1933 Act File No. 33-52149
1940 Act File No. 811-7141
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
Pre-Effective Amendment No. ..........
Post-Effective Amendment No. 11 .......... X
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
Amendment No. 12 ......................... X
WORLD INVESTMENT SERIES, INC.
(Exact Name of Registrant as Specified in Charter)
Federated Investors Tower, Pittsburgh, Pennsylvania 15222-3779
(Address of Principal Executive Offices)
(412) 288-1900
(Registrant's Telephone Number)
John W. McGonigle, Esquire,
Federated Investors Tower,
Pittsburgh, Pennsylvania 15222-3779
(Name and Address of Agent for Service)
It is proposed that this filing will become effective:
immediately upon filing pursuant to paragraph (b)
pursuant to paragraph (b)(1)(v)
60 days after filing pursuant to paragraph (a) (i)
on pursuant to paragraph (a) (i)
X 75 days after filing pursuant to paragraph (a)(ii)
on pursuant to paragraph (a)(ii) of Rule 485
-----------------
If appropriate, check the following box:
This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Registrant has filed with the Securities and Exchange Commission a
declaration pursuant to Rule 24f-2 under the Investment Company Act of
1940, and:
X filed the Notice required by that Rule on January 15, 1997; or
intends to file the Notice required by that Rule on or about
; or
------------
during the most recent fiscal year did not sell any securities pursuant
to Rule 24f-2 under the Investment Company Act of 1940, and, pursuant
to Rule 24f-2(b)(2), need not file the Notice.
Copies to:
Matthew G. Maloney, Esquire
Dickstein Shapiro Morin & Oshinsky LLP
2101 L Street, N.W.
Washington, D.C. 20037
CROSS-REFERENCE SHEET
This amendment to the Registration Statement of WORLD INVESTMENT
SERIES, INC., which is comprised of eight portfolios: (1) Federated World
Utility Fund consisting of four classes of shares (a) Class A Shares, (b)
Class F Shares, (c) Class B Shares, and (d) Class C Shares; (2) Federated
Asia Pacific Growth Fund consisting of three classes of shares (a) Class A
Shares, (b) Class B Shares, and (c) Class C Shares; (3) Federated Emerging
Markets Fund consisting of three classes of shares (a) Class A Shares, (b)
Class B Shares, and (c) Class C Shares; (4) Federated European Growth Fund
consisting of three classes of shares (a) Class A Shares, (b) Class B
Shares, and (c) Class C Shares; (5) Federated International Small Company
Fund consisting of three classes of shares (a) Class A Shares, (b) Class B
Shares, and (c) Class C Shares; (6) Federated Latin American Growth Fund
consisting of three classes of shares (a) Class A Shares, (b) Class B
Shares, and (c) Class C Shares; (7) Federated International High Income
Fund consisting of three classes of shares (a) Class A Shares, (b) Class B
Shares, and (c) Class C Shares, and (8) Federated International Growth Fund
consisting of three classes of shares (a) Class A Shares, (b) Class B
Shares, and (c) Class C Shares, relates only to Federated International
Growth Fund, is comprised of the following (The remaining references to
other portfolios have been kept for easier cross reference, with the
exception of Item 23):
PART A. INFORMATION REQUIRED IN A PROSPECTUS.
Prospectus Heading
(Rule 404(c) Cross Reference)
Item 1. Cover Page...............(1a-d,2a-c,3a-c,4a-c,5a-c,6a-c,7a-c, 8a-
c)Cover Page.
Item 2. Synopsis.................(1a-d, 2a-c,3a-c,4a-c,5a-c,6a-c, 7a-
c,8a-c) Summary of Fund Expenses.
Item 3. Condensed Financial
Information .............(1a-d, 2a-c,3a-c,4a-c,5a-c,6a-c, 7a-c)
Performance Information; (1a, 2a, 3a,
4a, 5a, 6a, 7a) Financial Highlights-
Class A Shares; (1b) Financial
Highlights-Class F Shares; (1c, 2b, 3b,
4b, 5b, 6b, 7b) Financial Highlights-
Class B Shares; (1d, 2c, 3c, 4c, 5c, 6c,
7c) Financial Highlights-Class C Shares.
Item 4. General Description
of Registrant ..........(1a-d, 7a-c) General Information;
(2a-c,3a-c,4a-c,5a-c,6a-c) Synopsis;
(1a-d, 2a-c,3a-c,4a-c,5a-c,6a-c, 7a-c,
8a-c) Investment Information; (1a-d, 2a-
c,3a-c,4a-c,5a-c,6a-c, 7a-c, 8a-c)
Investment Objective; (1a-d, 2a-c,3a-
c,4a-c, 5a-c,6a-c, 7a-c, 8a-c)
Investment Policies; (1a-d) Risk Factors
and Investment Considerations; (7a-c)
Risk Considerations in Emerging
Markets;(1a-d) Other Investment
Practices; (1a-d,2a-c, 3a-c,4a-c,5a-
c,6a-c, 7a-c, 8a-c) Investment
Limitations.
Item 5. Management of the Fund...(1a-d, 7a-c) Fund Information; (2a-c,
3a-c,4a-c, 5a-c,6a-c, 8a-c) Corporation
Information; (1a-d, 2a-c,3a-c,4a-c,5a-
c,6a-c, 7a-c, 8a-c) Management of the
Corporation; (1a,c,d, 2a-c,3a-c,4a-
c,5a-c,6a-c, 7a-c, 8a-c) Distribution of
Shares; (1b) Distribution of Class F
Shares; (1a-d,2a-c,3a-c,4a-c,5a-c,6a-c,
7a-c, 8a-c) Administration of the Fund;
(2a-c,3a-c,4a-c,5a-c,6a-c,7a-c, 8a-c)
Expenses of the Fund and Class A Shares,
Class B Shares, and Class C Shares; (1a-
d,2a-c,3a-c,4a-c,5a-c,6a-c, 7a-c, 8a-c)
Brokerage Transactions.
Item 6. Capital Stock and
Other Securities .......(1a-d, 7a-c) Dividends and
Distributions; (2a-c,3a-c,4a-c,5a-c,6a-
c, 8a-c)Dividends; (1a-d,2a-c,3a-c,4a-
c,5a-c,6a-c, 7a-c, 8a-c) Account and
Share Information; (1a-d,2a-c,3a-c,4a-
c,5a-c,6a-c, 7a-c, 8a-c) Shareholder
Information; (1a-d,2a-c,3a-c,4a-c,5a-
c,6a-c,7a-c, 8a-c) Voting Rights; (1a-
d,2a-c,3a-c,4a-c,5a-c,6a-c,7a-c, 8a-c)
Tax Information; (1a-d,2a-c,3a-c,4a-
c,5a-c,6a-c, 7a-c, 8a-c) Federal Income
Tax; (1a-d,2a-c,3a-c,4a-c,5a-c,6a-c,7a-
c, 8a-c) State and Local Taxes; (1a-
d,2a,3a,4a,5a,6a) Other Classes of
Shares.
Item 7. Purchase of Securities Being
Offered .................(1a-d,2a-c,3a-c,4a-c,5a-c,6a-c,7a-c, 8a-
c) Net Asset Value; (1a,1c,1d, 2a-c,3a-
c,4a-c,5a-c,6a-c,7a-c, 8a-c) Investing
in the Fund; (1a,1c,1d, 2a-c,3a-c,4a-
c,5a-c,6a-c, 7a-c, 8a-c) How To Purchase
Shares; (1a,2a,3a,4a,5a,6a,7a, 8a)
Investing in Class A Shares; (1b)
Investing in Class F Shares;
(1c,2b,3b,4b,5b,6b,7b, 8b) Investing in
Class B Shares; (1d,2c,3c,4c,5c,6c,7c,
8c) Investing in Class C Shares;
(1a,c,d, 2a-c,3a-c,4a-c,5a-c,6a-c,7a-c,
8a-c) Special Purchase Features; (1b)
Share Purchases; (1b) Minimum Investment
Required; (1b) What Shares Cost; (1b,
2a-c,3a-c,4a-c,5a-c,6a-c, 7a, 8a-c)
Reducing or Eliminating the Sales
Charge; (1b, 2a-c,3a-c,4a-c,5a-c,6a-c,
7a-c, 8a-c) Systematic Investment
Program; (1b) Exchanging Securities for
Fund Shares; (1a-d, 2a-c,3a-c,4a-c,5a-
c,6a-c, 7a-c, 8a-c) Certificates and
Confirmations; (1a-d,2a-c,3a-c,4a-c,5a-
c,6a-c,7a-c, 8a-c) Exchange Privilege.
Item 8. Redemption or Repurchase.(1a,1c,1d, 2a-c,3a-c,4a-c,5a-c,6a-c,7a-
c, 8a-c) How To Redeem Shares; (1b)
Redeeming Class F Shares; (1b,7a-c)
Through a Financial Institution; (1b,
2a-c,3a-c,4a-c,5a-c,6a-c, 7a-c, 8a-c)
Redeeming Shares by Telephone; (1b, 2a-
c,3a-c,4a-c,5a-c,6a-c, 7a-c, 8a-c)
Redeeming Shares by Mail; (1a,1c,1d, 2a-
c,3a-c,4a-c,5a-c,6a-c,7a-c, 8a-c)
Special Redemption Features; (1a-d,2a-
c,3a-c,4a-c,5a-c,6a-c,7a-c, 8a-c)
Contingent Deferred Sales Charge; (1a-
d,2a-c,3a-c,4a-c,5a-c,6a-c,7a-c, 8a-c)
Elimination of Contingent Deferred Sales
Charge; (1b,7a-c) Systematic Withdrawal
Program; (1a-d, 2a-c,3a-c,4a-c,5a-
c,6a-c, 7a-c,8a-c) Accounts With Low
Balances.
Item 9. Pending Legal Proceedings None
PART B. INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION.
Item 10. Cover Page...............(1a-d,2a-c,3a-c,4a-c,5a-c,6a-c,7a-c, 8a-
c) Cover Page.
Item 11. Table of Contents........(1a-d,2a-c,3a-c,4a-c,5a-c,6a-c,7a-c, 8a-
c) Table of Contents.
Item 12. General Information
and History..............(1a-d,2a-c,3a-c,4a-c,5a-c,6a-c,7a-c, 8a-
c) General Information About the Fund;
(1a-d,2a-c,3a-c,4a-c,5a-c,6a-c,7a-c, 8a-
c) About Federated Investors.
Item 13. Investment Objectives
and Policies.............(1a-d,2a-c,3a-c,4a-c,5a-c,6a-c,7a-c, 8a-
c) Investment Objective and Policies.
Item 14. Management of the Corporation.(1a-d,2a-c,3a-c,4a-c,5a-c,6a-c,7a-
c, 8a-c) World Investment Series, Inc.
Management; Directors Compensation.
Item 15. Control Persons and Principal
Holders of Securities....(1a-d,2a-c,3a-c,4a-c,5a-c,6a-c,7a-c, 8a-
c) Fund Ownership.
Item 16. Investment Advisory and Other
Services.................(1a-d,2a-c,3a-c,4a-c,5a-c,6a-c,7a-c, 8a-
c) Investment Advisory Services; (1a-
d,2a-c,3a-c,4a-c,5a-c,6a-c,7a-c, 8a-c)
Other Services.
Item 17. Brokerage Allocation.....(1a-d,2a-c,3a-c,4a-c,5a-c,6a-c,7a-c, 8a-
c) Brokerage Transactions.
Item 18. Capital Stock and Other
Securities...............Not applicable.
Item 19. Purchase, Redemption
and Pricing of Securities
Being Offered............(1a-d,2a-c,3a-c,4a-c,5a-c,6a-c,7a-c, 8a-
c) Purchasing Shares; (1a-d,2a-c,3a-
c,4a-c,5a-c,6a-c,7a-c, 8a-c) Determining
Net Asset Value; (1b) Exchange
Privilege; (1a-d,2a-c,3a-c,4a-c,5a-c,6a-
c,7a-c, 8a-c) Redeeming Shares.
Item 20. Tax Status...............(1a-d,2a-c,3a-c,4a-c,5a-c,6a-c,7a-c, 8a-
c) Tax Status.
Item 21. Underwriters.............(1b-d,2a-c,3a-c,4a-c,5a-c,6a-c,7a-c, 8a-
c) Distribution Plan and Shareholder
Services Agreement.
Item 22. Calculation of
Performance Data.........(1a-d,2a-c,3a-c,4a-c,5a-c,6a-c,7a-c, 8a-
c) Total Return; (1a-d,2a-c,3a-c,4a-
c,5a-c,6a-c,7a-c, 8a-c) Yield; (1a-d,2a-
c,3a-c,4a-c,5a-c,6a-c,7a-c, 8a-c)
Performance Comparisons; (1a-d,2a-c,3a-
c,4a-c,5a-c,6a-c,7a-c, 8a-c) Appendix -
included in the Prospectus.
Item 23. Financial Statements.....(8a-c) Not applicable.
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY, NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, PRELIMINARY PROSPECTUS
DATED MAY 21, 1997
FEDERATED INTERNATIONAL GROWTH FUND
(A PORTFOLIO OF WORLD INVESTMENT SERIES, INC.)
CLASS A SHARES
CLASS B SHARES
CLASS C SHARES
PROSPECTUS
The shares of Federated International Growth Fund (the "Fund") represent
interests in a diversified investment portfolio of World Investment Series,
Inc. (the "Corporation"), an open-end management investment company (a
mutual fund). The investment objective of the Fund is to provide long-term
growth of capital. Any income received from the portfolio is incidental.
The Fund pursues its investment objective by investing primarily in shares
of other mutual funds, the portfolios of which consist primarily of equity
securities of non-U.S. issuers. The Fund's strategy of investing in other
mutual funds may result in greater aggregate expenses than if you directly
purchased shares of those funds.
THE SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR OBLIGATIONS OF
ANY BANK, ARE NOT ENDORSED OR GUARANTEED BY ANY BANK, AND ARE NOT INSURED
BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR
ANY OTHER GOVERNMENT AGENCY. INVESTMENT IN THESE SHARES INVOLVES INVESTMENT
RISKS, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
This prospectus contains the information you should read and know before
you invest in the Fund. Keep this prospectus for future reference.
The Fund has also filed a Statement of Additional Information for Class A
Shares, Class B Shares and Class C Shares dated , 1997, with the
--------
Securities and Exchange Commission (`SEC''). The information contained in
the Statement of Additional Information is incorporated by reference into
this prospectus. 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 the
Fund at the address listed in the back of this prospectus. The Statement
of Additional Information, material incorporated by reference into this
document, and other information regarding the Fund are maintained
electronically with the SEC at Internet Web site (http://www.sec.gov).
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
Prospectus dated , 1997
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Table of Contents
FEDERATED INTERNATIONAL GROWTH FUND
SUMMARY OF FUND EXPENSES
SHAREHOLDER TRANSACTION EXPENSES
CLASS A CLASS B CLASS C
Maximum Sales Charge Imposed on
Purchases (as a percentage of offering 5.50% None None
price)
Maximum Sales Charge Imposed on
Reinvested Dividends (as a percentage None None None
of offering price)
Contingent Deferred Sales Charge (as a
percentage of original purchase price None 5.50% 1.00%
or redemption proceeds, as applicable)
(1)......................
Redemption Fee (as a percentage of None None None
amount redeemed, if applicable)....
Exchange Fee None None None
ANNUAL OPERATING EXPENSES
(As a percentage of projected average net assets)*
Management Fee (2) 0.00% 0.00% 0.00%
Asset Allocation Fee (3) 0.00% 0.00% 0.00%
12b-1 Fee 0.75% 0.75%
0.00%
(4)
Total Other Expenses 0.07% 0.07% 0.07%
Shareholder Services Fee (5) 0.00% 0.00% 0.00%
Total Operating Expenses 0.07% 0.82%(7)(8) 0.82%
(6) (7)
(1) For shareholders of Class B, the contingent deferred sales charge is
5.50% in the first year declining to 1.00% in the sixth year and 0.00%
thereafter. For shareholders of Class C, the contingent deferred sales
charge assessed is 1.00% of the lesser of the original purchase price or
the net asset value of Shares redeemed within one year of their purchase
date. For a more complete description, see "Contingent Deferred Sales
Charge."
(2) The Fund has no present intention of paying or accruing the management
fee during the fiscal year ending November 30, 1997. If the Fund were
paying or accruing the management fee, the Fund would be able to pay up to
1.25% of its average daily net assets which are invested in individual
stocks, bonds or money market instruments, and not on those assets invested
in shares of the underlying funds.
(3) The Fund has no present intention of paying or accruing the asset
allocation fee during the fiscal year ending November 30, 1997. If the Fund
were paying or accruing the asset allocation fee, the Fund would be able to
pay up to 0.20% of its average daily net assets which are entirely held
within the International Growth Fund, including both individual securities
and shares of the underlying funds.
(4) The Class A Shares has no present intention of paying or accruing the
12b-1 fee during the fiscal year ending November 30, 1997. If the Class A
Shares were paying or accruing the 12b-1, the Class A Shares would be able
to pay up to 0.25% of its average daily net assets for the 12b-1 fee.
(5) The shareholder services fee has been reduced to reflect the voluntary
waiver of the shareholder services fee. The shareholder service provider
can terminate this voluntary waiver at any time at its sole discretion. The
maximum shareholder services fee is 0.25%.
(6) The total Class A Shares operating expenses are estimated to be 1.28%
absent the anticipated voluntary waiver described in note 5 above and the
anticipated voluntary reimbursement of certain other operating expenses.
(7) The total Class B Shares and Class C Shares operating expenses are
estimated to be 2.03% absent the anticipated voluntary waiver described in
note 5 above and the anticipated voluntary reimbursement of certain other
operating expenses.
(8) Class B Shares convert to Class A Shares (which pay lower ongoing
expenses) approximately eight years after purchase.
* Total operating expenses are estimated based on average expenses expected
to be incurred during the period ending November 30, 1997. During the
course of this period, expenses may be more or less than the average amount
shown.
The purpose of this table is to assist an investor in understanding the
various costs and expenses that a shareholder of the Fund will bear, either
directly or indirectly. For more complete descriptions of the various
costs and expenses, see "How To Purchase Shares" and "Fund Information."
Wire-transferred redemptions of less than $5,000 may be subject to
additional fees.
*LONG-TERM SHAREHOLDERS MAY PAY MORE THAN THE ECONOMIC EQUIVALENT OF THE
MAXIMUM FRONT-END SALES CHARGES PERMITTED UNDER THE RULES OF THE NATIONAL
ASSOCIATION OF SECURITIES DEALERS, INC.
EXAMPLE CLASS A CLASS B CLASS C
You would pay the following expenses on
a $1,000 investment, assuming (1) 5%
annual return, (2) redemption at the
end of each time period, and (3)
payment of the maximum sales charge.
1 Year $56 $66 $19
3 Year $57 $71 $26
You would pay the following expenses on
the same investment, assuming no
redemption.
1 Year $56 $8 $8
3 Year $57 $26 $26
THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
THIS EXAMPLE IS BASED ON ESTIMATED DATA FOR THE FUND'S FISCAL YEAR ENDING
NOVEMBER 30, 1997.
SYNOPSIS
The Corporation was established under the laws of the State of Maryland on
January 25, 1994. The Corporation's address is Federated Investors Tower,
Pittsburgh, Pennsylvania 15222-3779. The Articles of Incorporation permit
the Corporation to offer separate series of shares representing interests
in separate portfolios of securities. As of the date of this prospectus,
the Board of Directors (the `Directors'') has established three classes of
shares for the Fund, known as Class A Shares, Class B Shares, and Class C
Shares (individually and collectively as the context requires, `Shares'').
Shares of the Fund are designed for individuals and institutions seeking
long-term growth of capital by investing primarily in shares of other
mutual funds, the portfolios of which consist primarily of equity
securities of non-U.S. issuers and by investing directly in equity
securities of companies domiciled outside the United States.
For information on how to purchase Shares of the Fund, please refer to
`How to Purchase Shares.'' The minimum initial investment for Class A
Shares is $500. The minimum initial investment for Class B Shares and Class
C Shares is $1,500. However, the minimum initial investment for a
retirement account in any class is $50. Subsequent investments in any class
must be in amounts of at least $100, except for retirement plans which must
be in amounts of at least $50.
In general, Class A Shares are sold at net asset value plus an applicable
sales charge and are redeemed at net asset value. However, a contingent
deferred sales charge is imposed under certain circumstances. For a more
complete description, see `How to Redeem Shares.''
Class B Shares are sold at net asset value. A contingent deferred sales
charge is imposed on certain Shares which are redeemed within six full
years of purchase. See `How to Redeem Shares.''
Class C Shares are sold at net asset value. A contingent deferred sales
charge of 1.00% will be charged on assets redeemed within the first 12
months following purchase. See `How to Redeem Shares.''
In addition, the Fund pays a shareholder services fee at an annual rate not
to exceed 0.25% of average daily net assets.
Additionally, information regarding the exchange privilege offered with
respect to the Fund and certain other funds can be found under `Exchange
Privilege.''
Federated Global Research Corp. is the investment adviser (the `Adviser'')
to the Fund and receives compensation for its services. The Adviser's
address is 175 Water Street, New York, New York 10038-4965.
The Fund and the underlying funds may make certain investments and employ
certain investment techniques that involve risks, including, but not
limited to, investing in foreign securities, lending portfolio securities,
investing in restricted and illiquid securities, investing in securities on
a when-issued and delayed delivery basis, writing put and call options and
entering into repurchase agreements.
The Fund's net asset value and offering price can be found in the mutual
funds section of local newspapers under `Federated'' and the appropriate
class designation listing.
INVESTMENT INFORMATION
INVESTMENT OBJECTIVE
The Fund's objective is to provide long-term growth of capital. Any income
received from the portfolio is incidental. The investment objective cannot
be changed without the approval of shareholders. While there is no
assurance that the Fund will achieve its investment objective, it endeavors
to do so by following the investment policies described in this prospectus.
INVESTMENT POLICIES
The Fund pursues its investment objective by investing in shares of other
open-end management investment companies for which affiliates of Federated
Investors serve as investment adviser and principal underwriter (the
`Federated Funds'' and herein referred to as the ``underlying funds'') that
invest primarily in foreign equity securities. The underlying funds in
which the Fund will invest include, but are not limited to, Federated Asia
Pacific Growth Fund, Federated Emerging Markets Fund, Federated European
Growth Fund, Federated International Small Company Fund, and Federated
Latin American Growth Fund.
The charts below show the approximate parameters in which the Fund will
generally invest in large and small capitalization stocks and in developed
and emerging markets. The Adviser can adjust these ranges from time to time
at its sole discretion.
The prospectus contains two pie charts in the center of the page.
The first depicts `Developed vs. Emerging Markets Exposure'' and
shows 30% of assets invested in emerging markets and 70% of assets
invested in developed markets. The second chart depicts
`Large Capitalization vs. Small Capitalization Exposure'' and shows 40%
of assets invested in small capitalization stocks and 60% of assets
invested in large capitalization stocks.
Under normal circumstances, the Fund expects to operate within the
following ranges:
Federated Asia Pacific Growth Fund 20 - 60%
Federated European Growth Fund 20 - 60%
Federated Emerging Markets Fund 0 - 25%
Federated International Small Company Fund 0 - 25%
Federated Latin American Growth Fund 0 - 25%
The Fund's strategy of investing in the shares of other international
equity funds is designed (but not guaranteed) to reduce the risk associated
with investing in a single sector- or regional-specfic underlying fund.
Holding a diversified portfolio of international equity funds also may
provide access to a wider range of companies, industries, countries, and
markets than would be available through any one underlying fund.
International securities and markets are subject to currency rate
fluctuations and potentially greater price volatility and liquidity
considerations than U.S. securities. Investors have historically sought to
reduce these risks through multi-country diversification. The Fund is
designed to give shareholders a single investment that offers broad
international diversification.
Under normal market conditions, and as an investment policy, the Fund will
invest at least 65% of its total assets in underlying funds that are
international equity funds. However, as an operational policy, the Fund
anticipates investing substantially all of its assets in international
equity funds. International equity funds are those which invest primarily
in equity securities of companies located in three or more countries
outside the United States. The Adviser will attempt to identify and select
a varied portfolio of international equity funds which presents the
greatest long-term capital growth potential based on the Adviser's analysis
of many factors.
The Adviser will allocate the Fund's assets across the underlying funds
such that the Fund will be exposed to large and small capitalization stocks
from both developed and emerging markets outside of the United States.
(Small capitalization companies are those companies that have a market
capitalization of $1.5 billion or less at the time of purchase. Large
capitalization companies are those companies that have a market
capitalization of over $1.5 billion at the time of purchase. Emerging
markets companies are defined as (i) those for which the principal
securities trading market is and emerging market country; (ii) those which
are organized under the laws of, or with a principal office in, an emerging
market country; or (iii) those, wherever organized or traded, who derive
(directly or indirectly through subsidiaries) at least 50% of their total
assets, capitalization, gross revenue or profit from its most current year
from goods produced, services performed, or sales made in such emerging
market countries.) From time to time, the Adviser will alter the allocation
percentages of the underlying funds based on market risk, economic
fundamentals and unique market characteristics within the foreign markets
an asset classes in which the underlying funds invest. The Adviser will
first assess the relative attractiveness of geographic regions and
individual countries. After identifying the most and least attractive
countries or regions, consideration will be given to expected returns and
risks before deciding which areas, if any, to overweight or underweight. By
rebalancing the Fund through investment of the proceeds of new purchases
into the Fund, by making purchases and sales among the shares of the
underlying funds, or a combination of the two, the Adviser will continually
manage the Fund's exposure to large and small capitalization stocks from
both developed and emerging markets.
Because the Fund and the underlying funds may invest in substantially
similar securities in a similar fashion, thereby incurring similar risks,
all further references to the Fund hereinafter include the underlying funds
unless otherwise indicated. Although many of the underlying funds may have
the same or similar investment policies as the Fund, they are not required
to do so.
Assets not invested in international equity funds may be invested in
underlying funds other than international equity funds, such as global
funds (funds that invest primarily in securities of issuers throughout the
world, including the United States).
