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Federated Investors
World Utility
Fund
Annual Report
November 30, 1995
Established 1994
Equity
President's Message
Dear Shareholder:
I am pleased to present the Annual Report for Federated World Utility Fund,
formerly, World Utility Fund, which covers the twelve-month period ended
November 30, 1995.
This report begins with an interview with portfolio manager Michael J.
Donnelly, Assistant Vice President, Federated Global Research Corp. Following
the interview are investment illustrations showing the fund's performance. I
urge you to review the fund's holdings of good dividend-paying utility
corporations as well as the fund's investments around the world. The fund's
holdings highlight the income and growth opportunities in our diversified
portfolio of income-producing stocks issued by utilities in key regions around
the world and the U.S. The fund's financial statements are also published.
Consistent with a favorable environment for utilities worldwide, your fund
delivered strong performance during the reporting period. The fund's Class A
Shares posted a total return for the 12-month period ended November 30, 1995 of
17.94% based on net asset value. The fund's Fortress Shares achieved a total
return of 17.79% based on net asset value.* This report also contains
information for Class B Shares and Class C Shares, which were introduced in
July, 1995.
For the twelve-month period, the share price increased 13%. This increase was
due to a large extent to the reduction in U.S. interest rates. Of course,
selection within the utility sectors helped as electric and gas issues
performed well. We are optimistic about international utility prospects as the
world population benefits from the vital services utilities provide.
Dividends paid per share during the reporting period totaled $0.40 for Class A
Shares and $0.38 for Fortress Shares. At the end of the period, the fund's net
assets stood at $16.3 million.
The positive performance of your investment in Federated World Utility Fund
should help you consider adding to your account and reinvesting your earnings.
In this manner you can enjoy the benefit of compounding your monthly dividends
in additional shares.
*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 and Fortress Shares were
11.49% and 15.52%, respectively
As always, we welcome your comments and suggestions. Remember, Federated World
Utility Fund puts a world of investments in your portfolio.
Sincerely,
/s/ Richard B. Fisher
Richard B. Fisher
President
January 15, 1996
Management Discussion and Analysis
Michael J. Donnelly
Assistant Vice President
Federated Global
Research Corp.
Q How did the global utilities market perform during the year ended
November 30, 1995?
A The global utilities market, as measured by the Financial Times/Standard &
Poor's Global Utility Index,* achieved a total return of 17.23% for the
twelve-month period. Throughout 1995, this Index has been propelled by its
weightings in Belgium, Germany, Spain, and Sweden. Utilities in these markets
have reacted most favorably to the decline in European bond yields.
Lower U.S. interest rates also contributed to the fund's total return of 17.94%
based on net asset value as of November 30, 1995.** The fund also paid slightly
more than 4% in dividends during the year. This income provided about 20% to
25% of the fund's total return. Shareholders benefited from a general decline
in global interest rates combined with growing dividends in some key utility
holdings.
Q The fund's assets are invested in income-producing utility stocks in key
world regions: Asia, the United States, Other Americas, and Europe. How
were the fund's assets allocated among these sectors as of
November 30, 1995, and why?
A 48.59% of fund assets were invested in the U.S.; 20.89% in Europe; 13.90%
in Other Americas (North and South America excluding the U.S.); and 16.62%
in Asia.
Our strategy has always been to remain diversified globally in order to offer
our shareholders the opportunity for a combination of capital growth from
utilities in rapidly developing economies, and income from utilities in more
mature markets.
During the year, the largest increase in regional weightings has been in Asia,
with the single largest country increase occurring in Japan. Federated Global
Research Corp. is optimistic about the prospects for earnings growth in Japan.
Telephone companies leveraged to cellular
*Financial Times/Standard & Poor's Global Utility Index is a representative
global utility index compiled by the Financial Times, Goldman Sachs, and
Standard & Poor's in conjuction with the British Institute of Actuaries. This
index is unmanaged.
**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.
telecommunications have exciting opportunities for such growth. NTT and DDI are
two such companies and make up a combined 4% of the fund's portfolio.
Our European exposure has grown over the course of 1995. The single largest
area of growth has been in Spain, where we take an optimistic view towards the
market over the short- to intermediate-term due to political changes, positive
developments with regards to interest rates, and changes within the utility
sector that will enhance shareholder value.
Included in the Other Americas weighting is a significant position invested in
Latin America. Over the long-term, the growth prospects for Latin American
economies and the quality companies operating within them appear to be very
good.
Q The last report discussed how world utilities offer a prudent investment
approach to long-term financial goals. Over the past several years, the
world utilities market has outperformed the international stock market as
measured by the Morgan Stanley Capital International Europe, Australia,
and Far East Index ("EAFE")*--with less risk. Do you see continued positive
opportunities in the world utility market, for the long-term?
A From January 1, 1986 until November 30, 1995, the global utility market as
measured by the Financial Times/Standard & Poor's Global Utility Index has
returned 270.81% on a cumulative basis, while the international stock
market as measured by EAFE returned 254.87% on a cumulative basis. Global
utility performance has been more stable: monthly returns have fluctuated
slightly more than two-thirds as much as the monthly returns of the EAFE.
This type of investment has offered less volatility and has produced
excellent returns.**
*Morgan Stanley Capital International Europe, Australia, and Far East Index is
a market capitalization weighted foreign securities index, which is widely
used to measure the performance of European, Australian and New Zealand and
Far Eastern stock markets. The index covers approximately 1,020 companies
drawn from 18 countries in the above regions. This index is unmanaged.
**Past performance is not indicative of future results. Investing in foreign
securities involves additional risks such as currency fluctuation and
increased volatility.
For the long-term, we see continued investment opportunities for several
reasons. Global interest rates are on a downward trend, and this is positive
for the generally higher yielding utility stocks. More importantly, in many
nations, coordinated global and national economic growth is increasingly
becoming the top priority of policy makers. The foundations for this growth
often lie in the creation and expansion of the infrastructure, including power
generation, transmission and distribution, and telecommunications networks.
Furthermore, this kind of growth creates the need for increased use of natural
resources such as water and natural gas. We see greater demand for utility
services, which can often lead to attractive investment opportunities in
utility markets worldwide.
Two Ways You May Seek to Invest for Success in
World Utility Fund
If you had made an initial investment of $2,000 in the Class A Shares of World
Utility Fund on 4/22/94, reinvested your dividends and capital gains, and did
not redeem any shares, your account would be worth $2,162 on 11/30/95. You
would have earned a 4.97%* average annual total return for the 1-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
gaining the benefit of compounding at the same time.
As of 12/31/95, the Class A Shares' average annual one-year and since inception
(4/22/94) total returns were 16.67% and 6.85% respectively. Class B Shares'
since inception (7/27/95) total return was 2.99%. Class C Shares' since
inception (7/27/95) total return was 7.41%. Fortress Shares' average annual
one-year and since inception (4/22/94) total returns were 21.13% and 9.15%,
respectively.*
GRAPHHIC REPRESENTATION OMITTED. SEE APPENDIX "A"
*Total return represents the change in the value of an investment after
reinvesting all income and capital gains, and taking into account the 5.50%
sales charge applicable to Class A Shares, the 5.50% contingent deferred sales
charge applicable to Class B Shares, the 1.00% contingent deferred sales charge
to Class C Shares and the 1.00% sales charge and 1.00% contingent deferred
sales charge applicable to Fortress 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.
