WORLD INVESTMENT SERIES INC, 485BPOS, 1995-07-11

WORLD INVESTMENT SERIES INC
485BPOS, 1995-07-11

Previous: CUNA MUTUAL FUNDS INC, NSAR-A, 1995-07-11

Next: PRICE T ROWE PERSONAL STRATEGY FUNDS INC, N-30D, 1995-07-11

1933 Act File No. 33-2149
1940 Act File No. 811-7141

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. 3 X

and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X

Amendment No. 5 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 26, 1995 pursuant to paragraph (b)
60 days after filing pursuant to paragraph (a) (i)
on pursuant to paragraph (a) (i).
75 days after filing pursuant to paragraph (a)(ii)
on _________________ pursuant to paragraph (a)(ii) of Rule 485.

If appropriate, check the following box:

This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.

Registrant has filed with the Securities and Exchange Commission a
declaration pursuant to Rule 24f-2 under the Investment Company Act of
1940, and:

X filed the Notice required by that Rule on January 13, 1995; or
intends to file the Notice required by that Rule on or about
____________; 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.

CROSS-REFERENCE SHEET

This Amendment to the Registration Statement of World Investment
Series, Inc., which consists of one portfolio, World Utility Fund,
consisting of four classes of shares (a) Class A Shares, (b) Fortress
Shares (c) Class B Shares and (d) Class C Shares, 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-d).
Item 2. Synopsis Synopsis, Summary of Fund Expenses
(a,c,d).
Item 3. Condensed Financial
Information Performance Information (a,b).
Financial Highlights (a).
Item 4. General Description
of Registrant Synopsis (a,c,d); Liberty Family of
Funds (a,c,d); Fortress Investment
Program (b); Investment Information
(a-d); Investment Objective (a-d);
Investment Policies (a-d); Risk
Factors and Investment
Considerations (a-d); Other
Investment Practices (a-d);
Investment Limitations (a-d); Other
Classes of Shares (a-d).
Item 5. Management of the Fund World Investment Series, Inc.
Information (b); Fund Information
(a,c,d); Management of the
Corporation (b); Management of the
Fund (a,c,d); Distribution of
Shares (a,c,d); Distribution of
Fortress Shares (b); Administration
of the Fund (a-d); Expenses of the
Fund and Fortress Shares (b);
Brokerage Transactions (a-d).
Item 6. Capital Stock and
Other Securities Dividends and Distributions (a-d);
Shareholder Information (a-d);
Voting Rights (a-d); Tax
Information (a-d); Federal Income
Tax (a-d); Pennsylvania Corporate
and Personal Property Taxes (a-d).
Item 7. Purchase of Securities Being
Offered Net Asset Value (a-d); Investing in
Class A Shares (a); Investing in
Fortress Shares (b); Investing in
Class B Shares (c); Investing in
Class C Shares (d); Share Purchases
(b); How To Purchase Shares
(a,b,d);Minimum Investment Required
(b); What Shares Cost (b);
Eliminating the Sales Load (b);
Reducing or Eliminating the Sales
Load (a,c,d); Systematic Investment
Program (a-d); Exchanging
Securities for Fund Shares(b);
Certificates and Confirmations (a-
d); Retirement Plans (a,c,d);
Exchange Privilege (a-d);
Requirements for Exchange (a,c,d);
Tax Consequences (a,c,d); Making an
Exchange (a,c,d).
Item 8. Redemption or Repurchase How To Redeem Shares (a,c,d);
Redeeming Fortress Shares (b);
Through a Financial Institution (a-
d); Redeeming Shares By Telephone
(a,c,d); Directly by Mail (b);
Redeeming Shares by Mail (a,c,d);
Special Redemption Features
(a,c,d); Contingent Deferred Sales
Charge (a-d); Elimination of
Contingent Deferred Sales Charge
(a,c,d); Systematic Withdrawal
Program (a-d); Accounts With Low
Balances (a-d).
Item 9. Pending Legal Proceedings None
PART B. INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION.

Item 10. Cover Page Cover Page (a-d).
Item 11. Table of Contents. Table of Contents (a-d).
Item 12. General Information
and History. General Information About the Fund
(a-d).
Item 13. Investment Objectives
and Policies. Investment Objective and Policies
(a-d).
Item 14. Management of the Corporation.See Part A - Management of the
Corporation/Management of the Fund
(a-d).
Item 15. Control Persons and Principal
Holders of Securities. The Funds (a-d).
Item 16. Investment Advisory and Other
Services. Investment Advisory Services (a-d);
Administrative Services (a-d).
Item 17. Brokerage Allocation. Brokerage Transactions (a-d).
Item 18. Capital Stock and Other
Securities. Not applicable.
Item 19. Purchase, Redemption
and Pricing of Securities
Being Offered. Purchasing Shares (a-d);
Determining Net Asset Value (a-d);
Exchange Privilege (a-d); Redeeming
Shares (a-d).
Item 20. Tax Status. Tax Status (a-d).
Item 21. Underwriters. See Part A - Distribution of Shares
(a,c,d) or Part A - Distribution of
Fortress Shares (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 B for a,c,d, filed
in Part A for (b)).

WORLD UTILITY FUND
(A PORTFOLIO OF WORLD INVESTMENT SERIES, INC.)
CLASS A SHARES
CLASS B SHARES
CLASS C SHARES
COMBINED PROSPECTUS

The 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 INVESTMENT RISKS
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.

This prospectus contains the information you should read and know before you
invest in Class A Shares, Class B Shares and Class C 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, Class B Shares, Class C Shares and Fortress Shares dated July 26,
1995, 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, which is in paper form only, or a paper copy of this
prospectus, if you have received it electronically, 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 July 26, 1995

- - -------------------------------------------------------------------------------
- - -------------------------------------------------------------------------------
TABLE OF CONTENTS

Summary of Fund Expenses.......................................................1

Financial Highlights...........................................................4

Synopsis.......................................................................5

Liberty Family of Funds........................................................6
Federated LifeTrack Program
(Class A Shares and Class C Shares).......................................7

Investment Information.........................................................8
Investment Objective.........................................................8
Investment Policies..........................................................8

Risk Factors and Investment Considerations.....................................9
Other Investment Policies...................................................12

Investment Limitations......................................................14

Net Asset Value...............................................................14

Investing in the Fund.........................................................15

How To Purchase Shares........................................................16
Investing in Class A Shares.................................................16
Investing in Class B Shares.................................................17
Investing in Class C Shares.................................................19
Special Purchase Features...................................................20

Exchange Privilege............................................................21

How To Redeem Shares..........................................................23
Special Redemption Features.................................................24
Contingent Deferred Sales Charge............................................24
Elimination of Contingent
Deferred Sales Charge....................................................25

Account and Share Information.................................................26

Fund Information..............................................................27
Management of the Fund......................................................27
Distribution of Shares......................................................28
Administration of the Fund..................................................30
Brokerage Transactions......................................................30

Shareholder Information.......................................................31
Voting Rights...............................................................31

Tax Information...............................................................32
Federal Income Tax..........................................................32
Pennsylvania Personal
Property Taxes...........................................................32

Performance Information.......................................................33

Other Classes of Shares.......................................................33

Addresses.....................................................................34

- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------

SUMMARY OF FUND EXPENSES
WORLD UTILITY FUND
(A PORTFOLIO OF WORLD INVESTMENT SERIES, INC.)
<TABLE>
<CAPTION>
CLASS A SHARES
SHAREHOLDER TRANSACTION EXPENSES
<S> <C> <C>
Maximum Sales Load Imposed on Purchases (as a percentage of offering price).................................... 5.50%
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) (1)...................................................................... 0.00%
Redemption Fee (as a percentage of amount redeemed, if applicable)............................................. None
Exchange Fee................................................................................................... None

ANNUAL CLASS A SHARES OPERATING EXPENSES
(As a percentage of average net assets)
Management Fee (after waiver) (2).............................................................................. 0.00%
12b-1 Fee...................................................................................................... None
Total Other Expenses (after expense reimbursement)............................................................. 1.50%
Shareholder Services Fee....................................................................... 0.25%
Total Class A Shares Operating Expenses (3).......................................................... 1.50%

</TABLE>

(1) Class A Shares purchased under a special offering with the proceeds of a
redemption of shares of an unaffiliated investment company purchased or
redeemed with a sales load and not distributed by Federated Securities
Corp. may be charged a contingent deferred sales charge of .50 of 1.00% for
redemptions made within one full year of purchase.

(2) The management fee has been reduced to reflect the voluntary waiver 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 Class A Shares operating expenses in the table above are based on
expenses expected during the fiscal year ending November 30, 1995. The
total operating expenses were 0.25% for the fiscal period ended November
30, 1994 and would have been 4.68% absent the voluntary waiver of the
management fee and the voluntary reimbursement of certain other expenses.

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 "Fund
Information." Wire-transferred redemptions of less than $5,000 may be subject to
additional fees.

THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.

- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------

SUMMARY OF FUND EXPENSES
WORLD UTILITY FUND
(A PORTFOLIO OF WORLD INVESTMENT SERIES, INC.)
<TABLE>
<CAPTION>
CLASS B SHARES
SHAREHOLDER TRANSACTION EXPENSES
<S> <C> <C>
Maximum Sales Load Imposed on Purchases (as a percentage of offering price).................................... None
Maximum Sales Load Imposed on Reinvested Dividends (as a percentage of offering price)......................... None
Contingent Deferred Sales Charge (as a percentage of original purchase price or redemption proceeds,
as applicable) (1)........................................................................................... 5.50%
Redemption Fee (as a percentage of amount redeemed, if applicable)............................................. None
Exchange Fee................................................................................................... None

ANNUAL CLASS B SHARES OPERATING EXPENSES
(As a percentage of projected average net assets)*
Management Fee (after waiver) (2).............................................................................. 0.00%
12b-1 Fee...................................................................................................... 0.75%
Total Other Expenses (after expense reimbursement)............................................................. 1.50%
Shareholder Services Fee........................................................................ 0.25%
Total Class B Shares Operating Expenses (3)(4)......................................................... 2.25%

</TABLE>

(1) The contingent deferred sales charge is 5.50% in the first year declining
to 1.00% in the sixth year and 0.00% thereafter. (See "Contingent Deferred
Sales Charge").

(2) The estimated management fee has been reduced to reflect the anticipated
voluntary waiver 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) Class B Shares convert to Class A Shares (which pay lower ongoing expenses)
approximately eight years after purchase.

(4) The total Class B Shares operating expenses are estimated to be 5.43%
absent the anticipated voluntary waiver of the management fee and the
anticipated voluntary reimbursement of certain other operating expenses.

* Total Class B Shares operating expenses are estimated based on average
expenses expected to be incurred during the period ending November 30, 1995.
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 B Shares will bear,
either directly or indirectly. For more complete descriptions of the various
costs and expenses, see "Investing in Class B Shares" and "Fund 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 charges 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............................................................ $79 $114
You would pay the following expenses on the same investment, assuming no redemption.................. $23 $70
</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 CLASS B SHARES' FISCAL YEAR ENDING
NOVEMBER 30, 1995.

- - -------------------------------------------------------------------------------
- - -------------------------------------------------------------------------------

SUMMARY OF FUND EXPENSES
WORLD UTILITY FUND
(A PORTFOLIO OF WORLD INVESTMENT SERIES, INC.)
<TABLE>
<CAPTION>
CLASS C SHARES
SHAREHOLDER TRANSACTION EXPENSES
<S> <C> <C>
Maximum Sales Load Imposed on Purchases (as a percentage of offering price).................................... None
Maximum Sales Load Imposed on Reinvested Dividends (as a percentage of offering price)......................... None
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 CLASS C SHARES OPERATING EXPENSES
(As a percentage of projected average net assets)*
Management Fee (after waiver) (2).............................................................................. 0.00%
12b-1 Fee...................................................................................................... 0.75%
Total Other Expenses (after expense reimbursement)............................................................. 1.50%
Shareholder Services Fee........................................................................ 0.25%
Total Class C Shares Operating Expenses (3)........................................................... 2.25%

</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
one year of their purchase date. (See "Contingent Deferred Sales Charge.")

(3) The total Class C Shares operating expenses are estimated to be 5.43%
absent the anticipated voluntary waiver of the management fee and the
anticipated voluntary reimbursement of certain other operating expenses.

* Total Class C Shares operating expenses are estimated based on average
expenses expected to be incurred during the period ending November 30, 1995.
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 C Shares will bear,
either directly or indirectly. For more complete descriptions of the various
costs and expenses, see "Investing in Class C Shares" and "Fund 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 charges 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 $70
You would pay the following expenses on the same investment, assuming no redemption................ $23 $70
</TABLE>

- - -------------------------------------------------------------------------------
- - -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS--CLASS A SHARES
WORLD UTILITY FUND
- - --------------------------------------------------------------------------------

(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)

The following table has been audited by Ernst & Young LLP, the Fund's
independent auditors. Their report dated January 12, 1995 on the Fund's
financial statements for the period from March 17, 1994 (start of business) to
November 30, 1994, and the financial highlights for the period from April 21,
1994 (date of initial public investment) to November 30, 1994 is included in the
Statement of Additional Information.

Class B Shares and Class C Shares were not being offered as of November 30,
1994. The financial highlights presented below are historical information for
Class A Shares.

<TABLE>
<CAPTION>
PERIOD ENDED
NOVEMBER 30,
1994*
-------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.06
- - ---------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- - ---------------------------------------------------------------------------------------------------
Net investment income 0.24
- - ---------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investment and foreign currency transactions (0.46)
- - --------------------------------------------------------------------------------------------------- -------
Total from investment operations (0.22)
- - ---------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
- - ---------------------------------------------------------------------------------------------------
Dividends to shareholders from net investment income (0.17)
- - --------------------------------------------------------------------------------------------------- -------
NET ASSET VALUE, END OF PERIOD $ 9.67
- - --------------------------------------------------------------------------------------------------- -------
TOTAL RETURN* (3.00%)
- - ---------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- - ---------------------------------------------------------------------------------------------------
Expenses 0.25%(b)
- - ---------------------------------------------------------------------------------------------------
Net investment income 5.10%(b)
- - ---------------------------------------------------------------------------------------------------
Expense waiver/reimbursement (a) 4.43%(b)
- - ---------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- - ---------------------------------------------------------------------------------------------------
Net assets, end of period (000 omitted)
$4,948
- - ---------------------------------------------------------------------------------------------------
Portfolio turnover rate 7%
- - ---------------------------------------------------------------------------------------------------
</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 21, 1994 (date of initial
public investment) to November 30, 1994. For the period from the start of
business, March 17, 1994, to April 20, 1994, Class A Shares had no public
investment.

(a) The Adviser waived all of its investment advisory fee, 1.00%, and
reimbursed other operating expenses, 0.86%, to comply with certain state
expense limitations. The remainder of the reimbursement was voluntary. This
expense decrease is reflected in both the expense and net investment income
ratios shown above.

(b) Computed on an annualized basis.