The Fund also may enter into forward commitments, repurchase agreements,
and foreign currency transactions; maintain reserves in foreign or U.S.
money market instruments; and purchase options and financial futures
contracts.
Unless indicated otherwise, the investment policies of the Fund may be
changed by the Directors without approval of shareholders. Shareholders
will be notified before any material changes in these policies become
effective.
Following the grant of certain exemptive relief from the SEC, the Fund will
also be permitted to invest directly in a professionally managed
diversified portfolio of equity securities of companies domiciled outside
the United States that the Adviser believes offer excellent opportunities
for long-term growth. Additionally, the Fund, for liquidity purposes, may
maintain direct investments in short-term money market securities.
However, for temporary defensive purposes, when the Adviser determines that
market conditions warrant, the Fund may invest up to 100% of its total
assets in U.S. and foreign money market instruments.
To the extent that the Fund's assets are invested in the underlying funds,
its investment performance will correspond directly to that of its
proportionate investment in those underlying funds. This strategy involves
certain additional expenses and certain tax results which would not be
present in a direct investment in mutual funds. See `Expenses of the Fund
and Shares''and ``Federal Tax Information.'' The Fund may purchase shares
of no-load funds available without a transaction fee and/or pay their own
distribution expenses. See `Additional Considerations of Investing in
Other Investment Companies.''Each underlying fund provides a prospectus
and other disclosure documents to the Fund. These documents are also
available to Fund shareholders directly from the underlying fund.
ACCEPTABLE INVESTMENTS. The equity securities in which the Fund may invest
include common stock, preferred stock (either convertible or non-
convertible), sponsored or unsponsored depositary receipts or shares, and
warrants, including other substantially similar forms of equity with
comparable risk characteristics as well as other forms which may be
developed in the future. Securities may be purchased on securities
exchanges, traded over-the-counter, or have no organized market. The Fund
may also purchase corporate and government fixed income securities
denominated in currencies other than U.S. dollars; enter into forward
commitments, repurchase agreements and foreign currency transactions;
maintain reserves in foreign or U.S. money market instruments and cash; and
purchase options and financial futures contracts.
COMMON AND PREFERRED STOCK. Stocks represent shares of ownership in a
company. Generally, preferred stock has a specified dividend and ranks
after bonds and before common stocks in its claim on income for dividend
payments and on assets should the company be liquidated. After other claims
are satisfied, common stockholders participate in company profits on a pro
rata basis; profits may be paid out in dividends or reinvested in the
company to help it grow. Increases and decreases in earnings are usually
reflected in a company's stock price, so common stocks generally have the
greatest appreciation and depreciation potential of all corporate
securities. While most preferred stocks pay a dividend, the Fund may
purchase preferred stock where the issuer has omitted, or is in danger of
omitting, payment of its dividend. Such investments would be made primarily
for their capital appreciation
DEPOSITARY RECEIPTS. The Fund may invest in foreign issuers by purchasing
sponsored or unsponsored securities representing underlying international
securities such as American Depositary Receipts ("ADRs"), American
Depositary Shares ("ADSs"), European Depositary Receipts ("EDRs"), Global
Depositary Receipts ("GDRs"), Global Depositary Certificates ("GDCs"),
International Depositary Receipts ("IDRs"), and Russian Depositary
Certificates ("RDCs") or securities convertible into foreign equity
securities. ADRs and ADSs typically are issued by a United States bank or
trust company and evidence ownership of underlying securities issued by a
foreign corporation. EDRs, which are sometimes referred to as Continental
Depositary Receipts ("CDRs"), GDRs, GDCs, IDRs and RDCs are typically
issued by foreign banks or trust companies, although they also may be
issued by United States banks or trust companies, and evidence ownership of
underlying securities issued by either a foreign or a United States
corporation. ADRs, ADSs, CDRs,
DEBT SECURITIES. In pursuit of the Fund's objective of long-term growth of
capital, the Fund may invest up to 35% of its total assets in debt
securities. Capital appreciation in debt securities may arise as a result
of favorable changes in the creditworthiness of issuers, relative interest
rate levels, or relative foreign exchange rates. Any income received from
debt securities will be incidental to the Fund's objective of long-term
growth of capital. These debt obligations consist of U.S. and foreign
government securities and corporate debt securities, including, but not
limited to, Samurai and Yankee bonds, Eurobonds and depositary receipts.
The issuers of such debt securities may or may not be domiciled in emerging
countries.
The debt securities in which the Fund may invest may be rated, at the time
of purchase, as low as C by Standard & Poor's Ratings Group ("S&P")
Convertible securities are fixed income securities which may be exchanged
or converted into a predetermined number of the issuer's underlying common
stock at the option of the holder during a specified time period.
Convertible securities may take the form of convertible bonds, convertible
preferred stock or debentures, units consisting of "usable" bonds and
warrants or a combination of the features of several of these securities.
The investment characteristics of each convertible security vary widely,
which allows convertible securities to be employed for a variety of
different investment strategies. In selecting a convertible security, the
Adviser evaluates the investment characteristics of the convertible
security as a fixed income investment, and the investment potential of the
underlying security for capital appreciation.
RESTRICTED AND ILLIQUID SECURITIES. The Fund may invest in restricted
securities. Restricted securities are any securities in which the Fund may
otherwise invest pursuant to its investment objective and policies but
which are subject to restrictions on resale under federal securities law.
Securities that can be traded without restrictions in non-U.S. securities
markets will not be treated as restricted, even if they cannot be traded in
U.S. securities markets without restriction. Restricted securities may be
issued by new and early stage companies which may include a high degree of
business and financial risk that can result in substantial losses. As a
result of the absence of a public trading market for these securities, they
may be less liquid than publicly traded securities. Although these
securities may be resold in privately negotiated transactions, the prices
realized from these sales could be less
REPURCHASE AGREEMENTS. The Fund may invest in repurchase agreements.
Repurchase agreements are arrangements by which the Fund purchases a
security for cash and obtains a simultaneous commitment from the seller
(usually a bank or broker/dealer) to repurchase the security at an agreed-
upon price and specified future date. The repurchase price reflects an
agreed-upon interest rate for the time period of the agreement. The Fund's
risk is the inability of the seller to pay the agreed-upon price on the
delivery date. However, this risk is tempered by the ability of the Fund to
sell the security in the open market in the case of a default. In such a
case, the Fund may incur costs in disposing of the security which would
increase Fund expenses. The Adviser will monitor the creditworthiness of
the firms with which the Fund enters into repurchase agreements.
WHEN-ISSUED A
LENDING OF PORTFOLIO SECURITIES. In order to generate additional income,
the Fund may lend portfolio securities on a short-term or long-term basis,
to broker/dealers, banks, or other institutional borrowers of securities.
The Fund will only enter into loan arrangements with broker/ dealers,
banks, or other institutions which the Adviser has determined are
creditworthy under guidelines established by the Directors and will receive
collateral in the form of cash or U.S. government securities equal to at
least 100% of the value of the securities loaned at all times.
TEMPORARY INVESTMENTS. For temporary defensive purposes, when the Adviser
determines that market conditions warrant (up to 100% of total assets) and
to maintain liquidity (up to 35% of total assets), the Fund may invest in
U.S. and foreign debt instruments as well as cash or cash equivalents,
including foreign and domestic money market instruments, short-term
government
The Fund may also enter into foreign currency transactions to protect Fund
assets against adverse changes in foreign currency exchange rates or
exchange control regulations. Such changes could unfavorably affect the
value of Fund assets which are denominated in foreign currencies, such as
foreign securities or funds deposited in foreign banks, as measured in U.S.
dollars. Although foreign currency exchanges may be used by the Fund to
protect against a decline in the value of one or more currencies, such
efforts may also limit any potential gain that might result from a relative
increase in the value of such currencies and might, in certain cases,
result in losses to the Fund. Further, the Fund may be affected either
unfavorably or favorably by fluctuations in the relative rates of exchange
between the currencies of different nations. Cross-hedging transactions by
the Fund involve the
The Fund may also protect against the decline of a particular foreign
currency by entering into a forward contract to sell an amount of that
currency approximating the value of all or a portion of the Fund's assets
denominated in that currency ("hedging"). The success of this type of
short-term hedging strategy is highly uncertain due to the difficulties of
predicting short-term currency market movements and of precisely matching
forward contract amounts and the constantly changing value of the
securities involved. Although the Adviser will consider the likelihood of
changes in currency values when making investment decisions, the Adviser
believes that it is important to be able to enter into forward contracts
when it believes the interests of the Fund will be served. The Fund will
not enter into forward contracts for hedging purposes in a particular
currency in an amount in
A call option gives the purchaser the right to buy, and the writer the
obligation to sell, the underlying currency, security or other asset at the
exercise price during the option period. A put option gives the purchaser
the right to sell, and the writer the obligation to buy, the underlying
currency, security or other asset at the exercise price during the option
period. The writer of a covered call owns assets that are acceptable for
escrow, and the writer of a secured put invests an amount not less than the
exercise price in eligible assets to the extent that it is obligated as a
writer. If a call written by the Fund is exercised, the Fund foregoes any
possible profit from an increase in the market price of the underlying
asset over the exercise price plus the premium received. In writing
FUTURES AND OPTIONS ON FUTURES. The Fund may enter into futures contracts
involving foreign currency, securities, and securities indices, or options
thereon, for bona fide hedging purposes. The Fund may also enter into such
futures contracts or related options for purposes other than bona fide
hedging if the aggregate amount of initial margin deposits exclusive of the
margin needed for foreign currency hedging, on the Fund's futures and
related options positions would not exceed 5% of the net liquidation value
of the Fund's assets, provided further that in the case of an option that
is in-the-money at the time of the purchase, the in-the-money amount may be
excluded in calculating the 5% limitation. In addition, the Fund may not
sell futures contracts if the value of such futures contracts exceeds the
total market value of the Fund's portfolio securities. Futures contracts
and
The Fund may enter into securities index futures contracts and purchase and
write put and call options on securities index futures contracts that are
traded on regulated exchanges, including non-U.S. exchanges, to the extent
permitted by the CFTC. Securities index futures contracts are based on
indexes that reflect the market value of securities of the firms included
in the indexes. An index futures contract is an agreement pursuant to which
two parties agree to take or make delivery of an amount of cash equal to
the differences between the value of the index at the close of the last
trading day of the contract and the price at which the index contract was
originally written.
The Fund may enter into securities index futures contracts to sell a
securities index in anticipation of or during a market decline to attempt
to offset the
An option on a securities index futures contract gives the purchaser the
right, in return for the premium paid, to assume a position in a securities
index futures contract. The Fund may purchase and write put and call
options on securities index futures contracts in order to hedge all or a
portion of its investment and may enter into closing purchase transactions
with respect to written options in order to terminate existing positions.
There is no guarantee that such closing transactions can be effected. The
Fund may also invest in options on securities index futures contracts when
the Adviser believes such investment is more efficient, liquid or cost-
effective than investing directly in the futures contract or in the
securities underlying the index, or when the futures contract or underlying
securities are not available for investment upon favorable terms.
The use of
It is not certain that a secondary market for positions in futures
contracts or for options will exist at all times. Although the Adviser will
consider liquidity before entering into these transactions, there is no
assurance that a liquid secondary market on an exchange or otherwise will
exist for any particular futures contract or option at any particular time.
The Fund's ability to establish and close out futures and options positions
depends on this secondary market.
New futures contracts, options thereon, and other financial products and
risk management techniques continue to be developed. The Fund may use these
investments and techniques to the extent consistent with its investment
objectives and regulatory and federal tax considerations.
RISKS OF FUTURES AND OPTIONS TRANSACTIONS. When the Fund uses futures and
options on futures as hedging devices, there is a risk that the prices of
the securities
SWAP AGREEMENTS. As one way of managing its exposure to different types of
investments, the Fund may enter into interest rate swaps, currency swaps,
and other types of swap agreements such as caps, collars, and floors.
Depending on how they are used, swap agreements may increase or decrease
the overall volatility of the Fund's investments, its share price and
yield. The Fund may invest up to 35% of its assets in swap agreements that
the Adviser determines to be liquid.
Swap agreements are sophisticated instruments that typically involve a
small investment of cash relative to the magnitude of risks assumed. As a
result, swaps can be highly volatile and may have a considerable impact on
the Fund's performance. Swap agreements are subject to risks related to the
counterparty's ability to perform, and may decline in value if the
counterparty's creditworthiness deteriorates.
The economies of foreign countries may differ from the U.S. economy in such
respects as growth of gross domestic product, rate of inflation, currency
depreciation, capital reinvestment, resource self-sufficiency, and balance
of payments position. Further, the economies of developing countries
generally are heavily dependent on international trade and, accordingly,
have been, and may continue to be, adversely affected by trade barriers,
exchange controls, managed adjustments in relative currency values, and
other protectionist measures imposed or negotiated by the countries with
which they trade. These economies also have been, and may continue to be,
adversely affected by economic conditions in the countries with which they
trade.
Prior governmental approval for foreign investments may be required under
certain circumstances in some countries, and the extent of foreign
investment in certain debt securities and domestic companies may be subject
to limitation. Foreign ownership
With respect to any foreign country, there is the possibility of
nationalization, expropriation or confiscatory taxation, political changes,
governmental regulation, social instability or diplomatic developments
(including war) which could affect adversely the economies of such
countries or the value of the Fund's investments in those countries. In
addition, it may be difficult to obtain and enforce a judgment in a court
outside of the United States.
Brokerage commissions, custodial services, and other costs relating to
investment may be more expensive than in the United States. Foreign markets
may have different clearance and settlement procedures such as requiring
payment for securities before delivery. In certain markets there have been
times when settlements have been unable to keep pace with the volume of
securities transactions, making it difficult to conduct such transactions.
The inability of the Fund to make intended security purchases
Securities prices in emerging market countries can be significantly more
volatile than in developed countries, reflecting the greater uncertainties
of investing in lesser developed markets and economies. In particular,
emerging market countries may have relatively unstable governments, and may
present the risk of nationalization of businesses, expropriation,
confiscatory taxation or, in certain instances, reversion to closed market,
centrally planned economies. Such countries may also have restrictions on
foreign ownership or prohibitions on the repatriation of assets, and may
have less protection of property rights than developed countries.
The economies of emerging market countries may be predominantly based on
only a few industries or dependent on revenues from particular commodities
or on international aid or development assistance, may be highly vulnerable
to changes in local or global trade conditions, and may suffer from extreme
and volatile debt burdens or inflation rates.
CURRENCY RISKS. Because the majority of securities purchased by the Fund
are denominated in currencies other than the U.S. dollar, changes in
foreign currency exchange rates will affect the Fund's net asset value; the
value of interest earned; gains and losses realized on the sale of
securities; and net investment income and capital gain, if any, to be
distributed to shareholders by the Fund. If the value of a foreign currency
rises against the U.S. dollar, the value of Fund assets denominated in the
currency will increase; correspondingly, if the value of a foreign currency
declines against the U.S. dollar, the value of Fund assets denominated in
that currency will decrease. Under the United States Internal Revenue Code,
(the "Code"), the Fund is required to separately account for the foreign
currency component of gains or losses, which will usually be viewed under
less readily available market quotations on foreign companies;
differences in government regulation and supervision of foreign
stock exchanges, brokers, listed companies, and banks;
differences in legal systems which may affect the ability to enforce
contractual obligations or obtain court judgments;
the limited size of many foreign securities markets and limited
trading volume in issuers compared to the volume of trading in U.S.
securities could cause prices to be erratic for reasons apart from
factors that affect the quality of securities;
the likelihood that foreign securities may be less liquid or more
volatile;
foreign brokerage commissions may be higher;
unreliable mail service between countries;
political or financial changes which adversely affect investments in
some countries;
increased risk of delayed settlements of portfolio transactions or
loss of certificates for portfolio securities;
certain markets may require payment for securities before delivery;
religious and ethnic instability; and
certain national policies which may restrict the Fund's investment
opportunities, including restrictions on investment in issuers or
industries deemed sensitive to national interests.
U.S. GOVERNMENT POLICIES. In the past, U.S. government policies have
discouraged or restricted certain investments abroad by investors such as
the Fund. Investors are advised that when such policies are instituted, the
Fund will abide by them.
DIVERSIFICATION. With respect to 75% of the value of total assets, the Fund
will not invest more than 5% in securities of any one issuer, other than
cash, cash items, securities of investment companies or securities issued
or guaranteed by the government of the United States or its agencies or
instrumentalities and repurchase agreements collateralized by U.S.
government securities or acquire more than 10% of the outstanding voting
securities of any one issuer (for which purposes all indebtedness of an
issuer shall be deemed a single class and all preferred stock of an issuer
shall be deemed a single class, except that futures or option contracts and
securities of mutual funds shall not be subject to this restriction). This
policy cannot be changed without the approval of holders of a majority of
the Fund's shares.
NON-DIVERSIFICATION. The underlying funds in which the Fund invests may be
non-diversified investment companies. As such, there is no Investment
Company Act of 1940 (`1940 Act'') limit on the percentage of assets which
can be invested in any single issuer. An investment in such funds,
therefore, will entail greater risks than would exist in diversified
investment companies because the higher percentage of investments among
fewer issuers may result in greater fluctuation in the total market value
of the fund's portfolio. Any economic, political, or regulatory
developments affecting the value of the securities of such issuer held by
the fund will have a greater impact on the total value of the fund's
portfolio than would be the case if the fund were diversified among more
issuers.
However, it is anticipated that the underlying funds will comply with
Subchapter M of the Internal Revenue Code. This requires that at the end of
each quarter of the taxable year, the aggregate value of all investments in
any one issuer (except U.S. government obligations, cash, cash items and
other investment companies) which exceed 5% of a fund's total assets shall
not exceed 50% of the value of its total assets, and, with respect to the
remaining assets, no more than 25% of a fund's assets shall be invested in
a single issuer.
RISK FACTORS RELATING TO INVESTING IN HIGH YIELD SECURITIES. The debt
securities in which the Fund invests are usually not in the three highest
rating categories of a nationally recognized statistical rating
organization (AAA, AA, or A for S&P or Fitch and Aaa, Aa, or A for
Moody's), but are in the lower rating categories or are unrated, but are of
comparable quality and have speculative characteristics or are speculative.
Lower-rated bonds or unrated bonds are commonly referred to as "junk
bonds." A description of the rating categories is contained in the Appendix
of this prospectus.
Debt obligations that are not determined to be investment grade are high-
yield, high-risk bonds, typically subject to greater market fluctuations
and greater risk of
ADDITIONAL CONSIDERATIONS OF INVESTING IN OTHER INVESTMENT COMPANIES
Any investment in a mutual fund involves risk and, although the Fund
invests in a number of underlying funds, this practice does not eliminate
investment risk.
Under certain circumstances an underlying fund may determine to make
payment of a redemption by a Fund wholly or partly by a distribution in
kind of securities from its portfolio, in lieu of cash, in conformity with
the rules of the SEC. In such cases, the Fund may hold portfolio securities
distributed by an underlying fund until the Adviser determines that it is
appropriate to dispose of such securities.
The Fund may purchase shares of both load and no-load underlying funds
(including those with a contingent deferred sales charge). However, in most
cases, the Fund anticipates purchasing fund shares without a sales charge
or qualifying for a reduction or waiver of any sales charge because of the
amount it intends to invest in the underlying fund.
Under the 1940 Act, a mutual fund must sell its shares at the price
(including sales charge, if any) described in its prospectus, and current
rules under the 1940 Act do not permit negotiation of sales charges.
Therefore, the Fund currently is not able to negotiate the level of the
sales charges at which it will purchase shares of load funds. Nevertheless,
when appropriate, the Fund will purchase such shares pursuant to (i)
letters of intent, permitting it to obtain reduced or no sales charges by
aggregating its intended purchases over time (generally 13 months from the
initial purchase under the letter); (ii) rights of accumulation, permitting
it to obtain reduced or no sales charges as it purchases additional shares
of an underlying fund; and (iii) the right to obtain reduced or no sales
charges by aggregating its purchases of several funds within a family of
mutual funds.
INVESTMENT LIMITATIONS
The Fund will not:
oborrow money directly or through reverse repurchase agreements
(arrangements in which the Fund sells a portfolio instrument for a
percentage of its cash value with an agreement to buy it back on a
set date) or pledge securities except, under certain circumstances,
the Fund may borrow up to one-third of the value of its total assets
and pledge its assets to secure such borrowings; or
owith respect to 75% of its total assets, invest more than 5% of the
value of its total assets in securities of any one issuer (other
than cash, cash items, securities of other investment companies, or
securities issued or guaranteed by the U.S. government and its
agencies or instrumentalities, and repurchase agreements
collateralized by such securities) or acquire more than 10% of the
outstanding voting securities of any one issuer.
The above investment limitations cannot be
PORTFOLIO TURNOVER
Although the Fund does not intend to invest for the purpose of seeking
short-term profits, securities in the Fund's portfolio will be sold
whenever the Adviser believes it is appropriate to do so in light of the
Fund's investment objective, without regard to the length of time a
particular security may have been held. Generally, a high portfolio
turnover rate results in increased transaction costs and higher taxes paid
by the Fund's shareholders. In addition, a high rate of portfolio turnover
may result in the realization of a larger amount of capital gains which,
when distributed to the Fund's shareholders, are taxable to them.
Transactions for the Fund's portfolio will be based only upon investment
considerations and will not be limited by any other considerations when the
Fund's Adviser deems it appropriate to make changes in the Fund's
portfolio. There is no limit on the underlying funds' portfolio turnover
rates.
HUB AND SPOKE(R) OPTION
If the Directors determine it to be in the best interest of the Fund and
its shareholders, the Fund may in the future seek to achieve its investment
objective by investing all of its assets in another investment company
having the same investment objective and substantially the same investment
policies and restrictions as those applicable to the Fund. It is expected
that any such investment company would be managed in substantially the same
manner as the Fund.
The initial shareholder of the Fund (who is an affiliate of Federated
Global Research) voted to vest authority to use this investment structure
in the sole discretion of the Directors. No further approval of
shareholders is required. Shareholders will receive at least 30 days prior
notice of any such investment.
In making its determination, the Directors will consider, among other
things, the benefits to shareholders and/or the opportunity to reduce costs
and achieve operational efficiencies. Although it is expected that the
Directors will not approve an arrangement that is likely to result in
higher costs, no assurance is given that costs will remain the same or be
materially reduced if this investment structure is implemented.
NET ASSET VALUE
The Fund's net asset value per Share fluctuates. The net asset value for
Shares is determined by adding the interest of each class of Shares in the
market value of all securities and other assets of the Fund, subtracting
the interest of each class of Shares in the liabilities of the Fund and
those attributable to each class of Shares, and dividing the remainder by
the total number of each class of Shares outstanding. The net asset value
for each class of Shares may differ due to the variance in daily net income
realized by each class. Such variance will reflect only accrued net income
to which the shareholders of a particular class are entitled.
The net asset value of each class of Shares of the Fund is determined as of
the close of trading (normally 4:00 p.m., Eastern time) on the New York
Stock Exchange, Monday through Friday, except on: (i) days on which there
are not sufficient changes in the value of the Fund's portfolio securities
that its net asset value might be materially affected; (ii) days during
which no Shares are tendered for redemption and no orders to purchase
Shares are received; or (iii) the following holidays: New Year's Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day, and Christmas Day.
INVESTING IN THE FUND
The Fund offers investors three classes of Shares that carry sales charges
and contingent deferred sales charges in different levels of expenses.
CLASS A SHARES. An investor who purchases Class A Shares pays a maximum
sales charge of 5.50% at the time of purchase. As a result, Class A Shares
are not subject to any charges when they are redeemed (except for special
programs offered under "Purchases with Proceeds From Redemptions of
Unaffiliated Investment Companies"). Certain purchases of Class A Shares
qualify for reduced sales charges. See "Reducing or Eliminating the Sales
Charge." Class A Shares have no conversion feature.
CLASS B SHARES. Class B Shares are sold without an initial sales charge,
but are subject to a contingent deferred sales charge of up to 5.50% if
redeemed within six full years following purchase. Class B Shares will
automatically convert into Class A Shares, based on relative net asset
value, on or around the fifteenth of the month eight full years after the
purchase date. Class B Shares provide an investor the benefit of putting
all of the investor's dollars to work from the time the investment is made,
but (until conversion) will have a higher expense ratio and pay lower
dividends than Class A Shares due to a 12b-1 fee.
CLASS C SHARES. Class C Shares are sold without an initial sales charge,
but are subject to a 1.00% contingent deferred sales charge on assets
redeemed within the first 12 months following purchase. Class C Shares
provide an investor the benefit of putting all of the investor's dollars to
work from the time the investment is made, but will have a higher expense
ratio and pay lower dividends than Class A Shares due to their 12b-1 fee.
Class C Shares have no conversion feature.
HOW TO PURCHASE SHARES
Shares of the Fund are sold on days on which the New York Stock Exchange is
open. Shares of the Fund may be purchased as described below, either
through a financial institution (such as a bank or broker/dealer which has
a sales agreement with the distributor) or by wire or by check directly to
the Fund, with a minimum initial investment of $500 for Class A Shares and
$1,500 for Class B Shares and Class C Shares. Additional investments can be
made for as little as $100. The minimum initial and subsequent investment
for retirement plans is only $50. (Financial institutions may impose
different minimum investment requirements on their customers.)
In connection with any sale, Federated Securities Corp., may, from time to
time, offer certain items of nominal value to any shareholder or investor.
The Fund reserves the right to reject any purchase request. An account must
be established at a financial institution or by completing, signing, and
returning the new account form available from the Fund before Shares can be
purchased.
INVESTING IN CLASS A SHARES
Class A Shares are sold at their net asset value next determined after an
order is received, plus a sales charge as follows:
SALES DEALER
SALES CHARGE CHARGE CONCESSION
AS A AS A AS A
PERCENTAGE PERCENTAGE PERCENTAGE
AMOUNT OF OF PUBLIC OF NET OF PUBLIC
TRANSACTION OFFERING PRICE AMOUNT INVESTED OFFERING PRICE
Less than $50,000 5.50% 5.82% 5.00%
$50,000 but less
than $100,000 4.50% 4.71% 4.00%
$100,000 but less
than $250,000 3.75% 3.90% 3.25%
$250,000 but less
than $500,000 2.50% 2.56% 2.25%
$500,000 but less
than $1,000,000 2.00% 2.04% 1.80%
$1,000,000 or greater 0.00% 0.00% 0.25%*
*See sub-section entitled "Dealer Concession" below.
