
the acts and omissions of the Agent.
SECTION THREE: Custody Services Procurement
Article 9. Appointment.
The Trust hereby appoints Company as its agent to evaluate and
obtain custody services from a financial institution that (i) meets
the criteria established in Section 17(f) of the 1940 Act and (ii)
has been approved by the Board as eligible for selection by the
Company as a custodian (the "Eligible Custodian"). The Company
accepts such appointment.
Article 10. The Company and Its Duties.
Subject to the review, supervision and control of the Board, the
Company shall:
(1) evaluate the nature and the quality of the custodial services
provided by the Eligible Custodian;
(2) employ the Eligible Custodian to serve on behalf of the Trust
as Custodian of the Trust's assets substantially on the terms
set forth as the form of agreement in Exhibit 2;
(3) negotiate and enter into agreements with the Custodians for
the benefit of the Trust, with the Trust as a party to each
such agreement. The Company shall not be a party to any
agreement with any such Custodian;
(4) establish procedures to monitor the nature and the quality of
the services provided by the Custodians;
(5) continuously monitor the nature and the quality of services
provided by the Custodians; and
(6) periodically provide to the Trust (i) written reports on the
activities and services of the Custodians; (ii) the nature and
amount of disbursement made on account of the Trust with
respect to each custodial agreement; and (iii) such other
information as the Board shall reasonably request to enable it
to fulfill its duties and obligations under Sections 17(f) and
36(b) of the 1940 Act and other duties and obligations
thereof.
Article 11. Fees and Expenses.
A. Annual Fee
For the performance by the Company pursuant to Section Three of
this Agreement, the Trust and/or the Fund agree to pay the Company
an annual fee as set forth in Schedule E, attached hereto.
B. Payment
The Company shall send an invoice with respect to fees and
reimbursable expenses to each of the Trust/or Fund as soon as
practicable at the end of each month. Each invoice will provide
detailed information about the Compensation and out-of-pocket
expenses in occurrence with Schedule E. The Trust and/or Fund will
pay to the Company the amount of such invoice within 30 days
following the receipt of the invoice.
Article 12. Representations.
The Company represents and warrants that it has obtained all
required approvals from all government or regulatory authorities
necessary to enter into this arrangement and to provide the
services contemplated in Section Three of this Agreement.
SECTION FOUR: General Provisions.
Article 13. Documents.
A. In connection with the appointment of the Company under this
Agreement, the Trust shall file with the Company the following
documents:
(1) A copy of the Charter and By-Laws of the Trust and all
amendments thereto;
(2) A copy of the resolution of the Board of the Trust authorizing
this Agreement;
(3) Specimens of all forms of outstanding Share certificates of
the Trust or the Funds in the forms approved by the Board of
the Trust with a certificate of the Secretary of the Trust as
to such approval;
(4) All account application forms and other documents relating to
Shareholders accounts; and
(5) A copy of the current Prospectus for each Fund.
B. The Fund will also furnish from time to time the following
documents:
(1) Each resolution of the Board of the Trust authorizing the
original issuance of each Fund's, and/or Class's Shares;
(2) Each Registration Statement filed with the SEC and amendments
thereof and orders relating thereto in effect with respect to
the sale of Shares of any Fund, and/or Class;
(3) A certified copy of each amendment to the governing document
and the By-Laws of the Trust;
(4) Certified copies of each vote of the Board authorizing
officers to give Proper Instructions to the Custodian and
agents for fund accountant, custody services procurement, and
shareholder recordkeeping or transfer agency services;
(5) Specimens of all new Share certificates representing Shares of
any Fund, accompanied by Board resolutions approving such
forms;
(6) Such other certificates, documents or opinions which the
Company may, in its discretion, deem necessary or appropriate
in the proper performance of its duties; and
(7) Revisions to the Prospectus of each Fund.
Article 14. Representations and Warranties.
A. Representations and Warranties of the Company
The Company represents and warrants to the Trust that:
(1) It is a business trust duly organized and existing and in good
standing under the laws of the State of Delaware.
(2) It is duly qualified to carry on its business in the State of
Delaware.
(3) It is empowered under applicable laws and by its charter and
by-laws to enter into and perform this Agreement.
(4) All requisite corporate proceedings have been taken to
authorize it to enter into and perform its obligations under
this Agreement.
(5) It has and will continue to have access to the necessary
facilities, equipment and personnel to perform its duties and
obligations under this Agreement.
(6) It is in compliance with federal securities law requirements
and in good standing as a transfer agent.
B. Representations and Warranties of the Trust
The Trust represents and warrants to the Company that:
(1) It is an investment company duly organized and existing and in
good standing under the laws of its state of organization;
(2) It is empowered under applicable laws and by its Charter and
By-Laws to enter into and perform its obligations under this
Agreement;
(3) All corporate proceedings required by said Charter and By-Laws
have been taken to authorize it to enter into and perform its
obligations under this Agreement;
(4) The Trust is an open-end investment company registered under
the 1940 Act; and
(5) A registration statement under the 1933 Act will be effective,
and appropriate state securities law filings have been made
and will continue to be made, with respect to all Shares of
each Fund being offered for sale.
Article 15. Indemnification.
A. Indemnification by Trust
The Company shall not be responsible for and the Trust or Fund
shall indemnify and hold the Company, including its officers,
directors, shareholders and their agents employees and affiliates,
harmless against any and all losses, damages, costs, charges,
counsel fees, payments, expenses and liabilities arising out of or
attributable to:
(1) The acts or omissions of any Custodian,
(2) The Trust's or Fund's refusal or failure to comply with the
terms of this Agreement, or which arise out of the Trust's or
The Fund's lack of good faith, negligence or willful
misconduct or which arise out of the breach of any
representation or warranty of the Trust or Fund hereunder or
otherwise.
(3) The reliance on or use by the Company or its agents or
subcontractors of information, records and documents in proper
form which
(a) are received by the Company or its agents or
subcontractors and furnished to it by or on behalf of the
Fund, its Shareholders or investors regarding the
purchase, redemption or transfer of Shares and
Shareholder account information; or
(b) have been prepared and/or maintained by the Fund or its
affiliates or any other person or firm on behalf of the
Trust.
(4) The reliance on, or the carrying out by the Company or its
agents or subcontractors of Proper Instructions of the Trust
or the Fund.
