[LOGO] FEDERATED INVESTORS
Since 1955
Federated World
Utility Fund
(formerly, World
Utility Fund)
Semi-Annual Report
May 31, 1996
Established 1994
GROWTH & INCOME
President's Message
- -------------------------------------------------------------------------------
[PHOTO APPEARS HERE]
Dear Shareholder:
I am pleased to present the Semi-Annual Report for Federated World Utility Fund
which covers the six-month period from December 1, 1995 through May 31, 1996.
This report begins with an interview with the fund's portfolio manager Michael
J. Donnelly, Assistant Vice President, Federated Global Research Corp.
Following the interview are a series of graphs showing the fund's performance,
a complete listing of the fund's global investments, and the fund's financial
statements.
I urge you to review the fund's holdings of good, dividend-paying utility
corporations and international investments. The fund's holdings reflect the
income and growth opportunities in our diversified portfolio of stocks issued
by utilities in key regions around the world and the U.S.
Although U.S. interest rates rose in the first quarter of 1996, depressing the
price of U.S. utility stocks, a favorable environment for international
utilities worldwide helped your fund deliver relatively strong performance
during the reporting period. Performance by share class is shown below.*
<TABLE>
<CAPTION>
Total Return Income Net Asset Value Increase
based on NAV
<S> <C> <C> <C>
Class A Shares 9.83% $0.20 $10.96 to $11.84=8.03%
Class B Shares 9.42% $0.17 $10.95 to $11.82=7.95%
Class C Shares 9.35% $0.16 $10.95 to $11.82=7.95%
Class F Shares 9.75% $0.20 $10.96 to $11.84=8.03%
</TABLE>
The fund's share price increase was largely influenced by the fund's
underweighting in U.S. telecommunications stocks and its position in emerging
international markets.
We trust you are pleased with the continued positive performance of your
investment in Federated World Utility Fund. I suggest that you consider adding
to your account and reinvesting your earnings. In this manner, you can enjoy
the benefit of compounding your quarterly dividend in additional shares.
Thank you for owning shares in this global utility fund. As always, we welcome
your comments and suggestions.
Sincerely,
/s/ Richard B. Fisher
Richard B. Fisher
President
July 15, 1996
*Performance quoted represents past performance. Investment return and
principal value will fluctuate, so that an investor's shares, when redeemed,
may be worth more or less than their original cost. Total returns for the
period based on offering price for Class A Shares, Class B Shares, Class C
Shares, and Class F Shares were 3.77%, 3.86%, 8.33% and 7.65%, respectively.
Investment Review
- --------------------------------------------------------------------------------
[PHOTO APPEARS HERE]
Michael J. Donnelly
Assistant Vice President
Federated Global
Research Corp.
Q. How did the global utilities market--and Federated World Utility
Fund--perform during the six-month period ended May 31, 1996?
A. The fund posted a total return of 9.83% for Class A shares based on net
asset value.* The fund's Class B Shares, Class C Shares and Class F Shares
achieved total returns of 9.42%, 9.35%, and 9.75%, respectively, based on net
asset value.* The fund's benchmark, The Financial Times/Standard & Poors
Actuaries Global Utility Index**, returned 4.53% for the same period.
The fund exhibited strong relative performance due to a variety of factors.
The most important factor contributing to outperformance has been the fund's
continued underweighting of telecommunications stocks in the United States,
which comprise approximately 31% of the index. These stocks have exhibited
weak relative performance since February, when new telecommunications
legislation was signed into law.
Another factor aiding relative performance has been the inclusion in the
portfolio of certain utilities operating in emerging markets. As many of
these markets have performed strongly over the last six months, their
utilities--often some of the largest and most liquid stocks in the market--have
tended to mirror the strong performance of many international markets.
Q. How were the fund's assets allocated among income producing utility stocks
in key world regions as of May 31, 1996, and why?
A. As of May 31, 1996, Federated World Utility Fund had roughly 44% of assets
in the United States, 22% in Europe, 20% in Asia, 13% in Latin America
and 1% in Canada. Management's general wariness with respect to the ensuing
competitive environments in both the U.S. electric and telecommunication
industries has led the U.S. portion of the fund to be close to its targeted
floor of 40% of assets. In contrast, the prospects for growth and the
relatively attractive valuations of companies overseas have convinced
management to increase foreign exposure.
*Performance quoted represents past performance. Investment return and
principal value will fluctuate, so that an investor's shares, when redeemed,
may be worth more or less than their original cost. Total returns for the
period based on offering price for Class A Shares, Class B Shares, Class C
Shares, and Class F Shares were 3.77%, 3.86%, 8.33% and 7.65%, respectively.
**The Financial Times/Standard & Poor's Actuaries Global Utility Index is a
market capitalization weighted index comprised of one hundred and sixty-five
issues in twenty two countries, classified as utilities by Goldman Sachs &
Co. This index is unmanaged and actual investments cannot be made in an index.
In particular, the Asian region has grown as a percentage of the fund's assets
by more than 3% since November, as opportunities in China, Korea and Japan
have contributed to positive relative performance.
Q. Were there any changes in your strategy during the period?
A. Yes, we have added some investment enhancements in 1996. First, we have
increased the number of securities owned by the fund. This broader
diversification is designed to lessen the dependence on any single security,
and the fund now owns 74 issues. In conjunction with this investment
enhancement, we designated stocks as strategic holdings and tactical holdings,
with the strategic garnering a more significant weighting in the fund due to
their long-term investment potential.
Q. What is your outlook for the world utilities market and your strategy for
the balance of 1996?
A. We are positive on the outlook for the global utility sector. It is
interesting to note that local Gross Domestic Product growth of any country
is often a strong influence on returns experienced by electric, gas,
telecommunications, and water companies. High standards of living are well
serviced by local utilities.
Recognizing this, the fund is well positioned to profit from some important,
anticipated local market demands. The bulk of assets in the United States are
invested in high-quality electric utilities, which on average, are selling at
significant discounts to the general market. Our European investments should
continue to benefit from lower interest rates there. Latin America is seeing a
rebound in economic growth in 1996, and this should aid utility performance.
Management expects the fund's exposure to these economies will benefit
shareholders throughout 1996.
Finally, on a global basis, we expect that companies leveraged to cellular
telecommunications service will still have excellent prospects. Their
subscriber growth is consistently underestimated by most analysts.
Telecommunications is truly a global industry, with several global players in
addition to local operators. This sector remains a key facet of our overall
strategy to provide worldwide utility exposure to shareholders.
Two Ways You May Seek to Invest for Success in
Federated World Utility Fund
(formerly, World Utility Fund)
- --------------------------------------------------------------------------------
If you had made an initial investment of $3,000 in the Class A Shares of
Federated World Utility Fund on 4/22/94, reinvested dividends and capital
gains, and didn't redeem any shares, your account would be worth $3,562 on
5/31/96. You would have earned a 8.48%* average annual total return for the 2
year investment lifespan.
One key to investing wisely is to reinvest all distributions in fund shares.
This increases the number of shares on which you can earn future dividends and
you gain the benefit of compounding.
As of 6/30/96, the Class A Shares` average annual one-year and since inception
(4/22/94) total returns were 12.84% and 8.66% respectively. Class B Shares`
since inception (7/27/95) total return was 10.42%. Class C Shares` since
inception (7/27/95) total return was 14.85%. Class F Shares' average annual
one-year and since inception (4/22/94) total returns were 17.23%, and 10.44%,
respectively.
GRAPHIC REPRESENTATION OMITTED. SEE APPENDIX A
* Total return represents the change in the value of an investment after
reinvesting all income and capital gains, and takes into account the 5.5%
sales charge applicable to an initial investment in Class A Shares.
Data quoted represents past performance and does not guarantee future results.
Investment return and principal value will fluctuate so an investor`s shares,
when redeemed, may be worth more or less than their original cost.
Federated World Utility Fund
(formerly, World Utility Fund)
- --------------------------------------------------------------------------------
Investing One Step at a Time
$1,000 invested each year for 2 years (reinvesting all dividends and capital
gains) grew to $3,304.
With this approach, the key is consistency.
If you had started investing $1,000 annually in the Class A Shares of Federated
World Utility Fund on 4/22/94, reinvested your dividends and capital gains,
and didn't redeem any shares, you would have invested only $3,000, but your
account would have reached a total value of $3,304* by 5/31/96. You would have
earned an average annual total return of 12.12%.
A practical investment plan helps you pursue income through a diversified
portfolio primarily invested in U.S. utility securities and non-U.S. utility
securities. Through systematic investing, you buy shares on a regular basis and
reinvest all earnings. An investment plan works for you when you invest only
$1,000 annually, You can take it one step at a time. Put time and compounding
to work!
GRAPHIC REPRESENTATION OMITTED. SEE APPENDIX B
* No method of investing can guarantee a profit or protect against loss in down
markets. However, by investing regularly over time and buying shares at
various prices, investors can purchase more shares at lower prices, and all
accumulated shares have the ability to pay income to the investor.
Because such a plan involves continuous investment, regardless of changing price
levels, the investor should consider whether or not to continue purchases
through periods of low price levels.
Federated World Utility Fund--
(formerly, World Utility Fund)
Portfolio Update
- --------------------------------------------------------------------------------
Top Ten Holdings as of 5/31/96
Basic Industries % of Net Assets
OY Nokia AB, Finland 2.63%
Telecommunicacoes Brasileras, Brazil 2.42%
Softe SA, Italy 2.32%
Hong Kong and China Gas Co. LTD, Hong Kong 2.22%
PT Telecom, Class CS, Indonesia 2.20%
Central Costanera S.A., Class B, Argentina 2.14%
National Power Co. PLC, Great Britain 2.07%
Iberdrola SA, Spain 1.93%
Compania Boliviana de Energia Elecrica, Bolivia 1.90%
Telephone and Data System, Inc., United States 1.82%
Federated World Utility Fund--
(formerly, World Utility Fund)
Portfolio Update
- --------------------------------------------------------------------------------
Country Diversification as of 5/31/96
United States 38.84%
Great Britain 7.70%
Japan 5.72%
Spain 4.01%
Hong Kong 3.50%
Argentina 3.21%
Korea 2.91%
Chile 2.82%
Brazil 2.63%
Finland 2.59%
Australia 2.46%
China 2.40%
Italy 2.28%
Indonesia 2.16%
Bolivia 1.87%
Germany 1.72%
Netherlands 1.37%
Austria 1.33%
Mexico 1.22%
Canada 1.17%
Sweden 1.03%
Peru 1.00%
Malaysia 0.73%
Federated World Utility Fund
(formerly, World Utility Fund)
Portfolio of Investments
- --------------------------------------------------------------------------------
May 31, 1996 (unaudited)
<TABLE>
<CAPTION>
VALUE IN
U.S.
SHARES DOLLARS
<C> <S> <C>
- ------------- ----------------------------------------------------------------------------------- -------------
COMMON STOCKS--78.1%
- --------------------------------------------------------------------------------------------------
CELLULAR TELEPHONE--5.3%
-----------------------------------------------------------------------------------
16,500 (a)NordicTel Holdings AB $ 224,722
-----------------------------------------------------------------------------------
13,000 OY Nokia AB, ADR 565,500
-----------------------------------------------------------------------------------
95,000 Vodafone Group PLC 376,143
----------------------------------------------------------------------------------- -------------
Total 1,166,365
----------------------------------------------------------------------------------- -------------
ENERGY MINERALS--3.7%
-----------------------------------------------------------------------------------
8,000 Repsol SA 273,579
-----------------------------------------------------------------------------------
2,000 Royal Dutch Petroleum Co., ADR 300,000
-----------------------------------------------------------------------------------
11,000 YPF Sociedad Anonima, ADR 242,000
----------------------------------------------------------------------------------- -------------
Total 815,579
----------------------------------------------------------------------------------- -------------
FINANCE--1.9%
-----------------------------------------------------------------------------------
7,000 Meditrust, REIT 230,125
-----------------------------------------------------------------------------------
20,000 National Australia Bank, Ltd., Melbourne 187,565
----------------------------------------------------------------------------------- -------------
Total 417,690
----------------------------------------------------------------------------------- -------------
HEALTH CARE--1.5%
-----------------------------------------------------------------------------------
6,000 American Home Products Corp. 321,000
----------------------------------------------------------------------------------- -------------
MAJOR U.S. TELECOMMUNICATIONS--4.9%
-----------------------------------------------------------------------------------
3,500 AT&T Corp. 218,313
-----------------------------------------------------------------------------------
2,000 BellSouth Corp. 81,250
-----------------------------------------------------------------------------------
7,000 GTE Corp. 299,250
-----------------------------------------------------------------------------------
8,700 MCI Communications Corp. 253,388
-----------------------------------------------------------------------------------
7,000 U.S. West, Inc. 228,375
----------------------------------------------------------------------------------- -------------
Total 1,080,576
----------------------------------------------------------------------------------- -------------
NATURAL GAS DISTRIBUTION--5.7%
-----------------------------------------------------------------------------------
8,000 Equitable Resources, Inc. 238,000
-----------------------------------------------------------------------------------
300,000 Hong Kong and China Gas Co. Ltd. 476,910
-----------------------------------------------------------------------------------
9,000 PacificEnterprises 237,375
-----------------------------------------------------------------------------------
3,500 Samchully Co. 299,384
----------------------------------------------------------------------------------- -------------
Total 1,251,669
----------------------------------------------------------------------------------- -------------
OIL/GAS TRANSMISSION--3.0%
-----------------------------------------------------------------------------------
7,000 Enron Corp. 280,000
-----------------------------------------------------------------------------------
7,000 Enron Global Power & Pipelines, L.L.C. 185,500
-----------------------------------------------------------------------------------
4,500 Sonat, Inc. 190,688
----------------------------------------------------------------------------------- -------------
Total 656,188
----------------------------------------------------------------------------------- -------------
OTHER TELEPHONE/COMMUNICATIONS--1.8%
-----------------------------------------------------------------------------------
9,000 Telephone and Data System, Inc. 392,625
----------------------------------------------------------------------------------- -------------
UTILITIES--50.3%
-----------------------------------------------------------------------------------
85,000 Australian Gas Light Co. 350,746
-----------------------------------------------------------------------------------
10,000 Boston Edison Co. 245,000
-----------------------------------------------------------------------------------
8,700 CMS Energy Corp. 250,125
-----------------------------------------------------------------------------------
125,000 Central Costanera S.A., Class B 460,184
-----------------------------------------------------------------------------------
10,000 Chilgener S.A., ADR 236,250
-----------------------------------------------------------------------------------
7,000 Cinergy Corp. 207,375
-----------------------------------------------------------------------------------
11,000 Compania Boliviana de Energia Electrica 408,375
-----------------------------------------------------------------------------------
40 DDI Corp. 346,667
-----------------------------------------------------------------------------------
13,000 DPL, Inc. 292,500
-----------------------------------------------------------------------------------
9,000 DQE, Inc. 241,875
-----------------------------------------------------------------------------------
8,000 Duke Power Co. 386,000
-----------------------------------------------------------------------------------
3,000 Empresa Nacional de Electricidad SA, ADR 186,750
-----------------------------------------------------------------------------------
5,000 FPL Group, Inc. 213,750
-----------------------------------------------------------------------------------
90,000 Hong Kong Electric Holdings Ltd. 288,473
-----------------------------------------------------------------------------------
17,000 (a)Huaneng Power International Inc., Class N, ADR $ 278,375
-----------------------------------------------------------------------------------
20,000 Hyder PLC 232,760
-----------------------------------------------------------------------------------
41,000 Iberdrola SA 415,847
-----------------------------------------------------------------------------------
8,200 Illinova Corp. 215,250
-----------------------------------------------------------------------------------
13,000 Korea Electric Power Corp., ADR 336,375
-----------------------------------------------------------------------------------
9,000 NIPSCO Industries, Inc. 335,250
-----------------------------------------------------------------------------------
29,380 National Grid Group PLC 82,863
-----------------------------------------------------------------------------------
19,000 National Power Co. PLC, ADR 446,500
-----------------------------------------------------------------------------------
40 Nippon Telegraph & Telephone Corp. 291,111
-----------------------------------------------------------------------------------
3,800 Oest Elektrizitats 290,471
-----------------------------------------------------------------------------------
15,500 PT Telecom, Class CS, ADR 472,750
-----------------------------------------------------------------------------------
11,000 Pacificorp 221,375
-----------------------------------------------------------------------------------
10,000 Pinnacle West Capital Corp. 265,000
-----------------------------------------------------------------------------------
40,000 Powergen PLC 232,450
-----------------------------------------------------------------------------------
9,300 Southern Co. 215,063
-----------------------------------------------------------------------------------
20,000 Southern Electric PLC 221,137
-----------------------------------------------------------------------------------
6,000 Southern Water PLC 91,027
-----------------------------------------------------------------------------------
8,800 TECO Energy, Inc. 207,900
-----------------------------------------------------------------------------------
5,200 Texas Utilities Co. 212,550
-----------------------------------------------------------------------------------
110,000 Telefonica Del Peru 1/3 CPT, Class B 217,632
-----------------------------------------------------------------------------------
12,900 Tokyo Electric Power 330,861
-----------------------------------------------------------------------------------
11,000 Unicom Corp. 303,875
-----------------------------------------------------------------------------------
11,600 Utilicorp United, Inc. 317,550
-----------------------------------------------------------------------------------
7,200 Veba AG 376,750
-----------------------------------------------------------------------------------
17,000 Westcoast Energy, Inc. $ 255,000
----------------------------------------------------------------------------------- -------------
Total 10,979,792
----------------------------------------------------------------------------------- -------------
TOTAL COMMON STOCKS (IDENTIFIED COST $15,241,315) 17,081,484
----------------------------------------------------------------------------------- -------------
</TABLE>
Federated World Utility Fund
(formerly, World Utility Fund)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR
FOREIGN
CURRENCY VALUE IN
PAR U.S.
AMOUNT OR DOLLARS
PRINCIPAL
AMOUNT
<C> <S> <C>
- ------------- ----------------------------------------------------------------------------------- -------------
CONVERTIBLE SECURITIES--CONTINUED
- --------------------------------------------------------------------------------------------------
CONVERTIBLE SECURITIES--16.2%
- --------------------------------------------------------------------------------------------------
BASIC INDUSTRY--2.3%
-----------------------------------------------------------------------------------
12,000 Coeur d'Alene Mines Corp., Conv. Pfd. 267,000
-----------------------------------------------------------------------------------
5,000 Reynolds Metals Co., PRIDES, $3.30 240,625
----------------------------------------------------------------------------------- -------------
Total 507,625
----------------------------------------------------------------------------------- -------------
CONSUMER NON-DURABLES--1.1%
-----------------------------------------------------------------------------------
36,000 RJR Nabisco Holdings Corp., Conv. Pfd., Series C, $.60 238,500
----------------------------------------------------------------------------------- -------------
FINANCE--2.2%
-----------------------------------------------------------------------------------
20,000,000 Bank of Tokyo Cayman Finance Ltd., Conv. Bond, 4.25%, 3/31/2049 282,407
-----------------------------------------------------------------------------------
3,500 Merrill Lynch & Co., Inc., STRYPES, Series MGIC, $3.12 192,500
----------------------------------------------------------------------------------- -------------
Total 474,907
----------------------------------------------------------------------------------- -------------
NATURAL GAS DISTRIBUTION--1.2%
-----------------------------------------------------------------------------------
10,000 MCN Corp., Conv. Pfd. 265,000
----------------------------------------------------------------------------------- -------------
UTILITIES--9.4%
-----------------------------------------------------------------------------------
325,000 Compania Telefono Chile, Conv. Bond, 4.50%, 1/15/2003 380,049
-----------------------------------------------------------------------------------
8,000 (b)Nacional Financiera, SNC, PRIDES 267,000
-----------------------------------------------------------------------------------
250,000 (b)New World Infrastructure, Conv. Bond, 5.00%, 7/15/2001 246,875
-----------------------------------------------------------------------------------
515,000,000 Softe SA, Conv. Bond, 4.25%, 7/30/1998 498,736
-----------------------------------------------------------------------------------
9,000 Telecomunicacoes Brasileras, PERQS 519,750
-----------------------------------------------------------------------------------
150,000 (b)TelekomMalaysia Berhad, Conv. Bond, 4.00%, 10/3/2004 160,250
----------------------------------------------------------------------------------- -------------
Total 2,072,660
----------------------------------------------------------------------------------- -------------
TOTAL CONVERTIBLE SECURITIES (IDENTIFIED COST $3,263,066) 3,558,692
----------------------------------------------------------------------------------- -------------
PREFERRED STOCKS--0.3%
- --------------------------------------------------------------------------------------------------
UTILITIES--0.3%
-----------------------------------------------------------------------------------
66,000,000 Cia Forca Luz Cataguazes Leo (IDENTIFIED COST $55,578) 55,534
----------------------------------------------------------------------------------- -------------
</TABLE>
Federated World Utility Fund
(formerly, World Utility Fund)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES,
FOREIGN
CURRENCY
PAR
AMOUNT OR
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------- ----------------------------------------------------------------------------------- -------------
(c) REPURCHASE AGREEMENT--3.8%
- --------------------------------------------------------------------------------------------------
$ 825,000 BT Securities Corporation, 5.34%, dated 5/31/1996, due 6/3/1996
(at amortized cost) 825,000
----------------------------------------------------------------------------------- -------------
TOTAL INVESTMENTS (IDENTIFIED COST $19,384,959) (d) $ 21,520,710
----------------------------------------------------------------------------------- -------------
</TABLE>
(a) Non-income producing security.
(b) Denotes a restricted security which is subject to restrictions on resale
under securities laws. At May 31, 1996, these securities amounted to
$674,125 which represents 3.1% of net assets.
(c) The repurchase agreement is fully collateralized by U.S. government and/or
agency obligations based on market prices at the date of the portfolio. The
investment in the repurchase agreement is through participation in a joint
account with other Federated funds.
(d) The cost of investments for federal tax purposes amounts to $19,384,959. The
net unrealized appreciation of investments on a federal tax basis amounts to
$2,135,751 which is comprised of $2,505,857 appreciation and $370,106
depreciation at May 31, 1996.
Note: The categories of investments are shown as a percentage of net assets
($21,861,089) at May 31, 1996.
The following acronym(s) are used throughout this portfolio:
ADR--American Depositary Receipt
PERQS-- Performance Equity-linked Redemption Quarterly-pay Securities
PLC--Public Limited Company
PRIDES-- Preferred Redeemable Increased Dividend Equity Securities
REIT--Real Estate Investment Trust
SA--Socicdad Anomina
STRYPES--Structured Yield Product Exchangeable for Stock
(See Notes which are an integral part of the Financial Statements)
Federated World Utility Fund
(formerly, World Utility Fund)
Statement of Assets and Liabilities
- --------------------------------------------------------------------------------
May 31, 1996 (unaudited)
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS:
- -------------------------------------------------------------------------------------------------------
Total investments in securities, at value (identified and tax cost $19,384,959) $21,520,710
- -------------------------------------------------------------------------------------------------------
Cash 6,408
- -------------------------------------------------------------------------------------------------------
Income receivable 93,471
- -------------------------------------------------------------------------------------------------------
Receivable for investments sold 186,172
- -------------------------------------------------------------------------------------------------------
Receivable for shares sold 69,436
- -------------------------------------------------------------------------------------------------------
Receivable for foreign currency sold 160,506
- -------------------------------------------------------------------------------------------------------
Deferred expenses 19,387
- -------------------------------------------------------------------------------------------------------
Receivable from Adviser 126,384
- ------------------------------------------------------------------------------------------------------- ----------
Total assets 22,182,474
- -------------------------------------------------------------------------------------------------------
LIABILITIES:
- --------------------------------------------------------------------------------------------
Payable for investments purchased $ 157,388
- --------------------------------------------------------------------------------------------
Payable for shares redeemed 1,150
- --------------------------------------------------------------------------------------------
Payable for taxes withheld 2,341
- --------------------------------------------------------------------------------------------
Payable for foreign currency purchased 160,506
- -------------------------------------------------------------------------------------------- ---------
Total liabilities 321,385
- ------------------------------------------------------------------------------------------------------- ----------
NET ASSETS for 1,847,369 shares outstanding $21,861,089
- ------------------------------------------------------------------------------------------------------- ----------
NET ASSETS CONSIST OF:
- -------------------------------------------------------------------------------------------------------
Paid in capital $19,198,693
- -------------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments and translation of assets and liabilities in foreign
currency 2,136,475
- -------------------------------------------------------------------------------------------------------
Accumulated net realized gain on investments and foreign currency transactions 347,687
- -------------------------------------------------------------------------------------------------------
Undistributed net investment income 178,234
- ------------------------------------------------------------------------------------------------------- ----------
Total Net Assets $21,861,089
- ------------------------------------------------------------------------------------------------------- ----------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
- -------------------------------------------------------------------------------------------------------
CLASS A SHARES:
- -------------------------------------------------------------------------------------------------------
Net Asset Value Per Share ($10,979,217 / 927,610 shares outstanding) $11.84
- ------------------------------------------------------------------------------------------------------- ----------
Offering Price Per Share (100/94.50 of $11.84)* $12.53
- ------------------------------------------------------------------------------------------------------- ----------
Redemption Proceeds Per Share $11.84
- ------------------------------------------------------------------------------------------------------- ----------
CLASS B SHARES:
- -------------------------------------------------------------------------------------------------------
Net Asset Value Per Share ($2,698,027 / 228,252 shares outstanding) $11.82
- ------------------------------------------------------------------------------------------------------- ----------
Offering Price Per Share $11.82
- ------------------------------------------------------------------------------------------------------- ----------
Redemption Proceeds Per Share (94.50/100 of $11.82)** $11.17
- ------------------------------------------------------------------------------------------------------- ----------
CLASS C SHARES:
- -------------------------------------------------------------------------------------------------------
Net Asset Value Per Share ($718,865 / 60,818 shares outstanding) $11.82
- ------------------------------------------------------------------------------------------------------- ----------
Offering Price Per Share $11.82
- ------------------------------------------------------------------------------------------------------- ----------
Redemption Proceeds Per Share (99.00/100 of $11.82)** $11.70
- ------------------------------------------------------------------------------------------------------- ----------
CLASS F SHARES:
- -------------------------------------------------------------------------------------------------------
Net Asset Value Per Share ($7,464,980 / 630,688 shares outstanding) $11.84
- ------------------------------------------------------------------------------------------------------- ----------
Offering Price Per Share (100/99.00 of $11.84)* $11.96
- ------------------------------------------------------------------------------------------------------- ----------
Redemption Proceeds Per Share (99.00/100 of $11.84)** $11.72
- ------------------------------------------------------------------------------------------------------- ----------
</TABLE>
* See "How to Purchase Shares" in the Prospectus.
** See "Contingent Deferred Sales Charge" in the Prospectus.
(See Notes which are an integral part of the Financial Statements)
Federated World Utility Fund
(formerly, World Utility Fund)
Statement of Operations
- --------------------------------------------------------------------------------
Six Months Ended May 31, 1996 (unaudited)
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- ------------------------------------------------------------------------------------------------------
Dividends (net of foreign taxes withheld of $22,801) $ 408,498
- ------------------------------------------------------------------------------------------------------
Interest 42,010
- ------------------------------------------------------------------------------------------------------ ---------
Total income 450,508
- ------------------------------------------------------------------------------------------------------
EXPENSES:
- -------------------------------------------------------------------------------------------
Investment advisory fee $ 98,112
- -------------------------------------------------------------------------------------------
Administrative personnel and services fee 107,500
- -------------------------------------------------------------------------------------------
Custodian fees 11,516
- -------------------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 31,661
- -------------------------------------------------------------------------------------------
Directors'/Trustees' fees 3,477
- -------------------------------------------------------------------------------------------
Auditing fees 6,771
- -------------------------------------------------------------------------------------------
Legal fees 4,026
- -------------------------------------------------------------------------------------------
Portfolio accounting fees 41,443
- -------------------------------------------------------------------------------------------
Distribution services fee--Class F Shares 1,336
- -------------------------------------------------------------------------------------------
Distribution services fee--Class B Shares 7,319
- -------------------------------------------------------------------------------------------
Distribution services fee--Class C Shares 2,100
- -------------------------------------------------------------------------------------------
Shareholder services fee--Class A Shares 12,812
- -------------------------------------------------------------------------------------------
Shareholder services fee--Class F Shares 8,576
- -------------------------------------------------------------------------------------------
Shareholder services fee--Class B Shares 2,440
- -------------------------------------------------------------------------------------------
Shareholder services fee--Class C Shares 700
- -------------------------------------------------------------------------------------------
Share registration costs 25,071
- -------------------------------------------------------------------------------------------
Printing and postage 15,006
- -------------------------------------------------------------------------------------------
Insurance premiums 2,745
- -------------------------------------------------------------------------------------------
Taxes 183
- -------------------------------------------------------------------------------------------
Miscellaneous 17,019
- ------------------------------------------------------------------------------------------- ---------
Total expenses 399,813
- -------------------------------------------------------------------------------------------
Waivers and reimbursements--
- --------------------------------------------------------------------------------
Waiver of investment advisory fee $ (98,112)
- --------------------------------------------------------------------------------
Reimbursement of other operating expenses (192,401)
- -------------------------------------------------------------------------------- ---------
Total waivers and reimbursements (290,513)
- ------------------------------------------------------------------------------------------- ---------
Net expenses 109,300
- ------------------------------------------------------------------------------------------------------ ---------
Net investment income 341,208
- ------------------------------------------------------------------------------------------------------ ---------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY:
- ------------------------------------------------------------------------------------------------------
Net realized gain on investments and foreign currency transactions 599,335
- ------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) of investments and translation of assets and
liabilities in foreign currency 826,736
- ------------------------------------------------------------------------------------------------------ ---------
Net realized and unrealized gain on investments and foreign currency 1,426,071
- ------------------------------------------------------------------------------------------------------ ---------
Change in net assets resulting from operations $1,767,279
- ------------------------------------------------------------------------------------------------------ ---------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
Federated World Utility Fund
(formerly, World Utility Fund)
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED
(UNAUDITED) YEAR ENDED
MAY 31, 1996 NOVEMBER 30, 1995
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ----------------------------------------------------------------
OPERATIONS--
- ----------------------------------------------------------------
Net investment income $ 341,208 $ 513,871
- ----------------------------------------------------------------
Net realized gain (loss) on investments and foreign currency
transactions ($599,335 and $(217,751), respectively, as computed
for federal tax purposes) 599,335 (213,222)
- ----------------------------------------------------------------
Net change in unrealized appreciation (depreciation) of
investments and translation of assets and liabilities in foreign
currency 826,736 1,701,368
- ---------------------------------------------------------------- ----------------------- -----------------------
Change in net assets resulting from operations 1,767,279 2,002,017
- ---------------------------------------------------------------- ----------------------- -----------------------
DISTRIBUTIONS TO SHAREHOLDERS--
- ----------------------------------------------------------------
Distributions from net investment income
- ----------------------------------------------------------------
Class A Shares (160,967) (241,857)
- ----------------------------------------------------------------
Class F Shares (104,279) (196,003)
- ----------------------------------------------------------------
Class B Shares (22,941) (3,135)
- ----------------------------------------------------------------
Class C Shares (6,057) (261)
- ----------------------------------------------------------------
Change in net assets resulting from distributions to
shareholders (294,244) (441,256)
- ---------------------------------------------------------------- ----------------------- -----------------------
SHARE TRANSACTIONS--
- ----------------------------------------------------------------
Proceeds from sale of shares 5,241,860 6,182,954
- ----------------------------------------------------------------
Net asset value of shares issued to shareholders in payment of
distributions declared 213,245 274,697
- ----------------------------------------------------------------
Cost of shares redeemed (1,412,171) (1,442,701)
- ---------------------------------------------------------------- ----------------------- -----------------------
Change in net assets resulting from share transactions 4,042,934 5,014,950
- ---------------------------------------------------------------- ----------------------- -----------------------
Change in net assets 5,515,969 6,575,711
- ----------------------------------------------------------------
NET ASSETS:
- ----------------------------------------------------------------
Beginning of period 16,345,120 9,769,409
- ---------------------------------------------------------------- ----------------------- -----------------------
End of period (including undistributed net investment income of
$178,234 and $112,583, respectively) $ 21,861,089 $ 16,345,120
- ---------------------------------------------------------------- ----------------------- -----------------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
Federated World Utility Fund
(formerly, World Utility Fund)
Financial Highlights--Class A Shares
- --------------------------------------------------------------------------------
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(UNAUDITED) YEAR ENDED
MAY 31, NOVEMBER 30,
1996 1995 1994(a)
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.96 $ 9.67 $ 10.06
- ----------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ----------------------------------------------------------------------------
Net investment income 0.20 0.42 0.24
- ----------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments
and foreign currency 0.87 1.27 (0.46)
- ---------------------------------------------------------------------------- ------- --------- -----------
Total from investment operations 1.07 1.69 (0.22)
- ---------------------------------------------------------------------------- ------- --------- -----------
LESS DISTRIBUTIONS
- ----------------------------------------------------------------------------
Distributions from net investment income (0.19) (0.40) (0.17)
- ---------------------------------------------------------------------------- ------- --------- -----------
NET ASSET VALUE, END OF PERIOD $ 11.84 $ 10.96 $ 9.67
- ---------------------------------------------------------------------------- ------- --------- -----------
TOTAL RETURN (b) 9.83% 17.94% (3.00%)
- ----------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ----------------------------------------------------------------------------
Expenses 1.00%* 0.25% .25%*
- ----------------------------------------------------------------------------
Net investment income 3.59%* 4.39% 5.10%*
- ----------------------------------------------------------------------------
Expense waiver/reimbursement (c) 2.96%* 4.78% 4.43%*
- ----------------------------------------------------------------------------
SUPPLEMENTAL DATA
- ----------------------------------------------------------------------------
Net assets, end of period (000 omitted) $10,979 $8,875 $4,948
- ----------------------------------------------------------------------------
Average commission rate paid $0.0161 -- --
- ----------------------------------------------------------------------------
Portfolio turnover 24 % 46% 7 %
- ----------------------------------------------------------------------------
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from April 21, 1994 (date of initial
public investment) to November 30, 1994.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
Federated World Utility Fund
(formerly, World Utility Fund)
Financial Highlights--Class B Shares
- --------------------------------------------------------------------------------
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(UNAUDITED) YEAR ENDED
MAY 31, NOVEMBER 30,
1996 1995 (a)
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.95 $ 10.53
- ------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ------------------------------------------------------------------------------
Net investment income 0.17 0.11
- ------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments
and foreign currency 0.85 0.41
- ------------------------------------------------------------------------------ ------- -------
Total from investment operations 1.02 0.52
- ------------------------------------------------------------------------------ ------- -------
LESS DISTRIBUTIONS
- ------------------------------------------------------------------------------
Distributions from net investment income (0.15) (0.10)
- ------------------------------------------------------------------------------ ------- -------
NET ASSET VALUE, END OF PERIOD $ 11.82 $ 10.95
- ------------------------------------------------------------------------------ ------- -------
TOTAL RETURN (b) 9.42% 5.00%
- ------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ------------------------------------------------------------------------------
Expenses 1.75%* 1.00%*
- ------------------------------------------------------------------------------
Net investment income 2.84%* 2.99%*
- ------------------------------------------------------------------------------
Expense waiver/reimbursement (c) 2.96%* 4.78%*
- ------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $2,698 $1,068
- ------------------------------------------------------------------------------
Average commission rate paid $0.0161 --
- ------------------------------------------------------------------------------
Portfolio turnover 24 % 46 %
- ------------------------------------------------------------------------------
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from July 27, 1995 (date of initial
public investment) to November 30, 1995.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
Federated World Utility Fund
(formerly, World Utility Fund)
Financial Highlights--Class C Shares
- --------------------------------------------------------------------------------
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(UNAUDITED) YEAR ENDED
MAY 31, NOVEMBER 30,
1996 1995 (a)
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.95 $ 10.53
- ------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ------------------------------------------------------------------------------
Net investment income 0.16 0.15
- ------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments
and foreign currency 0.86 0.37
- ------------------------------------------------------------------------------ ------- -------
Total from investment operations 1.02 0.52
- ------------------------------------------------------------------------------ ------- -------
LESS DISTRIBUTIONS
- ------------------------------------------------------------------------------
Distributions from net investment income (0.15) (0.10)
- ------------------------------------------------------------------------------ ------- -------
NET ASSET VALUE, END OF PERIOD $ 11.82 $ 10.95
- ------------------------------------------------------------------------------ ------- -------
TOTAL RETURN (b) 9.35% 4.92%
- ------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ------------------------------------------------------------------------------
Expenses 1.75%* 1.00%*
- ------------------------------------------------------------------------------
Net investment income 2.77%* 3.03%*
- ------------------------------------------------------------------------------
Expense waiver/reimbursement (c) 2.96%* 4.77%*
- ------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $719 $374
- ------------------------------------------------------------------------------
Average commission rate paid $0.0161 --
- ------------------------------------------------------------------------------
Portfolio turnover 24 % 46 %
- ------------------------------------------------------------------------------
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from July 27, 1995 (date of initial
public investment) to November 30, 1995.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
Notes which are an integral part of the Financial Statements)
Federated World Utility Fund
(formerly, World Utility Fund)
Financial Highlights--Class F Shares
- --------------------------------------------------------------------------------
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(UNAUDITED) YEAR ENDED
MAY 31, MAY 31,
1996 1995 1994(a)
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.96 $ 9.66 $ 10.04
- ----------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ----------------------------------------------------------------------------
Net investment income 0.20 0.43 0.21
- ----------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments
and foreign currency 0.86 1.25 (0.43)
- ---------------------------------------------------------------------------- ------- --------- -----------
Total from investment operations 1.06 1.68 (0.22)
- ---------------------------------------------------------------------------- ------- --------- -----------
LESS DISTRIBUTIONS
- ----------------------------------------------------------------------------
Distributions from net investment income (0.18) (0.38) (0.16)
- ---------------------------------------------------------------------------- ------- --------- -----------
NET ASSET VALUE, END OF PERIOD $ 11.84 $ 10.96 $ 9.66
- ---------------------------------------------------------------------------- ------- --------- -----------
TOTAL RETURN (b) 9.75% 17.79% (3.07%)
- ----------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ----------------------------------------------------------------------------
Expenses 1.04%* 0.50% 0.50%*
- ----------------------------------------------------------------------------
Net investment income 3.55%* 4.19% 4.59%*
- ----------------------------------------------------------------------------
Expense waiver/reimbursement (c) 2.96%* 4.78% 4.43%*
- ----------------------------------------------------------------------------
SUPPLEMENTAL DATA
- ----------------------------------------------------------------------------
Net assets, end of period (000 omitted) $7,465 $6,028 $4,821
- ----------------------------------------------------------------------------
Average commission rate paid $0.0161 -- --
- ----------------------------------------------------------------------------
Portfolio turnover 24 % 46% 7 %
- ----------------------------------------------------------------------------
</TABLE>
* Computed on an annualized basis.
(a) 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 28, 1994 to April 20, 1994, Fortress Shares had no public
investment.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
Federated World Utility Fund
(formerly, World Utility Fund)
Notes to Financial Statements
- --------------------------------------------------------------------------------
May 31, 1996 (unaudited)
(1) ORGANIZATION
World Investment Series, Inc. (the "Corporation") is registered under the
Investment Company Act of 1940, as amended (the "Act") as an open-end,
management investment company. The Corporation consists of six portfolios. The
financial statements included herein are only those of Federated World Utility
Fund (the "Fund"), a diversified portfolio. The financial statements of the
other portfolios are presented separately. The assets of each portfolio are
segregated and a shareholder's interest is limited to the portfolio in which
shares are held.
The Fund offers four classes of shares: Class A Shares, Class B Shares, Class C
Shares and Class F Shares. The Fund's investment objective is to provide total
return.
Effective January 31, 1996, the Board of Directors ("Directors") changed the
name of the Fund from World Utility Fund to Federated World Utility Fund.
Effective January 31, 1996, Fortress Shares changed its name to Class F 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.
INVESTMENT VALUATIONS--Market values of the Fund's portfolio securities are
determined according to the last reported sale price on a recognized
securities exchange, if available. If unavailable, or if the securities
trade over the counter, the securities are generally valued at the last
reported bid price. Short term securities with remaining maturities of
sixty days or less at the time of purchase may be valued at amortized cost,
which approximates fair market value.
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 under repurchase
agreement transactions. Additionally, procedures have been established by
the Fund to monitor, on a daily basis, the market value of each repurchase
agreement's collateral to ensure that the value of collateral at least
equals the repurchase price to be paid under the repurchase agreement
transaction.
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 the guidelines and/or
standards reviewed or established by the Board of Directors (the
"Directors"). Risks may arise from the potential inability of
counterparties to honor the terms of the repurchase agreement. Accordingly,
the Fund could receive less than the repurchase price on the sale of
collateral securities.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--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"). Dividend
income and distributions to shareholders are recorded on the ex-dividend
date. Certain dividends from foreign securities may be recorded after the
ex-dividend date based upon when information becomes available to the Fund
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 income. Accordingly, no
provisions for federal tax are necessary. However, federal taxes may be
imposed upon disposition of certain investments in Passive Foreign
Investment Companies.
Withholding taxes on foreign interest and dividends have been provided for
in accordance with the Fund's understanding of the applicable country's tax
rules and rates.
At last fiscal year-end date, the Fund, for federal tax purposes, had a
capital loss carryforward of $217,751, 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 as follows:
<TABLE>
<CAPTION>
EXPIRATION YEAR EXPIRATION AMOUNT
<S> <C>
2002 $42,265
2003 $175,486
</TABLE>
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.
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 its 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.
CONCENTRATION OF CREDIT RISK--The Fund invests in securities of non-U.S.
issuers. Although the Fund maintains a diversified investment portfolio,
the political or economic developments within a particular country or
region may have an adverse effect on the ability of domiciled issuers to
meet their obligations. Additionally, political or economic developments
may have an effect on the liquidity and volatility of portfolio securities
and currency holdings.
At May 31, 1996, the diversification of countries was as follows:
<TABLE>
<CAPTION>
% OF % OF
COUNTRY NET ASSETS COUNTRY NET ASSETS
<S> <C> <C> <C>
Argentina 3.2% Italy 2.3%
Australia 3.8% Japan 5.7%
Boliva 1.9% Korea 2.9%
Brazil 2.6% Malaysia 0.7%
Canada 1.2% Mexico 1.2%
Chile 2.8% Peru 0.9%
China 2.4% Spain 4.0%
Finland 2.6% Sweden 1.0%
Germany 1.7% The Netherlands 1.4%
Hong Kong 3.5% The United Kingdom 7.7%
Indonesia 2.2%
</TABLE>
FOREIGN EXCHANGE CONTRACTS--The Fund may enter into foreign currency
exchange contracts as a way of managing foreign exchange rate risk. The
Fund may enter into these contracts for the purchase or sale of a specific
foreign currency at a fixed price on a future date as a hedge or cross
hedge against either specific transactions or portfolio positions. The
objective of the Fund's foreign currency hedging transactions is to reduce
the risk that the U.S. dollar value of the Fund's foreign currency
denominated securities will decline in value due to changes in foreign
currency exchange rates. All foreign currency exchange contracts are
"marked to market" daily at the applicable translation rates resulting in
unrealized gains or losses. Realized gains or losses are recorded at the
time the foreign currency exchange contract is offset by entering into a
closing transaction or by the delivery or receipt of the currency. Risk may
arise upon entering into these contracts from the potential inability of
counterparties to meet the terms of their contracts and from unanticipated
movements in the value of a foreign currency relative to the U.S. dollar.
At May 31, 1996, the Fund had outstanding foreign currency contracts as set
forth below:
<TABLE>
<CAPTION>
UNREALIZED
SETTLEMENT CONTRACTS TO IN EXCHANGE APPRECIATION
SALES DATE DELIVER/RECEIVE FOR (DEPRECIATION)
<S> <C> <C> <C> <C>
Argentine Peso 6/3/96 4,961 $ 4,958 $ (4)
- ------------------------------------
Deutsche Mark 6/3/96 8,951 5,829 (36)
- ------------------------------------
Pound Sterling 6/4/96 98,792 149,719 (3,375)
- ------------------------------------ ---------- --------------- --------
Total 112,703 $ 160,506 $(3,416)
- ------------------------------------ ---------- --------------- --------
</TABLE>
FOREIGN CURRENCY TRANSLATION--The accounting records of the Fund 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 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 of
portfolio securities, sales and maturities of short-term securities, sales
of FCs, currency gains or losses realized between the trade and settlement
dates on securities transactions, the difference between the amounts of
dividends, interest, and foreign 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.
RESTRICTED SECURITIES--Restricted securities are securities that may only
be resold upon registration under securities laws or in transactions exempt
from such registration. In some cases, the issuer of restricted securities
has agreed to register such securities for resale, at the issuer's expense
either upon demand by the Fund or in connection with another registered
offering of the securities. Many restricted securities may be resold in the
secondary market in transactions exempt from registration. Such restricted
securities may be determined to be liquid under criteria established by the
Board of Directors. The Fund will not incur any registration costs upon
such resales. The Fund's restricted securities are valued at the price
provided by dealers in the secondary market or, if no market prices are
available, at the fair value as determined by the Fund's pricing committee.
Additional information on each restricted security held at May 31, 1996 is
as follows:
<TABLE>
<CAPTION>
FUND
SECURITY ACQUISITION DATES ACQUISITION COST
<S> <C> <C>
Nacional Financiera, SNC, PRIDES 12/22/94-4/22/96 $ 513,055
New World Infrastructure, Conv. Bond 5/15/96 250,000
Telekom Malaysia Berhad, Conv. Bond 9/22/94-3/6/96 352,125
</TABLE>
USE OF ESTIMATES--The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts of assets, liabilities,
expenses and revenues reported in the financial statements. Actual results
could differ from those estimated.
OTHER--Investment transactions are accounted for on the trade date.