No sales charge is imposed for Class A Shares purchased through financial
intermediaries that do not receive a reallowance of a sales charge.
However, investors who purchase Class A Shares through a trust department,
Adviser, or other financial intermediary may be charged a service or other
fee by the financial intermediary. Additionally, no sales charge is imposed
on shareholders designated as Liberty Life Members or on Class A Shares
purchased through "wrap accounts" or similar programs, under which clients
pay a fee for services.
DEALER CONCESSION. For sales of Class A Shares, a dealer will normally
receive up to 90% of the applicable sales charge. Any portion of the sales
charge which is not paid to a dealer will be retained by the distributor.
However, the distributor may offer to pay dealers up to 100% of the sales
charge retained by it. Such payments may take the form of cash or
promotional incentives, such as reimbursement of certain expenses of
qualified employees and their spouses to attend informational meetings
about the Fund, or other special events at recreational-type facilities, or
of items of material value. In some instances, these incentives will be
made available only to dealers whose employees have sold or may sell a
significant amount of Shares. On purchases of $1 million or more, the
investor pays no sales charge; however, the distributor will make twelve
monthly payments to the dealer totaling 0.25% of the public offering price
over the first year following the purchase. Such payments are based on the
original purchase price of Shares outstanding at each month end.
The sales charge for Shares sold other than through registered
broker/dealers will be retained by Federated Securities Corp. Federated
Securities Corp. may pay fees to banks out of the sales charge in exchange
for sales and/or administrative services performed on behalf of the bank's
customers in connection with the initiation of customer accounts and
purchases of Shares.
REDUCING OR ELIMINATING THE SALES CHARGE. The sales charge can be reduced
or eliminated on the purchase of Class A Shares through:
quantity discounts and accumulated purchases;
concurrent purchases.
signing a 13-month letter of intent;
using the reinvestment privilege; or
purchases with proceeds from redemptions of unaffiliated investment
companies.
QUANTITY DISCOUNTS AND ACCUMULATED PURCHASES. As shown in the table on the
previous page, larger purchases may reduce the sales charge paid. The Fund
will combine purchases of Class A Shares made on the same day by the
investor, the investor's spouse, and the investor's children under age 21
when it calculates the sales charge. In addition, the sales charge, if
applicable, is eliminated or reduced for purchases made at one time by a
trustee or fiduciary for a single trust estate or a single fiduciary
account.
If an additional purchase of Class A Shares is made, the Fund will consider
the previous purchases still invested in the Fund. For example, if a
shareholder already owns Class A Shares having a current value at the
public offering price of $90,000 and he purchases $10,000 more at the
current public offering price, the sales charge as a percentage of public
offering price on the additional purchase according to the schedule now in
effect would be 3.75%, not 4.50%.
To receive the sales charge reduction, Federated Securities Corp. must be
notified by the shareholder in writing or by his financial institution at
the time the purchase is made that Class A Shares are already owned or that
purchases are being combined. The Fund will reduce the sales charge after
it confirms the purchases.
CONCURRENT PURCHASES. For purposes of qualifying for a sales charge
elimination or reduction, a shareholder has the privilege of combining
concurrent purchases of Class A Shares of two or more Federated Funds, the
purchase price of which includes a sales charge. For example, if a
shareholder concurrently invested $30,000 in Class A Shares of one of the
other Federated Funds with a sales charge, and $20,000 in this Fund, the
sales charge would be reduced.
To receive this sales charge reduction, Federated Securities Corp. must be
notified by the shareholder in writing or by his financial institution at
the time the concurrent purchases are made. The Fund will eliminate or
reduce the sales charge after it confirms the purchases.
LETTER OF INTENT. If a shareholder intends to purchase at least $50,000 of
Class A Shares of Federated Funds (excluding money market funds) over the
next 13 months, the sales charge may be reduced by signing a letter of
intent to that effect. This letter of intent includes a provision for a
sales charge adjustment depending on the amount actually purchased within
the 13-month period and a provision for the custodian to hold up to 5.50%
of the total amount intended to be purchased in escrow (in Shares) until
such purchase is completed.
The Shares held in escrow in the shareholder's account will be released
upon fulfillment of the letter of intent or the end of the 13-month
period, whichever comes first. If the amount specified in the letter of
intent is not purchased, an appropriate number of escrowed Shares may be
redeemed in order to realize the difference in the sales charge.
While this letter of intent will not obligate the shareholder to purchase
Shares, each purchase during the period will be at the sales charge
applicable to the total amount intended to be purchased. At the time a
letter of intent is established, current balances in accounts in any Class
A Shares of any Federated Fund, excluding money market accounts, will be
aggregated to provide a purchase credit towards fulfillment of the letter
of intent. Prior trade prices will not be adjusted.
REINVESTMENT PRIVILEGE. If Class A Shares in the Fund have been redeemed,
the shareholder has the privilege, within 120 days, to reinvest the
redemption proceeds at the next-determined net asset value without any
sales charge. Federated Securities Corp. must be notified by the
shareholder in writing or by his financial institution of the reinvestment
in order to eliminate a sales charge. If the shareholder redeems his Class
A Shares in the Fund, there may be tax consequences.
INVESTING IN CLASS B SHARES
Class B Shares are sold at their net asset value next determined after an
order is received. While Class B Shares are sold without an initial sales
charge, under certain circumstances described under "Contingent Deferred
Sales Charge--Class B Shares," a contingent deferred sales charge may be
applied by the distributor at the time Class B Shares are redeemed.
CONVERSION OF CLASS B SHARES. Class B Shares will automatically convert
into Class A Shares on or around the fifteenth of the month eight full
years after the purchase date, except as noted below, and will no longer be
subject to a fee under the Fund's Distribution Plan (see "Distribution of
Shares"). Such conversion will be on the basis of the relative net asset
value per Share, without the imposition of any sales charge, fee, or other
charge. Class B Shares acquired by exchange from Class B Shares of another
Federated Fund will convert into Class A Shares based on the time of the
initial purchase. Each time any Class B Shares in the shareholder's account
(other than those in the sub-account) convert to Class A Shares, an equal
pro rata portion of the Class B Shares in the sub-account will also convert
to Class A Shares. The conversion of Class B Shares to Class A Shares is
subject to the continuing availability of a ruling from the Internal
Revenue Service or an opinion of counsel that such conversions will not
constitute taxable events for federal tax purposes. There can be no
assurance that such ruling or opinion will be available, and the conversion
of Class B Shares to Class A Shares will not occur if such ruling or
opinion is not available. In such event, Class B Shares would continue to
be subject to higher expenses than Class A Shares for an indefinite period.
Orders for $250,000 or more of Class B Shares will automatically be
invested in Class A Shares.
INVESTING IN CLASS C SHARES
Class C Shares are sold at net asset value next determined after an order
is received. A contingent deferred sales charge of 1.00% will be charged on
assets redeemed within the first full 12 months following purchase. For a
complete description of this charge see "Contingent Deferred Sales Charge--
Class C Shares."
PURCHASING SHARES
PURCHASING SHARES THROUGH A FINANCIAL INSTITUTION. An investor may call his
financial institution (such as a bank or an investment dealer) to place an
order to purchase Shares. Orders placed through a financial institution are
considered received when the Fund is notified of the purchase order or when
payment is converted into federal funds. Purchase orders through a
registered broker/dealer must be received by the broker before 4:00 p.m.
(Eastern time) and must be transmitted by the broker to the Fund before
5:00 p.m. (Eastern time) in order for Shares to be purchased at that day's
price. Purchase orders through other financial institutions must be
received by the financial institution and transmitted to the Fund before
4:00 p.m. (Eastern time) in order for Shares to be purchased at that day's
price. It is the financial institution's responsibility to transmit orders
promptly. Financial institutions may charge additional fees for their
services.
The financial institutions which maintain investor accounts in Class B
Shares or Class C Shares with the Fund must do so on a fully disclosed
basis unless they account for share ownership periods used in calculating
the contingent deferred sales charge (see "Contingent Deferred Sales
Charge"). In addition, advance payments made to financial institutions may
be subject to reclaim by the distributor for accounts transferred to
financial institutions which do not maintain investor accounts on a fully
disclosed basis and do not account for share ownership periods.
PURCHASING SHARES BY WIRE. Once an account has been established, Shares may
be purchased by Federal Reserve wire by calling the Fund. All information
needed will be taken over the telephone, and the order is considered
received immediately. Payment for purchases which are subject to a sales
charge must be received within three business days following the order.
Payment for purchases on which no sales charge is imposed must be received
before 3:00 p.m. (Eastern time) on the next business day following the
order. Federal funds should be wired as follows: Federated Shareholder
Services Company, c/o State Street Bank and Trust Company, Boston,
Massachusetts; Attention: EDGEWIRE; For Credit to: (Fund Name) (Fund
Class); (Fund Number - this number can be found on the account statement or
by contacting the Fund); Account Number; Trade Date and Order Number; Group
Number or Dealer Number; Nominee or Institution Name; and ABA Number
011000028. Shares cannot be purchased by wire on holidays when wire
transfers are restricted. Questions on wire purchases should be directed to
your shareholder services representative at the telephone number listed on
your account statement.
PURCHASING SHARES BY CHECK. Once an account has been established, Shares
may be purchased by mailing a check made payable to the name of the Fund
(designate class of Shares and account number) to: Federated Shareholder
Services Company, P.O. Box 8600, Boston, Massachusetts 02266-8600. Orders
by mail are considered received when payment by check is converted into
federal funds (normally the business day after the check is received).
SPECIAL PURCHASE FEATURES
SYSTEMATIC INVESTMENT PROGRAM. Once a Fund account has been opened,
shareholders may add to their investment on a regular basis in a minimum
amount of $100. Under this program, funds may be automatically withdrawn
periodically from the shareholder's checking account at an Automated
Clearing House ("ACH") member and invested in the Fund at the net asset
value next determined after an order is received by the Fund, plus the
applicable sales charge. Shareholders should contact their financial
institution or the Fund to participate in this program.
RETIREMENT PLANS. Fund Shares can be purchased as an investment for
retirement plans or for Individual Retirement Accounts (`IRAs''). For
further details, contact the Fund and consult a tax adviser.
EXCHANGE PRIVILEGE
CLASS A SHARES. Class A shareholders may exchange all or some of their
Shares for Class A Shares of other Federated Funds at net asset value.
Neither the Fund nor any of the Federated Funds imposes any additional fees
on exchanges. Shareholders in certain other Federated Funds may exchange
all or some of their shares for Class A Shares.
CLASS B SHARES. Class B shareholders may exchange all or some of their
Shares for Class B Shares of other Federated Funds. (Not all Federated
Funds currently offer Class B Shares. Contact your financial institution
regarding the availability of other Class B Shares of the Federated Funds).
Exchanges are made at net asset value without being assessed a contingent
deferred sales charge on the exchanged Shares. To the extent that a
shareholder exchanges Shares for Class B Shares in other Federated Funds,
the time for which the exchanged-for Shares are to be held will be added to
the time for which exchanged-from Shares were held for purposes of
satisfying the applicable holding period. For more information, see
"Contingent Deferred Sales Charge."
CLASS C SHARES. Class C shareholders may exchange all or some of their
Shares for Class C Shares of other Federated Funds at net asset value
without a contingent deferred sales charge. (Not all Federated Funds
currently offer Class C Shares. Contact your financial institution
regarding the availability of other Class C Shares of the Federated Funds.)
To the extent that a shareholder exchanges Shares for Class C Shares of
other Federated Funds, the time for which the exchanged-for Shares are to
be held will be added to the time for which exchanged-from Shares were held
for purposes of satisfying the applicable holding period. For more
information, see "Contingent Deferred Sales Charge."
Please contact your financial institution directly or Federated Securities
Corp. at 1-800-341-7400 for information on and prospectuses for the
Federated Fund into which your Shares may be exchanged free of charge.
Shareholders of Class A Shares who have been designated Liberty Life
Members are exempt from sales charges on future purchases in and exchanges
between the Class A Shares of any Federated Fund, as long as they maintain
a $500 balance in one of the Federated Funds.
REQUIREMENTS FOR EXCHANGE. Shareholders using this privilege must exchange
Shares having a net asset value equal to the minimum investment
requirements of the fund into which the exchange is being made. Before the
exchange, the shareholder must receive a prospectus of the fund for which
the exchange is being made.
Upon receipt of proper instructions and required supporting documents,
Shares submitted for exchange are redeemed and the proceeds invested in
shares of the other fund. The exchange privilege may be modified or
terminated at any time. Shareholders will be notified of the modification
or termination of the exchange privilege.
TAX CONSEQUENCES. An exercise of the exchange privilege is treated as a
sale for federal income tax purposes. Depending on the circumstances, a
short-term or long-term capital gain or loss may be realized.
MAKING AN EXCHANGE. Instructions for exchanging may be given in writing or
by telephone. Written instructions may require a signature guarantee.
Shareholders of the Fund may have difficulty in making exchanges by
telephone through brokers and other financial institutions during times of
drastic economic or market changes. If a shareholder cannot contact his
broker or financial institution by telephone, it is recommended that an
exchange request be made in writing and sent by overnight mail to Federated
Shareholder Services Company, 1099 Hingham Street, Rockland, Massachusetts
02370-3317.
TELEPHONE INSTRUCTIONS. Telephone instructions made by the investor may be
carried out only if a telephone authorization form completed by the
investor is on file with the Fund. If the instructions are given by a
broker, a telephone authorization form completed by the broker must be on
file with the Fund. If reasonable procedures are not followed by the Fund,
it may be liable for losses due to unauthorized or fraudulent telephone
instructions. Shares may be exchanged between two funds by telephone only
if the two funds have identical shareholder registrations.
Any Shares held in certificate form cannot be exchanged by telephone but
must be forwarded to Federated Shareholder Services Company, P.O. Box 8600,
Boston, Massachusetts 02266-8600, and deposited to the shareholder's
account before being exchanged. Telephone exchange instructions may be
recorded and will be binding upon the shareholder. Such instructions will
be processed as of 4:00 p.m. (Eastern time) and must be received by the
Fund before that time for Shares to be exchanged the same day. Shareholders
exchanging into a fund will not receive any dividend that is payable to
shareholders of record on that date. This privilege may be modified or
terminated at any time.
HOW TO REDEEM SHARES
Shares are redeemed at their net asset value, less any applicable
contingent deferred sales charge, next determined after the Fund receives
the redemption request. Redemptions will be made on days on which the Fund
computes its net asset value. Investors who redeem Shares through a
financial intermediary may be charged a service fee by that financial
intermediary. Redemption requests must be received in proper form and may
be made as described below.
REDEEMING SHARES THROUGH YOUR FINANCIAL INSTITUTION. Shares of the Fund may
be redeemed by calling your financial institution to request the
redemption. Shares will be redeemed at the net asset value, less any
applicable contingent deferred sales charge next determined after the Fund
receives the redemption request from the financial institution. Redemption
requests through a registered broker/dealer must be received by the broker
before 4:00 p.m. (Eastern time) and must be transmitted by the broker to
the Fund before 5:00 p.m. (Eastern time) in order for Shares to be redeemed
at that day's net asset value. Redemption requests through other financial
institutions (such as banks) must be received by the financial institution
and transmitted to the Fund before 4:00 p.m. (Eastern time) in order for
Shares to be redeemed at that day's net asset value. The financial
institution is responsible for promptly submitting redemption requests and
providing proper written redemption instructions. Customary fees and
commissions may be charged by the financial institution for this service.
REDEEMING SHARES BY TELEPHONE. Shares may be redeemed in any amount by
calling the Fund provided the Fund has a properly completed authorization
form. These forms can be obtained from Federated Securities Corp. Proceeds
will be mailed in the form of a check to the shareholder's address of
record or wire-transferred to the shareholder's account at a domestic
commercial bank that is a member of the Federal Reserve System. The minimum
amount for a wire transfer is $1,000. Proceeds from redeemed Shares
purchased by check or through an ACH will not be wired until that method of
payment has been cleared. Proceeds from redemption requests received on
holidays when wire transfers are restricted will be wired the following
business day. Questions about telephone redemptions on days when wire
transfers are restricted should be directed to your shareholder services
representative at the telephone number listed on your account statement.
Telephone redemption instructions may be recorded. If reasonable procedures
are not followed by the Fund, it may be liable for losses due to
unauthorized or fraudulent telephone instructions. In the event of drastic
economic or market changes, a shareholder may experience difficulty in
redeeming by telephone. If this occurs, "Redeeming Shares By Mail" should
be considered. If at any time the Fund shall determine it necessary to
terminate or modify this method of redemption, shareholders would be
promptly notified.
REDEEMING SHARES BY MAIL. Shares may be redeemed in any amount by mailing a
written request to: Federated Shareholder Services Company, Fund Name, Fund
Class, P.O. Box 8600, Boston, Massachusetts 02266-8600. If share
certificates have been issued, they should be sent unendorsed with the
written request by registered or certified mail to the address noted above.
The written request should state: the Fund name and the Share class
designation; the account name as registered with the Fund; the account
number; and the number of Shares to be redeemed or the dollar amount
requested. All owners of the account must sign the request exactly as the
Shares are registered. Normally, a check for the proceeds is mailed within
one business day, but in no event more than seven days, after the receipt
of a proper written redemption request. Dividends are paid up to and
including the day that a redemption request is processed.
Shareholders requesting a redemption of any amount to be sent to an address
other than that on record with the Fund, or a redemption payable other than
to the shareholder of record must have their signatures guaranteed by a
commercial or savings bank, trust company or savings association whose
deposits are insured by an organization which is administered by the
Federal Deposit Insurance Corporation; a member firm of a domestic stock
exchange; or any other "eligible guarantor institution," as defined in the
Securities Exchange Act of 1934. The Fund does not accept signatures
guaranteed by a notary public.
SPECIAL REDEMPTION FEATURES
SYSTEMATIC WITHDRAWAL PROGRAM. Shareholders who desire to receive payments
of a predetermined amount not less than $100 may take advantage of the
Systematic Withdrawal Program. Under this program, Shares are redeemed to
provide for periodic withdrawal payments in an amount directed by the
shareholder.
Depending upon the amount of the withdrawal payments, the amount of
dividends paid and capital gains distributions with respect to Shares, and
the fluctuation of the net asset value of Shares redeemed under this
program, redemptions may reduce, and eventually deplete, the shareholder's
investment in the Fund. For this reason, payments under this program should
not be considered as yield or income on the shareholder's investment in the
Fund. To be eligible to participate in this program, a shareholder must
have an account value of at least $10,000, other than retirement accounts
subject to required minimum distributions. A shareholder may apply for
participation in this program through his financial institution. Due to the
fact that Class A Shares are sold with a sales charge, it is not advisable
for shareholders to continue to purchase Class A Shares while participating
in this program. A contingent deferred sales charge may be imposed on Class
B Shares and Class C Shares.
CONTINGENT DEFERRED SALES CHARGE
Shareholders may be subject to a contingent deferred sales charge upon
redemption of their Shares under the following circumstances:
CLASS A SHARES. Class A Shares purchased under a periodic special offering
with the proceeds of a redemption of shares of an unaffiliated investment
company purchased or redeemed with a sales charge and not distributed by
Federated Securities Corp. may be charged a contingent deferred sales
charge of .50% for redemptions made within one full year of purchase. Any
applicable contingent deferred sales charge will be imposed on the lesser
of the net asset value of the redeemed Shares at the time of purchase or
the net asset value of the redeemed Shares at the time of redemption.
CLASS B SHARES. Shareholders redeeming Class B Shares from their Fund
accounts within six full years of the purchase date of those Shares will be
charged a contingent deferred sales charge by the Fund's distributor. Any
applicable contingent deferred sales charge will be imposed on the lesser
of the net asset value of the redeemed Shares at the time of purchase or
the net asset value of the redeemed Shares at the time of redemption in
accordance with the following schedule:
CONTINGENT
YEAR OF REDEMPTION DEFERRED
AFTER PURCHASE SALES CHARGE
First 5.50%
Second 4.75%
Third 4.00%
Fourth 3.00%
Fifth 2.00%
Sixth 1.00%
Seventh and thereafter 0.00%
CLASS C SHARES. Shareholders redeeming Class C Shares from their Fund
accounts within one full year of the purchase date of those Shares will be
charged a contingent deferred sales charge by the Fund's distributor of
1.00%. Any applicable contingent deferred sales charge will be imposed on
the lesser of the net asset value of the redeemed Shares at the time of
purchase or the net asset value of the redeemed Shares at the time of
redemption.
CLASS A SHARES, CLASS B SHARES, AND CLASS C SHARES. The contingent deferred
sales charge will be deducted from the redemption proceeds otherwise
payable to the shareholder and will be retained by the distributor. The
contingent deferred sales charge will not be imposed with respect to: (1)
Shares acquired through the reinvestment of dividends or distributions of
long-term capital gains; and (2) Shares held for more than six full years
from the date of purchase with respect to Class B Shares and one full year
from the date of purchase with respect to Class C Shares and applicable
Class A Shares. Redemptions will be processed in a manner intended to
maximize the amount of redemption which will not be subject to a contingent
deferred sales charge. In computing the amount of the applicable contingent
deferred sales charge, redemptions are deemed to have occurred in the
following order: (1) Shares acquired through the reinvestment of dividends
and long-term capital gains; (2) Shares held for more than six full years
from the date of purchase with respect to Class B Shares and one full year
from the date of purchase with respect to Class C Shares and applicable
Class A Shares; (3) Shares held for fewer than six years with respect to
Class B Shares and less than one full year from the date of purchase with
respect to Class C Shares and applicable Class A Shares on a first-in,
first-out basis. A contingent deferred sales charge is not assessed in
connection with an exchange of Fund Shares for shares of other Federated
Funds in the same class (see "Exchange Privilege"). Any contingent deferred
sales charge imposed at the time the exchanged-for Shares are redeemed is
calculated as if the shareholder had held the Shares from the date on which
he became a shareholder of the exchanged-from Shares. Moreover, the
contingent deferred sales charge will be eliminated with respect to certain
redemptions (see "Elimination of Contingent Deferred Sales Charge").
ELIMINATION OF CONTINGENT DEFERRED SALES CHARGE
The contingent deferred sales charge will be eliminated with respect to the
following redemptions: (1) redemptions following the death or disability,
as defined in Section 72(m)(7) of the Internal Revenue Code of 1986, of the
last surviving shareholder; (2) redemptions representing minimum required
distributions from an IRA or other retirement plan to a shareholder who has
attained the age of 70 1/2; (3) involuntary redemptions by the Fund of
Shares in shareholder accounts that do not comply with the minimum balance
requirements; and (4) qualifying redemptions of Class B Shares under a
Systematic Withdrawal Program. To qualify for elimination of the
contingent deferred sales charge through a Systematic Withdrawal Program,
the redemptions of Class B Shares must be from an account: that is at least
12 months old, has all Fund distributions reinvested in Fund Shares, and
has a value of at least $10,000 when the Systematic Withdrawal Program is
established. Qualifying redemptions may not exceed 1.00% monthly of the
account value as periodically determined by the Fund. For more information
regarding the elimination of the contingent deferred sales charge through a
Systematic Withdrawal Program contact your financial intermediary or the
Fund. No contingent deferred sales charge will be imposed on redemptions
of Shares held by Directors, employees and sales representatives of the
Fund, the distributor, or affiliates of the Fund or distributor, and their
immediate family members; employees of any financial institution that sells
Shares of the Fund pursuant to a sales agreement with the distributor; and
spouses and children under the age of 21 of the aforementioned persons.
Finally, no contingent deferred sales charge will be imposed on the
redemption of Shares originally purchased through a bank trust department,
an Adviser registered under the Advisers Act of 1940 or retirement plans
where the third party administrator has entered into certain arrangements
with Federated Securities Corp. or its affiliates, or any other financial
institution, to the extent that no payments were advanced for purchases
made through such entities. The Fund reserves the right to discontinue or
modify the elimination of the contingent deferred sales charge.
Shareholders will be notified of a discontinuation. Any Shares purchased
prior to the termination of such waiver would have the contingent deferred
sales charge eliminated as provided in the Fund's prospectus at the time of
the purchase of the Shares. If a shareholder making a redemption qualifies
for an elimination of the contingent deferred sales charge, the shareholder
must notify Federated Securities Corp. or the transfer agent in writing
that the shareholder is entitled to such elimination.
ACCOUNT AND SHARE INFORMATION
CERTIFICATES AND CONFIRMATIONS
As transfer agent for the Fund, Federated Shareholder Services Company
maintains a Share account for each shareholder. Share certificates are not
issued unless requested in writing to Federated Shareholder Services
Company.
Detailed confirmations of each purchase and redemption are sent to each
shareholder. Annual confirmations are sent to report dividends paid during
the year.
DIVIDENDS
Dividends are declared and paid annually to all shareholders invested in
the Fund on the record date. Dividends are automatically reinvested in
additional Shares on the payment date, at the ex-dividend date net asset
value without a sales charge, unless shareholders request cash payments on
the new account form or by writing to the transfer agent. All shareholders
on the record date are entitled to the dividend. If Shares are redeemed or
exchanged prior to the record date, or purchased after the record date,
those Shares are not entitled to that year's dividend.
CAPITAL GAINS
Net long-term capital gains realized by the Fund, if any, will be
distributed at least once every twelve months.
ACCOUNTS WITH LOW BALANCES
Due to the high cost of maintaining accounts with low balances, the Fund
may redeem Shares in any account, except retirement plans, and pay the
proceeds to the shareholder if the account balance falls below the Class A
Shares required minimum value of $500 or the required minimum value of
$1,500 for Class B Shares and Class C Shares. This requirement does not
apply, however, if the balance falls below the required minimum value
because of changes in the net asset value of the respective Share class.