Further information about the Fund's performance is contained in the Fund's
annual report for the fiscal period ended November 30, 1994, which can be
obtained free of charge.

- - -------------------------------------------------------------------------------
SYNOPSIS

The Corporation was established 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 Fund 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. As of the date of this prospectus, the Board
of Directors ("Directors") has established four classes of shares for the Fund,
known as Class A Shares, Class B Shares, Class C Shares and Fortress Shares.
This prospectus relates only to the Class A Shares, Class B Shares and Class C
Shares of the Fund (individually and collectively as the context requires,
"Shares").

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.

For information on how to purchase the Shares offered by this prospectus, please
refer to "How to Purchase Shares." The minimum initial investment for Class A
Shares is $500. The minimum initial investment for Class B Shares and Class C
Shares is $1500. However, the minimum initial investment for a retirement
account in any class is $50. Subsequent investments in any class must be in
amounts of at least $100, except for retirement plans which must be in amounts
of at least $50.

Class A Shares are sold at net asset value plus an applicable sales load and are
redeemed at net asset value. However, a contingent deferred sales charge is
imposed under certain circumstances. For a more complete description, see "How
to Redeem Shares."

Class B Shares are sold at net asset value and are redeemed at net asset value.
However, a contingent deferred sales charge is imposed on certain Shares which
are redeemed within six full years of purchase. See "How to Redeem Shares."

Class C Shares are sold at net asset value. A contingent deferred sales charge
of 1.00% will be charged on assets redeemed within the first 12 months following
purchase. See "How to Redeem Shares."

The Fund also pays a shareholder services fee at an annual rate not to exceed
0.25% of the Fund's average daily net assets.

Additionally, information regarding the exchange privilege offered with respect
to the Fund and certain other funds for which affiliates of Federated Investors
serve as principal underwriter ("Federated Funds") can be found under "Exchange
Privilege."

Federated Management is the investment adviser (the " Investment Adviser") to
the Fund and receives compensation for its services. The Investment Adviser's
address is Federated Investors Tower, Pittsburgh, Pennsylvania 15222-3779.

Investors should be aware of the following general observations. The Fund may
make certain investments and employ certain investment techniques that involve
risks, including entering into repurchase agreements, lending portfolio
securities, investing in restricted and illiquid securities, investing in
securities on a when-issued and delayed delivery basis, writing call options and
investing in foreign securities. In addition, there exist certain risks
associated with utilities industries. These risks are described under
"Investment Policies."

The Fund's current net asset value and offering price can be found in the mutual
funds section of local newspapers under "Federated Liberty 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, 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;

Federated Bond Fund, providing current income through high-quality corporate
debt;

Federated Growth Strategies Fund, providing appreciation of capital primarily
through equity securities of companies with above-average growth in earnings
and dividends, or of companies where significant fundamental changes are taking
place;

Federated Small Cap Strategies Fund, providing capital appreciation primarily
through common stocks of small and medium-sized companies;

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 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 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; 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 who have been designated as Liberty Life Members
are exempt from sales loads 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.

FEDERATED LIFETRACKTM PROGRAM (CLASS A SHARES AND CLASS C SHARES)

The Fund is also a member of the Federated LifeTrackTM Program sold through
financial representatives. Federated LifeTrackTM is an integrated program of
investment options, plan recordkeeping, and consultation services for 401(k) and
other participant-directed benefit and savings plans. Under the Program,
employers or plan trustees may select a group of investment options to be
offered in a plan which also uses the Program for recordkeeping and
administrative services. Additional fees are charged to participating plans for
these services. As part of the Program, exchanges may readily be made between
investment options selected by the employer or a plan trustee.

Other funds participating in the Federated LifeTrackTM Program are: American
Leaders Fund, Inc., Capital Growth Fund, Capital Preservation Fund, Federated
Growth Strategies Fund, Federated Small Cap Strategies Fund, Fund for U.S.
Government Securities, Inc., International Equity Fund, International Income
Fund, Liberty Equity Income Fund, Inc., Liberty High Income Bond Fund, Inc.,
Liberty Utility Fund, Inc., Prime Cash Series, Stock and Bond Fund, Inc. and
Strategic Income Fund.

With respect to Class A Shares, no sales load is imposed on purchases made by
qualified retirement plans with over $1 million invested in funds participating
in the Federated LifeTrackTM Program.

- - -------------------------------------------------------------------------------
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 investment 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 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 the 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 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 Ratings Group ("S&P") or Baa or better
by Moody's Investors Service, Inc., ("Moody's") 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 (i.e., "junk bonds"), but are
rated CCC or better by S&P or Caa or better by Moody's or are not rated but
determined by the Investment Adviser to be of comparable quality. Securities
rated BB, B, and CCC by S&P or Ba, B, and Caa by Moody's 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
Prospectus.

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 S&P, Prime-1 by Moody's, 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
customers. 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 borrowing 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, technology 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.

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 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 POLICIES

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 the 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 previously 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.

There is the risk that when lending portfolio securities, the securities may not
be available to the Fund on a timely basis and the Fund may, therefore, lose the
opportunity to sell the securities at a desirable price. In addition, in the
event that a borrower of securities would file for bankruptcy or become
insolvent, disposition of the securities may be delayed pending court action.

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.
These transactions are arrangements in which the Fund purchases securities with
payment and delivery scheduled for a future time. The seller's failure to
complete these transactions may cause the Fund to miss a price or yield
considered to be advantageous. Settlement dates may be a month or more after
entering into these transactions, and the market values of the securities
purchased may vary from the purchase prices. Accordingly, the Fund may pay
more/less than the market value of the securities on the settlement date.

The Fund may dispose of a commitment prior to settlement if the Investment
Adviser deems it appropriate to do so. In addition, the Fund may enter into
transactions to sell its purchase commitments to third parties at current market
values and simultaneously acquire other commitments to purchase similar
securities at later dates. The Fund may realize short-term profits or losses
upon the sale of such commitments.

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 limitation, however, may be changed by the Directors without the
approval of shareholders. Shareholders will be notified before any material
change in this limitations 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 each class of Shares in the market value
of all securities and other assets of the Fund, subtracting the interest of each
class of Shares in the liabilities of the Fund and those attributable to each
class of Shares, and dividing the remainder by the total number of each class of
Shares outstanding. The net asset value for each class of Shares may differ 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.

The net asset value of each class of Shares of the Fund is determined as of the
close of trading (normally, 4:00 p.m. Eastern time) on the New York Stock
Exchange each day the New York Stock Exchange is open, except on: (i) days on
which there are not sufficient changes in the value of the Fund's portfolio
securities that it's 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,
President's Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day, and Christmas Day.

- - -------------------------------------------------------------------------------
INVESTING IN THE FUND

This prospectus offers investors three classes of Shares that carry sales loads
and contingent deferred sales charges in different forms and amounts and which
bear different levels of expenses.

CLASS A SHARES

An investor who purchases Class A Shares pays a maximum sales load of 5.50% at
the time of purchase. As a result, Class A Shares are not subject to any charges
when they are redeemed (except for special programs offered under "Purchases
with Proceeds From Redemptions of Unaffiliated Investment Companies.") Certain
purchases of Class A Shares qualify for reduced sales loads. See "Reducing the
Sales Load-- Class A Shares." Class A Shares have no conversion feature.

CLASS B SHARES

Class B Shares are sold without an initial sales load, but are subject to a
contingent deferred sales charge of up to 5.50% if redeemed within six full
years following purchase. Class B Shares also bear a higher 12b-1 fee than Class
A Shares. Class B Shares will automatically convert into Class A Shares, based
on relative net asset value, on or around the fifteenth of the month eight full
years after the purchase date. Class B Shares provide an investor the benefit of
putting all of the investor's dollars to work from the time the investment is
made, but (until conversion) will have a higher expense ratio and pay lower
dividends than Class A Shares due to the higher 12b-1 fee.

CLASS C SHARES

Class C Shares are sold without an initial sales load, but are subject to a
1.00% contingent deferred sales charge on assets redeemed within the first 12
months following purchase. Class C Shares provide an investor the benefit of
putting all of the investor's dollars to work from the time the investment is
made, but will have a higher expense ratio and pay lower dividends than Class A
Shares due to the higher 12b-1 fee. Class C Shares have no conversion feature.

- - -------------------------------------------------------------------------------
HOW TO PURCHASE SHARES

Shares of the Fund are sold on days on which the New York Stock Exchange is
open. Shares of the Fund may be purchased as described below, either through a
financial institution (such as a bank or broker/dealer which has a sales
agreement with the distributor) or by wire or by check directly to the Fund,
with a minimum initial investment of $500 for Class A Shares and $1,500 for
Class B Shares and Class C Shares. Additional investments can be made for as
little as $100. The minimum initial and subsequent investment for retirement
plans is only $50. (Financial institutions may impose different minimum
investment requirements on their customers.)

In connection with any sale, 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. An account must be
established at a financial institution or by completing, signing, and returning
the new account form available from the Fund before Shares can be purchased.

INVESTING IN CLASS A SHARES

Class A Shares are sold at their net asset value next determined after an order
is received, plus a sales load as follows:

<TABLE>
<CAPTION>
DEALER
SALES LOAD SALES LOAD CONCESSION
AS A AS A AS A
PERCENTAGE PERCENTAGE PERCENTAGE
OF PUBLIC OF NET OF PUBLIC
AMOUNT OF OFFERING AMOUNT OFFERING
TRANSACTION PRICE INVESTED PRICE
<S> <C> <C> <C>
Less than $50,000 5.50% 5.82% 5.00%
$50,000 but less
than $100,000 4.50% 4.71% 4.00%
$100,000 but less
than $250,000 3.75% 3.90% 3.25%
$250,000 but less
than $500,000 2.50% 2.56% 2.25%
$500,000 but less
than $1 million 2.00% 2.04% 1.80%
$1 million or
greater 0.00% 0.00% 0.25%*
</TABLE>

*See sub-section entitled "Dealer Concession."

No sales load is imposed for Class A Shares purchased through bank trust
departments, investment advisers registered under the Investment Advisers Act of
1940, as amended, or retirement plans where the third party administrator has
entered into certain arrangements with Federated Securities Corp. or its
affiliates, or to shareholders designated as Liberty Life Members. However,
investors who purchase Shares through a trust department, investment adviser, or
retirement plan may be charged an additional service fee by the institution.
Additionally no sales load is imposed for Class A Shares purchased through "wrap
accounts" or similar programs, under which clients pay a fee or fees for
services.

No sales load is imposed on purchases made by retirement plans with over $1
million invested in funds available through the Federated LifeTrackTM Program.

DEALER CONCESSION

For sales of Class A Shares, a dealer will normally receive up to 90% of the
applicable sales load. Any portion of the sales load which is not paid to a
dealer will be retained by the distributor. However, the distributor may offer
to pay dealers up to 100% of the sales load retained by it. Such payments may
take the form of cash or

promotional incentives, such as reimbursement of certain expenses of qualified
employees and their spouses to attend informational meetings about the Fund or
other special events at recreational-type facilities, or items of material
value. In some instances, these incentives will be made available only to
dealers whose employees have sold or may sell a significant amount of Shares. On
purchases of $1 million or more, the investor pays no sales load; however, the
distributor will make twelve monthly payments to the dealer totaling 0.25% of
the public offering price over the first year following the purchase. Such
payments are based on the original purchase price of Shares outstanding at each
month end.

The sales load 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 load 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.

Effective June 1, 1995, and until further notice the entire amount of the
applicable sales load will be reallowed to dealers. In addition, the distributor
will pay dealers additional bonus payments in an amount equal to 0.50 of 1% of
the public offering price of the Shares sold.

REDUCING OR ELIMINATING
THE SALES LOAD

The sales load can be reduced or eliminated on the purchase of Class A Shares
through:

quantity discounts and accumulated purchases;

concurrent purchases;

signing a 13-month letter of intent;

using the reinvestment privilege; or

purchases with proceeds from redemptions of unaffiliated investment company
shares.

QUANTITY DISCOUNTS AND
ACCUMULATED PURCHASES

As shown in the table above, larger purchases reduce the sales load paid. The
Fund will combine purchases of Class A 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 load. In addition, the sales load, 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 Class A Shares is made, the Fund will consider the
previous purchases still invested in the Fund. For example, if a shareholder
already owns Class A 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 load on the additional purchase according to the schedule now in
effect would be 3.75%, not 4.50%.

To receive the sales load 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 Class A Shares are already owned or that purchases are
being combined. The Fund will reduce the sales load after it confirms the
purchases.

CONCURRENT PURCHASES

For purposes of qualifying for a sales load 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 load. For example,
if a shareholder concurrently invested $30,000 in one of the other funds in the
Liberty Family of Funds with a sales load, and $20,000 in this Fund, the sales
load would be reduced.

To receive this sales load 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 load
after it confirms the purchases.

LETTER OF INTENT

If a shareholder intends to purchase at least $50,000 of shares in the funds in
the Liberty Family of Funds (excluding money market funds) over the next 13
months, the sales load may be reduced by signing a letter of intent to that
effect. This letter of intent includes a provision for a sales load adjustment
depending on the amount actually purchased within the 13-month period and a
provision for the custodian to hold up to 5.50% of the total amount intended to
be purchased in escrow (in shares) until such purchase is completed.

The Shares held in escrow in the shareholder's account will be released upon
fulfillment of the letter of intent or the end of the 13-month period, whichever
comes first. If the amount specified in the letter of intent is not purchased,
an appropriate number of escrowed Shares may be redeemed in order to realize the
difference in the sales load.

While this letter of intent will not obligate the shareholder to purchase
Shares, each purchase during the period will be at the sales load applicable to
the total amount intended to be purchased. At the time a letter of intent is
established, current balances in accounts in any Class A Shares of any fund in
the Liberty Family of Funds, excluding money market accounts, will be aggregated
to provide a purchase credit towards fulfillment of the letter of intent. Prior
trade prices will not be adjusted.

REINVESTMENT PRIVILEGE

If Class A Shares in the Fund have been redeemed, the shareholder has a right,
within 120 days, to reinvest the redemption proceeds at the next-determined net
asset value without any sales load. 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 load. If the shareholder redeems his
Class A Shares in the Fund, there may be tax consequences.

PURCHASES WITH PROCEEDS FROM
REDEMPTIONS OF UNAFFILIATED
INVESTMENT COMPANIES

Investors may purchase Class A Shares at net asset value, without a sales load,
with the proceeds from the redemption of shares of an unaffiliated investment
company that were purchased or redeemed with a sales load or commission and were
not distributed by Federated Securities Corp. 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. From time to time, the Fund may offer dealers a payment of .50
of 1.00% for Shares purchased under this program. If Shares are purchased in
this manner, Fund purchases will be subject to a contingent deferred sales
charge for one year from the date of purchase.

INVESTING IN CLASS B SHARES

Class B Shares are sold at their net asset value next determined after an order
is received. While Class B Shares are sold without an initial sales load, under
certain circumstances described under "Contingent Deferred Sales Charge--Class B
Shares," a contingent deferred sales charge may be applied by the distributor at
the time Class B Shares are redeemed.