(3) CAPITAL STOCK
At May 31, 1996, par value shares ($0.001 per share) authorized were as follows:
<TABLE>
<CAPTION>
POUND OF PAR VALUE CAPITAL
CLASS NAME STOCK AUTHORIZED
<S> <C>
Class A 300,000,000
- --------------------------------------------------------------------------------------
Class F 150,000,000
- --------------------------------------------------------------------------------------
Class B 150,000,000
- --------------------------------------------------------------------------------------
Class C 150,000,000
- -------------------------------------------------------------------------------------- ---------------
Total Capital Stock Authorized 750,000,000
- -------------------------------------------------------------------------------------- ---------------
</TABLE>
Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
YEAR ENDED
MAY 31, 1996 NOVEMBER 30, 1995
<S> <C> <C> <C> <C>
CLASS A SHARES SHARES AMOUNT SHARES AMOUNT
Shares sold 185,773 $ 2,119,948 366,211 $ 3,790,807
- ---------------------------------------------------------------
Shares issued to shareholders in
payment of distributions declared 11,497 128,493 17,953 180,929
- ---------------------------------------------------------------
Shares redeemed (79,329) (912,904) (86,001) (884,844)
- --------------------------------------------------------------- --------- ------------ --------- ------------
Net change resulting from
Class A share transactions 117,941 $ 1,335,537 298,163 $ 3,086,892
- --------------------------------------------------------------- --------- ------------ --------- ------------
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED
MAY 31, 1996 NOVEMBER 30, 1995
<S> <C> <C> <C> <C>
CLASS B SHARES SHARES AMOUNT SHARES AMOUNT
Shares sold 137,704 $ 1,569,632 99,124 $ 1,064,086
- ----------------------------------------------------------------
Shares issued to shareholders in
payment of distributions declared 1,634 18,268 281 2,996
- ----------------------------------------------------------------
Shares redeemed (8,571) (97,712) (1,919) (20,958)
- ---------------------------------------------------------------- --------- ------------ --------- ------------
Net change resulting from
Class B share transactions 130,767 $ 1,490,188 97,486 $ 1,046,124
- ---------------------------------------------------------------- --------- ------------ --------- ------------
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED
MAY 31, 1996 NOVEMBER 30, 1995
<S> <C> <C> <C> <C>
CLASS C SHARES SHARES AMOUNT SHARES AMOUNT
Shares sold 26,878 $ 309,114 34,326 $ 369,138
- ---------------------------------------------------------------
Shares issued to shareholders in
payment of distributions declared 127 1,422 24 261
- ---------------------------------------------------------------
Shares redeemed (321) (3,729) (217) (2,322)
- --------------------------------------------------------------- --------- ------------ --------- ------------
Net change resulting from
Class C share transactions 26,684 $ 306,807 34,133 $ 367,077
- --------------------------------------------------------------- --------- ------------ --------- ------------
Net change resulting from
share transactions 355,987 4,042,934 480,735 5,014,950
- --------------------------------------------------------------- --------- ------------ --------- ------------
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED
MAY 31, 1996 NOVEMBER 30, 1995
<S> <C> <C> <C> <C>
CLASS F SHARES SHARES AMOUNT SHARES AMOUNT
Shares sold 109,567 $ 1,243,165 95,261 $ 958,923
- ----------------------------------------------------------------
Shares issued to shareholders in
payment of distributions declared 5,821 65,061 8,964 90,511
- ----------------------------------------------------------------
Shares redeemed (34,793) (397,826) (53,272) (534,577)
- ---------------------------------------------------------------- --------- ------------ --------- -----------
Net change resulting from
Class F share transactions 80,595 $ 910,400 50,953 $ 514,857
- ---------------------------------------------------------------- --------- ------------ --------- -----------
</TABLE>
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Federated Global Research Corp., the Fund's investment
adviser, (the "Adviser"), receives for its services an annual investment
advisory fee equal to 1.00% of the Fund's average daily net assets. Federated
Global Research Corp. became the Fund's investment adviser on November 20, 1995.
Prior to November 20, 1995, Federated Management served as the Fund's investment
adviser and received for its services an annual investment advisory fee equal to
1.00% of the Fund's average daily net assets.
For the period ended May 31, 1996, the adviser(s) earned fees as follows:
<TABLE>
<CAPTION>
AMOUNT OF AMOUNT OF
ADVISER NAME FEE EARNED FEE WAIVED
<S> <C> <C>
Federated Global Research Corp. $ 98,112 $ 98,112
</TABLE>
The Adviser may voluntarily choose to waive any portion of its fee and/or
reimburse certain operating expenses of the Fund. The Adviser can modify or
terminate this voluntary waiver and/ or reimbursement at any time at its sole
discretion.
ADMINISTRATIVE FEE--Federated Services Company ("FServ"), under the
Administrative Services Agreement, provides the Fund with administrative
personnel and services. The fee paid to FServ 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 the period of
the Administrative Services Agreement shall be at least $125,000 per portfolio
and $30,000 per each additional class of shares.
DISTRIBUTION SERVICES FEE--The Fund has adopted a Distribution Plan (the "Plan")
pursuant to Rule 12b-1 under the Act. Under the terms of the Plan, the Fund will
compensate Federated Securities Corp., the principal distributor, from the net
assets of the Fund to finance activities intended to result in the sale of the
Corporation's Class B Shares, Class C Shares and Class F Shares. The Plan
provides that the Fund may incur distribution expenses according to the
following schedule annually, to compensate Federated Securities Corp.
<TABLE>
<CAPTION>
% OF AVG. DAILY NET
SHARE CLASS NAME ASSETS OF CLASS
<S> <C>
Class B Shares 0.75 of 1%
- ----------------------------------------------------------------------------------------
Class C Shares 0.75 of 1%
- ----------------------------------------------------------------------------------------
Class F Shares 0.25 of 1%
- ----------------------------------------------------------------------------------------
</TABLE>
The distributor may voluntarily choose to waive any portion of its fee. The
distributor can modify or terminate this voluntary waiver at any time at its
sole discretion.
SHAREHOLDER SERVICES FEE--Under the terms of a Shareholder Services Agreement
with Federated Shareholder Services, the Fund will pay Federated Shareholder
Services up to 0.25 of 1% of average daily net assets of the Fund for the
period. The fee paid to Federated Shareholder Services is used to finance
certain services for shareholders and to maintain shareholder accounts.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES--FServ, through its
subsidiary, Federated Shareholder Services Company serves as transfer and
dividend disbursing agent for the Fund. The fee paid to FServ is based on the
size, type, and number of accounts and transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES--Federated Services Company maintains the Fund's
accounting records for which it receives a fee. The fee is based on the level of
the Fund's average daily net assets for the period, plus out-of-pocket expenses.
ORGANIZATIONAL EXPENSES--Organizational expenses of $75,061 and start-up
administrative service expenses of $39,069 were borne initially by
Administrator. The Fund has agreed to reimburse the Administrator for the
organizational expenses and start-up administrative expenses during the five
year period following the Fund's effective date. For the period ended May 31,
1996, the Fund paid $9,677 and $4,884 pursuant to this agreement.
GENERAL--Certain of the Officers and Directors of the Corporation are Officers
and Directors or Trustees of the above companies.
(5) INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the
period ended
May 31, 1996, were as follows:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
<S> <C>
PURCHASES $ 8,313,338
- ---------------------------------------------------------------------------------------------------- ------------
SALES $ 4,456,793
- ---------------------------------------------------------------------------------------------------- ------------
</TABLE>
<TABLE>
<CAPTION>
Directors Officers
- --------------------------------------------------------------------------------
<S> <C>
John F. Donahue John F. Donahue
Thomas G. Bigley Chairman
John T. Conroy, Jr. Richard B. Fisher
William J. Copeland President
James E. Dowd J. Christopher Donahue
Lawrence D. Ellis, M.D. Executive Vice President
Richard B. Fisher Edward C. Gonzales
Edward L. Flaherty, Jr. Executive Vice President
Peter E. Madden John W. McGonigle
Gregor F. Meyer Executive Vice President and Secretary
John E. Murray, Jr. David M. Taylor
Wesley W. Posvar Treasurer
Marjorie P. Smuts J. Crilley Kelly
Assistant Secretary
</TABLE>
Mutual funds are not bank deposits or obligations, are not guaranteed
by any bank, and are not insured or guaranteed by the FDIC, the Federal
Reserve Board, or any other governmental agency. Investment in mutual funds
involves risk, including possible loss of principal.
This report is authorized for distribution to prospective investors only when
preceded
or accompanied by the Fund's prospectus which contains facts concerning its
objective and policies, management fees, expenses and other information.
[LOGO] FEDERATED INVESTORS
Since 1955
Federated Investors Tower
Pittsburgh, PA 15222-3779
Federated Securities Corp. is the distributor of the fund
and is a subsidiary of Federated Investors.
Cusip 981487101
Cusip 981487309
Cusip 981487408
Cusip 981487200
G00259-05 (7/96)
FEDERATED ASIA PACIFIC GROWTH FUND
(A PORTFOLIO OF WORLD INVESTMENT SERIES, INC.)
CLASS A SHARES
SEMI-ANNUAL REPORT AND SUPPLEMENT TO THE PROSPECTUS DATED JANUARY 31, 1996
A. Please delete the third and fourth sentence of the fourth paragraph on
the cover page of the prospectus and replace it with the following:
"You may request a copy of the Statement of Additional information, or a
paper copy of this prospectus, if you have received your prospectus
electronically, free of charge by calling 1-800-341-7400. To obtain other
information or to make inquiries about the Fund, contact your financial
institution. The Statement of Additional Information, material incorporated
by reference into this document, and other information regarding the Fund is
maintained electronically with the SEC at Internet Web site
(http://www.sec.gov)."
B. Please insert the following "Financial Highlights" table for Class A
Shares immediately following the "Summary of Fund Expenses" tables in the
prospectus:
FEDERATED ASIA PACIFIC GROWTH FUND
FINANCIAL HIGHLIGHTS -- CLASS A SHARES
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
PERIOD ENDED
(UNAUDITED)
MAY 31, 1996(A)
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.00
INCOME FROM INVESTMENT OPERATIONS
Net realized and unrealized gain (loss) on investments and foreign currency 0.59
NET ASSET VALUE, END OF PERIOD $10.59
TOTAL RETURN(B) 5.90%
RATIOS TO AVERAGE NET ASSETS
Expenses 1.85%*
Net investment income 0.12%*
Expense waiver/reimbursement(c) 8.64%*
SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $4,624
Average commission rate paid $0.0095
Portfolio turnover 37%
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from February 28, 1996 (date of
initial public investment) to May 31, 1996.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
C. Please delete the final sentence of the section entitled "Making an
Exchange" on page 19 of the prospectus and replace it with the following:
"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 Shareholder Services Company, 1099
Hingham Street, Rockland, MA 02370-3317."
D. Please add the following as the fourth sentence of the section entitled
"How to Redeem Shares" on page 20 of the prospectus:
"Investors who redeem shares through a financial institution may be charged
a service fee by that institution."
E. Under the section entitled "Administrative Services" on page 27 of the
prospectus, please delete all references to "Federated Administrative
Services" and replace them with "Federated Services Company."
F. Please add the following as the last sentence of the first paragraph of
the section entitled "Voting Rights" on page 28 of the prospectus:
"As of July 5, 1996, Merrill Lynch Pierce Fenner & Smith, Jacksonville, FL,
owned 44.97% of the voting securities of the Fund's Class C Shares, and,
therefore, may, for certain purposes, be deemed to control the Fund and be
able to affect the outcome of certain matters presented for a vote of
shareholders."
G. Please insert the following financial statements beginning on page 31 of
the prospectus, immediately before the section entitled "Appendix."
FEDERATED ASIA PACIFIC GROWTH FUND
PORTFOLIO OF INVESTMENTS
MAY 31, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
COMMON STOCKS--86.4%
APPLIANCES & HOUSEHOLD DURABLES--0.3%
4,000 Tigaraksa Satria $ 19,893
AUTOMOBILE--1.0%
4,000 Cycle & Carriage Ltd. 42,031
1,400 (a)(b)Mahindra and Mahindra, GDR 15,400
Total 57,431
BANKING--3.6%
3,600 HSBC Holdings PLC 54,437
1,000 Kookmin Bank 19,544
4,200 Krung Thai Bank PLC 21,393
800 (a)Philippine Commercial International Bank 10,313
5,000 Sumitomo Trust & Banking 69,444
4,000 United Overseas Bank Ltd. 36,351
Total 211,482
BROADCASTING & PUBLISHING--1.8%
21,100 Austereo Ltd. 34,356
5,600 News Corp., Ltd. 31,421
2,000 Singapore Press Holdings Ltd. 37,487
Total 103,264
BUILDING MATERIALS & COMPONENTS--0.8%
3,000 PT Semen Gresik 9,936
10,800 Pioneer International Ltd. 33,101
Total 43,037
</TABLE>
FEDERATED ASIA PACIFIC GROWTH FUND
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
COMMON STOCKS--CONTINUED
BUSINESS & PUBLIC SERVICES--2.7%
4,000 Dai Nippon Printing Co., Ltd. $ 74,074
3,000 Kokuyo 80,278
Total 154,352
CHEMICALS--1.3%
4,000 Dainippon Ink and Chemicals, Inc. 19,556
10,000 Nippon Zeon Co. 60,370
Total 79,926
CONSTRUCTION & HOUSING--5.0%
16,000 Ekran Bhd 60,244
4,000 Maeda Road Construction 67,037
7,000 Nichiei Construction 81,019
7,000 Nippon Comsys Corp. 89,444
Total 297,744
ELECTRICAL & ELECTRONICS--7.3%
7,000 Canon Copyer Sales 89,444
6,000 Japan Radio 84,444
10,000 Mitsubishi Electric Corp. 68,519
3,000 Nitto Denko Corp. 49,167
12,000 Sanyo Electric 71,444
10,000 Toshiba Corp. 69,537
Total 432,555
ELECTRONIC COMPONENTS, INSTRUMENTS--5.2%
3,300 Hana Microelectronics Co., Ltd. 20,588
12,000 Malaysian Pacific Industries 49,509
5,000 Nihon Kaiheiki Industry 82,407
</TABLE>
FEDERATED ASIA PACIFIC GROWTH FUND
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
COMMON STOCKS--CONTINUED
ELECTRONIC COMPONENTS, INSTRUMENTS--CONTINUED
2,000 Noritsu Koki Co., Ltd. $ 88,889
4,000 Yamatake-Honeywell 71,481
Total 312,874
ENERGY EQUIPMENT & SERVICES--0.7%
2,000 (a)(b)Bombay Suburban Electric Supply, GDR 39,000
ENERGY SOURCES--1.1%
130 (a)Hub Power Co., GDR 3,315
1,700 (a)PTT Exploration and Production Public Co. 25,373
5,800 Woodside Petroleum Ltd. 33,192
Total 61,880
FINANCIAL SERVICES--6.1%
1,500 Dongsuh Securities Co. 24,557
5,800 (a)Industrial Finance Corporation of Thailand 26,108
8,000 Jaccs 72,519
3,000 Nomura Securities Co., Ltd. 56,667
26,000 Public Bank Bhd 70,298
23,000 TA Enterprise Berhad 35,746
9,000 Wako Securities Co., Ltd. 74,000
Total 359,895
FOOD & HOUSEHOLD PRODUCTS--1.3%
32,000 (a)(b)Want Want Holdings 74,560
FOREST PRODUCTS & PAPER--0.1%
8,000 Pab K Tjiwi Kimia 8,489
GOLD MINES--0.6%
12,700 (a)Delta Gold NL 34,464
HEALTH & PERSONAL CARE--2.4%
4,000 Kyowa Hakko Kogyo Co. 39,259
</TABLE>
FEDERATED ASIA PACIFIC GROWTH FUND
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
COMMON STOCKS--CONTINUED
HEALTH & PERSONAL CARE--CONTINUED
38,100 (a)Marsman & Company $ 20,374
83,100 Metro Pacific Corp. 22,219
50,000 (a)(b)Shanghai Industrial Holdings Ltd. 60,745
Total 142,597
INDUSTRIAL COMPONENTS--0.6%
2,000 Bridgestone Corp. 34,815
INSURANCE--1.3%
6,000 Tokio Marine and Fire Insurance Co. 77,778
LEISURE & TOURISM--0.5%
20,000 (a)Sydney Harbour Casino Holdings, Inc. 30,170
MACHINERY & ENGINEERING--11.3%
2,000 Chodai Co., Ltd 71,667
7,000 Far East Levingston Shipbuilding Ltd. 42,244
7,000 JGC Corp. 89,444
1,000 (b)Larsen & Toubro Ltd., GDR 20,000
9,000 Mitsubishi Heavy Industries Ltd. 77,417
17,000 (a)Nachi Fujikoshi Corp. 82,009
4,000 Nihon Denkei Co., Ltd 75,926
2,200 Nitto Kohki Co., Ltd. 92,685
7,000 Toyoda Machine Works 77,778
9,000 Westmont Industries Berhad 16,151
12,600 (a)Westmont Industries Berhad, Class A 21,198
Total 666,519
MERCHANDISING--5.9%
3,000 Chain Store Okuwa Co., Ltd. 52,500
60,000 Goldlion Holdings Ltd. 49,242
7,000 Matsuzakaya Co., Ltd. 87,500
5,000 Nichii Co., Ltd. 79,167
</TABLE>
FEDERATED ASIA PACIFIC GROWTH FUND
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
COMMON STOCKS--CONTINUED
MERCHANDISING--CONTINUED
1,000 PT Hero Supermarket $ 1,008
5,000 Takashimaya 81,481
Total 350,898
METALS - NON FERROUS--0.2%
300 (a)(b)Hindalco Industries Ltd., GDR 13,350
METALS - STEEL--1.5%
27,000 (a)NKK Corp. 79,000
1,000 (a)(b)Steel Authority of India, GDR 14,250
Total 93,250
MINING--0.1%
4,000 Tambang Timah 7,889
MISCELLANEOUS MATERIALS & COMMODITIES--4.6%
16,000 Nippon Sheet Glass Co. 76,593
4,400 Sanyo Pax Co., Ltd 97,370
208,000 Sinocan Holdings Ltd. 100,138
Total 274,101
MULTI-INDUSTRY--2.1%
93,500 Aboitiz Equity Ventures, Inc. 18,929
13,500 Pacific Dunlop Ltd. 29,200
26,000 Renong Berhad 43,325
3,250 (a)Renong Berhad, Warrants 709
12,900 Southcorp Holdings Ltd. 33,153
Total 125,316
REAL ESTATE--7.6%
11,000 Cheung Kong 81,391
5,000 City Developments 38,339
23,000 Eastern and Oriental Berhad 48,828
64,050 (a)Filinvest Land, Inc. 25,689
</TABLE>
FEDERATED ASIA PACIFIC GROWTH FUND
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
COMMON STOCKS--CONTINUED
REAL ESTATE--CONTINUED
22,000 Hotel Properties Ltd. $ 38,892
2,100 Lend Lease Corp., Ltd. 32,852
24,000 PT Pakuwon Jati 9,260
12,000 Parkway Holdings Ltd. 34,931
6,000 Sun Hung Kai Properties 61,262
12,000 Tokyo Tatemono Co., Ltd. 75,444
Total 446,888
TELECOMMUNICATIONS--1.8%
1,100 Advanced Information Services 18,155
13,000 (a)Technology Resources Industries Bhd 43,221
11,000 Telecom Corp. of New Zealand 44,715
Total 106,091
TEXTILES & APPAREL--1.6%
12,000 PT Great River Industries 13,376
20,000 Renown Inc. 82,222
Total 95,598
TRANSPORTATION - ROAD & RAIL--1.8%
3,150 (a)Guangshen Railway Co., Ltd., Class H, ADR 62,213
7,000 PT Citra Marga Nusaphala Persada 11,404
20,000 PT Steady Safe 28,725
Total 102,342
UTILITIES - ELECTRICAL & GAS--0.9%
12,000 Tenaga Nasional Berhad 50,951
</TABLE>
FEDERATED ASIA PACIFIC GROWTH FUND
<TABLE>
<CAPTION>
SHARES VALUE
OR PRINCIPAL IN U.S.
AMOUNT DOLLARS
<C> <S> <C>
COMMON STOCKS--CONTINUED
WHOLESALE & INTERNATIONAL TRADE--3.3%
600 (a)Doshisha Co., Ltd. $ 18,889
2,600 Iuchi Seiedo Co., Ltd. 102,315
14,000 Marubeni Corp. 76,352
Total 197,556
TOTAL COMMON STOCKS (IDENTIFIED COST $4,806,350) 5,106,955
(C)REPURCHASE AGREEMENT--11.7%
$ 690,000 BT Securities Corporation, 5.34%, dated 5/31/1996, due 6/3/1996
(AT AMORTIZED COST) 690,000
TOTAL INVESTMENTS (IDENTIFIED COST $5,496,350)(D) $ 5,796,955
</TABLE>
(a) Non-income producing security.
(b) Denotes a restricted security which is subject to restrictions on resale
under securities laws. At May 31, 1996, these securities amounted to
$237,305 which represents 4.0% of net assets.
(c) The repurchase agreement is fully collateralized by U.S. government
and/or agency obligations based on market prices at the date of the
portfolio. The investment in the repurchase agreement is through
participation in a joint account with other Federated funds.
(d) The cost of investments for federal tax purposes amounts to $5,496,350.
The net unrealized appreciation of investments on a federal tax basis
amounts to $300,605 which is comprised of $390,159 appreciation and $89,554
depreciation at May 31, 1996.
Note: The categories of investments are shown as a percentage of net assets
($5,908,566) at May 31, 1996.
The following acronyms are used throughout this portfolio:
ADR -- American Depository Receipts
GDR -- Global Depository Receipts
LTD -- Limited
PLC -- Public Limited Company
(See Notes which are an integral part of the Financial Statements)
FEDERATED ASIA PACIFIC GROWTH FUND
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 1996 (UNAUDITED)
<TABLE>
<S> <C> <C>
ASSETS:
Investment in repurchase agreement $ 690,000
Investments in securities 5,106,955
Total investments in securities, at value (identified and tax cost
$5,496,350) $5,796,955
Cash denominated in foreign currencies (identified cost $719) 721
Cash 18,794
Income receivable 18,405
Receivable for investments sold 24,012
Receivable for shares sold 92,093
Total assets 5,950,980
LIABILITIES:
Payable for investments purchased 21,462
Payable for foreign taxes withheld 2,532
Accrued expenses 18,420
Total liabilities 42,414
NET ASSETS for 558,109 shares outstanding $5,908,566
NET ASSETS CONSIST OF:
Paid in capital $5,609,638
Net unrealized appreciation of investments and translation of
assets and
liabilities in foreign currency 300,463
Accumulated net realized loss on investments and foreign currency
transactions (1,628)
Undistributed net investment income 93
Total Net Assets $5,908,566
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
CLASS A SHARES:
Net Asset Value Per Share ($4,624,235 O 436,631 shares outstanding) $10.59
Offering Price Per Share (100/94.50 of $10.59)* $11.21
Redemption Proceeds Per Share $10.59
CLASS B SHARES:
Net Asset Value Per Share ($956,731 O 90,494 shares outstanding) $10.57
Offering Price Per Share $10.57
Redemption Proceeds Per Share (94.50/100 of $10.57)** $9.99
CLASS C SHARES:
Net Asset Value Per Share ($327,600 O 30,984 shares outstanding) $10.57
Offering Price Per Share $10.57
Redemption Proceeds Per Share (99.00/100 of $10.57)** $10.46
</TABLE>
* See "How to Purchase Shares" in the Prospectus.
** See "Contingent Deferred Sales Charge" in the
Prospectus.
(See Notes which are an integral part of the Financial Statements)
FEDERATED ASIA PACIFIC GROWTH FUND
STATEMENT OF OPERATIONS
PERIOD ENDED MAY 31, 1996 (UNAUDITED)(A)
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends (net of foreign taxes withheld of $2,909) $ 23,407
Interest (net of foreign taxes withheld of $1,924) 2,588
Total income 25,995
EXPENSES:
Investment advisory fee $ 13,456
Administrative personnel and services fee 48,524
Custodian fees 34,795
Transfer and dividend disbursing agent fees and expenses 6,907
Legal fees 2,911
Portfolio accounting fees 20,631
Distribution services fee -- Class B Shares 718
Distribution services fee -- Class C Shares 232
Shareholder services fee -- Class A Shares 3,047
Shareholder services fee -- Class B Shares 239
Shareholder services fee -- Class C Shares 77
Share registration costs 2,154
Printing and postage 5,019
Insurance premiums 1,723
Miscellaneous 1,723
Total expenses 142,156
Waivers and reimbursements --
Waiver of investment advisory fee $ (13,456)
Reimbursement of other operating expenses (102,798)
Total waivers and reimbursements (116,254)
Net expenses 25,902
Net investment income 93
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY:
Net realized loss on investments and foreign
currency transactions (1,628)
Net change in unrealized appreciation of investments and
translation of assets and liabilities in foreign currency 300,463
Net realized and unrealized gain on investments and
foreign currency 298,835
Change in net assets resulting from operations $298,928
</TABLE>
(a) For the period from February 28, 1996 (date of initial
public investment) to May 31, 1996.
(See Notes which are an integral part of the Financial Statements)
FEDERATED ASIA PACIFIC GROWTH FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
PERIOD ENDED
(UNAUDITED)
MAY 31, 1996(A)
<S> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS--
Net investment income $ 93
Net realized gain (loss) on investments and foreign currency
transactions ($1,628 net loss, as computed for federal tax
purposes) (1,628)
Net change in unrealized appreciation (depreciation) of
investments and translation of assets and liabilities
in foreign currency 300,463
Change in net assets resulting from operations 298,928
SHARE TRANSACTIONS--
Proceeds from sale of shares 11,167,518
Cost of shares redeemed (5,557,880)
Change in net assets resulting from share transactions 5,609,638
Change in net assets 5,908,566
NET ASSETS:
Beginning of period --
End of period (including undistributed net investment income of
$93) $ 5,908,566
</TABLE>
(a) For the period from February 28, 1996 (date of initial public
investment) to May 31, 1996.
(See Notes which are an integral part of the Financial Statements)
FEDERATED ASIA PACIFIC GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
MAY 31, 1996 (UNAUDITED)
1. ORGANIZATION
World Investment Series, Inc. (the "Corporation") is registered under the
Investment Company Act of 1940, as amended (the "Act") as an open-end,
management investment company. The Corporation consists of six portfolios.
The financial statements included herein are only those of Federated Asia
Pacific Growth Fund (the "Fund"), a diversified portfolio. The financial
statements of the other portfolios are presented separately. The assets of
each portfolio are segregated and a shareholder's interest is limited to the
portfolio in which shares are held. The Fund seeks to provide long-term
growth of capital.
The Fund offers three classes of shares: Class A Shares, Class B Shares and
Class C 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.
INVESTMENT VALUATIONS -- Foreign equity securities are valued at the last
sale price reported on a national securities exchange or the
over-the-counter market. In the absence of recorded sales for equity
securities they are recorded at the last reported bid price. Short-term
domestic and foreign securities are valued at the prices provided by an
independent pricing service. However, short-term domestic and foreign
securities with remaining maturities of sixty days or less at the time of
purchase may be valued at amortized cost, which approximates fair market
value.
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 under repurchase agreement
transactions. Additionally, procedures have been established by the Fund to
monitor, on a daily basis, the market value of each repurchase agreement's
collateral to ensure that the value of collateral at least equals the
repurchase price to be paid under the repurchase agreement transaction.
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 the guidelines and/or
standards reviewed or established by the Board of Directors (the
"Directors"). Risks may arise from the potential inability of counterparties
to honor the terms of the repurchase agreement. Accordingly, the Fund could
receive less than the repurchase price on the sale of collateral securities.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS -- 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").
Dividend income and distributions to shareholders are recorded on the
ex-dividend date. Certain dividends from foreign securities may be recorded
after the ex-dividend date based upon when information becomes available to
the Fund.
FEDERATED ASIA PACIFIC GROWTH FUND
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 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 interest and
dividends have been provided for in accordance with the Fund's understanding
of the applicable country's tax rules and rates.
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.
CONCENTRATION OF CREDIT RISK -- The Fund invests in securities of non-U.S.
issuers. Although the Fund maintains a diversified investment portfolio, the
political or economic developments within a particular country or region may
have an adverse effect on the ability of domiciled issuers to meet their
obligations. Additionally, political or economic developments may have an
effect on the liquidity and volatility of portfolio securities and currency
holdings.
At May 31, 1996, the diversification by country was as follows:
<TABLE>
<CAPTION>
COUNTRY % OF NET ASSETS COUNTRY % OF NET ASSETS
<S> <C> <S> <C>
Australia 4.9 Malaysia 7.4
China 2.5 New Zealand 0.8
Hong Kong 5.2 Pakistan 0.2
India 1.7 Philippines 1.6
Indonesia 1.9 Singapore 4.6
Japan 51.6 Taiwan 1.3
Korea 0.8 Thailand 1.9
</TABLE>
FOREIGN EXCHANGE CONTRACTS -- The Fund may enter into foreign currency
exchange contracts as a way of managing foreign exchange rate risk. The Fund
may enter into these contracts for the purchase or sale of a specific
foreign currency at a fixed price on a future date as a hedge or cross hedge
against either specific transactions or portfolio positions. The objective
of the Fund's foreign currency hedging transactions is to reduce the risk
that the U.S. dollar value of the Fund's foreign currency denominated
securities will decline in value due to changes in foreign currency exchange
rates. All foreign currency exchange contracts are "marked to market" daily
at the applicable translation rates resulting in unrealized gains or losses.
Realized gains or losses are recorded at the time the foreign currency
exchange contract is offset by entering into a closing transaction or by the
delivery or receipt of the currency. Risk may arise upon entering into these
contracts from the potential inability of counterparties to meet the terms
of their contracts and from unanticipated movements in the value of a
foreign currency relative to the U.S. dollar. As of May 31, 1996, the Fund
had no foreign exchange contracts outstanding.
FEDERATED ASIA PACIFIC GROWTH FUND
FOREIGN CURRENCY TRANSLATION -- The accounting records of the Fund 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 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 of
portfolio securities, sales and maturities of short-term securities, sales
of FCs, currency gains or losses realized between the trade and settlement
dates on securities transactions, the difference between the amounts of
dividends, interest, and foreign 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.
RESTRICTED SECURITIES -- Restricted securities are securities that may only
be resold upon registration under 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 May 31, 1996 is
as follows:
<TABLE>
<CAPTION>
SECURITY ACQUISITION DATE ACQUISITION COST
<S> <C> <C>
Mahindra and Mahindra, GDR 2/26/96 $12,250
Bombay Suburban Electric Supply, GDR 2/29/96 20,640
Want Want Holdings 5/16/96 55,860
Shanghai Industrial Holdings Ltd. 5/23/96 47,537
Larsen & Toubro Ltd., GDR 3/1/96 15,350
Hindalco Industries Ltd., GDR 2/26/96 11,025
Steel Authority of India, GDR 3/6/96 12,975
</TABLE>
USE OF ESTIMATES -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts of assets, liabilities,
expenses and revenues reported in the financial statements. Actual results
could differ from those estimated.
OTHER -- Investment transactions are accounted for on the trade date.
FEDERATED ASIA PACIFIC GROWTH FUND
3. CAPITAL STOCK
At May 31, 1996, par value shares ($ 0.001 per share) authorized were as
follows:
<TABLE>
<CAPTION>
# OF PAR VALUE
CLASS NAME CAPITAL STOCK AUTHORIZED
<S> <C>
Class A Shares 150,000,000
Class B Shares 150,000,000
Class C Shares 150,000,000
Total 450,000,000
</TABLE>
Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
PERIOD ENDED
MAY 31, 1996(A)
CLASS A SHARES SHARES AMOUNT
<S> <C> <C>
Shares sold 950,749 $ 9,775,242
Shares redeemed (514,118) (5,440,116)
Net change resulting from Class A share transactions 436,631 $ 4,335,126
</TABLE>
<TABLE>
<CAPTION>
PERIOD ENDED
MAY 31, 1996(B)
CLASS B SHARES SHARES AMOUNT
<S> <C> <C>
Shares sold 94,734 $ 994,875
Shares redeemed (4,240) (44,811)
Net change resulting from Class B share transactions 90,494 $ 950,064
</TABLE>
<TABLE>
<CAPTION>
PERIOD ENDED
MAY 31, 1996(B)
CLASS C SHARES SHARES AMOUNT
<S> <C> <C>
Shares sold 37,764 $ 397,401
Shares redeemed (6,780) (72,953)
Net change resulting from Class C share transactions 30,984 $ 324,448
Net change resulting from share transactions 558,109 $ 5,609,638
</TABLE>
(a) For the period from February 28, 1996 (date of initial public
investment) to May 31, 1996.
(b) For the period from February 28, 1996 (date of initial public offering)
to May 31, 1996.
FEDERATED ASIA PACIFIC GROWTH FUND
4. INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE -- Federated Global Research Corp., the Fund's
investment adviser, (the "Adviser"), receives for its services an annual
investment advisory fee equal to 1.10% of the Fund's average daily net
assets. The Adviser may voluntarily choose to waive any portion of its fee
and reimburse certain operating expenses of the Fund. The Adviser can modify
or terminate this voluntary waiver and reimbursement at any time at its sole
discretion.
ADMINISTRATIVE FEE -- Federated Services Company ("FServ"), under the
Administrative Services Agreement, provides the Fund with administrative
personnel and services. The fee paid to FServ 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
the period of the Administrative Services Agreement shall be at least
$125,000 per portfolio and $30,000 per each additional class of shares.
DISTRIBUTION SERVICES FEE -- The Fund has adopted a Distribution Plan (the
"Plan") pursuant to Rule 12b-1 under the Act. 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 Corporation's Class A, Class B and Class C
shares. The Plan provides that the Fund may incur distribution expenses
according to the following schedule annually, to compensate FSC.
<TABLE>
<CAPTION>
% OF AVG. DAILY
SHARE CLASS NAME NET ASSETS OF CLASS
<S> <C>
Class A Shares 0.25%
Class B Shares 0.75%
Class C Shares 0.75%
</TABLE>
Class A shares did not incur a Distribution services fee for the period
ended May 31, 1996, and has no present intention of paying or accruing a
Distribution services fee.
SHAREHOLDER SERVICES FEE -- Under the terms of a Shareholder Services
Agreement with Federated Shareholder Services ("FSS"), the Fund will pay FSS
up to 0.25% of average daily net assets of the Fund for the period. The fee
paid to FSS is used to finance certain services for shareholders and to
maintain shareholder accounts.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES -- FServ, through
its subsidiary, Federated Shareholder Services Company ("FSSC") serves as
transfer and dividend disbursing agent for the Fund. The fee paid to FSSC is
based on the size, type, and number of accounts and transactions made by
shareholders.
PORTFOLIO ACCOUNTING FEES -- FServ maintains the Fund's accounting records
for which it receives a fee. The fee is based on the level of the Fund's
average daily net assets for the period, plus out-of-pocket expenses.
FEDERATED ASIA PACIFIC GROWTH FUND
ORGANIZATIONAL EXPENSES -- Organizational expenses of $48,248 were borne
initially by the Adviser. The Fund has agreed to reimburse the Adviser for
the organizational expenses during the five-year period following the Fund's
effective date. For the period ended May 31, 1996, no payments were made by
the Fund pursuant to this agreement.
GENERAL -- Certain of the Officers and Directors of the Corporation are
Officers and Directors or Trustees of the above companies.
5. INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the
period ended May 31, 1996, were as follows:
<TABLE>
<S> <C>
PURCHASES $6,226,838
SALES $1,428,037
</TABLE>
<TABLE>
<S> <S>
DIRECTORS OFFICERS
John F. Donahue John F. Donahue
Thomas G. Bigley Chairman
John T. Conroy, Jr. Richard B. Fisher
William J. Copeland President
James E. Dowd J. Christopher Donahue
Lawrence D. Ellis, M.D. Executive Vice President
Richard B. Fisher Edward C. Gonzales
Edward L. Flaherty, Jr. Executive Vice President
Peter E. Madden John W. McGonigle
Gregor F. Meyer Executive Vice President and Secretary
John E. Murray, Jr. David M. Taylor
Wesley W. Posvar Treasurer
Marjorie P. Smuts J. Crilley Kelly
Assistant Secretary
</TABLE>
Mutual funds are not bank deposits or obligations, are not guaranteed by any
bank, and are not insured or guaranteed by the U.S. government, the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other
government agency. Investment in mutual funds involves investment risk,
including possible loss of principal.
This report is authorized for distribution to prospective investors only
when preceded or accompanied by the Fund's prospectus which contains facts
concerning its objective and policies, management fees, expenses, and other
information.
[This Page Intentionally Left Blank]
[This Page Intentionally Left Blank]
FEDERATED
ASIA PACIFIC
GROWTH
FUND
CLASS A SHARES
SEMI-ANNUAL REPORT AND
SUPPLEMENT TO PROSPECTUS
DATED JANUARY 31, 1996
[Graphic]
Federated Investors
Since 1955
Federated Investors Tower
Pittsburgh, PA 15222-3779
Federated Securities Corp. is the distributor of the fund
and is a subsidiary of Federated Investors.
[Graphic]
Cusip 981487507
G01739-02 (7/96)
FEDERATED ASIA PACIFIC GROWTH FUND
(A PORTFOLIO OF WORLD INVESTMENT SERIES, INC.)
CLASS A SHARES, CLASS B SHARES, CLASS C SHARES
SEMI-ANNUAL REPORT AND SUPPLEMENT TO THE PROSPECTUS DATED JANUARY 31, 1996
A. Please delete the third and fourth sentence of the fourth paragraph on
the cover page of the prospectus and replace it with the following:
"You may request a copy of the Statement of Additional information, or a
paper copy of this prospectus, if you have received your prospectus
electronically, free of charge by calling 1-800-341-7400. To obtain other
information or to make inquiries about the Fund, contact your financial
institution. The Statement of Additional Information, material incorporated
by reference into this document, and other information regarding the Fund is
maintained electronically with the SEC at Internet Web site
(http://www.sec.gov)."
B. Please insert the following "Financial Highlights" tables for Class A
Shares, Class B Shares and Class C Shares immediately following the "Summary
of Fund Expenses" tables in the prospectus:
FEDERATED ASIA PACIFIC GROWTH FUND
FINANCIAL HIGHLIGHTS -- CLASS A SHARES
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
PERIOD ENDED
(UNAUDITED)
MAY 31, 1996(A)
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.00
INCOME FROM INVESTMENT OPERATIONS
Net realized and unrealized gain (loss) on investments and foreign currency 0.59
NET ASSET VALUE, END OF PERIOD $10.59
TOTAL RETURN(B) 5.90%
RATIOS TO AVERAGE NET ASSETS
Expenses 1.85%*
Net investment income 0.12%*
Expense waiver/reimbursement(c) 8.64%*
SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $4,624
Average commission rate paid $0.0095
Portfolio turnover 37%
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from February 28, 1996 (date of
initial public investment) to May 31, 1996.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
FEDERATED ASIA PACIFIC GROWTH FUND
FINANCIAL HIGHLIGHTS -- CLASS B SHARES
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
PERIOD ENDED
(UNAUDITED)
MAY 31, 1996(A)
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.00
INCOME FROM INVESTMENT OPERATIONS
Net realized and unrealized gain (loss) on investments and foreign currency 0.57
NET ASSET VALUE, END OF PERIOD $10.57
TOTAL RETURN(B) 5.70%
RATIOS TO AVERAGE NET ASSETS
Expenses 2.60%*
Net investment income (1.08%)*
Expense waiver/reimbursement(c) 8.64%*
SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $957
Average commission rate paid $0.0095
Portfolio turnover 37%
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from February 28, 1996 (date of
initial public offering) to May 31, 1996.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
FEDERATED ASIA PACIFIC GROWTH FUND
FINANCIAL HIGHLIGHTS -- CLASS C SHARES
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
PERIOD ENDED
(UNAUDITED)
MAY 31, 1996(A)
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.00
INCOME FROM INVESTMENT OPERATIONS
Net realized and unrealized gain (loss) on investments and foreign currency 0.57
NET ASSET VALUE, END OF PERIOD $10.57
TOTAL RETURN(B) 5.70%
RATIOS TO AVERAGE NET ASSETS
Expenses 2.60%*
Net investment income (1.07%)*
Expense waiver/reimbursement(c) 8.64%*
SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $328
Average commission rate paid $0.0095
Portfolio turnover 37%
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from February 28, 1996 (date of
initial public offering) to May 31, 1996.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
C. Please delete the final sentence of the section entitled "Making an
Exchange" on page 23 of the prospectus and replace it with the following:
"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 Shareholder Services Company, 1099
Hingham Street, Rockland, MA 02370-3317."
D. Please add the following as the fourth sentence of the section entitled
"How to Redeem Shares" on page 24 of the prospectus:
"Investors who redeem shares through a financial institution may be charged
a service fee by that institution."
E. Under the section entitled "Administrative Services" on page 32 of the
prospectus, please delete all references to "Federated Administrative
Services" and replace them with "Federated Services Company."
F. Please add the following as the last sentence of the first paragraph of
the section entitled "Voting Rights" on page 34 of the prospectus:
"As of July 5, 1996, Merrill Lynch Pierce Fenner & Smith, Jacksonville, FL,
owned 44.97% of the voting securities of the Fund's Class C Shares, and,
therefore, may, for certain purposes, be deemed to control the Fund and be
able to affect the outcome of certain matters presented for a vote of
shareholders."
G. Please insert the following financial statements beginning on page 36 of
the prospectus, immediately before the section entitled "Appendix."
FEDERATED ASIA PACIFIC GROWTH FUND
PORTFOLIO OF INVESTMENTS
MAY 31, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
COMMON STOCKS--86.4%
APPLIANCES & HOUSEHOLD DURABLES--0.3%
4,000 Tigaraksa Satria $ 19,893
AUTOMOBILE--1.0%
4,000 Cycle & Carriage Ltd. 42,031
1,400 (a)(b)Mahindra and Mahindra, GDR 15,400
Total 57,431
BANKING--3.6%
3,600 HSBC Holdings PLC 54,437
1,000 Kookmin Bank 19,544
4,200 Krung Thai Bank PLC 21,393
800 (a)Philippine Commercial International Bank 10,313
5,000 Sumitomo Trust & Banking 69,444
4,000 United Overseas Bank Ltd. 36,351
Total 211,482
BROADCASTING & PUBLISHING--1.8%
21,100 Austereo Ltd. 34,356
5,600 News Corp., Ltd. 31,421
2,000 Singapore Press Holdings Ltd. 37,487
Total 103,264
BUILDING MATERIALS & COMPONENTS--0.8%
3,000 PT Semen Gresik 9,936
10,800 Pioneer International Ltd. 33,101
Total 43,037
</TABLE>
FEDERATED ASIA PACIFIC GROWTH FUND
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
COMMON STOCKS--CONTINUED
BUSINESS & PUBLIC SERVICES--2.7%
4,000 Dai Nippon Printing Co., Ltd. $ 74,074
3,000 Kokuyo 80,278
Total 154,352
CHEMICALS--1.3%
4,000 Dainippon Ink and Chemicals, Inc. 19,556
10,000 Nippon Zeon Co. 60,370
Total 79,926
CONSTRUCTION & HOUSING--5.0%
16,000 Ekran Bhd 60,244
4,000 Maeda Road Construction 67,037
7,000 Nichiei Construction 81,019
7,000 Nippon Comsys Corp. 89,444
Total 297,744
ELECTRICAL & ELECTRONICS--7.3%
7,000 Canon Copyer Sales 89,444
6,000 Japan Radio 84,444
10,000 Mitsubishi Electric Corp. 68,519
3,000 Nitto Denko Corp. 49,167
12,000 Sanyo Electric 71,444
10,000 Toshiba Corp. 69,537
Total 432,555
ELECTRONIC COMPONENTS, INSTRUMENTS--5.2%
3,300 Hana Microelectronics Co., Ltd. 20,588
12,000 Malaysian Pacific Industries 49,509
5,000 Nihon Kaiheiki Industry 82,407
</TABLE>
FEDERATED ASIA PACIFIC GROWTH FUND
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
COMMON STOCKS--CONTINUED
ELECTRONIC COMPONENTS, INSTRUMENTS--CONTINUED
2,000 Noritsu Koki Co., Ltd. $ 88,889
4,000 Yamatake-Honeywell 71,481
Total 312,874
ENERGY EQUIPMENT & SERVICES--0.7%
2,000 (a)(b)Bombay Suburban Electric Supply, GDR 39,000
ENERGY SOURCES--1.1%
130 (a)Hub Power Co., GDR 3,315
1,700 (a)PTT Exploration and Production Public Co. 25,373
5,800 Woodside Petroleum Ltd. 33,192
Total 61,880
FINANCIAL SERVICES--6.1%
1,500 Dongsuh Securities Co. 24,557
5,800 (a)Industrial Finance Corporation of Thailand 26,108
8,000 Jaccs 72,519
3,000 Nomura Securities Co., Ltd. 56,667
26,000 Public Bank Bhd 70,298
23,000 TA Enterprise Berhad 35,746
9,000 Wako Securities Co., Ltd. 74,000
Total 359,895
FOOD & HOUSEHOLD PRODUCTS--1.3%
32,000 (a)(b)Want Want Holdings 74,560
FOREST PRODUCTS & PAPER--0.1%
8,000 Pab K Tjiwi Kimia 8,489
GOLD MINES--0.6%
12,700 (a)Delta Gold NL 34,464
HEALTH & PERSONAL CARE--2.4%
4,000 Kyowa Hakko Kogyo Co. 39,259
</TABLE>
FEDERATED ASIA PACIFIC GROWTH FUND
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
COMMON STOCKS--CONTINUED
HEALTH & PERSONAL CARE--CONTINUED
38,100 (a)Marsman & Company $ 20,374
83,100 Metro Pacific Corp. 22,219
50,000 (a)(b)Shanghai Industrial Holdings Ltd. 60,745
Total 142,597
INDUSTRIAL COMPONENTS--0.6%
2,000 Bridgestone Corp. 34,815
INSURANCE--1.3%
6,000 Tokio Marine and Fire Insurance Co. 77,778
LEISURE & TOURISM--0.5%
20,000 (a)Sydney Harbour Casino Holdings, Inc. 30,170
MACHINERY & ENGINEERING--11.3%
2,000 Chodai Co., Ltd 71,667
7,000 Far East Levingston Shipbuilding Ltd. 42,244
7,000 JGC Corp. 89,444
1,000 (b)Larsen & Toubro Ltd., GDR 20,000
9,000 Mitsubishi Heavy Industries Ltd. 77,417
17,000 (a)Nachi Fujikoshi Corp. 82,009
4,000 Nihon Denkei Co., Ltd 75,926
2,200 Nitto Kohki Co., Ltd. 92,685
7,000 Toyoda Machine Works 77,778
9,000 Westmont Industries Berhad 16,151
12,600 (a)Westmont Industries Berhad, Class A 21,198
Total 666,519
MERCHANDISING--5.9%
3,000 Chain Store Okuwa Co., Ltd. 52,500
60,000 Goldlion Holdings Ltd. 49,242
7,000 Matsuzakaya Co., Ltd. 87,500
5,000 Nichii Co., Ltd. 79,167
</TABLE>
FEDERATED ASIA PACIFIC GROWTH FUND
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
COMMON STOCKS--CONTINUED
MERCHANDISING--CONTINUED
1,000 PT Hero Supermarket $ 1,008
5,000 Takashimaya 81,481
Total 350,898
METALS - NON FERROUS--0.2%
300 (a)(b)Hindalco Industries Ltd., GDR 13,350
METALS - STEEL--1.5%
27,000 (a)NKK Corp. 79,000
1,000 (a)(b)Steel Authority of India, GDR 14,250
Total 93,250
MINING--0.1%
4,000 Tambang Timah 7,889
MISCELLANEOUS MATERIALS & COMMODITIES--4.6%
16,000 Nippon Sheet Glass Co. 76,593
4,400 Sanyo Pax Co., Ltd 97,370
208,000 Sinocan Holdings Ltd. 100,138
Total 274,101
MULTI-INDUSTRY--2.1%
93,500 Aboitiz Equity Ventures, Inc. 18,929
13,500 Pacific Dunlop Ltd. 29,200
26,000 Renong Berhad 43,325
3,250 (a)Renong Berhad, Warrants 709
12,900 Southcorp Holdings Ltd. 33,153
Total 125,316
REAL ESTATE--7.6%
11,000 Cheung Kong 81,391
5,000 City Developments 38,339
23,000 Eastern and Oriental Berhad 48,828
64,050 (a)Filinvest Land, Inc. 25,689
</TABLE>
FEDERATED ASIA PACIFIC GROWTH FUND
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
COMMON STOCKS--CONTINUED
REAL ESTATE--CONTINUED
22,000 Hotel Properties Ltd. $ 38,892
2,100 Lend Lease Corp., Ltd. 32,852
24,000 PT Pakuwon Jati 9,260
12,000 Parkway Holdings Ltd. 34,931
6,000 Sun Hung Kai Properties 61,262
12,000 Tokyo Tatemono Co., Ltd. 75,444
Total 446,888
TELECOMMUNICATIONS--1.8%
1,100 Advanced Information Services 18,155
13,000 (a)Technology Resources Industries Bhd 43,221
11,000 Telecom Corp. of New Zealand 44,715
Total 106,091
TEXTILES & APPAREL--1.6%
12,000 PT Great River Industries 13,376
20,000 Renown Inc. 82,222
Total 95,598
TRANSPORTATION - ROAD & RAIL--1.8%
3,150 (a)Guangshen Railway Co., Ltd., Class H, ADR 62,213
7,000 PT Citra Marga Nusaphala Persada 11,404
20,000 PT Steady Safe 28,725
Total 102,342
UTILITIES - ELECTRICAL & GAS--0.9%
12,000 Tenaga Nasional Berhad 50,951
</TABLE>
FEDERATED ASIA PACIFIC GROWTH FUND
<TABLE>
<CAPTION>
SHARES VALUE
OR PRINCIPAL IN U.S.