Before Shares are redeemed to close an account, the shareholder is notified
in writing and allowed 30 days to purchase additional Shares to meet the
minimum requirement.
CORPORATION INFORMATION
MANAGEMENT OF THE CORPORATION
BOARD OF DIRECTORS. The Corporation is managed by a Board of Directors. The
Directors are responsible for managing the Corporation's business affairs
and for exercising all the Corporation's powers except those reserved for
the shareholders. An Executive Committee of the Board of Directors handles
the Board's responsibilities between meetings of the Board.
ADVISER. Investment decisions for the Fund are made by Federated Global
Research Corp., the Fund's Adviser, subject to direction by the Directors.
The Adviser continually conducts investment research and supervision for
the Fund and is responsible for the purchase or sale of portfolio
instruments, for which it receives an annual fee from the Fund.
ADVISORY FEES. The Adviser receives an annual investment advisory fee equal
to 1.25% of the Fund's average daily net assets. This advisory fee applies
only to individual portfolio securities and not to investment in the
underlying funds. The fee paid by the Fund, while higher than the advisory
fee paid by other mutual funds in general, is comparable to fees paid by
many mutual funds with similar objectives and policies. The Adviser may
voluntarily waive a portion of its fee. The Adviser can terminate this
voluntary waiver at any time at its sole discretion.
The investment advisory fees of the underlying funds are not included in
the discussion of the Fund's advisory fee above. By investing in the Fund,
you bear not only the Fund's expenses, but also similar expenses of the
underlying funds. You would not incur the Fund's expenses if you were to
invest in the underlying funds directly.
ASSET ALLOCATION FEE. The Adviser provides its asset allocation services to
the Fund for which it receives an annual fee equal to .20% of the Fund's
average daily net assets. The Adviser determines the percentage of Fund
assets to be allocated among the underlying funds. The Adviser monitors the
allocation of the Fund's assets and is responsible for supervising
compliance with the Fund's investment objective and policies.The Adviser
will regularly review the Fund's allocation among the underlying funds and
make any changes, within the ranges established for each underlying fund,
that it believes will provide the most favorable outlook for achieving the
Fund's investment objective.
ADVISER'S BACKGROUND. Federated Global Research Corp., incorporated in
Delaware on May 12, 1995, is a registered investment adviser under the
Advisers Act of 1940. It is a subsidiary of Federated Investors. All of the
Class A (voting) shares of Federated Investors are owned by a trust, the
trustees of which are John F. Donahue, Chairman and Trustee of Federated
Investors, Mr. Donahue's wife, and Mr. Donahue's son, J. Christopher
Donahue, who is President and Trustee of Federated Investors.
Federated Global Research Corp. and other subsidiaries of Federated
Investors serve as investment advisers to a number of investment companies
and private accounts. Certain other subsidiaries also provide
administrative services to a number of investment companies. With over $76
billion invested across more than 348 funds under management and/or
administration by its subsidiaries, as of December 31, 1996, Federated
Investors is one of the largest mutual fund investment managers in the
United States. With more than 2,000 employees, Federated continues to be
led by the management who founded the company in 1955. Federated Funds are
presently at work in and through 4,500 financial institutions nationwide.
Drew J. Collins has been the Fund's portfolio manager since inception. Mr.
Collins joined Federated Investors in 1995 as a Senior Vice President of
the Fund's Adviser. Mr. Collins served as a Vice President/Portfolio
Manager of international equity portfolios at Arnhold and S. Bleichroeder,
Inc. from 1994 to 1995. He served as an Assistant Vice President/ Portfolio
Manager for international equities at the College Retirement Equities Fund
from 1986 to 1994. Mr. Collins is a Chartered Financial Analyst and
received his M.B.A. in finance from the Wharton School of The University of
Pennsylvania.
Henry A. Frantzen has been the Fund's portfolio manager since inception.
Mr. Frantzen joined Federated Investors in 1995 as an Executive Vice
President of the Fund's Adviser. Mr. Frantzen served as Chief Investment
Officer of international equities at Brown Brothers Harriman & Co. from
1992 until 1995.
Both the Corporation and the Adviser have adopted strict codes of ethics
governing the conduct of all employees who manage the Fund and its
portfolio securities. These codes recognize that such persons owe a
fiduciary duty to the Fund's shareholders and must place the interests of
shareholders ahead of the employees' own interest. Among other things, the
codes: require preclearance and periodic reporting of personal securities
transactions; prohibit personal transactions in securities being purchased
or sold, or being considered for purchase or sale, by the Fund; prohibit
purchasing securities in initial public offerings; and prohibit taking
profits on securities held for less than sixty days. Violations of these
codes are subject to review by the Directors, and could result in severe
penalties.
DISTRIBUTION OF SHARES
Federated Securities Corp. is the principal distributor for Shares of the
Fund. Federated Securities Corp. is located at Federated Investors Tower,
Pittsburgh, Pennsylvania 15222-3779. It is a Pennsylvania corporation
organized on November 14, 1969, and is the principal distributor for a
number of investment companies. Federated Securities Corp. is a subsidiary
of Federated Investors.
The distributor may offer to pay financial institutions an amount equal to
1% of the net asset value of Class C Shares purchased by their clients or
customers at the time of purchase. These payments will be made directly by
the distributor from its assets, and will not be made from assets of the
Fund. Financial institutions may elect to waive the initial payment
described above; such waiver will result in the waiver by the Fund of the
otherwise applicable contingent deferred sales charge.
DISTRIBUTION PLAN AND SHAREHOLDER SERVICES. Under a distribution plan
adopted in accordance with Investment Company Act Rule 12b-1 (the
"Distribution Plan"), the distributor may be paid a fee in an amount
computed at an annual rate of up to 0.25% for Class A Shares and up to
0.75% for Class B Shares and Class C Shares of the average daily net assets
of each class of Shares to finance any activity which is principally
intended to result in the sale of Shares subject to the Distribution Plan.
The Fund does not currently make payments to the distributor or charge a
fee under the Distribution Plan for Class A Shares, and shareholders of
Class A Shares will be notified if the Fund intends to charge a fee under
the Distribution Plan. For Class A Shares and Class C Shares, the
distributor may select financial
In addition, the Fund has entered into a Shareholder Services Agreement
with Federated Shareholder Services, a subsidiary of Federated Investors,
under which the Fund may make payments up to 0.25% of the average daily net
asset value of Class A Shares, Class B Shares, and Class C Shares to obtain
certain personal services for shareholders and for the maintenance of
shareholder accounts ("Shareholder Services"). The fee paid by the Fund to
Federated Shareholder Services will be reduced to the extent that the Fund
receives a fee from an underlying fund pursuant to the underlying fund's
Shareholder Services Agreement with Federated Shareholder Services. Under
the Shareholder Services Agreement, Federated Shareholder Services will
either perform Shareholder Services directly or will select financial
institutions to perform Shareholder Services. Financial institutions will
receive fees based upon Shares owned by their clients or customers. The
schedules of such fees and the basis upon which such fees will be paid will
be determined from time to time by the Fund and Federated Shareholder
Services.
In addition to payments
Furthermore, with respect to Class A Shares, Class B Shares, and Class C
Shares, Federated Securities Corp. and Federated Shareholder Services may
offer to pay a fee from their own assets to financial institutions as
financial assistance for providing substantial sales services, distribution
related support services or shareholder services. The support may include
sponsoring sales, educational and training seminars for their employees,
providing sales literature, and engineering computer software programs that
emphasize the attributes of the Fund. Such assistance will be predicated
upon the amount of Shares the financial institution sells or may sell,
and/or upon the type and nature of sales or marketing support furnished by
the financial institution. Any payments made by the distributor may be
reimbursed by the Fund's Adviser or its affiliates.
ADMINISTRATION OF THE FUND
Federated Services Company, a subsidiary of Federated Investors, provides
administrative personnel and services (including certain legal and
financial reporting services) necessary to operate the Corporation and the
Fund. Federated Services Company provides these at an annual rate which
relates to the
EXPENSES OF THE FUND AND CLASS A SHARES, CLASS B SHARES, AND CLASS C SHARES
Holders of Class A, Class B, and Class C Shares pay their allocable portion
of Corporation and portfolio expenses.
The Corporation expenses for which holders of Class A, Class B, and Class C
Shares pay their allocable portion include, but are not limited to: the
cost of organizing the Corporation and continuing its existence;
registering the Corporation with federal and state securities authorities;
Directors' fees; auditors' fees; the cost of meetings of Directors; legal
fees of the Corporation; association membership dues; and such non-
recurring and extraordinary items as may arise from time to time.
The portfolio expenses for which holders of Class A, Class B, and Class C
Shares pay their allocable portion include, but are not limited to:
registering the portfolio and Shares of the portfolio; investment advisory
services; taxes and commissions; custodian fees; insurance premiums;
auditors' fees; and such non-recurring and extraordinary items as may arise
from time to time.
At present, the only expenses which are allocated specifically to Class A,
Class B, and Class C Shares as classes are expenses under the Corporation's
Distribution Plan and fees for Shareholder Services. However, the Directors
reserve the right to allocate certain other expenses to holders of Class A,
Class B, and Class C Shares as it deems appropriate ("Class Expenses"). In
any case, Class Expenses would be limited to: distribution fees; transfer
agent fees as identified by the transfer agent as attributable to holders
of Class A, Class B, and Class C Shares; fees for Shareholder Services;
printing and postage expenses related to preparing and distributing
materials such as shareholder reports, prospectuses and proxies to current
shareholders; registration fees paid to the Securities and Exchange
Commission and registration fees paid to state securities commissions;
expenses related to administrative personnel and services as required to
support holders of Class A, Class B, and Class C Shares; legal fees
relating solely to Class A, Class B, and Class C Shares and Directors' fees
incurred as a result of issues relating solely to Class A, Class B, and
Class C Shares.
An investor in the Fund should recognize that you may invest directly in
underlying funds and that, by investing in underlying funds indirectly
through the Fund, you will bear not only your proportionate share of the
expenses of the Fund and as described above, but also, indirectly, similar
expenses of the underlying funds. In addition, you will bear your
proportionate share of expenses, if any, related to the distribution of
the Fund's shares, see "Distribution of Shares," and also may indirectly
bear expenses paid by an underlying fund related to the distribution of its
shares. You also will bear your proportionate share of any sales charges
incurred by the Fund related to the purchase of shares of the underlying
funds. However, in certain instances, the Fund may be eligible to purchase
underlying funds at a reduced or no sales charge, whereas an individual
investor would have to pay the full sales charge if the investor directly
invested in such underlying funds. In those instances, it may be possible
for an investor to bear greater transaction and operating expenses by
investing directly in the underlying funds than if the investor were to
invest indirectly through such underlying funds as a shareholder in the
Fund (even after aggregating the transaction and operating expenses of the
Fund and the underlying funds). Finally, you should recognize that, as a
result of the Fund's policies of investing in other mutual funds, you may
receive taxable capital gains distributions to a greater extent than would
be the case if you invested directly in the underlying funds. See
"Dividends,''``Capital Gains'' and ``Federal Income Tax."
BROKERAGE TRANSACTIONS
When selecting brokers and dealers to handle the purchase and sale of
portfolio instruments, the Adviser looks for prompt execution of the order
at a favorable price. In working with dealers, the Adviser will generally
utilize those who are recognized dealers in specific portfolio instruments,
except when a better price and execution of the order can be obtained
elsewhere. In selecting among firms believed to meet this criteria, the
Adviser may give consideration to those firms which have sold or are
selling Shares of the Fund and other funds distributed by Federated
Securities Corp. The Adviser makes decisions on portfolio transactions and
selects brokers and dealers subject to review by the Directors.
SHAREHOLDER INFORMATION
VOTING RIGHTS
Each Share of the Fund gives the shareholder one vote in Director elections
and other matters submitted to shareholders for vote. All Shares of each
portfolio or class in the Corporation have equal voting rights, except that
in matters affecting only a particular Fund or class, only Shares of that
particular Fund or class are entitled to vote.
As a Maryland corporation, the Corporation is not required to hold annual
shareholder meetings. Shareholder approval will be sought only for certain
changes in the Fund's operation and for the election of Directors under
certain circumstances.
Directors may be removed by the Directors or by shareholders at a special
meeting. The Directors shall call a special meeting of shareholders upon
the written request of shareholders owning at least 10% of the
Corporation's outstanding shares entitled to vote.
When the Fund is asked to vote on matters relating to the underlying funds,
the Fund is required to either: seek voting instructions from its
shareholders regarding underlying fund proxies and to vote such proxies in
accordance with the instructions received; or to vote such proxies in the
same proportion as the vote of all other holders of the underlying fund
securities.
TAX INFORMATION
FEDERAL INCOME TAX
The Fund will pay no federal income tax because it expects to meet
requirements of the Internal Revenue Code, as amended (the "Code"),
applicable to regulated investment companies and to receive the special tax
treatment afforded to such companies. However, the Fund may invest in the
stock of certain foreign corporations which would constitute a Passive
Foreign Investment Company ("PFIC"). Federal income taxes may be imposed on
the Fund upon disposition of PFIC investments.
The Fund will be treated as a single, separate entity for federal income
tax purposes so that income (including capital gains) and losses realized
by the Corporation's other portfolios, if any, will not be combined for tax
purposes with those realized by the Fund.
Investment income received by the Fund from sources within foreign
countries may be subject to foreign taxes withheld at the source. The
United States has entered into tax treaties with many foreign countries
that entitle the Fund to reduced tax rates or exemptions on this income.
The effective rate of foreign tax cannot be predicted since the amount of
Fund assets to be invested within various countries is unknown. However,
the Fund intends to operate so as to qualify for treaty-reduced tax rates
where applicable.
Unless otherwise exempt, shareholders are required to pay federal income
tax on any dividends and other distributions, including capital gains
distributions, received. This applies whether dividends and distributions
are received in cash or as additional Shares. Distributions representing
long-term capital gains, if any, will be taxable to shareholders as long-
term capital gains no matter how long the shareholders have held the
Shares. No federal income tax is due on any dividends earned in an IRA or
qualified retirement plan until distributed.
The Fund may invest in underlying funds with capital loss carry-forwards.
If such an underlying fund realizes capital gains, it will be able to
offset the gains to the extent of its loss carry-forwards in determining
the amount of capital gains which must be distributed to its shareholders.
To the extent that gains are offset in this manner, the Fund will not
realize gains on the related fund until such time as the underlying fund is
sold.
STATE AND LOCAL TAXES
Shares are exempt from personal property taxes imposed by counties,
municipalities, and school districts in Pennsylvania.
Shareholders are urged to consult their own tax advisers regarding the
status of their accounts under state and local tax laws.
PERFORMANCE INFORMATION
From time to time, the Fund advertises the total return for each class of
Shares.
Total return represents the change, over a specified period of time, in the
value of an investment in each class of Shares after reinvesting all income
and capital gains distributions. It is calculated by dividing that change
by the initial investment and is expressed as a percentage.
The performance information reflects the effect of non-recurring charges,
such as the maximum sales charge and contingent deferred sales charges,
which, if excluded, would increase the total return.
Total return will be calculated separately for Class A Shares, Class B
Shares, and Class C Shares. Expense differences between Class A Shares,
Class B Shares and Class C Shares may affect the performance of each class.
From time to time, advertisements for Class A Shares, Class B Shares and
Class C Shares of the Fund may refer to ratings, rankings, and other
information in certain financial publications and/or compare the
performance of Class A Shares, Class B Shares and Class C Shares to certain
indices.
APPENDIX
STANDARD AND POOR'S RATINGS GROUP LONG TERM DEBT RATING DEFINITIONS
AAA--Debt rated AAA has the highest rating assigned by Standard & Poor's
Ratings Group. Capacity to pay interest and repay principal is extremely
strong. AA--Debt rated AA has a very strong capacity to pay interest and
repay principal and differs from the higher rated issues only in small
degree.
A--Debt rated A has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes
in circumstances and economic conditions than debt in higher rated
categories.
BBB--Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for debt in this category than in higher rated
categories.
BB--Debt rated BB has less near-term, vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions which could
lead to inadequate capacity to meet timely interest and principal payments.
The BB rating category is also used for debt subordinated to senior debt
that is assigned an actual or implied BBB-rating.
B--Debt rated B has a greater vulnerability to default but currently has
the capacity to meet interest payments and principal repayments. Adverse
business, financial,
C--The rating C typically is applied to debt subordinated to senior debt
which is assigned an actual or implied CCC-debt rating. The C rating may be
used to cover a situation where a bankruptcy petition has been filed, but
debt service payments are continued.
MOODY'S INVESTORS SERVICE, INC. LONG TERM BOND RATING DEFINITIONS
AAA--Bonds which are rated AAA are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to
as "gilt edged." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized
are most unlikely to impair the fundamentally strong position of such
issues.
AA--Bonds which are rated AA are judged to be of high quality by all
standards.
BA--Bonds which are BA are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of
interest and principal payments may be very moderate and thereby not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.
B--Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance
of other terms of the contract over any long period of time may be small.
CAA--Bonds which are rated CAA are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to
principal or interest.
CA--Bonds which are rated CA represent obligations which are speculative in
a high degree. Such issues are often in default or have other
A--Bonds considered to be investment grade and of high credit quality. The
obligor's ability to pay interest and repay principal is considered to be
strong, but may be more vulnerable to adverse changes in economic
conditions and circumstances than bonds with higher ratings.
BBB--Bonds considered to be investment grade and of satisfactory credit
quality. The obligor's ability to pay interest and repay principal is
considered to be adequate. Adverse changes in economic conditions and
circumstances, however, are more likely to have adverse impact on these
bonds, and therefore impair timely payment. The likelihood that the ratings
of these bonds will fall below investment grade is higher than for bonds
with higher ratings.
BB--Bonds are considered speculative. The obligor's ability to pay interest
and repay principal may be affected over time by adverse economic changes.
However, business and financial alternatives can
PRIME-1--Issuers rated PRIME-1 (or related supporting institutions) have a
superior capacity for repayment of short-term promissory obligations.
PRIME-1 repayment capacity will normally be evidenced by the following
characteristics:
oLeading market positions in well established industries.
oHigh rates of return on funds employed.
oConservative capitalization structure with moderate reliance on debt
and ample asset protection.
oBroad margins in earning coverage of fixed financial charges and
high internal cash generation.
oWell established access to a range of financial markets and assured
sources of alternate liquidity.
PRIME-2--Issuers rated PRIME-1 (or related supporting institutions) have a
strong capacity for repayment of short-term promissory obligations. This
will normally be evidenced by many of the characteristics cited above but
to a lesser degree. Earnings trends and coverage ratios, while sound, will
be more subject to variation. Capitalization characteristics, while still
appropriate, may
FITCH-2--(Very Good Grade) Issues assigned this rating reflect an assurance
of timely payment only slightly less in degree than the strongest issues.
ADDRESSES
Federated International Growth Fund
Class A Shares Federated Investors Tower
Class B Shares Pittsburgh, Pennsylvania 15222-3779
Class C Shares
Distributor
Federated Securities Corp. Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
Adviser
Federated Global Research Corp. 175 Water Street
New York, New York 10038-4965
Custodian
State Street Bank and Trust Company P.O. Box 8600
Boston, Massachusetts 02266-8600
Transfer Agent and Dividend Disbursing Agent
Federated Shareholder P.O. Box 8600
Services Company Boston, Massachusetts 02266-8600
Independent Public Accountants
Ernst & Young LLP One Oxford Centre
Pittsburgh, Pennsylvania 15219
FEDERATED INTERNATIONAL GROWTH FUND
(A PORTFOLIO OF WORLD INVESTMENT SERIES, INC.)
CLASS A SHARES
CLASS B SHARES
CLASS C SHARES
PROSPECTUS
An Open-End, Diversified
Management Investment Company
, 1997
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INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY, NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, PRELIMINARY PROSPECTUS
DATED MAY 21, 1997
FEDERATED INTERNATIONAL GROWTH FUND
A PORTFOLIO OF WORLD INVESTMENT SERIES, INC.
CLASS A SHARES
CLASS B SHARES
CLASS C SHARES
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information should be read with the
prospectus of Federated International Growth Fund (the ``Fund'), a
portfolio of World Investment Series, Inc. (the ``Corporation') dated
, 1997. This Statement is not a prospectus. You may request a
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copy of a prospectus or a paper copy of this Statement of Additional
Information, if you have received it electronically, free of charge by
calling 1-800-341-7400.
Statement dated , 1997
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FEDERATED INVESTORS
Federated Investors Tower
Pittsburgh, PA 15222-3779
Federated Securities Corp. is the distributor of the Fund
and is a subsidiary of Federated Investors.
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GENERAL INFORMATION ABOUT THE FUND 1
INVESTMENT OBJECTIVE AND POLICIES 1
Types of Investments 1
When-Issued and Delayed Delivery Transactions 1
Repurchase Agreements 1
Lending Portfolio Securities 2
Restricted and Illiquid Securities 2
Futures and Options Transactions 2
Futures Contracts 2
Put Options on Futures Contracts 3
Call Options on Futures Contracts 3
``Margin''in Futures Transactions 4
Regulatory Restrictions 4
Purchasing Put Options on Portfolio Securities4
Writing Covered Call Options on Portfolio
Securities 4
Over-the-Counter Options 4
Warrants 5
Additional Risk Considerations 5
Portfolio Turnover 5
INVESTMENT LIMITATIONS 5
INTERNATIONAL SERIES, INC. MANAGEMENT 8
Fund Ownership 12
Directors Compensation 13
INVESTMENT ADVISORY SERVICES 14
Adviser to the Fund 14
Advisory Fees 14
BROKERAGE TRANSACTIONS 14
OTHER SERVICES 14
Fund Administration 14
Custodian and Portfolio Accountant 15
Transfer Agent 15
Independent Public Accountants 15
PURCHASING SHARES 15
DISTRIBUTION PLAN AND SHAREHOLDER SERVICES 15
Purchases by Sales Representatives, Directors of
the Corporation, and Employees 15
DETERMINING NET ASSET VALUE 16
Determining Market Value of Securities 16
Trading in Foreign Securities 16
REDEEMING SHARES 16
Redemption in Kind 16
Elimination of the Contingent Deferred Sales
Charge 17
TAX STATUS 17
The Fund's Tax Status 17
Foreign Taxes 17
Shareholders' Tax Status 17
TOTAL RETURN 18
PERFORMANCE COMPARISONS 18
Economic and Market Information 19
ABOUT FEDERATED INVESTORS 19
FINANCIAL STATEMENTS 20
APPENDIX 21
GENERAL INFORMATION ABOUT THE FUND
The Fund is a portfolio in World Investment Series, Inc. (the
`Corporation''), which was established under the laws of the State of
Maryland on January 25, 1994.
Shares of the Fund are offered in three classes, known as Class A Shares,
Class B Shares, and Class C Shares (individually and collectively referred
to as `Shares'' as the context may require). This Statement of Additional
Information relates to all three classes of Shares of the Fund.
INVESTMENT OBJECTIVE AND POLICIES
The investment objective of the Fund is to provide long-term growth of
capital. Any income realized from the portfolio is incidental. The Fund
pursues its investment objective by investing primarily in shares of other
mutual funds, the portfolios of which consist primarily of equity
securities of non-U.S. issuers. Additionally, pursuant to exemptive relief
from the Securities and Exchange Commission (`SEC''), the Fund may also
invest directly in equity securities of companies domiciled outside the
United States. The investment objective cannot be changed without approval
of shareholders.
TYPES OF INVESTMENTS
The Fund invests primarily in shares of other open-end management
investment companies for which affiliates of Federated Investors serve as
investment adviser and principal underwriter (the `Federated Funds'' and
herein referred to as the `underlying funds'') that invest primarily in
foreign equity securities. To the extent that the Fund's assets are
invested in underlying funds, its investment experience will correspond
directly with that of its proportionate investment in those funds. The Fund
may also invest in a diversified portfolio composed of non-U.S. securities
and directly in the securities held by the underlying funds. Because the
Fund and the underlying funds will have substantially similar investment
experiences and incur similar risks, all further references to the Fund
hereinafter include the underlying funds unless otherwise indicated.
Although many of the underlying funds have the same or similar investment
policies as the Fund, they are not required to do so.
A substantial portion of these instruments will be equity securities of
companies domiciled outside the United States. The Fund will invest in
equity securities denominated in foreign currencies, including European
Currency Units, of issuers located in at least three countries outside of
the United States and sponsored or unsponsored depositary receipts. The
Fund may also enter into forward commitments, repurchase agreements,
foreign currency transactions and maintain reserves in foreign or U.S.
money market instruments.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
These transactions are made to secure what is considered to be an
advantageous price or yield for the Fund. No fees or other expenses, other
than normal transaction costs, are incurred. However, liquid assets of the
Fund sufficient to make payment for the securities to be purchased are
segregated on the Fund's records at the trade date. These assets are marked
to market daily and are maintained until the transaction has been settled.
The Fund does not intend to engage in when-issued and delayed delivery
transactions to an extent that would cause the segregation of more than 20%
of the total value of its assets.
LENDING OF PORTFOLIO SECURITIES
The collateral received when the Fund lends portfolio securities must be
valued daily and, should the market value of the loaned securities
increase, the borrower must furnish additional collateral to the Fund.
During the time portfolio securities are on loan, the borrower pays the
Fund any dividends or interest paid on such securities. Loans are subject
to termination at the option of the Fund or the borrower. The Fund may pay
reasonable administrative and custodial fees in connection with a loan and
may pay a negotiated portion of the interest earned on the cash or
equivalent collateral to the borrower or placing broker. The Fund does not
have the right to vote securities on loan, but would terminate the loan and
regain the right to vote if that were considered important with respect to
the investment.
There is the risk that when lending portfolio securities, the securities
may not be available to the Fund on a timely basis and the Fund may,
therefore, lose the opportunity to sell the securities at a desirable
price. In addition, in the event that a borrower of securities would file
for bankruptcy or become insolvent, disposition of the securities may be
delayed pendng court action.
REPURCHASE AGREEMENTS
The Fund or its custodian will take possession of the securities subject to
repurchase agreements, and these securities will be marked to market daily.