World Utility Fund
One Step at a Time
$1,000 invested each year (reinvesting all dividends and capital gains) grew
to $2,132.
With this approach, the key is consistency.
If you had started investing $1,000 annually in the Class A Shares of World
Utility Fund on 4/22/94, reinvested your dividends and capital gains, and did
not redeem any shares, you would have invested only $2,000, but your account
would have reached a total value of $2,132* by 11/30/95. You would have earned
an average annual total return of 5.96%.
A practical investment plan helps you pursue long-term performance from utility
securities. Through systematic investing, you buy shares on a regular basis and
reinvest all earnings. This investment plan works for you even if 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. 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.
World Utility Fund--
(Class A Shares)
Growth of $10,000 Invested in World Utility Fund (Class A Shares)
The graph below illustrates the hypothetical investment of $10,000 in the World
Utility Fund (Class A Shares) (the "Fund") from April 22, 1994 (start of
performance) to November 30, 1995 compared to the Standard and Poor's 500 Index
(S&P 500)+ and the FT-Actuaries World Utility Index (FTWUI).+
GRAPHIC REPRESENTATION OMITTED. SEE APPENDIX "C"
AVERAGE ANNUAL TOTAL RETURN** FOR THE PERIOD ENDED NOVEMBER 30, 1995
1 Year 11.49%
Start of Performance (4/22/94) 4.97%
Past performance is not predictive of future performance. Your investment
return and principal value will fluctuate so when shares are redeemed, they may
be worth more or less than original cost. Mutual funds are not obligations of
or guaranteed by any bank and are not federally insured.
*Represents a hypothetical investment of $10,000 in the Fund after deducting
the maximum sales charge of 4.50% ($10,000 investment minus $450 sales charge
= $9,550) that was in effect prior to October 1, 1994. As of October 1, 1994,
the maximum sales charge was 5.50%. The Fund's performance assumes the
reinvestment of all dividends and distributions. The S&P 500 and the FTWUI
have been adjusted to reflect reinvestment of dividends on securities in the
indices.
**Total return quoted reflects the maximum sales charge of 5.50% and any
applicable contingent deferred sales charges.
+The S&P 500 and the FTWUI are not adjusted to reflect sales charges, expenses,
or other fees that the Securities and Exchange Commission requires to be
reflected in the Fund's performance. The indices are unmanaged.
World Utility Fund--
(Class B Shares)
Growth of $10,000 Invested in World Utility Fund (Class B Shares)
The graph below illustrates the hypothetical investment of $10,000 in the World
Utility Fund (Class B Shares) (the "Fund") from July 27, 1995 (start of
performance) to November 30, 1995 compared to the Standard and Poor's 500
Index (S&P 500)+ and FT-Actuaries World Utility Index (FTWUI).+
GRAPHIC REPRESENTATION OMITTED. SEE APPENDIX "D"
AVERAGE ANNUAL TOTAL RETURN** FOR THE PERIOD ENDED NOVEMBER 30, 1995
Start of Performance (7/27/95)(cumulative) (0.56%)
Past performance is not predictive of future performance. Your investment
return and principal value will fluctuate so when shares are redeemed, they may
be worth more or less than original cost. Mutual funds are not obligations of
or guaranteed by any bank and are not federally insured.
*Represents a hypothetical investment of $10,000 in the Fund. The ending
value of the Fund reflects a 5.50% contingent deferred sales charge on any
redemption less than 1 year from the purchase date. The Fund's performance
assumes the reinvestment of all dividends and distributions. The S&P 500 and
the FTWUI have been adjusted to reflect reinvestment of dividends on
securities in the indices.
**Total return quoted reflects all applicable sales charges and
contingent deferred sales charges.
+The S&P 500 and the FTWUI are not adjusted to reflect sales charges,
expenses, or other fees that the Securities and Exchange Commission requires
to be reflected in the Fund's performance. The indices are unmanaged.
World Utility Fund--
(Class C Shares)
Growth of $10,000 Invested in World Utility Fund (Class C Shares)
The graph below illustrates the hypothetical investment of $10,000 in the World
Utility Fund (Class C Shares) (the "Fund") from July 27, 1995 (start of
performance) to November 30, 1995 compared to the Standard and Poor's 500
Index (S&P 500)+ and the FT-Actuaries World Utility Index (FTWUI).+
GRAPHIC REPRESENTATION OMITTED. SEE APPENDIX "E"
AVERAGE ANNUAL TOTAL RETURN** FOR THE PERIOD ENDED NOVEMBER 30, 1995
Start of Performance (7/27/95) (cumulative) 3.87%
Past performance is not predictive of future performance. Your investment
return and principal value will fluctuate so when shares are redeemed, they may
be worth more or less than original cost. Mutual funds are not obligations of
or guaranteed by any bank and are not federally insured.
*Represents a hypothetical investment of $10,000 in the Fund. The ending
value of the Fund reflects a 1.00% contingent deferred sales charge on any
redemption less than 1 year from the purchase date. The Fund's performance
assumes the reinvestment of all dividends and distributions. The S&P 500 and
the FTWUI have been adjusted to reflect reinvestment of dividends on
securities in the indices.
**Total return quoted reflects all applicable sales charges and
contingent deferred sales charges.
+The S&P 500 and the FTWUI are not adjusted to reflect sales charges,
expenses, or other fees that the Securities and Exchange Commission requires
to be reflected in the Fund's performance. The indices are unmanaged.
World Utility Fund--
(Fortress Shares)
Growth of $10,000 Invested in World Utility Fund (Fortress Shares)
The graph below illustrates the hypothetical investment of $10,000 in the World
Utility Fund (Fortress Shares) (the "Fund") from April 22, 1994 (start of
performance) to November 30, 1995 compared to the Standard and Poor's 500 Index
(S&P 500)+ and the FT-Actuaries World Utility Index (FTWUI).+
GRAPHIC REPRESENTATION OMITTED. SEE APPENDIX "F"
AVERAGE ANNUAL TOTAL RETURN** FOR THE PERIOD ENDED NOVEMBER 30, 1995
1 Year 15.52%
Start of Performance (4/22/94) 7.32%
Past performance is not predictive of future performance. Your investment
return and principal value will fluctuate so when shares are redeemed, they may
be worth more or less than original cost. Mutual funds are not obligations of
or guaranteed by any bank and are not federally insured.
*Represents a hypothetical investment of $10,000 in the Fund after
deducting the maximum sales charge of 1.00% ($10,000 investment minus $100
sales charge = $9,900). The Fund's performance assumes the reinvestment of
all dividends and distributions. The S&P 500 and the FTWUI have been
adjusted to reflect reinvestment of dividends on securities in the indices.
**The ending value of the Fund reflects a contingent deferred sales
charge of 1.00% on any redemption less than 4 years from the purchase date.