(5) The offer or sale of Shares in violation of any requirement
under the federal securities laws or regulations or the
securities laws or regulations of any state that such Shares
be registered in such state or in violation of any stop order
or other determination or ruling by any federal agency or any
state with respect to the offer or sale of such Shares in such
state.
Provided, however, that the Company shall not be protected by
this Article 15.A. from liability for any act or omission
resulting from the Company's willful misfeasance, bad faith,
gross negligence or reckless disregard of its duties.
B. Indemnification by the Company
The Company shall indemnify and hold the Trust or each Fund
harmless from and against any and all losses, damages, costs,
charges, counsel fees, payments, expenses and liabilities arising
out of or attributable to any action or failure or omission to act
by the Company as a result of the Company's willful misfeasance,
bad faith, gross negligence or reckless disregard of its duties.
C. Reliance
At any time the Company may apply to any officer of the Trust or
Fund for instructions, and may consult with legal counsel with
respect to any matter arising in connection with the services to be
performed by the Company under this Agreement, and the Company and
its agents or subcontractors shall not be liable and shall be
indemnified by the Trust or the appropriate Fund for any action
reasonably taken or omitted by it in reliance upon such
instructions or upon the opinion of such counsel provided such
action is not in violation of applicable federal or state laws or
regulations. The Company, its agents and subcontractors shall be
protected and indemnified in recognizing stock certificates which
are reasonably believed to bear the proper manual or facsimile
signatures of the officers of the Trust or the Fund, and the proper
countersignature of any former transfer agent or registrar, or of a
co-transfer agent or co-registrar.
D. Notification
In order that the indemnification provisions contained in this
Article 15 shall apply, upon the assertion of a claim for which
either party may be required to indemnify the other, the party
seeking indemnification shall promptly notify the other party of
such assertion, and shall keep the other party advised with respect
to all developments concerning such claim. The party who may be
required to indemnify shall have the option to participate with the
party seeking indemnification in the defense of such claim. The
party seeking indemnification shall in no case confess any claim or
make any compromise in any case in which the other party may be
required to indemnify it except with the other party's prior
written consent.
Article 16. Termination of Agreement.
This Agreement may be terminated by either party upon one hundred
twenty (120) days written notice to the other. Should the Trust
exercise its rights to terminate, all out-of-pocket expenses
associated with the movement of records and materials will be borne
by the Trust or the appropriate Fund. Additionally, the Company
reserves the right to charge for any other reasonable expenses
associated with such termination. The provisions of Article 15
shall survive the termination of this Agreement.
Article 17. Amendment.
This Agreement may be amended or modified by a written agreement
executed by both parties.
Article 18. Interpretive and Additional Provisions.
In connection with the operation of this Agreement, the Company and
the Trust may from time to time agree on such provisions
interpretive of or in addition to the provisions of this Agreement
as may in their joint opinion be consistent with the general tenor
of this Agreement. Any such interpretive or additional provisions
shall be in a writing signed by both parties and shall be annexed
hereto, provided that no such interpretive or additional provisions
shall contravene any applicable federal or state regulations or any
provision of the Charter. No interpretive or additional provisions
made as provided in the preceding sentence shall be deemed to be an
amendment of this Agreement.
Article 19. Governing Law.
This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the
Commonwealth of Massachusetts
Article 20. Notices.
Except as otherwise specifically provided herein, Notices and other
writings delivered or mailed postage prepaid to the Trust at
Federated Investors Tower, Pittsburgh, Pennsylvania, 15222-3779, or
to the Company at Federated Investors Tower, Pittsburgh,
Pennsylvania, 15222-3779, or to such other address as the Trust or
the Company may hereafter specify, shall be deemed to have been
properly delivered or given hereunder to the respective address.
Article 21. Counterparts.
This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original.
Article 22. Limitations of Liability of Trustees and Shareholders of
the Trust.
The execution and delivery of this Agreement have been authorized
by the Trustees of the Trust and signed by an authorized officer of
the Trust, acting as such, and neither such authorization by such
Trustees nor such execution and delivery by such officer shall be
deemed to have been made by any of them individually or to impose
any liability on any of them personally, and the obligations of
this Agreement are not binding upon any of the Trustees or
Shareholders of the Trust, but bind only the appropriate property
of the Fund, or Class, as provided in the Declaration of Trust.
Article 23. Limitations of Liability of Trustees and Shareholders of
the Company.
The execution and delivery of this Agreement have been authorized
by the Trustees of the Company and signed by an authorized officer
of the Company, acting as such, and neither such authorization by
such Trustees nor such execution and delivery by such officer shall
be deemed to have been made by any of them individually or to
impose any liability on any of them personally, and the obligations
of this Agreement are not binding upon any of the Trustees or
Shareholders of the Company, but bind only the property of the
Company as provided in the Declaration of Trust.
Article 24. Assignment.
This Agreement and the rights and duties hereunder shall not be
assignable with respect to the Trust or the Funds by either of the
parties hereto except by the specific written consent of the other
party.
Article 25. Merger of Agreement.
This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement with respect to the
subject hereof whether oral or written.
Article 26. Successor Agent.
If a successor agent for the Trust shall be appointed by the Trust,
the Company shall upon termination of this Agreement deliver to
such successor agent at the office of the Company all properties of
the Trust held by it hereunder. If no such successor agent shall
be appointed, the Company shall at its office upon receipt of
Proper Instructions deliver such properties in accordance with such
instructions.
In the event that no written order designating a successor agent or
Proper Instructions shall have been delivered to the Company on or
before the date when such termination shall become effective, then
the Company shall have the right to deliver to a bank or trust
company, which is a "bank" as defined in the 1940 Act, of its own
selection, having an aggregate capital, surplus, and undivided
profits, as shown by its last published report, of not less than
$2,000,000, all properties held by the Company under this
Agreement. Thereafter, such bank or trust company shall be the
successor of the Company under this Agreement.
Article 27. Force Majeure.
The Company shall have no liability for cessation of services
hereunder or any damages resulting therefrom to the Fund as a
result of work stoppage, power or other mechanical failure, natural
disaster, governmental action, communication disruption or other
impossibility of performance.
Article 28. Assignment; Successors.
This Agreement shall not be assigned by either party without the
prior written consent of the other party, except that either party
may assign to a successor all of or a substantial portion of its
business, or to a party controlling, controlled by, or under common
control with such party. Nothing in this Article 28 shall prevent
the Company from delegating its responsibilities to another entity
to the extent provided herein.