To the extent that the original seller does not repurchase the securities
from the Fund, the Fund could receive less than the repurchase price on any
sale of such securities. In the event that such a defaulting seller filed
for bankruptcy or became insolvent, disposition of such securities by the
Fund might be delayed pending court action. The Fund believes that under
the regular procedures normally in effect for custody of the Fund's
portfolio securities subject to repurchase agreements, a court of competent
jurisdiction would rule in favor of the Fund and allow retention or
disposition of such securities. The Fund will only enter into repurchase
agreements with banks and other recognized financial institutions, such as
broker/dealers, which are found by Federated Global Research, the Fund's
investment adviser (the `Adviser'') to be creditworthy pursuant to
guidelines established by the Corporation's Board of Directors (the
`Directors'').
The Fund or its custodian will take possession of the securities subject to
repurchase agreements, and these securities will be marked to market daily.
In the event that such a defaulting seller filed for bankruptcy or became
insolvent, disposition of such securities by the Fund might be delayed
pending court action. The Fund believes that under the regular procedures
normally in effect for custody of the Fund's portfolio securities subject
to repurchase agreements, a court of competent jurisdiction would rule in
favor of the Fund and allow retention or disposition of such securities.
The Fund will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed
by Federated Global Research Corp., the Fund's Adviser (the `Adviser'') to
be creditworthy.
RESTRICTED AND ILLIQUID SECURITIES
The ability of the Directors to determine the liquidity of certain
restricted securities is permitted under an SEC staff position set forth in
the adopting release for Rule 144A under the Securities Act of 1933, as
amended (the `Rule''). The Rule is a non-exclusive safe-harbor for
certain secondary market transactions involving registration for resales of
otherwise restricted securities to qualified institutional buyers. The
Rule was expected to further enhance the liquidity of the secondary market
for securities eligible for resale under the Rule. The Fund believes that
the staff of the SEC has left the question of determining the liquidity of
all restricted securities to the Directors. The Directors may consider the
following criteria in determining the liquidity of certain restricted
securities:
othe frequency of trades and quotes for the security;
othe number of dealers willing to purchase or sell the security and
the number of other potential buyers;
odealer undertakings to make a market in the security; and
othe nature of the security and the nature of the marketplace trades.
Notwithstanding the foregoing, securities of foreign issuers which are not
listed on a recognized domestic or foreign exchange or for which a bona
fide market does not exist at the time of purchase or subsequent
transaction shall be treated as illiquid securities by the Directors.
FUTURES AND OPTIONS TRANSACTIONS
The Fund may engage in futures and options hedging transactions. In an
effort to reduce fluctuations in the net asset value of Shares, the Fund
may attempt to hedge all or a portion of its portfolio by buying and
selling financial futures contracts, buying put options on portfolio
securities and listed put options on futures contracts, and writing call
options on futures contracts. The Fund may also write covered call options
on portfolio securities to attempt to increase its current income. The Fund
will maintain its positions in securities, option rights, and segregated
cash subject to puts and calls until the options are exercised, closed, or
have expired. An option position on financial futures contracts may be
closed out only on the exchange on which the position was established.
FUTURES CONTRACTS
The Fund may engage in transactions in futures contracts. A futures
contract is a firm commitment by two parties: the seller who agrees to make
delivery of the specific type of security called for in the contract
(`going short'') and the buyer who agrees to take delivery of the security
(`going long'') at a certain time in the future. However, a stock index
futures contract is an agreement pursuant to which two parties agree to
take or make delivery of an amount of cash equal to the difference between
the value of the index at the close of the last trading day of the contract
and the price at which the index contract was originally written. No
physical delivery of the underlying securities in the index is made.
The purpose of the acquisition or sale of a futures contract by the Fund is
to protect the Fund from fluctuations in the value of its securities caused
by anticipated changes in interest rates or market conditions without
necessarily buying or selling the securities. For example, in the fixed
income securities market, price generally moves inversely to interest
rates. A rise in rates generally means a drop in price. Conversely, a drop
in rates generally means a rise in price. In order to hedge its holdings of
fixed income securities against a rise in market interest rates, the Fund
could enter into contracts to deliver securities at a predetermined price
(i.e., `go short'') to protect itself against the possibility that the
prices of its fixed income securities may decline during the anticipated
holding period. The Fund would `go long'' (i.e., agree to purchase
securities in the future at a predetermined price) to hedge against a
decline in market interest rates.
PUT OPTIONS ON FUTURES CONTRACTS
The Fund may engage in transactions in put options on futures contracts.
The Fund may purchase listed put options on futures contracts. Unlike
entering directly into a futures contract, which requires the purchaser to
buy a financial instrument on a set date at a specified price, the purchase
of a put option on a futures contract entitles (but does not obligate) its
purchaser to decide on or before a future date whether to assume a short
position at the specified price. The Fund would purchase put options on
futures contracts to protect portfolio securities against decreases in
value resulting from market factors, such as an anticipated increase in
interest rates.
Generally, if the hedged portfolio securities decrease in value during the
term of an option, the related futures contracts will also decrease in
value and the option will increase in value. In such an event, the Fund
will normally close out its option by selling an identical option. If the
hedge is successful, the proceeds received by the Fund upon the sale of the
second option may be large enough to offset both the premium paid by the
Fund for the original option plus the decrease in value of the hedged
securities. Alternatively, the Fund may exercise its put option to close
out the position. To do so, it would simultaneously enter into a futures
contract of the type underlying the option (for a price less than the
strike price of the option) and exercise the option. The Fund would then
deliver the futures contract in return for payment of the strike price. If
the Fund neither closes out nor exercises an option, the option will expire
on the date provided in the option contract, and only the premium paid for
the contract will be lost.
When the Fund sells a put on a futures contract, it receives a cash premium
which can be used in whatever way is deemed most advantageous to the Fund.
In exchange for such premium, the Fund grants to the purchaser of the put
the right to receive from the Fund, at the strike price, a short position
in such futures contract, even though the strike price upon exercise of the
option is greater than the value of the futures position received by such
holder. If the value of the underlying futures position is not such that
exercise of the option would be profitable to the option holder, the option
will generally expire without being exercised. The Fund has no obligation
to return premiums paid to it whether or not the option is exercised. It
will generally be the policy of the Fund, in order to avoid the exercise of
an option sold by it, to cancel its obligation under the option by entering
into a closing purchase transaction, if available, unless it is determined
to be in the Fund's interest to deliver the underlying futures position. A
closing purchase transaction consists of the purchase by the Fund of an
option having the same term as the option sold by the Fund, and has the
effect of canceling the Fund's position as a seller. The premium which the
Fund will pay in executing a closing purchase transaction may be higher
than the premium received when the option was sold, depending in large part
upon the relative price of the underlying futures position at the time of
each transaction.
CALL OPTIONS ON FUTURES CONTRACTS
The Fund may engage in transactions in call options on futures contracts.
In addition to purchasing put options on futures, the Fund may write listed
call options on futures contracts to hedge its portfolio against, for
example, an increase in market interest rates. When the Fund writes a call
option on a futures contract, it is undertaking the obligation of assuming
a short futures position (selling a futures contract) at the fixed strike
price at any time during the life of the option if the option is exercised.
As market interest rates rise or as stock prices fall, causing the prices
of futures to go down, the Fund's obligation under a call option on a
future (to sell a futures contract) costs less to fulfill, causing the
value of the Fund's call option position to increase. In other words, as
the underlying future's price goes down below the strike price, the buyer
of the option has no reason to exercise the call, so that the Fund keeps
the premium received for the option. This premium can help substantially to
offset the drop in value of the Fund's portfolio securities. Prior to the
expiration of a call written by the Fund, or exercise of it by the buyer,
the Fund may close out the option by buying an identical option. If the
hedge is successful, the cost of the second option will be less than the
premium received by the Fund for the initial option. The net premium income
of the Fund will then help offset the decrease in value of the hedged
securities.
When the Fund purchases a call on a financial futures contract, it receives
in exchange for the payment of a cash premium the right, but not the
obligation, to enter into the underlying futures contract at a strike price
determined at the time the call was purchased, regardless of the
comparative market value of such futures position at the time the option is
exercised. The holder of a call option has the right to receive a long (or
buyer's) position in the underlying futures contract.
The Fund will not maintain open positions in futures contracts it has sold
or call options it has written on futures contracts if, in the aggregate,
the value of the open positions (marked to market) exceeds the current
market value of its securities portfolio (including cash or cash
equivalents) plus or minus the unrealized gain or loss on those open
positions, adjusted for the correlation of volatility between the hedged
securities and the futures contracts. If this limitation is exceeded at any
time, the Fund will take prompt action to close out a sufficient number of
open contracts to bring its open futures and options positions within this
limitation.
`MARGIN'' IN FUTURES TRANSACTIONS
Unlike the purchase or sale of a security, the Fund does not pay or receive
money upon the purchase or sale of a futures contract. Rather, the Fund is
required to deposit an amount of `initial margin'' in cash or U.S.
Treasury bills with the custodian (or the broker, if legally permitted).
The nature of initial margin in futures transactions is different from that
of margin in securities transactions in that futures contracts initial
margin does not involve a borrowing by the Fund to finance the
transactions. Initial margin is in the nature of a performance bond or good
faith deposit on the contract which is returned to the Fund upon
termination of the futures contract, assuming all contractual obligations
have been satisfied.
A futures contract held by the Fund is valued daily at the official
settlement price of the exchange on which it is traded. Each day the Fund
pays or receives cash, called `variation margin,'' equal to the daily
change in value of the futures contract. This process is known as `marking
to market.''Variation margin does not represent a borrowing or loan by the
Fund but is instead settlement between the Fund and the broker of the
amount one would owe the other if the futures contract expired. In
computing its daily net asset value, the Fund will mark to market its open
futures positions. The Fund is also required to deposit and maintain margin
when it writes call options on futures contracts.
REGULATORY RESTRICTIONS
To the extent required to comply with Commodity Futures Trading Commission
Regulation 4.5 and thereby avoid status as a `commodity pool operator,''
the Fund will not enter into a futures contract, or purchase an option
thereon, if immediately thereafter the initial margin deposits for futures
contracts held by it, plus premiums paid by it for open options on futures,
would exceed 5% of the total assets of the Fund. The Fund will not engage
in transactions in futures contracts or options thereon for speculation,
but only to attempt to hedge against changes in market conditions affecting
the value of assets which the Fund holds or intends to purchase. When
futures contracts or options thereon are purchased in order to protect
against a price increase on securities or other assets intended to be
purchased later, it is anticipated that at least 75% of such intended
purchases will be completed. When other futures contracts or options
thereon are purchased, the underlying value of such contracts at all times
will not exceed the sum of (1) accrued profit on such contracts held by the
broker; (2) cash or high-quality money market instruments set aside in an
identifiable manner; and (3) cash proceeds from investments due in 30 days
or less.
PURCHASING PUT OPTIONS ON PORTFOLIO SECURITIES
The Fund may purchase put options on portfolio securities to protect
against price movements in particular securities in its portfolio. A put
option gives the Fund, in return for a premium, the right to sell the
underlying security to the writer (seller) at a specified price during the
term of the option.
WRITING COVERED CALL OPTIONS ON PORTFOLIO SECURITIES
The Fund may write covered call options to generate income. As a writer of
a call option, the Fund has the obligation upon exercise of the option
during the option period to deliver the underlying security upon payment of
the exercise price. The Fund may only sell call options either on
securities held in its portfolio or on securities which it has the right to
obtain without payment of further consideration (or has segregated cash in
the amount of any additional consideration).
OVER-THE-COUNTER OPTIONS
The Fund may purchase and write over-the-counter options (`OTC options'')
on portfolio securities in negotiated transactions with the buyers or
writers of the options for those options on portfolio securities held by
the Fund and not traded on an exchange.
OTC options are two-party contracts with price and terms negotiated between
buyer and seller. In contrast, exchange-traded options are third-party
contracts with standardized strike prices and expiration dates and are
purchased from a clearing corporation. Exchange-traded options have a
continuous liquid market while over-the-counter options may not.
RISKS
OPTIONS
Certain hedging vehicles have risks associated with them including
possible default by the other party to the transaction, illiquidity
and, to the extent the adviser's view as to certain market movements is
incorrect, the risk that the use of such hedging strategies could
result in losses greater than if they had not been used. Use of put
and call options may result in losses to the Fund, force the sale or
purchase of portfolio securities at inopportune times or for prices
higher than (in the case of put options) or lower than (in the case of
call options) current market values, limit the amount of appreciation
the Fund can realize on its investments or cause the Fund to hold a
security it might otherwise sell. The use of currency transactions can
result in the Fund incurring losses as a result of a number of factors
including the imposition of exchange controls, suspension of
settlements, or the inability to deliver or receive a specified
currency. The use of options and futures transactions entails certain
other risks. In particular, the variable degree of correlation between
price movements of futures contracts and price movements in the related
portfolio position of the Fund creates the possibility that losses on
the hedging instrument may be greater than gains in the value of the
Fund's position. In addition, futures and options markets may both be
liquid in all circumstances and certain over-the-counter options may
have not markets. As a result, in certain markets, the Fund might not
be able to close out a transaction without incurring substantial
losses, if at all. Although the use of futures and options transactions
for hedging should tend to minimize the risk of loss due to a decline
in the value of the hedged position, at the same time they tend to
limit any potential gain which might result from an increase in value
of such position. Finally, the daily variation margin requirements for
futures contracts would create a greater ongoing potential financial
risk than would purchase of options, where the exposure is limited to
the cost of the initial premium. Losses resulting from the use of
hedging strategies would reduce net asset value, and possibly income,
and such losses can be greater than if the hedging strategies had not
been utilized.
COMBINED TRANSACTIONS
The Fund may enter into multiple transactions, including multiple
options transactions, multiple futures transactions, multiple currency
transaction (including forward currency contracts) and multiple
interest rate transactions and any combination of futures, options,
currency and interest rate transactions (``component" transactions),
instead of a single hedging strategy, as part of a single or combined
strategy when, in the opinion of the Adviser, it is in the best
interests of the Fund to do so. A combined transaction will usually
contain elements of risk that are present in each of its component
transactions. Although combined transactions are normally entered into
based on the Adviser's judgment that the combined strategies will
reduce risk or otherwise more effectively achieve the desired portfolio
management goal, it is possible that the combination will instead
increase such risks or hinder achievement of the portfolio management
objective.
SWAPS, CAPS, FLOORS AND COLLARS
Among the hedging strategies into which the Fund may enter are interest
rate, currency and index swaps and the purchase or sale of related
caps, floors, and collars. The Fund expects to enter into these
transactions primarily to preserve a return or spread on a particular
investment or portion of its portfolio, to protect against currency
fluctuations, as a duration management technique or to protect against
any increase in the price of securities the Fund anticipates purchasing
at a later date. The Fund intends to use these transactions as hedges
and not as speculative investments and will not sell interest rate caps
or floors where it does not own securities or other instruments
providing the income stream the Fund may be obligated to pay. Interest
rate swaps involve the exchange by the Fund with another party of
their respective commitments to pay or receive interest, e.g., an
exchange of floating rating payments of fixed rate payments with
respect to a notional amount of principal. A currency swap is an
agreement to exchange cash flows on a notional amount of two or more
currencies based on the relative value differential among them and an
index swap is an agreement to swap cash flows on a notional amount
based on changes in the values of the reference indices. The purchase
of a cap entitles the purchaser to receive payments on a notional
principal amount from the party selling such cap to the extent that a
specified index exceeds a predetermined interest rate or amount. The
purchase of a floor entitles the purchaser to receive payments on a
notional principal amount from the party selling such floor to the
extent that specified index falls below a predetermined interest rate
or amount. A collar is a combination of a cap and a floor that
preserves a certain return within a predetermined range of interest
rates or values.
The Fund will usually enter into swaps on a net basis, i.e., the two
payment streams are netted out in a cash settlement on the payment date
or dates specified in the instrument, with the Fund receiving or
paying, as the case may be, only the net amount of the two payments.
Inasmuch as these swaps, caps, floors, and collars are entered into for
good faith hedging purposes, the Adviser and the Fund believe such
obligations do not constitute senior securities under the Investment
Company Act of 1940, as amended, and, accordingly, will not treat them
as being subject to its borrowing restrictions. There is no minimal
acceptable rating for a swap, cap, floor, or collar to be purchased or
held in the Fund's portfolio. If there is a default by the
counterparty, the Fund may have contractual remedies pursuant to the
agreements related to the transaction. The swap market has grown
substantially in recent years with a large number of banks and
investment banking firms acting both as principals and agents utilizing
standardized swap documentation. As a result, the swap market has
become relatively liquid. Caps, floors and collars are more recent
innovations for which standardized documentation has not yet been fully
developed and, accordingly, they are less liquid than swaps.
RISKS OF HEDGING STRATEGIES OUTSIDE THE U.S.
When conducted outside the U.S., hedging strategies may not be
regulated as rigorously as in the U.S., may not involve a clearing
mechanism and related guarantees, and are subject to the risk of
governmental actions affecting trading in, or the prices of, foreign
securities, currencies and other instruments. The value of such
positions also could be adversely affected by: (i) other complex
foreign political, legal and economic factors, (ii) lesser availability
than in the U.S. of data on which to make trading decisions, (iii)
delays in the Fund's ability to act upon economic events occurring in
foreign markets during non-business hours in the U.S., (iv) the
imposition of different exercise and settlement terms and procedures
and the margin requirements than in the U.S., and (v) lower trading
volume and liquidity.
USE OF SEGREGATED AND OTHER SPECIAL ACCOUNTS
Many hedging strategies, in addition to other requirements, require
that the Fund segregate liquid high grade assets with its custodian to
the extent Fund obligations are not otherwise "covered" through
ownership of the underlying security, financial instrument or currency.
In general, either the full amount of any obligation by the Fund to pay
or deliver securities or assets must be covered at all times by the
securities, instruments or currency required to be delivered, or,
subject to any regulatory restrictions, an amount of cash or liquid
high grade securities at least equal to the current amount of the
obligation must be segregated with the custodian. The segregated
assets cannot be sold or transferred unless equivalent assets are
substituted in their place or it is no longer necessary to segregate
them. For example, a call option written by the Fund will require the
Fund to hold the securities subject to the call (or securities
convertible into the needed securities without additional
consideration) or to segregate liquid high grade securities sufficient
to purchase and deliver the securities if the call is exercised. A
call option sold by the Fund on an index will require the Fund to own
portfolio securities which correlate with the index or to segregate
liquid high grade assets equal to the excess of the index value over
the exercise price on a current basis. A put option written by the
Fund requires the Fund to segregate liquid high grade assets equal to
the exercise price.
Except when the Fund enters into a forward contract for the purchase or
sale of a security denominated in a particular currency, a currency
contract which obligates the Fund to buy or sell currency will
generally require the Fund to hold an amount of that currency or liquid
securities denominated in that currency equal to the Fund's obligations
or to segregate liquid high grade assets equal to the amount of the
Fund's obligations.
OTC options entered into by the Fund, including those on securities,
currency, financial instruments or indices and OTC issued and exchange
listed index options, will generally provide for cash settlement. As a
result, when the Fund sells these instruments it will only segregate an
amount of assets equal to its accrued net obligations, as there is no
requirement for payment or delivery of amounts in excess of the net
amount. These amounts will equal 100% of the exercise price in the
case of a non cash-settled put, the same as an OTC guaranteed listed
option sold by the Fund, or the in-the-money amount plus any sell-back
formula amount in the case of a cash-settled put or call. In addition,
when the Fund sells a call option on an index at a time when the in-
the-money amount exceeds the exercise price, the Fund will segregate,
until the option expires or is closed out, cash or cash equivalents
equal in value to such excess. OTC issued and exchange listed options
sold by the Fund other than those above generally settle with physical
delivery, and the Fund will segregate an equal amount of assets equal
to the full value of the option. OTC options settling with physical
delivery, or with an election of either physical delivery or cash
settlement will be treated the same as other options settling with
physical delivery.
In the case of a futures contract or an option thereon, the Fund must
deposit initial margin and possible daily variation margin in addition
to segregating assets sufficient to meet its obligation to purchase or
provide securities or currencies, or to pay the amount owed at the
expiration of an index-based futures contract. Such assets may consist
of cash, cash equivalents, liquid debt or equity securities or other
acceptable assets.
With respect to swaps, the Fund will accrue the net amount of the
excess, if any, of its obligations over its entitlements with respect
to each swap on a daily basis and will segregate an amount of cash or
liquid high grade securities having a value equal to the accrued
excess. Caps, floors and collars require segregation of assets with a
value equal to the Fund's net obligation, if any.
Strategic transactions may be covered by other means when consistent
with applicable regulatory policies. The Fund may also enter into
offsetting transactions so that its combined position, coupled with any
segregated assets, equals its net outstanding obligation in related
options and hedging strategies. For example, the Fund could purchase a
put option if the strike price of that option is the same or higher
than the strike price of a put option sold by the Fund. Moreover,
instead of segregating assets if the Fund held a futures or forward
contract, it could purchase a put option on the same futures or forward
contract with a strike price as high or higher than the price of the
contract held. Other hedging strategies may also be offset in
combinations. If the offsetting transaction terminates at the time of
or after the primary transaction no segregation is required, but if it
terminates prior to such time, assets equal to any remaining obligation
would need to be segregated.
The Fund's activities involving hedging strategies may be limited by
the requirements of Subchapter M of the Internal Revenue Code of 1986,
as amended (the "Code") for qualification as a regulated investment
company. (See "Tax Status")
FOREIGN CURRENCY TRANSACTIONS
CURRENCY RISKS
The exchange rates between the U.S. dollar and foreign currencies are a
function of such factors as supply and demand in the currency exchange
markets, international balances of payments, governmental intervention,
speculation and other economic and political conditions. Although the
Fund values its assets daily in U.S. dollars, the Fund may not convert
its holdings of foreign currencies to U.S. dollars daily. The Fund may
incur conversion costs when it converts its holdings to another
currency. Foreign exchange dealers may realize a profit on the
difference between the price at which the Fund buys and sells
currencies.
The Fund will engage in foreign currency exchange transactions in
connection with its portfolio investments. The Fund will conduct its
foreign currency exchange transactions either on a spot (i.e., cash)
basis at the spot rate prevailing in the foreign currency exchange
market or through forward contracts to purchase or sell foreign
currencies.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
The Fund may enter into forward foreign currency exchange contracts in
order to protect against a possible loss resulting from an adverse
change in the relationship between the U.S. dollar and a foreign
currency involved in an underlying transaction. However, forward
foreign currency exchange contracts may limit potential gains which
could result from a positive change in such currency relationships. The
Adviser believes that it is important to have the flexibility to enter
into forward foreign currency exchange contracts whenever it determines
that it is in the Fund's best interest to do so. The Fund will not
speculate in foreign currency exchange.
The Fund will not enter into forward foreign currency exchange
contracts or maintain a net exposure in such contracts when it would be
obligated to deliver an amount of foreign currency in excess of the
value of its portfolio securities or other assets denominated in that
currency or, in the case of a "cross-hedge" denominated in a currency
or currencies that the Adviser believes will tend to be closely
correlated with that currency with regard to price movements.
Generally, the Fund will not enter into a forward foreign currency
exchange contract with a term longer than one year.
FOREIGN CURRENCY OPTIONS
A foreign currency option provides the option buyer with the right to
buy or sell a stated amount of foreign currency at the exercise price
on a specified date or during the option period. The owner of a call
option has the right, but not the obligation, to buy the currency.
Conversely, the owner of a put option has the right, but not the
obligation, to sell the currency.
When the option is exercised, the seller (i.e., writer) of the option
is obligated to fulfill the terms of the sold option. However, either
the seller or the buyer may, in the secondary market, close its
position during the option period at any time prior to expiration.
A call option on foreign currency generally rises in value if the
underlying currency appreciates in value, and a put option on foreign
currency generally rises in value if the underlying currency
depreciates in value. Although purchasing a foreign currency option can
protect the Fund against an adverse movement in the value of a foreign
currency, the option will not limit the movement in the value of such
currency. For example, if the Fund was holding securities denominated
in a foreign currency that was appreciating and had purchased a foreign
currency put to hedge against a decline in the value of the currency,
the Fund would not have to exercise its put option. Likewise, if the
Fund were to enter into a contract to purchase a security denominated
in foreign currency and, in conjunction with that purchase, were to
purchase a foreign currency call option to hedge against a rise in
value of the currency, and if the value of the currency instead
depreciated between the date of purchase and the settlement date, the
Fund would not have to exercise its call. Instead, the Fund could
acquire in the spot market the amount of foreign currency needed for
settlement.
SPECIAL RISKS ASSOCIATED WITH FOREIGN CURRENCY OPTIONS
Buyers and sellers of foreign currency options are subject to the same
risks that apply to options generally. In addition, there are certain
risks associated with foreign currency options. The markets in foreign
currency options are relatively new, and the Fund's ability to
establish and close out positions on such options is subject to the
maintenance of a liquid secondary market. Although the Fund will not
purchase or write such options unless and until, in the opinion of the
Adviser, the market for them has developed sufficiently to ensure that
the risks in connection with such options are not greater than the
risks in connection with the underlying currency, there can be no
assurance that a liquid secondary market will exist for a particular
option at any specific time.
In addition, options on foreign currencies are affected by all of those
factors that influence foreign exchange rates and investments
generally.
The value of a foreign currency option depends upon the value of the
underlying currency relative to the U.S. dollar. As a result, the price
of the option position may vary with changes in the value of either or
both currencies and may have no relationship to the investment merits
of a foreign security. Because foreign currency transactions occurring
in the interbank market involve substantially larger amounts than those
that may be involved in the use of foreign currency options, investors
may be disadvantaged by having to deal in an odd lot market (generally
consisting of transactions of less than $1 million) for the underlying
foreign currencies at prices that are less favorable than for round
lots.