***Total return quoted reflects all applicable sales charges and
contingent deferred sales charges.
+The S&P 500 and the FTWUI are not adjusted to reflect sales charges,
expenses, or other fees that the Securities and Exchange Commission
requires to be reflected in the Fund's performance. The indices are
unmanaged.
World Utility Fund
Portfolio of Investments
- --------------------------------------------------------------------------------
November 30, 1995
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------- ----------------------------------------------------------------------------------- -------------
COMMON STOCKS--77.3%
- --------------------------------------------------------------------------------------------------
UTILITY--48.3%
-----------------------------------------------------------------------------------
85,000 Australian Gas Light Co. $ 298,389
-----------------------------------------------------------------------------------
5,700 CMS Energy Corp. 155,325
-----------------------------------------------------------------------------------
46,000 Central Costanera S.A. 143,578
-----------------------------------------------------------------------------------
7,000 Cinergy Corp. 206,500
-----------------------------------------------------------------------------------
11,000 Compania Boliviana de Energia Electrica 297,000
-----------------------------------------------------------------------------------
10,600 DPL, Inc. 254,400
-----------------------------------------------------------------------------------
9,000 DQE, Inc. 259,875
-----------------------------------------------------------------------------------
5,000 Duke Power Co. 224,375
-----------------------------------------------------------------------------------
4,700 Empresa National, ADR 253,800
-----------------------------------------------------------------------------------
5,000 FPL Group, Inc. 216,875
-----------------------------------------------------------------------------------
90,000 Hong Kong Electric Holdings Ltd. 301,943
-----------------------------------------------------------------------------------
41,000 Iberdrola SA 345,950
-----------------------------------------------------------------------------------
5,500 Illinova Corp. 156,063
-----------------------------------------------------------------------------------
10,000 (a)Korea Electric Power Corp., ADR 242,500
-----------------------------------------------------------------------------------
3,000 Korea Electric Power Corp., ADR 73,125
-----------------------------------------------------------------------------------
20,000 Midlands Electricity 283,834
-----------------------------------------------------------------------------------
9,000 NIPSCO Industries, Inc. 333,000
-----------------------------------------------------------------------------------
15,000 National Power Co. PLC, ADR 172,500
-----------------------------------------------------------------------------------
40 Nippon Telegraph & Telephone Corp. 326,683
-----------------------------------------------------------------------------------
10,000 Pacificorp 196,250
-----------------------------------------------------------------------------------
10,000 Pinnacle West Capital Corp. 272,500
-----------------------------------------------------------------------------------
8,000 Southern Co. 183,000
-----------------------------------------------------------------------------------
20,000 Southern Electric PLC 281,384
-----------------------------------------------------------------------------------
12,000 Southern Water PLC 122,627
-----------------------------------------------------------------------------------
7,000 Telecomunicacoes Brasileras, ADR 344,903
-----------------------------------------------------------------------------------
8,000 Telefonica de Espana, ADR 332,000
-----------------------------------------------------------------------------------
10,100 Tokyo Electric Power 262,054
-----------------------------------------------------------------------------------
</TABLE>
World Utility Fund
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------- ----------------------------------------------------------------------------------- -------------
COMMON STOCKS--CONTINUED
- --------------------------------------------------------------------------------------------------
UTILITY--CONTINUED
-----------------------------------------------------------------------------------
9,300 Unicom Corp. $ 297,600
-----------------------------------------------------------------------------------
11,600 Utilicorp United, Inc. 323,350
-----------------------------------------------------------------------------------
7,200 Veba AG 293,715
-----------------------------------------------------------------------------------
20,000 Welsh Water PLC 210,808
-----------------------------------------------------------------------------------
15,000 Westcoast Energy, Inc. 221,250
----------------------------------------------------------------------------------- -------------
Total 7,887,156
----------------------------------------------------------------------------------- -------------
ENERGY MINERALS--4.2%
-----------------------------------------------------------------------------------
8,000 Repsol SA 252,160
-----------------------------------------------------------------------------------
2,000 Royal Dutch Petroleum Co., ADR 256,750
-----------------------------------------------------------------------------------
9,000 YPF Sociedad Anonima, ADR 175,500
----------------------------------------------------------------------------------- -------------
Total 684,410
----------------------------------------------------------------------------------- -------------
FINANCE--2.5%
-----------------------------------------------------------------------------------
7,000 Meditrust, REIT 231,000
-----------------------------------------------------------------------------------
20,000 National Australia Bank, Ltd., Melbourne 174,262
----------------------------------------------------------------------------------- -------------
Total 405,262
----------------------------------------------------------------------------------- -------------
HEALTH CARE--1.7%
-----------------------------------------------------------------------------------
3,000 American Home Products Corp. 273,750
----------------------------------------------------------------------------------- -------------
MAJOR U.S. TELECOMMUNICATIONS--5.6%
-----------------------------------------------------------------------------------
7,000 AT&T Corp. 462,000
-----------------------------------------------------------------------------------
4,000 BellSouth Corp. 155,500
-----------------------------------------------------------------------------------
7,000 GTE Corp. 298,375
----------------------------------------------------------------------------------- -------------
Total 915,875
----------------------------------------------------------------------------------- -------------
NATURAL GAS DISTRIBUTION--3.0%
-----------------------------------------------------------------------------------
8,000 Equitable Resources, Inc. 246,000
-----------------------------------------------------------------------------------
9,000 Pacific Enterprises 240,750
----------------------------------------------------------------------------------- -------------
Total 486,750
----------------------------------------------------------------------------------- -------------
NON-UTILITY--3.2%
-----------------------------------------------------------------------------------
40 DDI Corp. 321,572
-----------------------------------------------------------------------------------
</TABLE>
World Utility Fund
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR
FOREIGN
CURRENCY
PAR AMOUNT VALUE
<C> <S> <C>
- ------------- ----------------------------------------------------------------------------------- -------------
COMMON STOCKS--CONTINUED
- --------------------------------------------------------------------------------------------------
NON-UTILITY--CONTINUED
-----------------------------------------------------------------------------------
10,000 PT Telecom, Class CS, ADR $ 210,000
----------------------------------------------------------------------------------- -------------
Total 531,572
----------------------------------------------------------------------------------- -------------
OIL/GAS TRANSMISSION--4.4%
-----------------------------------------------------------------------------------
7,000 Enron Corp. 262,500
-----------------------------------------------------------------------------------
7,000 Enron Global Power & Pipelines, L.L.C. 175,875
-----------------------------------------------------------------------------------
9,000 Sonat, Inc. 290,250
----------------------------------------------------------------------------------- -------------
Total 728,625
----------------------------------------------------------------------------------- -------------
OTHER TELEPHONE/COMMUNICATIONS--1.6%
-----------------------------------------------------------------------------------
7,000 Telephone and Data System, Inc. 266,875
----------------------------------------------------------------------------------- -------------
TECHNOLOGY--2.8%
-----------------------------------------------------------------------------------
8,400 Nokia (AB), ADR 455,700
----------------------------------------------------------------------------------- -------------
TOTAL COMMON STOCKS (IDENTIFIED COST $11,307,143) 12,635,975
----------------------------------------------------------------------------------- -------------
CONVERTIBLE SECURITIES--17.0%
- --------------------------------------------------------------------------------------------------
UTILITY--8.7%
-----------------------------------------------------------------------------------
4,900 (b)Cointel, Telefonica de Argentina SA, PRIDES, $5.04 256,638
-----------------------------------------------------------------------------------