Article 29. Severability.
In the event any provision of this Agreement is held illegal, void
or unenforceable, the balance shall remain in effect.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed in their names and on their behalf under their seals by and
through their duly authorized officers, as of the day and year first
above written.
ATTEST: INVESTMENT COMPANIES (listed on Exhibit 1)
/s/ John W. McGonigle_______ By:__/s/ John F. Donahue___
John W. McGonigle John F. Donahue
Secretary Chairman
ATTEST: FEDERATED SERVICES COMPANY
/s/ Jeannette Fisher-Garber By:_/s/ James J. Dolan_____
Jeannette Fisher-Garber James J. Dolan
Secretary President
EXHIBIT 1
2/24/94 World Investment Series, Inc.
4/12/94 World Utility Fund
4/12/94 Class A Shares
4/12/94 Fortress Shares
Exhibit 9 ii under Form N-1A
Exhibit 10 under Item 601/Reg S-K
ADMINISTRATIVE SERVICES AGREEMENT
This Administrative Services Agreement is made as of this
first day of March, 1994, between those investment companies
listed on Exhibit 1, as may be amended from time to time, having
their principal office and place of business at Federated
Investors Tower, Pittsburgh PA 15222-3779 (individually
referred to herein as "Fund" and collectively referred to as
"Funds), on behalf of the portfolios of the Funds, and Federated
Administrative Services, a Delaware business trust (herein
called "FAS").
WHEREAS, the Funds desire to retain FAS as their
Administrator to provide them with Administrative Services (as
herein defined), and FAS is willing to render such services;
WHEREAS, the Funds are registered as open-end management
investment companies under the Investment Company Act of 1940,
as amended (the "1940 Act"), with authorized and issued shares
of capital stock or beneficial interest ("Shares"); and
NOW, THEREFORE, in consideration of the premises and mutual
covenants set forth herein, the parties hereto agree as follows:
1. Appointment of Administrator. The Funds hereby
appoint FAS as Administrator of the Funds on the terms and
conditions set forth in this Agreement; and FAS hereby accepts
such appointment and agrees to perform the services and duties
set forth in Section 2 of this Agreement in consideration of the
compensation provided for in Section 4 hereof.
2. Services and Duties. As Administrator, and subject to
the supervision and control of the Funds' Boards of Trustees or
Directors, as applicable (the "Boards"), FAS will provide
facilities, equipment, and personnel to carry out the following
administrative services for operation of the business and
affairs of the Funds and each of their portfolios:
(a) prepare, file, and maintain the
Funds' governing documents and any amendments
thereto, including the Declaration of Trust or
Articles of Incorporation, as appropriate,(which has
already been prepared and filed), the By-laws and
minutes of meetings of their Boards, Committees, and
shareholders;
(b) prepare and file with the
Securities and Exchange Commission and the
appropriate state securities authorities the
registration statements for the Funds and the Funds'
shares and all amendments thereto, reports to
regulatory authorities and shareholders,
prospectuses, proxy statements, and such other
documents all as may be necessary to enable the Funds
to make continuous offerings of their shares, as
applicable;
(c) prepare, negotiate, and
administer contracts on behalf of the Funds with,
among others, each Fund's investment adviser,
distributor, custodian, and transfer agent, subject
to any applicable restrictions of the Boards or the
1940 Act;
(d) supervise the Funds' custodians
in the maintenance of the Funds' general ledgers and
in the preparation of the Funds' financial
statements, including oversight of expense accruals
and payments, the determination of the net asset
value of the Funds and the declaration and payment of
dividends and other distributions to shareholders;
(e) calculate performance data of
the Funds for dissemination to information services
covering the investment company industry;
(f) prepare and file the Funds' tax
returns;
(g) examine and review the
operations of the Funds' custodians and transfer
agents;
(h) coordinate the layout and
printing of publicly disseminated prospectuses and
reports;
(i) perform internal audit
examinations in accordance with a charter to be
adopted by FAS and the Funds;
(j) assist with the design,
development, and operation of the Funds;
(k) provide individuals reasonably
acceptable to the Funds' Boards for nomination,
appointment, or election as officers of the Funds,
who will be responsible for the management of certain
of the Funds' affairs as determined by the Funds'
Boards; and
(l) consult with the Funds and their
Boards of Trustees or Directors, as appropriate, on
matters concerning the Funds and their affairs.
The foregoing, along with any additional services that FAS
shall agree in writing to perform for the Funds hereunder, shall
hereafter be referred to as "Administrative Services."
Administrative Services shall not include any duties, functions,
or services to be performed for any Fund by such Fund's
investment adviser, distributor, custodian, transfer agent, or
shareholder service agent, pursuant to their respective
agreements with such Fund.
3. Expenses. FAS shall be responsible for expenses
incurred in providing office space, equipment, and personnel as
may be necessary or convenient to provide the Administrative
Services to the Fund, including the compensation of FAS
employees who serve on the Funds' Boards, or as officers of the
Funds. Each Fund shall be responsible for all other expenses
incurred by FAS on behalf of such Fund, including without
limitation postage and courier expenses, printing expenses,
travel expenses, registration fees, filing fees, fees of outside
counsel and independent auditors, insurance premiums, fees
payable to members of such Fund's Board who are not FAS
employees, and trade association dues.
4. Compensation. For the Administrative Services
provided, each Fund hereby agrees to pay and FAS hereby agrees
to accept as full compensation for its services rendered
hereunder an administrative fee at an annual rate, payable
daily, as specified below, based upon the total assets of all of
the Funds:
Maximum Administrative Average Daily Net Assets
Fee of the Funds
.150% on the first $250 million
.125% on the next $250 million
.100% on the next $250
million
.075% on assets in excess of
$750 million
However, in no event shall the administrative fee received
during any year of this Agreement be less than, or be paid at a
rate less than would aggregate, $125,000, per individual Fund,
with an additional $30,000 for each class of shares added to any
such Fund after the date hereof.