AMOUNT DOLLARS
<C> <S> <C>
COMMON STOCKS--CONTINUED
WHOLESALE & INTERNATIONAL TRADE--3.3%
600 (a)Doshisha Co., Ltd. $ 18,889
2,600 Iuchi Seiedo Co., Ltd. 102,315
14,000 Marubeni Corp. 76,352
Total 197,556
TOTAL COMMON STOCKS (IDENTIFIED COST $4,806,350) 5,106,955
(C)REPURCHASE AGREEMENT--11.7%
$ 690,000 BT Securities Corporation, 5.34%, dated 5/31/1996, due 6/3/1996
(AT AMORTIZED COST) 690,000
TOTAL INVESTMENTS (IDENTIFIED COST $5,496,350)(D) $ 5,796,955
</TABLE>
(a) Non-income producing security.
(b) Denotes a restricted security which is subject to restrictions on resale
under securities laws. At May 31, 1996, these securities amounted to
$237,305 which represents 4.0% of net assets.
(c) The repurchase agreement is fully collateralized by U.S. government
and/or agency obligations based on market prices at the date of the
portfolio. The investment in the repurchase agreement is through
participation in a joint account with other Federated funds.
(d) The cost of investments for federal tax purposes amounts to $5,496,350.
The net unrealized appreciation of investments on a federal tax basis
amounts to $300,605 which is comprised of $390,159 appreciation and $89,554
depreciation at May 31, 1996.
Note: The categories of investments are shown as a percentage of net assets
($5,908,566) at May 31, 1996.
The following acronyms are used throughout this portfolio:
ADR -- American Depository Receipts
GDR -- Global Depository Receipts
LTD -- Limited
PLC -- Public Limited Company
(See Notes which are an integral part of the Financial Statements)
FEDERATED ASIA PACIFIC GROWTH FUND
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 1996 (UNAUDITED)
<TABLE>
<S> <C> <C>
ASSETS:
Investment in repurchase agreement $ 690,000
Investments in securities 5,106,955
Total investments in securities, at value (identified and tax cost
$5,496,350) $5,796,955
Cash denominated in foreign currencies (identified cost $719) 721
Cash 18,794
Income receivable 18,405
Receivable for investments sold 24,012
Receivable for shares sold 92,093
Total assets 5,950,980
LIABILITIES:
Payable for investments purchased 21,462
Payable for foreign taxes withheld 2,532
Accrued expenses 18,420
Total liabilities 42,414
NET ASSETS for 558,109 shares outstanding $5,908,566
NET ASSETS CONSIST OF:
Paid in capital $5,609,638
Net unrealized appreciation of investments and translation of
assets and
liabilities in foreign currency 300,463
Accumulated net realized loss on investments and foreign currency
transactions (1,628)
Undistributed net investment income 93
Total Net Assets $5,908,566
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
CLASS A SHARES:
Net Asset Value Per Share ($4,624,235 O 436,631 shares outstanding) $10.59
Offering Price Per Share (100/94.50 of $10.59)* $11.21
Redemption Proceeds Per Share $10.59
CLASS B SHARES:
Net Asset Value Per Share ($956,731 O 90,494 shares outstanding) $10.57
Offering Price Per Share $10.57
Redemption Proceeds Per Share (94.50/100 of $10.57)** $9.99
CLASS C SHARES:
Net Asset Value Per Share ($327,600 O 30,984 shares outstanding) $10.57
Offering Price Per Share $10.57
Redemption Proceeds Per Share (99.00/100 of $10.57)** $10.46
</TABLE>
* See "How to Purchase Shares" in the Prospectus.
** See "Contingent Deferred Sales Charge" in the
Prospectus.
(See Notes which are an integral part of the Financial Statements)
FEDERATED ASIA PACIFIC GROWTH FUND
STATEMENT OF OPERATIONS
PERIOD ENDED MAY 31, 1996 (UNAUDITED)(A)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends (net of foreign taxes withheld of $2,909) $ 23,407
Interest (net of foreign taxes withheld of $1,924) 2,588
Total income 25,995
EXPENSES:
Investment advisory fee $ 13,456
Administrative personnel and services fee 48,524
Custodian fees 34,795
Transfer and dividend disbursing agent fees and expenses 6,907
Legal fees 2,911
Portfolio accounting fees 20,631
Distribution services fee -- Class B Shares 718
Distribution services fee -- Class C Shares 232
Shareholder services fee -- Class A Shares 3,047
Shareholder services fee -- Class B Shares 239
Shareholder services fee -- Class C Shares 77
Share registration costs 2,154
Printing and postage 5,019
Insurance premiums 1,723
Miscellaneous 1,723
Total expenses 142,156
Waivers and reimbursements --
Waiver of investment advisory fee $ (13,456)
Reimbursement of other operating expenses (102,798)
Total waivers and reimbursements (116,254)
Net expenses 25,902
Net investment income 93
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY:
Net realized loss on investments and foreign currency transactions (1,628)
Net change in unrealized appreciation of investments and translation of assets and
liabilities in
foreign currency 300,463
Net realized and unrealized gain on investments and
foreign currency 298,835
Change in net assets resulting from operations $298,928
</TABLE>
(a) For the period from February 28, 1996 (date of initial
public investment) to May 31, 1996.
(See Notes which are an integral part of the Financial Statements)
FEDERATED ASIA PACIFIC GROWTH FUND
STATEMENT OF CHANGES IN NET ASSETS
PERIOD ENDED
(UNAUDITED)
MAY 31, 1996(A)
<TABLE>
<CAPTION>
<S> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS--
Net investment income $ 93
Net realized gain (loss) on investments and foreign currency
transactions ($1,628 net loss, as computed for federal tax
purposes) (1,628)
Net change in unrealized appreciation (depreciation) of
investments and translation of assets and liabilities
in foreign currency 300,463
Change in net assets resulting from operations 298,928
SHARE TRANSACTIONS--
Proceeds from sale of shares 11,167,518
Cost of shares redeemed (5,557,880)
Change in net assets resulting from share transactions 5,609,638
Change in net assets 5,908,566
NET ASSETS:
Beginning of period --
End of period (including undistributed net investment income of
$93) $ 5,908,566
</TABLE>
(a) For the period from February 28, 1996 (date of initial
public investment) to May 31, 1996.
(See Notes which are an integral part of the Financial Statements)
FEDERATED ASIA PACIFIC GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
MAY 31, 1996 (UNAUDITED)
1. ORGANIZATION
World Investment Series, Inc. (the "Corporation") is registered under the
Investment Company Act of 1940, as amended (the "Act") as an open-end,
management investment company. The Corporation consists of six portfolios.
The financial statements included herein are only those of Federated Asia
Pacific Growth Fund (the "Fund"), a diversified portfolio. The financial
statements of the other portfolios are presented separately. The assets of
each portfolio are segregated and a shareholder's interest is limited to the
portfolio in which shares are held. The Fund seeks to provide long-term
growth of capital.
The Fund offers three classes of shares: Class A Shares, Class B Shares and
Class C 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.
INVESTMENT VALUATIONS -- Foreign equity securities are valued at the last
sale price reported on a national securities exchange or the
over-the-counter market. In the absence of recorded sales for equity
securities they are recorded at the last reported bid price. Short-term
domestic and foreign securities are valued at the prices provided by an
independent pricing service. However, short-term domestic and foreign
securities with remaining maturities of sixty days or less at the time of
purchase may be valued at amortized cost, which approximates fair market
value.
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 under repurchase agreement
transactions. Additionally, procedures have been established by the Fund to
monitor, on a daily basis, the market value of each repurchase agreement's
collateral to ensure that the value of collateral at least equals the
repurchase price to be paid under the repurchase agreement transaction.
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 the guidelines and/or
standards reviewed or established by the Board of Directors (the
"Directors"). Risks may arise from the potential inability of counterparties
to honor the terms of the repurchase agreement. Accordingly, the Fund could
receive less than the repurchase price on the sale of collateral securities.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS -- 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").
Dividend income and distributions to shareholders are recorded on the
ex-dividend date. Certain dividends from foreign securities may be recorded
after the ex-dividend date based upon when information becomes available
to the Fund.
FEDERATED ASIA PACIFIC GROWTH FUND
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 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 interest and
dividends have been provided for in accordance with the Fund's understanding
of the applicable country's tax rules and rates.
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.
CONCENTRATION OF CREDIT RISK -- The Fund invests in securities of non-U.S.
issuers. Although the Fund maintains a diversified investment portfolio, the
political or economic developments within a particular country or region may
have an adverse effect on the ability of domiciled issuers to meet their
obligations. Additionally, political or economic developments may have an
effect on the liquidity and volatility of portfolio securities and currency
holdings.
At May 31, 1996, the diversification by country was as follows:
<TABLE>
<CAPTION>
COUNTRY % OF NET ASSETS COUNTRY % OF NET ASSETS
<S> <C> <S> <C>
Australia 4.9 Malaysia 7.4
China 2.5 New Zealand 0.8
Hong Kong 5.2 Pakistan 0.2
India 1.7 Philippines 1.6
Indonesia 1.9 Singapore 4.6
Japan 51.6 Taiwan 1.3
Korea 0.8 Thailand 1.9
</TABLE>
FOREIGN EXCHANGE CONTRACTS -- The Fund may enter into foreign currency
exchange contracts as a way of managing foreign exchange rate risk. The Fund
may enter into these contracts for the purchase or sale of a specific
foreign currency at a fixed price on a future date as a hedge or cross hedge
against either specific transactions or portfolio positions. The objective
of the Fund's foreign currency hedging transactions is to reduce the risk
that the U.S. dollar value of the Fund's foreign currency denominated
securities will decline in value due to changes in foreign currency exchange
rates. All foreign currency exchange contracts are "marked to market" daily
at the applicable translation rates resulting in unrealized gains or losses.
Realized gains or losses are recorded at the time the foreign currency
exchange contract is offset by entering into a closing transaction or by the
delivery or receipt of the currency. Risk may arise upon entering into these
contracts from the potential inability of counterparties to meet the terms
of their contracts and from unanticipated movements in the value of a
foreign currency relative to the U.S. dollar. As of May 31, 1996, the Fund
had no foreign exchange contracts outstanding.
FEDERATED ASIA PACIFIC GROWTH FUND
FOREIGN CURRENCY TRANSLATION -- The accounting records of the Fund 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 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 of
portfolio securities, sales and maturities of short-term securities, sales
of FCs, currency gains or losses realized between the trade and settlement
dates on securities transactions, the difference between the amounts of
dividends, interest, and foreign 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.
RESTRICTED SECURITIES -- Restricted securities are securities that may only
be resold upon registration under 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 May 31, 1996 is
as follows:
<TABLE>
<CAPTION>
SECURITY ACQUISITION ACQUISITION
DATE COST
<S> <C> <C>
Mahindra and Mahindra, GDR 2/26/96 $12,250
Bombay Suburban Electric
Supply, GDR 2/29/96 20,640
Want Want Holdings 5/16/96 55,860
Shanghai Industrial Holdings
Ltd. 5/23/96 47,537
Larsen & Toubro Ltd., GDR 3/1/96 15,350
Hindalco Industries Ltd.,
GDR 2/26/96 11,025
Steel Authority of India,
GDR 3/6/96 12,975
</TABLE>
USE OF ESTIMATES -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts of assets, liabilities,
expenses and revenues reported in the financial statements. Actual results
could differ from those estimated.
OTHER -- Investment transactions are accounted for on the trade date.
FEDERATED ASIA PACIFIC GROWTH FUND
3. CAPITAL STOCK
At May 31, 1996, par value shares ($ 0.001 per share) authorized were as
follows:
<TABLE>
<CAPTION>
# OF PAR VALUE
CLASS NAME CAPITAL STOCK AUTHORIZED
<S> <C>
Class A Shares 150,000,000
Class B Shares 150,000,000
Class C Shares 150,000,000
Total 450,000,000
</TABLE>
Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
PERIOD ENDED
MAY 31, 1996(A)
CLASS A SHARES SHARES AMOUNT
<S> <C> <C>
Shares sold 950,749 $ 9,775,242
Shares redeemed (514,118) (5,440,116)
Net change resulting from Class A share transactions 436,631 $ 4,335,126
</TABLE>
<TABLE>
<CAPTION>
PERIOD ENDED
MAY 31, 1996(B)
CLASS B SHARES SHARES AMOUNT
<S> <C> <C>
Shares sold 94,734 $ 994,875
Shares redeemed (4,240) (44,811)
Net change resulting from Class B share transactions 90,494 $ 950,064
</TABLE>
<TABLE>
<CAPTION>
PERIOD ENDED
MAY 31, 1996(B)
CLASS C SHARES SHARES AMOUNT
<S> <C> <C>
Shares sold 37,764 $ 397,401
Shares redeemed (6,780) (72,953)
Net change resulting from Class C share transactions 30,984 $ 324,448
Net change resulting from share transactions 558,109 $ 5,609,638
</TABLE>
(a) For the period from February 28, 1996 (date of initial public
investment) to May 31, 1996.
(b) For the period from February 28, 1996 (date of initial public offering)
to May 31, 1996.
FEDERATED ASIA PACIFIC GROWTH FUND
4. INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE -- Federated Global Research Corp., the Fund's
investment adviser, (the "Adviser"), receives for its services an annual
investment advisory fee equal to 1.10% of the Fund's average daily net
assets. The Adviser may voluntarily choose to waive any portion of its fee
and reimburse certain operating expenses of the Fund. The Adviser can modify
or terminate this voluntary waiver and reimbursement at any time at its sole
discretion.
ADMINISTRATIVE FEE -- Federated Services Company ("FServ"), under the
Administrative Services Agreement, provides the Fund with administrative
personnel and services. The fee paid to FServ 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
the period of the Administrative Services Agreement shall be at least
$125,000 per portfolio and $30,000 per each additional class of shares.
DISTRIBUTION SERVICES FEE -- The Fund has adopted a Distribution Plan (the
"Plan") pursuant to Rule 12b-1 under the Act. 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 Corporation's Class A, Class B and Class C
shares. The Plan provides that the Fund may incur distribution expenses
according to the following schedule annually, to compensate FSC.
<TABLE>
<CAPTION>
% OF AVG. DAILY
SHARE CLASS NAME NET ASSETS OF CLASS
<S> <C>
Class A Shares 0.25%
Class B Shares 0.75%
Class C Shares 0.75%
</TABLE>
Class A shares did not incur a Distribution services fee for the period
ended May 31, 1996, and has no present intention of paying or accruing a
Distribution services fee.
SHAREHOLDER SERVICES FEE -- Under the terms of a Shareholder Services
Agreement with Federated Shareholder Services ("FSS"), the Fund will pay FSS
up to 0.25% of average daily net assets of the Fund for the period. The fee
paid to FSS is used to finance certain services for shareholders and to
maintain shareholder accounts.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES -- FServ, through
its subsidiary, Federated Shareholder Services Company ("FSSC") serves as
transfer and dividend disbursing agent for the Fund. The fee paid to FSSC is
based on the size, type, and number of accounts and transactions made by
shareholders.
PORTFOLIO ACCOUNTING FEES -- FServ maintains the Fund's accounting records
for which it receives a fee. The fee is based on the level of the Fund's
average daily net assets for the period, plus out-of-pocket expenses.
FEDERATED ASIA PACIFIC GROWTH FUND
ORGANIZATIONAL EXPENSES -- Organizational expenses of $48,248 were borne
initially by the Adviser. The Fund has agreed to reimburse the Adviser for
the organizational expenses during the five-year period following the Fund's
effective date. For the period ended May 31, 1996, no payments were made by
the Fund pursuant to this agreement.
GENERAL -- Certain of the Officers and Directors of the Corporation are
Officers and Directors or Trustees of the above companies.
5. INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the
period ended May 31, 1996, were as follows:
<TABLE>
<S> <C>
PURCHASES $6,226,838
SALES $1,428,037
</TABLE>
<TABLE>
<CAPTION>
<S> <S>
DIRECTORS OFFICERS
John F. Donahue John F. Donahue
Thomas G. Bigley Chairman
John T. Conroy, Jr. Richard B. Fisher
William J. Copeland President
James E. Dowd J. Christopher Donahue
Lawrence D. Ellis, M.D. Executive Vice President
Richard B. Fisher Edward C. Gonzales
Edward L. Flaherty, Jr. Executive Vice President
Peter E. Madden John W. McGonigle
Gregor F. Meyer Executive Vice President and Secretary
John E. Murray, Jr. David M. Taylor
Wesley W. Posvar Treasurer
Marjorie P. Smuts J. Crilley Kelly
Assistant Secretary
</TABLE>
Mutual funds are not bank deposits or obligations, are not guaranteed by any
bank, and are not insured or guaranteed by the U.S. government, the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other
government agency. Investment in mutual funds involves investment risk,
including possible loss of principal.
This report is authorized for distribution to prospective investors only
when preceded or accompanied by the Fund's prospectus which contains facts
concerning its objective and policies, management fees, expenses, and other
information.
[This Page Intentionally Left Blank]
[This Page Intentionally Left Blank]
FEDERATED
ASIA PACIFIC
GROWTH
FUND
COMBINED
SEMI-ANNUAL REPORT AND
SUPPLEMENT TO PROSPECTUS
DATED JANUARY 31, 1996
[Graphic]
Federated Investors
Since 1955
Federated Investors Tower
Pittsburgh, PA 15222-3779
Federated Securities Corp. is the distributor of the fund
and is a subsidiary of Federated Investors.
Cusip 981487507
Cusip 981487606
Cusip 981487705
G01739-01 (7/96)
[Graphic]
FEDERATED EMERGING MARKETS FUND
(A PORTFOLIO OF WORLD INVESTMENT SERIES, INC.)
CLASS A SHARES
SEMI-ANNUAL REPORT AND SUPPLEMENT TO THE PROSPECTUS DATED JANUARY 31, 1996
A. Please delete the third and fourth sentence of the fourth paragraph on
the cover page of the prospectus and replace it with the following:
"You may request a copy of the Statement of Additional information, or a
paper copy of this prospectus, if you have received your prospectus
electronically, free of charge by calling 1-800-341-7400. To obtain other
information or to make inquiries about the Fund, contact your financial
institution. The Statement of Additional Information, material incorporated
by reference into this document, and other information regarding the Fund is
maintained electronically with the SEC at Internet Web site
(http://www.sec.gov)."
B. Please insert the following "Financial Highlights" table for Class A
Shares immediately following the "Summary of Fund Expenses" table in the
prospectus:
FEDERATED EMERGING MARKETS FUND
FINANCIAL HIGHLIGHTS -- CLASS A SHARES
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
PERIOD ENDED
(UNAUDITED)
MAY 31, 1996(A)
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.06
Net realized and unrealized gain (loss) on investments and foreign currency 0.66
Total from investment operations 0.72
NET ASSET VALUE, END OF PERIOD $10.72
TOTAL RETURN(B) 7.20%
RATIOS TO AVERAGE NET ASSETS
Expenses 1.97%*
Net investment income 1.88%*
Expense waiver/reimbursement(c) 8.94%*
SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $4,565
Average commission rate paid $0.0005
Portfolio turnover 4%
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from February 28, 1996 (date of
initial public investment) to May 31, 1996.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
C. Please delete the final sentence of the section entitled "Making an
Exchange" on page 20 of the prospectus and replace it with the following:
"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 Shareholder Services Company, 1099
Hingham Street, Rockland, MA 02370-3317."
D. Please add the following as the fourth sentence of the section entitled
"How to Redeem Shares" on page 21 of the prospectus:
"Investors who redeem shares through a financial institution may be charged
a service fee by that institution."
E. Under the section entitled "Administrative Services" on page 27 of the
prospectus, please delete all references to "Federated Administrative
Services" and replace them with "Federated Services Company."
F. Please add the following as the last sentence of the first paragraph of
the section entitled "Voting Rights" on page 29 of the prospectus:
"As of July 5, 1996, Merrill Lynch Pierce Fenner & Smith, Jacksonville, FL,
owned 79.27% of the voting securities of the Fund's Class C Shares, and,
therefore, may, for certain purposes, be deemed to control the Fund and be
able to affect the outcome of certain matters presented for a vote of
shareholders."
G. Please insert the following financial statements beginning on page 32 of
the prospectus, immediately before the section entitled "Appendix."
FEDERATED EMERGING MARKETS FUND
PORTFOLIO OF INVESTMENTS
MAY 31, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
COMMON STOCKS--86.4%
AUTOMOBILE--3.4%
1,100 (a)Bajaj Auto, Ltd., GDR $ 43,175
3,500 (a)(b)Mahindra and Mahindra, GDR 38,500
14,000 PT United Tractors 25,509
2,800 Salvador Caetano Industrias Metalurgicas e Veiculos de
Transporte S.A. 35,082
2,000 (b)Tata Engineering & Locomotive Co. Ltd., GDR 36,000
Total 178,266
BANKING--11.5%
666 Alpha Credit Bank 33,183
2,714 Banco Commercial Portugues, Class R 33,418
1,200 Banco O'Higgins, ADR 27,300
1,500 Banco Totta & Acores Nationalisiert, Class B 29,408
16,100 (a)Banco Wiese 27,189
1,400 (a)Bank Rozwoju Eksportu S.A. 34,174
500 (a)Bank Slaski S.A. 36,615
3,000 (a)Bansud S.A., Class B 35,414
5,000 Commerce Asset Holdings Bhd 33,647
900,000 Demirbank T.A.S. 28,631
15,900 Grupo Financiero Banamex, Class B 35,988
477 Grupo Financiero Banamex, Class L 1,003
6,700 Krung Thai Bank PLC 34,127
11,000 (a)Mauritius Commercial Bank 41,918
7,000 PT Bank International Indonesia 36,538
24,000 PT Bank Tiara Asia 31,125
2,200 (a)Philippine National Bank 38,866
</TABLE>
FEDERATED EMERGING MARKETS FUND
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
COMMON STOCKS--CONTINUED
BANKING--CONTINUED
71,000 (a)State Bank Mauritius $ 30,143
2,900 Thai Farmers Bank Co. 33,207
Total 601,894
BASIC INDUSTRY--1.0%
5,000 (a)Rogers and Company Ltd. 26,343
11,598 (a)United Docks Limited 25,510
Total 51,853
BEVERAGE & TOBACCO--5.7%
20,000 (a)Cervecer Backus & Johnson, Class T 28,642
1,400 Compania Cervecerias Unidas SA, ADR 31,872
800 Embotelladora Andina S.A., ADR 28,400
45,000 Erciyas Biracilik Ve Malt Sanayii 23,478
13,500 Fomento Economico Mexicano, SA de C.V., Class B 39,923
800 Hellenic Bottling Co., S.A. 27,695
3,297 (a)Mauritius Breweries Ltd. 21,081
7,500 (a)Nobleza Piccardo S.A.I.C. y F. 28,887
2,500 PT Hanjaya Mandala Sampoerna 31,056
600 (a)Prazske Pivovary A.S. 39,024
Total 300,058
BROADCASTING & PUBLISHING--0.7%
2,300 (a)Grupo Televisa SA 35,635
BUILDING MATERIALS & COMPONENTS--2.4%
8,000 (a)Cemex SA, Class B 31,903
8,000 PT Semen Gresik 26,495
20,000 (a)Sanitary Wares Manufacturing Corp. 3,209
8,000 Sungei Way Holdings Bhd. 34,929
600 Titan Cement Co. 28,998
Total 125,534
</TABLE>
FEDERATED EMERGING MARKETS FUND
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
COMMON STOCKS--CONTINUED
CHEMICALS--3.7%
102,200 (a)Aksa Akrilik Kimya Sanayii AS $ 19,600
73,000 Aksa Akrilik Kimya Sanayii AS, Rights 0
1,200 CIN-Corparacao Industrial do Norte SA 29,246
1,500 (a)Debica S.A. 33,541
18,200 (b)Indo Gulf Fertilizer & Chemical 144-A, GDR 30,940
32,000 (a)Petkim Petrokimya Holding A.S. 13,845
6,700 (a)Polifarb-Cieszyn SA 34,707
2,000 (a)Reliance Industries, GDR 30,500
Total 192,379
CONSTRUCTION & HOUSING--1.4%
2,300 Empresas ICA Sociedad Controladora S.A. 33,466
6,000 (a)Somague-Sociedade Gestora de Participacoes 39,135
Total 72,601
ELECTRICAL & ELECTRONICS--1.0%
400,000 EEI Corp. 38,961
85,000 Netas Telekomunik 17,036
Total 55,997
ELECTRONIC COMPONENTS, INSTRUMENTS--1.1%
5,400 Hana Microelectronics Co., Ltd. 33,689
61,200 Shanghai Diesel Engine Co. Ltd., Class B 24,235
Total 57,924
ENERGY - OIL & GAS--2.1%
1,900 (a)Huaneng Power International Inc., Class N, ADR 31,113
1,800 (a)Lukoil Oil Co., ADR 55,800
63,000 (a)Mauritius Oil Refineries Ltd. 24,491
Total 111,404
</TABLE>
FEDERATED EMERGING MARKETS FUND
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
COMMON STOCKS--CONTINUED
ENERGY EQUIPMENT & SERVICES--0.6%
2,400 Transportadora de Gas de Sur S.A., Class B, ADR $ 30,600
ENERGY SOURCES--0.6%
2,600 (a)MOL Magyar Olaj-es Gazipari RT 30,193
ENGINEERING--1.3%
2,900 Ergas 24,904
600 (a)Vodni Stavby Praha A.S. 43,144
Total 68,048
FINANCIAL SERVICES--1.4%
8,400 (a)Industrial Finance Corporation of Thailand 37,811
9,000 Rashid Hussain Bhd 33,527
Total 71,338
FOOD & HOUSEHOLD PRODUCTS--0.8%
500 Estabelecimentos Jeronimo Martins & Filho SGPS, S.A. 39,771
FOOD PROCESSING--1.7%
65,000 D'Onofrino S.A. 23,945
17,211 (a)Mon Tresor & Mon Desert Ltd. 32,485
700 (a)Pick Szeged Rt 31,012
Total 87,442
FOREST PRODUCTS & PAPER--0.2%
160,000 Kartonsan Karton Sanayi Ve Ticaret AS 13,438
HEALTH & PERSONAL CARE--2.7%
1,800 Kimberly-Clark de Mexico 33,272
13,000 (a)PT Darya Varia Laboratoria 27,310
1,560 (a)PT Darya Varia Laboratoria, Rights 0
2,670 (b)Pliva D.D., GDR 81,435
Total 142,017
</TABLE>
FEDERATED EMERGING MARKETS FUND
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
COMMON STOCKS--CONTINUED
HOUSEHOLD APPLIANCES--1.0%
41,500 Shanghai Shangling Electric Appliances Co. Ltd., Class B $ 27,805
3,100 Singer Thailand 26,439
Total 54,244
INDUSTRIAL COMPONENTS--0.4%
3,100 (a)Fabryka Kotlow Rafako S.A. 21,951
INSURANCE--1.3%
200 (a)Ceska Pojistovna 38,482
16,977 (a)Swan Insurance Co., Ltd. 29,525
Total 68,007
LEISURE & TOURISM--1.5%
2,800 (a)Danubius Hotels Rt 47,458
17,000 (a)Sun Resorts Ltd. 30,609
Total 78,067
MACHINERY & ENGINEERING--1.4%
5,400 (a)CKD Praha Holding A.S. 36,098
20,000 Tractors Malaysia Holdings Bhd 38,454
Total 74,552
MANUFACTURING--1.3%
600 (a)Ceska Zbrojovka A.S. 33,604
900 (a)Zalakeramia Rt 36,550
Total 70,154
MERCHANDISING--0.6%
42,000 (a)Migros Turk 31,533
METALS - NON FERROUS--3.2%
700 Aluminum of Greece S.A. 32,728
5,033 (a)Cia de Minas Buenaventura S.A. 43,726
800 (a)(b) Hindalco Industries Ltd., GDR 35,600
1,000 Madeco S.A., ADR 26,750
</TABLE>
FEDERATED EMERGING MARKETS FUND
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
COMMON STOCKS--CONTINUED
METALS - NON FERROUS--CONTINUED
600 (a)Sociedad Quimica Y Minera De Chile, ADR $ 31,050
Total 169,854
METALS - STEEL--0.8%
50,000 (a)Acindar Industria Argentina de Aceros S.A. 39,516
MINING--0.7%
1,200 Banpu Public Company Ltd. 34,494
MISCELLANEOUS MATERIALS & COMMODITIES--1.2%
1,400 Hellas Can Packaging Manufacturers, S.A. 29,620
66,000 Sinocan Holdings Ltd. 31,775
Total 61,395
MULTI-INDUSTRY--5.1%
2,400 Alfa, S.A. de C.V., Class A 38,930
6,000 Compania Naviera Perez Companc S.A., Class B 38,295
90,000 (a)EnkaHolding Yatirim 27,200
16,000 First Philippine Holdings Corp., Class B 40,947
4,500 (a)Grupo Carso S.A. de CV 33,102
144,000 (a)Koc Yatirim Ve Sanayi Mamulleri Pazarlama S.A. 20,156
120,000 (a)Koc Yatirim Ve Sanayi Mamulleri Pazarlama S.A., Rights 0
21,700 (a)Ledesma Agricola S.A. 34,191
1,200 (a)Skoda Koncern Plzen A.S. 34,472
Total 267,293
PHARMACEUTICALS--3.3%
900 (a)EGIS 45,008
900 Gedeon Richter RT 37,758
2,700 (a)Jelfa S.A. 30,992
2,400 Laboratorio Chile, ADR 32,700
1,100 (b)Ranbaxy Laboratories, GDR 144-A, GDR 25,300
Total 171,758
</TABLE>
FEDERATED EMERGING MARKETS FUND
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
COMMON STOCKS--CONTINUED
REAL ESTATE--2.6%
22,000 Ayala Land, Inc., Class B $ 37,815
200,000 (a)Guoco Holdings (Philippines) 53,476
172,000 (a)Robinson's Land Corp., Class B 44,018
Total 135,309
TOBACCO--0.5%
3,000 (b)ITC Ltd., GDR 25,290
TELECOMMUNICATIONS--7.3%
1,500 Advanced Information Services 24,757
2,370 (a)(b)Hellenic Telecommunications Organization 39,525
20,000 Nizhny Novgordo Svyazinform, RDC 42,000
18,000 (a)PT Telekomunikasi Indonesia 27,395
1,200 (a)Portugal Telecom S.A. 29,009
30,000 (a)Rostelecom RDC 51,000
300 (a)SPT Telekom A.S. 36,152
27,000 (a)Tele 2000 S.A.- La Nueva Com de Telefonos 46,155
7,714 (a)Telecomunicacoes de Sao Paulo S.A., Rights 391
14,000 (a)Telefonica Del Peru CPT, Class B 27,699
11,000 Telefonica de Argentina S.A., Class B 32,133
3,200 Telex-Chile S.A., ADR 27,200
Total 383,416
TEXTILES & APPAREL--0.6%
2,100 (a)Indian Rayon & Industries Ltd., GDR 31,500
TRANSPORTATION - ROAD & RAIL--1.3%
1,950 (a)Guangshen Railway Co. Ltd., Class H, ADR 38,513
39,000 (a)Shanghai Dazhong Taxi Co., Class B 28,080
Total 66,593
</TABLE>
FEDERATED EMERGING MARKETS FUND
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
COMMON STOCKS--CONTINUED
TRANSPORTATION - SHIPPING--1.1%
12,000 Kelang Container Terminal $ 29,561
4,000 (a)Transportacion Maritima Mexicana S.A., Class A 27,753
Total 57,314
UTILITIES - ELECTRICAL & GAS--6.7%
800 (a)CEZ A.S. 35,122
8,000 (a)Central Puerto S.A., Class B 28,812
7,000 (a)Cesc Limited-Sponsored, GDR 21,000
1,100 Enersis S.A., ADR 32,313
10,000 Irkutskenergo, RDC 67,500
3,400 Manila Electric Co., Class B 34,740
4,300 (a)(b)Mosenergo, ADR 95,675
900 (a)Prvni Severozapadni 37,724
Total 352,886
WHOLESALE & INTERNATIONAL TRADE--1.2%
5,400 Elektrim Spolka Akcyina S.A. 36,224
20,800 (a)Enrique Ferreyros S.A. 26,517
Total 62,741
TOTAL COMMON STOCKS (IDENTIFIED COST $4,217,968) 4,524,259
PREFERRED STOCKS--4.6%
BANKING--1.2%
2,700,000 Banco Bradesco S.A., Preference 31,371
80,000 Banco Itau S.A., Preference 32,415
Total 63,786
BEVERAGE & TOBACCO--0.6%
50,000 (a)Cia Cervejaria Brahma, Preference 29,801
ENERGY SOURCES--0.6%
270,000 (a)Petroleo Brasileiro S.A., Preference 32,590
</TABLE>
FEDERATED EMERGING MARKETS FUND
<TABLE>
<CAPTION>
SHARES VALUE
OR PRINCIPAL IN U.S.
AMOUNT DOLLARS
<C> <S> <C>
PREFERRED STOCKS--CONTINUED
MERCHANDISING--0.4%
1,200,000 (a)Lojas Americanas S.A., Preference $ 22,610
METALS - STEEL--0.6%
27,000,000 Usinas Siderurgicas de Minas Gerais, Pfd. 29,457
TELECOMMUNICATIONS--0.7%
180,000 (a)Telecomunicacoes de Sao Paulo S.A., Preference 38,045
UTILITIES - ELECTRICAL & GAS--0.5%
100,000 (a)Centrais Eletricas Brasileiras, Preference, Series B 25,844
TOTAL PREFERRED STOCKS (IDENTIFIED COST $231,917) $ 242,133
(C)REPURCHASE AGREEMENT--7.6%
$ 400,000 BT Securities Corporation, 5.34%, dated 5/31/1996, due 6/3/1996
(AT AMORTIZED COST) 400,000
TOTAL INVESTMENTS (IDENTIFIED COST $4,849,885)(D) $ 5,166,392
</TABLE>
(a) Non-income producing security.
(b) Denotes a restricted security which is subject to restrictions on resale
under securities laws. At May 31, 1996, these securities amounted to
$408,265 which represents 7.8% of net assets.
(c) The repurchase agreement is fully collateralized by U.S. government
and/or agency obligations based on market prices at the date of the
portfolio. The investment in the repurchase agreement are through
participation in joint accounts with other Federated Funds.
(d) The cost of investments for federal tax purposes amounts to $4,849,885.
The net unrealized appreciation of investments on a federal tax basis
amounts to $316,507 which is comprised of $542,713 appreciation and $226,206
depreciation at May 31, 1996.
Note: The categories of investments are shown as a percentage of net assets
($5,238,598) at May 31, 1996.
The following acronym(s) are used throughout this portfolio:
ADR -- American Depository Receipt
GDR -- Global Depository Receipts
PLC -- Public Limited Company
RDC -- Russian Depository Certificate
(See Notes which are an integral part of the Financial Statements)
FEDERATED EMERGING MARKETS FUND
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 1996 (UNAUDITED)
<TABLE>
<S> <C> <C>
ASSETS:
Total investments in securities, at value (identified and tax cost
$4,849,885) $ 5,166,392
Cash 5,088
Income receivable 16,711
Receivable for shares sold 69,250
Total assets 5,257,441
LIABILITIES:
Payable for foreign taxes withheld $ 1,344
Accrued expenses 17,499
Total liabilities 18,843
Net Assets for 488,614 shares outstanding $ 5,238,598
NET ASSETS CONSIST OF:
Paid in capital $ 4,877,711
Net unrealized appreciation of investments and translation of assets and
liabilities in
foreign currency 316,507
Accumulated net realized gain on investments and foreign currency
transactions 20,029
Undistributed net investment income 24,351
Total Net Assets $ 5,238,598
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
CLASS A SHARES:
Net Asset Value Per Share ($4,565,269 O 425,712 shares outstanding) $10.72
Offering Price Per Share (100/94.50 of $10.72)* $11.34
Redemption Proceeds Per Share $10.72
CLASS B SHARES:
Net Asset Value Per Share ($571,531 O 53,395 shares outstanding) $10.70
Offering Price Per Share $10.70
Redemption Proceeds Per Share (94.50/100 of $10.70)** $10.11
CLASS C SHARES:
Net Asset Value Per Share ($101,798 O 9,507 shares outstanding) $10.71
Offering Price Per Share $10.71
Redemption Proceeds Per Share (99.00/100 of $10.71)** $10.60
* See "How to Purchase Shares" in the Prospectus.
** See "Contingent Deferred Sales Charge" in the Prospectus.
(See Notes which are an integral part of the Financial Statements)
</TABLE>
FEDERATED EMERGING MARKETS FUND
STATEMENT OF OPERATIONS
PERIOD ENDED MAY 31, 1996 (UNAUDITED)(A)
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends (net of foreign taxes withheld of $2,732) $ 37,896
Interest (net of foreign taxes withheld of $2,112) 12,993
Total income 50,889
EXPENSES:
Investment advisory fee $ 16,532
Administrative personnel and services fee 48,524
Custodian fees 31,819
Transfer and dividend disbursing agent fees and expenses 6,906
Legal fees 2,911
Portfolio accounting fees 23,632
Distribution services fee -- Class B Shares 357
Distribution services fee -- Class C Shares 67
Shareholder services fee -- Class A Shares 3,165
Shareholder services fee -- Class B Shares 119
Shareholder services fee -- Class C Shares 22
Share registration costs 2,068
Printing and postage 5,169
Insurance premiums 1,723
Miscellaneous 1,723
Total expenses 144,737
Waivers and reimbursements --
Waiver of investment advisory fee $(16,532)
Reimbursement of other operating expenses (101,667)
Total waivers and reimbursements (118,199)
Net expenses 26,538
Net investment income 24,351
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND
FOREIGN CURRENCY:
Net realized gain on investments and foreign
currency transactions 20,029
Net change in unrealized appreciation of investments and
translation of assets and liabilities in foreign currency 316,507
Net realized and unrealized gain on investments and
foreign currency 336,536
Change in net assets resulting from operations $ 360,887
</TABLE>
(a) For the period from February 28, 1996 (date of initial
public investment) to May 31, 1996.
(See Notes which are an integral part of the Financial Statements)
FEDERATED EMERGING MARKETS FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
PERIOD ENDED
(UNAUDITED)
MAY 31, 1996(A)
<S> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS--
Net investment income $ 24,351
Net realized gain (loss) on investments and foreign currency
transactions ($20,029, as computed for federal tax purposes) 20,029
Net change in unrealized appreciation (depreciation) of
investments and translation of assets and liabilities
in foreign currency 316,507
Change in net assets resulting from operations 360,887
SHARE TRANSACTIONS--
Proceeds from sale of shares 9,193,462
Cost of shares redeemed (4,315,751)
Change in net assets resulting from share transactions 4,877,711
Change in net assets 5,238,598
NET ASSETS:
Beginning of period --
End of period (including undistributed net investment income of
$24,351) $5,238,598
</TABLE>
(a) For the period from February 28, 1996 (date of initial public
investment) to May 31, 1996.
(See Notes which are an integral part of the Financial Statements)
FEDERATED EMERGING MARKETS FUND
NOTES TO FINANCIAL STATEMENTS
MAY 31, 1996 (UNAUDITED)
1. ORGANIZATION
World Investment Series, Inc. (the "Corporation") is registered under the
Investment Company Act of 1940, as amended (the "Act") as an open-end,
management investment company. The Corporation consists of six portfolios.
The financial statements included herein are only those of Federated
Emerging Markets Fund (the "Fund"), a diversified portfolio. The financial
statements of the other portfolios are presented separately. The assets of
each portfolio are segregated and a shareholder's interest is limited to the
portfolio in which shares are held. The Fund offers three classes of shares:
Class A Shares, Class B Shares and Class C Shares. The investment objective
of the Fund is to provide long-term growth of capital.
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.
INVESTMENT VALUATIONS -- Foreign equity securities are valued at the last
sale price reported on a national securities exchange or the
over-the-counter market. In the absence of recorded sales for equity
securities they are recorded at the last reported bid price. Short-term
domestic and foreign securities are valued at the prices provided by an
independent pricing service. However, short-term domestic and foreign
securities with remaining maturities of sixty days or less at the time of
purchase may be valued at amortized cost, which approximates fair market
value.
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 under repurchase agreement
transactions. Additionally, procedures have been established by the Fund to
monitor, on a daily basis, the market value of each repurchase agreement's
collateral to ensure that the value of collateral at least equals the
repurchase price to be paid under the repurchase agreement transaction.
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 the guidelines and/or
standards reviewed or established by the Board of Directors (the
"Directors"). Risks may arise from the potential inability of counterparties
to honor the terms of the repurchase agreement. Accordingly, the Fund could
receive less than the repurchase price on the sale of collateral securities.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS -- 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").
Dividend income and distributions to shareholders are recorded on the
ex-dividend date. Certain dividends from foreign securities may be recorded
after the ex-dividend date based upon when information becomes available to
the Fund.
FEDERATED EMERGING MARKETS FUND
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 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 interest and
dividends have been provided for in accordance with the Fund's understanding
of the applicable country's tax rules and rates.
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.
CONCENTRATION OF CREDIT RISK -- The Fund invests in securities of non-U.S.
issuers. Although the Fund maintains a diversified investment portfolio, the
political or economic developments within a particular country or region may
have an adverse effect on the ability of domiciled issuers to meet their
obligations. Additionally, political or economic developments may have an
effect on the liquidity and volatility of portfolio securities and currency
holdings.