275,000 Compania de Telefonos, Conv. Bond, 4.50%, 1/15/2003 289,094
-----------------------------------------------------------------------------------
11,000 (b)Nacional Financiera, SNC, PRIDES 378,125
-----------------------------------------------------------------------------------
385,000,000 Softe SA, Conv. Bond, 4.25%, 7/30/1998 260,610
-----------------------------------------------------------------------------------
250,000 (b)Telekom Malaysia, Conv. Bond, 4.00%, 10/3/2004 238,125
----------------------------------------------------------------------------------- -------------
Total 1,422,592
----------------------------------------------------------------------------------- -------------
BASIC INDUSTRY--1.6%
-----------------------------------------------------------------------------------
5,000 Reynolds Metals Co., PRIDES, $3.30 262,500
----------------------------------------------------------------------------------- -------------
CONSUMER DURABLES--1.2%
-----------------------------------------------------------------------------------
15,000 Kaufman & Broad Homes Corp., Conv. Pfd., Series B, $1.52 198,750
----------------------------------------------------------------------------------- -------------
</TABLE>
World Utility Fund
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR
FOREIGN
CURRENCY
PAR AMOUNT VALUE
<C> <S> <C>
- ------------- ----------------------------------------------------------------------------------- -------------
CONVERTIBLE SECURITIES--CONTINUED
- --------------------------------------------------------------------------------------------------
CONSUMER NON-DURABLES--1.8%
-----------------------------------------------------------------------------------
49,750 RJR Nabisco Holdings Corp., Conv. Pfd., Series C, $.60 $ 292,281
----------------------------------------------------------------------------------- -------------
FINANCE--2.7%
-----------------------------------------------------------------------------------
20,000,000 Bank of Tokyo Cayman Finance, Conv. Bond, 4.25%, 3/31/2049 252,088
-----------------------------------------------------------------------------------
3,500 Merrill Lynch & Co., Inc., STRYPES, Series MGIC, $3.12 184,625
----------------------------------------------------------------------------------- -------------
Total 436,713
----------------------------------------------------------------------------------- -------------
PRODUCER MANUFACTURING--1.0%
-----------------------------------------------------------------------------------
10,000 (b)Westinghouse Electric Corp., PEPS, Series C, $1.30 165,000
----------------------------------------------------------------------------------- -------------
TOTAL CONVERTIBLE SECURITIES (IDENTIFIED COST $2,797,884) 2,777,836
----------------------------------------------------------------------------------- -------------
PRINCIPAL
AMOUNT VALUE
- ------------- -------------
(C) REPURCHASE AGREEMENTS--7.7%
- --------------------------------------------------------------------------------------------------
$ 1,255,000 J.P. Morgan Securities, Inc., 5.93%, dated 11/30/1995,
due 12/1/1995 (at amortized cost) 1,255,000
----------------------------------------------------------------------------------- -------------
TOTAL INVESTMENTS (IDENTIFIED COST $15,360,027)(D) $ 16,668,811
----------------------------------------------------------------------------------- -------------
</TABLE>
(a) Non-income producing security.
(b) Denotes a restricted security which is subject to restrictions on resale
under Federal Securities laws. At the end of the period, these securities
amounted to $1,037,888 which represents 6.3% 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 $15,379,738. The
net unrealized appreciation of investments on a federal tax basis amounts to
$1,289,073 which is comprised of $1,549,499 appreciation and $260,426
depreciation at November 30, 1995.
Note: The categories of investments are shown as a percentage of net assets
($16,345,120) at November 30, 1995.
The following acronyms are used throughout this portfolio:
ADR--American Depositary Receipt
PEPS--Participating Equity Preferred Stock
PLC--Public Limited Company
PRIDES-- Preferred Redeemable Increased Dividend Equity Securities
REIT--Real Estate Investment Trust
STRYPES-- Structured Yield Product Exchangeable for Stock
(See Notes which are an integral part of the Financial Statements)
World Utility Fund
Statement of Assets and Liabilities
- --------------------------------------------------------------------------------
November 30, 1995
<TABLE>
<S> <C> <C>
ASSETS:
- ------------------------------------------------------------------------------------------------------
Total investments in securities, at value (identified cost $15,360,027 and tax cost $15,379,738) $16,668,811
- ------------------------------------------------------------------------------------------------------
Cash 3,866
- ------------------------------------------------------------------------------------------------------
Income receivable 58,941
- ------------------------------------------------------------------------------------------------------
Receivable for shares sold 297,998
- ------------------------------------------------------------------------------------------------------
Deferred expenses 28,127
- ------------------------------------------------------------------------------------------------------ ----------
Total assets 17,057,743
- ------------------------------------------------------------------------------------------------------
LIABILITIES:
- ------------------------------------------------------------------------------------------------------
Payable for investments purchased $ 622,421
- -------------------------------------------------------------------------------------------
Payable for shares redeemed 55,592
- -------------------------------------------------------------------------------------------
Payable for taxes withheld 847
- -------------------------------------------------------------------------------------------
Accrued expenses 33,763
- ------------------------------------------------------------------------------------------- ---------
Total liabilities 712,623
- ------------------------------------------------------------------------------------------------------ ----------
NET ASSETS for 1,491,382 shares outstanding $16,345,120
- ------------------------------------------------------------------------------------------------------ ----------
NET ASSETS CONSIST OF:
- ------------------------------------------------------------------------------------------------------
Paid in capital $15,155,759
- ------------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments and translation of assets and liabilities in foreign
currency 1,309,739
- ------------------------------------------------------------------------------------------------------
Accumulated net realized loss on investments and foreign currency transactions (262,580)
- ------------------------------------------------------------------------------------------------------
Undistributed net investment income 142,202
- ------------------------------------------------------------------------------------------------------ ----------
Total Net Assets $16,345,120
- ------------------------------------------------------------------------------------------------------ ----------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
- ------------------------------------------------------------------------------------------------------
CLASS A SHARES:
- ------------------------------------------------------------------------------------------------------
Net Asset Value Per Share ($8,875,228 / 809,669 shares outstanding) $10.96
- ------------------------------------------------------------------------------------------------------ ----------
Offering Price Per Share (100/94.50 of $10.96)* $11.60
- ------------------------------------------------------------------------------------------------------ ----------
Redemption Proceeds Per Share $10.96
- ------------------------------------------------------------------------------------------------------ ----------
CLASS B SHARES:
- ------------------------------------------------------------------------------------------------------
Net Asset Value Per Share ($1,067,704 / 97,486 shares outstanding) $10.95
- ------------------------------------------------------------------------------------------------------ ----------
Offering Price Per Share $10.95
- ------------------------------------------------------------------------------------------------------ ----------
Redemption Proceeds Per Share (94.50/100 of $10.95)** $10.35
- ------------------------------------------------------------------------------------------------------ ----------
CLASS C SHARES:
- ------------------------------------------------------------------------------------------------------
Net Asset Value Per Share ($373,777 / 34,133 shares outstanding) $10.95
- ------------------------------------------------------------------------------------------------------ ----------
Offering Price Per Share $10.95
- ------------------------------------------------------------------------------------------------------ ----------
Redemption Proceeds Per Share (99.00/100 of $10.95)** $10.84
- ------------------------------------------------------------------------------------------------------ ----------
FORTRESS SHARES:
- ------------------------------------------------------------------------------------------------------
Net Asset Value Per Share ($6,028,411 / 550,094 shares outstanding) $10.96
- ------------------------------------------------------------------------------------------------------ ----------
Offering Price Per Share (100/99.00 of $10.96)* $11.07
- ------------------------------------------------------------------------------------------------------ ----------
Redemption Proceeds Per Share (99.00/100 of $10.96)** $10.85
- ------------------------------------------------------------------------------------------------------ ----------
</TABLE>
*See "What Shares Cost" in the Prospectus.