5. Standard of Care.
(a) FAS shall not be liable for any
error of judgment or mistake of law or for any loss
suffered by any Fund in connection with the matters
to which this Agreement relates, except a loss
resulting from willful misfeasance, bad faith or
gross negligence on its part in the performance of
its duties or from reckless disregard by it of its
obligations and duties under this Agreement. FAS
shall be entitled to rely on and may act upon advice
of counsel (who may be counsel for such Fund) on all
matters, and shall be without liability for any
action reasonably taken or omitted pursuant to such
advice. Any person, even though also an officer,
trustee, partner, employee or agent of FAS, who may
be or become a member of such Fund's Board, officer,
employee or agent of any Fund, shall be deemed, when
rendering services to such Fund or acting on any
business of such Fund (other than services or
business in connection with the duties of FAS
hereunder) to be rendering such services to or acting
solely for such Fund and not as an officer, trustee,
partner, employee or agent or one under the control
or direction of FAS even though paid by FAS.
(b) This Section 5 shall survive
termination of this Agreement.
6. Duration and Termination. The initial term of this
Agreement with respect to each Fund shall commence on the date
hereof, and extend for a period of one year, renewable annually
by the approval of the Board of Directors/Trustees of each Fund.
7. Amendment. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by an
instrument in writing signed by the party against which an
enforcement of the change, waiver, discharge or termination is
sought.
8. Limitations of Liability of Trustees or Officers,
Employees, Agents and Shareholders of the Funds. FAS is
expressly put on notice of the limitation of liability as set
forth in the Declaration of Trust of each Fund that is a
Massachusetts business trust and agrees that the obligations
assumed by each such Fund pursuant to this Agreement shall be
limited in any case to such Fund and its assets and that FAS
shall not seek satisfaction of any such obligations from the
shareholders of such Fund, the Trustees, Officers, Employees or
Agents of such Fund, or any of them.
9. Limitations of Liability of Trustees and Shareholders
of FAS. The execution and delivery of this Agreement have been
authorized by the Trustees of FAS and signed by an authorized
officer of FAS, acting as such, and neither such authorization
by such Trustees nor such execution and delivery by such officer
shall be deemed to have been made by any of them individually or
to impose any liability on any of them personally, and the
obligations of this Agreement are not binding upon any of the
Trustees or shareholders of FAS, but bind only the trust
property of FAS as provided in the Declaration of Trust of FAS.
10. Notices. Notices of any kind to be given hereunder
shall be in writing (including facsimile communication) and
shall be duly given if delivered to any Fund at the following
address: Federated Investors Tower, Pittsburgh, PA 15222-3779,
Attention: President and if delivered to FAS at Federated
Investors Tower, Pittsburgh, PA 15222-3779, Attention:
President.
11. Miscellaneous. This Agreement constitutes the entire
agreement between the parties hereto and supersedes any prior
agreement with respect to the subject hereof whether oral or
written. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit
any of the provisions hereof or otherwise affect their
construction or effect. If any provision of this Agreement
shall be held or made invalid by a court or regulatory agency
decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby. Subject to the
provisions of Section 5, hereof, this Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and
their respective successors and shall be governed by
Pennsylvania law; provided, however, that nothing herein shall
be construed in a manner inconsistent with the Investment
Company Act of 1940 or any rule or regulation promulgated by the
Securities and Exchange Commission thereunder.
12. Counterparts. This Agreement may be executed by
different parties on separate counterparts, each of which, when
so executed and delivered, shall be an original, and all such
counterparts shall together constitute one and the same
instrument.
13. Assignment; Successors. This Agreement shall not be
assigned by any party without the prior written consent of FAS,
in the case of assignment by any Fund, or of the Funds, in the
case of assignment by FAS, except that any party may assign to a
successor all of or a substantial portion of its business to a
party controlling, controlled by, or under common control with
such party. Nothing in this Section 13 shall prevent FAS from
delegating its responsibilities to another entity to the extent
provided herein.
IN WITNESS WHEREOF, the parties hereto have caused this
instrument to be executed by their officers designated below as
of the day and year first above written.
Investment Companies (listed
on Exhibit 1)
By: /s/ John F. Donahue
John F. Donahue
Chairman
Attest: /s/ John W. McGonigle
John W. McGonigle
Federated Administrative Services
By: /s/ Edward C. Gonzales
Edward C. Gonzales
Chairman
Attest: /s/ John W. McGonigle
John W. McGonigle
Exhibit 1
World Investment Series, Inc.
World Utility Fund
Class A Shares
Fortress Shares
Exhibit 9 iii under Form N-1A
Exhibit 10 under Item 601/Reg S-K
SHAREHOLDER SERVICES PLAN
This Shareholder Services Plan ("Plan") is adopted as
of this 1st day of March, 1994, by the Boards of Directors
or Trustees, as applicable (the "Boards"), of those
investment companies listed on Exhibit 1 hereto as may be
amended from time to time, having their principal office and
place of business at Federated Investors Tower, Pittsburgh,
PA 15222-3779 (individually referred to herein as a "Fund"
and collectively as "Funds").
1. This Plan is adopted to allow the Funds 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 Federated
Shareholder Services ("FSS") for providing personal services
and/or the maintenance of shareholder accounts to the Funds
and their shareholders. In compensation for the services
provided pursuant to this Plan, FSS may 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 each
Fund held during the month.
3. Any payments made by the Funds to FSS
pursuant to this Plan will be made pursuant to a
"Shareholder Services Agreement" between FSS and each of the
Funds.
4. Quarterly in each year that this Plan remains
in effect, FSS shall prepare and furnish to the Boards of
the Funds, and the Boards shall review, a written report of
the amounts expended under the Plan.
5. This Plan shall become effective with regard
to each Fund (i) after approval by majority votes of: (a)
such Fund's Board; and (b) the members of the Board of such
Fund who are not interested persons of such Fund and have no
direct or indirect financial interest in the operation of
such Fund's Plan or in any related documents to the Plan
("Independent Trustees or Directors"), cast in person at a
meeting called for the purpose of voting on the Plan.
6. This Plan shall remain in effect with respect
to each Fund presently set forth on an exhibit and any
subsequent Fund 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 Fund at least
annually by a majority of the relevant Fund's Board and a
majority of the Independent Trustees or
Directors, of such Fund as applicable, cast in person at a
meeting called for the purpose of voting on the renewal of
such Plan. If this Plan is adopted with respect to a fund
after the first annual approval by the Trustees or Directors
as described above, this Plan will be effective as to that
Fund at such time as Exhibit 1 hereto is amended to add such
Fund and will continue in effect until the next annual
approval of this Plan by the Funds' Boards and thereafter
for successive periods of one year subject to approval as
described above.