There is no systematic reporting of last sale information for foreign
currencies or any regulatory requirement that quotations available
through dealers or other market sources be firm or revised on a timely
basis. Available quotation information is generally representative of
very large transactions in the interbank market and thus may not
reflect relatively smaller transactions (i.e., less than $1 million)
where rates may be less favorable. The interbank market in foreign
currencies is a global, around-the-clock market. To the extent that the
U.S. option markets are closed while the markets for the underlying
currencies remain open, significant price and rate movements may take
place in the underlying markets that cannot be reflected in the options
markets until they reopen.
FOREIGN CURRENCY FUTURES TRANSACTIONS
By using foreign currency futures contracts and options on such
contracts, the Fund may be able to achieve many of the same objectives
as it would through the use of forward foreign currency exchange
contracts. The Fund may be able to achieve these objectives possibly
more effectively and at a lower cost by using futures transactions
instead of forward foreign currency exchange contracts.
SPECIAL RISKS ASSOCIATED WITH FOREIGN CURRENCY FUTURES CONTRACTS AND
RELATED OPTIONS
Buyers and sellers of foreign currency futures contracts are subject to
the same risks that apply to the use of futures generally. In addition,
there are risks associated with foreign currency futures contracts and
their use as a hedging device similar to those associated with options
on currencies, as described above.
Options on foreign currency futures contracts may involve certain
additional risks. Trading options on foreign currency futures contracts
is relatively new. The ability to establish and close out positions on
such options is subject to the maintenance of a liquid secondary
market. To reduce this risk, the Fund will not purchase or write
options on foreign currency futures contracts unless and until, in the
opinion of the Adviser, the market for such options has developed
sufficiently that the risks in connection with such options are not
greater than the risks in connection with transactions in the
underlying foreign currency futures contracts. Compared to the purchase
or sale of foreign currency futures contracts, the purchase of call or
put options on futures contracts involves less potential risk to the
Fund because the maximum amount at risk is the premium paid for the
option (plus transaction costs). However, there may be circumstances
when the purchase of a call or put option on a futures contract would
result in a loss, such as when there is no movement in the price of the
underlying currency or futures contract.
SPECIAL CONSIDERATIONS AFFECTING EMERGING MARKETS
Investing in equity securities of companies in emerging markets may entail
greater risks than investing in equity securities in developed countries.
These risks include (i) less social, political and economic stability; (ii)
the small current size of the markets for such securities and the currently
low or nonexistent volume of trading, which result in a lack of liquidity
and in greater price volatility; (iii) certain national policies which may
restrict the Fund's investment opportunities, including restrictions on
investment in issuers or industries deemed sensitive to national interests;
(iv) foreign taxation; and (v) the absence of developed structures
governing private or foreign investment or allowing for judicial redress
for injury to private property. Investing in the securities of companies in
emerging markets, may entail special risks relating to the potential
political and economic instability and the risks of expropriation,
nationalization, confiscation or the imposition of restrictions on foreign
investment, convertibility of currencies into U.S. dollars and on
repatriation of capital invested. In the event of such expropriation,
nationalization or other confiscation by any country, the Fund could lose
its entire investment in any such country.
Settlement mechanisms in emerging markets may be less efficient and
reliable than in more developed markets. In such emerging securities
markets there may be share registration and delivery delays or failures.
Most Latin American countries have experienced substantial, and in some
periods extremely high, rates of inflation for many years. Inflation and
rapid fluctuations in inflation rates and corresponding currency
devaluations have had any may continue to have negative effects on the
economies and securities markets of certain Latin American countries.
POLITICAL, SOCIAL AND ECONOMIC RISKS. Even though opportunities for
investment may exist in emerging markets, any change in the leadership or
policies of the governments of those countries or in the leadership or
policies of any other government which exercises a significant influence
over those countries, may halt the expansion of or reverse the
liberalization of foreign investment policies now occurring and thereby
eliminate any investment opportunities which may currently exist.
Investors should note that upon the accession to power of authoritarian
regimes, the governments of a number of Latin American countries previously
expropriated large quantities of real and personal property similar to the
property which will be represented by the securities purchased by the Fund.
The claims of property owners against those governments were never finally
settled. There can be no assurance that any property represented by
securities purchased by the Fund will not also be expropriated,
nationalized, or otherwise confiscated. If such confiscation were to occur,
the Fund could lose its entire investment in such countries. The Fund's
investments would similarly be adversely affected by exchange control
regulation in any of those countries.
Certain countries in which the Fund may invest may have groups that
advocate radical religious or revolutionary philosophies or support ethnic
independence. Any disturbance on the part of such individuals could carry
the potential for widespread destruction or confiscation of property owned
by individuals and entities foreign to such country and could cause the
loss of the Fund's investment in those countries. Instability may also
result from, among other things: (i) authoritarian governments or military
involvement in political and economic decision-making, including changes in
government through extraconsititutional means; (ii) popular unrest
associated with demands for improved political, economic and social
conditions; and (iii) hostile relations with neighboring or other
countries. Such political, social and economic instability could disrupt
the principal financial markets in which the Fund invests and adversely
affect the value of the Fund's assets.
ADDITIONAL RISK CONSIDERATIONS
The Directors consider at least annually the likelihood of the imposition
by any foreign government of exchange control restrictions which would
affect the liquidity of the Fund's assets maintained with custodians in
foreign countries, as well as the degree of risk from political acts of
foreign governments to which such assets may be exposed. The Directors also
consider the degree of risk involved through the holding of portfolio
securities in domestic and foreign securities depositories. However, in the
absence of willful misfeasance, bad faith or gross negligence on the part
of the Adviser, any losses resulting from the holding of the Fund's
portfolio securities in foreign countries and/or with securities
depositories will be at the risk of shareholders. No assurance can be given
that the Directors' appraisal of the risks will always be correct or that
such exchange control restrictions or political acts of foreign governments
might not occur.
PORTFOLIO TURNOVER
The Fund will not attempt to set or meet a portfolio turnover rate since
any turnover would be incidental to transactions undertaken in an attempt
to achieve the Fund's investment objective. Portfolio securities will be
sold when the Adviser believes it is appropriate, regardless of how long
those securities have been held. However, the underlying funds may
experience much higher portfolio turnover rates resulting in higher
brokerage commissions, and taxable gains or losses. It is estimated the
rate of portfolio turnover will, generally, not exceed 40%.
For the period from February 28, 1996 (date of initial public investment)
to November 30, 1996 (fiscal year end), the Federated Asia Pacific Growth
Fund's portfolio turnover rate was 99%.
For the period from February 28, 1996 (date of initial public investment)
to November 30, 1996 (fiscal year end), the Federated Emerging Markets
Fund's portfolio turnover rate was 32%.
For the period from February 28, 1996 (date of initial public investment)
to November 30, 1996 (fiscal year end), the Federated European Growth
Fund's portfolio turnover rate was 58%.
For the period from February 28, 1996 (date of initial public investment)
to November 30, 1996 (fiscal year end), the Federated International Small
Company Fund's portfolio turnover rate was 174%.
For the period from February 28, 1996 (date of initial public investment)
to November 30, 1996 (fiscal year end), the Federated Latin American Growth
Fund's portfolio turnover rate was 38%.
INVESTMENT LIMITATIONS
The following investment limitations are fundamental (except that no
investment limitation of the Fund shall prevent the Fund from investing
substantially all of its assets (except for assets which are not considered
`investment securities'' under the Investment Company Act of 1940, as
amended, or assets exempted by the SEC) in an open-end investment company
with substantially the same investment objectives):
SELLING SHORT AND BUYING ON MARGIN
The Fund will not sell any securities short or purchase any securities
on margin, but may obtain such short-term credits as are necessary for
the clearance of purchases and sales of portfolio securities. The
deposit or payment by the Fund of initial or variation margin in
connection with financial futures contracts or related options
transactions is not considered the purchase of a security on margin.
ISSUING SENIOR SECURITIES AND BORROWING MONEY
The Fund will not issue senior securities, except that the Fund may
borrow money directly or through reverse repurchase agreements in
amounts up to one-third of the value of its total assets, including the
amount borrowed, and except to the extent that the Fund may enter into
futures contracts. The Fund will not borrow money or engage in reverse
repurchase agreements for investment leverage, but rather as a
temporary, extraordinary, or emergency measure or to facilitate
management of the portfolio by enabling the Fund to meet redemption
requests when the liquidation of portfolio securities is deemed to be
inconvenient or disadvantageous. The Fund will not purchase any
securities while any borrowings in excess of 5% of its total assets are
outstanding.
PLEDGING ASSETS
The Fund will not mortgage, pledge, or hypothecate any assets except to
secure permitted borrowings. In these cases, the Fund may pledge
assets as necessary to secure such borrowings. For purposes of this
limitation, the following will not be deemed to be pledges of the
Fund's assets: (a) the deposit of assets in escrow in connection with
the writing of covered put or call options and the purchase of
securities on a when-issued basis; and (b) collateral arrangements with
respect to: (i) the purchase and sale of securities options (and
options on securities indexes) and (ii) initial or variation margin for
futures contracts.
CONCENTRATION OF INVESTMENTS
The Fund will not invest 25% or more of the value of its total assets
in any one industry, except that the Fund may invest 25% or more of the
value of its total assets in securities issued or guaranteed by the
U.S. government, its agencies or instrumentalities, and repurchase
agreements collateralized by such securities.
INVESTING IN COMMODITIES
The Fund will not invest in commodities, except that the Fund reserves
the right to engage in transactions involving futures contracts,
options, and forward contracts with respect to securities, securities
indexes or currencies.
INVESTING IN REAL ESTATE
The Fund will not purchase or sell real estate, including limited
partnership interests, although it may invest in the securities of
companies whose business involves the purchase or sale of real estate
or in securities which are secured by real estate or interests in real
estate.
LENDING CASH OR SECURITIES
The Fund will not lend any of its assets, except portfolio securities.
This shall not prevent the Fund from purchasing or holding U.S.
government obligations, corporate bonds, money market instruments,
debentures, notes, certificates of indebtedness, or other debt
securities, entering into repurchase agreements, or engaging in other
transactions where permitted by the Fund's investment objective,
policies, and limitations or the Corporation's Articles of
Incorporation.
UNDERWRITING
The Fund will not underwrite any issue of securities, except as it may
be deemed to be an underwriter under the Securities Act of 1933 in
connection with the sale of securities in accordance with its
investment objective, policies, and limitations.
DIVERSIFICATION OF INVESTMENTS
With respect to securities comprising 75% of the value of its total
assets, the Fund will not purchase securities issued by any one issuer
(other than cash, cash items, securities of investment companies, or
securities issued or guaranteed by the U.S. government, its agencies or
instrumentalities, and repurchase agreements collateralized by such
securities) if, as a result, more than 5% of the value of its total
assets would be invested in the securities of that issuer, and will not
acquire more than 10% of the outstanding voting securities of any one
issuer.
The above investment limitations cannot be changed without shareholder
approval. The following limitations, however, may be changed by the
Directors without shareholder approval (except that no investment
limitation of the Fund shall prevent the Fund from investing substantially
all of its assets (except for assets which are not considered `investment
securities''under the Investment Company Act of 1940, as amended, or
assets exempted by the SEC) in an open-end investment company with
substantially the same investment objectives). Shareholders will be
notified before any material changes in these limitations become effective.
INVESTING IN ILLIQUID SECURITIES
The Fund will not invest more than 15% of the value of its net assets
in illiquid securities, including repurchase agreements providing for
settlement in more than seven days after notice, non-negotiable time
deposits with maturities over seven days, over-the-counter options,
swap agreements not determined to be liquid, and certain restricted
securities not determined by the Directors to be liquid.
PURCHASING SECURITIES TO EXERCISE CONTROL
The Fund will not purchase securities of a company for the purpose of
exercising control or management.
INVESTING IN PUT OPTIONS
The Fund will not purchase put options on securities or futures
contracts, unless the securities or futures contracts are held in the
Fund's portfolio or unless the Fund is entitled to them in deliverable
form without further payment or after segregating cash in the amount of
any further payment.
WRITING COVERED CALL OPTIONS
The Fund will not write call options on securities unless the
securities or futures contracts are held in the Fund's portfolio or
unless the Fund is entitled to them in deliverable form without further
payment or after segregating cash in the amount of any further payment.
Except with respect to borrowing money, if a percentage limitation is
adhered to at the time of investment, a later increase or decrease in
percentage resulting from any change in value or net assets will not result
in a violation of such restriction.
The Fund has no present intent to borrow money, pledge securities, or
invest in reverse repurchase agreements in excess of 5% of the value of its
total assets in the coming fiscal year. In addition, the Fund expects to
lend not more than 5% of its total assets in the coming fiscal year.
For purposes of its policies and limitations, the Fund considers
certificates of deposit and demand and time deposits issued by a U.S.
branch of a domestic bank or savings associations having capital, surplus,
and undivided profits in excess of $100,000,000 at the time of investment
to be `cash items.''
WORLD INVESTMENT SERIES, INC. MANAGEMENT
Officers and Directors are listed with their addresses, birthdates, present
positions with World Investment Series, Inc., and principal occupations.
John F. Donahue@*
Federated Investors Tower
Pittsburgh, PA
Birthdate: July 28, 1924
Chairman and Director
Chairman and Trustee, Federated Investors, Federated Advisers, Federated
Management, and Federated Research; Chairman and Director, Federated
Research Corp. and Federated Global Research Corp.; Chairman, Passport
Research, Ltd.; Chief Executive Officer and Director or Trustee of the
Funds.
Thomas G. Bigley
28th Floor, One Oxford Centre
Pittsburgh, PA
Birthdate: February 3, 1934
Director
Chairman of the Board, Children's Hospital of Pittsburgh; formerly, Senior
Partner, Ernst & Young LLP; Director, MED 3000 Group, Inc.; Trustee,
University of Pittsburgh; Director or Trustee of the Funds.
John T. Conroy, Jr.
Wood/IPC Commercial Department
John R. Wood and Associates, Inc., Realtors
3255 Tamiami Trail North
Naples, FL
Birthdate: June 23, 1937
Director
President, Investment Properties Corporation; Senior Vice-President, John
R. Wood and Associates, Inc., Realtors; Partner or Trustee in private real
estate ventures in Southwest Florida; formerly, President, Naples Property
Management, Inc. and Northgate Village Development Corporation; Director or
Trustee of the Funds.
William J. Copeland
One PNC Plaza - 23rd Floor
Pittsburgh, PA
Birthdate: July 4, 1918
Director
Director and Member of the Executive Committee, Michael Baker, Inc.;
formerly, Vice Chairman and Director, PNC Bank, N.A., and PNC Bank Corp.;
Director, Ryan Homes, Inc.; Director or Trustee of the Funds.
James E. Dowd
571 Hayward Mill Road
Concord, MA
Birthdate: May 18, 1922
Director
Attorney-at-law; Director, The Emerging Germany Fund, Inc.; Trustee or
Director of the Funds.
Lawrence D. Ellis, M.D.*
3471 Fifth Avenue, Suite 1111
Pittsburgh, PA
Birthdate: October 11, 1932
Director
Professor of Medicine, University of Pittsburgh; Medical Director,
University of Pittsburgh Medical Center - Downtown; Member, Board of
Directors, University of Pittsburgh Medical Center; formerly, Hematologist,
Oncologist, and Internist, Presbyterian and Montefiore Hospitals; Director
or Trustee of the Funds.
Richard B. Fisher
Federated Investors Tower
Pittsburgh, PA
Birthdate: May 17, 1923
President and Directer
Executive Vice President and Trustee, Federated Investors; Chairman and
Director, Federated Securities Corp.; President or Vice President of some
of the Funds; Director or Trustee of some of the Funds.
Edward L. Flaherty, Jr.@
Miller, Ament, Henny & Kochuba
205 Ross Street
Pittsburgh, PA
Birthdate: June 18, 1924
Director
Attorney of Counsel, Miller, Ament, Henny & Kochuba; Director, Eat'N Park
Restaurants, Inc.; formerly, Counsel, Horizon Financial, F.A., Western
Region; Director or Trustee of the Funds.
Peter E. Madden
One Royal Palm Way
100 Royal Palm Way
Palm Beach, FL
Birthdate: March 16, 1942
Director
Consultant; Former State Representative, Commonwealth of Massachusetts;
formerly, President, State Street Bank and Trust Company and State Street
Boston Corporation; Director or Trustee of the Funds.
Gregor F. Meyer
Boca Grande Club
Boca Grande, Florida
Birthdate: October 6, 1926
Director
Attorney, Retired Member of Miller, Ament, Henny & Kochuba; Chairman,
Meritcare, Inc.; Director, Eat'N Park Restaurants, Inc.; Director or
Trustee of the Funds.
John E. Murray, Jr., J.D., S.J.D.
President, Duquesne University
Pittsburgh, PA
Birthdate: December 20, 1932
Director
President, Law Professor, Duquesne University; Consulting Partner, Mollica,
Murray and Hogue; Director or Trustee of the Funds.
Wesley W. Posvar
1202 Cathedral of Learning
University of Pittsburgh
Pittsburgh, PA
Birthdate: September 14, 1925
Director
Professor, International Politics; Management Consultant; Trustee, Carnegie
Endowment for International Peace, RAND Corporation, Online Computer
Library Center, Inc., National Defense University, U.S. Space Foundation
and Czech Management Center; President Emeritus, University of Pittsburgh;
Founding Chairman, National Advisory Council for Environmental Policy and
Technology, Federal Emergency Management Advisory Board and Czech
Management Center; Director or Trustee of the Funds.
Marjorie P. Smuts
4905 Bayard Street
Pittsburgh, PA
Birthdate: June 21, 1935
Director
Public relations/Marketing/Conference Planning, Manchester Craftsmen's
Guild; Restaurant Consultant, Frick Art & History Center; Conference
Coordinator, University of Pittsburgh Art History Department; Director or
Trustee of the Funds.
J. Christopher Donahue
Federated Investors Tower
Pittsburgh, PA
Birthdate: April 11, 1949
Executive Vice President
President and Trustee, Federated Investors, Federated Advisers, Federated
Management, and Federated Research; President and Director, Federated
Research Corp. and Federated Global Research Corp.; President, Passport
Research, Ltd.; Trustee, Federated Shareholder Services Company and
Federated Shareholder Services; Director, Federated Services Company;
President or Executive Vice President of the Funds; Director or Trustee of
some of the Funds. Mr. Donahue is the son of John F. Donahue, Chairman of
the Company.
Edward C. Gonzales
Federated Investors Tower
Pittsburgh, PA
Birthdate: October 22, 1930
Executive Vice President
Vice Chairman, Treasurer, and Trustee, Federated Investors; Vice President,
Federated Advisers, Federated Management, Federated Research, Federated
Research Corp., Federated Global Research Corp. and Passport Research,
Ltd.; Executive Vice President and Director, Federated Securities Corp.;
Trustee, Federated Shareholder Services Company; Trustee or Director of
some of the Funds; President, Executive Vice President and Treasurer of
some of the Funds.
John W. McGonigle
Federated Investors Tower
Pittsburgh, PA
Birthdate: October 26, 1938
Executive Vice President , Secretary and Treasurer
Executive Vice President, Secretary, and Trustee, Federated Investors;
Trustee, Federated Advisers, Federated Management, and Federated Research;
Director, Federated Research Corp. and Federated Global Research Corp.;
Trustee, Federated Shareholder Services Company; Director, Federated
Services Company; President and Trustee, Federated Shareholder Services;
Director, Federated Securities Corp.; Executive Vice President and
Secretary of the Funds; Treasurer of some of the Funds.
*This Director is deemed to be an ``interested person'' as defined in
the Investment Company Act of 1940.
@Member of the Executive Committee. The Executive Committee of the
Board of Directors handles the responsibilities of the Board between
meetings of the Board.
As used in the table above, `The Funds'' and ``Funds'' mean the following
investment companies: 111 Corcoran Funds; Arrow Funds; Automated Government
Money Trust; Blanchard Funds; Blanchard Precious Metals Fund, Inc.; Cash
Trust Series II; Cash Trust Series, Inc. ; DG Investor Series; Edward D.
Jones & Co. Daily Passport Cash Trust; Federated Adjustable Rate U.S.
Government Fund, Inc.; Federated American Leaders Fund, Inc.; Federated
ARMs Fund; Federated Equity Funds; Federated Equity Income Fund, Inc.;
Federated Fund for U.S. Government Securities, Inc.; Federated GNMA Trust;
Federated Government Income Securities, Inc.; Federated Government Trust;
Federated High Income Bond Fund, Inc.; Federated High Yield Trust;
Federated Income Securities Trust; Federated Income Trust; Federated Index
Trust; Federated Institutional Trust; Federated Insurance Series; Federated
Investment Portfolios; Federated Investment Trust; Federated Master Trust;
Federated Municipal Opportunities Fund, Inc.; Federated Municipal
Securities Fund, Inc.; Federated Municipal Trust; Federated Short-Term
Municipal Trust; Federated Short-Term U.S. Government Trust; Federated
Stock and Bond Fund, Inc.; Federated Stock Trust; Federated Tax-Free Trust;
Federated Total Return Series, Inc.; Federated U.S. Government Bond Fund;
Federated U.S. Government Securities Fund: 1-3 Years; Federated U.S.
Government Securities Fund: 2-5 Years; Federated U.S. Government Securities
Fund: 5-10 Years; Federated Utility Fund, Inc.; First Priority Funds; Fixed
Income Securities, Inc.; High Yield Cash Trust; Intermediate Municipal
Trust; International Series, Inc.; Investment Series Funds, Inc.;
Investment Series Trust; Liberty Term Trust, Inc. - 1999; Liberty U.S.
Government Money Market Trust; Liquid Cash Trust; Managed Series Trust;
Money Market Management, Inc.; Money Market Obligations Trust; Money Market
Trust; Municipal Securities Income Trust; Newpoint Funds; Peachtree Funds;
RIMCO Monument Funds; Targeted Duration Trust; Tax-Free Instruments Trust;
The Planters Funds; The Starburst Funds; The Starburst Funds II; The Virtus
Funds; Trust for Financial Institutions; Trust for Government Cash
Reserves; Trust for Short-Term U.S. Government Securities; Trust for U.S.
Treasury Obligations; Wesmark Funds; and World Investment Series, Inc.
FUND OWNERSHIP
Officers and Directors own less than 1% of the Fund's outstanding Shares.
DIRECTORS' COMPENSATION
AGGREGATE TOTAL COMPENSATION PAID
NAME , COMPENSATION TO DIRECTORS FROM
POSITION WITH FROM THE THE CORPORATION
THE CORPORATION CORPORATION *# AND FUND COMPLEX +
John F. Donahue, $0 $0 for the Corporation and
Chairman and Director 56 other investment companies in
the Complex
Thomas G. Bigley, $1,018.27 $108,725 for the Corporation and
Director 56 other investment companies in
the Complex
John T. Conroy, Jr., $1,120.27 $119,615 for the Corporation and
Director 56 other investment companies in
the Complex
William J. Copeland, $1,120.27 $119,615 for the Corporation and
Director 56 other investment companies in
the Complex
James E. Dowd, $1,120.27 $119,615 for the Corporation and
Director 56 other investment companies in
the Complex
Lawrence D. Ellis, M.D., $1,018.27 $108,725 for the Corporation and
Director 56 other investment companies in
the Complex
Edward L. Flaherty, Jr. $1,120.27 $119,615 for the Corporation and
Director 56 other investment companies in
the Complex
Peter E. Madden, $1,018.27 $108,725 for the Corporation and
Director 56 other investment companies in
the Complex
Gregor F. Meyer, $1,018.27 $108,725 for the Corporation and
Director 56 other investment companies in
the Complex
John E. Murray, Jr. $1,018.27 $108,725 for the Corporation and
Director 56 other investment companies in
the Complex
Wesley W. Posvar, $1,018.27 $108,725 for the Corporation and
Director 56 other investment companies in
the Complex
Marjorie P. Smuts, $1,018.27 $108,725 for the Corporation and
Director 56 other investment companies in
the Complex
*Information is furnished for the fiscal year ended November 30, 1996.
#The aggregate compensation is provided for the Corporation which is
comprised of 8 portfolios.
+The information is provided for the last calendar year.
INVESTMENT ADVISORY SERVICES
ADVISER TO THE FUND
The Fund's Adviser is Federated Global Research Corp. It is a subsidiary of
Federated Investors. All the voting securities of Federated Investors are
owned by a trust, the trustees of which are John F. Donahue, his wife, and
his son, J. Christopher Donahue.
The Adviser shall not be liable to the Fund, the Corporation, or any
shareholder of the Fund for any losses that may be sustained in the
purchase, holding, or sale of any security or for anything done or omitted
by it, except acts or omissions involving willful misfeasance, bad faith,
gross negligence, or reckless disregard of the duties imposed upon it by
its contract with the Corporation.
ADVISORY FEES
For its advisory services, the Adviser receives an annual investment
advisory fee as described in the prospectus.
BROKERAGE TRANSACTIONS
The Adviser may select brokers and dealers who offer brokerage and research
services. These services may be furnished directly to the Fund or to the
Adviser and may include: advice as to the advisability of investing in
securities; security analysis and reports; economic studies; industry
studies; receipt of quotations for portfolio evaluations; and similar
services. Research services provided by brokers and dealers may be used by
the Adviser or its affiliates in advising the Fund and other accounts. To
the extent that receipt of these services may supplant services for which
the Adviser or its affiliates might otherwise have paid, it would tend to
reduce their expenses. The Adviser and its affiliates exercise reasonable
business judgment in selecting brokers who offer brokerage and research
services to execute securities transactions. They determine in good faith
that commissions charged by such persons are reasonable in relationship to
the value of the brokerage and research services provided.
Although investment decisions for the Fund are made independently from
those of any other accounts managed by the Adviser, investments of the type
the Fund may make may also be made by those other accounts. When the Fund
and one or more other accounts managed by the Adviser are prepared to
invest in, or desire to dispose of, the same security, available
investments or opportunities for sales will be allocated in a manner
believed by the Adviser to be equitable to each. In some cases, this
procedure may adversely affect the price paid or received by the Fund or
the size of the position obtained or disposed of by the Fund. In other
cases, however, it is believed that coordination and the ability to
participate in volume transactions will be to the benefit of the Fund.