CONVERSION OF CLASS B SHARES

Class B Shares will automatically convert into Class A Shares on or around the
fifteenth of the

month eight full years after the purchase date, except as noted below, and will
no longer be subject to a distribution services fee (see "Distribution of
Shares"). Such conversion will be on the basis of the relative net asset values
per share, without the imposition of any sales load, fee or other charge. Class
B Shares acquired by exchange from Class B Shares of another fund in the Liberty
Family of Funds will convert into Class A Shares based on the time of the
initial purchase. For purposes of conversion to Class A Shares, Shares purchased
through the reinvestment of dividends and distributions paid on Class B Shares
will be considered to be held in a separate sub-account. Each time any Class B
Shares in the shareholder's account (other than those in the sub-account)
convert to Class A Shares, an equal pro rata portion of the Class B Shares in
the sub-account will also convert to Class A Shares. The conversion of Class B
Shares to Class A Shares is subject to the continuing availability of a ruling
from the Internal Revenue Service or an opinion of counsel that such conversions
will not constitute taxable events for federal tax purposes. There can be no
assurance that such ruling or opinion will be available, and the conversion of
Class B Shares to Class A Shares will not occur if such ruling or opinion is not
available. In such event, Class B Shares would continue to be subject to higher
expenses than Class A Shares for an indefinite period.

Orders for $250,000 or more of Class B Shares will automatically be invested in
Class A Shares.

INVESTING IN CLASS C SHARES

Class C Shares are sold at net asset value next determined after an order is
received. A contingent deferred sales charge of 1.00% will be charged on assets
redeemed within the first full 12 months following purchase. For a complete
description of this charge see "Contingent Deferred Sales Charge--Class C
Shares."

PURCHASING SHARES 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 placed through a financial
institution are considered received when the Fund is notified of the purchase
order or when payment is converted into federal funds. 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. It is the
financial institution's responsibility to transmit orders promptly. Financial
institutions may charge additional fees for their services.

The financial institution which maintains investor accounts in Class B Shares or
Class C Shares 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.

PURCHASING SHARES BY WIRE

Once an account has been established, Shares may be purchased by wire by calling
the Fund. All information needed will be taken over the telephone, and the order
is considered received immediately. Payment for purchases which are subject to a
sales load must be received within three business days following the order.
Payment for purchases on which no sales load is imposed must be received before
3:00 p.m. (Eastern time) on the next business day following the order. Federal
funds should be wired as follows: State Street Bank and Trust Company, Boston,
MA; Attn: EDGEWIRE; For Credit to: (Fund Name) (Fund Class); (Fund Number);
Account Number; Trade Date and Order Number; Group Number or Dealer Number;
Nominee or Institution Name; and ABA Number 011000028. Shares cannot be
purchased by wire on holidays when wire transfers are restricted.

PURCHASING SHARES BY CHECK

Once an account has been established, Shares may be purchased by sending a check
made payable to the name of the Fund (designate class of Shares and account
number) to: Federated Services Company, P.O. Box 8600, Boston, MA 02266-8600.
Orders by mail are considered received when payment by check is converted into
federal funds (normally the business day after the check is received).

SPECIAL PURCHASE FEATURES

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 at
an Automated Clearing House ("ACH") member and invested in the Fund at the net
asset value next determined after an order is received by the Fund, plus the
sales load, if applicable. Shareholders should contact their financial
institution or the Fund to participate in this program.

RETIREMENT PLANS

Fund Shares can be purchased as an investment for retirement plans or IRA
accounts. For further details, contact the Fund and consult a tax adviser.

- - -------------------------------------------------------------------------------
EXCHANGE PRIVILEGE

CLASS A SHARES

Class A shareholders may exchange all or some of their Shares for Class A Shares
of other funds in the Liberty Family of Funds at net asset value. Neither the
Fund nor any of the funds in the Liberty Family of Funds imposes any additional
fees on exchanges. Participants in a retirement plan under the Federated
LifeTrackTM Program may exchange all or some of their Shares for Class A Shares
of other funds offered under the plan at net asset value.

CLASS B SHARES

Class B shareholders may exchange all or some of their Shares for Class B Shares
of other funds in the Liberty Family of Funds. (Not all funds in the Liberty
Family of Funds currently offer Class B Shares. Contact your financial
institution regarding the availability of other Class B Shares in the Liberty
Family of Funds). Exchanges are made at net asset value without being assessed a
contingent deferred sales charge on the exchanged Shares. To the extent that a
shareholder exchanges Shares for Class B Shares in other funds in the Liberty
Family of Funds, the time for which the exchanged-for Shares are to be held will
be added to the time for which exchanged-from Shares were held for purposes of
satisfying the applicable holding period.

CLASS C SHARES

Class C shareholders may exchange all or some of their Shares for Class C Shares
in other funds in the Liberty Family of Funds at net asset value without a
contingent deferred sales charge. (Not all funds in the Liberty Family of Funds
currently offer Class C Shares. Contact your financial institution regarding the
availability of other Class C Shares in the Liberty Family of Funds.)
Participants in a retirement plan under the Program may exchange some or all of
their Shares for Class C Shares of other funds offered under their plan at net
asset value without a contingent deferred sales charge. To the extent that a
shareholder exchanges Shares for Class C Shares in other funds in the Liberty
Family of Funds, the time for which the exchanged-for Shares are to be held will
be added to the time for which exchanged-from Shares were held for purposes of
satisfying the applicable holding period. For more information, see "Contingent
Deferred Sales Charge."

REQUIREMENTS FOR EXCHANGE

Shareholders using this privilege must exchange Shares having a net asset value
equal to the minimum investment requirements of 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
Shares being acquired may be sold. Upon receipt of proper instructions and
required supporting documents, Shares submitted for exchange are redeemed and
proceeds invested in the same class of 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 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 upon the circumstances, a capital gain or loss may be
realized.

MAKING AN EXCHANGE

Instructions for exchanges for the Liberty Family of Funds may be given in
writing or by telephone. 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, 500
Victory Road--2nd Floor, Quincy, Massachusetts 02171.

Instructions for exchanges for retirement plans participating in the Federated
LifeTrackTM Program should be given to the plan administrator.

TELEPHONE INSTRUCTIONS

Telephone instructions made by the investor may be carried out only if a
telephone authorization form completed by the investor is on file with the Fund.
If the instructions are given by a broker, a telephone authorization form
completed by the broker must be on file with the Fund. If reasonable procedures
are not followed by the Fund, it may be liable for losses due to unauthorized or
fraudulent 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, P.O. Box 8600, Boston, Massachusetts
02266-8600, 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 the Fund before that time for Shares to be exchanged the
same day. Shareholders exchanging into a Fund will begin receiving dividends the
following business day. This privilege may be modified or terminated at any
time.

- - -------------------------------------------------------------------------------
HOW TO REDEEM SHARES

Shares are redeemed at their net asset value, less any applicable contingent
deferred sales charge, next determined after the Fund 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
as described below. Redemptions of Shares held through retirement plans
participating in the Federated LifeTrackTM Program will be governed by the
requirements of the respective plans.

REDEEMING SHARES THROUGH YOUR
FINANCIAL INSTITUTION

Shares of the Fund may be redeemed by calling your financial institution 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
(such as banks) 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. Customary fees and commissions may be charged by the financial
institution for this service.

REDEEMING SHARES BY TELEPHONE

Shares may be redeemed in any amount by calling the Fund provided the Fund has a
properly completed authorization form. These forms can be obtained from
Federated Securities Corp. Proceeds will be mailed in the form of a check, to
the shareholder's address of record or by wire transfer to the shareholder's
account at a domestic commercial bank that is a member of the Federal Reserve
System. The minimum amount for a wire transfer is $1,000. Proceeds from redeemed
Shares purchased by check or through ACH will not be wired until that method of
payment has cleared.

Telephone instructions will 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
this occurs, "Redeeming Shares By Mail" should be considered. If at any time the
Fund shall determine it necessary to terminate or modify the telephone
redemption privilege, shareholders would be promptly notified.

REDEEMING SHARES BY MAIL

Shares may be redeemed in any amount by mailing a written request to: Federated
Services Company, Fund Name, Fund Class, P.O. Box 8600, Boston, MA 02266-8600.

The written request should state: Fund Name and the Class designation; the
account name as registered with the Fund; the account number; and the number of
Shares to be redeemed or the dollar amount requested. All owners of the account
must sign the request exactly as the Shares are registered. It is recommended
that any share certificates be sent by registered or certified mail with the
written request.

If you are requesting a redemption of any amount to be sent to an address other
than that on record with the Fund, or a redemption payable to a third party,
then all signatures appearing on the written request must be guaranteed by a
bank which is a member of the Federal Deposit Insurance Corporation, a trust
company, a member firm of a domestic stock exchange, or any other "eligible
guarantor institution," as defined by the Securities and 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.

SPECIAL REDEMPTION FEATURES

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 the Fund. For
this reason, payments under this program should not be considered as yield or
income on the shareholder's investment in the Fund. 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 Class A Shares are sold with a
sales load, it is not advisable for shareholders to continue to purchase Class A
Shares while participating in this program. A contingent deferred sales charge
may be imposed on Class B and C Shares.

CONTINGENT DEFERRED SALES CHARGE

Shareholders may be subject to a contingent deferred sales charge upon
redemption of their Shares under the following circumstances:

CLASS A SHARES

Class A Shares purchased under a periodic special offering with the proceeds of
a redemption of Shares of an unaffiliated investment company purchased or
redeemed with a sales load and not distributed by Federated Securities Corp. may
be charged a contingent deferred sales charge of .50 of 1.00% for redemptions
made within one full year of purchase. Any applicable contingent deferred sales
charge will be imposed on the lesser of the net asset value of the redeemed
Shares at the time of purchase or the net asset value of the redeemed Shares at
the time of redemption.

CLASS B SHARES

Shareholders redeeming Class B Shares from their Fund accounts within six full
years of the purchase date of those Shares will be charged a contingent deferred
sales charge by the Fund's distributor. Any applicable contingent deferred sales
charge will be imposed on the lesser of the net asset value of the redeemed
Shares at the time of purchase or the net asset value of the redeemed Shares at
the time of redemption in accordance with the following schedule:

<TABLE>
<CAPTION>
CONTINGENT
YEAR OF REDEMPTION DEFERRED
AFTER PURCHASE SALES CHARGE
------------------ ------------
<S> <C>
First 5.50%
Second 4.75%
Third 4%
Fourth 3%
Fifth 2%
Sixth 1%
Seventh and thereafter 0%
</TABLE>

CLASS C SHARES

Shareholders redeeming Class C Shares from their Fund accounts within one full
year of the purchase date of those Shares will be charged a contingent deferred
sales charge by the Fund's distributor of 1.00%. Any applicable contingent
deferred sales charge will be imposed on the lesser of the net asset value of
the redeemed Shares at the time of purchase or the net asset value of the
redeemed Shares at the time of redemption. No contingent deferred sales charge
will be charged for redemptions of Class C Shares from the Federated LifeTrackTM
Program.

CLASS A SHARES, CLASS B SHARES,
AND CLASS C SHARES

The contingent deferred sales charge will be deducted from the redemption
proceeds otherwise payable to the shareholder and will be retained by the
distributor. The contingent deferred sales charge will not be imposed with
respect to: (1) Shares acquired through the reinvestment of dividends or
distributions of long-term capital gains; and (2) Shares held for more than six
full years from the date of purchase with respect to Class B Shares and one full
year from the date of purchase with respect to Class C Shares and applicable
Class A Shares. Redemptions will be processed in a manner intended to maximize
the amount of redemption which will not be subject to a contingent deferred
sales charge. In computing the amount of the applicable contingent deferred
sales charge, redemptions are deemed to have occurred in the following order:
(1) Shares acquired through the reinvestment of dividends and long-term capital
gains; (2) Shares held for more than six full years from the date of purchase
with respect to Class B Shares and one full year from the date of purchase with
respect to Class C Shares and applicable Class A Shares; (3) Shares held for
fewer than six years with respect to Class B Shares and one full year from the
date of purchase with respect to Class C Shares and applicable Class A Shares on
a first-in, first-out basis. A contingent deferred sales charge is not assessed
in connection with an exchange of Fund Shares for Shares of other funds in the
Liberty Family of Funds in the same class (see "Exchange Privilege"). Any
contingent deferred sales charge imposed at the time the exchanged for Shares
are redeemed is calculated as if the shareholder had held the Shares from the
date on which he became a shareholder of the exchanged-from Shares. Moreover,
the contingent deferred sales charge will be eliminated with respect to certain
redemptions (see "Elimination of Contingent Deferred Sales Charge").

ELIMINATION OF CONTINGENT
DEFERRED SALES CHARGE

A contingent deferred sales charge will not be charged in connection with
exchanges of Shares for Class A Shares in other Liberty Family Funds or
Federated LifeTrackTM Program funds or redemptions from the Federated
LifeTrackTM Program.

The contingent deferred sales charge will be eliminated with respect to the
following redemptions: (1) redemptions following the death or disability, as
defined in Section 72(m)(7) of the Internal Revenue Code of 1986, of a
shareholder; (2) redemptions representing minimum required distributions from an
Individual Retirement Account or other retirement plan to a shareholder who has
attained the age of 70-1/2; and (3) involuntary redemptions by the Fund of
Shares in shareholder accounts that do not comply with the minimum balance
requirements. No contingent deferred sales charge will be imposed on redemptions
of Shares held by Directors, employees and sales representatives of the Fund,
the distributor, or affiliates of the Fund or distributor; employees of any
financial institution that sells Shares of the Fund pursuant to a sales
agreement with the distributor; and spouses and children under the age of 21 of
the aforementioned persons. Finally, no contingent deferred sales charge will be
imposed on the redemption of Shares originally purchased through a bank trust
department, an investment adviser registered under the Investment Advisers Act
of 1940, as amended, or retirement plans where the third party administrator has
entered into certain arrangements with Federated Securities Corp. or its
affiliates, or any other financial institution, to the extent that no payments
were advanced for purchases made through such entities. The Directors reserve
the right to discontinue elimination of the contingent deferred sales charge.
Shareholders will be notified of such elimination. Any Shares purchased prior to
the termination of such waiver would have the contingent deferred sales charge
eliminated as provided in the Fund's prospectus at the time of the purchase of
the Shares. If a shareholder making a redemption qualifies for an elimination of
the contingent deferred sales charge, the shareholder must notify Federated
Securities Corp. or the transfer agent in writing that he is entitled to such
elimination.

- - -------------------------------------------------------------------------------
ACCOUNT AND SHARE
INFORMATION

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
in writing to Federated Services Company.

Detailed confirmations of each purchase and redemption are sent to each
shareholder. Monthly confirmations are sent to report dividends paid during that
month.

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 of the Fund on payment dates at
the ex-dividend date net asset value without a sales load, unless shareholders
request cash payments on the new account form or by contacting 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.