7. All material amendments to this Plan must be
approved by a vote of the Board of each Fund and of the
Independent Directors or Trustees of such Fund, cast in
person at a meeting called for such purpose.
8. This Plan may be terminated as follows:
(a) at any time, without the payment of any
penalty, by the vote of a majority of the Independent
Board Members of any Fund or by a vote of a majority
of the outstanding voting securities of any Fund as
defined in the Investment Company Act of 1940 on
sixty (60) days' written notice to the parties to
this Agreement; or
(b) by any party to the Agreement without cause
by giving the other party at least sixty (60) days'
written notice of its intention to terminate.
9. While this Plan shall be in effect, the
selection and nomination of Independent Directors or
Trustees of each Fund shall be committed to the discretion
of the Independent Directors or Trustees then in office.
10. 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 8 herein.
11. This Plan shall be construed in
accordance with and governed by the laws of the Commonwealth
of Pennsylvania.
Witness the due execution hereof this as of the
date set forth above.
Investment Companies (listed
on Exhibit 1)
By: /s/ John F. Donahue
John F. Donahue
Chairman
Attest: /s/ John W. McGonigle
John W. McGonigle
Federated Shareholder Services
By: /s/ James J. Dolan
Title: President
Attest: /s/ John W. McGonigle
John W. McGonigle
Exhibit 1
World Investment Series, Inc.
World Utility Fund
Class A Shares
Fortress Shares
Exhibit 9 iv under Form N-1A
Exhibit 10 under Item 601/Reg S-K
SHAREHOLDER SERVICES AGREEMENT
AGREEMENT made as of the first day of March, 1994, by
and between those investment companies listed on Exhibit 1,
as may be amended from time to time, having their principal
office and place of business at Federated Investors Tower,
Pittsburgh, PA 15222-3779 and who have approved a
Shareholder Services Plan (the "Plan") and this form of
Agreement (individually referred to herein as a "Fund" and
collectively as "Funds") and Federated Shareholder Services,
a Delaware business trust, having its principal office and
place of business at Federated Investors Tower, Pittsburgh,
Pennsylvania 15222-3779 ("FSS").
1. The Funds hereby appoint FSS to render or cause to
be rendered personal services to shareholders of the Funds
and/or the maintenance of accounts of shareholders of the
Funds ("Services"). In addition to providing Services
directly to shareholders of the Funds, FSS is hereby
appointed the Funds' agent to select, negotiate and
subcontract for the performance of Services. FSS hereby
accepts such appointments. FSS agrees to provide or cause
to be provided Services which, in its best judgment (subject
to supervision and control of the Funds' Boards of Trustees
or Directors, as applicable), are necessary or desirable for
shareholders of the Funds. FSS further agrees to provide
the Funds, upon request, a written description of the
Services which FSS is providing hereunder.
2. During the term of this Agreement, each Fund will
pay FSS and FSS agrees to accept as full compensation for
its services rendered hereunder a fee at an annual rate,
calculated daily and payable monthly, up to 0.25% of 1% of
average net assets of each Fund.
For the payment period in which this Agreement becomes
effective or terminates with respect to any Fund, there
shall be an appropriate proration of the monthly fee on the
basis of the number of days that this Agreement is in effect
with respect to such Fund during the month. To enable the
Funds to comply with an applicable exemptive order, FSS
represents that the fees received pursuant to this Agreement
will be disclosed to and authorized by any person or entity
receiving Services, and will not result in an excessive fee
to FSS.
3. This Agreement shall continue in effect for one
year from the date of its execution, and thereafter for
successive periods of one year only if the form of this
Agreement is approved at least annually by the Board of each
Fund, including a majority of the members of the Board of
the Fund who are not interested persons of the Fund and have
no direct or indirect financial interest in the operation of
the Funds' Plan or in any related documents to the Plan
("Independent Board Members") cast in person at a meeting
called for that purpose.
4. Notwithstanding paragraph 3, this Agreement may be
terminated as follows:
(a) at any time, without the payment of any
penalty, by the vote of a majority of the Independent
Board Members of any Fund or by a vote of a majority
of the outstanding voting securities of any Fund as
defined in the Investment Company Act of 1940 on
sixty (60) days' written notice to the parties to
this Agreement;
(b) automatically in the event of the
Agreement's assignment as defined in the Investment
Company Act of 1940; and
(c) by any party to the Agreement without cause
by giving the other party at least sixty (60) days'
written notice of its intention to terminate.
5. FSS agrees to obtain any taxpayer identification
number certification from each shareholder of the Funds to
which it provides Services that is required under Section
3406 of the Internal Revenue Code, and any applicable
Treasury regulations, and to provide each Fund or its
designee with timely written notice of any failure to obtain
such taxpayer identification number certification in order
to enable the implementation of any required backup
withholding.
6. FSS shall not be liable for any error of judgment
or mistake of law or for any loss suffered by any Fund in
connection with the matters to which this Agreement relates,
except a loss resulting from willful misfeasance, bad faith
or gross negligence on its part in the performance of its
duties or from reckless disregard by it of its obligations
and duties under this Agreement. FSS shall be entitled to
rely on and may act upon advice of counsel (who may be
counsel for such Fund) on all matters, and shall be without
liability for any action reasonably taken or omitted
pursuant to such advice. Any person, even though also an
officer, trustee, partner, employee or agent of FSS, who may
be or become a member of such Fund's Board, officer,
employee or agent of any Fund, shall be deemed, when
rendering services to such Fund or acting on any business of
such Fund (other than services or business in connection
with the duties of FSS hereunder) to be rendering such
services to or acting solely for such Fund and not as an
officer, trustee, partner, employee or agent or one under
the control or direction of FSS even though paid by FSS.
This Section 6 shall survive termination of this
Agreement.
7. No provision of this Agreement may be changed,
waived, discharged or terminated orally, but only by an
instrument in writing signed by the party against which an
enforcement of the change, waiver, discharge or termination
is sought.
8. FSS is expressly put on notice of the limitation
of liability as set forth in the Declaration of Trust of
each Fund that is a Massachusetts business trust and agrees
that the obligations assumed by each such Fund pursuant to
this Agreement shall be limited in any case to such Fund and
its assets and that FSS shall not seek satisfaction of any
such obligations from the shareholders of such Fund, the
Trustees, Officers, Employees or Agents of such Fund, or any
of them.