**See "Contingent Deferred Sales Charge" in the Prospectus.
(See Notes which are an integral part of the Financial Statements)
World Utility Fund
Statement of Operations
- --------------------------------------------------------------------------------
Year Ended November 30, 1995
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- ------------------------------------------------------------------------------------------------------
Dividends (net of foreign taxes withheld of $19,001) $ 497,792
- ------------------------------------------------------------------------------------------------------
Interest 61,107
- ------------------------------------------------------------------------------------------------------ ---------
Total income 558,899
- ------------------------------------------------------------------------------------------------------
EXPENSES:
- ------------------------------------------------------------------------------------------------------
Investment advisory fee $ 120,144
- -------------------------------------------------------------------------------------------
Administrative personnel and services fee 175,713
- -------------------------------------------------------------------------------------------
Custodian fees 59,666
- -------------------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 40,983
- -------------------------------------------------------------------------------------------
Directors'/Trustees' fees 7,140
- -------------------------------------------------------------------------------------------
Auditing fees 13,665
- -------------------------------------------------------------------------------------------
Legal fees 8,151
- -------------------------------------------------------------------------------------------
Portfolio accounting fees 34,279
- -------------------------------------------------------------------------------------------
Distribution services fee--Class B Shares 1,047
- -------------------------------------------------------------------------------------------
Distribution services fee--Class C Shares 502
- -------------------------------------------------------------------------------------------
Distribution services fee--Fortress Shares 13,444
- -------------------------------------------------------------------------------------------
Shareholder services fee--Class A Shares 16,075
- -------------------------------------------------------------------------------------------
Shareholder services fee--Class B Shares 349
- -------------------------------------------------------------------------------------------
Shareholder services fee--Class C Shares 167
- -------------------------------------------------------------------------------------------
Shareholder services fee--Fortress Shares 13,444
- -------------------------------------------------------------------------------------------
Share registration costs 46,748
- -------------------------------------------------------------------------------------------
Printing and postage 49,304
- -------------------------------------------------------------------------------------------
Insurance premiums 5,259
- -------------------------------------------------------------------------------------------
Taxes 228
- -------------------------------------------------------------------------------------------
Miscellaneous 12,457
- ------------------------------------------------------------------------------------------- ---------
Total expenses 618,765
- -------------------------------------------------------------------------------------------
Waivers and reimbursements--
- -------------------------------------------------------------------------------------------
Waiver of investment advisory fee ($120,144)
- --------------------------------------------------------------------------------
Reimbursement of other operating expenses (453,593)
- -------------------------------------------------------------------------------- ---------
Total waivers and reimbursements (573,737)
- ------------------------------------------------------------------------------------------- ---------
Net expenses 45,028
- ------------------------------------------------------------------------------------------------------ ---------
Net investment income 513,871
- ------------------------------------------------------------------------------------------------------ ---------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY:
- ------------------------------------------------------------------------------------------------------
Net realized loss on investments and foreign currency transactions (213,222)
- ------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation of investments and translation of assets and liabilities in
foreign currency 1,701,368
- ------------------------------------------------------------------------------------------------------ ---------
Net realized and unrealized gain on investments and foreign currency 1,488,146
- ------------------------------------------------------------------------------------------------------ ---------
Change in net assets resulting from operations $2,002,017
- ------------------------------------------------------------------------------------------------------ ---------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
World Utility Fund
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
NOVEMBER 30, NOVEMBER 30,
1995 1994*
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ----------------------------------------------------------------------------
OPERATIONS--
- ----------------------------------------------------------------------------
Net investment income $ 513,871 $ 175,680
- ----------------------------------------------------------------------------
Net realized gain (loss) on investments and foreign currency transactions
($175,486 net loss and $42,265 net loss, respectively, as computed for
federal tax purposes) (213,222) (46,782)
- ----------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) of investments and
translation of assets and liabilities in foreign currency 1,701,368 (391,629)
- ---------------------------------------------------------------------------- ----------------- -----------------
Change in net assets resulting from operations 2,002,017 (262,731)
- ---------------------------------------------------------------------------- ----------------- -----------------
DISTRIBUTIONS TO SHAREHOLDERS--
- ----------------------------------------------------------------------------
Distributions from net investment income
- ----------------------------------------------------------------------------
Class A Shares (241,857) (54,743)
- ----------------------------------------------------------------------------
Class B Shares (3,135) --
- ----------------------------------------------------------------------------
Class C Shares (261) --
- ----------------------------------------------------------------------------
Fortress Shares (196,003) (53,926)
- ---------------------------------------------------------------------------- ----------------- -----------------
Change in net assets resulting from distributions to shareholders (441,256) (108,669)
- ---------------------------------------------------------------------------- ----------------- -----------------
SHARE TRANSACTIONS--
- ----------------------------------------------------------------------------
Proceeds from sale of shares 6,182,954 11,113,812
- ----------------------------------------------------------------------------
Net asset value of shares issued to shareholders in payment of distributions
declared 274,697 57,563
- ----------------------------------------------------------------------------
Cost of shares redeemed (1,442,701) (1,130,566)
- ---------------------------------------------------------------------------- ----------------- -----------------
Change in net assets resulting from share transactions 5,014,950 10,040,809
- ---------------------------------------------------------------------------- ----------------- -----------------
Change in net assets 6,575,711 9,669,409
- ----------------------------------------------------------------------------
NET ASSETS:
- ----------------------------------------------------------------------------
Beginning of period 9,769,409 100,000
- ---------------------------------------------------------------------------- ----------------- -----------------
End of period (including undistributed net investment income of $142,202 and
$62,494, respectively) $ 16,345,120 $ 9,769,409
- ---------------------------------------------------------------------------- ----------------- -----------------
</TABLE>
* For the period from March 17, 1994 (start of business) to November 30, 1994.