At May 31, 1996, the diversification by country was as follows:
<TABLE>
<CAPTION>
COUNTRY % OF NET ASSETS COUNTRY % OF NET ASSETS
<S> <C> <S> <C>
Argentina 5.1% Malaysia 3.3%
Brazil 4.6% Mauritius 5.0%
Chile 4.5% Mexico 5.9%
China 3.5% Peru 4.3%
Croatia 1.6% Philippines 5.6%
Czecholsovakia 6.4% Poland 4.4%
Greece 4.1% Portugal 4.5%
Hungary 4.4% Russia 6.0%
India 6.1% Thailand 4.3%
Indonesia 3.9% Turkey 3.7%
</TABLE>
FOREIGN EXCHANGE CONTRACTS -- The Fund may enter into foreign currency
exchange contracts as a way of managing foreign exchange rate risk. The Fund
may enter into these contracts for the purchase or sale of a specific
foreign currency at a fixed price on a future date as a hedge or cross hedge
against either specific transactions or portfolio positions. The objective
of the Fund's foreign currency hedging transactions is to reduce the risk
that the U.S. dollar value of the Fund's foreign currency denominated
securities will decline in value due to changes in foreign currency exchange
rates. All foreign currency exchange contracts are "marked to market" daily
at the applicable translation rates resulting in unrealized gains or losses.
Realized gains or losses are recorded at the time the foreign currency
exchange contract is offset by entering into a closing transaction or by the
delivery or receipt of the currency. Risk may arise upon entering into these
contracts from the potential inability of counterparties to meet the terms
of their contracts and from unanticipated movements in the value of a
foreign currency relative to the U.S. dollar. As of May 31, 1996 the Fund
had no foreign exchange contracts outstanding.
FEDERATED EMERGING MARKETS FUND
FOREIGN CURRENCY TRANSLATION -- The accounting records of the Fund 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 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 of
portfolio securities, sales and maturities of short-term securities, sales
of FCs, currency gains or losses realized between the trade and settlement
dates on securities transactions, the difference between the amounts of
dividends, interest, and foreign 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.
RESTRICTED SECURITIES -- Restricted securities are securities that may only
be resold upon registration under 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.
FEDERATED EMERGING MARKETS FUND
Additional information on each restricted security held at May 31, 1996 is
as follows:
<TABLE>
<CAPTION>
SECURITY ACQUISITION DATE ACQUISITION COST
<S> <C> <C>
Mahindra and Mahindra, GDR 2/28/96 $30,625
Tata Engineering & Locomotive Co. Ltd GDR 2/28/96 29,000
Indo Gulf Fertilizer & Chemical 2/28/96 29,120
Pliva D.D. GDR 3/30/96 49,956
Hellenic Telecommunication Organizations 4/4/96 39,389
Hindalco Industries Ltd, GDR 3/1/96 29,520
Ranbaxy Laboratories, GDR 2/28/96 30,258
ITC Ltd., GDR 3/1/96 2,889
Mosenergo, ADR 3/12/96 30,659
</TABLE>
USE OF ESTIMATES -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts of assets, liabilities,
expenses and revenues reported in the financial statements. Actual results
could differ from those estimated.
OTHER -- Investment transactions are accounted for on the trade date.
3. CAPITAL STOCK
At May 31, 1996, par value shares ($ 0.001 per share) authorized were as
follows:
<TABLE>
<CAPTION>
# OF PAR VALUE
CLASS NAME CAPITAL STOCK AUTHORIZED
<S> <C>
Class A Shares 150,000,000
Class B Shares 150,000,000
Class C Shares 150,000,000
Total 450,000,000
</TABLE>
FEDERATED EMERGING MARKETS FUND
Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
PERIOD ENDED
MAY 31, 1996(A)
CLASS A SHARES SHARES AMOUNT
<S> <C> <C>
Shares sold 839,934 $ 8,520,752
Shares redeemed (414,222) (4,296,901)
Net change resulting from Class A share transactions 425,712 $ 4,223,851
</TABLE>
<TABLE>
<CAPTION>
PERIOD ENDED
MAY 31, 1996(B)
CLASS B SHARES SHARES AMOUNT
<S> <C> <C>
Shares sold 53,395 $ 555,095
Net change resulting from Class B share transactions 53,395 $ 555,095
</TABLE>
<TABLE>
<CAPTION>
PERIOD ENDED
MAY 31, 1996(B)
CLASS C SHARES SHARES AMOUNT
<S> <C> <C>
Shares sold 11,323 $ 117,615
Shares redeemed (1,816) (18,850)
Net change resulting from Class C share transactions 9,507 $ 98,765
Net change resulting from share transactions 488,614 4,877,711
</TABLE>
(a) For the period from February 28, 1996 (date of intial public investment)
to May 31, 1996.
(b) For the period from February 28, 1996 (date of intial public offering)
to May 31, 1996.
FEDERATED EMERGING MARKETS FUND
4. INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE -- Federated Global Research Corp., the Fund's
investment adviser, (the "Adviser"), receives for its services an annual
investment advisory fee equal to 1.25% of the Fund's average daily net
assets. The Adviser may voluntarily choose to waive any portion of its fee
and/or reimburse certain operating expenses of the Fund. The Adviser can
modify or terminate this voluntary waiver and/or reimbursement at any time
at its sole discretion.
ADMINISTRATIVE FEE -- Federated Services Company ("FServ"), under the
Administrative Services Agreement, provides the Fund with administrative
personnel and services. The fee paid to FServ 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
the period of the Administrative Services Agreement shall be at least
$125,000 per portfolio and $30,000 per each additional class of shares.
DISTRIBUTION SERVICES FEE -- The Fund has adopted a Distribution Plan (the
"Plan") pursuant to Rule 12b-1 under the Act. Under the terms of the Plan,
the Fund will compensate Federated Securities Corp., the principal
distributor, from the net assets of the Fund to finance activities intended
to result in the sale of the Corporation's Class A, Class B and Class C
shares. The Plan provides that the Fund may incur distribution expenses
according to the following schedule annually, to compensate Federated
Securities Corp.
<TABLE>
<CAPTION>
% OF AVG. DAILY
SHARE CLASS NAME NET ASSETS OF CLASS
<S> <C>
Class A Shares 0.25%
Class B Shares 0.75%
Class C Shares 0.75%
</TABLE>
Class A shares did not incur a Distribution services fee for the period
ended May 31, 1996, and has no present intention of paying or accruing a
Distribution services fee.
SHAREHOLDER SERVICES FEE -- Under the terms of a Shareholder Services
Agreement with Federated Shareholder Services, the Fund will pay Federated
Shareholder Services up to 0.25% of average daily net assets of the Fund
shares for the period. The fee paid to Federated Shareholder Services is
used to finance certain services for shareholders and to maintain
shareholder accounts.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES -- FServ, through
its subsidiary, Federated Shareholder Services Company ("FSSC") serves as
transfer and dividend disbursing agent for the Fund. The fee paid to FSSC is
based on the size, type, and number of accounts and transactions made by
shareholders.
PORTFOLIO ACCOUNTING FEES -- FServ maintains the Fund's accounting records
for which it receives a fee. The fee is based on the level of the Fund's
average daily net assets for the period, plus out-of-pocket expenses.
FEDERATED EMERGING MARKETS FUND
ORGANIZATIONAL EXPENSES -- Organizational expenses of $48,748 were borne
initially by Adviser. The Fund has agreed to reimburse Adviser for the
organizational expenses during the five-year period following effective
date. For the period ended May 31, 1996, no payments were made by the Fund
pursuant to this agreement.
GENERAL -- Certain of the Officers and Directors of the Corporation are
Officers and Directors or Trustees of the above companies.
5. INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the
period ended May 31, 1996, were as follows:
PURCHASES $4,569,119
SALES $ 112,218
<TABLE>
<CAPTION>
<S> <S>
DIRECTORS OFFICERS
John F. Donahue John F. Donahue
Thomas G. Bigley Chairman
John T. Conroy, Jr. Richard B. Fisher
William J. Copeland President
James E. Dowd J. Christopher Donahue
Lawrence D. Ellis, M.D. Executive Vice President
Richard B. Fisher Edward C. Gonzales
Edward L. Flaherty, Jr. Executive Vice President
Peter E. Madden John W. McGonigle
Gregor F. Meyer Executive Vice President and Secretary
John E. Murray, Jr. David M. Taylor
Wesley W. Posvar Treasurer
Marjorie P. Smuts J. Crilley Kelly
Assistant Secretary
</TABLE>
Mutual funds are not bank deposits or obligations, are not guaranteed by any
bank, and are not insured or guaranteed by the U.S. government, the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other
government agency. Investment in mutual funds involves investment risk,
including possible loss of principal.
This report is authorized for distribution to prospective investors only
when preceded or accompanied by the Fund's prospectus which contains facts
concerning its objective and policies, management fees, expenses, and other
information.
FEDERATED
EMERGING
MARKETS
FUND
CLASS A SHARES
SEMI-ANNUAL REPORT AND
SUPPLEMENT TO PROSPECTUS
DATED JANUARY 31, 1996
[Graphic]
Federated Investors
Since 1955
Federated Investors Tower
Pittsburgh, PA 15222-3779
Federated Securities Corp. is the distributor of the fund
and is a subsidiary of Federated Investors.
Cusip 981487804
G01741-02 (7/96)
[Graphic]
FEDERATED EMERGING MARKETS FUND
(A PORTFOLIO OF WORLD INVESTMENT SERIES, INC.)
CLASS A SHARES, CLASS B SHARES, CLASS C SHARES
SEMI-ANNUAL REPORT AND SUPPLEMENT TO THE PROSPECTUS DATED JANUARY 31, 1996
A. Please delete the third and fourth sentence of the fourth paragraph on
the cover page of the prospectus and replace it with the following:
"You may request a copy of the Statement of Additional information, or a
paper copy of this prospectus, if you have received your prospectus
electronically, free of charge by calling 1-800-341-7400. To obtain other
information or to make inquiries about the Fund, contact your financial
institution. The Statement of Additional Information, material incorporated
by reference into this document, and other information regarding the Fund is
maintained electronically with the SEC at Internet Web site
(http://www.sec.gov)."
B. Please insert the following "Financial Highlights" tables for Class A
Shares, Class B Shares and Class C Shares immediately following the "Summary
of Fund Expenses" tables in the prospectus:
FEDERATED EMERGING MARKETS FUND
FINANCIAL HIGHLIGHTS -- CLASS A SHARES
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
PERIOD ENDED
(UNAUDITED)
MAY 31, 1996(A)
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.06
Net realized and unrealized gain (loss) on investments and foreign currency 0.66
Total from investment operations 0.72
NET ASSET VALUE, END OF PERIOD $10.72
TOTAL RETURN(B) 7.20%
RATIOS TO AVERAGE NET ASSETS
Expenses 1.97%*
Net investment income 1.88%*
Expense waiver/reimbursement(c) 8.94%*
SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $4,565
Average commission rate paid $0.0005
Portfolio turnover 4%
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from February 28, 1996 (date of
initial public investment) to May 31, 1996.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
FEDERATED EMERGING MARKETS FUND
FINANCIAL HIGHLIGHTS -- CLASS B SHARES
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
PERIOD ENDED
(UNAUDITED)
MAY 31, 1996(A)
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.01
Net realized and unrealized gain (loss) on investments and foreign currency 0.69
Total from investment operations 0.70
NET ASSET VALUE, END OF PERIOD $10.70
TOTAL RETURN(B) 7.00%
RATIOS TO AVERAGE NET ASSETS
Expenses 2.72%*
Net investment income 1.11%*
Expense waiver/reimbursement(c) 8.94%*
SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $572
Average commission rate paid $0.0005
Portfolio turnover 4%
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from February 28, 1996
(date of initial public offering) to May 31, 1996.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and
net investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
FEDERATED EMERGING MARKETS FUND
FINANCIAL HIGHLIGHTS -- CLASS C SHARES
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
PERIOD ENDED
(UNAUDITED)
MAY 31, 1996(A)
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.00
Net realized and unrealized gain (loss) on investments and foreign currency 0.71
Total from investment operations 0.71
NET ASSET VALUE, END OF PERIOD $10.71
TOTAL RETURN(B) 7.10%
RATIOS TO AVERAGE NET ASSETS
Expenses 2.72%*
Net investment income 0.52%*
Expense waiver/reimbursement(c) 8.94%*
SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $102
Average commission rate paid $0.0005
Portfolio turnover 4%
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from February 28, 1996 (date of
initial public offering) to May 31, 1996.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
C. Please delete the final sentence of the section entitled "Making an
Exchange" on page 24 of the prospectus and replace it with the following:
"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 Shareholder Services Company, 1099
Hingham Street, Rockland, MA 02370-3317."
D. Please add the following as the fourth sentence of the section entitled
"How to Redeem Shares" on page 25 of the prospectus:
"Investors who redeem shares through a financial institution may be charged
a service fee by that institution."
E. Under the section entitled "Administrative Services" on page 33 of the
prospectus, please delete all references to "Federated Administrative
Services" and replace them with "Federated Services Company."
F. Please add the following as the last sentence of the first paragraph of
the section entitled "Voting Rights" on page 34 of the prospectus:
"As of July 5, 1996, Merrill Lynch Pierce Fenner & Smith, Jacksonville, FL,
owned 79.27% of the voting securities of the Fund's Class C Shares, and,
therefore, may, for certain purposes, be deemed to control the Fund and be
able to affect the outcome of certain matters presented for a vote of
shareholders."
G. Please insert the following financial statements beginning on page 37 of
the prospectus, immediately before the section entitled "Appendix."
FEDERATED EMERGING MARKETS FUND
PORTFOLIO OF INVESTMENTS
MAY 31, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
COMMON STOCKS--86.4%
AUTOMOBILE--3.4%
1,100 (a)Bajaj Auto, Ltd., GDR $ 43,175
3,500 (a)(b)Mahindra and Mahindra, GDR 38,500
14,000 PT United Tractors 25,509
2,800 Salvador Caetano Industrias Metalurgicas e Veiculos de
Transporte S.A. 35,082
2,000 (b)Tata Engineering & Locomotive Co. Ltd., GDR 36,000
Total 178,266
BANKING--11.5%
666 Alpha Credit Bank 33,183
2,714 Banco Commercial Portugues, Class R 33,418
1,200 Banco O'Higgins, ADR 27,300
1,500 Banco Totta & Acores Nationalisiert, Class B 29,408
16,100 (a)Banco Wiese 27,189
1,400 (a)Bank Rozwoju Eksportu S.A. 34,174
500 (a)Bank Slaski S.A. 36,615
3,000 (a)Bansud S.A., Class B 35,414
5,000 Commerce Asset Holdings Bhd 33,647
900,000 Demirbank T.A.S. 28,631
15,900 Grupo Financiero Banamex, Class B 35,988
477 Grupo Financiero Banamex, Class L 1,003
6,700 Krung Thai Bank PLC 34,127
11,000 (a)Mauritius Commercial Bank 41,918
7,000 PT Bank International Indonesia 36,538
24,000 PT Bank Tiara Asia 31,125
2,200 (a)Philippine National Bank 38,866
</TABLE>
FEDERATED EMERGING MARKETS FUND
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
COMMON STOCKS--CONTINUED
BANKING--CONTINUED
71,000 (a)State Bank Mauritius $ 30,143
2,900 Thai Farmers Bank Co. 33,207
Total 601,894
BASIC INDUSTRY--1.0%
5,000 (a)Rogers and Company Ltd. 26,343
11,598 (a)United Docks Limited 25,510
Total 51,853
BEVERAGE & TOBACCO--5.7%
20,000 (a)Cervecer Backus & Johnson, Class T 28,642
1,400 Compania Cervecerias Unidas SA, ADR 31,872
800 Embotelladora Andina S.A., ADR 28,400
45,000 Erciyas Biracilik Ve Malt Sanayii 23,478
13,500 Fomento Economico Mexicano, S.A. de C.V., Class B 39,923
800 Hellenic Bottling Co., S.A. 27,695
3,297 (a)Mauritius Breweries Ltd. 21,081
7,500 (a)Nobleza Piccardo S.A.I.C. y F. 28,887
2,500 PT Hanjaya Mandala Sampoerna 31,056
600 (a)Prazske Pivovary A.S. 39,024
Total 300,058
BROADCASTING & PUBLISHING--0.7%
2,300 (a)Grupo Televisa SA 35,635
BUILDING MATERIALS & COMPONENTS--2.4%
8,000 (a)Cemex SA, Class B 31,903
8,000 PT Semen Gresik 26,495
20,000 (a)Sanitary Wares Manufacturing Corp. 3,209
8,000 Sungei Way Holdings Bhd. 34,929
600 Titan Cement Co. 28,998
Total 125,534
</TABLE>
FEDERATED EMERGING MARKETS FUND
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
COMMON STOCKS--CONTINUED
CHEMICALS--3.7%
102,200 (a)Aksa Akrilik Kimya Sanayii AS $ 19,600
73,000 Aksa Akrilik Kimya Sanayii AS, Rights 0
1,200 CIN-Corparacao Industrial do Norte S.A. 29,246
1,500 (a)Debica S.A. 33,541
18,200 (b)Indo Gulf Fertilizer & Chemical 144-A, GDR 30,940
32,000 (a)Petkim Petrokimya Holding A.S. 13,845
6,700 (a)Polifarb-Cieszyn SA 34,707
2,000 (a)Reliance Industries, GDR 30,500
Total 192,379
CONSTRUCTION & HOUSING--1.4%
2,300 Empresas ICA Sociedad Controladora S.A. 33,466
6,000 (a)Somague-Sociedade Gestora de Participacoes 39,135
Total 72,601
ELECTRICAL & ELECTRONICS--1.0%
400,000 EEI Corp. 38,961
85,000 Netas Telekomunik 17,036
Total 55,997
ELECTRONIC COMPONENTS, INSTRUMENTS--1.1%
5,400 Hana Microelectronics Co., Ltd. 33,689
61,200 Shanghai Diesel Engine Co. Ltd., Class B 24,235
Total 57,924
ENERGY - OIL & GAS--2.1%
1,900 (a)Huaneng Power International Inc., Class N, ADR 31,113
1,800 (a)Lukoil Oil Co., ADR 55,800
63,000 (a)Mauritius Oil Refineries Ltd. 24,491
Total 111,404
</TABLE>
FEDERATED EMERGING MARKETS FUND
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
COMMON STOCKS--CONTINUED
ENERGY EQUIPMENT & SERVICES--0.6%
2,400 Transportadora de Gas de Sur S.A., Class B, ADR $ 30,600
ENERGY SOURCES--0.6%
2,600 (a)MOL Magyar Olaj-es Gazipari RT 30,193
ENGINEERING--1.3%
2,900 Ergas 24,904
600 (a)Vodni Stavby Praha A.S. 43,144
Total 68,048
FINANCIAL SERVICES--1.4%
8,400 (a)Industrial Finance Corporation of Thailand 37,811
9,000 Rashid Hussain Bhd 33,527
Total 71,338
FOOD & HOUSEHOLD PRODUCTS--0.8%
500 Estabelecimentos Jeronimo Martins & Filho SGPS, S.A. 39,771
FOOD PROCESSING--1.7%
65,000 D'Onofrino SA 23,945
17,211 (a)Mon Tresor & Mon Desert Ltd. 32,485
700 (a)Pick Szeged Rt 31,012
Total 87,442
FOREST PRODUCTS & PAPER--0.2%
160,000 Kartonsan Karton Sanayi Ve Ticaret AS 13,438
HEALTH & PERSONAL CARE--2.7%
1,800 Kimberly-Clark de Mexico 33,272
13,000 (a)PT Darya Varia Laboratoria 27,310
1,560 (a)PT Darya Varia Laboratoria, Rights 0
2,670 (b)Pliva D.D., GDR 81,435
Total 142,017
</TABLE>
FEDERATED EMERGING MARKETS FUND
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
COMMON STOCKS--CONTINUED
HOUSEHOLD APPLIANCES--1.0%
41,500 Shanghai Shangling Electric Appliances Co. Ltd., Class B $ 27,805
3,100 Singer Thailand 26,439
Total 54,244
INDUSTRIAL COMPONENTS--0.4%
3,100 (a)Fabryka Kotlow Rafako S.A. 21,951
INSURANCE--1.3%
200 (a)Ceska Pojistovna 38,482
16,977 (a)Swan Insurance Co., Ltd. 29,525
Total 68,007
LEISURE & TOURISM--1.5%
2,800 (a)Danubius Hotels Rt 47,458
17,000 (a)Sun Resorts Ltd. 30,609
Total 78,067
MACHINERY & ENGINEERING--1.4%
5,400 (a)CKD Praha Holding A.S. 36,098
20,000 Tractors Malaysia Holdings Bhd 38,454
Total 74,552
MANUFACTURING--1.3%
600 (a)Ceska Zbrojovka A.S. 33,604
900 (a)Zalakeramia Rt 36,550
Total 70,154
MERCHANDISING--0.6%
42,000 (a)Migros Turk 31,533
METALS - NON FERROUS--3.2%
700 Aluminum of Greece S.A. 32,728
5,033 (a)Cia de Minas Buenaventura S.A. 43,726
800 (a)(b) Hindalco Industries Ltd., GDR 35,600
1,000 Madeco S.A., ADR 26,750
</TABLE>
FEDERATED EMERGING MARKETS FUND
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
COMMON STOCKS--CONTINUED
METALS - NON FERROUS--CONTINUED
600 (a)Sociedad Quimica Y Minera De Chile, ADR $ 31,050
Total 169,854
METALS - STEEL--0.8%
50,000 (a)Acindar Industria Argentina de Aceros S.A. 39,516
MINING--0.7%
1,200 Banpu Public Company Ltd. 34,494
MISCELLANEOUS MATERIALS & COMMODITIES--1.2%
1,400 Hellas Can Packaging Manufacturers, S.A. 29,620
66,000 Sinocan Holdings Ltd. 31,775
Total 61,395
MULTI-INDUSTRY--5.1%
2,400 Alfa, S.A. de C.V., Class A 38,930
6,000 Compania Naviera Perez Companc S.A., Class B 38,295
90,000 (a)EnkaHolding Yatirim 27,200
16,000 First Philippine Holdings Corp., Class B 40,947
4,500 (a)Grupo Carso S.A. de CV 33,102
144,000 (a)Koc Yatirim Ve Sanayi Mamulleri Pazarlama S.A. 20,156
120,000 (a)Koc Yatirim Ve Sanayi Mamulleri Pazarlama S.A., Rights 0
21,700 (a)Ledesma Agricola S.A. 34,191
1,200 (a)Skoda Koncern Plzen A.S. 34,472
Total 267,293
PHARMACEUTICALS--3.3%
900 (a)EGIS 45,008
900 Gedeon Richter RT 37,758
2,700 (a)Jelfa SA 30,992
2,400 Laboratorio Chile, ADR 32,700
1,100 (b)Ranbaxy Laboratories, GDR 144-A, GDR 25,300
Total 171,758
</TABLE>
FEDERATED EMERGING MARKETS FUND
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
COMMON STOCKS--CONTINUED
REAL ESTATE--2.6%
22,000 Ayala Land, Inc., Class B $ 37,815
200,000 (a)Guoco Holdings (Philippines) 53,476
172,000 (a)Robinson's Land Corp., Class B 44,018
Total 135,309
TOBACCO--0.5%
3,000 (b)ITC Ltd., GDR 25,290
TELECOMMUNICATIONS--7.3%
1,500 Advanced Information Services 24,757
2,370 (a)(b)Hellenic Telecommunications Organization 39,525
20,000 Nizhny Novgordo Svyazinform, RDC 42,000
18,000 (a)PT Telekomunikasi Indonesia 27,395
1,200 (a)Portugal Telecom S.A. 29,009
30,000 (a)Rostelecom RDC 51,000
300 (a)SPT Telekom A.S. 36,152
27,000 (a)Tele 2000 S.A.- La Nueva Com de Telefonos 46,155
7,714 (a)Telecomunicacoes de Sao Paulo S.A., Rights 391
14,000 (a)Telefonica Del Peru CPT, Class B 27,699
11,000 Telefonica de Argentina S.A., Class B 32,133
3,200 Telex-Chile S.A., ADR 27,200
Total 383,416
TEXTILES & APPAREL--0.6%
2,100 (a)Indian Rayon & Industries Ltd., GDR 31,500
TRANSPORTATION - ROAD & RAIL--1.3%
1,950 (a)Guangshen Railway Co. Ltd., Class H, ADR 38,513
39,000 (a)Shanghai Dazhong Taxi Co., Class B 28,080
Total 66,593
TRANSPORTATION - SHIPPING--1.1%
12,000 Kelang Container Terminal $ 29,561
4,000 (a)Transportacion Maritima Mexicana S.A., Class A 27,753
Total 57,314
</TABLE>
FEDERATED EMERGING MARKETS FUND
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
COMMON STOCKS--CONTINUED
UTILITIES - ELECTRICAL & GAS--6.7%
800 (a)CEZ A.S. 35,122
8,000 (a)Central Puerto S.A., Class B 28,812
7,000 (a)Cesc Limited-Sponsored, GDR 21,000
1,100 Enersis S.A., ADR 32,313
10,000 Irkutskenergo, RDC 67,500
3,400 Manila Electric Co., Class B 34,740
4,300 (a)(b)Mosenergo, ADR 95,675
900 (a)Prvni Severozapadni 37,724
Total 352,886
WHOLESALE & INTERNATIONAL TRADE--1.2%
5,400 Elektrim Spolka Akcyina S.A. 36,224
20,800 (a)Enrique Ferreyros S.A. 26,517
Total 62,741
TOTAL COMMON STOCKS (IDENTIFIED COST $4,217,968) 4,524,259
PREFERRED STOCKS--4.6%
BANKING--1.2%
2,700,000 Banco Bradesco S.A., Preference 31,371
80,000 Banco Itau S.A., Preference 32,415
Total 63,786
BEVERAGE & TOBACCO--0.6%
50,000 (a)Cia Cervejaria Brahma, Preference 29,801
ENERGY SOURCES--0.6%
270,000 (a)Petroleo Brasileiro S.A., Preference 32,590
</TABLE>
FEDERATED EMERGING MARKETS FUND
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES
OR PRINCIPAL AMOUNT DOLLARS
<C> <S> <C>
PREFERRED STOCKS--CONTINUED
MERCHANDISING--0.4%
1,200,000 (a)Lojas Americanas S.A., Preference $ 22,610
METALS - STEEL--0.6%
27,000,000 Usinas Siderurgicas de Minas Gerais, Pfd. 29,457
TELECOMMUNICATIONS--0.7%
180,000 (a)Telecomunicacoes de Sao Paulo S.A., Preference 38,045
UTILITIES - ELECTRICAL & GAS--0.5%
100,000 (a)Centrais Eletricas Brasileiras, Preference, Series B 25,844
TOTAL PREFERRED STOCKS (IDENTIFIED COST $231,917) $ 242,133
(C)REPURCHASE AGREEMENT--7.6%
400,000 BT Securities Corporation, 5.34%, dated 5/31/1996, due 6/3/1996
(AT AMORTIZED COST) 400,000
TOTAL INVESTMENTS (IDENTIFIED COST $4,849,885)(D) $ 5,166,392
</TABLE>
(a) Non-income producing security.
(b) Denotes a restricted security which is subject to restrictions on resale
under securities laws. At May 31, 1996, these securities amounted to
$408,265 which represents 7.8% of net assets.
(c) The repurchase agreement is fully collateralized by U.S. government
and/or agency obligations based on market prices at the date of the
portfolio. The investment in the repurchase agreement are through
participation in joint accounts with other Federated Funds.
(d) The cost of investments for federal tax purposes amounts to $4,849,885.
The net unrealized appreciation of investments on a federal tax basis
amounts to $316,507 which is comprised of $542,713 appreciation and $226,206
depreciation at May 31, 1996.
Note: The categories of investments are shown as a percentage of net assets
($5,238,598) at May 31, 1996.
The following acronym(s) are used throughout this portfolio:
ADR -- American Depository Receipt
GDR -- Global Depository Receipts
PLC -- Public Limited Company
RDC -- Russian Depository Certificate
(See Notes which are an integral part of the Financial Statements)
FEDERATED EMERGING MARKETS FUND
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 1996 (UNAUDITED)
<TABLE>
<S> <C>
ASSETS:
Total investments in securities, at value (identified and tax cost
$4,849,885) $ 5,166,392
Cash 5,088
Income receivable 16,711
Receivable for shares sold 69,250
Total assets 5,257,441
LIABILITIES:
Payable for foreign taxes withheld $ 1,344
Accrued expenses 17,499
Total liabilities 18,843
Net Assets for 488,614 shares outstanding $ 5,238,598
NET ASSETS CONSIST OF:
Paid in capital $ 4,877,711
Net unrealized appreciation of investments and translation of assets and
liabilities in
foreign currency 316,507
Accumulated net realized gain on investments and foreign currency
transactions 20,029
Undistributed net investment income 24,351
Total Net Assets $ 5,238,598
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
CLASS A SHARES:
Net Asset Value Per Share ($4,565,269 O 425,712 shares outstanding) $10.72
Offering Price Per Share (100/94.50 of $10.72)* $11.34
Redemption Proceeds Per Share $10.72
CLASS B SHARES:
Net Asset Value Per Share ($571,531 O 53,395 shares outstanding) $10.70
Offering Price Per Share $10.70
Redemption Proceeds Per Share (94.50/100 of $10.70)** $10.11
CLASS C SHARES:
Net Asset Value Per Share ($101,798 O 9,507 shares outstanding) $10.71
Offering Price Per Share $10.71
Redemption Proceeds Per Share (99.00/100 of $10.71)** $10.60
</TABLE>
* See "How to Purchase Shares" in the Prospectus.
** See "Contingent Deferred Sales Charge" in the Prospectus.
(See Notes which are an integral part of the Financial Statements)
FEDERATED EMERGING MARKETS FUND
STATEMENT OF OPERATIONS
PERIOD ENDED MAY 31, 1996 (UNAUDITED)(A)
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends (net of foreign taxes withheld of $2,732) $ 37,896
Interest (net of foreign taxes withheld of $2,112) 12,993
Total income 50,889
EXPENSES:
Investment advisory fee $ 16,532
Administrative personnel and services fee 48,524
Custodian fees 31,819
Transfer and dividend disbursing agent fees and expenses 6,906
Legal fees 2,911
Portfolio accounting fees 23,632
Distribution services fee -- Class B Shares 357
Distribution services fee -- Class C Shares 67
Shareholder services fee -- Class A Shares 3,165
Shareholder services fee -- Class B Shares 119
Shareholder services fee -- Class C Shares 22
Share registration costs 2,068
Printing and postage 5,169
Insurance premiums 1,723
Miscellaneous 1,723
Total expenses 144,737
Waivers and reimbursements --
Waiver of investment advisory fee $ (16,532)
Reimbursement of other operating expenses (101,667)
Total waivers and reimbursements (118,199)
Net expenses 26,538
Net investment income 24,351
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND
FOREIGN CURRENCY:
Net realized gain on investments and foreign currency
transactions 20,029
Net change in unrealized appreciation of investments and
translation of assets and liabilities in foreign currency 316,507
Net realized and unrealized gain on investments and
foreign currency 336,536
Change in net assets resulting from operations $ 360,887
</TABLE>
(a) For the period from February 28, 1996 (date of initial public investment)
to May 31, 1996.
(See Notes which are an integral part of the Financial Statements)
FEDERATED EMERGING MARKETS FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
PERIOD ENDED
(UNAUDITED)
MAY 31, 1996(A)
<S> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS--
Net investment income $ 24,351
Net realized gain (loss) on investments and foreign currency
transactions ($20,029, as computed for federal tax purposes) 20,029
Net change in unrealized appreciation (depreciation) of
investments and translation of assets and liabilities
in foreign currency 316,507
Change in net assets resulting from operations 360,887
SHARE TRANSACTIONS--
Proceeds from sale of shares 9,193,462
Cost of shares redeemed (4,315,751)
Change in net assets resulting from share transactions 4,877,711
Change in net assets 5,238,598
NET ASSETS:
Beginning of period --
End of period (including undistributed net investment income of
$24,351) $ 5,238,598
</TABLE>
(a) For the period from February 28, 1996 (date of initial public
investment) to May 31, 1996.
(See Notes which are an integral part of the Financial Statements)
FEDERATED EMERGING MARKETS FUND
NOTES TO FINANCIAL STATEMENTS
MAY 31, 1996 (UNAUDITED)
1. ORGANIZATION
World Investment Series, Inc. (the "Corporation") is registered under the
Investment Company Act of 1940, as amended (the "Act") as an open-end,
management investment company. The Corporation consists of six portfolios.
The financial statements included herein are only those of Federated
Emerging Markets Fund (the "Fund"), a diversified portfolio. The financial
statements of the other portfolios are presented separately. The assets of
each portfolio are segregated and a shareholder's interest is limited to the
portfolio in which shares are held. The Fund offers three classes of shares:
Class A Shares, Class B Shares and Class C Shares. The investment objective
of the Fund is to provide long-term growth of capital.
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.
INVESTMENT VALUATIONS -- Foreign equity securities are valued at the last
sale price reported on a national securities exchange or the
over-the-counter market. In the absence of recorded sales for equity
securities they are recorded at the last reported bid price. Short-term
domestic and foreign securities are valued at the prices provided by an
independent pricing service. However, short-term domestic and foreign
securities with remaining maturities of sixty days or less at the time of
purchase may be valued at amortized cost, which approximates fair market
value.
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 under repurchase agreement
transactions. Additionally, procedures have been established by the Fund to
monitor, on a daily basis, the market value of each repurchase agreement's
collateral to ensure that the value of collateral at least equals the
repurchase price to be paid under the repurchase agreement transaction.
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 the guidelines and/or
standards reviewed or established by the Board of Directors (the
"Directors"). Risks may arise from the potential inability of counterparties
to honor the terms of the repurchase agreement. Accordingly, the Fund could
receive less than the repurchase price on the sale of collateral securities.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS -- 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").
Dividend income and distributions to shareholders are recorded on the
ex-dividend date. Certain dividends from foreign securities may be recorded
after the ex-dividend date based upon when information becomes available
to the Fund.
FEDERATED EMERGING MARKETS FUND
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 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 interest and
dividends have been provided for in accordance with the Fund's understanding
of the applicable country's tax rules and rates.
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.
CONCENTRATION OF CREDIT RISK -- The Fund invests in securities of non-U.S.
issuers. Although the Fund maintains a diversified investment portfolio, the
political or economic developments within a particular country or region may
have an adverse effect on the ability of domiciled issuers to meet their
obligations. Additionally, political or economic developments may have an
effect on the liquidity and volatility of portfolio securities and currency
holdings.
At May 31, 1996, the diversification by country was as follows:
<TABLE>
<CAPTION>
% OF % OF
NET NET
COUNTRY % ASSETS COUNTRY ASSETS
<S> <C> <S> <C>
Argentina 5.1% Malaysia 3.3%
Brazil 4.6% Mauritius 5.0%
Chile 4.5% Mexico 5.9%
China 3.5% Peru 4.3%
Croatia 1.6% Philippines 5.6%
Czecholsovakia 6.4% Poland 4.4%
Greece 4.1% Portugal 4.5%
Hungary 4.4% Russia 6.0%
India 6.1% Thailand 4.3%
Indonesia 3.9% Turkey 3.7%
</TABLE>
FOREIGN EXCHANGE CONTRACTS -- The Fund may enter into foreign currency
exchange contracts as a way of managing foreign exchange rate risk. The Fund
may enter into these contracts for the purchase or sale of a specific
foreign currency at a fixed price on a future date as a hedge or cross hedge
against either specific transactions or portfolio positions. The objective
of the Fund's foreign currency hedging transactions is to reduce the risk
that the U.S. dollar value of the Fund's foreign currency denominated
securities will decline in value due to changes in foreign currency exchange
rates. All foreign currency exchange contracts are "marked to market" daily
at the applicable translation rates resulting in unrealized gains or losses.
Realized gains or losses are recorded at the time the foreign currency
exchange contract is offset by entering into a closing transaction or by the
delivery or receipt of the currency. Risk may arise upon entering into these
contracts from the potential inability of counterparties to meet the terms
of their contracts and from unanticipated movements in the value of a
foreign currency relative to the U.S. dollar. As of May 31, 1996 the Fund
had no foreign exchange contracts outstanding.
FOREIGN CURRENCY TRANSLATION -- The accounting records of the Fund 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 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.
FEDERATED EMERGING MARKETS FUND
Reported net realized foreign exchange gains or losses arise from sales of
portfolio securities, sales and maturities of short-term securities, sales
of FCs, currency gains or losses realized between the trade and settlement
dates on securities transactions, the difference between the amounts of
dividends, interest, and foreign 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.
RESTRICTED SECURITIES -- Restricted securities are securities that may only
be resold upon registration under 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 May 31, 1996 is
as follows:
<TABLE>
<CAPTION>
SECURITY ACQUISITION DATE ACQUISITION COST
<S> <C> <C>
Mahindra and Mahindra, GDR 2/28/96 $ 30,625
Tata Engineering & Locomotive Co.
Ltd GDR 2/28/96 29,000
Indo Gulf Fertilizer & Chemical 2/28/96 29,120
Pliva D.D. GDR 3/30/96 49,956
Hellenic Telecommunication
Organizations 4/4/96 39,389
Hindalco Industries Ltd, GDR 3/1/96 29,520
Ranbaxy Laboratories, GDR 2/28/96 30,258
ITC Ltd., GDR 3/1/96 2,889
Mosenergo, ADR 3/12/96 30,659
</TABLE>
FEDERATED EMERGING MARKETS FUND
USE OF ESTIMATES -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts of assets, liabilities,
expenses and revenues reported in the financial statements. Actual results
could differ from those estimated.
OTHER -- Investment transactions are accounted for on the trade date.
3. CAPITAL STOCK
At May 31, 1996, par value shares ($ 0.001 per share) authorized were as
follows:
<TABLE>
<CAPTION>
# OF PAR VALUE
CLASS NAME CAPITAL STOCK AUTHORIZED
<S> <C>
Class A 150,000,000
Class B 150,000,000
Class C 150,000,000
Total 450,000,000
</TABLE>
Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
PERIOD ENDED
MAY 31, 1996(A)
CLASS A SHARES SHARES AMOUNT
<S> <C> <C>
Shares sold 839,934 $ 8,520,752
Shares redeemed (414,222) (4,296,901)
Net change resulting from Class A share transactions 425,712 $ 4,223,851
</TABLE>
<TABLE>
<CAPTION>
PERIOD ENDED
MAY 31, 1996(B)
<S> <C> <C>
CLASS B SHARES SHARES AMOUNT
Shares sold 53,395 $ 555,095
Net change resulting from Class B share transactions 53,395 $ 555,095
</TABLE>
<TABLE>
<CAPTION>
PERIOD ENDED
MAY 31, 1996(B)
<S> <C> <C>
CLASS C SHARES SHARES AMOUNT
Shares sold 11,323 $ 117,615
Shares redeemed (1,816) (18,850)
Net change resulting from Class C share transactions 9,507 $ 98,765
Net change resulting from share transactions 488,614 4,877,711
</TABLE>
(a) For the period from February 28, 1996 (date of initial public
investment) to May 31, 1996.
(b) For the period from February 28, 1996 (date of initial public offering)
to May 31, 1996.
FEDERATED EMERGING MARKETS FUND
4. INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE -- Federated Global Research Corp., the Fund's
investment adviser, (the "Adviser"), receives for its services an annual
investment advisory fee equal to 1.25% of the Fund's average daily net
assets. The Adviser may voluntarily choose to waive any portion of its fee
and/or reimburse certain operating expenses of the Fund. The Adviser can
modify or terminate this voluntary waiver and/or reimbursement at any time
at its sole discretion.
ADMINISTRATIVE FEE -- Federated Services Company ("FServ"), under the
Administrative Services Agreement, provides the Fund with administrative
personnel and services. The fee paid to FServ 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
the period of the Administrative Services Agreement shall be at least
$125,000 per portfolio and $30,000 per each additional class of shares.
DISTRIBUTION SERVICES FEE -- The Fund has adopted a Distribution Plan (the
"Plan") pursuant to Rule 12b-1 under the Act. Under the terms of the Plan,
the Fund will compensate Federated Securities Corp., the principal
distributor, from the net assets of the Fund to finance activities intended
to result in the sale of the Corporation's Class A, Class B and Class C
shares. The Plan provides that the Fund may incur distribution expenses
according to the following schedule annually, to compensate Federated
Securities Corp.
<TABLE>
<CAPTION>
% OF AVG. DAILY
SHARE CLASS NAME NET ASSETS OF CLASS
<S> <C>
Class A Shares 0.25%
Class B Shares 0.75%
Class C Shares 0.75%
</TABLE>
Class A Shares did not incur a Distribution services fee for the period
ended May 31, 1996, and has no present intention of paying or accruing a
Distribution services fee.
SHAREHOLDER SERVICES FEE -- Under the terms of a Shareholder Services
Agreement with Federated Shareholder Services, the Fund will pay Federated
Shareholder Services up to 0.25% of average daily net assets of the Fund
shares for the period. The fee paid to Federated Shareholder Services is
used to finance certain services for shareholders and to maintain
shareholder accounts.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES -- FServ, through
its subsidiary, Federated Shareholder Services Company ("FSSC") serves as
transfer and dividend disbursing agent for the Fund. The fee paid to FSSC is
based on the size, type, and number of accounts and transactions made by
shareholders.
PORTFOLIO ACCOUNTING FEES -- FServ maintains the Fund's accounting records
for which it receives a fee. The fee is based on the level of the Fund's
average daily net assets for the period, plus out-of-pocket expenses.
FEDERATED EMERGING MARKETS FUND
ORGANIZATIONAL EXPENSES -- Organizational expenses of $48,748 were borne
initially by Adviser. The Fund has agreed to reimburse Adviser for the
organizational expenses during the five-year period following effective
date. For the period ended May 31, 1996, no payments were made by the Fund
pursuant to this agreement.
GENERAL -- Certain of the Officers and Directors of the Corporation are
Officers and Directors or Trustees of the above companies.
5. INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the
period ended May 31, 1996, were as follows:
<TABLE>
<CAPTION>
<S> <C>
PURCHASES $ 4,569,119
SALES $ 112,218
</TABLE>
DIRECTORS
John F. Donahue
Thomas G. Bigley
John T. Conroy, Jr.
William J. Copeland
James E. Dowd
Lawrence D. Ellis, M.D.
Richard B. Fisher
Edward L. Flaherty, Jr.
Peter E. Madden
Gregor F. Meyer
John E. Murray, Jr.
Wesley W. Posvar
Marjorie P. Smuts
OFFICERS
John F. Donahue
Chairman
Richard B. Fisher
President
J. Christopher Donahue
Executive Vice President
Edward C. Gonzales
Executive Vice President
John W. McGonigle
Executive Vice President and Secretary
David M. Taylor
Treasurer
J. Crilley Kelly
Assistant Secretary
Mutual funds are not bank deposits or obligations, are not guaranteed by any
bank, and are not insured or guaranteed by the U.S. government, the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other
government agency. Investment in mutual funds involves investment risk,
including possible loss of principal.
This report is authorized for distribution to prospective investors only
when preceded or accompanied by the Fund's prospectus which contains facts
concerning its objective and policies, management fees, expenses, and other
information.
[This Page Intentionally Left Blank]
FEDERATED
EMERGING
MARKETS
FUND
COMBINED
SEMI-ANNUAL REPORT AND
SUPPLEMENT TO PROSPECTUS
DATED JANUARY 31, 1996
[Graphic]
Federated Investors
Since 1955
Federated Investors Tower
Pittsburgh, PA 15222-3779
Federated Securities Corp. is the distributor of the fund
and is a subsidiary of Federated Investors.
[Graphic]
Cusip 981487804
Cusip 981487887
Cusip 981487879
G01741-01 (7/96)
[Graphic]
FEDERATED EUROPEAN GROWTH FUND
(A PORTFOLIO OF WORLD INVESTMENT SERIES, INC.)
CLASS A SHARES
SEMI-ANNUAL REPORT AND SUPPLEMENT TO THE PROSPECTUS DATED JANUARY 31, 1996
A. Please delete the third and fourth sentence of the fourth paragraph on
the cover page of the prospectus and replace it with the following:
"You may request a copy of the Statement of Additional information, or a
paper copy of this prospectus, if you have received your prospectus
electronically, free of charge by calling 1-800-341-7400. To obtain other
information or to make inquiries about the Fund, contact your financial
institution. The Statement of Additional Information, material incorporated
by reference into this document, and other information regarding the Fund is
maintained electronically with the SEC at Internet Web site
(http://www.sec.gov)."
B. Please insert the following "Financial Highlights" table for Class A
Shares immediately following the "Summary of Fund Expenses" tables in the
prospectus:
FEDERATED EUROPEAN GROWTH FUND
FINANCIAL HIGHLIGHTS -- CLASS A SHARES
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
PERIOD
ENDED
(UNAUDITED)
<S> <C>
MAY 31, 1996(A)
NET ASSET VALUE, BEGINNING OF PERIOD $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.06
Net realized and unrealized gain (loss) on investments and foreign
currency transactions 0.71
Total from investment operations 0.77
NET ASSET VALUE, END OF PERIOD $10.77
TOTAL RETURN(B) 7.70%
RATIOS TO AVERAGE NET ASSETS
Expenses 1.75%*
Net investment income 2.36%*
Expense waiver/reimbursement(c) 14.75%*
SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $3,066
Average commission rate paid $.0183
Portfolio turnover 15%
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from February 28, 1996 (date of
initial public investment) to May 31, 1996.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
C. Please delete the final sentence of the section entitled "Making an
Exchange" on page 19 of the prospectus and replace it with the following:
"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 Shareholder Services Company, 1099
Hingham Street, Rockland, MA 02370-3317."
D. Please add the following as the fourth sentence of the section entitled
"How to Redeem Shares" on page 20 of the prospectus:
"Investors who redeem shares through a financial institution may be charged
a service fee by that institution."
E. Under the section entitled "Administrative Services" on page 27 of the
prospectus, please delete all references to "Federated Administrative
Services" and replace them with "Federated Services Company."