9. The execution and delivery of this Agreement have
been authorized by the Trustees of FSS and signed by an
authorized officer of FSS, acting as such, and neither such
authorization by such Trustees nor such execution and
delivery by such officer shall be deemed to have been made
by any of them individually or to impose any liability on
any of them personally, and the obligations of this
Agreement are not binding upon any of the Trustees or
shareholders of FSS, but bind only the trust property of FSS
as provided in the Declaration of Trust of FSS.
10. Notices of any kind to be given hereunder shall be
in writing (including facsimile communication) and shall be
duly given if delivered to any Fund and to such Fund at the
following address: Federated Investors Tower, Pittsburgh,
PA 15222-3779, Attention: President and if delivered to
FSS at Federated Investors Tower, Pittsburgh, PA 15222-
3779, Attention: President.
11. This Agreement constitutes the entire agreement
between the parties hereto and supersedes any prior
agreement with respect to the subject hereof whether oral or
written. If any provision of this Agreement shall be held
or made invalid by a court or regulatory agency decision,
statute, rule or otherwise, the remainder of this Agreement
shall not be affected thereby. Subject to the provisions of
Sections 3 and 4, hereof, this Agreement shall be binding
upon and shall inure to the benefit of the parties hereto
and their respective successors and shall be governed by
Pennsylvania law; provided, however, that nothing herein
shall be construed in a manner inconsistent with the
Investment Company Act of 1940 or any rule or regulation
promulgated by the Securities and Exchange Commission
thereunder.
12. This Agreement may be executed by different
parties on separate counterparts, each of which, when so
executed and delivered, shall be an original, and all such
counterparts shall together constitute one and the same
instrument.
13. This Agreement shall not be assigned by any party
without the prior written consent of FSS in the case of
assignment by any Fund, or of the Funds in the case of
assignment by FSS, except that any party may assign to a
successor all of or a substantial portion of its business to
a party controlling, controlled by, or under common control
with such party. Nothing in this Section 13 shall prevent
FSS from delegating its responsibilities to another entity
to the extent provided herein.
IN WITNESS WHEREOF, the parties hereto have caused this
instrument to be executed by their officers designated below
as of the day and year first above written.
Investment Companies (listed
on Exhibit 1)
By: /s/ John F. Donahue
John F. Donahue
Chairman
Attest: /s/ John W. McGonigle
John W. McGonigle
Federated Shareholder Services
By: /s/ James J. Dolan
Title: President
Attest: /s/ John W. McGonigle
John W. McGonigle
Exhibit 1
World Investment Series, Inc.
World Utility Fund
Class A Shares
Fortress Shares
Exhibit 9 v under Form N-1A
Exhibit 10 under Item 601/Reg S-K
SHAREHOLDER SERVICES SUB-CONTRACT
This Agreement is made between the Financial
Institution executing this Agreement ("Provider") and
Federated Shareholder Services ("FSS") on behalf of the
investment companies listed in Exhibit A hereto (the
"Funds"), for whom FSS administers the Shareholder Services
Plan ("Plan") and who have approved this form of Agreement.
In consideration of the mutual covenants hereinafter
contained, it is hereby agreed by and between the parties
hereto as follows:
1. FSS hereby appoints Provider to render or cause to
be rendered personal services to shareholders of the Funds
and/or the maintenance of accounts of shareholders of the
Funds ("Services"). Provider agrees to provide Services
which, in its best judgment, are necessary or desirable for
its customers who are investors in the Funds. Provider
further agrees to provide FSS, upon request, a written
description of the Services which Provider is providing
hereunder.
2. During the term of this Agreement, the Funds will
pay the Provider fees as set forth in a written schedule
delivered to the Provider pursuant to this Agreement. The
fee schedule for Provider may be changed by FSS sending a
new fee schedule to Provider pursuant to Paragraph 9 of this
Agreement. For the payment period in which this Agreement
becomes effective or terminates, there shall be an
appropriate proration of the fee on the basis of the number
of days that this Agreement is in effect during the quarter.
To enable the Funds to comply with an applicable exemptive
order, Provider represents that the fees received pursuant
to this Agreement will be disclosed to its customers, will
be authorized by its customers, and will not result in an
excessive fee to the Provider.
3. The Provider understands that the Department of
Labor views ERISA as prohibiting fiduciaries of
discretionary ERISA assets from receiving shareholder
service fees or other compensation from funds in which the
fiduciary's discretionary ERISA assets are invested. To
date, the Department of Labor has not issued any exemptive
order or advisory opinion that would exempt fiduciaries from
this interpretation. Without specific authorization from
the Department of Labor, fiduciaries should carefully avoid
investing discretionary assets in any fund pursuant to an
arrangement where the fiduciary is to be compensated by the
fund for such investment. Receipt of such compensation
could violate ERISA provisions against fiduciary self-
dealing and conflict of interest and could subject the
fiduciary to substantial penalties.
4. The Provider agrees not to solicit or cause to be
solicited directly, or indirectly at any time in the future,
any proxies from the shareholders of a Fund in opposition to
proxies solicited by management of the Fund, unless a court
of competent jurisdiction shall have determined that the
conduct of a majority of the Board of Trustees or Directors
of the Fund constitutes willful misfeasance, bad faith,
gross negligence or reckless disregard of their duties.
This paragraph 4 will survive the term of this Agreement.
5. This Agreement shall continue in effect for one
year from the date of its execution, and thereafter for
successive periods of one year if the form of this Agreement
is approved at least annually by the Board of each Fund,
including a majority of the members of the Board of the Fund
who are not interested persons of the Fund and have no
direct or indirect financial interest in the operation of
the Fund's Plan or in any related documents to the Plan
("Disinterested Board Members") cast in person at a meeting
called for that purpose.
6. Notwithstanding paragraph 5, this Agreement may be
terminated as follows:
(a) at any time, without the payment of any
penalty, by the vote of a majority of the
Disinterested Board Members of the Fund or by a vote
of a majority of the outstanding voting securities of
the Fund as defined in the Investment Company Act of
1940 on not more than sixty (60) days' written notice
to the parties to this Agreement;
(b) automatically in the event of the
Agreement's assignment as defined in the Investment
Company Act of 1940; and
(c) by either party to the Agreement without
cause by giving the other party at least sixty (60)
days' written notice of its intention to terminate.