(See Notes which are an integral part of the Financial Statements)
World Utility Fund
Financial Highlights--Class A Shares
- --------------------------------------------------------------------------------
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
NOVEMBER 30, NOVEMBER 30,
1995 1994(a)
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.67 $ 10.06
- ----------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ----------------------------------------------------------------------------
Net investment income 0.42 0.24
- ----------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments
and foreign currency 1.27 (0.46)
- ---------------------------------------------------------------------------- ------- -------
Total from investment operations 1.69 (0.22)
- ---------------------------------------------------------------------------- ------- -------
LESS DISTRIBUTIONS
- ----------------------------------------------------------------------------
Distributions from net investment income (0.40) (0.17)
- ---------------------------------------------------------------------------- ------- -------
NET ASSET VALUE, END OF PERIOD $ 10.96 $ 9.67
- ---------------------------------------------------------------------------- ------- -------
TOTAL RETURN (b) 17.94% (3.00%)
- ----------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ----------------------------------------------------------------------------
Expenses 0.25% 0.25%*
- ----------------------------------------------------------------------------
Net investment income 4.39% 5.10%*
- ----------------------------------------------------------------------------
Expense waiver/reimbursement (c) 4.78% 4.43%*
- ----------------------------------------------------------------------------
SUPPLEMENTAL DATA
- ----------------------------------------------------------------------------
Net assets, end of period (000 omitted) $8,875 $4,948
- ----------------------------------------------------------------------------
Portfolio turnover 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 17, 1994, to April 20, 1994, Class A 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) For the periods ended November 30, 1995 and 1994, the Adviser waived all of
its investment advisory fee, 1.00% and 1.00%, respectively, and reimbursed
other operating expenses, 0.34% and 0.86%, respectively, to comply with
certain state expense limitations. The remainder of the reimbursement was
voluntary. This expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
World Utility Fund
Financial Highlights--Class B Shares
- --------------------------------------------------------------------------------
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
PERIOD ENDED
NOVEMBER 30,
1995(a)
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.53
- -----------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- -----------------------------------------------------------------------------------------------
Net investment income 0.11
- -----------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investment
and foreign currency 0.41
- ----------------------------------------------------------------------------------------------- -------
Total from investment operations 0.52
- ----------------------------------------------------------------------------------------------- -------
LESS DISTRIBUTIONS
- -----------------------------------------------------------------------------------------------
Distributions from net investment income (0.10)
- ----------------------------------------------------------------------------------------------- -------
NET ASSET VALUE, END OF PERIOD $ 10.95
- ----------------------------------------------------------------------------------------------- -------
TOTAL RETURN (b) 5.00%
- -----------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- -----------------------------------------------------------------------------------------------
Expenses 1.00%*
- -----------------------------------------------------------------------------------------------
Net investment income 2.99%*
- -----------------------------------------------------------------------------------------------
Expense waiver/reimbursement 4.78%*(c)
- -----------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $1,068
- -----------------------------------------------------------------------------------------------
Portfolio turnover 46 %
- -----------------------------------------------------------------------------------------------
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from July 27, 1995 (date of initial
public offering) 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) The Adviser waived all of its investment advisory fee, 1.00%, and
reimbursed other operating expenses, 0.34%, to comply with certain state
expenses limitations. The remainder of the reimbursement was voluntary.
This 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)
World Utility Fund
Financial Highlights--Class C Shares
- --------------------------------------------------------------------------------
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
PERIOD ENDED
NOVEMBER 30,
1995(a)
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.53
- -----------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- -----------------------------------------------------------------------------------------------
Net investment income 0.15
- -----------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments
and foreign currency 0.37
- ----------------------------------------------------------------------------------------------- -------
Total from investment operations 0.52
- ----------------------------------------------------------------------------------------------- -------
LESS DISTRIBUTIONS
- -----------------------------------------------------------------------------------------------
Distributions from net investment income (0.10)
- ----------------------------------------------------------------------------------------------- -------
NET ASSET VALUE, END OF PERIOD $ 10.95
- ----------------------------------------------------------------------------------------------- -------
TOTAL RETURN (b) 4.92%
- -----------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- -----------------------------------------------------------------------------------------------
Expenses 1.00%*
- -----------------------------------------------------------------------------------------------
Net investment income 3.03%*
- -----------------------------------------------------------------------------------------------
Expense waiver/reimbursement 4.77%*(c)
- -----------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $374
- -----------------------------------------------------------------------------------------------
Portfolio turnover 46 %
- -----------------------------------------------------------------------------------------------
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from July 27, 1995 (date of initial
public offering) 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) The Adviser waived all of its investment advisory fee, 1.00%, and
reimbursed other operating expenses, 0.34%, to comply with certain state
expenses limitations. The remainder of the reimbursement was voluntary.
This 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)
World Utility Fund
Financial Highlights--Fortress Shares
- --------------------------------------------------------------------------------
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
NOVEMBER 30, NOVEMBER 30,
<S> <C> <C>
1995 1994(a)
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.66 $ 10.04
- ----------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ----------------------------------------------------------------------------
Net investment income 0.43 0.21
- ----------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments
and foreign currency 1.25 (0.43)
- ---------------------------------------------------------------------------- ------- -------
Total from investment operations 1.68 (0.22)
- ---------------------------------------------------------------------------- ------- -------
LESS DISTRIBUTIONS
- ----------------------------------------------------------------------------
Distributions from net investment income (0.38) (0.16)
- ---------------------------------------------------------------------------- ------- -------
NET ASSET VALUE, END OF PERIOD $ 10.96 $ 9.66
- ---------------------------------------------------------------------------- ------- -------
TOTAL RETURN (b) 17.79% (3.07%)
- ----------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ----------------------------------------------------------------------------
Expenses 0.50% 0.50%*
- ----------------------------------------------------------------------------
Net investment income 4.19% 4.59%*
- ----------------------------------------------------------------------------
Expense waiver/reimbursement (c) 4.78% 4.43%*
- ----------------------------------------------------------------------------
SUPPLEMENTAL DATA
- ----------------------------------------------------------------------------
Net assets, end of period (000 omitted) $6,028 $4,821
- ----------------------------------------------------------------------------
Portfolio turnover 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) For the periods ended November 30, 1995 and 1994, the Adviser waived all of
its investment advisory fee, 1.00% and 1.00%, respectively, and reimbursed
other operating expenses, 0.34% and 0.86%, respectively, to comply with
certain state expenses limitations. The remainder of the reimbursement was
voluntary. This 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)
World Utility Fund
Notes to Financial Statements
- --------------------------------------------------------------------------------
November 30, 1995
(1) ORGANIZATION
World Investment Series, Inc. (the "Corporation") is registered under the
Investment Company Act of 1940, (the "Act") as an open-end, management
investment company. The Corporation consists of one diversified portfolio, World
Utility Fund (the "Fund").
The Fund offers four classes of shares: Class A Shares, Class B Shares, Class C
Shares and Fortress Shares.
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.
Two classes of shares of the Fund commenced operations during the fiscal year
ended
November 30, 1995:
<TABLE>
<CAPTION>
EFFECTIVE DATE NAME OF NEW CLASS(ES)
<S> <C>
07/27/95 Class B Shares
07/27/95 Class C Shares
</TABLE>
(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--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. All other securities are valued at
prices provided by an independent pricing service.