F. Please add the following as the last sentence of the first paragraph of
the section entitled "Voting Rights" on page 28 of the prospectus:
"As of July 5, 1996, Federated Securities Corp., Pittsburgh, PA, owned
41.59% of the voting securities of the Fund's Class A Shares and NFSC, for
the exclusive benefit of James D. Sperling, Harveys Lake, PA, owned 65.11%
of the voting securities of the Fund's Class C Shares, and, therefore, may,
for certain purposes, be deemed to control the Fund and be able to affect
the outcome of certain matters presented for a vote of shareholders."
G. Please insert the following financial statements beginning on page 31 of
the prospectus, immediately before the section entitled "Appendix."
FEDERATED EUROPEAN GROWTH FUND
PORTFOLIO OF INVESTMENTS
MAY 31, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
COMMON STOCKS -- 93.7%
AUTOMOBILE -- 1.1%
70 Daimler Benz AG $ 38,257
BANKING -- 6.4%
460 Banco Bilbao Vizcaya 17,393
2,200 Barclays PLC 25,604
5,500 Bca Pop Di Milano 28,110
530 Credit Commerical de France 25,540
300 Credit Local de France 24,577
346 CS Holding AG 29,859
1,410 Dresdner Bank Ag, Frankfurt 35,342
3,500 Imi 28,623
Total 215,048
BEVERAGE & TOBACCO -- 0.8%
110 LVMH (Moet-Hennessy) 26,683
BROADCASTING & PUBLISHING -- 2.3%
2,490 Elsevier NV 38,644
343 Wolters Kluwer NV 38,348
Total 76,992
BUILDING MATERIALS & COMPONENTS -- 3.3%
370 Lafarge-Coppee 24,364
1,700 RMC Group PLC 26,489
15,000 Rugby Group PLC 27,778
4,070 (a)Unicem S.P.A. 31,584
Total 110,215
BUSINESS & PUBLIC SERVICES -- 5.8%
3,000 Anglian Water PLC 27,894
4,600 Chubb Security 24,663
</TABLE>
FEDERATED EUROPEAN GROWTH FUND
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
COMMON STOCKS -- CONTINUED
BUSINESS & PUBLIC SERVICES -- CONTINUED
130 Ecco Sa $ 31,183
330 Havas Sa 28,215
2,400 Reuters Holdings PLC 27,894
60 Sodexho Sa 23,225
3 (a)Sodexho Sa, Warrants 1,567
3,200 Thames Water PLC 29,332
Total 193,973
CHEMICALS -- 4.0%
150 BASF AG 41,678
1,800 Boc Group PLC 25,941
38 Ciba-Giegy AG, Class B 41,689
1,900 Imperial Chemical Industries PLC 25,027
Total 134,335
CONSTRUCTION & HOUSING -- 1.0%
80 Hochtief AG 35,387
ELECTRICAL & ELECTRONICS -- 5.9%
27 BBC Brown Boveri 32,275
4,500 General Electric Co. PLC 25,941
420 Nokia AB-A 18,275
590 Schneider SA 27,300
600 Siemens AG 33,649
2,500 (a)Toolex Alpha NV 63,125
Total 200,565
ELECTRONIC COMPONENT INSTRUMENTS -- 1.0%
200 Nera AS 6,806
5,500 Racal Electronic PLC 26,933
Total 33,739
</TABLE>
FEDERATED EUROPEAN GROWTH FUND
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
COMMON STOCKS -- CONTINUED
ENERGY SOURCES -- 2.1%
3,200 British Petroleum Co. PLC $ 27,522
500 Repsol SA 17,099
370 Total SA-B 26,747
Total 71,368
FINANCIAL SERVICES -- 1.3%
549 International Nederlanden 45,259
FOOD & HOUSEHOLD PRODUCTS -- 3.3%
3,269 Cadbury Schweppes PLC 24,522
3,900 Grand Metropolitan PLC 26,351
31 Nestle SA 34,926
2,500 Reckitt & Colman PLC 26,800
Total 112,599
FOREST PRODUCTS & PAPER -- 3.3%
8,500 Bunzl PLC 30,955
4,920 Burgo (Cartiere) S.P.A. 30,500
5,500 David S. Smith (Holdings) PLC 25,399
1,790 Stora Kopparbergs, Class A 23,846
Total 110,700
HEALTH & PERSONAL CARE -- 10.3%
470 Astra AB, Class A 21,512
2,330 (b)Pliva D.D., GDR 71,065
430 Rhone-Poulenc Rorer, Inc. 27,842
4 Roche Holding AG 30,683
36 Sandoz AG, Class B 37,453
500 Schering Ag 37,713
600 Schwarz Pharma Ag 36,409
2,451 Smithkline Beecham Corp. 24,960
350 Synthelabo 30,332
1,400 Zeneca Group 29,679
Total 347,648
</TABLE>
FEDERATED EUROPEAN GROWTH FUND
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
COMMON STOCKS -- CONTINUED
INDUSTRIAL COMPONENTS -- 1.6%
920 Autoliv AB $ 25,881
2,100 Siebe PLC 28,150
Total 54,031
INSURANCE -- 4.7%
390 AXA 22,112
360 Corp Mapfre Sa 17,739
12,500 Sedgwick Group PLC 28,863
960 Skandia Forsakrings AB 24,506
4,400 Sun Alliance Group PLC 27,138
1,360 (a)UNI Storebrand AS 6,567
121 Zurich Versicherungsgesellschaft 31,906
Total 158,831
LEISURE & TOURISM -- 2.6%
3,400 Compass Group 30,454
9,579 Ladbroke Group PLC 28,130
3,500 Rank Organisation PLC 27,743
Total 86,327
MACHINERY & ENGINEERING -- 3.6%
60 Linde AG 38,532
110 Mannesmann AG 38,154
1,400 Svedala Industri 26,882
170 Zardoya-Otis SA 16,899
Total 120,467
MERCHANDISING -- 6.3%
2,900 Boots Co. PLC 27,414
910 Centros Comerciales Pryca, SA 21,395
200 Delhaize-Le Lion 10,140
100 Karstadt Ag 39,384
192 (a)La Rinascente S.P.A., Warrants 143
4,000 Marks & Spencer PLC 28,669
</TABLE>
FEDERATED EUROPEAN GROWTH FUND
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
COMMON STOCKS -- CONTINUED
MERCHANDISING -- CONTINUED
100 Pinault-Printemps-Redoute Sa $ 30,951
4,500 Sainsbury PLC 27,650
4,000 Smith, W.H. Group PLC 28,080
Total 213,826
METALS - STEEL -- 0.6%
190 Acerinox SA 20,969
MISCELLANEOUS MATERIALS & COMMODITIES -- 0.9%
8,200 Caradon PLC 29,544
MULTI-INDUSTRY -- 5.4%
5,300 BTR PLC 23,079
630 Hunter Douglas N.V. 43,722
990 Lagardere Groupe 26,869
270 Lyonnaise des Eaux SA 26,167
367 (a)Oerlikon-Buhrle Holding AG 38,122
6,300 Tomkins PLC 24,944
Total 182,903
RECREATION, OTHER CONSUMER GOODS -- 1.1%
610 PolyGram NV 35,725
TELECOMMUNICATIONS -- 5.3%
4,600 British Telecommunication PLC 25,342
3,700 Cable & Wireless 25,515
422 Koninklijke PTT Nederland NV 15,274
14,410 (a)Telecom Italia Mobile 30,803
16,000 Telecom Italia S.P.A. 32,026
1,150 Telefonica de Espana 20,647
7,300 Vodafone Group PLC 28,904
Total 178,511
</TABLE>
FEDERATED EUROPEAN GROWTH FUND
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
COMMON STOCKS -- CONTINUED
TRANSPORTATION - AIRLINES -- 1.1%
36 (a)Swissair AG $ 35,525
TRANSPORTATION - SHIPPING -- 2.4%
5,800 Associated British Ports Holdings PLC 25,661
3,300 Peninsular & Oriental Steam Navigation Co. 26,797
8,500 (b)Railtrack Group PLC 28,584
Total 81,042
UTILITIES - ELECTRICAL & GAS -- 5.3%
1,880 Iberdrola SA 19,068
3,500 National Power Co. PLC 28,231
900 RWE AG 35,534
4,600 Scottish Power PLC 22,633
2,100 Shell Transport & Trading Co. 30,005
810 Veba AG 42,384
Total 177,855
WHOLESALE & INTERNATIONAL TRADE -- 0.9%
6,600 Inchcape PLC 31,093
TOTAL COMMON STOCKS (IDENTIFIED COST $2,984,832) 3,159,417
</TABLE>
FEDERATED EUROPEAN GROWTH FUND
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
PREFERRED STOCKS -- 1.2%
FOOD & HOUSEHOLD PRODUCTS -- 1.2%
100 Henkel KGAA, Vorzugsaktien $ 42,038
TOTAL PREFERRED STOCKS (IDENTIFIED COST $39,274) 42,038
CORPORATE BONDS -- 0.1%
BUSINESS & PUBLIC SERVICES -- 0.1%
$ 3,000 Sodexho Sa, 6.00%, 6/7/2004 2,902
TOTAL CORPORATE BONDS (IDENTIFIED COST $2,891) 2,902
(C)REPURCHASE AGREEMENT -- 4.3%
145,000 BT Securities Corporation, 5.34%, dated 5/31/1996, due 6/3/1996
(AT AMORTIZED COST) 145,000
TOTAL INVESTMENTS (IDENTIFIED COST $3,171,997)(D) $ 3,349,357
</TABLE>
(a) Non-income producing security.
(b) Denotes a restricted security which is subject to restrictions on resale
under securities laws. At May 31, 1996, these securities amounted to $99,649
which represents 3% of net assets.
(c) The repurchase agreement is fully collateralized by U.S. government
and/or agency obligations based on market prices at the date of the
portfolio. The investment in the repurchase agreement is through
participation in a joint account with other Federated funds.
(d) The cost of investments for federal tax purposes amounts to $3,171,997.
The net unrealized appreciation of investments on a federal tax basis
amounts to $177,360 which is comprised of $238,864 appreciation and $61,504
depreciation at May 31, 1996.
Note: The categories of investments are shown as a percentage of net assets
($3,373,238) at May 31, 1996.
The following acronyms are used throughout this portfolio:
GDR -- Global Depository Receipts
PLC -- Public Limited Company
(See Notes which are an integral part of the Financial Statements)
FEDERATED EUROPEAN GROWTH FUND
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 1996 (UNAUDITED)
<TABLE>
<S> <C> <C>
ASSETS:
Total investments in securities, at value (identified and tax
cost $3,171,997) $3,349,357
Cash 2,002
Income receivable 13,474
Receivable for investments sold 55,133
Total assets 3,419,966
LIABILITIES:
Payable for investments purchased $32,478
Payable for foreign taxes withheld 1,708
Net payable for forward foreign currency exchange contracts 192
Accrued expenses 12,350
Total liabilities 46,728
Net Assets for 313,359 shares outstanding $3,373,238
NET ASSETS CONSIST OF:
Paid in capital $3,141,113
Net unrealized appreciation of investments and translation of assets and
liabilities in foreign currency 177,678
Accumulated net realized gain on investments and foreign currency
transactions 35,548
Undistributed net investment income 18,899
Total Net Assets $3,373,238
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER
SHARE:
CLASS A SHARES:
Net Asset Value Per Share ($3,066,335 O 284,790 shares
outstanding) $10.77
Offering Price Per Share (100/94.50 of $10.77)* $11.40
Redemption Proceeds Per Share $10.77
CLASS B SHARES:
Net Asset Value Per Share ($280,822 O 26,141 shares outstanding) $10.74
Offering Price Per Share $10.74
Redemption Proceeds Per Share (94.50/100 of $10.74)** $10.15
CLASS C SHARES:
Net Asset Value Per Share ($26,081 O 2,428 shares outstanding) $10.74
Offering Price Per Share $10.74
Redemption Proceeds Per Share (99.00/100 of $10.74)** $10.63
</TABLE>
* See "How to Purchase Shares" in the Prospectus.
** See "Contingent Deferred Sales Charge" in the Prospectus.
(See Notes which are an integral part of the Financial Statements)
FEDERATED EUROPEAN GROWTH FUND
STATEMENT OF OPERATIONS
PERIOD ENDED MAY 31, 1996(A) (UNAUDITED)
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends (net of foreign taxes withheld of $4,062) $ 28,170
Interest 5,354
Total income 33,524
EXPENSES:
Investment advisory fee $ 8,146
Administrative personnel and services fee 48,524
Custodian fees 34,828
Transfer and dividend disbursing agent fees and expenses 7,075
Legal fees 2,911
Portfolio accounting fees 20,570
Distribution services fee -- Class B Shares 318
Distribution services fee -- Class C Shares 15
Shareholder services fee -- Class A Shares 1,926
Shareholder services fee -- Class B Shares 106
Shareholder services fee -- Class C Shares 5
Share registration costs 1,758
Printing and postage 5,168
Insurance premiums 1,723
Miscellaneous 1,722
Total expenses 134,795
Waivers and reimbursements --
Waiver of investment advisory fee $ (8,146)
Reimbursement of other operating expenses (112,024)
Total waivers and reimbursements (120,170)
Net expenses 14,625
Net investment income 18,899
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY:
Net realized gain on investments and foreign currency
translations 35,548
Net change in unrealized appreciation of investments and
translation of assets and liabilities in foreign currency 177,678
Net realized and unrealized gain on investments and
foreign currency 213,226
Change in net assets resulting from operations $232,125
</TABLE>
(a) For the period from February 28, 1996 (date of initial
public investment) to May 31, 1996.
(See Notes which are an integral part of the Financial Statements)
FEDERATED EUROPEAN GROWTH FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
PERIOD ENDED
(UNAUDITED)
MAY 31, 1996(A)
<S> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS--
Net investment income $ 18,899
Net realized gain (loss) on investments and foreign currency
transactions ($35,548 net gain as computed for federal tax purposes) 35,548
Net change in unrealized appreciation (depreciation) of
investments and translation of assets and liabilities in foreign currency 177,678
Change in net assets resulting from operations 232,125
SHARE TRANSACTIONS--
Proceeds from sale of shares 5,554,066
Cost of shares redeemed (2,412,953)
Change in net assets resulting from share
transactions 3,141,113
Change in net assets 3,373,238
NET ASSETS:
Beginning of period --
End of period (including undistributed net investment income of
$18,899) $3,373,238
</TABLE>
(a) For the period from February 28, 1996 (date of initial
public investment) to May 31, 1996.
(See Notes which are an integral part of the Financial Statements)
FEDERATED EUROPEAN GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
MAY 31, 1996 (UNAUDITED)
1. ORGANIZATION
World Investment Series, Inc. (the "Corporation") is registered under the
Investment Company Act of 1940, as amended (the "Act") as an open-end,
management investment company. The Corporation consists of six portfolios.
The financial statements included herein are only those of Federated
European Growth Fund (the "Fund"), a diversified portfolio. The financial
statements of the other portfolios are presented separately. The assets of
each portfolio are segregated and a shareholder's interest is limited to the
portfolio in which shares are held. The Fund offers three classes of shares:
Class A Shares, Class B Shares and Class C Shares. The investment objective
of the Fund is to provide long-term growth of capital.
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.
INVESTMENT VALUATIONS -- Listed foreign corporate bonds, and unlisted
securities and private placement securities are generally valued at the mean
of the latest bid and asked price as furnished by an independent pricing
service. Foreign and domestic equity securities are valued at the last sale
price reported on a national securities exchange or over-the-counter market.
In the absence of recorded sales for equity securities, they are valued
according to the last reported bid price. Short-term securities are valued
at the prices provided by an independent pricing service. However,
short-term securities with remaining maturities of sixty days or less at the
time of purchase may be valued at amortized cost, which approximates fair
market value.
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 under repurchase agreement
transactions. Additionally, procedures have been established by the Fund to
monitor, on a daily basis, the market value of each repurchase agreement's
collateral to ensure that the value of collateral at least equals the
repurchase price to be paid under the repurchase agreement transaction.
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 the guidelines and/or
standards reviewed or established by the Board of Directors (the
"Directors"). Risks may arise from the potential inability of counterparties
to honor the terms of the repurchase agreement. Accordingly, the Fund could
receive less than the repurchase price on the sale of collateral securities.
FEDERATED EUROPEAN GROWTH FUND
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS -- 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").
Dividend income and distributions to shareholders are recorded on the
ex-dividend date. Certain dividends from foreign securities may be recorded
after the ex-dividend date based upon when information becomes available to
the Fund.
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 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 interest and dividends have been provided for in accordance
with the Fund's understanding of the applicable country's tax rules and
rates.
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.
CONCENTRATION OF CREDIT RISK -- The Fund invests in securities of non-U.S.
issuers. Although the Fund maintains a diversified investment portfolio, the
political or economic developments within a particular country or region may
have an adverse effect on the ability of domiciled issuers to meet their
obligations. Additionally, political or economic developments may have an
effect on the liquidity and volatility of portfolio securities and currency
holdings.
At May 31, 1996, the diversification by country was as follows:
<TABLE>
<CAPTION>
% OF NET % OF NET
COUNTRY ASSETS COUNTRY ASSETS
<S> <C> <S> <C>
Belgium 0.3 Netherlands 6.4
Croatia 2.1 Norway 0.4
Finland 0.5 Spain 4.5
France 12.1 Sweden 5.5
Germany 14.7 Switzerland 9.3
Italy 5.4 United Kingdom 33.9
</TABLE>
FOREIGN EXCHANGE CONTRACTS -- The Fund may enter into foreign currency
exchange contracts as a way of managing foreign exchange rate risk. The Fund
may enter into these contracts for the purchase or sale of a specific
foreign currency at a fixed price on a future date as a hedge or cross-hedge
against either specific transactions or portfolio positions. The objective
of the Fund's foreign currency hedging transactions is to reduce the risk
that the U.S. dollar value of the Fund's foreign currency denominated
securities will decline in value due to changes in foreign currency exchange
rates. All foreign currency exchange contracts are "marked-to-market" daily
at the applicable translation rates resulting in unrealized gains or losses.
Realized gains or losses are recorded at the time the foreign currency
exchange contract is offset by entering into a closing transaction or by
delivery or receipt of the currency. Risks may arise upon entering into
these contracts from the potential inability of counterparties to meet the
terms of their contracts and from unanticipated movements in the value of a
foreign currency relative to the U.S. dollar.
FEDERATED EUROPEAN GROWTH FUND
At May 31, 1996, the Fund had outstanding foreign exchange contracts as set
forth below:
<TABLE>
<CAPTION>
UNREALIZED
SETTLEMENT CONTRACTS TO IN EXCHANGE CONTRACTS APPRECIATION
DATE DELIVER/RECEIVE FOR AT VALUE (DEPRECIATION)
<S> <C> <S> <C> <C> <C>
Contracts Purchased:
June 7, 1996 15,000 French Franc $ 2,864 $ 2,902 $ 38
Contracts Sold:
June 28, 1996 158,124 French Franc $30,438 $30,588 (150)
June 5, 1996 18,756,510 Italian Lira $12,070 $12,150 (80)
Net unrealized Depreciation
on foreign exchange contracts $(192)
</TABLE>
FOREIGN CURRENCY TRANSLATION -- The accounting records of the Fund 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 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 of
portfolio securities, sales and maturities of short-term securities, sales
of FCs, currency gains or losses realized between the trade and settlement
dates on securities transactions, the difference between the amounts of
dividends, interest, and foreign 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.
RESTRICTED SECURITIES -- Restricted securities are securities that may only
be resold upon registration under 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.
FEDERATED EUROPEAN GROWTH FUND
Additional information on each restricted security held at May 31, 1996 is
as follows:
<TABLE>
<CAPTION>
SECURITY ACQUISITION DATE ACQUISITION COST
<S> <C> <C>
Plira D.D., GDR 3/30/96 $43,594
Railtrack Group PLC 5/20/96 25,758
</TABLE>
USE OF ESTIMATES -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts of assets, liabilities,
expenses and revenues reported in the financial statements. Actual results
could differ from those estimated.
OTHER -- Investment transactions are accounted for on the trade date.
3. CAPITAL STOCK
At May 31, 1996, par value shares ($ 0.001 per share) authorized were as
follows:
<TABLE>
<CAPTION>
# OF PAR VALUE
CLASS NAME CAPITAL STOCK AUTHORIZED
<S> <C>
Class A Shares 150,000,000
Class B Shares 150,000,000
Class C Shares 150,000,000
Total 450,000,000
</TABLE>
FEDERATED EUROPEAN GROWTH FUND
Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
MAY 31, 1996(A)
CLASS A SHARES SHARES AMOUNT
<S> <C> <C>
Shares sold 515,475 $ 5,259,523
Shares redeemed (230,685) (2,412,953)
Net change resulting from
Class A share transactions 284,790 $ 2,846,570
</TABLE>
<TABLE>
<CAPTION>
MAY 31, 1996(B)
CLASS B SHARES SHARES AMOUNT
<S> <C> <C>
Shares sold 26,141 $ 269,044
Net change resulting from
Class B share transactions 26,141 $ 269,044
</TABLE>
<TABLE>
<CAPTION>
MAY 31, 1996(B)
CLASS C SHARES SHARES AMOUNT
<S> <C> <C>
Shares sold 2,428 $ 25,499
Net change resulting from
Class C share transactions 2,428 $ 25,499
Net change resulting from share
transactions 313,359 $ 3,141,113
</TABLE>
(a) For the period from February 28, 1996 (date of initial public
investment) to May 31, 1996.
(b) For the period from February 28, 1996 (date of initial public offering)
to May 31, 1996.
4. INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE -- Federated Global Research Corp., the Fund's
investment adviser, (the "Adviser"), receives for its services an annual
investment advisory fee equal to 1.00% of the Fund's average daily net
assets.
The Adviser may voluntarily choose to waive any portion of its fee and/or
reimburse certain operating expenses of the Fund. The Adviser can modify or
terminate this voluntary waiver and/or reimbursement at any time at its sole
discretion.
ADMINISTRATIVE FEE -- Federated Services Company ("FServ"), under the
Administrative Services Agreement, provides the Fund with administrative
personnel and services. The fee paid to FServ 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
the period of the Administrative Services Agreement shall be at least
$125,000 per portfolio and $30,000 per each additional class of shares.
FEDERATED EUROPEAN GROWTH FUND
DISTRIBUTION SERVICES FEE -- The Fund has adopted a Distribution Plan (the
"Plan") pursuant to Rule 12b-1 under the Act. 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 Corporation's Class A, Class B and Class C
shares. The Plan provides that the Fund may incur distribution expenses
according to the following schedule annually, to compensate FSC.
<TABLE>
<CAPTION>
% OF AVG. DAILY
SHARE CLASS NAME NET ASSETS OF CLASS
<S> <C>
Class A Shares 0.25%
Class B Shares 0.75%
Class C Shares 0.75%
</TABLE>
Class A shares did not incur a Distribution services fee for the period
ended May 31, 1996, and has no present intention of paying or accruing the
Distribution services fee.
SHAREHOLDER SERVICES FEE -- Under the terms of a Shareholder Services
Agreement with Federated Shareholder Services ("FSS"), the Fund will pay FSS
up to 0.25% of average daily net assets of the Fund for the period. The fee
paid to FSS is used to finance certain services for shareholders and to
maintain shareholder accounts.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES -- Federated
Services Company ("FServ"), through its subsidiary, Federated Shareholder
Services Company ("FSSC") serves as transfer and dividend disbursing agent
for the Fund. The fee paid to FSSC is based on the size, type, and number of
accounts and transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES -- FServ maintains the Fund's accounting records
for which it receives a fee. The fee is based on the level of the Fund's
average daily net assets for the period, plus out-of-pocket expenses.
ORGANIZATIONAL EXPENSES -- Organizational expenses of $42,822 were borne
initially by the Adviser. The Fund has agreed to reimburse the Adviser for
the organizational expenses during the five-year period following the
effective date. For the period ended May 31, 1996, no payments were made by
the Fund pursuant to this agreement.
GENERAL -- Certain of the Officers and Directors of the Corporation are
Officers and Directors or Trustees of the above companies.
5. INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the
period ended May 31, 1996, were as follows:
PURCHASES $3,449,350
SALES $ 443,314
<TABLE>
<CAPTION>
DIRECTORS OFFICERS
<S> <S>
John F. Donahue John F. Donahue
Thomas G. Bigley Chairman
John T. Conroy, Jr. Richard B. Fisher
William J. Copeland President
James E. Dowd J. Christopher Donahue
Lawrence D. Ellis, M.D. Executive Vice President
Richard B. Fisher Edward C. Gonzales
Edward L. Flaherty, Jr. Executive Vice President
Peter E. Madden John W. McGonigle
Gregor F. Meyer Executive Vice President and Secretary
John E. Murray, Jr. David M. Taylor
Wesley W. Posvar Treasurer
Marjorie P. Smuts J. Crilley Kelly
Assistant Secretary
</TABLE>
Mutual funds are not bank deposits or obligations, are not guaranteed by any
bank, and are not insured or guaranteed by the U.S. government, the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other
government agency. Investment in mutual funds involves risk, including
possible loss of principal.
This report is authorized for distribution to prospective investors only
when preceded or accompanied by the Fund's prospectus which contains facts
concerning its objective and policies, management fees, expenses and other
information.
[This Page Intentionally Left Blank]
[This Page Intentionally Left Blank]
FEDERATED
EUROPEAN
GROWTH
FUND
CLASS A SHARES
SEMI-ANNUAL REPORT AND
SUPPLEMENT TO PROSPECTUS
DATED JANUARY 31, 1996
[Graphic]
Federated Investors
Since 1955
Federated Investors Tower
Pittsburgh, PA 15222-3779
Federated Securities Corp. is the distributor of the fund
and is a subsidiary of Federated Investors.
[Graphic]
Cusip 981487861
G01742-02 (7/96)
FEDERATED EUROPEAN GROWTH FUND
(A PORTFOLIO OF WORLD INVESTMENT SERIES, INC.)
CLASS A SHARES, CLASS B SHARES, CLASS C SHARES
SEMI-ANNUAL REPORT AND SUPPLEMENT TO THE PROSPECTUS DATED JANUARY 31, 1996
A. Please delete the third and fourth sentence of the fourth paragraph on
the cover page of the prospectus and replace it with the following:
"You may request a copy of the Statement of Additional information, or a
paper copy of this prospectus, if you have received your prospectus
electronically, free of charge by calling 1-800-341-7400. To obtain other
information or to make inquiries about the Fund, contact your financial
institution. The Statement of Addition Information, material incorporated by
reference into this document, and other information regarding the Fund is
maintained electronically with the SEC at Internet Web site
(http://www.sec.gov)."
B. Please insert the following "Financial Highlights" tables for Class A
Shares, Class B Shares and Class C Shares immediately following the "Summary
of Fund Expenses" tables in the prospectus:
FEDERATED EUROPEAN GROWTH FUND
FINANCIAL HIGHLIGHTS -- CLASS A SHARES
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
PERIOD
ENDED
(UNAUDITED)
MAY 31, 1996(A)
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.06
Net realized and unrealized gain (loss) on investments and foreign
currency transactions 0.71
Total from investment operations 0.77
NET ASSET VALUE, END OF PERIOD $10.77
TOTAL RETURN(B) 7.70%
RATIOS TO AVERAGE NET ASSETS
Expenses 1.75%*
Net investment income 2.36%*
Expense waiver/reimbursement(c) 14.75%*
SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $3,066
Average commission rate paid $.0183
Portfolio turnover 15%
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from February 28, 1996 (date of
initial public investment) to May 31, 1996.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
FEDERATED EUROPEAN GROWTH FUND
FINANCIAL HIGHLIGHTS -- CLASS B SHARES
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
PERIOD
ENDED
(UNAUDITED)
MAY 31, 1996(A)
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.03
Net realized and unrealized gain (loss) on investments and foreign
currency transactions 0.71
Total from investment operations 0.74
NET ASSET VALUE, END OF PERIOD $10.74
TOTAL RETURN(B) 7.40%
RATIOS TO AVERAGE NET ASSETS
Expenses 2.50%*
Net investment income 1.58%*
Expense waiver/reimbursement(c) 14.75%*
SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $281
Average commission rate paid $.0183
Portfolio turnover 15%
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from February 28, 1996 (date of
initial public offering) to May 31, 1996.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
FEDERATED EUROPEAN GROWTH FUND
FINANCIAL HIGHLIGHTS -- CLASS C SHARES
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
PERIOD
ENDED
(UNAUDITED)
MAY 31, 1996(A)
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.01
Net realized and unrealized gain (loss) on investments and foreign
currency transactions 0.73
Total from investment operations 0.74
NET ASSET VALUE, END OF PERIOD $10.74
TOTAL RETURN(B) 7.40%
RATIOS TO AVERAGE NET ASSETS
Expenses 2.50%*
Net investment income 1.53%*
Expense waiver/reimbursement(c) 14.75%*
SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $26
Average commission rate paid $.018
Portfolio turnover 15%
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from February 28, 1996 (date of
initial public offering) to May 31, 1996.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
C. Please delete the final sentence of the section entitled "Making an
Exchange" on page 24 of the prospectus and replace it with the following:
"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 Shareholder Services Company, 1099
Hingham Street, Rockland, MA 02370-3317."
D. Please add the following as the fourth sentence of the section entitled
"How to Redeem Shares" on page 25 of the prospectus:
"Investors who redeem shares through a financial institution may be charged
a service fee by that institution."
E. Under the section entitled "Administrative Services" on page 33 of the
prospectus, please delete all references to "Federated Administrative
Services" and replace them with "Federated Services Company."
F. Please add the following as the last sentence of the first paragraph of
the section entitled "Voting Rights" on page 34 of the prospectus:
"As of July 5, 1996, Federated Securities Corp., Pittsburgh, PA, owned
41.59% of the voting securities of the Fund's Class A Shares and NFSC, for
the exclusive benefit of James D. Sperling, Harveys Lake, PA, owned 65.11%
of the voting securities of the Fund's Class C Shares, and, therefore, may,
for certain purposes, be deemed to control the Fund and be able to affect
the outcome of certain matters presented for a vote of shareholders."
G. Please insert the following financial statements beginning on page 37 of
the prospectus, immediately before the section entitled "Appendix."
FEDERATED EUROPEAN GROWTH FUND
PORTFOLIO OF INVESTMENTS
MAY 31, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
COMMON STOCKS -- 93.7%
<C> <S> <C>
AUTOMOBILE -- 1.1%
70 Daimler Benz AG $ 38,257
BANKING -- 6.4%
460 Banco Bilbao Vizcaya 17,393
2,200 Barclays PLC 25,604
5,500 Bca Pop Di Milano 28,110
530 Credit Commerical de France 25,540
300 Credit Local de France 24,577
346 CS Holding AG 29,859
1,410 Dresdner Bank Ag, Frankfurt 35,342
3,500 Imi 28,623
Total 215,048
BEVERAGE & TOBACCO -- 0.8%
110 LVMH (Moet-Hennessy) 26,683
BROADCASTING & PUBLISHING -- 2.3%
2,490 Elsevier NV 38,644
343 Wolters Kluwer NV 38,348
Total 76,992
BUILDING MATERIALS & COMPONENTS -- 3.3%
370 Lafarge-Coppee 24,364
1,700 RMC Group PLC 26,489
15,000 Rugby Group PLC 27,778
4,070 (a)Unicem S.P.A. 31,584
Total 110,215
BUSINESS & PUBLIC SERVICES -- 5.8%
3,000 Anglian Water PLC 27,894
4,600 Chubb Security 24,663
</TABLE>
FEDERATED EUROPEAN GROWTH FUND
<TABLE>
<CAPTION>
SHARES VALUE
COMMON STOCKS -- CONTINUED
<C> <S> <C>
BUSINESS & PUBLIC SERVICES -- CONTINUED
130 Ecco Sa $ 31,183
330 Havas Sa 28,215
2,400 Reuters Holdings PLC 27,894
60 Sodexho Sa 23,225
3 (a)Sodexho Sa, Warrants 1,567
3,200 Thames Water PLC 29,332
Total 193,973
CHEMICALS -- 4.0%
150 BASF AG 41,678
1,800 Boc Group PLC 25,941
38 Ciba-Giegy AG, Class B 41,689
1,900 Imperial Chemical Industries PLC 25,027
Total 134,335
CONSTRUCTION & HOUSING -- 1.0%
80 Hochtief AG 35,387
ELECTRICAL & ELECTRONICS -- 5.9%
27 BBC Brown Boveri 32,275
4,500 General Electric Co. PLC 25,941
420 Nokia AB-A 18,275
590 Schneider SA 27,300
600 Siemens AG 33,649
2,500 (a)Toolex Alpha NV 63,125
Total 200,565
ELECTRONIC COMPONENT INSTRUMENTS -- 1.0%
200 Nera AS 6,806
5,500 Racal Electronic PLC 26,933
Total 33,739
</TABLE>
FEDERATED EUROPEAN GROWTH FUND
<TABLE>
<CAPTION>
SHARES VALUE
COMMON STOCKS -- CONTINUED
<C> <S> <C>
ENERGY SOURCES -- 2.1%
3,200 British Petroleum Co. PLC $ 27,522
500 Repsol SA 17,099
370 Total SA-B 26,747
Total 71,368
FINANCIAL SERVICES -- 1.3%
549 International Nederlanden 45,259
FOOD & HOUSEHOLD PRODUCTS -- 3.3%
3,269 Cadbury Schweppes PLC 24,522
3,900 Grand Metropolitan PLC 26,351
31 Nestle SA 34,926
2,500 Reckitt & Colman PLC 26,800
Total 112,599
FOREST PRODUCTS & PAPER -- 3.3%
8,500 Bunzl PLC 30,955
4,920 Burgo (Cartiere) S.P.A. 30,500
5,500 David S. Smith (Holdings) PLC 25,399
1,790 Stora Kopparbergs, Class A 23,846
Total 110,700
HEALTH & PERSONAL CARE -- 10.3%
470 Astra AB, Class A 21,512
2,330 (b)Pliva D.D., GDR 71,065
430 Rhone-Poulenc Rorer, Inc. 27,842
4 Roche Holding AG 30,683
36 Sandoz AG, Class B 37,453
500 Schering Ag 37,713
600 Schwarz Pharma Ag 36,409
2,451 Smithkline Beecham Corp. 24,960
350 Synthelabo 30,332
1,400 Zeneca Group 29,679
Total 347,648
</TABLE>
FEDERATED EUROPEAN GROWTH FUND
<TABLE>
<CAPTION>
SHARES VALUE
COMMON STOCKS -- CONTINUED
<C> <S> <C>
INDUSTRIAL COMPONENTS -- 1.6%
920 Autoliv AB $ 25,881
2,100 Siebe PLC 28,150
Total 54,031
INSURANCE -- 4.7%
390 AXA 22,112
360 Corp Mapfre Sa 17,739
12,500 Sedgwick Group PLC 28,863
960 Skandia Forsakrings AB 24,506
4,400 Sun Alliance Group PLC 27,138
1,360 (a)UNI Storebrand AS 6,567
121 Zurich Versicherungsgesellschaft 31,906
Total 158,831
LEISURE & TOURISM -- 2.6%
3,400 Compass Group 30,454
9,579 Ladbroke Group PLC 28,130
3,500 Rank Organisation PLC 27,743
Total 86,327
MACHINERY & ENGINEERING -- 3.6%
60 Linde AG 38,532
110 Mannesmann AG 38,154
1,400 Svedala Industri 26,882
170 Zardoya-Otis SA 16,899
Total 120,467
MERCHANDISING -- 6.3%
2,900 Boots Co. PLC 27,414
910 Centros Comerciales Pryca, SA 21,395
200 Delhaize-Le Lion 10,140
</TABLE>
FEDERATED EUROPEAN GROWTH FUND
<TABLE>
<CAPTION>
SHARES VALUE
COMMON STOCKS -- CONTINUED
<C> <S> <C>
MERCHANDISING -- CONTINUED
100 Karstadt Ag $ 39,384
192 (a)La Rinascente S.P.A., Warrants 143
4,000 Marks & Spencer PLC 28,669
100 Pinault-Printemps-Redoute Sa 30,951
4,500 Sainsbury PLC 27,650
4,000 Smith, W.H. Group PLC 28,080
Total 213,826
METALS - STEEL -- 0.6%
190 Acerinox SA 20,969
MISCELLANEOUS MATERIALS & COMMODITIES -- 0.9%
8,200 Caradon PLC 29,544
MULTI-INDUSTRY -- 5.4%
5,300 BTR PLC 23,079
630 Hunter Douglas N.V. 43,722
990 Lagardere Groupe 26,869
270 Lyonnaise des Eaux SA 26,167
367 (a)Oerlikon-Buhrle Holding AG 38,122
6,300 Tomkins PLC 24,944
Total 182,903
RECREATION, OTHER CONSUMER GOODS -- 1.1%
610 PolyGram NV 35,725
TELECOMMUNICATIONS -- 5.3%
4,600 British Telecommunication PLC 25,342
3,700 Cable & Wireless 25,515
422 Koninklijke PTT Nederland NV 15,274
14,410 (a)Telecom Italia Mobile 30,803
16,000 Telecom Italia S.P.A. 32,026
</TABLE>
FEDERATED EUROPEAN GROWTH FUND
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
COMMON STOCKS -- CONTINUED
TELECOMMUNICATIONS -- CONTINUED
1,150 Telefonica de Espana $ 20,647
7,300 Vodafone Group PLC 28,904
Total 178,511
TRANSPORTATION - AIRLINES -- 1.1%
36 (a)Swissair AG 35,525
TRANSPORTATION - SHIPPING -- 2.4%
5,800 Associated British Ports Holdings PLC 25,661
3,300 Peninsular & Oriental Steam Navigation Co. 26,797
8,500 (b)Railtrack Group PLC 28,584
Total 81,042
UTILITIES - ELECTRICAL & GAS -- 5.3%
1,880 Iberdrola SA 19,068
3,500 National Power Co. PLC 28,231
900 RWE AG 35,534
4,600 Scottish Power PLC 22,633
2,100 Shell Transport & Trading Co. 30,005
810 Veba AG 42,384
Total 177,855
WHOLESALE & INTERNATIONAL TRADE -- 0.9%
6,600 Inchcape PLC 31,093
TOTAL COMMON STOCKS (IDENTIFIED COST $2,984,832) 3,159,417
</TABLE>
FEDERATED EUROPEAN GROWTH FUND
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
PREFERRED STOCKS -- 1.2%
FOOD & HOUSEHOLD PRODUCTS -- 1.2%
100 Henkel KGAA, Vorzugsaktien $ 42,038
TOTAL PREFERRED STOCKS (IDENTIFIED COST $39,274) 42,038
CORPORATE BONDS -- 0.1%
BUSINESS & PUBLIC SERVICES -- 0.1%
$ 3,000 Sodexho Sa, 6.00%, 6/7/2004 2,902
TOTAL CORPORATE BONDS (IDENTIFIED COST $2,891) 2,902
(C)REPURCHASE AGREEMENT -- 4.3%
145,000 BT Securities Corporation, 5.34%, dated 5/31/1996, due 6/3/1996
(AT AMORTIZED COST) 145,000
TOTAL INVESTMENTS (IDENTIFIED COST $3,171,997)(D) $ 3,349,357
</TABLE>
(a) Non-income producing security.
(b) Denotes a restricted security which is subject to restrictions on resale
under securities laws. At May 31, 1996, these securities amounted to
$99,649 which represents 3% of net assets.
(c) The repurchase agreement is fully collateralized by U.S. government
and/or agency obligations based on market prices at the date of the
portfolio. The investment in the repurchase agreement is through
participation in a joint account with other Federated funds.
(d) The cost of investments for federal tax purposes amounts to $3,171,997.
The net unrealized appreciation of investments on a federal tax basis
amounts to $177,360 which is comprised of $238,864 appreciation and $61,504
depreciation at May 31, 1996.
Note: The categories of investments are shown as a percentage of net assets
($3,373,238) at May 31, 1996.
The following acronyms are used throughout this portfolio:
GDR -- Global Depository Receipts
PLC -- Public Limited Company
(See Notes which are an integral part of the Financial Statements)
FEDERATED EUROPEAN GROWTH FUND
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 1996 (UNAUDITED)
<TABLE>
<S> <C>
ASSETS:
Total investments in securities, at value (identified and tax cost
$3,171,997) $ 3,349,357
Cash 2,002
Income receivable 13,474
Receivable for investments sold 55,133
Total assets 3,419,966
LIABILITIES:
Payable for investments purchased $ 32,478
Payable for foreign taxes withheld 1,708
Net payable for forward foreign currency exchange contracts 192
Accrued expenses 12,350
Total liabilities 46,728
Net Assets for 313,359 shares outstanding $ 3,373,238
NET ASSETS CONSIST OF:
Paid in capital $ 3,141,113
Net unrealized appreciation of investments and translation of assets and
liabilities in foreign currency 177,678
Accumulated net realized gain on investments and foreign currency
transactions 35,548
Undistributed net investment income 18,899
Total Net Assets $ 3,373,238
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
CLASS A SHARES:
Net Asset Value Per Share ($3,066,335 O 284,790 shares
outstanding) $10.77
Offering Price Per Share (100/94.50 of $10.77)* $11.40
Redemption Proceeds Per Share $10.77
CLASS B SHARES:
Net Asset Value Per Share ($280,822\26,141 shares outstanding) $10.74
Offering Price Per Share $10.74
Redemption Proceeds Per Share (94.50/100 of $10.74)** $10.15
CLASS C SHARES:
Net Asset Value Per Share ($26,081\2,428 shares outstanding) $10.74
Offering Price Per Share $10.74
Redemption Proceeds Per Share (99.00/100 of $10.74)** $10.63
</TABLE>
* See "How to Purchase Shares" in the Prospectus.
** See "Contingent Deferred Sales Charge" in the Prospectus.
(See Notes which are an integral part of the Financial Statements)
FEDERATED EUROPEAN GROWTH FUND
STATEMENT OF OPERATIONS
PERIOD ENDED MAY 31, 1996(A) (UNAUDITED)
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends (net of foreign taxes withheld of $4,062) $ 28,170
Interest 5,354
Total income 33,524
EXPENSES:
Investment advisory fee $ 8,146
Administrative personnel and services fee 48,524
Custodian fees 34,828
Transfer and dividend disbursing agent fees and expenses 7,075
Legal fees 2,911
Portfolio accounting fees 20,570
Distribution services fee -- Class B Shares 318
Distribution services fee -- Class C Shares 15
Shareholder services fee -- Class A Shares 1,926
Shareholder services fee -- Class B Shares 106
Shareholder services fee -- Class C Shares 5
Share registration costs 1,758
Printing and postage 5,168
Insurance premiums 1,723
Miscellaneous 1,722
Total expenses 134,795
Waivers and reimbursements --
Waiver of investment advisory fee $ (8,146)
Reimbursement of other operating expenses (112,024)
Total waivers and reimbursements (120,170)
Net expenses 14,625
Net investment income 18,899
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY:
Net realized gain on investments and foreign currency transactions 35,548
Net change in unrealized appreciation of investments and translation of assets and
liabilities in foreign currency 177,678
Net realized and unrealized gain on investments and foreign currency 213,226
Change in net assets resulting from operations $ 232,125
</TABLE>
(a) For the period from February 28, 1996 (date of initial public investment)
to May 31, 1996.
(See Notes which are an integral part of the Financial Statements)
FEDERATED EUROPEAN GROWTH FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
PERIOD ENDED
(UNAUDITED)
MAY 31,
1996(A)
<S> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS--
Net investment income $ 18,899
Net realized gain (loss) on investments and foreign currency
transactions ($35,548 net gain as computed for federal tax purposes) 35,548
Net change in unrealized appreciation (depreciation) of
investments and translation of assets and liabilities in foreign currency 177,678
Change in net assets resulting from operations 232,125
SHARE TRANSACTIONS--
Proceeds from sale of shares 5,554,066
Cost of shares redeemed (2,412,953)
Change in net assets resulting from share transactions 3,141,113
Change in net assets 3,373,238
NET ASSETS:
Beginning of period --
End of period (including undistributed net investment income of $18,899) $3,373,238
</TABLE>
(a) For the period from February 28, 1996 (date of initial public investment)
to May 31, 1996.
(See Notes which are an integral part of the Financial Statements)
FEDERATED EUROPEAN GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
MAY 31, 1996 (UNAUDITED)
1. ORGANIZATION
World Investment Series, Inc. (the "Corporation") is registered under the
Investment Company Act of 1940, as amended (the "Act") as an open-end,
management investment company. The Corporation consists of six portfolios.
The financial statements included herein are only those of Federated
European Growth Fund (the "Fund"), a diversified portfolio. The financial
statements of the other portfolios are presented separately. The assets of
each portfolio are segregated and a shareholder's interest is limited to the
portfolio in which shares are held. The Fund offers three classes of shares:
Class A Shares, Class B Shares and Class C Shares. The investment objective
of the Fund is to provide long-term growth of capital.
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.
INVESTMENT VALUATIONS -- Listed foreign corporate bonds, and unlisted
securities and private placement securities are generally valued at the mean
of the latest bid and asked price as furnished by an independent pricing
service. Foreign and domestic equity securities are valued at the last sale
price reported on a national securities exchange or over-the-counter market.
In the absence of recorded sales for equity securities, they are valued
according to the last reported bid price. Short-term securities are valued
at the prices provided by an independent pricing service. However,
short-term securities with remaining maturities of sixty days or less at the
time of purchase may be valued at amortized cost, which approximates fair
market value.
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 under repurchase agreement
transactions. Additionally, procedures have been established by the Fund to
monitor, on a daily basis, the market value of each repurchase agreement's
collateral to ensure that the value of collateral at least equals the
repurchase price to be paid under the repurchase agreement transaction.
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 the guidelines and/or
standards reviewed or established by the Board of Directors (the
"Directors"). Risks may arise from the potential inability of counterparties
to honor the terms of the repurchase agreement. Accordingly, the Fund could
receive less than the repurchase price on the sale of collateral securities.