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 Class A Share required
minimum value of $500 or the required minimum value of $1,500 for Class B Shares
and Class C Shares. This requirement does not apply, however, if the balance
falls below the required minimum value because of changes in the net asset value
of the respective Share Class. 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.

- - -------------------------------------------------------------------------------
FUND INFORMATION

MANAGEMENT OF THE FUND

BOARD OF DIRECTORS

The Fund is managed by a Board of Directors. The Directors are responsible for
managing the Fund's business affairs and for exercising all the Fund'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.

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 Investment Adviser receives an annual investment advisory fee equal to 1.00%
of the Fund's average daily net assets. 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
Investment Adviser may voluntarily choose to waive a portion of its fee or
reimburse the Fund for certain operating expenses. The Investment 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.
Certain other subsidiaries also provide administrative services to a number of
investment companies. With over $72 billion invested across more than 260 funds
under management and/or administration by its subsidiaries, as of December 31,
1994, Federated Investors is one of the largest mutual fund investment managers
in the United States. With more than 1,750 employees, Federated continues to be
led by the management who founded the company in 1955. Federated funds are
presently at work in and through 4,000 financial institutions nationwide. More
than 100,000 investment professionals have selected Federated funds for their
clients.

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.

Both the Corporation and the Investment Adviser have adopted strict codes of
ethics governing the conduct of all employees who manage the Fund and its
portfolio securities. These codes recognize that such persons owe a fiduciary
duty to the Fund's shareholders and must lace the interests of shareholders
ahead of the employees' own interest. Among other things, the codes: require
preclearance and periodic reporting of personal securities transactions;
prohibit personal transactions in securities being purchased or sold, or being
considered for purchase or sale, by the Fund; prohibit purchasing securities in
initial public offerings; and prohibit taking profits on securities held for
less than sixty days. Violations of the codes are subject to review by the Board
of Directors, and could result in severe penalties.

DISTRIBUTION OF SHARES

Federated Securities Corp. is the principal distributor for Shares of the Fund.
Federated Securities Corp. is located at Federated Investors Tower, Pittsburgh,
Pennsylvania 15222-3779. It is a Pennsylvania corporation organized on November
14, 1969, and is the principal distributor for a number of investment companies.
Federated Securities Corp. is a subsidiary of Federated Investors.

The distributor may offer to pay financial institutions an amount equal to 1% of
the net asset value of Class C Shares purchased by their clients or customers at
the time of purchase (except for participants in the Federated LifeTrackTM
Program). These payments will be made directly by the distributor from its
assets, and will not be made from assets of the Fund. Financial institutions may
elect to waive the initial payment described above; such waiver will result in
the waiver by the Fund of the otherwise applicable contingent deferred sales
charge.

The distributor will pay dealers an amount equal to 5.5% of the net asset value
of Class B Shares purchased by their clients or customers. These payments will
be made directly by the distributor from its assets, and will not be made from
the assets of the Fund. Dealers may voluntarily waive receipt of all or any
portion of these payments. The distributor may pay a portion of the distribution
fee discussed below to financial institutions that waive all or any portion of
the advance payments.

DISTRIBUTION PLAN (CLASS B SHARES
AND CLASS C SHARES ONLY) AND
SHAREHOLDER SERVICES AGREEMENT

Under a distribution plan adopted in accordance with Investment Company Act Rule
12b-1 (the "Distribution Plan"), Class B Shares and Class C Shares will pay a
fee to the distributor in an amount computed at an annual rate of 0.75 of 1% of
the average daily net assets of each class of Shares to finance any activity
which is principally intended to result in the sale of Shares subject to the
Distribution Plan. For Class C Shares, the distributor may select financial
institutions such as banks, fiduciaries, custodians for public funds, investment
advisers, and broker/dealers to provide sales services or distribution-related
support services as agents for their clients or customers. With respect to Class
B Shares, because distribution fees to be paid by the Fund to the distributor
may not exceed an annual rate of 0.75 of 1% of each class of Shares' average
daily net assets, it will take the distributor a number of years to recoup the
expenses it has incurred for its sales services and distribution-related support
services pursuant to the Plan.

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 amounts or may earn a profit from future payments made by Shares
under the Plan.

In addition, the Fund has entered into a Shareholder Services Agreement with
Federated Shareholder Services, a subsidiary of Federated Investors, under which
the Fund may make payments up to 0.25 of 1% of the average daily net asset value
of Class A Shares, Class B Shares, and Class C Shares to obtain certain personal
services for shareholders and for the maintenance of shareholder accounts
("Shareholder Services"). Under the Shareholder Services Agreement, 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.

In addition to payments made pursuant to the Distribution Plan and Shareholder
Services Agreement, Federated Securities Corp. and Federated Shareholder
Services, from their own assets, may pay financial institutions supplemental
fees for the performance of sales services, distribution-related support
services, or shareholder services.

The Glass-Steagall Act prohibits a depository institution (such as a commercial
bank or savings and loan association) from being an underwriter or distributor
of most securities. In the event the Glass-Steagall Act is deemed to prohibit
depository institutions from acting in the capacities described above or should
Congress relax current restrictions on depository institutions, the Directors
will consider appropriate changes in the 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 laws.

OTHER PAYMENTS TO FINANCIAL INSTITUTIONS

Federated Securities Corp. will pay financial institutions, at the time of
purchase of Class A Shares, an amount equal to 0.50 of 1% of the net asset value
of Class A Shares purchased by their clients or customers under the Federated
LifeTrackTM Program or by certain qualified plans as approved by Federated
Securities Corp. (Such payments are subject to a reclaim from the financial
institution should the assets leave the program within 12 months after
purchase.)

Furthermore, with respect to Class A Shares, Class B Shares, and Class C Shares,
the distributor may offer to pay a fee from its own assets to financial
institutions as financial assistance for providing substantial marketing and
sales support. The support may include sponsoring sales, educational and
training seminars for their employees, providing sales literature, and
engineering computer software programs that emphasize the attributes of the
Fund. Such assistance will be predicated upon the amount of Shares the financial
institution sells or may sell, and/or upon the type and nature of sales or
marketing support furnished by the financial institution. Any payments made by
the distributor may be reimbursed by the Adviser or its affiliates.

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 Federated Funds as specified below:

<TABLE>
<CAPTION>
MAXIMUM AVERAGE AGGREGATE
ADMINISTRATIVE DAILY NET ASSETS
FEE OF THE FEDERATED FUNDS
-------------- ----------------------
<C> <S>
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, P.O. Box 8600, Boston, Massachusetts 02266-8600 is
transfer agent for the Shares of the Fund, and dividend disbursing agent for the
Fund.

INDEPENDENT AUDITORS

The independent auditors for the Fund are Ernst & Young LLP, 2100 One Oxford
Centre, Pittsburgh, Pennsylvania 15219.

BROKERAGE TRANSACTIONS

are recognized dealers in specific portfolio instruments, except when a better
price and execution of the order can be obtained elsewhere. In selecting among
firms believed to meet these criteria, the Adviser may give consideration to
those firms which have sold or are selling Shares of the 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
Directors.

- - -------------------------------------------------------------------------------
SHAREHOLDER INFORMATION

VOTING RIGHTS

Each share of the Fund 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 Fund have equal voting rights, except that in matters affecting
only a particular portfolio or class, only Shares of that portfolio or class are
entitled to vote.

As a Maryland corporation, the Fund is not required to hold annual shareholder
meetings. Shareholder approval will be sought only for certain changes in the
Fund's operation and for the election of Directors under certain circumstances.

Directors may be removed by a 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. A special meeting of shareholders shall be called by the Directors upon
the written request of shareholders owning at least 10% of the Fund's
outstanding Shares of all series entitled to vote.

- - -------------------------------------------------------------------------------
TAX INFORMATION

FEDERAL INCOME TAX

The Fund will pay no federal income tax because it expects to meet requirements
of the Internal Revenue Code, 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 rate 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 PERSONAL PROPERTY TAXES

Shares are exempt from personal property taxes imposed by counties,
municipalities, and school districts in Pennsylvania.

Shareholders are urged to consult their own tax advisers regarding the status of
their accounts under state and local tax laws.

- - -------------------------------------------------------------------------------
PERFORMANCE INFORMATION

From time to time, the Fund advertises its total return and yield for each class
of Shares including Fortress Shares as described under "Other Classes of
Shares."

Total return represents the change, over a specific period of time, in the value
of an investment in each class of Shares after reinvesting all income and
capital gains distributions. It is calculated by dividing that change by the
initial investment and is expressed as a percentage.

The yield of each class of Shares is calculated by dividing the net investment
income per share (as defined by the Securities and Exchange Commission) earned
by each class of Shares over a thirtyday period by the maximum offering price
per share of each class on the last day of the period. This number is then
annualized using semi-annual compounding. The yield does not necessarily reflect
income actually earned by each class of Shares, and therefore, may not correlate
to the dividends or other distributions paid to shareholders.

The performance information reflects the effect of non-recurring charges, such
as the maximum sales load or contingent deferred sales charges, which, if
excluded, would increase the total return and yield.

Total return and yield will be calculated separately for Class A Shares, Class B
Shares, Class C Shares, and Fortress Shares.

From time to time, advertisements for Class A Shares, Class B Shares, Class C
Shares and Fortress Shares of the Fund may refer to ratings, rankings, and other
information in certain financial publications and/or compare the performance of
Class A Shares, Class B Shares, Class C Shares and Fortress Shares to certain
indices.

- - -------------------------------------------------------------------------------
OTHER CLASSES OF SHARES

The Fund also offers another class of shares called Fortress Shares. Fortress
Shares are sold primarily to customers of financial institutions subject to a
front-end sales load, a contingent deferred sales charge and a minimum initial
investment of $1,500, unless the investment is in a retirement account in which
the minimum investment is $50.

Shares and Fortress Shares are subject to certain of the same expenses. Expense
differences, however, between Shares and Fortress Shares may affect the
performance of each class.

To obtain more information and a prospectus for Fortress Shares, investors may
call 1-800-235-4669 or contact their financial institution.

ADDRESSES
- - --------------------------------------------------------------------------------

<TABLE>
<S> <C> <C>
World Utility Fund
Class A Shares Federated Investors Tower
Class B Shares Pittsburgh, Pennsylvania 15222-3779
Class C Shares
- - ---------------------------------------------------------------------------------------------------------------------------

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 Trust Company P.O. Box 8604
Boston, Massachusetts 02266-8604
- - ---------------------------------------------------------------------------------------------------------------------------

Transfer Agent and Dividend Disbursing Agent
Federated Services Company Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- - ---------------------------------------------------------------------------------------------------------------------------

Independent Public Accountants
Ernst & Young One Oxford Centre
Pittsburgh, Pennsylvania 15219
- - ---------------------------------------------------------------------------------------------------------------------------
</TABLE>

WORLD UTILITY FUND
(A PORTFOLIO OF WORLD INVESTMENT
SERIES, INC.)
CLASS A SHARES
CLASS B SHARES
CLASS C SHARES
COMBINED PROSPECTUS
An Open-End, Diversified
Management Investment Company
July 26, 1995

[logo] FEDERATED SECURITIES CORP.
---------------------------------------------
Distributor
A subsidiary of FEDERATED INVESTORS

FEDERATED INVESTORS TOWER
PITTSBURGH, PENNSYLVANIA 15222-3779
G00440-03 (8/95)

World Utility Fund

(A Portfolio of World Investment Series, Inc.)
Class A Shares
Class B Shares
Class C Shares
Fortress Shares
Combined Statement of Additional Information

This Combined Statement of Additional Information should be read
with the combined prospectus for Class A Shares, Class B Shares,
and Class C Shares of World Utility Fund (the "Fund"), each dated
July 26, 1995 and the prospectus for Fortress Shares of the Fund,
dated January 31, 1995 . This Statement is not a prospectus
itself. To receive a copy of any of the prospectuses, write or
call the Fund.

Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779

Statement dated July 26, 1995

Federated Securities Corp.
Distributor
A subsidiary of FEDERATED
INVESTORS
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
Lending Cash or Securities 2
Diversification of Investments 2
Concentration of Investments 2
Issuing Senior Securities and
Borrowing Money 2
Pledging Securities 2
Buying on Margin 2
Underwriting 2
Investing in Real Estate 2
Investing in Commodities 2
Investing in Minerals 3
Purchasing Securities to
Exercise Control 3
Investing in Warrants 3
Investing in Securities of
Other Investment Companies 3
Investing in New Issuers 3
Investing in Illiquid
Securities 3
Investing in Restricted
Securities 3
Puts and Calls 3
Investing in Issuers Whose
Securities are Owned by
Officers and Directors of
the Corporation 3

World Investment Series, Inc.
Management 4

Fund Ownership 8
Officers and Directors
Compensation 9
Investment Advisory Services 9
Adviser to the Fund 9
Advisory Fees 10
State Expense Limitations 10
Administrative Services 10
Transfer Agent and Dividend
Disbursing Agent 10
Brokerage Transactions 10

Distribution Plan (Class B
Shares, Class C Shares and
Fortress Shares) and
Shareholder Services Agreement 11

Conversion to Federal Funds 11
Purchases by Sales
Representatives, Fund
Directors, and Employees 11
Exchanging Securities for Fund
Shares 12
Tax Consequences 12
Determining Net Asset Value 12
Determining Market Value of
Securities 12
Trading in Foreign Securities 12
Exchange Privilege 13
Reduced Sales Load 13
Requirements for Exchange 13
Tax Consequences 13
Making an Exchange 13
Telephone Instructions 13
Redeeming Shares 13
Redemption in Kind 14
Tax Status 14
The Fund's Tax Status 14
United Kingdom Taxes 14
Shareholders' Tax Status 14
Capital Gains 14
Total Return 14
Yield 15
Performance Comparisons 15

About Federated Investors 17
Mutual Fund Market 17
Institutional 17
Trust Organizations 17
Broker/dealers and bank
broker/dealer subsidiaries 17
Appendix 18
Financial Statements 19

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 four classes known as Class A Shares,
Class B Shares, Class C Shares and Fortress Shares (individually and
collectively referred to as "Shares" as the context may require). This
Combined Statement of Additional Information relates to all classes of
Shares of the Fund.

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. 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 are maintained until the
transaction has been settled. The Fund does not intend to engage in when-
issued and delayed delivery transactions to an extent that would cause
the segregation of more than 20% of the total value of its assets.
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 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 has
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.
During the period from April 21, 1994 (date of initial public
investment) through November 30, 1994, the Fund's portfolio turnover
rate was 7%.
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.
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, and invest no 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 load 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 total 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.

World Investment Series, Inc. Management
Officers and Directors are listed with their addresses, present
positions with World Investment Series, Inc., and principal
occupations.

John F. Donahue@*
Federated Investors Tower
Pittsburgh, PA
Birthdate: July 28, 1924
Chairman and Director
Chairman and Trustee, Federated Investors, Federated Advisers, Federated
Management, and Federated Research; Chairman and Director, Federated
Research Corp.; Chairman, Passport Research, Ltd.; Director, AEtna Life
and Casualty Company; Chief Executive Officer and Director, Trustee, or
Managing General Partner of the Funds. Mr. Donahue is the father of J.
Christopher Donahue, Vice President of the Company.