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 Directors. Risks may arise from
the potential inability of counterparties to honor the terms of
World Utility Fund
- --------------------------------------------------------------------------------
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. Income and capital gain distributions are determined in accordance
with income tax regulations which may differ from generally accepted
accounting principles. These differences are primarily due to differing
treatments for foreign currency transactions. The following
reclassifications have been made to the financial statements:
<TABLE>
<CAPTION>
INCREASE (DECREASE)
<S> <C>
ACCUMULATED NET UNDISTRIBUTED NET
REALIZED GAIN/LOSS INVESTMENT INCOME
($7,093) $7,093
</TABLE>
Net investment income, net realized gains/losses, and net assets were not
affected by this reclassification.
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 dividends have
been provided for in accordance with the Fund's understanding of the
applicable country's tax rules and rates. At November 30, 1995, 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.
World Utility Fund
- --------------------------------------------------------------------------------
CONCENTRATION OF CREDIT RISK--The Fund invests in equity and fixed income
securities of non-U.S. issuers. Although the Fund maintains a diversified
investment portfolio, the political or economic developments within a
particular country or region may have an adverse effect on the ability of
domiciled issuers to meet their obligations. Additionally, political or
economic developments may have an effect on the liquidity and volatility of
portfolio securities and currency holdings.
At November 30, 1995, the portfolio was diversified with the following
countries:
<TABLE>
<S> <C> <C> <C>
Argentina 0.7% Italy 1.9%
Australia 2.7% Japan 7.1%
Great Britain 5.1% The Netherlands 1.5%
Hong Kong 1.9% Spain 3.6%
</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 federal securities laws or in
transactions exempt from such registration. In some cases, the issuer of
restricted securities has agreed to register such securities for resale, at
the issuer's expense either upon demand by the Fund or in connection with
another registered offering of the securities. Many restricted securities
may be resold in the secondary market in transactions exempt from
registration. Such restricted securities may be determined to be liquid
under criteria established by the Board of Directors. The Fund will not
incur any registration costs upon such resales. The Fund's restricted
securities are valued
World Utility Fund
- --------------------------------------------------------------------------------
at the price provided by dealers in the secondary market or, if no market
prices are available, at the fair value as determined by the Fund's pricing
committee. Additional information on each restricted security held at
November 30, 1995 is as follows:
<TABLE>
<CAPTION>
ACQUISITION ACQUISITION
SECURITY DATE COST
<S> <C> <C>
Cointel, Telefonica de Argentina SA, PRIDES 4/15/94-3/17/95 $ 232,825
Nacional Financiera, SNC, PRIDES 12/22/94-11/3/95 396,805
Telekom Malaysia, Conv. Bond 9/22/94-12/21/94 245,125
Westinghouse Electric Corp., PEPS 4/15/94-12/21/94 133,250
</TABLE>
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.
OTHER--Investment transactions are accounted for on the trade date.
(3) CAPITAL STOCK
At November 30, 1995, par value shares ($0.001 per share) authorized were as
follows:
<TABLE>
<CAPTION>
SHARES OF
PAR VALUE CAPITAL
CLASS NAME STOCK AUTHORIZED
<S> <C>
Class A 300,000,000
- -------------------------------------------------------------------------
Class B 150,000,000
- -------------------------------------------------------------------------
Class C 150,000,000
- -------------------------------------------------------------------------
Fortress 150,000,000
- ------------------------------------------------------------------------- ---------------------
Total capital stock authorized 750,000,000
- ------------------------------------------------------------------------- ---------------------
</TABLE>
World Utility Fund
- --------------------------------------------------------------------------------
Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
NOVEMBER 30, 1995 NOVEMBER 30, 1994(A)
<S> <C> <C> <C> <C>
CLASS A SHARES SHARES AMOUNT SHARES AMOUNT
Shares sold 366,211 $ 3,790,807 603,819 $ 6,052,720
- ----------------------------------------------------
Shares issued to shareholders in payment of
distributions declared 17,953 180,929 4,034 40,152
- ----------------------------------------------------
Shares redeemed (86,001) (884,844) (106,347) (1,072,939)
- ---------------------------------------------------- ---------- ------------ ----------- --------------
Net change resulting from Class A share
transactions 298,163 $ 3,086,892 501,506 $ 5,019,933
- ---------------------------------------------------- ---------- ------------ ----------- --------------
<CAPTION>
PERIOD ENDED
NOVEMBER 30, 1995(B)
CLASS B SHARES SHARES AMOUNT
<S> <C> <C> <C> <C>
Shares sold 99,124 $ 1,064,086
- ----------------------------------------------------
Shares issued to shareholders in payment of
distributions declared 281 2,996
- ----------------------------------------------------
Shares redeemed (1,919) (20,958)
- ---------------------------------------------------- ---------- ------------
Net change resulting from Class B share
transactions 97,486 $ 1,046,124
- ---------------------------------------------------- ---------- ------------
<CAPTION>
PERIOD ENDED
NOVEMBER 30, 1995(B)
CLASS C SHARES SHARES AMOUNT
<S> <C> <C> <C> <C>
Shares sold 34,326 $ 369,138
- ----------------------------------------------------
Shares issued to shareholders in payment of
distributions declared 24 261
- ----------------------------------------------------
Shares redeemed (217) (2,322)
- ---------------------------------------------------- ---------- ------------
Net change resulting from Class C share
transactions 34,133 $ 367,077
- ---------------------------------------------------- ---------- ------------
</TABLE>
World Utility Fund
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
NOVEMBER 30, 1995 NOVEMBER 30, 1994(C)
FORTRESS SHARES SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
Shares sold 95,261 $ 958,923 503,245 $ 5,061,092
- ----------------------------------------------------
Shares issued to shareholders in payment of
distributions declared 8,964 90,511 1,751 17,411
- ----------------------------------------------------
Shares redeemed (53,272) (534,577) (5,855) (57,627)
- ---------------------------------------------------- ---------- ------------ ----------- --------------
Net change resulting from Fortress share
transactions 50,953 514,857 499,141 5,020,876
- ---------------------------------------------------- ---------- ------------ ----------- --------------
Net change resulting from share
transactions 480,735 $ 5,014,950 1,000,647 $ 10,040,809
- ---------------------------------------------------- ---------- ------------ ----------- --------------
</TABLE>
(a) For the period from March 17, 1994 (start of business) to November 30,
1994.
(b) For the period from July 26, 1995 (start of business) to November 30, 1995.
(c) For the period from March 28, 1994 (start of business) to November 30,
1994.
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Federated 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. The Adviser waived its fee and
reimbursed a portion of other operating expenses to be in compliance with
certain state expense limitations. The Adviser may also voluntarily choose to
reimburse certain other operating expenses of the Fund. The Adviser can modify
or terminate this voluntary reimbursement at any time at its sole discretion.