The Adviser may engage in other non-U.S. transactions that may have adverse
effects on the market for securities in the Fund's portfolio. The Adviser
is not obligated to obtain any material non-public (`inside'') information
about any securities issuer, or to base purchase or sale recommendations on
such information.
The distributor may assist in the execution of the Fund's portfolio
transactions to purchase underlying fund shares for which it may receive
distribution payments from the underlying funds or their underwriters in
accordance with the distribution plans of those funds. In providing
execution assistance, the distributor receives orders from the Adviser;
places them with the underlying fund's distributor, transfer agent or other
person, as appropriate; confirms the trade, price and number of shares
purchased; and assures prompt payment by the Fund and proper completion of
the order.
With respect to purchases of load fund shares, the Adviser may direct
substantially all of the Fund's orders to the distributor, which may, in
its discretion, direct the order to other broker-dealers in consideration
of sales of the Fund's shares.
The distributor may retain brokerage commissions on portfolio transactions
of mutual funds held in the Fund's portfolio, including funds which have a
policy of considering sales of their shares in selecting broker-dealers for
the execution of their portfolio transactions. Payment of brokerage
commissions to the distributor is not a factor considered by the Adviser in
selecting an underlying fund for investment.
Under certain circumstances, a sales charge incurred by the Fund in
acquiring shares of an underlying fund may not be taken into account in
determining the gain or loss on the disposition of the shares acquired. If
shares are disposed of within 90 days from the date they were purchased and
if shares of a new underlying fund are subsequently acquired without
imposition of a sales charge or imposition of a reduced sales charge
pursuant to a right granted to the Fund to acquire shares without payment
of a sales charge or with the payment of a reduced charge, then the sales
charge paid upon the purchase of the initial shares will be treated as paid
in connection with the acquisition of the new underlying fund's shares
rather than the initial shares.
OTHER SERVICES
FUND ADMINISTRATION
Federated Services Company, a subsidiary of Federated Investors, provides
administrative personnel and services to the Fund for a fee as described in
the prospectus.
CUSTODIAN AND PORTFOLIO ACCOUNTANT
State Street Bank and Trust Company, Boston, MA, is custodian for the
securities and cash of the Fund. Federated Services Company, Pittsburgh,
PA, provides certain accounting and recordkeeping services with respect to
the Fund's portfolio investments. The fee paid for this service is based
upon the level of the Fund's average net assets for the period, plus out-
of-pocket expenses.
TRANSFER AGENT
Federated Services Company, through its registered transfer agent,
Federated Shareholder Services Company maintains all necessary shareholder
records. For its services, the transfer agent receives a fee based on size,
type, and number of accounts and transactions made by shareholders.
INDEPENDENT AUDITORS
The independent auditors for the Fund are Ernst & Young LLP, Pittsburgh,
PA.
PURCHASING SHARES
Except under certain circumstances described in the prospectus, Shares are
sold at their net asset value, plus a sales charge (for Class A Shares
only) on days the New York Stock Exchange (`NYSE'') is open for business.
The procedure for purchasing Shares is explained in the prospectus under
`How to Purchase Shares.''
DISTRIBUTION PLAN AND SHAREHOLDER SERVICES AGREEMENT
These arrangements permit the payment of fees to financial institutions,
the distributor, and Federated Shareholder Services as appropriate, to
stimulate distribution activities and to cause services to be provided to
shareholders by a representative who has knowledge of the shareholder's
particular circumstances and goals. These activities and services may
include, but are not limited to, marketing efforts; providing office space,
equipment, telephone facilities, and various clerical, supervisory,
computer, and other personnel as necessary or beneficial to establish and
maintain shareholder accounts and records; processing purchase and
redemption transactions and automatic investments of client account cash
balances; answering routine client inquiries; and assisting clients in
changing dividend options, account designations, and addresses.
By adopting the Distribution Plan, the Directors expect that the Class A
Shares, Class B Shares, and Class C Shares of the Fund will be able to
achieve a more predictable flow of cash for investment purposes and to meet
redemptions. This will facilitate more efficient portfolio management and
assist the Fund in pursuing its investment objectives. By identifying
potential investors whose needs are served by the Fund's objectives, and
properly servicing these accounts, it may be possible to curb sharp
fluctuations in rates of redemptions and sales.
Other benefits, which may be realized under either arrangement, may
include: (1) providing personal services to shareholders; (2) investing
shareholder assets with a minimum of delay and administrative detail; (3)
enhancing shareholder recordkeeping systems; and (4) responding promptly to
shareholders' requests and inquiries concerning their accounts.
CONVERSION TO FEDERAL FUNDS
It is the Fund's policy to be as fully invested as possible so that maximum
interest may be earned. To this end, all payments from shareholders must be
in federal funds or be converted into federal funds before shareholders
begin to earn dividends. Federated Shareholder Services Company acts as the
shareholder's agent in depositing checks and converting them to federal
funds.
PURCHASES BY SALES REPRESENTATIVES, DIRECTORS OF THE CORPORATION, AND
EMPLOYEES
Directors, employees, and sales representatives of the Fund, the Adviser,
and Federated Securities Corp., or their affiliates and their immediate
family members, or any investment dealer who has a sales agreement with
Federated Securities Corp., and their spouses and children under 21, may
buy Class A Shares at net asset value without a sales charge. Shares may
also be sold without sales charges to trusts or pension or profit-sharing
plans for these persons.
These sales are made with the purchaser's written assurance that the
purchase is for investment purposes and that the securities will not be
resold except through redemption by the Fund.
DETERMINING NET ASSET VALUE
Net asset value generally changes each day. The days on which net asset
value is calculated by the Fund are described in the prospectus.
Dividend income is recorded on the ex-dividend date, except certain
dividends from foreign securities where the ex-dividend date may have
passed. Such dividends are recorded as soon as the Fund is informed of the
ex-dividend date.
DETERMINING MARKET VALUE OF SECURITIES
Market or fair values of the Fund's portfolio securities are determined as
follows:
oaccording to the last reported sale price on a recognized securities
exchange, if available. (If a security is traded on more than one
exchange, the price on the primary market for that security, as
determined by the Adviser, is used);
oin the absence of recorded sales for equity securities, according to
the mean between the last closing bid and asked prices;
oat fair value as determined in good faith by the Directors; or
ofor short-term obligations with remaining maturities of 60 days or
less at the time of purchase, at amortized cost, which approximates
value.
Prices provided by independent pricing services may be determined without
relying exclusively on quoted prices and may consider: institutional
trading in similar groups of securities; yield; quality; coupon rate;
maturity; type of issue; trading characteristics; and other market data.
The underlying funds in which the Fund may invest value securities in their
portfolios for which market quotations are readily available at their
current market value (generally the last reported sale price) and all other
securities and assets at fair value pursuant to methods established in good
faith by the board of directors/trustees of the underlying fund.
TRADING IN FOREIGN SECURITIES
Trading in foreign securities may be completed at times which vary from the
closing of the NYSE. In computing the net asset value, the Fund values
foreign securities at the latest closing price on the exchange on which
they are traded immediately prior to the closing of the NYSE. Certain
foreign currency exchange rates may also be determined at the latest rate
prior to the closing of the NYSE. Foreign securities quoted in foreign
currencies are translated into U.S. dollars at current rates. Occasionally,
events that affect these values and exchange rates may occur between the
times at which they are determined and the closing of the NYSE. If such
events materially affect the value of portfolio securities, these
securities may be valued at their fair value as determined in good faith by
the Directors, although the actual calculation may be done by others.
REDEEMING SHARES
The Fund redeems Shares at the next computed net asset value after the Fund
receives the redemption request. Shareholder redemptions may be subject to
a contingent deferred sales charge. Redemption procedures are explained in
the prospectus under `How to Redeem Shares.'' Although the Fund does not
charge for telephone redemptions, it reserves the right to charge a fee for
the cost of wire-transferred redemptions of less than $5,000.
Class B Shares redeemed within six years of purchase and Class C Shares
redeemed within one year of purchase may be subject to a contingent
deferred sales charge. The amount of the contingent deferred sales charge
is based upon the amount of the administrative fee paid at the time of
purchase by the distributor to the financial institutions for services
rendered, and the length of time the investor remains a shareholder in the
Fund. Should financial institutions elect to receive an amount less than
the administrative fee that is stated in the prospectus for servicing a
particular shareholder, the contingent deferred sales charge and/or holding
period for that particular shareholder will be reduced accordingly.
Since portfolio securities of the Fund may be traded on foreign exchanges
which trade on Saturdays or on holidays on which the Fund will not make
redemptions, the net asset value of each class of Shares of the Fund may be
significantly affected on days when shareholders do not have an opportunity
to redeem their Shares.
REDEMPTION IN KIND
Although the Corporation intends to redeem Shares in cash, it reserves the
right under certain circumstances to pay the redemption price, in whole or
in part, by a distribution of securities from the Fund's portfolio. The
Corporation has elected to be governed by Rule 18f-1 of the Investment
Company Act of 1940, under which the Corporation is obligated to redeem
Shares for any one shareholder in cash only up to the lesser of $250,000 or
1% of a class of Shares' net asset value during any 90-day period. Any
redemption beyond this amount will also be in cash unless the Directors
determine that further cash payments will have a materially adverse effect
on remaining shareholders. In such a case, the Fund will pay all or a
portion of the remainder of the redemption in portfolio instruments, valued
in the same way as the Fund determines net asset value. The portfolio
instruments will be selected in a manner that the Directors deem fair and
equitable.
Redemption in kind will be made in conformity with applicable SEC rules,
taking such securities at the same value employed in determining net asset
value and selecting the securities in a manner the Directors determine to
be fair and equitable.
Redemption in kind is not as liquid as a cash redemption. If redemption is
made is kind, shareholders receiving their securities and selling them
before their maturity could receive less than the redemption value of their
securities and could incur certain transaction costs.
ELIMINATION OF THE CONTINGENT DEFERRED SALES CHARGE
The amounts that a shareholder may withdraw under a Systematic Withdrawal
Program that qualify for elimination of the contingent deferred sales
charge may not exceed 12% annually with reference initially to the value of
the Class B Shares upon establishment of the Systematic Withdrawal Program
and then as calculated at the fiscal year end. Redemptions on a qualifying
Systematic Withdrawal Program can be made at a rate of 1.00% monthly, 3.00%
quarterly, or 6.00% semi-annually with reference to the applicable account
valuation amount. Amounts that exceed the 12.00% annual limit for
redemption, as described, may be subject to the contingent deferred sales
charge. To the extent that a shareholder exchanges Shares for Class B
Shares of other Federated Funds, the time for which the exchanged-for
Shares are to be held will be added to the time for which exchanged-from
Shares were held for purposes of satisfying the 12 month holding
requirement. However, for purposes of meeting the $10,000 minimum account
value requirement, Class B Share accounts values will not be aggregated.
TAX STATUS
THE FUND'S TAX STATUS
The Fund will pay no federal income tax because it expects to meet the
requirements of Subchapter M of the Internal Revenue Code, as amended,
applicable to regulated investment companies and to receive the special tax
treatment afforded to such companies. To qualify for this treatment, the
Fund must, among other requirements:
oderive at least 90% of its gross income from dividends, interest,
and gains from the sale of securities;
oderive less than 30% of its gross income from the sale of securities
held less than three months;
oinvest in securities within certain statutory limits; and
odistribute to its shareholders at least 90% of its net income earned
during the year.
Income the Fund receives from sources within various foreign countries may
be subject to foreign income taxes withheld at the source. If the Fund has
at least 50% of its assets invested directly in foreign securities at the
end of its taxable year, it may elect to pass through the foreign tax
credit to its shareholders. It is expected that the Fund will not have more
than 50% of the value of its total assets at the close of its taxable year
invested directly in foreign securities, and therefore will not be
permitted to make this election and `pass through'' to its shareholders.
Each shareholder's respective pro rata share of foreign taxes the Fund pays
will, therefore, be netted against their share of the Fund's gross income.
The Fund may invest in any non-U.S. corporations which could be treated as
passive foreign investment companies ("PFICs"). This could result in
adverse tax consequences upon the disposition of, or the receipt of "excess
distributions" with respect to, such equity investments. To the extent the
Fund does invest in PFICs, it may adopt certain tax strategies to reduce or
eliminate the adverse effects of certain federal tax provisions governing
PFIC investments. Many non-U.S. banks and insurance companies may not be
treated as PFICs if they satisfy certain technical requirements under the
Code. To the extent that the Fund does invest in foreign securities which
are determined to be PFIC securities and is required to pay a tax on such
investments, a credit for this tax would not be allowed to be passed
through to its shareholders. Therefore, the payment of this tax would
reduce the Fund's economic return from its PFIC shares, and excess
distributions received with respect to such shares are treated as ordinary
income rather than capital gains.
An underlying fund may invest in non-U.S. corporations which would be
treated as a PFIC or become a PFIC under the Code. This could result in
adverse tax consequences upon the disposition of, or the receipt of "excess
distributions" with respect to, such equity investments. To the extent an
underlying fund does invest in PFICs, it may elect to treat the PFIC as a
"qualified electing fund" or mark-to-market its investments in PFICs
annually. In either case, the underlying fund may be required to distribute
amounts in excess of its realized income and gains. To the extent that the
underlying fund itself is required to pay a tax on income or gain from
investment in PFICs, the payment of this tax would reduce the Fund's
economic return.
Investment income on certain foreign securities in which the Fund may
invest may be subject to foreign withholding or other taxes that could
reduce the return on these securities. Tax treaties between the United
States and foreign countries, however, may reduce or eliminate the amount
of foreign taxes to which the Fund would be subject.
SHAREHOLDERS' TAX STATUS
Shareholders are subject to federal income tax on dividends and capital
gains received as cash or additional Shares. The Fund's dividends, and any
short-term capital gains, are taxable as ordinary income.
CAPITAL GAINS
Shareholders will pay federal tax at capital gains rates on long-term
capital gains distributed to them regardless of how long they have held
the Fund Shares.
TOTAL RETURN
The average annual total return for each class of Shares of the Fund is the
average compounded rate of return for a given period that would equate a
$1,000 initial investment to the ending redeemable value of that
investment. The ending redeemable value is computed by multiplying the
number of Shares owned at the end of the period by the offering price per
Share at the end of the period. The number of Shares owned at the end of
the period is based on the number of Shares purchased at the beginning of
the period with $1,000, less any applicable sales charge on Class A Shares,
adjusted over the period by any additional Shares, assuming the annual
reinvestment of all dividends and distributions. Any applicable contingent
deferred sales charge is deducted from the ending value of the investment
based on the lesser of the original purchase price or the offering price of
Shares redeemed. Occasionally, total return which does not reflect the
effect of the sales charge may be quoted in advertising.
YIELD
The yield for each class of Shares is determined by dividing the net
investment income per share (as defined by the SEC) earned by the class
over a thirty-day period by the maximum offering price per Share of the
Fund on the last day of the period. This value is then annualized using
semi-annual compounding. This means that the amount of income generated
during the thirty-day period is assumed to be generated each month over a
twelve-month period and is reinvested every six months. The yield does not
necessarily reflect income actually earned by the class of Share because of
certain adjustments required by the SEC and, therefore, may not correlate
to the dividends or other distributions paid to shareholders.
To the extent that financial institutions and broker/dealers charge fees in
connection with services provided in conjunction with an investment in the
Fund, the performance will be reduced for those shareholders paying those
fees.
PERFORMANCE COMPARISONS
The Fund's performance of each class of Shares depends upon such variables
as:
oportfolio quality;
oaverage portfolio maturity;
otype of instruments in which the portfolio is invested;
ochanges in interest rates on money market instruments;
ochanges in the Fund's or a class of Shares' expenses; and
ovarious other factors.
The Fund's performance fluctuates on a daily basis largely because net
earnings and offering price per Share fluctuate daily. Both net earnings
and offering price per Share are factors in the computation of total
return.
Investors may use financial publications and/or indices to obtain a more
complete view of the Fund's performance. When comparing performance,
investors should consider all relevant factors such as the composition of
any indices used, prevailing market conditions, portfolio compositions of
other funds, and methods used to value portfolio securities and compute
offering price. The financial publications and/or indices which the Fund
uses in advertising may include:
oLIPPER ANALYTICAL SERVICES, INC., for example, makes comparative
calculations for one-month, three-month, one-year, and five-year
periods which assume the reinvestment of all capital gains
distributions and income dividends.
oMORGAN STANLEY CAPITAL INTERNATIONAL EUROPE, AUSTRALIA, AND FAR EAST
(EAFE) INDEX is a market capitalization weighted foreign securities
index, which is widely used to measure the performance of European,
Australian, New Zealand and Far Eastern stock markets. The index
covers approximately 1,020 companies drawn from 18 countries in the
above regions. The index values its securities daily in both U.S.
dollars and local currency and calculates total returns monthly.
EAFE U.S. dollar total return is a net dividend figure less
Luxembourg withholding tax. The EAFE is monitored by Capital
International, S.A., Geneva, Switzerland.
oMORGAN STANLEY CAPITAL INTERNATIONAL LATIN AMERICA EMERGING MARKET
INDICES, including the Morgan Stanley Emerging Markets Free Latin
America Index (which excludes Mexican banks and securities companies
which cannot be purchased by foreigners) and the Morgan Stanley
Emerging Markets Global Latin America Index. Both indices include
60% of the market capitalization of the following countries:
Argentina, Brazil, Chile, and Mexico. The indices are weighted by
market capitalization and are calculated without dividends
reinvested.
oINTERNATIONAL FINANCE CORPORATION (IFC) EMERGING MARKETS DATA BASE,
which provides detailed statistics on stock and bond markets in
developing countries, including IFC market indices.
oFINANCIAL TIMES ACTUARIES/STANDARD AND POOR'S WORLD (EX U.S.)
MID/SMALL CAP INDICES, which is a total return, market cap-weighted
index of companies from 25.countries.
oFINANCIAL TIMES ACTUARIES INDICES, including the FTA-World Index
(and components thereof), which are based on stocks in major world
equity markets.
oSTANDARD & POOR'S DAILY STOCK PRICE INDEX OF 500 COMMON STOCKS, a
composite index of common stocks in industry, transportation, and
financial and public utility companies, can be used to compare to
the total returns of funds whose portfolios are invested primarily
in common stocks. In addition, the Standard & Poor's index assumes
reinvestments of all dividends paid by stocks listed on its index.
Taxes due on any of these distributions are not included, nor are
brokerage or other fees calculated in Standard & Poor's figures.
oMORNINGSTAR, INC., an independent rating service, is the publisher
of the bi-weekly MUTUAL FUND VALUES. MUTUAL FUND VALUES rates more
than 1,000 NASDAQ-listed mutual funds of all types, according to
their risk-adjusted returns. The maximum rating is five stars, and
ratings are effective for two weeks.
Advertisements and sales literature for all three classes of Shares may
quote total returns which are calculated on non-standardized base periods.
These total returns also represent the historic change in the value of an
investment in any class of Shares based on annual reinvestment of dividends
over a specified period of time.
Advertisements may quote performance information which does not reflect the
effect of the sales charge or contingent deferred sales charge, as
applicable.
Advertising and other promotional literature may include charts, graphs and
other illustrations using the Fund's returns, or returns in general, that
demonstrate basic investment concepts such as tax-deferred compounding,
dollar-cost averaging and systematic investment. In addition, the Fund can
compare its performance, or performance for the types of securities in
which it invests, to a variety of other investments, such as bank savings
accounts, certificates of deposit, and Treasury bills.
ECONOMIC AND MARKET INFORMATION
Advertising and sales literature for the Fund may include discussions of
economic, financial and political developments and their effect on the
securities market. Such discussions may take the form of commentary on
these developments by Fund portfolio managers and their views and analysis
on how such developments could affect the Fund. In addition, advertising
and sales literature may quote statistics and give general information
about the mutual fund industry, including the growth of the industry, from
sources such as the Investment Company Institute.
ABOUT FEDERATED INVESTORS
Federated Investors is dedicated to meeting investor needs which is
reflected in its investment decision making-structured, straightforward,
and consistent. This has resulted in a history of competitive performance
with a range of competitive investment products that have gained the
confidence of thousands of clients and their customers.
The company's disciplined security selection process is firmly rooted in
sound methodologies backed by fundamental and technical research.
Investment decisions are made and executed by teams of portfolio managers,
analysts, and traders dedicated to specific market sectors. These traders
handle trillions of dollars in annual trading volume.
In the equity sector, Federated Investors has more than 26 years
experience. As of December 31, 1996, Federated managed 31 equity funds
totaling approximately $7.6 billion in assets across growth, value, equity
income, international, index and sector (i.e. utility) styles. Federated's
value-oriented management style combines quantitive and qualitative
analysis and features a structured, computer-assisted composite modeling
system that was developed in the 1970s.
J. Thomas Madden, Executive Vice President, oversees Federated Investor's
equity and high yield corporate bond management while William D. Dawson,
Executive Vice President, oversees Federated Investor's domestic fixed
income management. Henry A. Frantzen, Executive Vice President, oversees
the management of Federated Investor's international and global portfolios.
MUTUAL FUND MARKET
Thirty-seven percent of American households are pursuing their financial
goals through mutual funds. These investors, as well as businesses and
institutions, have entrusted over $3.5 trillion to the more than 6,000
funds available.*
Federated Investors, through its subsidiaries, distributes mutual funds for
a variety of investment applications. Specific markets include:
INSTITUTIONAL CLIENTS
Federated Investors meets the needs of more than 4,000 institutional
clients nationwide by managing and servicing separate accounts and mutual
funds for a variety of applications, including defined benefit and defined
contribution programs, cash management, and asset/liability management.
Institutional clients include corporations, pension funds, tax-exempt
entities, foundations/endowments, insurance companies, and investment and
financial advisors. The marketing effort to these institutional clients
is headed by John B. Fisher, President, Institutional Sales Division.
BANK MARKETING
Other institutional clients include close relationships with more than
1,600 banks and trust organizations. Virtually all of the trust divisions
of the top 100 bank holding companies use Federated funds in their clients'
portfolios. The marketing effort to trust clients is headed by Mark R.
Gensheimer, Executive Vice President, Bank Marketing & Sales.
BROKER/DEALERS AND BANK BROKER/DEALER SUBSIDIARIES
Federated funds are available to consumers through major brokerage firms
nationwide--we have over 2,200 broker/dealer and bank broker/dealer
relationships across the country--supported by more wholesalers than any
other mutual fund distributor. Federated's service to financial
professionals and institutions has earned it high rankings in several
surveys performed by DALBAR, Inc. DALBAR is recognized as the industry
benchmark for service quality measurement. The marketing effort to these
firms is headed by James F. Getz, President, Broker/Dealer Division.
* Source: Investment Company Institute
PART C. OTHER INFORMATION.
Item 24. Financial Statements and Exhibits:
(a) Not applicable. .
(b) Exhibits:
(1) (i) Conformed Copy of Articles of Incorporation of
the Registrant;(1)
(ii) Conformed Copy of Articles Supplementary;(5)
(2) Copy of By-Laws of the Registrant; (1)
(3) Not applicable;
(4) (i) Copies of Specimen Certificates for Shares of
Capital Stock of Federated World Utility Fund;
Federated Asia Pacific Growth Fund, Federated
Emerging Markets Fund, Federated European Growth
Fund, Federated International Small Company Fund,
and Federated Latin American Growth Fund; (7)
(ii) Copies of Specimen Certificates for Shares of
Capital Stock of Federated International High
Income Fund Class A Shares, Class B Shares, and
Class C Shares; (8)
(5) (i) Conformed Copy of Investment Advisory Contract of
the Registrant through and including Exhibit
F;(5)
(ii) Conformed Copy of Assignment of Investment
Advisory Contract;(5)
(iii)Conformed Copy of Exhibit G to the Investment
Advisory Contract of the Registrant; (8)
(iv) Form of Exhibit H to the Investment Advisory
Contract of the Registrant; +
(6) (i) Conformed Copy of Distributor's Contract of the
Registrant through and including Exhibit S;(5)
(ii) Conformed Copy of Exhibits T, U, and V to the
Distributor's Contract of the Registrant; (8)
(iii)Conformed Copy of Exhibits W,X, and Y to the
Distributor's Contract of the Registrant;+
(iv) The Registrant hereby incorporates the conformed
copy of the Specimen Mutual Funds Sales and
Service Agreement; Mutual Funds Service
Agreement; and Plan Trustee/Mutual Funds Service
Agreement from Item 24(b)6 of the Cash Trust
Series II Registration Statement on Form N-1A,
filed with the Commission on July 24, 1995. (File
Nos. 33-38550 and 811-6269)
(7) Not applicable;
+All exhibits have been filed electronically.
1. Response is incorporated by reference to Registrant's Initial
Registration Statement on Form N-1A filed February 4, 1994. (File Nos.
33-52149 and 811-7141).
5. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 6 on Form N-1A filed January 26, 1996 (File Nos. 33-52149
and 811-7141).
7. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 8 on Form N-1A filed July 31, 1996 (File Nos. 33-52149
and 811-7141).
8. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 11 on Form N-1A filed January 30, 1997 (File Nos. 33-
52149 and 811-7141).
(8) Conformed copy of Custodian Agreement of the
Registrant; (3)
(9) (i) Conformed copy of Agreement for Fund Accounting
Services, Administrative Services, Transfer
Agency Services, and Custody Services
Procurement (7);
(ii) The responses described in Item 24(b)6 are
hereby incorporated by reference.