John T. Conroy, Jr.
Wood/IPC Commercial Department
John R. Wood and Associates, Inc., Realtors
3255 Tamiami Trail North
Naples, FL
Birthdate: June 23, 1937
Director
President, Investment Properties Corporation; Senior Vice-President,
John R. Wood and Associates, Inc., Realtors; President, Northgate
Village Development Corporation; Partner or Trustee in private real
estate ventures in Southwest Florida; Director, Trustee, or Managing
General Partner of the Funds; formerly, President, Naples Property
Management, Inc.

William J. Copeland
One PNC Plaza - 23rd Floor
Pittsburgh, PA
Birthdate: July 4, 1918
Director
Director and Member of the Executive Committee, Michael Baker, Inc.;
Director, Trustee, or Managing General Partner of the Funds; formerly,
Vice Chairman and Director, PNC Bank, N.A., and PNC Bank Corp. and
Director, Ryan Homes, Inc.

James E. Dowd
571 Hayward Mill Road
Concord, MA
Birthdate: May 18, 1922
Director
Attorney-at-law; Director, The Emerging Germany Fund, Inc.; Director,
Trustee, or Managing General Partner of the Funds.

Lawrence D. Ellis, M.D.*
3471 Fifth Avenue, Suite 1111
Pittsburgh, PA
Birthdate: October 11, 1932
Director
Professor of Medicine and Member, Board of Trustees, University of
Pittsburgh; Medical Director, University of Pittsburgh Medical Center -
Downtown; Member, Board of Directors, University of Pittsburgh Medical
Center; formerly, Hematologist, Oncologist, and Internist, Presbyterian
and Montefiore Hospitals; Director, Trustee, or Managing General Partner
of the Funds.

Richard B. Fisher *
Federated Investors Tower
Pittsburgh, PA
Birthdate: May 17, 1923
President and Director
Executive Vice President and Trustee, Federated Investors; Director,
Federated Research Corp.; Chairman and Director, Federated Securities
Corp.; President or Vice President of some of the Funds; Director or
Trustee of some of the Funds.

Edward L. Flaherty, Jr.@
Henny, Kochuba, Meyer and Flaherty
Two Gateway Center - Suite 674
Pittsburgh, PA
Birthdate: June 18, 1924
Director
Attorney-at-law; Shareholder, Henny, Kochuba, Meyer and Flaherty;
Director, Eat'N Park Restaurants, Inc., and Statewide Settlement Agency,
Inc.; Director, Trustee, or Managing General Partner of the Funds;
formerly, Counsel, Horizon Financial, F.A., Western Region.

Peter E. Madden
70 Westcliff Road
Westin, MA
Birthdate: March 16, 1942
Director
Consultant; State Representative, Commonwealth of Massachusetts;
Director, Trustee, or Managing General Partner of the Funds; formerly,
President, State Street Bank and Trust Company and State Street Boston
Corporation.

Gregor F. Meyer
Henny, Kochuba, Meyer and Flaherty
Two Gateway Center - Suite 674
Pittsburgh, PA
Birthdate: October 6, 1926
Director
Attorney-at-law; Partner, Henny, Kochuba, Meyer and Flaherty; Chairman,
Meritcare, Inc.; Director, Eat'N Park Restaurants, Inc.; Director,
Trustee, or Managing General Partner of the Funds; formerly, Vice
Chairman, Horizon Financial, F.A.

John E. Murray, Jr., J.D., S.J.D.
President, Duquesne University
Pittsburgh, PA
Birthdate: December 20, 1932
Director
President, Law Professor, Duquesne University; Consulting Partner,
Mollica, Murray and Hogue; Director, Trustee or Managing General Partner
of the Funds.

Wesley W. Posvar
1202 Cathedral of Learning
University of Pittsburgh
Pittsburgh, PA
Birthdate: September 14, 1925
Director
Professor, International Politics and Management Consultant; Trustee,
Carnegie Endowment for International Peace, RAND Corporation, Online
Computer Library Center, Inc., and U.S. Space Foundation; Chairman,
Czecho Management Center; Director, Trustee, or Managing General
Partner of the Funds; President Emeritus, University of Pittsburgh;
founding Chairman, National Advisory Council for Environmental Policy
and Technology and Federal Emergency Management Advisory Board.

Marjorie P. Smuts
4905 Bayard Street
Pittsburgh, PA
Birthdate: June 21, 1935
Director
Public relations/marketing consultant; Conference Coordinator, Non-
profit entities; Director, Trustee, or Managing General Partner of the
Funds.

J. Christopher Donahue
Federated Investors Tower
Pittsburgh, PA
Birthdate: April 11, 1949
Vice President
President and Trustee, Federated Investors, Federated Advisers,
Federated Management, and Federated Research; President and Director,
Federated Research Corp.; President, Passport Research, Ltd.; Trustee,
Federated Administrative Services, Federated Services Company, and
Federated Shareholder 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 Company.

Edward C. Gonzales
Federated Investors Tower
Pittsburgh, PA
Birthdate: October 22, 1930
Vice President and Treasurer
Vice President, Treasurer, and Trustee, Federated Investors; Vice
President and Treasurer, Federated Advisers, Federated Management,
Federated Research, Federated Research Corp., and Passport Research,
Ltd.; Executive Vice President, Treasurer, and Director, Federated
Securities Corp.; Trustee, Federated Services Company and Federated
Shareholder Services; Chairman, Treasurer, and Trustee, Federated
Administrative Services; Trustee or Director of some of the Funds; Vice
President and Treasurer of the Funds.

John W. McGonigle
Federated Investors Tower
Pittsburgh, PA
Birthdate: October 26, 1938
Vice President and Secretary
Vice President, Secretary, General Counsel, and Trustee, Federated
Investors; Vice President, Secretary, and Trustee, Federated Advisers,
Federated Management, and Federated Research; Vice President and
Secretary, Federated Research Corp. and Passport Research, Ltd.;
Trustee, Federated Services Company; Executive Vice President,
Secretary, and Trustee, Federated Administrative Services; Secretary and
Trustee, Federated Shareholder Services; Executive Vice President and
Director, Federated Securities Corp.; Vice President and Secretary of
the Funds.

* This Director is deemed to be an "interested person" as defined
in the Investment Company Act of 1940, as amended.
@ Member of the 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.
As used in the table above, "The Funds" and "Funds" mean the following
investment companies: American Leaders Fund, Inc.; Annuity Management
Series; Arrow Funds; Automated Cash Management Trust; Automated
Government Money Trust; California Municipal Cash Trust; Cash Trust
Series II; Cash Trust Series, Inc.; 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
Institutional 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; 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 Term
Trust, Inc. - 1999; Liberty Utility Fund, Inc.; Liquid Cash Trust;
Managed Series Trust; Money Market Management, Inc.; Money Market
Obligations Trust; Money Market Trust; Municipal Securities Income
Trust; Newpoint Funds; New York Municipal Cash Trust; 111 Corcoran
Funds; Peachtree Funds; The Planters Funds; RIMCO Monument Funds; The
Shawmut Funds; Short-Term Municipal Trust; 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; The Virtus Funds; and World Investment
Series, Inc.
Fund Ownership
As of July 1995, the following shareholders of record owned 5% or
more of the outstanding Class A Shares of the Fund:
As of July __, 1995, no shareholders of record owned 5% or more of the
outstanding Class B Shares of the Fund.
As of July __, 1995, no shareholders of record owned 5% or more of the
outstanding Class C Shares of the Fund.
As of July __, 1995, the following shareholders of record owned 5% or
more of the outstanding Fortress Shares of the Fund:

Officers and Directors Compensation

NAME , AGGREGATE TOTAL COMPENSATION
PAID
POSITION WITH COMPENSATION FROM TO DIRECTORS FROM
CORPORATION CORPORATION CORPORATION AND FUND
COMPLEX

John F. Donahue,
Chairman and Director $ -0- $ -0- for the
Corporation and
69 investment companies

John T. Conroy, Jr.,
Director $ -0- $ 136,100 for the
Corporation and
65 investment companies

William J. Copeland,
Director $ -0- $ 136,100 for the
Corporation and
65 investment companies

James E. Dowd,
Director $ -0- $ 136,100 for the
Corporation and
65 investment companies

Lawrence D. Ellis, M.D.,
Director $ -0- $ 123,600 for the
Corporation and
65 investment companies

Richard B. Fisher,
President and Director $ -0- $ -0- for the
Corporation and
9 investment companies

Edward L. Flaherty, Jr.,
Director $ -0- $ 136,100 for the
Corporation and
65 investment companies

Peter E. Madden,
Director $ -0- $ 104,880 for the
Corporation and
65 investment companies

Gregor F. Meyer,
Director $ -0- $ 123,600 for the
Corporation and
65 investment companies

Wesley W. Posvar,
Director $ -0- $ 123,600 for the
Corporation and
65 investment companies

Marjorie P. Smuts,
Director $ -0- $ 123,600 for the
Corporation and
65 investment companies
Investment Advisory Services
Adviser to the Fund
The Fund's investment adviser is Federated Management (the "Adviser").
It is a subsidiary of Federated Investors. All the voting securities of
Federated Investors are owned by a trust, the trustees of which are John
F. Donahue, his wife, and his son, J. Christopher Donahue.
The Adviser shall not be liable to the Fund or any shareholder for any
losses that may be sustained in the purchase, holding, or sale of any
security or for anything done or omitted by it except acts or omissions
involving willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties imposed upon it by its contract with the Fund.
Advisory Fees

For its advisory services, the Adviser receives an annual investment
advisory fee as described in the respective prospectuses. During the
period from March 17, 1994 (start of business) through November 30,
1994, the Adviser earned $36,237, all of which was waived.

State Expense Limitations
The Adviser has undertaken to comply with the expense limitations
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 single fiscal year, by the amount
of the investment advisory fee.
This arrangement is not part of the advisory contract and may be
amended or rescinded in the future.
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 respective prospectuses. Dr. Henry J. Gailliot, an
officer of Federated Management, the adviser to the Fund, holds
approximately 20%, of the outstanding common stock and serves as a
director of Commercial Data Services, Inc., a company which provides
computer processing services to Federated Administrative Services, Inc.,
and Federated Administrative Services. During the period from March 17,
1994, (start of business) through November 30, 1994 the Fund incurred
administrative services costs of $38,643.

Transfer Agent and Dividend Disbursing Agent
Federated Services Company serves as transfer agent and dividend
disbursing agent for the Fund. The fee paid to the transfer agent is
based upon the size, type and number of accounts and transactions made
by shareholders.
Federated Services Company also maintains the Fund's accounting records.
The fee paid for this service is based upon the level of the Fund's
average net assets for the period plus out-of-pocket expenses.
Brokerage Transactions

When selecting brokers and dealers to handle the purchase and sale of
portfolio instruments, the Adviser looks for prompt execution of the
order at a favorable price. In working with dealers, the Adviser will
generally utilize those who are recognized dealers in specific portfolio
instruments, except when a better price and execution of the order can
be obtained elsewhere. The Adviser makes decisions on portfolio
transactions and selects brokers and dealers subject to review by the
Directors.

The Adviser may select brokers and dealers who offer brokerage and
research services. These services may be furnished directly to the Fund
or to the Adviser and may include:
- advice as to the advisability of investing in securities;
- security analysis and reports;
- economic studies;
- industry studies;
- receipt of quotations for portfolio evaluations; and
- similar services.
The Adviser and its affiliates exercise reasonable business judgment in
selecting brokers who offer brokerage and research services to execute
securities transactions. They determine in good faith that commissions
charged by such persons are reasonable in relationship to the value of
the brokerage and research services provided.
Research services provided by brokers may be used by the Adviser or by
affiliates of Federated Investors in advising Federated Funds and other
accounts. To the extent that receipt of these services may supplant
services for which the Adviser or its affiliates might otherwise have
paid, it would tend to reduce their expenses.
During the period from April 21, 1994 (date of initial public
investment) to November 30, 1994 the Fund paid $21,932 in brokerage
commissions for brokerage transactions.
Purchasing Shares

Except under certain circumstances described in the respective
prospectuses, Shares are sold at their net asset value (plus a sales
load on Class A Shares and Fortress Shares only) on days the New York
Stock Exchange is open for business. The procedure for purchasing Shares
is explained in the respective prospectuses under "How to Purchase
Shares" and "Investing in Fortress Shares."
Distribution Plan (Class B Shares, Class C Shares and Fortress Shares)
and Shareholder Services Agreement

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.

By adopting the Distribution Plan, (Class B Shares, Class C Shares and
Fortress Shares) the Directors expect 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;
(3) enhancing shareholder recordkeeping systems; and (4) responding
promptly to shareholders' requests and inquiries concerning their
accounts.

For the fiscal period from March 17, 1994 (start of business) to
November 30, 1994, payments in the amount of $4,464 for Fortress Shares
were made pursuant to the Distribution Plan, all of which was paid to
financial institutions. In addition, for this period, the Fund paid
shareholder services fees in the amount of $4,595 for Class A Shares and
$4,464 for Fortress Shares, respectively. Class B Shares and Class C
Shares were not being offered prior to July 26, 1995.

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. Federated Services Company
acts as the shareholder's agent in depositing checks and converting them
to federal funds.
Purchases by Sales Representatives, Fund Directors, 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 load. Shares may also be sold without a
sales load 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 convertible securities they already own for
Shares, or they may exchange a combination of convertible securities and
cash for Shares. Any securities to be exchanged must meet the investment
objective and policies of the Fund, must have a 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 and Trust Company. 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 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 60 days or
less 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

This section relates only to Fortress Shares of the Fund. For
information regarding the Exchange Privilege for Class A Shares, Class B
Shares, and Class C Shares of the Fund, please see the combined
prospectus for these classes of 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
Fortress Shares for shares in other Fortress Funds (which are sold with
a sales load different from that of the Fund or with no sales load and
which are advised by subsidiaries or affiliates of Federated Investors)
without the assessment of a contingent deferred sales charge on the
exchanged Shares.

Reduced Sales Load
If a shareholder making such an exchange qualifies for a reduction or
elimination of the sales load, the shareholder must notify Federated
Securities Corp.
Requirements for Exchange
Shareholders using this privilege must exchange Shares having a net
asset value of at least $1,500. 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 upon 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.

Telephone Instructions
Telephone instructions made by the investor may be carried out
only if a telephone authorization form completed by the investor
is on file with the Fund or its agents. If the instructions are
given by a broker, a telephone authorization form completed by the
broker must be on file with the Fund or its agents. Shares may be
exchanged between two funds by telephone only if the two funds
have identical shareholder registrations.
Telephoned exchange instructions may be recorded. They must be
received by the transfer agent before 4:00 p.m. (Eastern time) for
shares to be exchanged that day. If reasonable procedures are not
followed by the Fund, it may be liable for losses due to
unauthorized or fraudulent telephone instructions.