FEDERATED EUROPEAN GROWTH FUND
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS -- 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").
Dividend income and distributions to shareholders are recorded on the
ex-dividend date. Certain dividends from foreign securities may be recorded
after the ex-dividend date based upon when information becomes available to
the Fund.
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 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 interest and dividends have been provided for in accordance
with the Fund's understanding of the applicable country's tax rules and
rates.
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.
CONCENTRATION OF CREDIT RISK -- The Fund invests in securities of non-U.S.
issuers. Although the Fund maintains a diversified investment portfolio, the
political or economic developments within a particular country or region may
have an adverse effect on the ability of domiciled issuers to meet their
obligations. Additionally, political or economic developments may have an
effect on the liquidity and volatility of portfolio securities and currency
holdings.
At May 31, 1996, the diversification by country was as follows:
<TABLE>
<CAPTION>
% OF NET % OF NET
COUNTRY ASSETS COUNTRY ASSETS
<S> <C> <S> <C>
Belgium 0.3 Netherlands 6.4
Croatia 2.1 Norway 0.4
Finland 0.5 Spain 4.5
France 12.1 Sweden 5.5
Germany 14.7 Switzerland 9.3
Italy 5.4 United Kingdom 33.9
</TABLE>
FOREIGN EXCHANGE CONTRACTS -- The Fund may enter into foreign currency
exchange contracts as a way of managing foreign exchange rate risk. The Fund
may enter into these contracts for the purchase or sale of a specific
foreign currency at a fixed price on a future date as a hedge or cross-hedge
against either specific transactions or portfolio positions. The objective
of the Fund's foreign currency hedging transactions is to reduce the risk
that the U.S. dollar value of the Fund's foreign currency denominated
securities will decline in value due to changes in foreign currency exchange
rates. All foreign currency exchange contracts are "marked-to-market" daily
at the applicable translation rates resulting in unrealized gains or losses.
Realized gains or losses are recorded at the time the foreign currency
exchange contract is offset by entering into a closing transaction or by
delivery or receipt of the currency. Risks may arise upon entering into
these contracts from the potential inability of counterparties to meet the
terms of their contracts and from unanticipated movements in the value of a
foreign currency relative to the U.S. dollar.
FEDERATED EUROPEAN GROWTH FUND
At May 31, 1996, the Fund had outstanding foreign exchange contracts as set
forth below:
<TABLE>
<CAPTION>
UNREALIZED
SETTLEMENT CONTRACTS TO IN EXCHANGE CONTRACTS APPRECIATION
DATE DELIVER/RECEIVE FOR AT VALUE (DEPRECIATION)
<S> <C> <S> <C> <C> <C>
Contracts Purchased:
June 7, 1996 15,000 French Franc $ 2,864 $ 2,902 $ 38
Contracts Sold:
June 28, 1996 158,124 French Franc $30,438 $30,588 (150)
June 5, 1996 18,756,510 Italian Lira $12,070 $12,150 (80)
Net unrealized Depreciation on foreign exchange contracts $ (192)
</TABLE>
FOREIGN CURRENCY TRANSLATION -- The accounting records of the Fund 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 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 of
portfolio securities, sales and maturities of short-term securities, sales
of FCs, currency gains or losses realized between the trade and settlement
dates on securities transactions, the difference between the amounts of
dividends, interest, and foreign 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.
RESTRICTED SECURITIES -- Restricted securities are securities that may only
be resold upon registration under 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.
FEDERATED EUROPEAN GROWTH FUND
Additional information on each restricted security held at May 31, 1996 is
as follows:
<TABLE>
<CAPTION>
SECURITY ACQUISITION DATE ACQUISITION COST
<S> <C> <C>
Plira D.D., GDR 3/30/96 $43,594
Railtrack Group PLC 5/20/96 25,758
</TABLE>
USE OF ESTIMATES -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts of assets, liabilities,
expenses and revenues reported in the financial statements. Actual results
could differ from those estimated.
OTHER -- Investment transactions are accounted for on the trade date.
3. CAPITAL STOCK
At May 31, 1996, par value shares ($ 0.001 per share) authorized were as
follows:
<TABLE>
<CAPTION>
# OF PAR VALUE
CLASS NAME CAPITAL STOCK AUTHORIZED
<S> <C>
Class A Shares 150,000,000
Class B Shares 150,000,000
Class C Shares 150,000,000
Total 450,000,000
</TABLE>
FEDERATED EUROPEAN GROWTH FUND
Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
MAY 31, 1996(A)
CLASS A SHARES SHARES AMOUNT
<S> <C> <C>
Shares sold 515,475 $ 5,259,523
Shares redeemed (230,685) (2,412,953)
Net change resulting from Class A share transactions 284,790 $ 2,846,570
<CAPTION>
MAY 31, 1996(B)
CLASS B SHARES SHARES AMOUNT
<S> <C> <C>
Shares sold 26,141 $ 269,044
Net change resulting from Class B share transactions 26,141 $ 269,044
<CAPTION>
MAY 31, 1996(B)
CLASS C SHARES SHARES AMOUNT
<S> <C> <C>
Shares sold 2,428 $ 25,499
Net change resulting from Class C share transactions 2,428 $ 25,499
Net change resulting from share transactions 313,359 $ 3,141,113
</TABLE>
(a) For the period from February 28, 1996 (date of initial public
investment) to May 31, 1996.
(b) For the period from February 28, 1996 (date of initial public offering)
to May 31, 1996.
4. INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE -- Federated Global Research Corp., the Fund's
investment adviser, (the "Adviser"), receives for its services an annual
investment advisory fee equal to 1.00% of the Fund's average daily net
assets.
The Adviser may voluntarily choose to waive any portion of its fee and/or
reimburse certain operating expenses of the Fund. The Adviser can modify or
terminate this voluntary waiver and/or reimbursement at any time at its sole
discretion.
ADMINISTRATIVE FEE -- Federated Services Company ("FServ"), under the
Administrative Services Agreement, provides the Fund with administrative
personnel and services. The fee paid to FServ 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
the period of the Administrative Services Agreement shall be at least
$125,000 per portfolio and $30,000 per each additional class of shares.
FEDERATED EUROPEAN GROWTH FUND
DISTRIBUTION SERVICES FEE -- The Fund has adopted a Distribution Plan (the
"Plan") pursuant to Rule 12b-1 under the Act. 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 Corporation's Class A, Class B and Class C
shares. The Plan provides that the Fund may incur distribution expenses
according to the following schedule annually, to compensate FSC.
<TABLE>
<CAPTION>
% OF AVG. DAILY
SHARE CLASS NAME NET ASSETS OF CLASS
<S> <C>
Class A Shares 0.25%
Class B Shares 0.75%
Class C Shares 0.75%
</TABLE>
Class A shares did not incur a Distribution services fee for the period
ended May 31, 1996, and has no present intention of paying or accruing the
Distribution services fee.
SHAREHOLDER SERVICES FEE -- Under the terms of a Shareholder Services
Agreement with Federated Shareholder Services ("FSS"), the Fund will pay FSS
up to 0.25% of average daily net assets of the Fund for the period. The fee
paid to FSS is used to finance certain services for shareholders and to
maintain shareholder accounts.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES -- Federated
Services Company ("FServ"), through its subsidiary, Federated Shareholder
Services Company ("FSSC") serves as transfer and dividend disbursing agent
for the Fund. The fee paid to FSSC is based on the size, type, and number of
accounts and transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES -- FServ maintains the Fund's accounting records
for which it receives a fee. The fee is based on the level of the Fund's
average daily net assets for the period, plus out-of-pocket expenses.
ORGANIZATIONAL EXPENSES -- Organizational expenses of $42,822 were borne
initially by the Adviser. The Fund has agreed to reimburse the Adviser for
the organizational expenses during the five-year period following the
effective date. For the period ended May 31, 1996, no payments were made by
the Fund pursuant to this agreement.
GENERAL -- Certain of the Officers and Directors of the Corporation are
Officers and Directors or Trustees of the above companies.
5. INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the
period ended May 31, 1996, were as follows:
<TABLE>
<S> <C>
PURCHASES $ 3,449,350
SALES $ 443,314
</TABLE>
DIRECTORS
John F. Donahue
Thomas G. Bigley
John T. Conroy, Jr.
William J. Copeland
James E. Dowd
Lawrence D. Ellis, M.D.
Richard B. Fisher
Edward L. Flaherty, Jr.
Peter E. Madden
Gregor F. Meyer
John E. Murray, Jr.
Wesley W. Posvar
Marjorie P. Smuts
OFFICERS
John F. Donahue
Chairman
Richard B. Fisher
President
J. Christopher Donahue
Executive Vice President
Edward C. Gonzales
Executive Vice President
John W. McGonigle
Executive Vice President and Secretary
David M. Taylor
Treasurer
J. Crilley Kelly
Assistant Secretary
Mutual funds are not bank deposits or obligations, are not guaranteed by any
bank, and are not insured or guaranteed by the U.S. government, the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other
government agency. Investment in mutual funds involves risk, including
possible loss of principal.
This report is authorized for distribution to prospective investors only
when preceded or accompanied by the Fund's prospectus which contains facts
concerning its objective and policies, management fees, expenses and other
information.
FEDERATED
EUROPEAN
GROWTH
FUND
COMBINED
SEMI-ANNUAL REPORT AND
SUPPLEMENT TO PROSPECTUS
DATED JANUARY 31, 1996
[Graphic]
Federated Investors
Since 1955
Federated Investors Tower
Pittsburgh, PA 15222-3779
Federated Securities Corp. is the distributor of the fund
and is a subsidiary of Federated Investors.
Cusip 981487861
Cusip 981487853
Cusip 981487846
G01742-01 (7/96)
[Graphic]
FEDERATED INTERNATIONAL SMALL COMPANY FUND
(A PORTFOLIO OF WORLD INVESTMENT SERIES, INC.)
CLASS A SHARES
SEMI-ANNUAL REPORT AND SUPPLEMENT TO THE PROSPECTUS DATED JANUARY 31, 1996
A. Please delete the third and fourth sentence of the fourth paragraph on
the cover page of the prospectus and replace it with the following:
"You may request a copy of the Statement of Additional information, or a
paper copy of this prospectus, if you have received your prospectus
electronically, free of charge by calling 1-800-341-7400. To obtain other
information or to make inquiries about the Fund, contact your financial
institution. The Statement of Additional Information, material incorporated
by reference into this document, and other information regarding the Fund is
maintained electronically with the SEC at Internet Web site
(http://www.sec.gov)."
B. Please insert the following "Financial Highlights" table for Class A
Shares immediately following the "Summary of Fund Expenses" tables in the
prospectus:
FEDERATED INTERNATIONAL SMALL COMPANY FUND
FINANCIAL HIGHLIGHTS -- CLASS A SHARES
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
PERIOD
ENDED
(UNAUDITED)
MAY 31, 1996(A)
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.01
Net realized and unrealized gain (loss) on investments
and foreign currency 1.21
Total from investment operations 1.22
NET ASSET VALUE, END OF PERIOD $11.22
TOTAL RETURN(B) 12.20%
RATIOS TO AVERAGE NET ASSETS
Expenses 1.98%*
Net investment income 0.43%*
Expense waiver/reimbursement(c) 8.19%*
SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $4,025
Average commission rate paid $0.0130
Portfolio turnover 93%
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from February 28, 1996 (date of
initial public investment) to May 31, 1996.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
C. Please delete the final sentence of the section entitled "Making an
Exchange" on page 20 of the prospectus and replace it with the following:
"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 Shareholder Services Company, 1099
Hingham Street, Rockland, MA 02370-3317."
D. Please add the following as the fourth sentence of the section entitled
"How to Redeem Shares" on page 21 of the prospectus:
"Investors who redeem shares through a financial institution may be charged
a service fee by that institution."
E. Under the section entitled "Administrative Services" on page 28 of the
prospectus, please delete all references to "Federated Administrative
Services" and replace them with "Federated Services Company."
F. Please insert the following financial statements beginning on page 32 of
the prospectus, immediately before the section entitled "Appendix."
FEDERATED INTERNATIONAL SMALL COMPANY FUND
PORTFOLIO OF INVESTMENTS
MAY 31, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
COMMON STOCKS -- 88.8%
BANKING -- 1.0%
60,000 (a)Faysal Bank $ 59,060
BEVERAGE & TOBACCO -- 1.6%
15,000 GPO Continental Sa 60,627
24,350 (a)Jose R Lindley E Hijos SA 1,748
Total 92,375
BROADCASTING & PUBLISHING -- 0.9%
20,000 Nanyang Press BHD 53,675
BUILDING MATERIALS & COMPONENTS -- 2.5%
10,000 Apasco SA de CV 53,890
80,000 (a)Hi Cement Corporation 27,502
5,000 Kondotec, Inc. 65,278
Total 146,670
BUSINESS & PUBLIC SERVICES -- 8.1%
18,000 Admiral PLC 71,130
1,600 (a)Business Objects SA, ADR 74,400
1,000 Daitec Co., Ltd. 59,259
3,500 (a)Discreet Logic, Inc. 28,438
1,500 (a)Fulcrum Technologies Inc. 51,468
1,800 (a)Lernout and Hauspie Speech Products N.V. 66,600
1,300 TT Tieto OY, Class B 59,050
1,100 WM-Data AB 66,475
Total 476,820
</TABLE>
FEDERATED INTERNATIONAL SMALL COMPANY FUND
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
COMMON STOCKS -- CONTINUED
CHEMICALS -- 1.6%
2,580 (a)Indian Petrochemicals, GDR $ 44,505
2,500 Saes Getters 48,907
Total 93,412
CONSTRUCTION & HOUSING -- 3.6%
1,000 Chodai Co., Ltd 35,833
15,000 (a)Corporacion GEO, S.A. de C.V., Class B 65,477
80,000 (a)DMCI Holdings 58,824
7,000 Obayashi Road Corp. 53,083
Total 213,217
DATA PROCESSING & REPRODUCTION -- 3.0%
1,000 (a)CBT Group PLC, ADR 46,875
10,000 JBA Holdings PLC 81,358
1,300 (a)Ordina Beheer NV 49,107
Total 177,340
ELECTRICAL & ELECTRONICS -- 3.9%
5,000 Canon Copyer Sales Co 63,889
9,000 Mitsubishi Cable Industries 56,333
18,000 Pressac Holdings PLC 48,815
2,500 (a)Toolex Alpha NV 63,125
Total 232,162
ELECTRONIC COMPONENTS, INSTRUMENTS -- 8.8%
800 Azkoyen SA 55,586
6,000 Azlan Group PLC 59,786
280 (a)Frontec AB, Class B 13,754
1,400 (a)Frontec AB, Class B 68,767
8,000 Hana Microelectronics Co., Ltd. 49,909
3,000 Nihon Kaiheiki Industry 49,445
3,000 Noritsu Koki Co. Ltd. 133,333
</TABLE>
FEDERATED INTERNATIONAL SMALL COMPANY FUND
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
COMMON STOCKS -- CONTINUED
ELECTRONIC COMPONENTS, INSTRUMENTS -- CONTINUED
45,000 Sunright Ltd. $ 46,007
5,000 Telspec PLC 41,454
Total 518,041
ENERGY SOURCES -- 2.5%
218,000 (a)Belle Corp. 49,129
50,000 (a)Hub Power Co. 53,456
15,000 (a)Pan East Resources Inc. 43,802
Total 146,387
FINANCIAL SERVICES -- 2.5%
50,000 JCG Holdings Ltd. 41,035
38,000 Malaysian Industrial Development Bhd 53,883
20,000 Omega Holdings Berhad 53,675
Total 148,593
FOOD & HOUSEHOLD PRODUCTS -- 5.6%
1,300 Hokuto Corp. 56,574
1,400 Raision Tehtaat 84,987
1,400 (a)Raision Tehtaat, Rights 0
2,000 Tenma 50,000
60,000 (a)(b)Want Want Holdings 139,800
Total 331,361
GOLD MINES -- 4.0%
26,000 (a)Geomaque Explorations Ltd. 69,280
7,000 (a)Greenstone Resources Ltd. 101,438
5,500 (a)Nevsun Resources, Ltd. 68,258
Total 238,976
HEALTH & PERSONAL CARE -- 3.8%
100,000 (a)Marsman & Company 53,476
22,000 (a)PT Darya Varia Laboratoria 46,217
</TABLE>
FEDERATED INTERNATIONAL SMALL COMPANY FUND
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
COMMON STOCKS -- CONTINUED
HEALTH & PERSONAL CARE -- CONTINUED
2,640 (a)PT Darya Varia Laboratoria, Rights $ 0
50,000 (a)(b)Shanghai Industrial Holdings Ltd. 60,745
75,000 Sonic Healthcare Ltd. 62,854
Total 223,292
INDUSTRIAL COMPONENTS -- 1.0%
13,500 (a)La Givanni Crespi SPA 57,629
INSURANCE -- 1.0%
22,000 Reinsurance Australia Corp. 61,809
LEISURE & TOURISM -- 1.7%
1,900 (a)East India Hotels, GDR 53,200
33,000 (a)Sydney Harbour Casino Holdings, Inc. 49,781
Total 102,981
MACHINERY & ENGINEERING -- 3.6%
3,000 Nihon Denkei Co., Ltd 56,945
1,100 Nitto Kohki Co. Ltd. 46,343
25,000 The 600 Group 106,540
Total 209,828
MERCHANDISING -- 8.2%
24,500 Flying Flowers Ltd. 66,442
110 Fotolabo S.A. 46,145
500 Grand Optical Photoservice 67,318
13,100 (b)Harvey Nichols 68,718
8,500 Importadora y Exportadora 80,782
2,000 (a)Santa Isabel S.A., ADR 53,000
11,000 Siam Makro 55,161
6,000 Watson & Philip PLC 47,792
Total 485,358
</TABLE>
FEDERATED INTERNATIONAL SMALL COMPANY FUND
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
COMMON STOCKS -- CONTINUED
METALS - STEEL -- 1.0%
14,000 Hylsamex SA, Class B $ 59,225
MISCELLANEOUS MATERIALS & COMMODITIES -- 3.0%
4,000 (a)Bulgari SPA 64,000
2,200 Sanyo Pax Co., Ltd 48,685
130,000 Sinocan Holdings Ltd. 62,586
Total 175,271
PHARMACEUTICALS -- 1.0%
1,000 Schwarz Pharma Ag 60,682
REAL ESTATE -- 3.5%
26,000 Eastern and Oriental Berhad 55,197
40,000 Econstates Berhad 49,990
18,000 Parkway Holdings Ltd. 52,396
40,000 Selangor Properties Bhd 46,465
Total 204,048
RECREATION, OTHER CONSUMER GOODS -- 0.9%
11,000 PT Modern Photo Film Co. 53,762
TELECOMMUNICATIONS -- 2.0%
200 Altran Technologies SA 58,033
3,000 Toyo Communication Equipment 62,778
Total 120,811
TEXTILES & APPAREL -- 3.6%
1,000 Fila Holding SPA, ADR 86,625
5,000 Juel Verite Ohkubo Co. Ltd. 49,537
2,000 Xebio Co. Ltd. 74,630
Total 210,792
TRANSPORTATION - ROAD & RAIL -- 3.1%
3,000 (a)Guangshen Railway Co. Ltd., Class H, ADR 59,250
35,000 PT Citra Marga Nusaphala Persada 57,021
</TABLE>
FEDERATED INTERNATIONAL SMALL COMPANY FUND
<TABLE>
<CAPTION>
SHARES OR VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
<C> <S> <C>
COMMON STOCKS -- CONTINUED
TRANSPORTATION - ROAD & RAIL -- CONTINUED
45,000 PT Steady Safe $ 64,630
Total 180,901
WHOLESALE & INTERNATIONAL TRADE -- 1.8%
300 Doshisha Co., Ltd 9,444
33,000 Enrique Ferreyros S.A. 42,070
1,300 Iuchi Seiedo Co. Ltd. 51,157
Total 102,671
TOTAL COMMON STOCKS (IDENTIFIED COST $4,624,083) 5,237,149
PREFERRED STOCKS -- 3.6%
AUTOMOBILE -- 0.8%
5,000,000 (a)Organizacao Sistemas Aplica S.A., Preference 47,580
LEISURE & TOURISM -- 0.9%
15,500 Village Roadshow Ltd. 51,836
MERCHANDISING -- 1.9%
3,700,000 (a)Cia Bras Distr Pao Acucar, Preference 58,553
1,300,000 (a)Lojas Renner S.A., Preference 53,390
Total 111,943
TOTAL PREFERRED STOCKS (IDENTIFIED COST $203,365) 211,359
(C)REPURCHASE AGREEMENT -- 3.4%
$ 200,000 BT Securities Corporation, 5.34%, dated 5/31/1996,
due 6/3/1996 (at amortized cost) 200,000
TOTAL INVESTMENTS (IDENTIFIED COST $5,027,448)(D) $ 5,648,508
</TABLE>
(a) Non-income producing security.
(b) Denotes a restricted security which is subject to restrictions on resale
under securities laws. At May 31, 1996, these securities amounted to
$269,263 which represents 4.57% of net assets.
(c) The repurchase agreement is fully collateralized by U.S. government
and/or agency obligations based on market prices at the date of the
portfolio. The investment in the repurchase agreement is through
participation in joint accounts with other Federated Funds.
(d) The cost of investments for federal tax purposes amounts to $5,027,448.
The net unrealized appreciation of investments on a federal tax basis
amounts to $621,060 which is comprised of $741,996 appreciation and $120,936
depreciation at May 31, 1996.
FEDERATED INTERNATIONAL SMALL COMPANY FUND
Note: The categories of investments are shown as a percentage of net assets
($5,894,974) at May 31, 1996.
The following acronym(s) are used throughout this portfolio:
ADR -- American Depository Receipt
GDR -- Global Depository Receipts
PLC -- Public Limited Company
(See Notes which are an integral part of the Financial Statements)
FEDERATED INTERNATIONAL SMALL COMPANY FUND
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 1996 (UNAUDITED)
<TABLE>
<S> <C> <C>
ASSETS:
Total investments in securities, at value
(identified and tax cost $5,027,448) $ 5,648,508
Cash 199,832
Cash denominated in foreign currencies (at cost $946) 948
Receivable for shares sold 283,511
Receivable for investments sold 202,022
Income receivable 10,034
Total assets 6,344,855
LIABILITIES:
Payable for investments purchased $ 437,697
Payable for foreign taxes withheld 1,548
Net payable for forward foreign currency exchange contracts
purchased and sold 68
Accrued expenses 10,568
Total liabilities 449,881
NET ASSETS for 525,592 shares outstanding $ 5,894,974
NET ASSETS CONSIST OF:
Paid in capital $ 5,278,389
Net unrealized appreciation of investments and translation of
assets and liabilities in foreign currency 620,854
Accumulated net realized gain on investments and foreign
currency transactions (8,138)
Undistributed net investment income 3,869
Total Net Assets $ 5,894,974
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
CLASS A SHARES:
Net Asset Value Per Share ($4,025,299 O 358,673 shares outstanding) $11.22
Offering Price Per Share (100/94.50 of $11.22)* $11.87
Redemption Proceeds Per Share (99.50/100 of $11.22)** $11.16
CLASS B SHARES:
Net Asset Value Per Share ($1,530,554 O 136,649 shares outstanding) $11.20
Offering Price Per Share $11.20
Redemption Proceeds Per Share (94.50/100 of $11.20)** $10.58
CLASS C SHARES:
Net Asset Value Per Share ($339,121 O 30,270 shares outstanding) $11.20
Offering Price Per Share $11.20
Redemption Proceeds Per Share (99.00/100 of $11.20)** $11.09
</TABLE>
* See "How to Purchase Shares" in the Prospectus.
** See "Contingent Deferred Sales Charge" in the Prospectus.
(See Notes which are an integral part of the Financial Statements)
FEDERATED INTERNATIONAL SMALL COMPANY FUND
STATEMENT OF OPERATIONS
PERIOD ENDED MAY 31, 1996 (UNAUDITED)(A)
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends (net of foreign taxes withheld of $2,417) $ 27,783
Interest (net of foreign taxes withheld of $1,347) 4,031
Total income 31,814
EXPENSES:
Investment advisory fee $ 17,037
Administrative personnel and services fee 48,524
Custodian fees 29,221
Transfer and dividend disbursing agent fees and expenses 6,145
Legal fees 2,911
Portfolio accounting fees 20,532
Distribution services fee -- Class B Shares 886
Distribution services fee -- Class C Shares 149
Shareholder services fee -- Class A Shares 3,062
Shareholder services fee -- Class B Shares 295
Shareholder services fee -- Class C Shares 50
Share registration costs 2,083
Printing and postage 5,169
Insurance premiums 1,723
Miscellaneous 1,723
Total expenses 139,510
Waivers and reimbursements --
Waiver of investment advisory fee $ (17,037)
Reimbursement of other operating expenses (94,528)
Total waivers and reimbursements (111,565)
Net expenses 27,945
Net investment income 3,869
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY:
Net realized loss on investments and foreign
currency transactions (8,138)
Net change in unrealized appreciation of investments and
translation of assets and liabilities in foreign currency 620,854
Net realized and unrealized gain on investments and
foreign currency 612,716
Change in net assets resulting from operations $ 616,585
</TABLE>
(a) For the period from February 28, 1996 (date of initial public
investment) to May 31, 1996.
(See Notes which are an integral part of the Financial Statements)
FEDERATED INTERNATIONAL SMALL COMPANY FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
PERIOD ENDED
(UNAUDITED)
MAY 31, 1996(A)
<S> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS--
Net investment income $ 3,869
Net realized gain (loss) on investments and foreign currency
transactions ($8,138 net loss as computed for federal tax purposes) (8,138)
Net change in unrealized appreciation (depreciation) of investments and
translation of assets and liabilities in foreign currency 620,854
Change in net assets resulting from operations 616,585
DISTRIBUTIONS TO SHAREHOLDERS--
SHARE TRANSACTIONS--
Proceeds from sale of shares 10,263,712
Cost of shares redeemed (4,985,323)
Change in net assets resulting from share transactions 5,278,389
Change in net assets 5,894,974
NET ASSETS:
Beginning of period --
End of period (including undistributed net investment income of $3,869) $5,894,974
</TABLE>
(a) For the period from February 28, 1996 (date of initial public
investment) to May 31, 1996.
(See Notes which are an integral part of the Financial Statements)
FEDERATED INTERNATIONAL SMALL COMPANY FUND
NOTES TO FINANCIAL STATEMENTS
MAY 31, 1996 (UNAUDITED)
1. ORGANIZATION
World Investment Series, Inc. (the "Corporation") is registered under the
Investment Company Act of 1940, as amended (the "Act") as an open-end,
management investment company. The Corporation consists of six portfolios.
The financial statements included herein are only those of Federated
International Small Company Fund (the "Fund"), a diversified portfolio. The
financial statements of the other portfolios are presented separately. The
assets of each portfolio are segregated and a shareholder's interest is
limited to the portfolio in which shares are held. The Fund offers three
classes of shares: Class A Shares, Class B Shares, and Class C Shares. The
investment objective of the Fund is to provide long-term growth of capital.
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.
INVESTMENT VALUATIONS -- Foreign equity securities are valued at the last
sale price reported on a national securities exchange or the
over-the-counter market. In the absence of recorded sales for equity
securities, they are valued according to the last reported bid price.
Short-term foreign and domestic securities are valued at the prices provided
by an independent pricing service. However, short-term foreign and domestic
securities with remaining maturities of sixty days or less at the time of
purchase may be valued at amortized cost, which approximates fair market
value.
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 under repurchase agreement
transactions. Additionally, procedures have been established by the Fund to
monitor, on a daily basis, the market value of each repurchase agreement's
collateral to ensure that the value of collateral at least equals the
repurchase price to be paid under the repurchase agreement transaction.
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 the guidelines and/or
standards reviewed or established by the Board of Directors (the
"Directors"). Risks may arise from the potential inability of counterparties
to honor the terms of the repurchase agreement. Accordingly, the Fund could
receive less than the repurchase price on the sale of collateral securities.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS -- 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").
Dividend income and distributions to shareholders are recorded on the
ex-dividend date. Certain dividends from foreign securities may be recorded
after the ex-dividend date based upon when information becomes available to
the Fund.
FEDERATED INTERNATIONAL SMALL COMPANY FUND
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 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 interest and dividends have been provided for in accordance
with the Fund's understanding of the applicable country's tax rules and
rates.
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.
CONCENTRATION OF CREDIT RISK -- The Fund invests in securities of non-U.S.
issuers. Although the Fund maintains a diversified investment portfolio, the
political or economic developments within a particular country or region may
have an adverse effect on the ability of domiciled issuers to meet their
obligations. Additionally, political or economic developments may have an
effect on the liquidity and volatility of portfolio securities and currency
holdings.
At May 31, 1996, the diversification by country was as follows:
<TABLE>
COUNTRY % OF NET ASSETS COUNTRY % OF NET ASSETS
<S> <C> <S> <C>
Argentina 1.4% Japan 17.4%
Australia 3.8% Malaysia 5.3%
Belgium 1.1% Mexico 4.1%
Brazil 2.7% Netherlands 0.8%
Canada 6.2% Pakistan 1.9%
Chile 0.9% Peru 1.3%
China 2.1% Philippines 2.7%
Finland 2.4% Singapore 1.7%
France 3.4% Spain 0.9%
Germany 1.0% Sweden 3.6%
Hong Kong 1.7% Switzerland 0.8%
India 1.7% Taiwan 2.4%
Indonesia 3.8% Thailand 1.8%
Italy 4.4% United Kingdom 10.0%
</TABLE>
FOREIGN EXCHANGE CONTRACTS -- The Fund may enter into foreign currency
exchange contracts as a way of managing foreign exchange rate risk. The Fund
may enter into these contracts for the purchase or sale of a specific
foreign currency at a fixed price on a future date as a hedge or cross-hedge
against either specific transactions or portfolio positions. The objective
of the Fund's foreign currency hedging transactions is to reduce the risk
that the U.S. dollar value of the Fund's foreign currency denominated
securities will decline in value due to changes in foreign currency exchange
rates. All foreign currency exchange contracts are "marked-to-market" daily
at the applicable translation rates resulting in unrealized gains or losses.
Realized gains or losses are recorded at the time the foreign currency
exchange contract is offset by entering into a closing transaction or by
delivery or receipt of the currency. Risks may arise upon entering into
these contracts from the potential inability of counterparties to meet the
terms of their contracts and from unanticipated movements in the value of a
foreign currency relative to the U.S. dollar.
At May 31, 1996, the Fund had outstanding foreign exchange contracts as set
forth below:
<TABLE>
<CAPTION>
UNREALIZED
SETTLEMENT CONTRACTS TO IN EXCHANGE CONTRACTS AT APPRECIATION
CONTRACTS SOLD DATE DELIVER/RECEIVE FOR VALUE (DEPRECIATION)
<S> <C> <C> <C> <C> <C>
Malaysian Ringgit 06/04/1996 121,744 $48,697 $48,765 ($68)
</TABLE>
FOREIGN CURRENCY TRANSLATION -- The accounting records of the Fund 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 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 of
portfolio securities, sales and maturities of short-term securities, sales
of FCs, currency gains or losses realized between the trade and settlement
dates on securities transactions, the difference between the amounts of
dividends, interest, and foreign 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.
RESTRICTED SECURITIES -- Restricted securities are securities that may only
be resold upon registration under 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.
FEDERATED INTERNATIONAL SMALL COMPANY FUND
Additional information on each restricted security held at May 31, 1996 is
as follows:
<TABLE>
<CAPTION>
SECURITY ACQUISITION DATE ACQUISITION COST
<S> <C> <C>
Want Want Holdings 05/16/1996 $ 105,000
Shanghai Industrial Holdings Ltd. 05/23/1996 $ 47,537
Harvey Nichols 04/22/1996 $ 53,494
</TABLE>
USE OF ESTIMATES -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts of assets, liabilities,
expenses and revenues reported in the financial statements. Actual results
could differ from those estimated.
OTHER -- Investment transactions are accounted for on the trade date.
3. CAPITAL STOCK
At May 31, 1996, par value shares ($ 0.001 per share) authorized were as
follows:
<TABLE>
<CAPTION>
# OF PAR VALUE
CLASS NAME CAPITAL STOCK AUTHORIZED
<S> <C>
Class A Shares 150,000,000
Class B Shares 150,000,000
Class C Shares 150,000,000
Total 450,000,000
</TABLE>
Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
PERIOD ENDED
MAY 31, 1996(A)
CLASS A SHARES SHARES AMOUNT
<S> <C> <C>
Shares sold 824,311 $ 8,449,292
Shares redeemed (465,638) (4,957,611)
Net change resulting from Class A share transactions 358,673 $ 3,491,681
</TABLE>
<TABLE>
<CAPTION>
PERIOD ENDED
MAY 31, 1996(B)
CLASS B SHARES SHARES AMOUNT
<S> <C> <C>
Shares sold 136,893 $ 1,460,779
Shares redeemed (244) (2,615)
Net change resulting from Class B share transactions 136,649 $ 1,458,164
</TABLE>
FEDERATED INTERNATIONAL SMALL COMPANY FUND
<TABLE>
<CAPTION>
PERIOD ENDED
MAY 31, 1996(B)
CLASS C SHARES SHARES AMOUNT
<S> <C> <C>
Shares sold 32,598 $ 353,641
Shares redeemed (2,328) (25,097)
Net change resulting from Class C share transactions 30,270 $ 328,544
Net change resulting from Fund share transactions 525,592 $ 5,278,389
</TABLE>
(a) For the period from February 28, 1996 (date of initial public
investment) to May 31, 1996.
(b) For the period from February 28, 1996 (date of initial public offering)
to May 31, 1996.
4. INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE -- Federated Global Research Corp., the Fund's
investment adviser, (the "Adviser"), receives for its services an annual
investment advisory fee equal to 1.25% of the Fund's average daily net
assets.
The Adviser may voluntarily choose to waive any portion of its fee and
reimburse certain operating expenses of the Fund. The Adviser can modify or
terminate this voluntary waiver and reimbursement at any time at its sole
discretion.
ADMINISTRATIVE FEE -- Federated Services Company ("FServ"), under the
Administrative Services Agreement, provides the Fund with administrative
personnel and services. The fee paid to FServ 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
the period of the Administrative Services Agreement shall be at least
$125,000 per portfolio and $30,000 per each additional class of shares.
DISTRIBUTION SERVICES FEE -- The Fund has adopted a Distribution Plan (the
"Plan") pursuant to Rule 12b-1 under the Act. 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 Class A Shares, Class B Shares, and
Class C Shares. The Plan provides that the Fund may incur distribution
expenses according to the following schedule annually, to compensate FSC.
<TABLE>
<CAPTION>
% OF AVG. DAILY
SHARE CLASS NAME NET ASSETS OF CLASS
<S> <C>
Class A Shares 0.25%
Class B Shares 0.75%
Class C Shares 0.75%
</TABLE>
Class A Shares did not incur a Distribution services fee for the period
ended May 31, 1996, and has no present intention of paying or accruing the
Distribution services fees.
FEDERATED INTERNATIONAL SMALL COMPANY FUND
SHAREHOLDER SERVICES FEE -- Under the terms of a Shareholder Services
Agreement with Federated Shareholder Services("FSS"), the Fund will pay FSS
up to 0.25% of daily average net assets of the Fund shares for the period.
The fee paid to FSS is used to finance certain services for shareholders and
to maintain shareholder accounts.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES -- FServ, through
its subsidiary, Federated Shareholder Services Company ("FSSC") serves as
transfer and dividend disbursing agent for the Fund. The fee paid to FSSC is
based on the size, type, and number of accounts and transactions made by
shareholders.
PORTFOLIO ACCOUNTING FEES -- FServ maintains the Fund's accounting records
for which it receives a fee. The fee is based on the level of the Fund's
average daily net assets for the period, plus out-of-pocket expenses.
ORGANIZATIONAL EXPENSES -- Organizational expenses of $47,932 were borne
initially by Adviser. The Fund has agreed to reimburse Adviser for the
organizational expenses during the five year period following effective
date. For the period ended May 31, 1996, no payments were made by the Fund
pursuant to this agreement.
GENERAL -- Certain of the Officers and Directors of the Corporation are
Officers and Directors or Trustees of the above companies.
5. INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the
period ended May 31, 1996, were as follows:
<TABLE>
<S> <C>
PURCHASES $ 7,556,187
SALES $ 4,766,137
</TABLE>
<TABLE>
<S> <S>
DIRECTORS OFFICERS
John F. Donahue John F. Donahue
Thomas G. Bigley Chairman
John T. Conroy, Jr. Richard B. Fisher
William J. Copeland President
James E. Dowd J. Christopher Donahue
Lawrence D. Ellis, M.D. Executive Vice President
Richard B. Fisher Edward C. Gonzales
Edward L. Flaherty, Jr. Executive Vice President
Peter E. Madden John W. McGonigle
Gregor F. Meyer Executive Vice President and Secretary
John E. Murray, Jr. David M. Taylor
Wesley W. Posvar Treasurer
Marjorie P. Smuts J. Crilley Kelly
Assistant Secretary
</TABLE>
Mutual funds are not bank deposits or obligations, are not guaranteed by any
bank, and are not insured or guaranteed by the U.S. government, the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other
government agency. Investment in mutual funds involves investment risk,
including possible loss of principal.
This report is authorized for distribution to prospective investors only
when preceded or accompanied by the Fund's prospectus which contains facts
concerning its objective and policies, management fees, expenses, and other
information.
[This Page Intentionally Left Blank]
[This Page Intentionally Left Blank]
FEDERATED
INTERNATIONAL
SMALL
COMPANY
FUND
CLASS A SHARES
SEMI-ANNUAL REPORT AND
SUPPLEMENT TO PROSPECTUS
DATED JANUARY 31, 1996
[Graphic]
Federated Investors
Since 1955
Federated Investors Tower
Pittsburgh, PA 15222-3779
Federated Securities Corp. is the distributor of the fund
and is a subsidiary of Federated Investors.
[Graphic]
Cusip 981487838
G01743-02 (7/96)
FEDERATED INTERNATIONAL SMALL COMPANY FUND
(A PORTFOLIO OF WORLD INVESTMENT SERIES, INC.)
CLASS A SHARES, CLASS B SHARES, CLASS C SHARES
SEMI-ANNUAL REPORT AND SUPPLEMENT TO THE PROSPECTUS DATED JANUARY 31, 1996
A. Please delete the third and fourth sentence of the fourth paragraph on
the cover page of the prospectus and replace it with the following:
"You may request a copy of the Statement of Additional information, or a
paper copy of this prospectus, if you have received your prospectus
electronically, free of charge by calling 1-800-341-7400. To obtain other
information or to make inquiries about the Fund, contact your financial
institution. The Statement of Additional Information, material incorporated
by reference into this document, and other information regarding the Fund is
maintained electronically with the SEC at Internet Web site
(http://www.sec.gov)."
B. Please insert the following "Financial Highlights" tables for Class A
Shares, Class B Shares and Class C Shares immediately following the "Summary
of Fund Expenses" tables in the prospectus:
FEDERATED INTERNATIONAL SMALL COMPANY FUND
FINANCIAL HIGHLIGHTS -- CLASS A SHARES
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
PERIOD
ENDED
(UNAUDITED)
MAY 31, 1996(A)
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.01
Net realized and unrealized gain (loss) on investments and foreign currency 1.21
Total from investment operations 1.22
NET ASSET VALUE, END OF PERIOD $11.22
TOTAL RETURN(B) 12.20%
RATIOS TO AVERAGE NET ASSETS
Expenses 1.98%*
Net investment income 0.43%*
Expense waiver/reimbursement(c) 8.19%*
SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $4,025
Average commission rate paid $0.0130
Portfolio turnover 93%
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from February 28, 1996 (date of
initial public investment) to May 31, 1996.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
FEDERATED INTERNATIONAL SMALL COMPANY FUND
FINANCIAL HIGHLIGHTS -- CLASS B SHARES
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
PERIOD
ENDED
(UNAUDITED)
<S> <C>
MAY 31, 1996(A)
NET ASSET VALUE, BEGINNING OF PERIOD $10.00
INCOME FROM INVESTMENT OPERATIONS
Net operating loss (0.01)
Net realized and unrealized gain (loss) on investments and foreign currency 1.21
Total from investment operations 1.20
NET ASSET VALUE, END OF PERIOD $11.20
TOTAL RETURN(B) 12.00%
RATIOS TO AVERAGE NET ASSETS
Expenses 2.72%*
Net operating loss (1.02%)*
Expense waiver/reimbursement(c) 8.19%*
SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $1,531
Average commission rate paid $0.0130
Portfolio turnover 93%
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from February 28, 1996 (date of
initial public offering) to May 31, 1996.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
FEDERATED INTERNATIONAL SMALL COMPANY FUND
FINANCIAL HIGHLIGHTS -- CLASS C SHARES
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
PERIOD
ENDED
(UNAUDITED)
MAY 31, 1996(A)
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.00
INCOME FROM INVESTMENT OPERATIONS
Net operating loss (0.01)
Net realized and unrealized gain (loss) on investments and foreign currency 1.21
Total from investment operations 1.20
NET ASSET VALUE, END OF PERIOD $11.20
TOTAL RETURN(B) 12.00%
RATIOS TO AVERAGE NET ASSETS
Expenses 2.72%*
Net operating loss (1.18%)*
Expense waiver/reimbursement(c) 8.19%*
SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $339
Average commission rate paid $0.0130
Portfolio turnover 93%
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from February 28, 1996 (date of
initial public offering) to May 31, 1996.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
C. Please delete the final sentence of the section entitled "Making an
Exchange" on page 25 of the prospectus and replace it with the following:
"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 Shareholder Services Company, 1099
Hingham Street, Rockland, MA 02370-3317."
D. Please add the following as the fourth sentence of the section entitled
"How to Redeem Shares" on page 26 of the prospectus:
"Investors who redeem shares through a financial institution may be charged
a service fee by that institution."
E. Under the section entitled "Administrative Services" on page 33 of the
prospectus, please delete all references to "Federated Administrative
Services" and replace them with "Federated Services Company."
F. Please insert the following financial statements beginning on page 37 of
the prospectus, immediately before the section entitled "Appendix."