7. The Provider agrees to obtain any taxpayer
identification number certification from its customers
required under Section 3406 of the Internal Revenue Code,
and any applicable Treasury regulations, and to provide the
Fund or its designee with timely written notice of any
failure to obtain such taxpayer identification number
certification in order to enable the implementation of any
required backup withholding.
8. The execution and delivery of this Agreement have
been authorized by the Trustees of FSS and signed by an
authorized officer of FSS, acting as such, and neither such
authorization by such Trustees nor such execution and
delivery by such officer shall be deemed to have been made
by any of them individually or to impose any liability on
any of them personally, and the obligations of this
Agreement are not binding upon any of the Trustees or
shareholders of FSS, but bind only the trust property of FSS
as provided in the Declaration of Trust of FSS.
9. Notices of any kind to be given hereunder shall be
in writing (including facsimile communication) and shall be
duly given if delivered to Provider at the address set forth
below and if delivered to FSS at Federated Investors Tower,
Pittsburgh, PA 15222-3779, Attention: President.
10. This Agreement constitutes the entire agreement
between the parties hereto and supersedes any prior
agreement with respect to the subject hereof whether oral or
written. If any provision of this Agreement shall be held
or made invalid by a court or regulatory agency decision,
statute, rule or otherwise, the remainder of this Agreement
shall not be affected thereby. Subject to the provisions of
Sections 5 and 6, hereof, this Agreement shall be binding
upon and shall inure to the benefit of the parties hereto
and their respective successors and shall be governed by
Pennsylvania law; provided, however, that nothing herein
shall be construed in a manner inconsistent with the
Investment Company Act of 1940 or any rule or regulation
promulgated by the Securities and Exchange Commission
thereunder.
11. This Agreement may be executed by different
parties on separate counterparts, each of which, when so
executed and delivered, shall be an original, and all such
counterparts shall together constitute one and the same
instrument.
12. This Agreement shall not be assigned by any party
without the prior written consent of FSS in the case of
assignment by Provider, or of Provider in the case of
assignment by FSS, except that any party may assign to a
successor all of or a substantial portion of its business to
a party controlling, controlled by, or under common control
with such party.
13. This Agreement may be amended by FSS from time to
time by the following procedure. FSS will mail a copy of
the amendment to the Provider's address, as shown below. If
the Provider does not object to the amendment within thirty
(30) days after its receipt, the amendment will become part
of the Agreement. The Provider's objection must be in
writing and be received by FSS within such thirty days.
14. This Agreement may be terminated with regard to a
particular Fund or Class at any time, without the payment of
any penalty, by FSS or by the vote of a majority of the
Disinterested Trustees or Directors, as applicable, 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 the Provider. This Agreement may be
terminated by Provider on sixty (60) days' written notice
to FSS.
15. The Provider acknowledges and agrees that FSS has
entered into this Agreement solely in the capacity of agent
for the Funds and administrator of the Plan. The Provider
agrees not to claim that FSS is liable for any
responsibilities or amounts due by the Funds hereunder.
[Provider]
Address
City State Zip Code
Dated: By:
Authoried Signature
Title
Print Name of Authorized
Signature
FEDERATED SHAREHOLDER SERVICES
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
By:
Vice President
EXHIBIT A to Shareholder Services Sub-Contract with
World Investment Series, Inc.
Funds covered by this Agreement:
World Utility Fund
Class A Shares
Fortress Shares
Shareholder Service Fees
1. During the term of this Agreement, FSS will pay
Provider a quarterly fee. This fee will be computed at the
annual rate of .25 of 1% of the average net asset value of
shares of the Funds held during the quarter in accounts for
which the Provider provides Services under this Agreement,
so long as the average net asset value of Shares in the
Funds during the quarter equals or exceeds such minimum
amount as FSS shall from time to time determine and
communicate in writing to the Provider.
2. For the quarterly period in which the Agreement
becomes effective or terminates, there shall be an
appropriate proration of any fee payable on the basis of the
number of days that the Agreement is in effect during the
quarter.
Exhibit 15 under Form N-1A
Exhibit 1 under Item 601/Reg S-K
DEALER AGREEMENT
WORLD INVESTMENT SERIES, INC.
Agreement made this _____ day of __________, _____, by and
between the Investment Firm executing this agreement ("Broker")
and FEDERATED SECURITIES CORP. ("FSC"), the Distributor of
shares of beneficial interest ("Shares") of World Investment
Series, Inc. (the "Fund"). In consideration of the mutual
covenants hereinafter contained, it is hereby agreed by and
between the parties hereto as follows:
1. FSC hereby appoints Broker to (a) sell Shares at the
current offering price thereof as described and set forth in the
prospectus of the Fund and (b) render administrative support
services to the Fund and its shareholders.
2. Administrative support services may include, but are not
limited to, providing office space, equipment, telephone
facilities and various personnel including clerical, supervisory
and computer, as is necessary or beneficial to establish and
maintain shareholder accounts and records; process purchase and
redemption transactions, process automatic investment in Fund
Shares of client account cash balances; answer routine client
inquiries regarding the Fund; assist clients in changing
dividend options, account designations and addresses; and
providing such other services as the Fund or FSC may reasonably
request.
The Broker shall provide such security as is necessary to
prevent unauthorized use of any computer facilities. The Broker
agrees to release, indemnify and hold harmless the Fund, FSC,
the Fund's Transfer Agent and Custodian from any and all direct
or indirect liabilities or losses resulting from requests,
directions, actions or inactions, of or by the Broker, its
officers, employees or agents regarding the purchase,
redemption, transfer or registration of Shares for accounts of
the Broker, its clients and other shareholders. Principals of
the Broker will be available to consult from time to time with
FSC concerning administration and performance of the services
contemplated by this Agreement.
3. (a) FSC, in its sole discretion, will pay the Broker an
amount not more than the fees set forth in Exhibit A hereto.
(b) The Broker will be allowed sales commissions as set
forth in the current prospectus of the Fund. The Broker
understands that these sales commissions may be changed from
time to time.
4. FSC has the right, in its sole discretion, to terminate
this Agreement at any time without cause.
5. This Agreement shall be construed in accordance with the
laws of the Commonwealth of Pennsylvania.