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 "How to Redeem Shares" or
"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.
Class B Shares redeemed within six years of purchase, Class C Shares and
applicable Class A Shares redeemed within one year of purchase, and
Fortress Shares redeemed within 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
institutions 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 Fund 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 SEC 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 Fund has elected to be governed by Rule 18f-1 of the Investment
Company Act of 1940 under which the Fund is obligated to redeem Shares
for any shareholder in cash up to the lesser of $250,000 or 1% of the
Fund'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, as amended,
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 Fund's cumulative total return from April 21, 1994, (date of initial
public investment) to November 30, 1994 was (8.33%) for Class A Shares.
The cumulative total return from April 21, 1994 (date of initial public
investment) to November 30, 1994 for Fortress Shares was (5.01%). Class
B Shares and Class C Shares were not being offered prior to July 26,
1995.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 7 1/2 months of fund activity since the
Fund's effective date.

The average annual total return for each class 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 offering
price per Share at the end of the period. The number of Shares owned at
the end of the period is based on the number of Shares purchased at the
beginning of the period with $1,000, less any applicable sales load on
Class A Shares or Fortress Shares, adjusted over the period by any
additional Shares, assuming the quarterly 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 offering price of Shares redeemed.
Occasionally, total return which does not reflect the effect of the
sales load may be quoted in advertising.
Yield

For the period ended November 30, 1994, the thirty day yields for Class
A Shares and Fortress Shares were 4.32% and 4.27%, respectively. Class
B Shares and Class C Shares were not being offered prior to July 26,
1995.

The yield for each class of Shares of the Fund is determined by dividing
the net investment income per share (as defined by the SEC) earned by
the 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 a 12-month period and is
reinvested every six months. The yield does not necessarily reflect
income actually earned by the Fund because of certain adjustments
required by the SEC 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 a class of Shares, the performance will be reduced for those
shareholders paying those fees.
Performance Comparisons
The performance of each class 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 and market value of portfolio
securities;
- changes in the Fund's or a class of Shares' expenses; and
- various other factors.
The Fund's performance fluctuates on a daily basis largely because net
earnings and net asset value per Share fluctuate daily. Both net
earnings and net asset value per Share are factors in the computation of
yield and total return.
Investors may use financial publications and/or indices to obtain a more
complete view of the Fund's performance. When comparing performance
investors should consider all relevant factors such as the composition
of any index used, prevailing market conditions, portfolio compositions
of other funds, and methods used to value portfolio securities and
compute offering price. The financial publications and/or indices which
the Fund uses in advertising may include:
- 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. The highest rating is one, and ratings
are effective for two weeks.
- 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.

- Strategic Insight Mutual Fund Research and Consulting, 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.

Advertisements and sales literature for all four 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 quarterly
reinvestment of dividends over a specified period of time.

From time to time as it deems appropriate, the Fund may advertise the
performance of a class of Shares using charts, graphs, and descriptions,
compared to federally insured bank products including certificates of
deposit and time deposits and to money market funds using the Lipper
Analytical Services money market instruments average.
Advertisements may quote performance information which does not reflect
the effect of various sales loads on Class A Shares, Class B Shares,
Class C Shares, and Fortress Shares.
About Federated Investors
Federated is dedicated to meeting investor needs which is reflected in
its investment decision making structured, straightforward, and
consistent. This has resulted in a history of competitive performance
with a range of competitive investment products that have gained the
confidence of thousands of clients and their customers.
The company's disciplined security selection process is firmly rooted in
sound methodologies backed by fundamental and technical research.
Investment decisions are made and executed by teams of portfolio
managers, analysts, and traders dedicated to specific market sectors.
In the equity sector, Federated has more than 25 years' experience. As
of December 31, 1994, Federated managed 15 equity funds totaling
approximately $4 billion in assets across growth, value, equity income,
international, index and sector (i.e. utility) styles. Federated's
value-oriented management style combines quantitative and qualitative
analysis and features a structured, computer-assisted composite modeling
system that was developed in the 1970s.
In the corporate bond sector, as of December 31, 1994, Federated managed
8 money market funds, 5 investment grade and 4 high yield bond funds
with assets approximating $7.4 billion, $.9 billion and $.8 billion,
respectively. Federated's corporate bond decision making--based on
intensive, diligent credit analysis--is backed by over 20 years of
experience in the corporate bond sector. In 1972, Federated introduced
one of the first high-yield bond funds in the industry. In 17 years
ending December 1994, Federated's high-yield portfolios experienced a
default rate of just 1.86%, versus 3.10% for the market as a whole. In
1983, Federated was one of the first fund managers to participate in the
asset-backed securities market, a market totaling more than $200
billion.
J. Thomas Madden, Executive Vice President, oversees Federated's equity
and high yield corporate bond management while William D. Dawson,
Executive Vice President, oversees Federated's domestic fixed income
management. Henry A. Frantzen, Executive Vice President, oversees the
management of Federated's international portfolios.
Mutual Fund Market
Twenty-seven percent of American households are pursuing their financial
goals through mutual funds. These investors, as well as businesses and
institutions, have entrusted over $2 trillion to the more than 5,500
funds available.*
Federated Investors, through its subsidiaries, distributes mutual funds
for a variety of investment applications. Specific markets include:
Institutional
Federated meets the needs of more than 4,000 institutional clients
nationwide by managing and servicing separate accounts and mutual funds
for a variety of applications, including defined benefit and defined
contribution programs, cash management, and asset/liability management.
Institutional clients include corporations, pension funds, tax-exempt
entities, foundations/endowments, insurance companies, and investment
and financial advisors. The marketing effort to these institutional
clients is headed by John B. Fisher, President, Institutional Sales
Division.
Trust Organizations
Other institutional clients include close relationships with more than
1,500 banks and trust organizations. Virtually all of the trust
divisions of the top 100 bank holding companies use Federated funds in
their clients' portfolios. The marketing effort to trust clients is
headed by Mark R. Gensheimer, Executive Vice President, Bank Marketing &
Sales.
Broker/dealers and bank broker/dealer subsidiaries
Federated mutual funds are available to consumers through major
brokerage firms nationwide--including 200 New York Stock Exchange firms-
- - -supported by more wholesalers than any other mutual fund distributor.
The marketing effort to these firms is headed by James F. Getz,
President, Broker/Dealer Division.
*source: Investment Company Institute

Appendix
Standard & Poor's Ratings Group Commercial Paper Rating Definitions
A-1--This highest category designation indicates that the degree of
safety regarding timely payment is strong. Those issues determined to
possess extremely strong safety characteristics are denoted with a plus
sign (+) designation.
Moody's Commercial Paper Ratings
Prime-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:
- Leading market positions in well established industries.
- High rates of returns on funds employed.
- Conservative capitalization structure with moderate reliance on
debt and ample asset protection.
- Broad margins in earning coverage of fixed financial charges and
high internal cash generation.
- Well-established access to a range of financial markets and
assured sources of alternate liquidity.

World Utility Fund
Portfolio of Investments
November 30, 1994
- - --------------------------------------------------------------------------------

Shares Value

- - ------------- ---------------------------------------- ------------
Common Stocks--76.4%
- - -------------------------------------------------------------------
Utility--62.3%
------------------------------------------------------
5,000 AT & T Corp. $ 245,625
-----------------------------------------------------
70,000 Australian Gas and Light Co. 225,407
---------------------------------------------------
5,000 BCE, Inc. 166,875
-----------------------------------------------------------
4,000 BellSouth Corp. 207,500
---------------------------------------------------------
2,500 British Telecommunications PLC, ADR 148,438
-------------------------------------------------------
10,000 China Light and Power 43,058
---------------------------------------------------------------
25,000 China Light and Power, ADR 107,650
---------------------------------------------------
9,000 Cinergy Corp. 200,250
------------------------------------------------------
9,000 Compania Boliviana 207,000
---------------------------------------------------
10,000 DPL, Inc. 203,750
----------------------------------------------------
4,800 DQE, Inc. 145,200
-------------------------------------------------------
4,500 Duke Power Co. 183,375
--------------------------------------------------------
4,000 Empresa Nacional, ADR 181,000
-------------------------------------------------------
6,000 Enron Corp. 162,000
-------------------------------------------------------
8,000 Enron Global Power & Pipelines L.L.C. 185,000
------------------------------------------------------
6,000 Equitable Resources, Inc. 162,000
-------------------------------------------------------
5,000 FPL Group, Inc. 176,875
---------------------------------------------------
6,000 GTE Corp. 183,750
----------------------------------------------------
7,000 Hong Kong Telecommunications, ADR 135,625
------------------------------------------------------
20,000 National Power Co., PLC 155,340
---------------------------------------------------
6,000 NIPSCO Industries, Inc. 175,500
-------------------------------------------------------
9,000 Pacific Enterprises 192,375
-----------------------------------------------------
10,000 PacifiCorp 185,000
------------------------------------------------------
10,000 Pinnacle West Capital Corp. 193,750
------------------------------------------------------
6,000 Sonat, Inc. 168,750
--------------------------------------------------------

World Utility Fund
- - --------------------------------------------------------------------------------

Shares or
Principal
Amount Value

- - --------------------------------------------------- ------------
Common Stocks--continued
- - -----------------------------------------------------------------
Utility--continued
- - -------------------------------------------------------------------------
8,000 Southern Co. $ 166,000
-----------------------------------------------------
20,000 Southern Electric PLC 248,982
---------------------------------------------------
80,000 Stet Societa Finanziaria Telefonica 232,110
--------------------------------------------------------
6,000 Telefonos De Mexico, Series A, Class L, ADR 318,000
--------------------------------------------------
40,000 Tenaga Nasional Berhad 172,164
-------------------------------------------------------
6,000 Utilicorp United, Inc. 154,500
---------------------------------------------------
600 Veba AG 196,690
-------------------------------------------------
15,000 Westcoast Energy, Inc. 255,000
-------------------------------------------------- ------------
Total 6,084,539
------------------------------------ ------------
Non-Utility--14.1%
--------------------------------------------------------
3,000 American Home Products Corp. 195,375
----------------------------------------------------------
3,000 Bankers Trust New York Corp. 177,750
-----------------------------------------------
5,000 Elf Aquitaine, ADR 170,000
-------------------------------------------------------
10,000 Hanson, PLC, ADR 182,500
-------------------------------------------------------
7,000 Meditrust, REIT 208,250
-------------------------------------------------------
2,000 Royal Dutch Petroleum Co. 217,250
--------------------------------------------------------
10,000 YPF Sociedad Anonima, ADR 226,250
-------------------------------------- ------------
Total 1,377,375
-------------------------------------- ------------
Total Common Stocks(identified cost $7,711,574) 7,461,914
----------------------------------------------------------
Convertible Securities--17.0%
- - --------------------------------------------------------------------
Utility--4.8%
- - -------------------------------------------------------------------------
3,000 (a)Cointel/Telefonia De Argentina SA, PRIDES, $5.04 161,250
------------------------------------------------
4,000 (a)Philippine Long Distance, Conv. Pfd., Series II, $1.44 121,852
- - ----------------------------------------------------------------------------
$200,000 (a)Telekom Malaysia Berhad, Conv. Bond, 4.00%, 10/3/2004 184,376
------------------------------------------------------
Total 467,478
-----------------------------------------------------

World Utility Fund
- - --------------------------------------------------------------------------------

Shares or
Principal
Amount Value

- - --------------------------------------------------- ------------
Convertible Securities--continued
- - --------------------------------------------------------------
Non-Utility--12.2%
- - ----------------------------------------------------------------
$10,000,000 Bank of Tokyo, Cayman Finance, Conv. Bond, 4.25%, 3/31/2049 $114,675
---------------------------------------------------------
3,000 (a)Freeport McMoRan, Inc., Conv. Pfd., $4.38 $142,125
----------------------------------------------------------
10,000 Kaufman and Broad Homes, Inc., Conv. Pfd., Series B, $8.74 146,250
--------------------------------------------------------
20,000 RJR Nabisco Holdings Corp., Conv. Pfd., Series C, $0.60 135,000
--------------------------------------------------------
4,000 Reynolds Metals Co., PRIDES, $3.31 187,000
-----------------------------------------------------
2,000 Sears, Roebuck & Co., Conv. Pfd., Series A, $3.75 111,000
--------------------------------------------------------
4,000 Tenneco, Inc., Conv. Pfd., Series A, $2.80 150,500
-------------------------------------------------------
15,000 (a)Westinghouse Electric Corp., PEPS, Series C, $1.30 206,250
----------------------------------------------------------------
Total 1,192,800
------------------------------------ ------------
Total Convertible Securities (identified cost $1,802,233) 1,660,278
-------------------------------------------------------
*Repurchase Agreement--6.1%
- - ------------------------------------------------------------------
$ 595,000 J.P. Morgan Securities, Inc., 5.77%, dated 11/30/94,
due 12/1/94 (at amortized cost) 595,000
- - ------------------------------------------------------- ------------
Total Investments (identified $10,108,807) $ 9,717,192+
- - --------------------------------------------------------- ------------

The following abbreviations are used in this portfolio:

ADR--American Depository Receipts
PEPS--Participating Equity Preferred Stock
PRIDES--Preferred Redeemable Increased Dividend Equity Securities
REIT--Real Estate Investment Trust

(a) Restricted securities--Investments in securities not registered under the
Securities Act of 1933. At the end of the period, these securities amounted
to $815,853 which represents 8.4% of net assets.

The cost of investments for federal tax purposes amounts to $10,108,807. The
net unrealized depreciation of investments on a federal tax basis amounts to
$391,615, which is comprised of $178,677 appreciation and $570,292
depreciation at November 30, 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
($9,769,409) at
November 30, 1994.