FEDERATED INTERNATIONAL SMALL COMPANY FUND
PORTFOLIO OF INVESTMENTS
MAY 31, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
COMMON STOCKS -- 88.8%
BANKING -- 1.0%
60,000 (a)Faysal Bank $ 59,060
BEVERAGE & TOBACCO -- 1.6%
15,000 GPO Continental Sa 60,627
24,350 (a)Jose R Lindley E Hijos SA 31,748
Total 92,375
BROADCASTING & PUBLISHING -- 0.9%
20,000 Nanyang Press BHD 53,675
BUILDING MATERIALS & COMPONENTS -- 2.5%
10,000 Apasco SA de CV 53,890
80,000 (a)Hi Cement Corporation 27,502
5,000 Kondotec, Inc. 65,278
Total 146,670
BUSINESS & PUBLIC SERVICES -- 8.1%
18,000 Admiral PLC 71,130
1,600 (a)Business Objects SA, ADR 74,400
1,000 Daitec Co., Ltd. 59,259
3,500 (a)Discreet Logic, Inc. 28,438
1,500 (a)Fulcrum Technologies Inc. 51,468
1,800 (a)Lernout and Hauspie Speech Products N.V. 66,600
1,300 TT Tieto OY, Class B 59,050
1,100 WM-Data AB 66,475
Total 476,820
</TABLE>
FEDERATED INTERNATIONAL SMALL COMPANY FUND
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
COMMON STOCKS -- CONTINUED
CHEMICALS -- 1.6%
2,580 (a)Indian Petrochemicals, GDR $ 44,505
2,500 Saes Getters 48,907
Total 93,412
CONSTRUCTION & HOUSING -- 3.6%
1,000 Chodai Co., Ltd 35,833
15,000 (a)Corporacion GEO, S.A. de C.V., Class B 65,477
80,000 (a)DMCI Holdings 58,824
7,000 Obayashi Road Corp. 53,083
Total 213,217
DATA PROCESSING & REPRODUCTION -- 3.0%
1,000 (a)CBT Group PLC, ADR 46,875
10,000 JBA Holdings PLC 81,358
1,300 (a)Ordina Beheer NV 49,107
Total 177,340
ELECTRICAL & ELECTRONICS -- 3.9%
5,000 Canon Copyer Sales Co 63,889
9,000 Mitsubishi Cable Industries 56,333
18,000 Pressac Holdings PLC 48,815
2,500 (a)Toolex Alpha NV 63,125
Total 232,162
ELECTRONIC COMPONENTS, INSTRUMENTS -- 8.8%
800 Azkoyen SA 55,586
6,000 Azlan Group PLC 59,786
280 (a)Frontec AB, Class B 13,754
1,400 (a)Frontec AB, Class B 68,767
8,000 Hana Microelectronics Co., Ltd. 49,909
3,000 Nihon Kaiheiki Industry 49,445
3,000 Noritsu Koki Co. Ltd. 133,333
</TABLE>
FEDERATED INTERNATIONAL SMALL COMPANY FUND
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
COMMON STOCKS -- CONTINUED
ELECTRONIC COMPONENTS, INSTRUMENTS -- CONTINUED
45,000 Sunright Ltd. $ 46,007
5,000 Telspec PLC 41,454
Total 518,041
ENERGY SOURCES -- 2.5%
218,000 (a)Belle Corp. 49,129
50,000 (a)Hub Power Co. 53,456
15,000 (a)Pan East Resources Inc. 43,802
Total 146,387
FINANCIAL SERVICES -- 2.5%
50,000 JCG Holdings Ltd. 41,035
38,000 Malaysian Industrial Development Bhd 53,883
20,000 Omega Holdings Berhad 53,675
Total 148,593
FOOD & HOUSEHOLD PRODUCTS -- 5.6%
1,300 Hokuto Corp. 56,574
1,400 Raision Tehtaat 84,987
1,400 (a)Raision Tehtaat, Rights 0
2,000 Tenma 50,000
60,000 (a)(b)Want Want Holdings 139,800
Total 331,361
GOLD MINES -- 4.0%
26,000 (a)Geomaque Explorations Ltd. 69,280
7,000 (a)Greenstone Resources Ltd. 101,438
5,500 (a)Nevsun Resources, Ltd. 68,258
Total 238,976
HEALTH & PERSONAL CARE -- 3.8%
100,000 (a)Marsman & Company 53,476
22,000 (a)PT Darya Varia Laboratoria 46,217
</TABLE>
FEDERATED INTERNATIONAL SMALL COMPANY FUND
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
COMMON STOCKS -- CONTINUED
HEALTH & PERSONAL CARE -- CONTINUED
2,640 (a)PT Darya Varia Laboratoria, Rights $ 0
50,000 (a)(b)Shanghai Industrial Holdings Ltd. 60,745
75,000 Sonic Healthcare Ltd. 62,854
Total 223,292
INDUSTRIAL COMPONENTS -- 1.0%
13,500 (a)La Givanni Crespi SPA 57,629
INSURANCE -- 1.0%
22,000 Reinsurance Australia Corp. 61,809
LEISURE & TOURISM -- 1.7%
1,900 (a)East India Hotels, GDR 53,200
33,000 (a)Sydney Harbour Casino Holdings, Inc. 49,781
Total 102,981
MACHINERY & ENGINEERING -- 3.6%
3,000 Nihon Denkei Co., Ltd 56,945
1,100 Nitto Kohki Co. Ltd. 46,343
25,000 The 600 Group 106,540
Total 209,828
MERCHANDISING -- 8.2%
24,500 Flying Flowers Ltd. 66,442
110 Fotolabo S.A. 46,145
500 Grand Optical Photoservice 67,318
13,100 (b)Harvey Nichols 68,718
8,500 Importadora y Exportadora 80,782
2,000 (a)Santa Isabel S.A., ADR 53,000
11,000 Siam Makro 55,161
6,000 Watson & Philip PLC 47,792
Total 485,358
</TABLE>
FEDERATED INTERNATIONAL SMALL COMPANY FUND
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
COMMON STOCKS -- CONTINUED
METALS - STEEL -- 1.0%
14,000 Hylsamex SA, Class B $ 59,225
MISCELLANEOUS MATERIALS & COMMODITIES -- 3.0%
4,000 (a)Bulgari SPA 64,000
2,200 Sanyo Pax Co., Ltd 48,685
130,000 Sinocan Holdings Ltd. 62,586
Total 175,271
PHARMACEUTICALS -- 1.0%
1,000 Schwarz Pharma Ag 60,682
REAL ESTATE -- 3.5%
26,000 Eastern and Oriental Berhad 55,197
40,000 Econstates Berhad 49,990
18,000 Parkway Holdings Ltd. 52,396
40,000 Selangor Properties Bhd 46,465
Total 204,048
RECREATION, OTHER CONSUMER GOODS -- 0.9%
11,000 PT Modern Photo Film Co. 53,762
TELECOMMUNICATIONS -- 2.0%
200 Altran Technologies SA 58,033
3,000 Toyo Communication Equipment 62,778
Total 120,811
TEXTILES & APPAREL -- 3.6%
1,000 Fila Holding SPA, ADR 86,625
5,000 Juel Verite Ohkubo Co. Ltd. 49,537
2,000 Xebio Co. Ltd. 74,630
Total 210,792
TRANSPORTATION - ROAD & RAIL -- 3.1%
3,000 (a)Guangshen Railway Co. Ltd., Class H, ADR 59,250
35,000 PT Citra Marga Nusaphala Persada 57,021
</TABLE>
FEDERATED INTERNATIONAL SMALL COMPANY FUND
<TABLE>
<CAPTION>
SHARES OR VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
<C> <S> <C>
COMMON STOCKS -- CONTINUED
TRANSPORTATION - ROAD & RAIL -- CONTINUED
45,000 PT Steady Safe $ 64,630
Total 180,901
WHOLESALE & INTERNATIONAL TRADE -- 1.8%
300 Doshisha Co., Ltd 9,444
33,000 Enrique Ferreyros S.A. 42,070
1,300 Iuchi Seiedo Co. Ltd. 51,157
Total 102,671
TOTAL COMMON STOCKS (IDENTIFIED COST $4,624,083) 5,237,149
PREFERRED STOCKS -- 3.6%
AUTOMOBILE -- 0.8%
5,000,000 (a)Organizacao Sistemas Aplica S.A., Preference 47,580
LEISURE & TOURISM -- 0.9%
15,500 Village Roadshow Ltd. 51,836
MERCHANDISING -- 1.9%
3,700,000 (a)Cia Bras Distr Pao Acucar, Preference 58,553
1,300,000 (a)Lojas Renner S.A., Preference 53,390
Total 111,943
TOTAL PREFERRED STOCKS (IDENTIFIED COST $203,365) 211,359
(C)REPURCHASE AGREEMENT -- 3.4%
$ 200,000 BT Securities Corporation, 5.34%, dated 5/31/1996, due 6/3/1996
(at amortized cost) 200,000
TOTAL INVESTMENTS (IDENTIFIED COST $5,027,448)(D) $ 5,648,508
</TABLE>
(a) Non-income producing security.
(b) Denotes a restricted security which is subject to restrictions on resale
under securities laws. At May 31, 1996, these securities amounted to
$269,263 which represents 4.57% of net assets.
(c) The repurchase agreement is fully collateralized by U.S. government
and/or agency obligations based on market prices at the date of the
portfolio. The investment in the repurchase agreement is through
participation in joint accounts with other Federated funds.
(d) The cost of investments for federal tax purposes amounts to $5,027,448.
The net unrealized appreciation of investments on a federal tax basis
amounts to $621,060 which is comprised of $741,996 appreciation and $120,936
depreciation at May 31, 1996.
FEDERATED INTERNATIONAL SMALL COMPANY FUND
Note: The categories of investments are shown as a percentage of net assets
($5,894,974) at May 31, 1996.
The following acronym(s) are used throughout this portfolio:
ADR -- American Depository Receipt
GDR -- Global Depository Receipts
PLC -- Public Limited Company
(See Notes which are an integral part of the Financial Statements)
FEDERATED INTERNATIONAL SMALL COMPANY FUND
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 1996 (UNAUDITED)
<TABLE>
<S> <C> <C>
ASSETS:
Total investments in securities, at value (identified and tax cost
$5,027,448) $5,648,508
Cash 199,832
Cash denominated in foreign currencies (at cost $946) 948
Receivable for shares sold 283,511
Receivable for investments sold 202,022
Income receivable 10,034
Total assets 6,344,855
LIABILITIES:
Payable for investments purchased $437,697
Payable for foreign taxes withheld 1,548
Net payable for forward foreign currency exchange contracts purchased
and sold 68
Accrued expenses 10,568
Total liabilities 449,881
NET ASSETS for 525,592 shares outstanding $5,894,974
NET ASSETS CONSIST OF:
Paid in capital $5,278,389
Net unrealized appreciation of investments and translation of assets
and liabilities
in foreign currency 620,854
Accumulated net realized gain on investments and foreign currency
transactions (8,138)
Undistributed net investment income 3,869
Total Net Assets $5,894,974
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
CLASS A SHARES:
Net Asset Value Per Share ($4,025,299 O 358,673 shares outstanding) $11.22
Offering Price Per Share (100/94.50 of $11.22)* $11.87
Redemption Proceeds Per Share (99.50/100 of $11.22)** $11.16
CLASS B SHARES:
Net Asset Value Per Share ($1,530,554 O 136,649 shares outstanding) $11.20
Offering Price Per Share $11.20
Redemption Proceeds Per Share (94.50/100 of $11.20)** $10.58
CLASS C SHARES:
Net Asset Value Per Share ($339,121 O 30,270 shares outstanding) $11.20
Offering Price Per Share $11.20
Redemption Proceeds Per Share (99.00/100 of $11.20)** $11.09
</TABLE>
* See "How to Purchase Shares" in the Prospectus.
** See "Contingent Deferred Sales Charge" in the Prospectus.
(See Notes which are an integral part of the Financial Statements)
FEDERATED INTERNATIONAL SMALL COMPANY FUND
STATEMENT OF OPERATIONS
PERIOD ENDED MAY 31, 1996 (UNAUDITED)(A)
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends (net of foreign taxes withheld of $2,417) $ 27,783
Interest (net of foreign taxes withheld of $1,347) 4,031
Total income 31,814
EXPENSES:
Investment advisory fee $ 17,037
Administrative personnel and services fee 48,524
Custodian fees 29,221
Transfer and dividend disbursing agent fees and expenses 6,145
Legal fees 2,911
Portfolio accounting fees 20,532
Distribution services fee -- Class B Shares 886
Distribution services fee -- Class C Shares 149
Shareholder services fee -- Class A Shares 3,062
Shareholder services fee -- Class B Shares 295
Shareholder services fee -- Class C Shares 50
Share registration costs 2,083
Printing and postage 5,169
Insurance premiums 1,723
Miscellaneous 1,723
Total expenses 139,510
Waivers and reimbursements --
Waiver of investment advisory fee $(17,037)
Reimbursement of other operating expenses (94,528)
Total waivers and reimbursements (111,565)
Net expenses 27,945
Net investment income 3,869
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY:
Net realized loss on investments and foreign currency transactions (8,138)
Net change in unrealized appreciation of investments and translation
of assets and liabilities in foreign currency 620,854
Net realized and unrealized gain on investments and
foreign currency 612,716
Change in net assets resulting from operations $616,585
</TABLE>
(a) For the period from February 28, 1996 (date of initial
public investment) to May 31, 1996.
(See Notes which are an integral part of the Financial Statements)
FEDERATED INTERNATIONAL SMALL COMPANY FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
PERIOD ENDED
(UNAUDITED)
MAY 31, 1996(A)
<S> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS--
Net investment income $ 3,869
Net realized gain (loss) on investments and foreign currency
transactions ($8,138 net loss as computed for federal tax purposes) (8,138)
Net change in unrealized appreciation (depreciation) of investments
and translation of assets and liabilities in foreign currency 620,854
Change in net assets resulting from operations 616,585
SHARE TRANSACTIONS--
Proceeds from sale of shares 10,263,712
Cost of shares redeemed (4,985,323)
Change in net assets resulting from share transactions 5,278,389
Change in net assets 5,894,974
NET ASSETS:
Beginning of period --
End of period (including undistributed net investment income of
$3,869) $ 5,894,974
</TABLE>
(a) For the period from February 28, 1996 (date of initial
public investment) to May 31, 1996.
(See Notes which are an integral part of the Financial Statements)
FEDERATED INTERNATIONAL SMALL COMPANY FUND
NOTES TO FINANCIAL STATEMENTS
MAY 31, 1996 (UNAUDITED)
1. ORGANIZATION
World Investment Series, Inc. (the "Corporation") is registered under the
Investment Company Act of 1940, as amended (the "Act") as an open-end,
management investment company. The Corporation consists of six portfolios.
The financial statements included herein are only those of Federated
International Small Company Fund (the "Fund"), a diversified portfolio. The
financial statements of the other portfolios are presented separately. The
assets of each portfolio are segregated and a shareholder's interest is
limited to the portfolio in which shares are held. The Fund offers three
classes of shares: Class A Shares, Class B Shares, and Class C Shares. The
investment objective of the Fund is to provide long-term growth of capital.
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.
INVESTMENT VALUATIONS -- Foreign equity securities are valued at the last
sale price reported on a national securities exchange or the
over-the-counter market. In the absence of recorded sales for equity
securities, they are recorded at the last reported bid price. Short-term
foreign and domestic securities are valued at the prices provided by an
independent pricing service. However, short-term foreign and domestic
securities with remaining maturities of sixty days or less at the time of
purchase may be valued at amortized cost, which approximates fair market
value.
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 under repurchase agreement
transactions. Additionally, procedures have been established by the Fund to
monitor, on a daily basis, the market value of each repurchase agreement's
collateral to ensure that the value of collateral at least equals the
repurchase price to be paid under the repurchase agreement transaction.
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 the guidelines and/or
standards reviewed or established by the Board of Directors (the
"Directors"). Risks may arise from the potential inability of counterparties
to honor the terms of the repurchase agreement. Accordingly, the Fund could
receive less than the repurchase price on the sale of collateral securities.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS -- 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").
Dividend income and distributions to shareholders are recorded on the
ex-dividend date. Certain dividends from foreign securities may be recorded
after the ex-dividend date based upon when information becomes available to
the Fund.
FEDERATED INTERNATIONAL SMALL COMPANY FUND
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 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 interest and dividends have been provided for in accordance
with the Fund's understanding of the applicable country's tax rules and
rates.
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.
CONCENTRATION OF CREDIT RISK -- The Fund invests in securities of non-U.S.
issuers. Although the Fund maintains a diversified investment portfolio, the
political or economic developments within a particular country or region may
have an adverse effect on the ability of domiciled issuers to meet their
obligations. Additionally, political or economic developments may have an
effect on the liquidity and volatility of portfolio securities and currency
holdings.
At May 31, 1996, the diversification by country was as follows:
<TABLE>
<CAPTION>
COUNTRY % OF NET ASSETS COUNTRY % OF NET ASSETS
<S> <C> <S> <C>
Argentina 1.4% Japan 17.4%
Australia 3.8% Malaysia 5.3%
Belgium 1.1% Mexico 4.1%
Brazil 2.7% Netherlands 0.8%
Canada 6.2% Pakistan 1.9%
Chile 0.9% Peru 1.3%
China 2.1% Philippines 2.7%
Finland 2.4% Singapore 1.7%
France 3.4% Spain 0.9%
Germany 1.0% Sweden 3.6%
Hong Kong 1.7% Switzerland 0.8%
India 1.7% Taiwan 2.4%
Indonesia 3.8% Thailand 1.8%
Italy 4.4% United Kingdom 10.0%
</TABLE>
FOREIGN EXCHANGE CONTRACTS -- The Fund may enter into foreign currency
exchange contracts as a way of managing foreign exchange rate risk. The Fund
may enter into these contracts for the purchase or sale of a specific
foreign currency at a fixed price on a future date as a hedge or cross-hedge
against either specific transactions or portfolio positions. The objective
of the Fund's foreign currency hedging transactions is to reduce the risk
that the U.S. dollar value of the Fund's foreign currency denominated
securities will decline in value due to changes in foreign currency exchange
rates. All foreign currency exchange contracts are "marked-to-market" daily
at the applicable translation rates resulting in unrealized gains or losses.
Realized gains or losses are recorded at the time the foreign currency
exchange contract is offset by entering into a closing transaction or by
delivery or receipt of the currency. Risks may arise upon entering into
these contracts from the potential inability of counterparties to meet the
terms of their contracts and from unanticipated movements in the value of a
foreign currency relative to the U.S. dollar.
At May 31, 1996, the Fund had outstanding foreign exchange contracts as set
forth below:
<TABLE>
<CAPTION>
UNREALIZED
SETTLEMENT CONTRACTS TO IN EXCHANGE CONTRACTS AT APPRECIATION
CONTRACTS SOLD DATE DELIVER/RECEIVE FOR VALUE (DEPRECIATION)
<S> <C> <C> <C> <C> <C>
Malaysian Ringgit 06/04/1996 121,744 $48,697 $48,765 ($68)
</TABLE>
FOREIGN CURRENCY TRANSLATION -- The accounting records of the Fund 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 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 of
portfolio securities, sales and maturities of short-term securities, sales
of FCs, currency gains or losses realized between the trade and settlement
dates on securities transactions, the difference between the amounts of
dividends, interest, and foreign 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.
RESTRICTED SECURITIES -- Restricted securities are securities that may only
be resold upon registration under 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.
FEDERATED INTERNATIONAL SMALL COMPANY FUND
Additional information on each restricted security held at May 31, 1996 is
as follows:
<TABLE>
<CAPTION>
SECURITY ACQUISITION DATE ACQUISITION COST
<S> <C> <C>
Want Want Holdings 05/16/1996 $105,000
Shanghai Industrial Holdings Ltd. 05/23/1996 $ 47,537
Harvey Nichols 04/22/1996 $ 53,494
</TABLE>
USE OF ESTIMATES -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts of assets, liabilities,
expenses and revenues reported in the financial statements. Actual results
could differ from those estimated.
OTHER -- Investment transactions are accounted for on the trade date.
3. CAPITAL STOCK
At May 31, 1996, par value shares ($ 0.001 per share) authorized were as
follows:
<TABLE>
<CAPTION>
# OF PAR VALUE
CLASS NAME CAPITAL STOCK AUTHORIZED
<S> <C>
Class A Shares 150,000,000
Class B Shares 150,000,000
Class C Shares 150,000,000
Total 450,000,000
</TABLE>
Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
PERIOD ENDED
MAY 31, 1996(A)
CLASS A SHARES SHARES AMOUNT
<S> <C> <C>
Shares sold 824,311 $ 8,449,292
Shares redeemed (465,638) (4,957,611)
Net change resulting from Class A share transactions 358,673 $ 3,491,681
</TABLE>
<TABLE>
<CAPTION>
PERIOD ENDED
MAY 31, 1996(B)
CLASS B SHARES SHARES AMOUNT
<S> <C> <C>
Shares sold 136,893 $ 1,460,779
Shares redeemed (244) (2,615)
Net change resulting from Class B share transactions 136,649 $ 1,458,164
</TABLE>
FEDERATED INTERNATIONAL SMALL COMPANY FUND
<TABLE>
<CAPTION>
PERIOD ENDED
MAY 31, 1996(B)
CLASS C SHARES SHARES AMOUNT
<S> <C> <C>
Shares sold 32,598 $ 353,641
Shares redeemed (2,328) (25,097)
Net change resulting from Class C share transactions 30,270 $ 328,544
Net change resulting from Fund share transactions 525,592 $ 5,278,389
</TABLE>
(a) For the period from February 28, 1996 (date of initial public
investment) to May 31, 1996.
(b) For the period from February 28, 1996 (date of initial public offering)
to May 31, 1996.
4. INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE -- Federated Global Research Corp., the Fund's
investment adviser, (the "Adviser"), receives for its services an annual
investment advisory fee equal to 1.25% of the Fund's average daily net
assets.
The Adviser may voluntarily choose to waive any portion of its fee and
reimburse certain operating expenses of the Fund. The Adviser can modify or
terminate this voluntary waiver and reimbursement at any time at its sole
discretion.
ADMINISTRATIVE FEE -- Federated Services Company ("FServ"), under the
Administrative Services Agreement, provides the Fund with administrative
personnel and services. The fee paid to FServ 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
the period of the Administrative Services Agreement shall be at least
$125,000 per portfolio and $30,000 per each additional class of shares.
DISTRIBUTION SERVICES FEE -- The Fund has adopted a Distribution Plan (the
"Plan") pursuant to Rule 12b-1 under the Act. 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 Class A Shares, Class B Shares, and
Class C Shares. The Plan provides that the Fund may incur distribution
expenses according to the following schedule annually, to compensate FSC.
<TABLE>
<CAPTION>
% OF AVG. DAILY
SHARE CLASS NAME NET ASSETS OF CLASS
<S> <C>
Class A Shares 0.25%
Class B Shares 0.75%
Class C Shares 0.75%
</TABLE>
Class A Shares did not incur a Distribution services fee for the period
ended May 31, 1996, and has no present intention of paying or accruing the
Distribution services fees.
FEDERATED INTERNATIONAL SMALL COMPANY FUND
SHAREHOLDER SERVICES FEE -- Under the terms of a Shareholder Services
Agreement with Federated Shareholder Services("FSS"), the Fund will pay FSS
up to 0.25% of average daily net assets of the Fund shares for the period.
The fee paid to FSS is used to finance certain services for shareholders and
to maintain shareholder accounts.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES -- FServ, through
its subsidiary, Federated Shareholder Services Company ("FSSC") serves as
transfer and dividend disbursing agent for the Fund. The fee paid to FSSC is
based on the size, type, and number of accounts and transactions made by
shareholders.
PORTFOLIO ACCOUNTING FEES -- FServ maintains the Fund's accounting records
for which it receives a fee. The fee is based on the level of the Fund's
average daily net assets for the period, plus out-of-pocket expenses.
ORGANIZATIONAL EXPENSES -- Organizational expenses of $47,932 were borne
initially by Adviser. The Fund has agreed to reimburse Adviser for the
organizational expenses during the five year period following effective
date. For the period ended May 31, 1996, no payments were made by the Fund
pursuant to this agreement.
GENERAL -- Certain of the Officers and Directors of the Corporation are
Officers and Directors or Trustees of the above companies.
5. INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the
period ended May 31, 1996, were as follows:
<TABLE>
<S> <C>
PURCHASES $7,556,187
SALES $4,766,137
</TABLE>
<TABLE>
<S> <S>
DIRECTORS OFFICERS
John F. Donahue John F. Donahue
Thomas G. Bigley Chairman
John T. Conroy, Jr. Richard B. Fisher
William J. Copeland President
James E. Dowd J. Christopher Donahue
Lawrence D. Ellis, M.D. Executive Vice President
Richard B. Fisher Edward C. Gonzales
Edward L. Flaherty, Jr. Executive Vice President
Peter E. Madden John W. McGonigle
Gregor F. Meyer Executive Vice President and Secretary
John E. Murray, Jr. David M. Taylor
Wesley W. Posvar Treasurer
Marjorie P. Smuts J. Crilley Kelly
Assistant Secretary
</TABLE>
Mutual funds are not bank deposits or obligations, are not guaranteed by any
bank, and are not insured or guaranteed by the U.S. government, the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other
government agency. Investment in mutual funds involves investment risk,
including possible loss of principal.
This report is authorized for distribution to prospective investors only
when preceded or accompanied by the Fund's prospectus which contains facts
concerning its objective and policies, management fees, expenses, and other
information.
FEDERATED
INTERNATIONAL
SMALL
COMPANY
FUND
COMBINED
SEMI-ANNUAL REPORT AND
SUPPLEMENT TO PROSPECTUS
DATED JANUARY 31, 1996
[Graphic]
Federated Investors
Since 1955
Federated Investors Tower
Pittsburgh, PA 15222-3779
Federated Securities Corp. is the distributor of the fund
and is a subsidiary of Federated Investors.
Cusip 981487838
Cusip 981487820
Cusip 981487812
G01743-01 (7/96)
[Graphic]
FEDERATED LATIN AMERICAN GROWTH FUND
(A PORTFOLIO OF WORLD INVESTMENT SERIES, INC.)
CLASS A SHARES
SEMI-ANNUAL REPORT AND SUPPLEMENT TO THE PROSPECTUS DATED JANUARY 31, 1996
A. Please delete the third and fourth sentence of the fourth paragraph on the
cover page of the prospectus and replace it with the following:
"You may request a copy of the Statement of Additional Information, or a
paper copy of this prospectus, if you have received your prospectus
electronically, free of charge by calling 1-800-341-7400. To obtain other
information or to make inquiries about the Fund, contact your financial
institution. The Statement of Addition Information, material incorporated
by reference into this document, and other information regarding the Fund
is maintained electronically with the SEC at Internet Web site
(http://www.sec.gov)."
B. Please insert the following "FINANCIAL HIGHLIGHTS" table for Class A
Shares immediately following the "Summary of Fund Expenses" table in the
prospectus:
FEDERATED LATIN AMERICAN GROWTH FUND
FINANCIAL HIGHLIGHTS--CLASS A SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
PERIOD ENDED
(UNAUDITED)
MAY 31, 1996(A)
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
- ----------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ----------------------------------------------------------------------------------------------
Net investment income 0.16
- ----------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments and foreign currency 1.14
- ---------------------------------------------------------------------------------------------- -------
Total from investment operations 1.30
- ---------------------------------------------------------------------------------------------- -------
NET ASSET VALUE, END OF PERIOD $ 11.30
- ---------------------------------------------------------------------------------------------- -------
TOTAL RETURN (B) 13.00%
- ----------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ----------------------------------------------------------------------------------------------
Expenses 1.97%*
- ----------------------------------------------------------------------------------------------
Net investment income 6.01%*
- ----------------------------------------------------------------------------------------------
Expense waiver/reimbursement (c) 2.84%*
- ----------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- ----------------------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $5,479
- ----------------------------------------------------------------------------------------------
Average commission rate paid $0.0001
- ----------------------------------------------------------------------------------------------
Portfolio turnover 12%
- ----------------------------------------------------------------------------------------------
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from February 28, 1996 (date of initial
public investment) to May 31, 1996.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
C. Please delete the final sentence of the section entitled "Making an
Exchange" on page 20 of the prospectus and replace it with the
following:
"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 Shareholder Services Company, 1099
Hingham Street, Rockland, MA 02370-3317."
D. Please add the following as the fourth sentence of the section entitled
"How to Redeem Shares" on page 21 of the prospectus:
"Investors who redeem shares through a financial institution may be charged
a service fee by that institution."
E. Under the section entitled "Administrative Services" on page 27 of the
prospectus, please delete all references to "Federated Administrative
Services" and replace them with "Federated Services Company."
F. Please add the following as the last sentence of the first paragraph of
the section entitled "Voting Rights" on page 29 of the prospectus:
"As of July 5, 1996, Federated Securities Corp., Pittsburgh, PA, owned
32.21% of the voting securities of the Fund's Class A Shares and Edward D.
Jones & Co., for the account of Sidney J. Miles and for account number
915-03933-1-3, Maryland Heights, MO, owned 31.54% of the voting securities
of the Fund's Class C Shares, and, therefore, may, for certain purposes, be
deemed to control the Fund and be able to affect the outcome of certain
matters presented for a vote of shareholders."
G. Please insert the following financial statements beginning on page 32 of
the prospectus, immediately before the section entitled "Appendix."
FEDERATED LATIN AMERICAN GROWTH FUND
PORTFOLIO OF INVESTMENTS
MAY 31, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE IN U.S.
SHARES DOLLARS
<C> <S> <C>
COMMON STOCKS--58.0%
- -----------------------------------------------------------------------------------------------
BANKING--9.8%
--------------------------------------------------------------------------------
4,700 Banco de A. Edwards, ADR $ 92,825
--------------------------------------------------------------------------------
4,000 Banco Frances del Rio de la Plata S.A., ADR 112,500
--------------------------------------------------------------------------------
3,100 Banco Ganadero S.A., ADR 70,137
--------------------------------------------------------------------------------
3,300 Banco Industrial Colombiano, ADR 62,700
--------------------------------------------------------------------------------
25,000 (a)Banco Wiese 42,219
--------------------------------------------------------------------------------
250,000 Grupo Financiero Bancomer, S.A. de C.V., Class B 110,812
--------------------------------------------------------------------------------
8,300 (a)Grupo Financiero Bancomer, S.A. de C.V., Class B, ADR(b) 76,079
-------------------------------------------------------------------------------- ----------------
Total 567,272
-------------------------------------------------------------------------------- ----------------
BEVERAGE & TOBACCO--8.7%
--------------------------------------------------------------------------------
60,000 Fomento Economico Mexicano, S.A. de C.V., Class B 177,433
--------------------------------------------------------------------------------
4,400 Pan American Beverage, Class A 184,800
--------------------------------------------------------------------------------
11,500 Quilmes Industrial (Quinsa), Societe Ano, ADR 140,875
-------------------------------------------------------------------------------- ----------------
Total 503,108
-------------------------------------------------------------------------------- ----------------
BUILDING MATERIALS & COMPONENTS--5.1%
--------------------------------------------------------------------------------
22,600 Cemex S.A., Class B, ADR 184,331
--------------------------------------------------------------------------------
25,000 Juan Minetti S.A. 109,294
-------------------------------------------------------------------------------- ----------------
Total 293,625
-------------------------------------------------------------------------------- ----------------
CONSTRUCTION & HOUSING--7.5%
--------------------------------------------------------------------------------
54,000 (a)Corporacion GEO, S.A. de C.V., Class B 235,716
--------------------------------------------------------------------------------
14,000 Empresas ICA Sociedad Controladora S.A., ADR 201,250
-------------------------------------------------------------------------------- ----------------
Total 436,966
-------------------------------------------------------------------------------- ----------------
ENERGY EQUIPMENT & SERVICES--1.7%
--------------------------------------------------------------------------------
1,800 (a)Chilectra S.A., ADR(b) 99,900
-------------------------------------------------------------------------------- ----------------
</TABLE>
FEDERATED LATIN AMERICAN GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE IN U.S.
SHARES DOLLARS
<C> <S> <C>
COMMON STOCKS--CONTINUED
- -----------------------------------------------------------------------------------------------
ENERGY SOURCES--1.9%
--------------------------------------------------------------------------------
5,000 YPF Sociedad Anonima, ADR $ 110,000
-------------------------------------------------------------------------------- ----------------
FINANCIAL SERVICES--0.9%
--------------------------------------------------------------------------------
2,937 (a)Credicorp Ltd. 54,334
-------------------------------------------------------------------------------- ----------------
FOOD & HOUSEHOLD PRODUCTS--4.2%
--------------------------------------------------------------------------------
230,000 Grupo Industrial Maseca S.A. de C.V., Class B 242,317
-------------------------------------------------------------------------------- ----------------
FOREST PRODUCTS & PAPER--1.2%
--------------------------------------------------------------------------------
8,300 (a)Papeles Nacionales, ADR 70,550
-------------------------------------------------------------------------------- ----------------
MACHINERY & ENGINEERING--1.1%
--------------------------------------------------------------------------------
18,000 Sider Venezolana, ADR 66,656
-------------------------------------------------------------------------------- ----------------
MERCHANDISING--4.8%
--------------------------------------------------------------------------------
3,800 Cadenalco-Gran Cad, ADR 57,950
--------------------------------------------------------------------------------
79,000 (a)Cifra S.A. de C.V., Class B 117,928
--------------------------------------------------------------------------------
4,000 (a)Santa Isabel S.A., ADR 106,000
-------------------------------------------------------------------------------- ----------------
Total 281,878
-------------------------------------------------------------------------------- ----------------
METALS--NON FERROUS--3.2%
--------------------------------------------------------------------------------
10,128 Cia de Minas Buenaventura S.A. 87,991
--------------------------------------------------------------------------------
1,900 Sociedad Quimica Y Minera de Chile, ADR 98,325
-------------------------------------------------------------------------------- ----------------
Total 186,316
-------------------------------------------------------------------------------- ----------------
METALS--STEEL--1.0%
--------------------------------------------------------------------------------
10,000 (b)Venprecar, ADR 58,750
-------------------------------------------------------------------------------- ----------------
MULTI-INDUSTRY--2.2%
--------------------------------------------------------------------------------
20,000 Compania Naviera Perez Companc S.A., Class B 127,651
-------------------------------------------------------------------------------- ----------------
REAL ESTATE--2.1%
--------------------------------------------------------------------------------
3,700 IRSA Inversiones y Representaciones S.A., GDR 120,712
-------------------------------------------------------------------------------- ----------------
TELECOMMUNICATIONS--1.9%
--------------------------------------------------------------------------------
1,200 Compania Telecomunicacion Chile, ADR 109,500
--------------------------------------------------------------------------------
55,498 (a)Telecomunicacoes de Sao Paulo S.A., Rights 2,812
--------------------------------------------------------------------------------
</TABLE>
FEDERATED LATIN AMERICAN GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE IN U.S.
SHARES DOLLARS
<C> <S> <C>
COMMON STOCKS--CONTINUED
- -----------------------------------------------------------------------------------------------
TELECOMMUNICATIONS--CONTINUED
--------------------------------------------------------------------------------
45,648 Telemig, Rights $ 0
-------------------------------------------------------------------------------- ----------------
Total 112,312
-------------------------------------------------------------------------------- ----------------
WHOLESALE & INTERNATIONAL TRADE--0.7%
--------------------------------------------------------------------------------
33,000 Enrique Ferreyros S.A. 42,070
-------------------------------------------------------------------------------- ----------------
TOTAL COMMON STOCKS (IDENTIFIED COST $3,023,343) 3,374,417
-------------------------------------------------------------------------------- ----------------
PREFERRED STOCKS--36.6%
- -----------------------------------------------------------------------------------------------
BANKING--5.6%
--------------------------------------------------------------------------------
19,654,000 Banco Bradesco S.A., Preference 228,375
--------------------------------------------------------------------------------
234,000 Banco Itau S.A., Preference 94,814
-------------------------------------------------------------------------------- ----------------
Total 323,189
-------------------------------------------------------------------------------- ----------------
BEVERAGE & TOBACCO--4.5%
--------------------------------------------------------------------------------
438,000 Cia Cervejaria Brahma, Preference 261,054
-------------------------------------------------------------------------------- ----------------
MERCHANDISING--8.7%
--------------------------------------------------------------------------------
15,640,000 (a)Cia Bras Distr Pao Acucar, Preference 247,533
--------------------------------------------------------------------------------
6,256,000 (a)Lojas Renner S.A., Preference 256,933
-------------------------------------------------------------------------------- ----------------
Total 504,466
-------------------------------------------------------------------------------- ----------------
METALS--STEEL--3.7%
--------------------------------------------------------------------------------
194,818,000 Usinas Siderurgicas de Minas Gerais, Preference 212,713
-------------------------------------------------------------------------------- ----------------
TELECOMMUNICATIONS--10.4%
--------------------------------------------------------------------------------
3,380,000 Telecomunicacoes de Minas Gerais, Preference 333,497
--------------------------------------------------------------------------------
1,295,000 Telecomunicacoes de Sao Paulo S.A., Preference 273,710
-------------------------------------------------------------------------------- ----------------
Total 607,207
-------------------------------------------------------------------------------- ----------------
UTILITIES--ELECTRICAL & GAS--3.7%
--------------------------------------------------------------------------------
8,225,000 Companhia Energetica de Minas Gerais, Preference 217,922
-------------------------------------------------------------------------------- ----------------
TOTAL PREFERRED STOCKS (IDENTIFIED COST $1,906,504) 2,126,551
-------------------------------------------------------------------------------- ----------------
</TABLE>
FEDERATED LATIN AMERICAN GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL VALUE IN U.S.
AMOUNT DOLLARS
<C> <S> <C>
(C) REPURCHASE AGREEMENT--3.9%
- -----------------------------------------------------------------------------------------------
$ 225,000 BT Securities Corporation, 5.34%, dated 5/31/1996, due 6/3/1996
(AT AMORTIZED COST) $ 225,000
-------------------------------------------------------------------------------- ----------------
TOTAL INVESTMENTS (IDENTIFIED COST $5,154,847)(D) $ 5,725,968
-------------------------------------------------------------------------------- ----------------
</TABLE>
(a) Non-income producing security.
(b) Denotes a restricted security which is subject to restrictions on resale
under securities laws. At May 31, 1996, these securities amounted to
$201,079 which represents 3.5% of net assets.
(c) The repurchase agreement is fully collateralized by U.S. government
obligations based on market prices at the date of the portfolio. The
investment in the repurchase agreement is through participation in a joint
account with other Federated Funds.
(d) The cost of investments for federal tax purposes amounts to $5,154,847. The
net unrealized appreciation of investments on a federal tax basis amounts
to $571,121 which is comprised of $626,253 appreciation and $55,132
depreciation at May 31, 1996.
Note: The categories of investments are shown as a percentage of net assets
($5,812,271) at May 31, 1996.
The following acronyms are used throughout this portfolio:
ADR--American Depositary Receipt
GDR--Global Depository Receipt
SA--Socicdad Anomina
(See Notes which are an integral part of the Financial Statements)
FEDERATED LATIN AMERICAN GROWTH FUND
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- ------------------------------------------------------------------------------------------------------
Total investments in securities, at value (identified and tax cost $5,154,847) $ 5,725,968
- ------------------------------------------------------------------------------------------------------
Income receivable 42,627
- ------------------------------------------------------------------------------------------------------
Receivable for shares sold 45,530
- ------------------------------------------------------------------------------------------------------
Prepaid expenses 52,375
- ------------------------------------------------------------------------------------------------------ -----------
Total assets 5,866,500
- ------------------------------------------------------------------------------------------------------
LIABILITIES:
- -------------------------------------------------------------------------------------------
Payable to Bank $ 53,548
- -------------------------------------------------------------------------------------------
Payable for foreign taxes withheld 681
- ------------------------------------------------------------------------------------------- ---------
Total liabilities 54,229
- ------------------------------------------------------------------------------------------------------ -----------
NET ASSETS for 514,492 shares outstanding $ 5,812,271
- ------------------------------------------------------------------------------------------------------ -----------
NET ASSETS CONSIST OF:
- ------------------------------------------------------------------------------------------------------
Paid in capital $ 5,161,883
- ------------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments and translation of assets
and liabilities in foreign currency 570,858
- ------------------------------------------------------------------------------------------------------
Accumulated net realized loss on investments and foreign currency transactions (521)
- ------------------------------------------------------------------------------------------------------
Undistributed net investment income 80,051
- ------------------------------------------------------------------------------------------------------ -----------
Total Net Assets $ 5,812,271
- ------------------------------------------------------------------------------------------------------ -----------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
- ------------------------------------------------------------------------------------------------------
CLASS A SHARES:
- ------------------------------------------------------------------------------------------------------
Net Asset Value Per Share ($5,478,625 / 484,922 shares outstanding) $11.30
- ------------------------------------------------------------------------------------------------------ -----------
Offering Price Per Share (100 / 94.50 of $11.30)* $11.96
- ------------------------------------------------------------------------------------------------------ -----------
Redemption Proceeds Per Share** $11.30
- ------------------------------------------------------------------------------------------------------ -----------
CLASS B SHARES:
- ------------------------------------------------------------------------------------------------------
Net Asset Value Per Share ($262,409 / 23,251 shares outstanding) $11.29
- ------------------------------------------------------------------------------------------------------ -----------
Offering Price Per Share* $11.29
- ------------------------------------------------------------------------------------------------------ -----------
Redemption Proceeds Per Share (94.50 / 100 of $11.29)** $10.67
- ------------------------------------------------------------------------------------------------------ -----------
CLASS C SHARES:
- ------------------------------------------------------------------------------------------------------
Net Asset Value Per Share ($71,237 / 6,319 shares outstanding) $11.27
- ------------------------------------------------------------------------------------------------------ -----------
Offering Price Per Share* $11.27
- ------------------------------------------------------------------------------------------------------ -----------
Redemption Proceeds Per Share (99.00/100 of $11.27)** $11.16
- ------------------------------------------------------------------------------------------------------ -----------
</TABLE>
*See "How to Purchase Shares" in the Prospectus.
**See "Contingent Deferred Sales Charge" in the Prospectus.
(See Notes which are an integral part of the Financial Statements)
FEDERATED LATIN AMERICAN GROWTH FUND
STATEMENT OF OPERATIONS
PERIOD ENDED MAY 31, 1996 (UNAUDITED)(A)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- -------------------------------------------------------------------------------------------------------
Dividends (net of foreign taxes withheld of $9,079) $ 101,920
- -------------------------------------------------------------------------------------------------------
Interest 4,402
- ------------------------------------------------------------------------------------------------------- ---------
Total income 106,322
- -------------------------------------------------------------------------------------------------------
EXPENSES:
- -------------------------------------------------------------------------------------------
Investment advisory fee $ 16,607
- -------------------------------------------------------------------------------------------
Administrative personnel and services fee 47,513
- -------------------------------------------------------------------------------------------
Custodian fees 25,826
- -------------------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 15,560
- -------------------------------------------------------------------------------------------
Legal fees 2,888
- -------------------------------------------------------------------------------------------
Portfolio accounting fees 21,733
- -------------------------------------------------------------------------------------------
Distribution services fee--Class B Shares 73
- -------------------------------------------------------------------------------------------
Distribution services fee--Class C Shares 24
- -------------------------------------------------------------------------------------------
Shareholder services fee--Class A Shares 3,289
- -------------------------------------------------------------------------------------------
Shareholder services fee--Class B Shares 24
- -------------------------------------------------------------------------------------------
Shareholder services fee--Class C Shares 8
- -------------------------------------------------------------------------------------------
Share registration costs 9,955
- -------------------------------------------------------------------------------------------
Printing and postage 4,171
- -------------------------------------------------------------------------------------------
Insurance premiums 1,604
- -------------------------------------------------------------------------------------------
Miscellaneous 1,603
- ------------------------------------------------------------------------------------------- ----------
Total expenses 150,878
- -------------------------------------------------------------------------------------------
WAIVERS AND REIMBURSEMENTS--
- -------------------------------------------------------------------------------
Waiver of investment advisory fee $ (13,882)
- -------------------------------------------------------------------------------
Reimbursement of other operating expenses (110,725)
- ------------------------------------------------------------------------------- ----------
Total waivers and reimbursements (124,607)
- ------------------------------------------------------------------------------------------- ----------
Net expenses 26,271
- ------------------------------------------------------------------------------------------------------- ---------
Net investment income 80,051
- ------------------------------------------------------------------------------------------------------- ---------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
- -------------------------------------------------------------------------------------------------------
Net realized loss on investments (521)
- -------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation of investments 570,858
- ------------------------------------------------------------------------------------------------------- ---------
Net realized and unrealized gain on investments 570,337
- ------------------------------------------------------------------------------------------------------- ---------
Change in net assets resulting from operations $ 650,388
- ------------------------------------------------------------------------------------------------------- ---------
</TABLE>
(a) For the period from February 28, 1996 (date of initial public investment) to
May 31, 1996.
(See Notes which are an integral part of the Financial Statements)
FEDERATED LATIN AMERICAN GROWTH FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERIOD ENDED
(UNAUDITED)
MAY 31, 1996(A)
<S> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ----------------------------------------------------------------------------------------------
OPERATIONS--
- ----------------------------------------------------------------------------------------------
Net investment income $ 80,051
- ----------------------------------------------------------------------------------------------
Net realized gain (loss) on investments and foreign currency transactions
($521 net loss as computed for federal tax purposes) (521)
- ----------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) of investments and
translation of assets and liabilities in foreign currency 570,858
- ---------------------------------------------------------------------------------------------- ------------------
Change in net assets resulting from operations 650,388
- ---------------------------------------------------------------------------------------------- ------------------
SHARE TRANSACTIONS--
- ----------------------------------------------------------------------------------------------
Proceeds from sale of shares 7,794,365
- ----------------------------------------------------------------------------------------------
Cost of shares redeemed (2,632,482)
- ---------------------------------------------------------------------------------------------- ------------------
Change in net assets resulting from share transactions 5,161,883
- ---------------------------------------------------------------------------------------------- ------------------
Change in net assets 5,812,271
- ----------------------------------------------------------------------------------------------
NET ASSETS:
- ----------------------------------------------------------------------------------------------
Beginning of period --
- ---------------------------------------------------------------------------------------------- ------------------
End of period (including undistributed net investment income of $80,051) $ 5,812,271
- ---------------------------------------------------------------------------------------------- ------------------
</TABLE>
(a) For the period from February 28, 1996 (date of initial public investment) to
May 31, 1996.
(See Notes which are an integral part of the Financial Statements)
FEDERATED LATIN AMERICAN GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
MAY 31, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
(1) ORGANIZATION
World Investment Series, Inc. (the "Corporation") is registered under the
Investment Company Act of 1940, as amended (the "Act") as an open-end,
management investment company. The Corporation consists of six portfolios. The
financial statements included herein are only those of Federated Latin American
Growth Fund (the "Fund"), a diversified portfolio. The financial statements of
the other portfolios are presented separately. The assets of each portfolio are
segregated and a shareholder's interest is limited to the portfolio in which
shares are held.
The Fund offers three classes of shares: Class A Shares, Class B Shares and
Class C Shares. The investment objective of the Fund is to provide long-term
growth of capital.
(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.
INVESTMENT VALUATIONS--Foreign equity securities are valued at the last
sale price reported on a national securities exchange. Unlisted foreign
securities are generally valued on the over-the-counter market. In the
absence of recorded sales for equity securities, they are valued according
to the last reported bid price. Short-term domestic and foreign securities
are valued at the prices provided by an independent pricing service.
However, short-term securities with remaining maturities of sixty days or
less at the time of purchase may be valued at amortized cost, which
approximates fair market value.
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 under repurchase
agreement transactions. Additionally, procedures have been established by
the Fund to monitor, on a daily basis, the market value of each repurchase
agreement's collateral to ensure that the value of collateral at least
equals the repurchase price to be paid under the repurchase agreement
transaction.
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 the guidelines and/or
standards reviewed or established by the Board of Directors (the
"Directors"). Risks may arise from the potential inability of
counterparties to honor the terms of the repurchase agreement. Accordingly,
the Fund could receive less than the repurchase price on the sale of
collateral securities.
FEDERATED LATIN AMERICAN GROWTH FUND
- --------------------------------------------------------------------------------
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--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"). Dividend
income and distributions to shareholders are recorded on the ex-dividend
date. Certain dividends from foreign securities may be recorded after the
ex-dividend date based upon when information becomes available to the Fund.
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 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 interest and
dividends have been provided for in accordance with the Fund's
understanding of the applicable country's tax rules and rates.
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.
CONCENTRATION OF CREDIT RISK--The Fund invests in securities of non-U.S.
issuers. Although the Fund maintains a diversified investment portfolio,
the political or economic developments within a particular country or
region may have an adverse effect on the ability of domiciled issuers to
meet their obligations. Additionally, political or economic developments
may have an effect on the liquidity and volatility of portfolio securities
and currency holdings.