6. The Broker acknowledges that FSC may enter into similar
agreements with others without the consent of the Broker.
7. The Broker shall prepare such quarterly reports for FSC
as shall reasonably be requested by FSC.
8. No person is authorized to make any representations
concerning the Fund or its Shares, except those contained in the
current prospectus of the Fund and any such information as may
be officially designated as information supplemental to the
prospectus. In the solicitation of purchase orders, the Broker
shall rely solely on the representations contained in the
current prospectus.
9. Additional copies of any prospectus and any printed
information designated as supplemental to such prospectus will
be supplied by FSC in reasonable quantities on request.
10. In no transaction shall the Broker have any authority
whatever to act as FSC's agent or agent for the Fund.
11. The Broker certifies that he is a member of the National
Association of Securities Dealers, Inc. and agrees to abide by
and cause his representatives to abide by all of its rules and
regulations including its Rules of Fair Practice.
12. This Agreement may be terminated at any time, without
the payment of any penalty by the vote of a majority of the
members of the Board of Directors of the Fund who are not
interested persons of the Fund and have no direct or indirect
financial interest in the operation of the Fund's Rule 12b-1
Plan (the "Plan") or in any related documents to the Plan
("Disinterested Directors") or by a majority of the outstanding
voting securities of the Fund on not more than sixty (60) days'
written notice to the parties to this Agreement.
13. This Agreement will terminate automatically in the event
of its assignment as defined in the Investment Company Act of
1940 or upon the termination of the Administrative Support and
Distributor's Contract between the Fund and FSC.
14. This Agreement may be amended by FSC from time to time
by the following procedure. FSC will mail a copy of the
amendment to the Broker's address, as shown below. If the
Broker does not object to such amendment within thirty (30) days
after its receipt, the amendment will become part of the
Agreement. The Broker's objection must be in writing and be
received by FSC at its address below within such thirty (30)
days.
15. This Agreement shall continue in effect for one year
from the date of its execution, and thereafter for successive
periods of one year if the form of this Agreement is approved at
least annually by the Directors of the Fund including a majority
of the Disinterested Directors cast in person at a meeting for
that purpose.
16. Broker is hereby expressly put on notice that all
persons dealing with the Fund, a Massachusetts Business Trust,
must look solely to the Fund for the enforcement of any claim
against the Fund, as the Trustees, officers, agents or
shareholders of the Fund assume no personal liability whatsoever
for obligations entered into on behalf of the Fund.
IN WITNESS WHEREOF, this Agreement has been executed for FSC
and the Broker and their respective seals affixed hereto by
their duly authorized officers, hereto this _____ day of
_____________, _____.
ATTEST: __________________________
____________________________ By:___________________________
Secretary
(SEAL)
ATTEST: FEDERATED SECURITIES CORP.
____________________________ By:___________________________
Secretary President
World Investment Series, Inc. - Fortress Shares
EXHIBIT A to Dealer Agreement with
Federated Securities Corp. ("FSC")
1. FSC will pay the Broker a monthly fee computed at the
annual rate of .25% of the average aggregate net asset value of
shares held during the period in the accounts for which the
Broker provides services under the Dealer Agreement, so long as
the average aggregate net asset value of those Shares in the
Fund during such period is $100,000 or more.
2. For the monthly period in which the Dealer Agreement
becomes effective or terminates, there shall be an appropriate
proration on the basis of the number of days that the Dealer
Agreement is in effect during the period.
World Utility Fund (A)class Yield = 2{( $8,996.89 - $387.89 )+1)^6-1}=
Computation of SEC Yield 190,129 * $10.10 - 0.01080 )
As of: June 30, 1994
SEC Yield = 5.45%
Dividend and/or Interest
Inc for the 30 days ended $8,996.89
Net Expenses for $387.89
the Period
Avg Daily Shares
Outstanding and entitled
to receive dividends 190,129
Maxium offering price $10.10
per share as of 6-30-94
Undistributed net income 0.01080
World Utility Fund (FS)class Yield = 2{( $8,946.43 - $771.43 )+1)^6-1}=
Computation of SEC Yield 189,445 * $9.75 - 0.01050 )
As of: June 30, 1994
SEC Yield = 5.38%
Dividend and/or Interest
Inc for the 30 days ended $8,946.43
Net Expenses for $771.43
the Period
Avg Daily Shares
Outstanding and entitled
to receive dividends 189,445
Maxium offering price $9.75
per share as of 6-30-94
Undistributed net income 0.01050
Schedule for Computation of Initial
Fund Performance Data Invest of: $1,000
Offering
World Utility Fund (A)class Price/Share= $10.63
Return Since Inception NAV= $10.63
ending 6/30/94
FYE: November 30
<TABLE>
<CAPTION>
Beginning Capital Reinvest Ending Total
DECLARED: QUARTERLY Reinvest Period Dividend Gain Price Period Ending Investmen
PAID: QUARTERLY Dates Shares /Share /Share /Share Shares Price Value
<S> <C> <C> <C> <C> <C> <C> <C> <C>
5/31/94 94.073 0.000000000 0.00000 $10.16 94.073 $10.16 $955.79
6/16/94 94.073 0.070000000 0.00000 $9.96 94.735 $9.96 $943.56
6/30/94 94.735 0.000000000 0.00000 $0.00 94.735 $9.65 $914.19
</TABLE>
$1,000 (1+T) = Ending Value
T = -8.58%
Schedule for Computation of Initial
Fund Performance Data Invest of: $1,000
Offering
World Utility Fund (FS)class Price/Share= $10.24
Return Since Inception NAV= $10.24
ending 6/30/94
FYE: September 30
<TABLE>
<CAPTION>
Beginning Capital Reinvest Ending Total
DECLARED: QUARTERLY Reinvest Period Dividend Gain Price Period Ending Investmen
PAID: QUARTERLY Dates Shares /Share /Share /Share Shares Price Value
<S> <C> <C> <C> <C> <C> <C> <C> <C>
5/31/94 97.656 0.000000000 0.00000 $10.15 97.656 $10.15 $991.21
6/16/94 97.656 0.068000000 0.00000 $9.95 98.324 $9.95 $978.32
6/30/94 98.324 0.000000000 0.00000 $0.00 98.324 $9.55 $938.99
</TABLE>
$1,000 (1+T) = Ending Value
T = -6.10%