(See Notes which are an integral part of the Financial Statements)

World Utility Fund
Statement of Assets and Liabilities
November 30, 1994
- - --------------------------------------------------------------------------------

Assets:
- - -----------------------------------------------------------------
Investments in securities, at value (identified and tax cost; $10,108,807)
$ 9,717,192
- - -------------------------------------------------------------------
Cash 763
- - -------------------------------------------------------------------
Receivable for capital stock sold 58,255
- - --------------------------------------------------------------------
Dividend and interest receivable 48,689
- - ---------------------------------------------------------------------
Deferred expenses 15,827
- - ------------------------------------------------------ ------------
Total assets 9,840,726
- - -----------------------------------------------------------------------
Liabilities:
- - --------------------------------------------------------------------
Payable for capital stock redeemed $ 1,511
- - -----------------------------------------------------------------
Tax withholding liability 499
- - ----------------------------------------------------------------
Accrued expenses 69,307
- - ----------------------------------------------------- ---------
Total liabilities 71,317
- - ----------------------------------------------------- ------------
Net Assets for 1,010,647 shares of capital stock outstanding $ 9,769,409
- - -------------------------------------------------------------------
Net Assets consist of:
- - ------------------------------------------------------------------
Paid-in capital $ 10,140,809
- - -----------------------------------------------------------------
Net unrealized appreciation (depreciation) of investments and translation of
assets and liabilities in foreign currency (391,629)
- - ------------------------------------------------------------------
Accumulated net realized gain (loss) on investment and foreign currency
transactions (42,265)
- - -----------------------------------------------------------
Undistributed net investment income 62,494
- - -----------------------------------------------------------------------------
Total Net Assets $ 9,769,409
- - -----------------------------------------------------------------------------
Net Asset Value Per Share:
- - --------------------------------------------------------------------
Class A Shares (net assets of $4,948,082 / 511,506 shares of capital stock
outstanding) $9.67
- - ---------------------------------------------------------------- ------------
Fortress Shares (net assets of $4,821,327 / 499,141 shares of capital stock
outstanding) $9.66
- - --------------------------------------------------------- ------------
Offering Price Per Share:*
- - ---------------------------------------------------------------------
Class A Shares (100/94.5 of $9.67) $10.23
- - ---------------------------------------------------------------
Fortress Shares (100/99 of $9.66) $9.76
- - ------------------------------------------------------- ------------
Redemption Proceeds Per Share:**
- - ---------------------------------------------------------------------
Class A Shares $9.67
- - ------------------------------------------------------ ------------
Fortress Shares (99/100 of $9.66) $9.56
- - ------------------------------------------------------ ------------

* 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
Period Ended November 30, 1994*
- - --------------------------------------------------------------------------------

Investment Income:
- - ------------------------------------------------------------------
Dividend income (net of foreign taxes withheld of $4,614) $ 165,756
- - ----------------------------------------------------------------------
Interest income 23,447
- - ----------------------------------------------------------------- ----------
Total investment income 189,203
- - --------------------------------------------------------------------
Expenses:
- - ----------------------------------------------------------------------
Investment advisory fee $ 36,237
- - ------------------------------------------------------------------
Administrative personnel and services fees 38,643
- - -----------------------------------------------------------------------
Custodian and portfolio accounting fees 50,483
- - -----------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 9,912
- - --------------------------------------------------------------------
Distribution services fee 4,464
- - ---------------------------------------------------------------------
Shareholder services fee--Class A Shares 4,595
- - ----------------------------------------------------------------------
Shareholder services fee--Fortress Shares 4,464
- - -------------------------------------------------------------------
Capital stock registration costs 2,793
- - ------------------------------------------------------------------
Legal fees 4,000
- - --------------------------------------------------------------------
Printing and postage 8,000
- - ---------------------------------------------------------------------
Taxes 2,500
- - --------------------------------------------------------------------
Insurance premiums 4,784
- - -------------------------------------------------------------------
Miscellaneous 3,204
- - ------------------------------------------------------------ ---------
Total expenses 174,079
- - ------------------------------------------------------------------------
Deduct--
- - -------------------------------------------------------------------------------
Waiver of investment advisory fee $ 36,237
- - -------------------------------------------------------------------------------
Reimbursement of other operating expenses 124,319 160,556
- - --------------------------------------------------- --------- ---------
Net expenses 13,523
- - ----------------------------------------------------------- ----------
Net investment income 175,680
- - ------------------------------------------------------------ ----------
Realized and Unrealized Gain (Loss) on Investments and Foreign Currency:
- - ---------------------------------------------------------------------
Net realized gain (loss) on investment and foreign currency transactions
(identified cost basis) (46,782)
- - -------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) on investments and
translation of assets and liabilities in foreign currency (391,629)
- - ----------------------------------------------------------------
Net realized and unrealized gain (loss) on investments and foreign
currency (438,411)
- - -------------------------------------------------------- ----------
Change in net assets resulting from operations $ (262,731)
- - -------------------------------------------------------------- ----------

*For the period from March 17, 1994 (start of business) to November 30, 1994.
(See Notes which are an integral part of the Financial Statements)

World Utility Fund
Statement of Changes in Net Assets
- - --------------------------------------------------------------------------------

Period Ended
November 30,
1994*

Increase (Decrease) in Net Assets:
- - ---------------------------------------------------------------------
Operations--
- - ---------------------------------------------------------------------
Net investment income $ 175,680
- - ---------------------------------------------------------------------
Net realized gain (loss) on investment and foreign currency transactions
($42,265 net loss as computed for federal tax purposes) (46,782)
- - ---------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) on investments
and translation of assets and liabilities in foreign currency (391,629)
- - ------------------------------------------------------------------------------
Change in net assets resulting from operations (262,731)
- - ------------------------------------------------- -----------------
Distributions to Shareholders--
- - -----------------------------------------------------------
Dividends to shareholders from net investment income
- - ---------------------------------------------------------------------
Class A Shares (54,743)
- - -------------------------------------------------------------------
Fortress Shares (53,926)
- - ------------------------------------------------------ -----------------
Change in net assets resulting from distributions to shareholders (108,669)
- - -------------------------------------------------------------------------
Capital Stock Transactions--
- - ---------------------------------------------------------------
Proceeds from sale of shares 11,113,812
- - -----------------------------------------------------------------
Net asset value of shares issued to shareholders in payment of dividends
declared 57,563
- - -------------------------------------------------------------------
Cost of shares redeemed (1,130,566)
- - --------------------------------------------- -----------------
Change in net assets resulting from capital stock transactions 10,040,809
- - ----------------------------------------------------------------------------
Change in net assets 9,669,409
- - -------------------------------------------------------------------------
Net Assets:
- - -------------------------------------------------------------------
Beginning of period 100,000
- - --------------------------------------------------------- -----------------
End of period (including undistributed net investment income of $62,494)
$ 9,769,409
- - ------------------------------------------------ -----------------

*For the period from March 17, 1994 (start of business) to November 30, 1994.

(See Notes which are an integral part of the Financial Statements)

World Utility Fund
Notes to Financial Statements
November 30, 1994
- - --------------------------------------------------------------------------------

(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.

(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.

A. Investment Valuations--Listed equity securities and fixed income securities
are valued at the last sale 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 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 that the value
of collateral 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").

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 funds are
maintained in U.S. dollars. All assets and liabilities denominated in
foreign currencies ("FC") 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

World Utility Fund
- - --------------------------------------------------------------------------------
between income and expense amounts recorded and collected or paid are
adjusted when reported by the custodian bank. The Fund does not isolate
that portion of the results of operations resulting from changes in foreign
exchange rates on investments from the fluctuations arising from changes in
market prices of securities held. Such fluctuations are included with the
net realized and unrealized gain or loss from investments.

Reported net realized foreign exchange gains or losses arise from sales and
maturities of short-term securities, sales of FC's, currency gains or
losses realized between the trade date and settlement dates on withholding
taxes recorded on the Fund's books, and the U.S. dollar equivalent of the
amounts actually received or paid. Net unrealized foreign exchange gains
and losses arise from changes in the value of assets and liabilities other
than investments in securities at fiscal year end, resulting from changes
in the exchange rate.

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. At November
30, 1994, the Fund, for federal tax purposes, had a capital loss
carryforward of $42,265, which will reduce the Fund's taxable income
arising from future net realized gain on investments, if any, to the extent
permitted by the Code, and thus will reduce the amount of the distributions
to shareholders which would otherwise be necessary to relieve the Fund of
any liability for federal tax. Pursuant to the Code, such capital loss
carryforward will expire in 2002.

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.

World Utility Fund
- - --------------------------------------------------------------------------------

At November 30, 1994, the Fund's portfolio included investments within the
following countries:

Argentina 2.3%
Australia 2.3
France 1.7
Germany 2.0
Hong Kong 2.9
Italy 2.4
Japan 1.2
Malaysia 1.8
Mexico 3.2
Spain 1.8
United Kingdom 7.5

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 Directors. The Fund will not incur any
registration costs upon such resales. The Fund's restricted securities are
valued at the price 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 November 30, 1994 is as follows:

Acquisition Acquisition
Security Dates Cost

Cointel/Telefonica De Argentina SA, PRIDES 4/15/94-9/15/94 $ 203,575
Philippine Long Distance, Conv. Pfd. 4/15/94-7/6/94 152,690
Telekom Malaysia Berhad, Conv. Bond 9/22/94 200,000
Freeport McMoRan, Inc., Conv. Pfd. 11/15/94 144,000
Westinghouse Electric Corp., PEPS 4/15/94-9/28/94 205,750

I. Deferred Expenses--The costs incurred by the Fund with respect to
registration of its shares in its first fiscal year, excluding the initial
expense of registering the shares, have been deferred and are being
amortized using the straight-line method over a period of five years from
the Fund's commencement date.

J. Reclassification--During the current period ended November 30, 1994, the
Fund adopted Statement of Position 93-2, Determination, Disclosure, and
Financial Statement Presentation of

World Utility Fund
- - --------------------------------------------------------------------------------
Income, Capital Gain, and Return of Capital Distributions by Investment
Companies. Accordingly, permanent book and tax differences have been
reclassified. These differences are due to differing treatments for foreign
currency transactions. Amounts as of November 30, 1994, have been
reclassified to reflect a decrease in undistributed net investment income
of $4,517, and an increase in accumulated net realized gain (loss) of
$4,517. Net investment income, net realized gains, and net assets were not
affected by this change.

K. Other--Investment transactions are accounted for on the trade date.

(3) Capital Stock

At November 30, 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:

Period Ended
November 30,1994*
Class A Shares Shares Dollars
- - ---------------------------------------------------------
Shares sold 603,819 $ 6,052,720
- - -------------------------------------------------------
Shares issued to shareholders in payment of
dividends declared 4,034 40,152
- - -----------------------------------------------------------------
Shares redeemed (106,347) (1,072,939)
- - ------------------------------------------------ --------- -------------
Net change resulting from Class A Shares
transactions 501,506 $ 5,019,933
- - -------------------------------------------- --------- -------------

Period Ended
November 30, 1994**

Fortress Shares Shares Dollars
- - -------------------------------------------- -------------
Shares sold 503,245 $ 5,061,092
- - -------------------------------------------------
Shares issued to shareholders in payment of
dividends declared 1,751 17,411
- - -------------------------------------------------------
Shares redeemed (5,855) (57,627)
- - --------------------------------------------- ---------- -------------
Net change resulting from Fortress Shares
transactions 499,141 $ 5,020,876
- - ----------------------------------------- ---------- -------------
Net change resulting from capital stock
transactions 1,000,647 $ 10,040,809
- - ---------------------------------------------- ---------- -------------

* For the period from March 17, 1994 (start of business) to November 30, 1994.

** For the period from March 28, 1994 (start of business) to November 30, 1994.

(4) Investment Advisory Fee and Other Transactions with Affiliates

Investment Advisory Fee--Federated Management, the Fund's investment adviser
(the "Adviser"), receives for its services an annual investment advisory fee
equal to 1.00% of the Fund's

World Utility Fund
- - --------------------------------------------------------------------------------
average daily net assets.The Adviser waived its fee and reimbursed a portion of
other operating expenses to be in compliance with certain state expense
limitations. The Adviser may also voluntarily choose to reimburse certain other
operating expenses of the Fund. The Adviser can modify or terminate this
voluntary reimbursement at any time at its sole discretion.

Administrative Fee--Federated Administrative Services ("FAS") provides the Fund
administrative personnel and services. 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 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
of 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--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 ($39,069) and start-up
administrative service expenses ($75,061) were borne by the Administrator. 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). For the period ended November
30, 1994, the Fund paid $1,250 and $1,953, respectively, pursuant to this
agreement.

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
November 30, 1994, were as follows:

Purchases $ 9,908,196
- - ----------------------------------------------------------- ------------
Sales $ 400,084
- - ----------------------------------------------------------- ------------

Report of Ernst & Young LLP, Independent Auditors

To the Directors and Shareholders of
WORLD INVESTMENT SERIES, INC.:

We have audited the accompanying statement of assets and liabilities,
including the portfolio of investments, of World Utility Fund (a
portfolio of World Investment Series, Inc.) as of November 30, 1994, and
the related statement of operations and the statement of changes in net
assets for the period from March 17, 1994 (start of business) to
November 30, 1994, and the financial highlights (see page 4 of the
combined prospectus) for the period from April 21, 1994 (date of initial
public investment) to November 30, 1994. These financial statements and
financial highlights are the responsibility of the Fund's management.
Our responsibility is to express an opinion on these financial
statements and financial highlights 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 financial statements
and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included
confirmation of securities owned as of November 30, 1994, by
correspondence with the custodian and brokers. An audit also includes
assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for
our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the
financial position of World Utility Fund of World Investment Series,
Inc. at November 30, 1994, and the results of its operations and the
changes in its net assets for the period from March 17, 1994 (start of
business) to November 30, 1994, and financial highlights for the period
from April 21, 1994 to November 30, 1994, in conformity with generally
accepted accounting principles.

ERNST & YOUNG LLP

Pittsburgh, Pennsylvania
January 12, 1995

4021404B (7/95)

PART C. OTHER INFORMATION.

Item 24. Financial Statements and Exhibits:

(a) Financial Statements (Filed in Part A for Fortress Shares,
Part B for A, B & C Shares)
(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) (i)Copy of Distributor's Contract of the
Registrant; (2)
(ii) Conformed copy of Exhibit C to
Distributor's Contract;+
(iii)Conformed copy of Exhibit D to
Distributor's Contract;+
(7) Not applicable;
(8) Conformed copy of Custodian Agreement of the
Registrant;(3)
(9) (i) Conformed copy of Fund Accounting, Shareholder
Recordkeeping, and Custody Services Procurement
Agreement of the Registrant; (4)
(ii) Conformed copy of Administratrive Services
Agreement;(3)
(iii) Conformed copy of Shareholder Services Plan;(3)
(iv) Conformed copy of Shareholder Services
Agreement;(3)
(v) Form of Shareholder Services Sub-Contract;(3)
(10) Conformed copy of Opinion and Consent of Counsel
as to legality of shares being registered; (2)

+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).
3. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 1 on Form N-1A filed July 25, 1994 (File Nos. 33-52149 and
811-7141).
4. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 2 on Form N-1A filed January 27, 1995 (File Nos. 33-52149
and 811-7141)
(11) Conformed copy of Consent of Independent
Auditors;+
(12) Not applicable;
(13) Conformed copy of Initial Capital Understanding;
(2)
(14) Not applicable;
(15) (i)Copy of Rule 12b-1 Distribution Plan; (2)
(ii) Form of Dealer Agreement;(3)
(iii) Conformed copy of Exhibit B to
Distribution Plan;+
(iv) Conformed copy of Exhibit C to Distribution
Plan;+
(16) Schedule for Computation of Fund Performance
Data;(3)
(17) (i) Financial Data Schedules for the Class A
Shares of the Registrant;+
(ii) Financial Data Schedules for Fortress
Shares of the Registrant+
(18) Conformed copy of Power of Attorney;(4)

+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).
3. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 1 on Form N-1A filed July 25, 1994 (File Nos. 33-52149 and
811-7141).
4. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 2 on Form N-1A filed January 27, 1995 (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 June 9, 1995

Shares of capital stock

Class A Shares 630
Fortress Shares 272
Class B Shares 0
Class C Shares 0

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 three of the Trustees and two
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, Henry A. Frantzen, J. Thomas Madden, and Mark L.
Mallon, Executive Vice Presidents; Henry J. Gailliot, Senior Vice
President-Economist; Peter R. Anderson, and J. Alan Minteer,
Senior Vice Presidents; J. Scott Albrecht, Randall A Bauer, David
A. Briggs, Jonathan C. Conley, Deborah A. Cunningham, Michael P.
Donnelly, Mark E. Durbiano, Kathleen M. Foody-Malus, Thomas M.
Franks, Edward C. Gonzales, Jeff A. Kozemchak, Marian R.
Marinack, Susan M. Nason, Mary Jo Ochson, Robert J. Ostrowski,
Frederick L. Plautz, Jr., Charles A. Ritter, James D. Roberge,
Sandra L. Weber, Christopher H. 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; Arrow Funds; Automated Cash Management Trust;
Automated Government Money Trust; BayFunds; The Biltmore
Funds; The Biltmore Municipal Funds; California Municipal
Cash 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 Institutional Trust;
Federated Master Trust; Federated Municipal Trust; Federated
Short-Term Municipal Trust; Federated Short-Term U.S.
Government Trust; Federated Stock Trust; Federated Tax-Free
Trust; Federated Total Return Series, Inc.; Federated U.S.
Government Bond Fund; Federated U.S. Government Securities
Fund: 1-3 Years; Federated U.S. Government Securities Fund:
3-5 Years;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; 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; Marshall Funds,
Inc.; Money Market Management, Inc.; Money Market
Obligations Trust; Money Market Trust; The Monitor Funds;
Municipal Securities Income Trust; Newpoint Funds; New York
Municipal Cash Trust; 111 Corcoran Funds; Peachtree Funds;
The Planters Funds; RIMCO Monument Funds; The Shawmut 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; The Virtus Funds; Vision Fiduciary
Funds, Inc.; Vision Group of Funds, Inc.; and World
Investment Series, Inc.