At May 31, 1996, the diversification by countries was as follows:
<TABLE>
<CAPTION>
COUNTRY % OF NET ASSETS
<S> <C>
Argentina 12.4%
- ---------------------------------------------------------------------------------------------
Brazil 36.6%
- ---------------------------------------------------------------------------------------------
Chile 8.7%
- ---------------------------------------------------------------------------------------------
Columbia 4.5%
- ---------------------------------------------------------------------------------------------
Mexico 26.3%
- ---------------------------------------------------------------------------------------------
Peru 3.9%
- ---------------------------------------------------------------------------------------------
</TABLE>
FOREIGN EXCHANGE CONTRACTS--The Fund may enter into foreign currency
exchange contracts as a way of managing foreign exchange rate risk. The
Fund may enter into these contracts for the purchase or sale of a specific
foreign currency at a fixed price on a future date as a hedge or cross
hedge against either specific transactions or portfolio positions. The
objective of the Fund's foreign currency hedging transactions is to reduce
the risk that the U.S. dollar value of the Fund's foreign currency
denominated securities will decline in value due to changes in foreign
currency exchange rates. All foreign currency exchange contracts are
"marked to market" daily at the applicable translation rates resulting
in unrealized gains or losses. Realized gains or losses are recorded at
the time the foreign currency exchange contract is offset by entering
into a closing transaction or by the delivery or receipt of the currency.
Risk may arise upon entering into these contracts from the potential
inability of counterparties to meet the terms of their contracts and from
unanticipated movements in the value of a foreign currency relative to the
U.S. dollar. At May 31, 1996, the Fund had no outstanding foreign exchange
contracts.
FOREIGN CURRENCY TRANSLATION--The accounting records of the Fund 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 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 of
portfolio securities, sales and maturities of short-term securities, sales
of FCs, currency gains or losses realized between the trade and settlement
dates on securities transactions, the difference between the amounts of
dividends, interest, and foreign 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.
RESTRICTED SECURITIES--Restricted securities are securities that may only
be resold upon registration under 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.
FEDERATED LATIN AMERICAN GROWTH FUND
- --------------------------------------------------------------------------------
Additional information on each restricted security held at May 31, 1996 is
as follows:
<TABLE>
<CAPTION>
ACQUISITION ACQUISITION
SECURITY DATE COST
<S> <C> <C>
Chilectra S.A., ADR 2/28/96 $ 97,704
- -----------------------------------------------------------------------------
Grupo Financiero Bancomer, S.A. de C.V. Class B, ADR 2/28/96 64,325
- -----------------------------------------------------------------------------
Venprecar, ADR 2/28/96 39,050
- -----------------------------------------------------------------------------
</TABLE>
USE OF ESTIMATES--The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts of assets, liabilities,
expenses and revenues reported in the financial statements. Actual results
could differ from those estimated.
OTHER--Investment transactions are accounted for on the trade date.
(3) CAPITAL STOCK
At May 31, 1996, par value shares ($0.001 per share) authorized were as follows:
<TABLE>
<CAPTION>
POUND OF PAR VALUE CAPITAL
CLASS NAME STOCK AUTHORIZED
<S> <C>
Class A Shares 150,000,000
- --------------------------------------------------------------------------------------
Class B Shares 150,000,000
- --------------------------------------------------------------------------------------
Class C Shares 150,000,000
- -------------------------------------------------------------------------------------- --------------------------
Total 450,000,000
- -------------------------------------------------------------------------------------- --------------------------
</TABLE>
Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
PERIOD ENDED
MAY 31, 1996(A)
<S> <C> <C>
CLASS A SHARES SHARES AMOUNT
Shares sold 729,806 $ 7,465,880
- ---------------------------------------------------------------------------------------
Shares redeemed (244,884) (2,632,482)
- --------------------------------------------------------------------------------------- --------- -------------
Net change resulting from Class A share transactions 484,922 $ 4,833,398
- --------------------------------------------------------------------------------------- --------- -------------
</TABLE>
FEDERATED LATIN AMERICAN GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERIOD ENDED
MAY 31, 1996(A)
CLASS B SHARES SHARES AMOUNT
<S> <C> <C>
Shares sold 23,251 $ 258,160
- --------------------------------------------------------------------------------------- --------- -------------
Net change resulting from Class B share transactions 23,251 $ 258,160
- --------------------------------------------------------------------------------------- --------- -------------
</TABLE>
<TABLE>
<CAPTION>
PERIOD ENDED
MAY 31, 1996(A)
CLASS C SHARES SHARES AMOUNT
<S> <C> <C>
Shares sold 6,319 $ 70,325
- --------------------------------------------------------------------------------------- --------- -------------
Net change resulting from Class C share transactions 6,319 $ 70,325
- --------------------------------------------------------------------------------------- --------- -------------
Net change resulting from share transactions 514,492 $ 5,161,883
- --------------------------------------------------------------------------------------- --------- -------------
</TABLE>
(a) For the period from February 28, 1996 (date of initial public investment) to
May 31, 1996.
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Federated Global Research Corp., the Fund's
investment adviser, (the "Adviser"), receives for its services an annual
investment advisory fee equal to 1.25% of the Fund's average daily net
assets. The Adviser may voluntarily choose to waive any portion of its fee
and/or reimburse certain operating expenses of the Fund. The Adviser can
modify or terminate this voluntary waiver and/or reimbursement at any time
at its sole discretion.
ADMINISTRATIVE FEE--Federated Services Company ("FServ"), under the
Administrative Services Agreement, provides the Fund with administrative
personnel and services. The fee paid to FServ 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
the period of the Administrative Services Agreement shall be at least
$125,000 per portfolio and $30,000 per each additional class of shares.
DISTRIBUTION SERVICES FEE--The Fund has adopted a Distribution Plan (the
"Plan") pursuant to Rule 12b-1 under the Act. 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 Class A, Class B and Class C shares.
The Plan provides that the Fund may incur distribution expenses according
to the following schedule annually, to compensate Federated Securities
Corp.
FEDERATED LATIN AMERICAN GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
% OF AVG. DAILY NET
SHARE CLASS NAME ASSETS OF CLASS
<S> <C>
Class A Shares 0.25%
- ----------------------------------------------------------------------------------------
Class B Shares 0.75%
- ----------------------------------------------------------------------------------------
Class C Shares 0.75%
- ----------------------------------------------------------------------------------------
</TABLE>
Class A Shares did not incur a Distribution services fee for the period
ended May 31, 1996, and has no present intention of paying or accruing a
Distribution services fee.
SHAREHOLDER SERVICES FEE--Under the terms of a Shareholder Services
Agreement with Federated Shareholder Services ("FSS"), the Fund will pay
FSS up to 0.25% of average daily net assets of each class of shares of the
Fund for the period. The fee paid to Federated Shareholder Services is used
to finance certain services for shareholders and to maintain shareholder
accounts.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES--FServ, through
its subsidiary, Federated Shareholder Services Company ("FSSC") serves as
transfer and dividend disbursing agent for the Fund. The fee paid to FSSC
is based on the size, type, and number of accounts and transactions made by
shareholders.
PORTFOLIO ACCOUNTING FEES--FServ maintains the Fund's accounting records
for which it receives a fee. The fee is based on the level of the Fund's
average daily net assets for the period, plus out-of-pocket expenses.
ORGANIZATIONAL EXPENSES--Organizational and/or start-up administrative
service expenses of $53,789 were borne initially by the Adviser. The Fund
has agreed to reimburse the Adviser for the organizational and/or start-up
administrative expenses during the five year period following effective
date. For the period ended May 31, 1996, no payments were made by the Fund
pursuant to this agreement.
GENERAL--Certain of the Officers and Directors of the Corporation are
Officers and Directors or Trustees of the above companies.
(5) INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the
period ended May 31, 1996, were as follows:
<TABLE>
<S> <C>
- ----------------------------------------------------------------------------------------------------
PURCHASES $ 5,535,391
- ---------------------------------------------------------------------------------------------------- ------------
SALES $ 601,734
- ---------------------------------------------------------------------------------------------------- ------------
</TABLE>
July 31, 1996
TRUSTEES OFFICERS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
John F. Donahue John F. Donahue
Thomas G. Bigley Chairman
John T. Conroy, Jr. Richard B. Fisher
William J. Copeland President
James E. Dowd J. Christopher Donahue
Lawrence D. Ellis, M.D. Executive Vice President
Edward L. Flaherty, Jr. Edward C. Gonzales
Peter E. Madden Executive Vice President
Gregor F. Meyer John W. McGonigle
John E. Murray, Jr. Executive Vice President and Secretary
Wesley W. Posvar David M. Taylor
Marjorie P. Smuts Treasurer
J. Crilley Kelly
Assistant Secretary
</TABLE>
Mutual funds are not bank deposits or obligations, are not guaranteed by any
bank, and are not insured or guaranteed by the U.S. government, the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other
governmental agency. Investment in mutual funds involves investment risk,
including possible loss of principal.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the fund's prospectuses which contain facts
concerning its objective and policies, management fees, expenses and other
information.
FEDERATED
- -------------------------------------------------------------------------------
LATIN AMERICAN
- -------------------------------------------------------------------------------
GROWTH
- -------------------------------------------------------------------------------
FUND
CLASS A
SEMI-ANNUAL REPORT AND
SUPPLEMENT TO PROSPECTUS
DATED JANUARY 31, 1996
[LOGO] FEDERATED INVESTORS
Since 1955
Federated Investors Tower
Pittsburgh, PA 15222-3779
Federated Securities Corp. is the distributor of the fund
and is a subsidiary of Federated Investors.
Cusip 981487796 [LOGO]
G01740-02 (7/96) RECYCLED
PAPER
FEDERATED LATIN AMERICAN GROWTH FUND
(A PORTFOLIO OF WORLD INVESTMENT SERIES, INC.)
CLASS A SHARES, CLASS B SHARES, CLASS C SHARES
SEMI-ANNUAL REPORT AND SUPPLEMENT TO THE PROSPECTUS DATED JANUARY 31, 1996
A. Please delete the third and fourth sentence of the fourth paragraph on the
cover page of the prospectus and replace it with the following:
"You may request a copy of the Statement of Additional information, or a
paper copy of this prospectus, if you have received your prospectus
electronically, free of charge by calling 1-800-341-7400. To obtain other
information or to make inquiries about the Fund, contact your financial
institution. The Statement of Addition Information, material incorporated
by reference into this document, and other information regarding the Fund
is maintained electronically with the SEC at Internet Web site
(http://www.sec.gov)."
B. Please insert the following "Financial Highlights" tables for Class A
Shares, Class B Shares and Class C Shares immediately following the
"Summary of Fund Expenses" tables in the prospectus:
FEDERATED LATIN AMERICAN GROWTH FUND
FINANCIAL HIGHLIGHTS--CLASS A SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
PERIOD ENDED
(UNAUDITED)
MAY 31, 1996(A)
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
- ---------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------------------------------------------------------------------
Net investment income 0.16
- ---------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments and foreign currency 1.14
- --------------------------------------------------------------------------------------------- -------
Total from investment operations 1.30
- --------------------------------------------------------------------------------------------- -------
NET ASSET VALUE, END OF PERIOD $ 11.30
- --------------------------------------------------------------------------------------------- -------
TOTAL RETURN (B) 13.00%
- ---------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ---------------------------------------------------------------------------------------------
Expenses 1.97%*
- ---------------------------------------------------------------------------------------------
Net investment income 6.01%*
- ---------------------------------------------------------------------------------------------
Expense waiver/reimbursement (c) 2.84%*
- ---------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- ---------------------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $5,479
- ---------------------------------------------------------------------------------------------
Average commission rate paid $0.0001
- ---------------------------------------------------------------------------------------------
Portfolio turnover 12%
- ---------------------------------------------------------------------------------------------
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from February 28, 1996 (date of initial
public investment) to May 31, 1996.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
FEDERATED LATIN AMERICAN GROWTH FUND
FINANCIAL HIGHLIGHTS--CLASS B SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
PERIOD ENDED
(UNAUDITED)
MAY 31, 1996(A)
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
- ---------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------------------------------------------------------------------
Net investment income 0.06
- ---------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments and foreign currency 1.23
- --------------------------------------------------------------------------------------------- -------
Total from investment operations 1.29
- --------------------------------------------------------------------------------------------- -------
NET ASSET VALUE, END OF PERIOD $ 11.29
- --------------------------------------------------------------------------------------------- -------
TOTAL RETURN (B) 12.90%
- ---------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ---------------------------------------------------------------------------------------------
Expenses 2.72%*
- ---------------------------------------------------------------------------------------------
Net investment income 2.17%*
- ---------------------------------------------------------------------------------------------
Expense waiver/reimbursement (c) 2.84%*
- ---------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- ---------------------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $262
- ---------------------------------------------------------------------------------------------
Average commission rate paid $0.0001
- ---------------------------------------------------------------------------------------------
Portfolio turnover 12%
- ---------------------------------------------------------------------------------------------
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from February 28, 1996 (date of initial
public investment) to May 31, 1996.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
FEDERATED LATIN AMERICAN GROWTH FUND
FINANCIAL HIGHLIGHTS--CLASS C SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
PERIOD ENDED
(UNAUDITED)
MAY 31, 1996(A)
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
- ---------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------------------------------------------------------------------
Net operating loss (0.03)
- ---------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments and foreign currency 1.30
- --------------------------------------------------------------------------------------------- -------
Total from investment operations 1.27
- --------------------------------------------------------------------------------------------- -------
NET ASSET VALUE, END OF PERIOD $ 11.27
- --------------------------------------------------------------------------------------------- -------
TOTAL RETURN (B) 12.70%
- ---------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ---------------------------------------------------------------------------------------------
Expenses 2.72%*
- ---------------------------------------------------------------------------------------------
Net operating loss (0.95%)*
- ---------------------------------------------------------------------------------------------
Expense waiver/reimbursement (c) 2.84%*
- ---------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- ---------------------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $71
- ---------------------------------------------------------------------------------------------
Average commission rate paid $0.0001
- ---------------------------------------------------------------------------------------------
Portfolio turnover 12%
- ---------------------------------------------------------------------------------------------
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from February 28, 1996 (date of initial
public investment) to May 31, 1996.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
operating loss ratios shown above.
(See Notes which are an integral part of the Financial Statements)
C. Please delete the final sentence of the section entitled "Making an
Exchange" on page 24 of the prospectus and replace it with the
following:
"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 Shareholder Services Company, 1099
Hingham Street, Rockland, MA 02370-3317."
D. Please add the following as the fourth sentence of the section entitled
"How to Redeem Shares" on page 25 of the prospectus:
"Investors who redeem shares through a financial institution may be charged
a service fee by that institution."
E. Under the section entitled "Administrative Services" on page 33 of the
prospectus, please delete all references to "Federated Administrative
Services" and replace them with "Federated Services Company."
F. Please add the following as the last sentence of the first paragraph of
the section entitled "Voting Rights" on page 34 of the prospectus:
"As of July 5, 1996, Federated Securities Corp., Pittsburgh, PA, owned
32.21% of the voting securities of the Fund's Class A Shares and Edward D.
Jones & Co., for the account of Sidney J. Miles and for account number
915-03933-1-3, Maryland Heights, MO, owned 31.54% of the voting securities
of the Fund's Class C Shares, and, therefore, may, for certain purposes, be
deemed to control the Fund and be able to affect the outcome of certain
matters presented for a vote of shareholders."
G. Please insert the following financial statements beginning on page 37 of
the prospectus, immediately before the section entitled "Appendix."
FEDERATED LATIN AMERICAN GROWTH FUND
PORTFOLIO OF INVESTMENTS
MAY 31, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE IN U.S.
SHARES DOLLARS
- ------------- -------------------------------------------------------------------------------- ----------------
<C> <S> <C>
COMMON STOCKS--58.0%
- -----------------------------------------------------------------------------------------------
BANKING--9.8%
--------------------------------------------------------------------------------
4,700 Banco de A. Edwards, ADR $ 92,825
--------------------------------------------------------------------------------
4,000 Banco Frances del Rio de la Plata S.A., ADR 112,500
--------------------------------------------------------------------------------
3,100 Banco Ganadero S.A., ADR 70,137
--------------------------------------------------------------------------------
3,300 Banco Industrial Colombiano, ADR 62,700
--------------------------------------------------------------------------------
25,000 (a)Banco Wiese 42,219
--------------------------------------------------------------------------------
250,000 Grupo Financiero Bancomer, S.A. de C.V., Class B 110,812
--------------------------------------------------------------------------------
8,300 (a)Grupo Financiero Bancomer, S.A. de C.V., Class B, ADR(b) 76,079
-------------------------------------------------------------------------------- ----------------
Total 567,272
-------------------------------------------------------------------------------- ----------------
BEVERAGE & TOBACCO--8.7%
--------------------------------------------------------------------------------
60,000 Fomento Economico Mexicano, S.A. de C.V., Class B 177,433
--------------------------------------------------------------------------------
4,400 Pan American Beverage, Class A 184,800
--------------------------------------------------------------------------------
11,500 Quilmes Industrial (Quinsa), Societe Ano, ADR 140,875
-------------------------------------------------------------------------------- ----------------
Total 503,108
-------------------------------------------------------------------------------- ----------------
BUILDING MATERIALS & COMPONENTS--5.1%
--------------------------------------------------------------------------------
22,600 Cemex S.A., Class B, ADR 184,331
--------------------------------------------------------------------------------
25,000 Juan Minetti S.A. 109,294
-------------------------------------------------------------------------------- ----------------
Total 293,625
-------------------------------------------------------------------------------- ----------------
CONSTRUCTION & HOUSING--7.5%
--------------------------------------------------------------------------------
54,000 (a)Corporacion GEO, S.A. de C.V., Class B 235,716
--------------------------------------------------------------------------------
14,000 Empresas ICA Sociedad Controladora S.A., ADR 201,250
-------------------------------------------------------------------------------- ----------------
Total 436,966
-------------------------------------------------------------------------------- ----------------
ENERGY EQUIPMENT & SERVICES--1.7%
--------------------------------------------------------------------------------
1,800 (a)Chilectra S.A., ADR(b) 99,900
-------------------------------------------------------------------------------- ----------------
</TABLE>
FEDERATED LATIN AMERICAN GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE IN U.S.
SHARES DOLLARS
- ------------- -------------------------------------------------------------------------------- ----------------
<C> <S> <C>
COMMON STOCKS--CONTINUED
- -----------------------------------------------------------------------------------------------
ENERGY SOURCES--1.9%
--------------------------------------------------------------------------------
5,000 YPF Sociedad Anonima, ADR $ 110,000
-------------------------------------------------------------------------------- ----------------
FINANCIAL SERVICES--0.9%
--------------------------------------------------------------------------------
2,937 (a)Credicorp Ltd. 54,334
-------------------------------------------------------------------------------- ----------------
FOOD & HOUSEHOLD PRODUCTS--4.2%
--------------------------------------------------------------------------------
230,000 Grupo Industrial Maseca S.A. de C.V., Class B 242,317
-------------------------------------------------------------------------------- ----------------
FOREST PRODUCTS & PAPER--1.2%
--------------------------------------------------------------------------------
8,300 (a)Papeles Nacionales, ADR 70,550
-------------------------------------------------------------------------------- ----------------
MACHINERY & ENGINEERING--1.1%
--------------------------------------------------------------------------------
18,000 Sider Venezolana, ADR 66,656
-------------------------------------------------------------------------------- ----------------
MERCHANDISING--4.8%
--------------------------------------------------------------------------------
3,800 Cadenalco-Gran Cad, ADR 57,950
--------------------------------------------------------------------------------
79,000 (a)Cifra S.A. de C.V., Class B 117,928
--------------------------------------------------------------------------------
4,000 (a)Santa Isabel S.A., ADR 106,000
-------------------------------------------------------------------------------- ----------------
Total 281,878
-------------------------------------------------------------------------------- ----------------
METALS--NON FERROUS--3.2%
--------------------------------------------------------------------------------
10,128 Cia de Minas Buenaventura S.A. 87,991
--------------------------------------------------------------------------------
1,900 Sociedad Quimica Y Minera de Chile, ADR 98,325
-------------------------------------------------------------------------------- ----------------
Total 186,316
-------------------------------------------------------------------------------- ----------------
METALS--STEEL--1.0%
--------------------------------------------------------------------------------
10,000 (b)Venprecar, ADR 58,750
-------------------------------------------------------------------------------- ----------------
MULTI-INDUSTRY--2.2%
--------------------------------------------------------------------------------
20,000 Compania Naviera Perez Companc S.A., Class B 127,651
-------------------------------------------------------------------------------- ----------------
REAL ESTATE--2.1%
--------------------------------------------------------------------------------
3,700 IRSA Inversiones y Representaciones S.A., GDR 120,712
-------------------------------------------------------------------------------- ----------------
TELECOMMUNICATIONS--1.9%
--------------------------------------------------------------------------------
1,200 Compania Telecomunicacion Chile, ADR 109,500
--------------------------------------------------------------------------------
55,498 (a)Telecomunicacoes de Sao Paulo S.A., Rights 2,812
--------------------------------------------------------------------------------
</TABLE>
FEDERATED LATIN AMERICAN GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE IN U.S.
SHARES DOLLARS
- ------------- -------------------------------------------------------------------------------- ----------------
<C> <S> <C>
COMMON STOCKS--CONTINUED
- -----------------------------------------------------------------------------------------------
TELECOMMUNICATIONS--CONTINUED
--------------------------------------------------------------------------------
45,648 Telemig, Rights $ 0
-------------------------------------------------------------------------------- ----------------
Total 112,312
-------------------------------------------------------------------------------- ----------------
WHOLESALE & INTERNATIONAL TRADE--0.7%
--------------------------------------------------------------------------------
33,000 Enrique Ferreyros S.A. 42,070
-------------------------------------------------------------------------------- ----------------
TOTAL COMMON STOCKS (IDENTIFIED COST $3,023,343) 3,374,417
-------------------------------------------------------------------------------- ----------------
PREFERRED STOCKS--36.6%
- -----------------------------------------------------------------------------------------------
BANKING--5.6%
--------------------------------------------------------------------------------
19,654,000 Banco Bradesco S.A., Preference 228,375
--------------------------------------------------------------------------------
234,000 Banco Itau S.A., Preference 94,814
-------------------------------------------------------------------------------- ----------------
Total 323,189
-------------------------------------------------------------------------------- ----------------
BEVERAGE & TOBACCO--4.5%
--------------------------------------------------------------------------------
438,000 Cia Cervejaria Brahma, Preference 261,054
-------------------------------------------------------------------------------- ----------------
MERCHANDISING--8.7%
--------------------------------------------------------------------------------
15,640,000 (a)Cia Bras Distr Pao Acucar, Preference 247,533
--------------------------------------------------------------------------------
6,256,000 (a)Lojas Renner S.A., Preference 256,933
-------------------------------------------------------------------------------- ----------------
Total 504,466
-------------------------------------------------------------------------------- ----------------
METALS--STEEL--3.7%
--------------------------------------------------------------------------------
194,818,000 Usinas Siderurgicas de Minas Gerais, Preference 212,713
-------------------------------------------------------------------------------- ----------------
TELECOMMUNICATIONS--10.4%
--------------------------------------------------------------------------------
3,380,000 Telecomunicacoes de Minas Gerais, Preference 333,497
--------------------------------------------------------------------------------
1,295,000 Telecomunicacoes de Sao Paulo S.A., Preference 273,710
-------------------------------------------------------------------------------- ----------------
Total 607,207
-------------------------------------------------------------------------------- ----------------
UTILITIES--ELECTRICAL & GAS--3.7%
--------------------------------------------------------------------------------
8,225,000 Companhia Energetica de Minas Gerais, Preference 217,922
-------------------------------------------------------------------------------- ----------------
TOTAL PREFERRED STOCKS (IDENTIFIED COST $1,906,504) 2,126,551
-------------------------------------------------------------------------------- ----------------
</TABLE>
FEDERATED LATIN AMERICAN GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL VALUE IN U.S.
AMOUNT DOLLARS
<C> <S> <C>
- ------------- -------------------------------------------------------------------------------- ----------------
(C) REPURCHASE AGREEMENT--3.9%
- -----------------------------------------------------------------------------------------------
$ 225,000 BT Securities Corporation, 5.34%, dated 5/31/1996, due 6/3/1996
(AT AMORTIZED COST) $ 225,000
-------------------------------------------------------------------------------- ----------------
TOTAL INVESTMENTS (IDENTIFIED COST $5,154,847)(D) $ 5,725,968
-------------------------------------------------------------------------------- ----------------
</TABLE>
(a) Non-income producing security.
(b) Denotes a restricted security which is subject to restrictions on resale
under securities laws. At May 31, 1996, these securities amounted to
$201,079 which represents 3.5% of net assets.
(c) The repurchase agreement is fully collateralized by U.S. government
obligations based on market prices at the date of the portfolio. The
investment in the repurchase agreement is through participation in a joint
account with other Federated Funds.
(d) The cost of investments for federal tax purposes amounts to $5,154,847. The
net unrealized appreciation of investments on a federal tax basis amounts
to $571,121 which is comprised of $626,253 appreciation and $55,132
depreciation at May 31, 1996.
Note: The categories of investments are shown as a percentage of net assets
($5,812,271) at May 31, 1996.
The following acronyms are used throughout this portfolio:
ADR--American Depositary Receipt
GDR--Global Depository Receipt
SA--Socicdad Anomina
(See Notes which are an integral part of the Financial Statements)
FEDERATED LATIN AMERICAN GROWTH FUND
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- ------------------------------------------------------------------------------------------------------
Total investments in securities, at value (identified and tax cost $5,154,847) $ 5,725,968
- ------------------------------------------------------------------------------------------------------
Income receivable 42,627
- ------------------------------------------------------------------------------------------------------
Receivable for shares sold 45,530
- ------------------------------------------------------------------------------------------------------
Prepaid expenses 52,375
- ------------------------------------------------------------------------------------------------------ -----------
Total assets 5,866,500
- ------------------------------------------------------------------------------------------------------
LIABILITIES:
- -------------------------------------------------------------------------------------------
Payable to Bank $ 53,548
- -------------------------------------------------------------------------------------------
Payable for foreign taxes withheld 681
- ------------------------------------------------------------------------------------------- ---------
Total liabilities 54,229
- ------------------------------------------------------------------------------------------------------ -----------
NET ASSETS for 514,492 shares outstanding $ 5,812,271
- ------------------------------------------------------------------------------------------------------ -----------
NET ASSETS CONSIST OF:
- ------------------------------------------------------------------------------------------------------
Paid in capital $ 5,161,883
- ------------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments and translation of assets
and liabilities in foreign currency 570,858
- ------------------------------------------------------------------------------------------------------
Accumulated net realized loss on investments and foreign currency transactions (521)
- ------------------------------------------------------------------------------------------------------
Undistributed net investment income 80,051
- ------------------------------------------------------------------------------------------------------ -----------
Total Net Assets $ 5,812,271
- ------------------------------------------------------------------------------------------------------ -----------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
- ------------------------------------------------------------------------------------------------------
CLASS A SHARES:
- ------------------------------------------------------------------------------------------------------
Net Asset Value Per Share ($5,478,625 / 484,922 shares outstanding) $11.30
- ------------------------------------------------------------------------------------------------------ -----------
Offering Price Per Share (100 / 94.50 of $11.30)* $11.96
- ------------------------------------------------------------------------------------------------------ -----------
Redemption Proceeds Per Share** $11.30
- ------------------------------------------------------------------------------------------------------ -----------
CLASS B SHARES:
- ------------------------------------------------------------------------------------------------------
Net Asset Value Per Share ($262,409 / 23,251 shares outstanding) $11.29
- ------------------------------------------------------------------------------------------------------ -----------
Offering Price Per Share* $11.29
- ------------------------------------------------------------------------------------------------------ -----------
Redemption Proceeds Per Share (94.50 / 100 of $11.29)** $10.67
- ------------------------------------------------------------------------------------------------------ -----------
CLASS C SHARES:
- ------------------------------------------------------------------------------------------------------
Net Asset Value Per Share ($71,237 / 6,319 shares outstanding) $11.27
- ------------------------------------------------------------------------------------------------------ -----------
Offering Price Per Share* $11.27
- ------------------------------------------------------------------------------------------------------ -----------
Redemption Proceeds Per Share (99.00/100 of $11.27)** $11.16
- ------------------------------------------------------------------------------------------------------ -----------
</TABLE>
*See "How to Purchase Shares" in the Prospectus.
**See "Contingent Deferred Sales Charge" in the Prospectus.
(See Notes which are an integral part of the Financial Statements)
FEDERATED LATIN AMERICAN GROWTH FUND
STATEMENT OF OPERATIONS
PERIOD ENDED MAY 31, 1996 (UNAUDITED)(A)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- -------------------------------------------------------------------------------------------------------
Dividends (net of foreign taxes withheld of $9,079) $ 101,920
- -------------------------------------------------------------------------------------------------------
Interest 4,402
- ------------------------------------------------------------------------------------------------------- ---------
Total income 106,322
- -------------------------------------------------------------------------------------------------------
EXPENSES:
- -------------------------------------------------------------------------------------------
Investment advisory fee $ 16,607
- -------------------------------------------------------------------------------------------
Administrative personnel and services fee 47,513
- -------------------------------------------------------------------------------------------
Custodian fees 25,826
- -------------------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 15,560
- -------------------------------------------------------------------------------------------
Legal fees 2,888
- -------------------------------------------------------------------------------------------
Portfolio accounting fees 21,733
- -------------------------------------------------------------------------------------------
Distribution services fee--Class B Shares 73
- -------------------------------------------------------------------------------------------
Distribution services fee--Class C Shares 24
- -------------------------------------------------------------------------------------------
Shareholder services fee--Class A Shares 3,289
- -------------------------------------------------------------------------------------------
Shareholder services fee--Class B Shares 24
- -------------------------------------------------------------------------------------------
Shareholder services fee--Class C Shares 8
- -------------------------------------------------------------------------------------------
Share registration costs 9,955
- -------------------------------------------------------------------------------------------
Printing and postage 4,171
- -------------------------------------------------------------------------------------------
Insurance premiums 1,604
- -------------------------------------------------------------------------------------------
Miscellaneous 1,603
- ------------------------------------------------------------------------------------------- ----------
Total expenses 150,878
- -------------------------------------------------------------------------------------------
WAIVERS AND REIMBURSEMENTS--
- -------------------------------------------------------------------------------
Waiver of investment advisory fee $ (13,882)
- -------------------------------------------------------------------------------
Reimbursement of other operating expenses (110,725)
- ------------------------------------------------------------------------------- ----------
Total waivers and reimbursements (124,607)
- ------------------------------------------------------------------------------------------- ----------
Net expenses 26,271
- ------------------------------------------------------------------------------------------------------- ---------
Net investment income 80,051
- ------------------------------------------------------------------------------------------------------- ---------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
- -------------------------------------------------------------------------------------------------------
Net realized loss on investments (521)
- -------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation of investments 570,858
- ------------------------------------------------------------------------------------------------------- ---------
Net realized and unrealized gain on investments 570,337
- ------------------------------------------------------------------------------------------------------- ---------
Change in net assets resulting from operations $ 650,388
- ------------------------------------------------------------------------------------------------------- ---------
</TABLE>
(a) For the period from February 28, 1996 (date of initial public investment) to
May 31, 1996.
(See Notes which are an integral part of the Financial Statements)
FEDERATED LATIN AMERICAN GROWTH FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERIOD ENDED
(UNAUDITED)
MAY 31, 1996(A)
<S> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ----------------------------------------------------------------------------------------------
OPERATIONS--
- ----------------------------------------------------------------------------------------------
Net investment income $ 80,051
- ----------------------------------------------------------------------------------------------
Net realized gain (loss) on investments and foreign currency transactions
($521 net loss as computed for federal tax purposes) (521)
- ----------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) of investments and
translation of assets and liabilities in foreign currency 570,858
- ---------------------------------------------------------------------------------------------- ------------------
Change in net assets resulting from operations 650,388
- ---------------------------------------------------------------------------------------------- ------------------
SHARE TRANSACTIONS--
- ----------------------------------------------------------------------------------------------
Proceeds from sale of shares 7,794,365
- ----------------------------------------------------------------------------------------------
Cost of shares redeemed (2,632,482)
- ---------------------------------------------------------------------------------------------- ------------------
Change in net assets resulting from share transactions 5,161,883
- ---------------------------------------------------------------------------------------------- ------------------
Change in net assets 5,812,271
- ----------------------------------------------------------------------------------------------
NET ASSETS:
- ----------------------------------------------------------------------------------------------
Beginning of period --
- ---------------------------------------------------------------------------------------------- ------------------
End of period (including undistributed net investment income of $80,051) $ 5,812,271
- ---------------------------------------------------------------------------------------------- ------------------
</TABLE>
(a) For the period from February 28, 1996 (date of initial public investment) to
May 31, 1996.
(See Notes which are an integral part of the Financial Statements)
FEDERATED LATIN AMERICAN GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
MAY 31, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
(1) ORGANIZATION
World Investment Series, Inc. (the "Corporation") is registered under the
Investment Company Act of 1940, as amended (the "Act") as an open-end,
management investment company. The Corporation consists of six portfolios. The
financial statements included herein are only those of Federated Latin American
Growth Fund (the "Fund"), a diversified portfolio. The financial statements of
the other portfolios are presented separately. The assets of each portfolio are
segregated and a shareholder's interest is limited to the portfolio in which
shares are held.
The Fund offers three classes of shares: Class A Shares, Class B Shares and
Class C Shares. The investment objective of the Fund is to provide long-term
growth of capital.
(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.
INVESTMENT VALUATIONS--Foreign equity securities are valued at the last
sale price reported on a national securities exchange. Unlisted foreign
securities are generally valued on the over-the-counter market. In the
abscence of recorded sales for equity securities, they are valued according
to the last reported bid price. Short-term domestic and foreign securities
are valued at the prices provided by an independent pricing service.
However, short-term securities with remaining maturities of sixty days or
less at the time of purchase may be valued at amortized cost, which
approximates fair market value.
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 under repurchase
agreement transactions. Additionally, procedures have been established by
the Fund to monitor, on a daily basis, the market value of each repurchase
agreement's collateral to ensure that the value of collateral at least
equals the repurchase price to be paid under the repurchase agreement
transaction.
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 the guidelines and/or
standards reviewed or established by the Board of Directors (the
"Directors"). Risks may arise from the potential inability of
counterparties to honor the terms of the repurchase agreement. Accordingly,
the Fund could receive less than the repurchase price on the sale of
collateral securities.
FEDERATED LATIN AMERICAN GROWTH FUND
- --------------------------------------------------------------------------------
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--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"). Dividend
income and distributions to shareholders are recorded on the ex-dividend
date. Certain dividends from foreign securities may be recorded after the
ex-dividend date based upon when information becomes available to the Fund.
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 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 interest and
dividends have been provided for in accordance with the Fund's
understanding of the applicable country's tax rules and rates.
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.
CONCENTRATION OF CREDIT RISK--The Fund invests in securities of non-U.S.
issuers. Although the Fund maintains a diversified investment portfolio,
the political or economic developments within a particular country or
region may have an adverse effect on the ability of domiciled issuers to
meet their obligations. Additionally, political or economic developments
may have an effect on the liquidity and volatility of portfolio securities
and currency holdings.
At May 31, 1996, the diversification by countries was as follows:
<TABLE>
<CAPTION>
COUNTRY % OF NET ASSETS
<S> <C>
Argentina 12.4%
- ---------------------------------------------------------------------------------------------
Brazil 36.6%
- ---------------------------------------------------------------------------------------------
Chile 8.7%
- ---------------------------------------------------------------------------------------------
Columbia 4.5%
- ---------------------------------------------------------------------------------------------
Mexico 26.3%
- ---------------------------------------------------------------------------------------------
Peru 3.9%
- ---------------------------------------------------------------------------------------------
</TABLE>
FOREIGN EXCHANGE CONTRACTS--The Fund may enter into foreign currency
exchange contracts as a way of managing foreign exchange rate risk. The
Fund may enter into these contracts for the purchase or sale of a specific
foreign currency at a fixed price on a future date as a hedge or cross
hedge against either specific transactions or portfolio positions. The
objective of the Fund's foreign currency hedging transactions is to reduce
the risk that the U.S. dollar value of the Fund's foreign currency
denominated securities will decline in value due to changes in foreign
currency exchange rates. All foreign currency exchange contracts are
"marked to market" daily at the applicable translation rates resulting in
unrealized gains or losses. Realized gains or losses are recorded at the
time the foreign currency exchange contract is offset by entering into a
closing transaction or by the delivery or receipt of the currency. Risk
may arise upon entering into these contracts from the potential inability
of counterparties to meet the terms of their contracts and from
unanticipated movements in the value of a foreign currency relative to
the U.S. dollar. At May 31, 1996, the Fund had no outstanding foreign
exchange contracts.
FOREIGN CURRENCY TRANSLATION--The accounting records of the Fund 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 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 of
portfolio securities, sales and maturities of short-term securities, sales
of FCs, currency gains or losses realized between the trade and settlement
dates on securities transactions, the difference between the amounts of
dividends, interest, and foreign 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.
RESTRICTED SECURITIES--Restricted securities are securities that may only
be resold upon registration under 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.
FEDERATED LATIN AMERICAN GROWTH FUND
- --------------------------------------------------------------------------------
Additional information on each restricted security held at May 31, 1996 is
as follows:
<TABLE>
<CAPTION>
ACQUISITION ACQUISITION
SECURITY DATE COST
<S> <C> <C>
Chilectra S.A., ADR 2/28/96 $ 97,704
- -----------------------------------------------------------------------------
Grupo Financiero Bancomer, S.A. de C.V., Class B, ADR 2/28/96 64,325
- -----------------------------------------------------------------------------
Venprecar, ADR 2/28/96 39,050
- -----------------------------------------------------------------------------
</TABLE>
USE OF ESTIMATES--The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts of assets, liabilities,
expenses and revenues reported in the financial statements. Actual results
could differ from those estimated.
OTHER--Investment transactions are accounted for on the trade date.
(3) CAPITAL STOCK
At May 31, 1996, par value shares ($0.001 per share) authorized were as follows:
<TABLE>
<CAPTION>
POUND OF PAR VALUE CAPITAL
CLASS NAME STOCK AUTHORIZED
<S> <C>
Class A Shares 150,000,000
- --------------------------------------------------------------------------------------
Class B Shares 150,000,000
- --------------------------------------------------------------------------------------
Class C Shares 150,000,000
- -------------------------------------------------------------------------------------- --------------------------
Total 450,000,000
- -------------------------------------------------------------------------------------- --------------------------
</TABLE>
Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
PERIOD ENDED
MAY 31, 1996(A)
CLASS A SHARES SHARES AMOUNT
<S> <C> <C>
Shares sold 729,806 $ 7,465,880
- ---------------------------------------------------------------------------------------
Shares redeemed (244,884) (2,632,482)
- --------------------------------------------------------------------------------------- --------- -------------
Net change resulting from Class A share transactions 484,922 $ 4,833,398
- --------------------------------------------------------------------------------------- --------- -------------
</TABLE>
FEDERATED LATIN AMERICAN GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERIOD ENDED
MAY 31, 1996(A)
CLASS B SHARES SHARES AMOUNT
<S> <C> <C>
Shares sold 23,251 $ 258,160
- --------------------------------------------------------------------------------------- --------- -------------
Net change resulting from Class B share transactions 23,251 $ 258,160
- --------------------------------------------------------------------------------------- --------- -------------
</TABLE>
<TABLE>
<CAPTION>
PERIOD ENDED
MAY 31, 1996(A)
CLASS C SHARES SHARES AMOUNT
<S> <C> <C>
Shares sold 6,319 $ 70,325
- --------------------------------------------------------------------------------------- --------- -------------
Net change resulting from Class C share transactions 6,319 $ 70,325
- --------------------------------------------------------------------------------------- --------- -------------
Net change resulting from share transactions 514,492 $ 5,161,883
- --------------------------------------------------------------------------------------- --------- -------------
</TABLE>
(a) For the period from February 28, 1996 (date of initial public investment) to
May 31, 1996.
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Federated Global Research Corp., the Fund's
investment adviser, (the "Adviser"), receives for its services an annual
investment advisory fee equal to 1.25% of the Fund's average daily net
assets. The Adviser may voluntarily choose to waive any portion of its fee
and/or reimburse certain operating expenses of the Fund. The Adviser can
modify or terminate this voluntary waiver and/or reimbursement at any time
at its sole discretion.
ADMINISTRATIVE FEE--Federated Services Company ("FServ"), under the
Administrative Services Agreement, provides the Fund with administrative
personnel and services. The fee paid to FServ 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
the period of the Administrative Services Agreement shall be at least
$125,000 per portfolio and $30,000 per each additional class of shares.
DISTRIBUTION SERVICES FEE--The Fund has adopted a Distribution Plan (the
"Plan") pursuant to Rule 12b-1 under the Act. 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 Class A, Class B and Class C shares.
The Plan provides that the Fund may incur distribution expenses according
to the following schedule annually, to compensate Federated Securities
Corp.
FEDERATED LATIN AMERICAN GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
% OF AVG. DAILY NET
SHARE CLASS NAME ASSETS OF CLASS
<S> <C>
Class A Shares 0.25%
- ----------------------------------------------------------------------------------------
Class B Shares 0.75%
- ----------------------------------------------------------------------------------------
Class C Shares 0.75%
- ----------------------------------------------------------------------------------------
</TABLE>
Class A Shares did not incur a Distribution services fee for the period
ended May 31, 1996, and has no present intention of paying or accruing a
Distribution services fee.
SHAREHOLDER SERVICES FEE--Under the terms of a Shareholder Services
Agreement with Federated Shareholder Services ("FSS"), the Fund will pay
FSS up to 0.25% of average daily net assets of each class of shares of the
Fund for the period. The fee paid to Federated Shareholder Services is used
to finance certain services for shareholders and to maintain shareholder
accounts.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES--FServ, through
its subsidiary, Federated Shareholder Services Company ("FSSC") serves as
transfer and dividend disbursing agent for the Fund. The fee paid to FSSC
is based on the size, type, and number of accounts and transactions made by
shareholders.
PORTFOLIO ACCOUNTING FEES--FServ maintains the Fund's accounting records
for which it receives a fee. The fee is based on the level of the Fund's
average daily net assets for the period, plus out-of-pocket expenses.
ORGANIZATIONAL EXPENSES--Organizational and/or start-up administrative
service expenses of $53,789 were borne initially by the Adviser. The Fund
has agreed to reimburse the Adviser for the organizational and/or start-up
administrative expenses during the five year period following effective
date. For the period ended May 31, 1996, no payments were made by the Fund
pursuant to this agreement.
GENERAL--Certain of the Officers and Directors of the Corporation are
Officers and Directors or Trustees of the above companies.
(5) INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the
period ended May 31, 1996, were as follows:
<TABLE>
<S> <C>
- ----------------------------------------------------------------------------------------------------
PURCHASES $ 5,535,391
- ---------------------------------------------------------------------------------------------------- ------------
SALES $ 601,734
- ---------------------------------------------------------------------------------------------------- ------------
</TABLE>
July 31, 1996
TRUSTEES OFFICERS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
John F. Donahue John F. Donahue
Thomas G. Bigley Chairman
John T. Conroy, Jr. Richard B. Fisher
William J. Copeland President
James E. Dowd J. Christopher Donahue
Lawrence D. Ellis, M.D. Executive Vice President
Richard B. Fisher Edward C. Gonzales
Edward L. Flaherty, Jr. Executive Vice President
Peter E. Madden John W. McGonigle
Gregor F. Meyer Executive Vice President and Secretary
John E. Murray, Jr. David M. Taylor
Wesley W. Posvar Treasurer
Marjorie P. Smuts J. Crilley Kelly
Assistant Secretary
</TABLE>
Mutual funds are not bank deposits or obligations, are not guaranteed by any
bank, and are not insured or guaranteed by the U.S. government, the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other
governmental agency. Investment in mutual funds involves investment risk,
including possible loss of principal.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the fund's prospectuses which contain facts
concerning its objective and policies, management fees, expenses and other
information.
- -------------------------------------------------------------------------------
FEDERATED
- -------------------------------------------------------------------------------
LATIN AMERICAN
- --------------------------------------------------------------------------------
GROWTH
- --------------------------------------------------------------------------------
FUND
- --------------------------------------------------------------------------------
COMBINED
SEMI-ANNUAL REPORT AND
SUPPLEMENT TO PROSPECTUS
DATED JANAURY 31, 1996
[LOGO] FEDERATED INVESTORS
Since 1955
Federated Investors Tower
Pittsburgh, PA 15222-3779
Federated Securities Corp. is the distributor of the fund
and is a subsidiary of Federated Investors.
Cusip 981487796
Cusip 981487788 [LOGO]
Cusip 98148770 RECYCLED
G01740-01 (7/96) PAPER
APPENDIX
A. The graphic representation here displayed entitled `Initial Investment
of $3,000,''consists of a boxed legend in the upper left quadrant
indicating the components of the corresponding mountain chart. The lighter-
shaded portion represents the value of Reinvested Income for the Class A
Shares of Federated World Utility Fund (the `Fund''). The darker-shaded
portion reflects the Principal Value of a $3000/280 shares investment in
the Fund. The color-coded mountain chart is a visual representation of the
narrative text above it, which shows that an initial investment of $3,000
in the Fund on 4/22/94, would have a reinvested total worth of $3,562/301
shares on 5/31/96. The `x'' axis reflects computation periods from 4/22/94
to 5/31/96. The right margin of the chart reflects the ending values of a
hypothetical investment of $3,000 in the Fund measured in increments of
$1,000 ranging from $0 to $4,000.
B. The graphic representation here displayed, entitled `Yearly Investments
of $1000,''consists of a boxed legend in the upper left quadrant
indicating the components of the corresponding mountain chart. The lighter-
shaded portion represents the value of Reinvested Income for the Class A
Shares of Federated World Utility Fund (the `Fund''). The darker-shaded
portion reflects the Principal Value of a $1000/93 shares in the Fund
(totaling $3,000 by 5/31/96). The color-coded mountain chart is a visual
representation of the narrative text above it, which shows that $1000
annual investments in the Class A Shares of the Fund beginning on 4/22/94
would have a reinvested total value of $3,304/279 shares on 5/31/96. The
`x'' axis reflects computation periods from 4/22/94 to 5/31/96. The right
margin of the chart reflects the ending values of a hypothetical annual
investment of $1000 in the Fund measured in increments of $1000 ranging
from $0 to $4,000.