ADMINISTRATIVE FEE--Federated Administrative Services, under the Administrative
Services Agreement, provides the Fund with administrative personnel and
services. This fee is based on the level of average aggregate daily net assets
of all funds advised by subsidiaries of Federated Investors for the period. The
administrative fee received during 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
World Utility Fund
- --------------------------------------------------------------------------------
activities intended to result in the sale of the Fund's Class B Shares, Class C
Shares and Fortress Shares, respectively. 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%
Fortress Shares 0.25 of 1%
</TABLE>
SHAREHOLDER SERVICES FEE--Under the terms of a Shareholder Services Agreement
with Federated Shareholder Services ("FSS"), the Fund will pay FSS up to .25 of
1% of average daily net assets of the Fund for the period. This fee is to obtain
certain services for shareholders and to maintain shareholder accounts.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES--Federated
Services Company ("FServ") serves as transfer and dividend disbursing agent for
the Fund. This fee is based on the size, type, and number of accounts and
transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES--FServ also 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 the
Administrator. The Fund has agreed to reimburse the Administrator for the
organizational expenses and start-up administrative expenses during the five
year period following the Fund's effective date. For the period ended November
30, 1995, the Fund paid $14,350 and $7,163, respectively, 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
November 30, 1995, were as follows:
<TABLE>
- ---------------------------------------------------------------------------------------------------
<S> <C>
PURCHASES $ 10,107,168
- --------------------------------------------------------------------------------------------------- -------------
SALES $ 5,316,404
- --------------------------------------------------------------------------------------------------- -------------
</TABLE>
Report of Ernst & Young LLP,
Independent Auditors
- --------------------------------------------------------------------------------
To the Directors and Shareholders of
WORLD INVESTMENT SERIES, INC.:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of World Utility Fund (a portfolio of World
Investment Series, Inc.) as of November 30, 1995, and the related statement of
operations for the year then ended and the statement of changes in net assets
for the year then ended and the period from March 17, 1994 (start of business)
to November 30, 1995, and the financial highlights for the periods presented
therein. These financial statements and financial highlights are the
responsibility of the Corporation's management. Our responsibility is to express
an opinion on these financial statements and financial highlights based on our
audit.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
November 30, 1995, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of World
Utility Fund of World Investment Series, Inc. at November 30, 1995, and the
results of its operations for the year then ended and the changes in its net
assets for the year then ended and the period from March 17, 1994 (start of
business) to November 30, 1995, and the financial highlights for the periods
presented therein, in conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
Pittsburgh, Pennsylvania
January 18, 1996
Directors 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
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.
[LOGO]
Federated Funds
Where Experts Invest
Federated Securities Corp. is the distributor of the fund.
A Subsidiary of Federated Investors
Federated Investors Tower
Pittsburgh, PA 15222-3779
Cusip 981487309
Cusip 981487408
Cusip 981487101
Cusip 981487200
G00259-06 (1/96)
WORLD UTILITY FUND (THE "FUND")
APPENDIX
A. The graphic representation here displayed 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 Fund. The dark shaded portion reflects the
principal value of a $2,000 investment in the Fund, which is 186 shares. The
color-coded mountain chart is a visual representation of the narrative text
above it, which shows that an initial investment of $2,000 in the Fund, Inc.
on April 22, 1994 (start of performance) would have grown to $2,162 on
November 30, 1995. The "x" axis reflects computation periods from April 22,
1994 (start of performance) to November 30, 1995. The right margin of the
chart reflects the ending value of a hypothetical investment of $2,000 in the
Fund measured in increments of $1,000 ranging from $0 to $3,000.
B. The graphic representation here displayed 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 Fund. The dark shaded portion reflects the
principal value of annual $1,000 investments in the Fund, which is 93 shares.
The color-coded mountain chart is a visual representation of the narrative
text above it, which shows that an annual investment of $1,000 in the Fund
for two years starting on April 22, 1994 (start of performance) would have
grown to $2,132 on November 30, 1995. The "x" axis reflects computation
periods from April 22, 1994 (start of performance) to November 30, 1995. The
right margin of the chart reflects the ending value of a hypothetical annual
investment of $1,000 for two years in the Fund measured in increments of $500
ranging from $0 to $2,500.
C. The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed underneath. World
Utility Fund-Class A Shares are represented by a bold solid line. The
Standard & Poor's 500 Index is represented by a bold broken line. The FT-
Actuaries World Utilities Index is represented by a dotted line. The line
graph is a visual representation of a comparison of change in value of a
$10,000 hypothetical investment in Class A Shares of the Fund, the Standard &
Poor's 500 Index, and the FT-Actuaries World Utilities Index. The "x" axis
reflects computation periods from April 22, 1994 (start of performance) to
November 30, 1995. The "y" axis reflects the cost of the investment. The
right margin reflects the ending value of the hypothetical investment in
Class A Shares of the Fund as compared to the Standard & Poor's 500 Index,
and the FT-Actuaries World Utilities Index. The ending values were $10,925,
$14,052, and $11,207, respectively.
D. The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed underneath. World
Utility Fund-Class B Shares are represented by a bold solid line. The
Standard & Poor's 500 Index is represented by a bold broken line. The FT-
Actuaries World Utilities Index is represented by a dotted line. The line
graph is a visual representation of a comparison of change in value of a
$10,000 hypothetical investment in Class B Shares of the Fund, the Standard &
Poor's 500 Index, and the FT-Actuaries World Utilities Index. The "x" axis
reflects computation periods from July 27, 1995 (start of performance) to
November 30, 1995. The "y" axis reflects the cost of the investment. The
right margin reflects the ending value of the hypothetical investment in
Class B Shares of the Fund as compared to the Standard & Poor's 500 Index,
and the FT-Actuaries World Utilities Index. The ending values were $9,944,
$10,844, and $10,487, respectively.
E. The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed underneath. World
Utility Fund-Class C Shares are represented by a bold solid line. The
Standard & Poor's 500 Index is represented by a bold broken line. The FT-
Actuaries World Utilities Index is represented by a dotted line. The line
graph is a visual representation of a comparison of change in value of a
$10,000 hypothetical investment in Class C Shares of the Fund, the Standard &
Poor's 500 Index, and the FT-Actuaries World Utilities Index. The "x" axis
reflects computation periods from July 27, 1995 (start of performance) to
November 30, 1995. The "y" axis reflects the cost of the investment. The
right margin reflects the ending value of the hypothetical investment in
Class C Shares of the Fund as compared to the Standard & Poor's 500 Index,
and the FT-Actuaries World Utilities Index. The ending values were $10,387,
$10,844, and $10,487, respectively.
F. The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed underneath. World
Utility Fund-Fortress Shares are represented by a bold solid line. The
Standard & Poor's 500 Index is represented by a bold broken line. The FT-
Actuaries World Utilities Index is represented by a dotted line. The line
graph is a visual representation of a comparison of change in value of a
$10,000 hypothetical investment in Fortress Shares of the Fund, the Standard
& Poor's 500 Index, and the FT-Actuaries World Utilities Index. The "x" axis
reflects computation periods from April 22, 1994 (start of performance) to
November 30, 1995. The "y" axis reflects the cost of the investment. The
right margin reflects the ending value of the hypothetical investment in
Fortress Shares of the Fund as compared to the Standard & Poor's 500 Index,
and the FT-Actuaries World Utilities Index. The ending values were $11,202,