Federated Securities Corp. also acts as principal underwriter
for the following closed-end investment company: Liberty
Term Trust, Inc.- 1999.

(b)

(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Underwriter With Registrant

Richard B. Fisher Director, Chairman, Chief President,
Federated Investors Tower Executive Officer, Chief Director
Pittsburgh, PA 15222-3779 Operating Officer, and
Asst. Treasurer, Federated
Securities Corp.

Edward C. Gonzales Director, Executive Vice Vice President,
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 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

(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Underwriter With Registrant
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

Solon A. Person, IV Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Timothy C. Pillion Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Thomas E. Territ Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

John B. Bohnet Vice President,
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

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

Kevin J. Crenny Vice President,
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Daniel T. Culbertson Vice President,
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Underwriter With Registrant
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

Joseph L. Epstein 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

Michael D. Fitzgerald 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

Craig S. Gonzales Vice President,
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Richard C. Gonzales Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

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
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Underwriter With Registrant

Stephen A. LaVersa 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

Richard C. Mihm Vice President,
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

J. Michael Miller Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

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

Robert D. Oehlschlager 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

John C. Shelar, Jr. Vice President,
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Underwriter With Registrant

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

Jamie M. Teschner Vice President,
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

William C. Tustin Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Paul A. Uhlman Vice President,
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Richard B. Watts Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Michael P. Wolff Vice President,
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Philip C. Hetzel Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Charlene H. Jennings Assistant Vice President,
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Ernest L. Linane Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

S. Elliott Cohan Secretary, Assistant
Federated Investors Tower Federated Securities Corp. Secretary
Pittsburgh, PA 15222-3779

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 Pittsburgh, PA 15222-3779
Disbursing Agent and
Shareholder Servicing Agent

Federated Administrative Federated Investors Tower
Services Pittsburgh, PA 15222-3779
Administrator

Federated Management Federated Investors Tower
Adviser Pittsburgh, PA 15222-3779

State Street Bank and P.O. Box 8604
Trust Company Boston, MA 02266-8604
Custodian

Item 31. 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.,certifies that it meets all of the requirements for effectiveness
of this Amendment to is Registration Statement pursuant to Rule 485(b)
under the Securities Act of 1933 and has duly caused this Amendment to
its Registration Statement to be signed on its behalf by the
undersigned, thereto duly authorized, in the City of Pittsburgh and
Commonwealth of Pennsylvania, on the 11th day of July, 1995.

WORLD INVESTMENT SERIES, INC.

BY: /s/Byron F. Bowman
Byron F. Bowman, Assistant Secretary
Attorney in Fact for John F. Donahue
July ll, 1995

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 Attorney In Fact July ll, 1995
Byron F. Bowman For the Persons
ASSISTANT SECRETARY 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)

Thomas G. Bigley * Director
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 Item 601/Reg
SK

Consent of Ernst & Young LLP, Independent Auditors

We consent to the reference to our firm under the caption "Financial
Highlights" and to the use of our report dated January 12, 1995, with
respect to the financial statements and financial highlights of World
Utility Fund, in the Post-Effective Amendment Number 3 filing to the
Registration Statement (Form N-1A Number 33-52149) an related
Prospectuses of World Utility Fund, a portfolio of World Investment
Series, Inc.

/s/ERNST & YOUNG LLP
Ernst & Young, LLP
Pittsburgh, Pennsylvania
July 7, 1995

Exhibit (6)(ii) on Form N-1A
Exhibit (10) under Item 601, Reg. S-K

Exhibit C
to the
Distributor's Contract

WORLD INVESTMENT SERIES, INC.
World Utility Fund
Class B Shares

The following provisions are hereby incorporated and made
part of the Distributor's Contract dated March 1, 1994, between
World Investment Series, Inc. and Federated Securities Corp.
with respect to the Class of shares set forth above.
1. The Corporation hereby appoints FSC to engage in activities
principally intended to result in the sale of shares of the
above-listed Class ("Shares"). Pursuant to this appointment,
FSC is authorized to select a group of financial institutions
("Financial Institutions") to sell Shares at the current
offering price thereof as described and set forth in the
respective prospectuses of the Corporation.
2. During the term of this Agreement, the Corporation will pay FSC
for services pursuant to this Agreement, a monthly fee
computed at the annual rate of 0.75 of 1% of the average
aggregate net asset value of the Shares held during the month.
For the month in which this Agreement becomes effective or
terminates, there shall be an appropriate proration of any fee
payable on the basis of the number of days that the Agreement
is in effect during the month.
3. FSC may from time-to-time and for such periods as it deems
appropriate reduce its compensation to the extent any Class's
expenses exceed such lower expense limitation as FSC may, by
notice to the Corporation, voluntarily declare to be
effective.
4. FSC will enter into separate written agreements with various
firms to provide certain of the services set forth in
Paragraph 1 herein. FSC, in its sole discretion, may pay
Financial Institutions a periodic fee in respect of Shares
owned from time to time by their clients or customers. The
schedules of such fees and the basis upon which such fees will
be paid shall be determined from time to time by FSC in its
sole discretion.
5. FSC will prepare reports to the Board of Directors of the
Corporation on a quarterly basis showing amounts expended
hereunder including amounts paid to Financial Institutions and
the purpose for such expenditures.
In consideration of the mutual covenants set forth in the
Distributor's Contract dated March 1, 1994 between World
Investment Series, Inc. and Federated Securities Corp., World
Investment Series, Inc. executes and delivers this Exhibit on
behalf of the World Utility Fund, and with respect to the Class
B Shares thereof, first set forth in this Exhibit.
Witness the due execution hereof this 1st day of June, 1995.

ATTEST: World Investment Series, Inc.

/s/ John W. McGonigle By: /s/ Richard B. Fisher
Secretary President
(SEAL)

ATTEST: FEDERATED SECURITIES CORP.

/s/ S. Elliott Cohan By:/s/ John W. McGonigle
Secretary Executive Vice President
(SEAL)

Exhibit (6)(iii) on Form N-1A
Exhibit (10) under Item 601, Reg. S-K

Exhibit D
to the
Distributor's Contract

WORLD INVESTMENT SERIES, INC.
World Utility Fund
Class C Shares

The following provisions are hereby incorporated and made
part of the Distributor's Contract dated March 1, 1994, between
World Investment Series, Inc. and Federated Securities Corp.
with respect to the Class of shares set forth above.
1. The Corporation hereby appoints FSC to engage in activities
principally intended to result in the sale of shares of the
above-listed Class ("Shares"). Pursuant to this appointment,
FSC is authorized to select a group of financial institutions
("Financial Institutions") to sell Shares at the current
offering price thereof as described and set forth in the
respective prospectuses of the Corporation.
2. During the term of this Agreement, the Corporation will pay FSC
for services pursuant to this Agreement, a monthly fee
computed at the annual rate of 0.75 of 1% of the average
aggregate net asset value of the Shares held during the month.
For the month in which this Agreement becomes effective or
terminates, there shall be an appropriate proration of any fee
payable on the basis of the number of days that the Agreement
is in effect during the month.
3. FSC may from time-to-time and for such periods as it deems
appropriate reduce its compensation to the extent any Class's
expenses exceed such lower expense limitation as FSC may, by
notice to the Corporation, voluntarily declare to be
effective.
4. FSC will enter into separate written agreements with various
firms to provide certain of the services set forth in
Paragraph 1 herein. FSC, in its sole discretion, may pay
Financial Institutions a periodic fee in respect of Shares
owned from time to time by their clients or customers. The
schedules of such fees and the basis upon which such fees will
be paid shall be determined from time to time by FSC in its
sole discretion.
5. FSC will prepare reports to the Board of Directors of the
Corporation on a quarterly basis showing amounts expended
hereunder including amounts paid to Financial Institutions and
the purpose for such expenditures.
In consideration of the mutual covenants set forth in the
Distributor's Contract dated March 1, 1994 between World
Investment Series, Inc. and Federated Securities Corp., World
Investment Series, Inc. executes and delivers this Exhibit on
behalf of the World Utility Fund, and with respect to the Class
C Shares thereof, first set forth in this Exhibit.
Witness the due execution hereof this 1st day of June, 1995.

ATTEST: World Investment Series, Inc.

/s/ John W. McGonigle By: /s/ Richard B. Fisher
Secretary President
(SEAL)

ATTEST: FEDERATED SECURITIES CORP.

/s/ S. Elliott Cohan By:/s/ John W. McGonigle
Secretary Executive Vice President
(SEAL)

Exhibit (15(iii) on Form N-1A
Exhibit (10) under Item 601, Reg. S-K

EXHIBIT B
to the
Distribution Plan
World Investment Series, Inc.
World Utility Fund
Class B Shares

This Distribution Plan is adopted by World Investment Series,
Inc. with respect to the Class of Shares of the portfolio of the
Corporation set forth above.
In compensation for the services provided pursuant to this
Plan, FSC will be paid a monthly fee computed at the annual rate
of 0.75 of 1% of the average aggregate net asset value of the
Class B Shares of World Utility Fund held during the month.
Witness the due execution hereof this 1st day of June, 1995.

World Investment Series, Inc.

By: /s/ Richard B. Fisher
President

Exhibit (15)(iv) on Form N-1A
Exhibit (10) under Item 601, Reg. S-K

EXHIBIT C
to the
Distribution Plan
World Investment Series, Inc.
World Utility Fund
Class C Shares

This Distribution Plan is adopted by World Investment Series,
Inc. with respect to the Class of Shares of the portfolio of the
Corporation set forth above.
In compensation for the services provided pursuant to this
Plan, FSC will be paid a monthly fee computed at the annual rate
of 0.75 of 1% of the average aggregate net asset value of the
Class C Shares of World Utility Fund held during the month.
Witness the due execution hereof this 1st day of June, 1995.

World Investment Series, Inc.

By: /s/ Richard B. Fisher
President

<S> <C>

<ARTICLE> 6
<SERIES>
<NUMBER> 1
<NAME> World Investment Series, Inc.
World Utility Fund
Class A Shares
<PERIOD-TYPE> 8-MOS
<FISCAL-YEAR-END> Nov-30-1994
<PERIOD-END> Nov-30-1994
<INVESTMENTS-AT-COST> 10,108,807
<INVESTMENTS-AT-VALUE> 9,717,192
<RECEIVABLES> 106,944
<ASSETS-OTHER> 16,590
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 9,840,726
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 71,317
<TOTAL-LIABILITIES> 71,317
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 10,140,809
<SHARES-COMMON-STOCK> 511,506
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 62,494
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (42,265)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (391,629)
<NET-ASSETS> 4,948,082
<DIVIDEND-INCOME> 165,756
<INTEREST-INCOME> 23,447
<OTHER-INCOME> 0
<EXPENSES-NET> 13,523
<NET-INVESTMENT-INCOME> 175,680
<REALIZED-GAINS-CURRENT> (46,782)
<APPREC-INCREASE-CURRENT> (391,629)
<NET-CHANGE-FROM-OPS> (262,731)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 54,743
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 603,819
<NUMBER-OF-SHARES-REDEEMED> 106,347
<SHARES-REINVESTED> 4,034
<NET-CHANGE-IN-ASSETS> 9,669,409
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 36,237
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 174,079
<AVERAGE-NET-ASSETS> 4,957,590
<PER-SHARE-NAV-BEGIN> 10.060
<PER-SHARE-NII> 0.240
<PER-SHARE-GAIN-APPREC> (0.460)
<PER-SHARE-DIVIDEND> 0.170
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 9.670
<EXPENSE-RATIO> 25
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000

</TABLE>

<S> <C>

<ARTICLE> 6
<SERIES>
<NUMBER> 2
<NAME> World Investment Series, Inc.
World Utility Fund
Fortress Shares
<PERIOD-TYPE> 8-MOS
<FISCAL-YEAR-END> Nov-30-1994
<PERIOD-END> Nov-30-1994
<INVESTMENTS-AT-COST> 10,108,807
<INVESTMENTS-AT-VALUE> 9,717,192
<RECEIVABLES> 106,944
<ASSETS-OTHER> 16,590
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 9,840,726
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 71,317
<TOTAL-LIABILITIES> 71,317
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 10,140,809
<SHARES-COMMON-STOCK> 499,141
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 62,494
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (42,265)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (391,629)
<NET-ASSETS> 4,821,327
<DIVIDEND-INCOME> 165,756
<INTEREST-INCOME> 23,447
<OTHER-INCOME> 0
<EXPENSES-NET> 13,523
<NET-INVESTMENT-INCOME> 175,680
<REALIZED-GAINS-CURRENT> (46,782)
<APPREC-INCREASE-CURRENT> (391,629)
<NET-CHANGE-FROM-OPS> (262,731)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 53,926
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 503,245
<NUMBER-OF-SHARES-REDEEMED> 5,855
<SHARES-REINVESTED> 1,751
<NET-CHANGE-IN-ASSETS> 9,669,409
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 36,237
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 174,079
<AVERAGE-NET-ASSETS> 4,957,590
<PER-SHARE-NAV-BEGIN> 10.040
<PER-SHARE-NII> 0.210
<PER-SHARE-GAIN-APPREC> (0.430)
<PER-SHARE-DIVIDEND> 0.160
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 9.660
<EXPENSE-RATIO> 50
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000

</TABLE>