(iii)..........Form of Fund of Funds Shareholder
Services ......Agreement.+
(iv) On behalf of Federated World Utility Fund, the
Registrant hereby incorporates the conformed
copy of the Shareholder Services Sub-Contract
between Fidelity and Federated Shareholder
Services from Item 24(b)(9)(iii) of the
Federated GNMA Trust Registration Statement on
Form N-1A, filed with the Commission of March
25, 1996. (File nos. 2-75670 and 811-3375);
(10) Conformed copy of Opinion and Consent of Counsel as to
legality of shares being registered; (2)
(11) Not applicable;
(12) Not applicable;
(13) Conformed copy of Initial Capital Understanding; (2)
(14) Not applicable;
(15) (i) Conformed Copy of Rule 12b-1 Distribution Plan
through and including Exhibit R;(5)
(ii) Conformed Copy of Exhibits S, T, and U to the Rule
12b-1 Distribution Plan of the Registrant; (8)
(iii) Conformed Copy of Exhibits V,W, and X to the
Rule 12b-1 Distribution Plan of the Registrant; +
(16) Copy of Schedule for Computation of Fund Performance
Data for World Utility Fund; (3)
(i) Copy of Schedule for Computation of Fund
Performance Data for Federated Asia Pacific Growth
Fund, Federated Emerging Market Fund, Federated
European Growth Fund, Federated Small Company
Fund, Federated Latin American Growth Fund; (7)
(ii) Copy of Schedule for Computation of Fund
Performance Data for Federated International High
Income Fund; (8)
(17) Not applicable.
(18) Conformed Copy of Multiple Class Plan; (5)
(19) Conformed copy of Power of Attorney; (8)
+All exhibits have been filed electronically.
2. Response is incorporated by reference to Registrant's Pre-Effective
Amendment No. 1 on Form N-1A filed March 24, 1994. (File Nos. 33-52149
and 811-7141).
3. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 1 on Form N-1A filed July 25, 1994 (File Nos. 33-52149
and 811-7141).
5. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 6 on Form N-1A filed January 26, 1996 (File Nos. 33-52149
and 811-7141).
7. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 8 on Form N-1A filed July 31, 1996 (File Nos. 33-52149
and 811-7141).
8. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 11 on Form N-1A filed January 30, 1997 (File Nos. 33-
52149 and 811-7141).
Item 25. Persons Controlled by or Under Common Control with Registrant.
None
Item 26. Number of Holders of Securities:
Number of Record Holders
Title of Class as of April 22, 1997
Shares of capital stock
($0.001 per Share par value)
Federated World Utility Fund
a) Class A Shares 1,599
b) Class B Shares 923
c) Class C Shares 419
d) Class F Shares 473
Federated Asia Pacific Growth Fund
a) Class A Shares 1,360
b) Class B Shares 1,461
c) Class C Shares 1,061
Federated Emerging Markets Fund
a) Class A Shares 3,304
b) Class B Shares 2,435
c) Class C Shares 1,250
Federated European Growth Fund
a) Class A Shares 1,381
b) Class B Shares 1,324
c) Class C Shares 1,055
Federated International Small Company Fund
a) Class A Shares 3,130
b) Class B Shares 4,607
c) Class C Shares 1,605
Federated Latin American Growth Fund
a) Class A Shares 1,468
b) Class B Shares 1,405
c) Class C Shares 1,088
Federated International High Income Fund:
a) Class A Shares 1,133
b) Class B Shares 1,984
c) Class C Shares 1,046
Federated International Growth Fund:
a) Class A Shares 0
b) Class B Shares 0
c) Class C Shares 0
Item 27. Indemnification (1).
Item 28. Business and Other Connections of Investment Adviser:
(a) For a description of the other business of the investment adviser,
see the section entitled "INSERT PROSPECTUS HEADING''in Part A. The
affiliations with the Registrant of four of the Trustees and one of
the Officers of the investment adviser are included in Part B of
this Registration Statement under "Management of the Corporation"
The remaining Trustee of the investment adviser, his position with
the investment adviser, and, in parentheses, his principal
occupation is: Mark D. Olson (Partner, Wilson, Halbrook & Bayard),
107 W. Market Street, Georgetown, Delaware 19947.
The remaining Officers of the investment adviser are: William D.
Dawson,III, Henry A. Frantzen, J. Thomas Madden, and Mark L.
Mallon, Executive Vice Presidents; Peter R. Anderson, Drew J.
Collins, Jonathan C. Conley, Deborah A. Cunningham, Mark E.
Durbiano, J. Alan Minteer, and Mary Jo Ochson, Senior Vice
Presidents; J. Scott Albrecht, Joseph M. Balestrino, Randall S.
Bauer, David F. Belton, Christine A. Bosio, David A. Briggs,
Kenneth J. Cody, Alexandre de Bethmann, Linda A. Duessel, Michael
J. Donnelly, Michael P. Donnelly, Kathleen M. Foody-Malus, Thomas
M. Franks; Edward C. Gonzales, James E. Grefenstette, Susan R.
Hill, Stephen A. Keen, Robert M. Kowit, Mark S. Kopinski, Jeff A.
Kozemchak, Marian R. Marinack, Sandra L. McInerney, Susan M. Nason,
Robert J. Ostrowski, Charles A. Ritter, Frank Semack, Aash M. Shah,
Scott B. Schermerhorn, William F. Stotz, Tracy P.Stouffer, Edward
J. Tiedge, Paige M. Wilhelm, Jolanta M. Wysocka, Vice Presidents;
Todd A. Abraham, Stafanie L. Bachhuber, Michael W. Casey, William
R. Jamison, Constantine Kartsonsas, Robert M. March, Joseph M.
Natoli, Keith J. Sabol, and Michael W. Sirianni, Assistant Vice
Presidents; Stephen A. Keen, Secretary; Thomas R. Donahue,
Treasurer and Assistant Secretary; Richard B. Fisher, Assistant
Secretary and Assistant Treasurer; Christine I. McGonigle,
Assistant Secretary. The business address of each of the Officers
of the investment adviser is Federated Investors Tower, Pittsburgh,
Pennsylvania 15222-3779. These individuals are also officers of a
majority of the investment advisers to the Funds listed in Part B
of this Registration Statement.
Item 29. Principal Underwriters:
(a) Federated Securities Corp., the Distributor for shares of the
Registrant, also acts as principal underwriter for the following open-end
investment companies: 111 Corcoran Funds; Arrow Funds; Automated Government
Money Trust; BayFunds; Blanchard Funds; Blanchard Precious Metals Fund,
Inc.; Cash Trust Series II; Cash Trust Series, Inc.; DG Investor Series;
Edward D. Jones & Co. Daily Passport Cash Trust; Federated Adjustable Rate
U.S. Government Fund, Inc.; Federated American Leaders Fund, Inc.;
Federated ARMs Fund; Federated Equity Funds; Federated Equity Income Fund,
Inc.; Federated Fund for U.S. Government Securities, Inc.; Federated GNMA
Trust; Federated Government Income Securities, Inc.; Federated Government
Trust; Federated High Income Bond Fund, Inc.; Federated High Yield Trust;
Federated Income Securities Trust; Federated Income Trust; Federated Index
Trust; Federated Institutional Trust; Federated Insurance Series; Federated
Investment Portfolios; Federated Investment Trust; Federated Master Trust;
Federated Municipal Opportunities Fund, Inc.; Federated Municipal
Securities Fund, Inc.; Federated Municipal Trust; Federated Short-Term
Municipal Trust; Federated Short-Term U.S. Government Trust; Federated
Stock and Bond Fund, Inc.; Federated Stock Trust; Federated Tax-Free Trust;
Federated Total Return Series, Inc.; Federated U.S. Government Bond Fund;
Federated U.S. Government Securities Fund: 1-3 Years; Federated U.S.
Government Securities Fund: 2-5 Years; Federated U.S. Government Securities
Fund: 5-10 Years; Federated Utility Fund, Inc.; First Priority Funds; Fixed
Income Securities, Inc.; High Yield Cash Trust; Independence One Mutual
Funds; Intermediate Municipal Trust; International Series, Inc.; Investment
Series Funds, Inc.; Investment Series Trust; Liberty U.S. Government Money
Market Trust; Liquid Cash Trust; Managed Series Trust; Marshall Funds,
Inc.; Money Market Management, Inc.; Money Market Obligations Trust; Money
Market Obligations Trust II; Money Market Trust; Municipal Securities
Income Trust; Newpoint Funds; Peachtree Funds; RIMCO Monument Funds;
SouthTrust Vulcan Funds; Star Funds; Targeted Duration Trust; Tax-Free
Instruments Trust; The Biltmore Funds; The Biltmore Municipal Funds; The
Monitor Funds; The Planters Funds; The Starburst Funds; The Starburst Funds
II; The Virtus Funds; Tower Mutual Funds; Trust for Financial Institutions;
Trust for Government Cash Reserves; Trust for Short-Term U.S. Government
Securities; Trust for U.S. Treasury Obligations; Vision Group of Funds,
Inc.; Wesmark Funds; and World Investment Series, Inc.
Federated Securities Corp. also acts as principal underwriter for the
following closed-end investment company: Liberty Term Trust, Inc.- 1999.
(b)
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Underwriter With Registrant
Richard B. Fisher Director, Chairman, Chief President and
Federated Investors Tower Executive Officer, ChiefDirector
Pittsburgh, PA 15222-3779 Operating Officer, Asst.
Secretary, and Asst.
Treasurer, Federated
Securities Corp.
Edward C. Gonzales Director, Executive Vice
Federated Investors Tower President, Federated,
Pittsburgh, PA 15222-3779 Securities Corp.
Thomas R. Donahue Director, Assistant Secretary,
Federated Investors Tower Assistant Treasurer
Pittsburgh, PA 15222-3779 Federated Securities Corp
John B. Fisher President-Institutional Sales, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
James F. Getz President-Broker/Dealer, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Mark R. Gensheimer Executive Vice President of --
Federated Investors Tower Bank/Trust, Federated
Pittsburgh, PA 15222-3779 Securities Corp.
David M. Taylor Executive Vice President --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Mark W. Bloss Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard W. Boyd Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Laura M. Deger Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Theodore Fadool, Jr. Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Bryant R. Fisher Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Christopher T. Fives Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
James S. Hamilton Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
James M. Heaton Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Keith Nixon Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Solon A. Person, IV Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Timothy C. Pillion Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Thomas E. Territ Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Teresa M. Antoszyk Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
John B. Bohnet Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Byron F. Bowman Vice President, Secretary, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Jane E. Broeren-Lambesis Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Dale R. Browne Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Mary J. Combs Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
R. Edmond Connell, Jr. Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
R. Leonard Corton, Jr. Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Kevin J. Crenny Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Daniel T. Culbertson Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
G. Michael Cullen Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
William C. Doyle Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Jill Ehrenfeld Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Mark D. Fisher Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Joseph D. Gibbons Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
John K. Goettlicher Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Craig S. Gonzales Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard C. Gonzales Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Bruce E. Hastings Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Beth A. Hetzel Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
James E. Hickey Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Brian G. Kelly Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
H. Joseph Kennedy Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Mark J. Miehl Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard C. Mihm Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
J. Michael Miller Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Robert D. Oehlschlager Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Thomas A. Peters III Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Robert F. Phillips Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard A. Recker Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Eugene B. Reed Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
George D. Riedel Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Paul V. Riordan Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
John Rogers Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Brian S. Ronayne Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Thomas S. Schinabeck Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Edward L. Smith Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
David W. Spears Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
John A. Staley Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Jeffrey A. Stewart Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard Suder Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
William C. Tustin Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Paul A. Uhlman Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Miles J. Wallace Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
John F. Wallin Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard B. Watts Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Edward J. Wojnarowski Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Michael P. Wolff Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Edward R. Bozek Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Terri E. Bush Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Charlene H. Jennings Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Matthew S. Propelka Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Denis McAuley Treasurer, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Leslie K. Platt Assistant Secretary, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
(c)Not applicable.
Item 30. Location of Accounts and Records:
All accounts and records required to be maintained by Section 31(a) of the
Investment Company Act of 1940 and Rules 31a-1 through 31a-3 promulgated
thereunder are maintained at one of the following locations:
Registrant Federated Investors Tower
Pittsburgh, PA 15222-3779
Federated Shareholder Services Company P.O. Box 8600
(Transfer Agent, Dividend Boston, MA 02266-8600
Disbursing Agent and Portfolio
Recordkeeper)
Federated Services Company Federated Investors Tower
(Administrator) Pittsburgh, PA 15222-3779
Federated Global Research Corp. 175 Water Street
(Adviser) New York, NY 10038-4965
State Street Bank and Trust Company P.O. Box 8600
(Custodian) Boston, MA 02266-8600
Item 31. Not applicable.
Item 32. Undertakings:
Registrant hereby undertakes to file a post-effective amendment,
using financial statements which need not be certified, within
four to six months from effective date of Registrant's 1933 Act
Registration Statement, Post-Effective Amendment Number 11.
Registrant hereby undertakes to furnish each person to whom a
prospectus is delivered with a copy of the Registrant's latest
annual report to shareholders, upon request and without charge.
Registrant hereby undertakes to comply with the provisions of
Section 16(c) of the 1940 Act with respect to the removal of
Directors and the calling of special shareholder meetings by
shareholders.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant, WORLD INVESTMENT SERIES,
INC., has duly caused this Amendment to its Registration Statement to be
signed on its behalf by the undersigned, thereto duly authorized, in the
City of Pittsburgh and Commonwealth of Pennsylvania, on the 21st day of
May, 1997.
WORLD INVESTMENT SERIES, INC.
BY: /s/Karen M. Brownlee
Karen M. Brownlee, Assistant Secretary
Attorney in Fact for John F. Donahue
May 21, 1997
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to its Registration Statement has been signed below by the
following person in the capacity and on the date indicated:
NAME TITLE DATE
By:/s/Karen M. Brownlee Attorney In Fact May 21, 1997
Karen M. Brownlee For the Persons
ASSISTANT SECRETARY Listed Below
NAME TITLE
John F. Donahue* Chairman and Director
(Chief Executive Officer)
Richard B. Fisher* President and Director
John W. McGonigle* Treasurer, Executive Vice
President and Secretary
(Principal Financial and
Accounting Officer)
Thomas G. Bigley* Director
John T. Conroy, Jr.* Director
William J. Copeland* Director
James E. Dowd* Director
Lawrence D. Ellis, M.D.* Director
Edward L. Flaherty, Jr.* Director
Peter E. Madden* Director
Gregor F. Meyer* Director
John E. Murray, Jr.* Director
Wesley W. Posvar* Director
Marjorie P. Smuts* Director
* By Power of Attorney
Exhibit 5(iv) under Form N-1A
Exhibit 10(i) under Item 601/Reg. S-K
EXHIBIT H
to the
Investment Advisory Contract
WORLD INVESTMENT SERIES, INC.
FEDERATED INTERNATIONAL GROWTH FUND
For all services rendered by Adviser hereunder, the above-named Fund
of the World Investment Series, Inc. shall pay to Adviser and Adviser
agrees to accept as full compensation for all services rendered hereunder,
an annual investment advisory fee equal to 1.25% of the average daily net
assets of the Fund which are not held in shares of affiliated investment
companies and an asset allocation fee of 0.20 of 1% of the Funds average
daily net assets.
The portion of the fees based upon the average daily net assets of the
Fund shall be accrued daily at the rate of 1/365th of 1.25% or 1/365th of
0.20 of 1% applied to the daily net assets of the Fund.
The advisory fee and asset allocation fee so accrued shall be paid to
Adviser daily.
Witness the due execution hereof this day of , 1997.
--- -------
Attest: FEDERATED GLOBAL RESEARCH CORP.
By:
---------------------------
Assistant Secretary Vice President
Attest: WORLD INVESTMENT SERIES, INC.
By:
Secretary Vice President
Exhibit 6(i) under Form N-1A
Exhibit 1(i) under Item 601/Reg. S-K
Exhibit W
to the
Distributor's Contract
WORLD INVESTMENT SERIES, INC.
FEDERATED INTERNATIONAL GROWTH FUND
CLASS A SHARES
The following provisions are hereby incorporated and made part of the
Distributor's Contract dated March 1, 1994, between World Investment Series,
Inc. and Federated Securities Corp. with respect to the Class of shares set
forth above.
1. The Corporation hereby appoints FSC to engage in activities principally
intended to result in the sale of shares of the above-listed Class
("Shares"). Pursuant to this appointment, FSC is authorized to select a
group of financial institutions ("Financial Institutions") to sell Shares
at the current offering price thereof as described and set forth in the
respective prospectuses of the Corporation.
2. During the term of this Agreement, the Corporation will pay FSC for
services pursuant to this Agreement, a monthly fee computed at the annual
rate of .25% of the average aggregate net asset value of the Shares held
during the month. For the month in which this Agreement becomes effective
or terminates, there shall be an appropriate proration of any fee payable
on the basis of the number of days that the Agreement is in effect during
the month.
3. FSC may from time-to-time and for such periods as it deems appropriate
reduce its compensation to the extent any Class' expenses exceed such lower
expense limitation as FSC may, by notice to the Corporation, voluntarily
declare to be effective.
4. FSC will enter into separate written agreements with various firms to
provide certain of the services set forth in Paragraph 1 herein. FSC, in
its sole discretion, may pay Financial Institutions a periodic fee in
respect of Shares owned from time to time by their clients or customers.
The schedules of such fees and the basis upon which such fees will be paid
shall be determined from time to time by FSC in its sole discretion.
5. FSC will prepare reports to the Board of Directors of the Corporation on
a quarterly basis showing amounts expended hereunder including amounts paid to
Financial Institutions and the purpose for such expenditures.
In consideration of the mutual covenants set forth in the Distributor's
Contract dated March 1, 1994 between World Investment Series, Inc. and Federated
Securities Corp., World Investment Series, Inc. executes and delivers this
Exhibit on behalf of Federated International Growth Fund, and with respect to
the Class A Shares thereof, first set forth in this Exhibit.
Witness the due execution hereof this 1st day of March, 1997.
ATTEST: World Investment Series, Inc.
/s/ John W. McGonigle By: /s/ Richard B. Fisher
Secretary President
(SEAL)
ATTEST: FEDERATED SECURITIES CORP.
/s/ Byron F. Bowman By: /s/ David M. Taylor
Secretary Executive Vice President
(SEAL)
Exhibit 6(ii) under Form N-1A
Exhibit 1(ii) under Item 601/Reg. S-K
Exhibit X
to the
Distributor's Contract
WORLD INVESTMENT SERIES, INC.
FEDERATED INTERNATIONAL GROWTH FUND
CLASS B SHARES
The following provisions are hereby incorporated and made part of the
Distributor's Contract dated March 1, 1994, between World Investment Series,
Inc. and Federated Securities Corp. with respect to the Class of shares set
forth above.
1. The Corporation hereby appoints FSC to engage in activities principally
intended to result in the sale of shares of the above-listed Class
("Shares"). Pursuant to this appointment, FSC is authorized to select a
group of financial institutions ("Financial Institutions") to sell Shares
at the current offering price thereof as described and set forth in the
respective prospectuses of the Corporation.
2. During the term of this Agreement, the Corporation will pay FSC for
services pursuant to this Agreement, a monthly fee computed at the annual
rate of .75% of the average aggregate net asset value of the Shares held
during the month. For the month in which this Agreement becomes effective
or terminates, there shall be an appropriate proration of any fee payable
on the basis of the number of days that the Agreement is in effect during
the month.
3. FSC may from time-to-time and for such periods as it deems appropriate
reduce its compensation to the extent any Class' expenses exceed such lower
expense limitation as FSC may, by notice to the Corporation, voluntarily
declare to be effective.
4. FSC will enter into separate written agreements with various firms to
provide certain of the services set forth in Paragraph 1 herein. FSC, in
its sole discretion, may pay Financial Institutions a periodic fee in
respect of Shares owned from time to time by their clients or customers.
The schedules of such fees and the basis upon which such fees will be paid
shall be determined from time to time by FSC in its sole discretion.
5. FSC will prepare reports to the Board of Directors of the Corporation on
a quarterly basis showing amounts expended hereunder including amounts paid to
Financial Institutions and the purpose for such expenditures.
In consideration of the mutual covenants set forth in the Distributor's
Contract dated March 1, 1994 between World Investment Series, Inc. and Federated
Securities Corp., World Investment Series, Inc. executes and delivers this
Exhibit on behalf of Federated International Growth Fund, and with respect to
the Class B Shares thereof, first set forth in this Exhibit.
Witness the due execution hereof this 1st day of March, 1997.
ATTEST: World Investment Series, Inc.
/s/ John W. McGonigle By: /s/ Richard B. Fisher
Secretary President
(SEAL)
ATTEST: FEDERATED SECURITIES CORP.
/s/ Byron F. Bowman By: /s/ David M. Taylor
Secretary Executive Vice President
(SEAL)
Exhibit 6(iii) under Form N-1A
Exhibit 1(iii) under Item 601/Reg. S-K
Exhibit Y
to the
Distributor's Contract
WORLD INVESTMENT SERIES, INC.
FEDERATED INTERNATIONAL GROWTH FUND
CLASS C SHARES
The following provisions are hereby incorporated and made part of the
Distributor's Contract dated March 1, 1994, between World Investment Series,
Inc. and Federated Securities Corp. with respect to the Class of shares set
forth above.
1. The Corporation hereby appoints FSC to engage in activities principally
intended to result in the sale of shares of the above-listed Class
("Shares"). Pursuant to this appointment, FSC is authorized to select a
group of financial institutions ("Financial Institutions") to sell Shares
at the current offering price thereof as described and set forth in the
respective prospectuses of the Corporation.
2. During the term of this Agreement, the Corporation will pay FSC for
services pursuant to this Agreement, a monthly fee computed at the annual
rate of .75% of the average aggregate net asset value of the Shares held
during the month. For the month in which this Agreement becomes effective
or terminates, there shall be an appropriate proration of any fee payable
on the basis of the number of days that the Agreement is in effect during
the month.
3. FSC may from time-to-time and for such periods as it deems appropriate
reduce its compensation to the extent any Class' expenses exceed such lower
expense limitation as FSC may, by notice to the Corporation, voluntarily
declare to be effective.
4. FSC will enter into separate written agreements with various firms to
provide certain of the services set forth in Paragraph 1 herein. FSC, in
its sole discretion, may pay Financial Institutions a periodic fee in
respect of Shares owned from time to time by their clients or customers.
The schedules of such fees and the basis upon which such fees will be paid
shall be determined from time to time by FSC in its sole discretion.
5. FSC will prepare reports to the Board of Directors of the Corporation on
a quarterly basis showing amounts expended hereunder including amounts paid to
Financial Institutions and the purpose for such expenditures.
In consideration of the mutual covenants set forth in the Distributor's
Contract dated March 1, 1994 between World Investment Series, Inc. and Federated
Securities Corp., World Investment Series, Inc. executes and delivers this
Exhibit on behalf of Federated International Growth Fund, and with respect to
the Class C Shares thereof, first set forth in this Exhibit.
Witness the due execution hereof this 1st day of March, 1997.
ATTEST: World Investment Series, Inc.
/s/ John W. McGonigle By: /s/ Richard B. Fisher
Secretary President
(SEAL)
ATTEST: FEDERATED SECURITIES CORP.
/s/ Byron F. Bowman By: /s/ David M. Taylor
Secretary Executive Vice President
(SEAL)
Exhibit 9(iii) under Form N-1A
Exhibit 10(ii) under Item 601/Reg. S-K
SHAREHOLDER SERVICES AGREEMENT
THIS AGREEMENT, made and enterered into as of the day of , 1997, by
and between those investment companies listed on Exhibit 1, as may be amended
from time to time, having their principal office and place of business at
Federated Investors Tower, Pittsburgh, PA 15222-3779 and who have approved this
form of Agreement (referred to herein as "Fund-of-Funds''or ``FOFs") and
Federated Shareholder Services, a Delaware business trust, having its principal
office and place of business at Federated Investors Tower, Pittsburgh,
Pennsylvania 15222-3779 ("FSS").
1. The FOFs hereby appoint FSS to render or cause to be rendered personal
services to shareholders of the FOFs and/or the maintenance of accounts of
shareholders of the FOFs ("Services"). In addition to providing Services
directly to shareholders of the FOFs, FSS is hereby appointed the FOFs'
agent to select, negotiate and subcontract for the performance of Services.
FSS hereby accepts such appointments. FSS agrees to provide or cause to be
provided Services which, in its best judgment (subject to supervision and
control of the FOFs' Boards of Trustees or Directors, as applicable), are
necessary or desirable for shareholders of the FOFs. FSS further agrees to
provide the FOFs, upon request, a written description of the Services which
FSS is providing hereunder.
2. During the term of this Agreement, each FOF will pay FSS and FSS agrees to
accept as full compensation for its services rendered hereunder a fee at an
annual rate, calculated daily and payable monthly, up to 0.25% of 1% of
average net assets of each FOF. The fee paid by each FOF to FSS will be
reduced to the extent that the FOF receives a fee from an investment
company (`Fund'') in which the FOF invests pursuant to a Shareholder
Services Agreement between the Fund and FSS.
For the payment period in which this Agreement becomes effective or
terminates with respect to any FOF, there shall be an appropriate proration
Shareholder Services Agreement
Fund of Funds Page 2
of the monthly fee on the basis of the number of days that this Agreement
is in effect with respect to such FOF during the month.
3. This Agreement shall continue in effect for one year from the date of its
execution, and thereafter for successive periods of one year only if the
form of this Agreement is approved at least annually by the Board of each
FOF, including a majority of the members of the Board of the FOF who are
not interested persons of the FOF ("Independent Board Members") cast in
person at a meeting called for that purpose.
4. Notwithstanding paragraph 3, this Agreement may be terminated as follows:
(a)at any time, without the payment of any penalty, by the vote of a
majority of the Independent Board Members of any FOF or by a vote of a
majority of the outstanding voting securities of any FOF as defined in
the Investment Company Act of 1940 on sixty (60) days' written notice
to the parties to this Agreement;
(b)automatically in the event of the Agreement's assignment as defined in
the Investment Company Act of 1940; and
(c)by any party to the Agreement without cause by giving the other party
at least sixty (60) days' written notice of its intention to terminate.
5. FSS agrees to obtain any taxpayer identification number certification from
each shareholder of the FOFs to which it provides Services that is required
under Section 3406 of the Internal Revenue Code, and any applicable
Treasury regulations, and to provide each FOF or its designee with timely
written notice of any failure to obtain such taxpayer identification number
certification in order to enable the implementation of any required backup
withholding.
6. FSS shall not be liable for any error of judgment or mistake of law or for
any loss suffered by any FOF in connection with the matters to which this
Agreement relates, except a loss resulting from willful misfeasance, bad
faith or gross negligence on its part in the performance of its duties or
from reckless disregard by it of its obligations and duties under this
Shareholder Services Agreement
Fund of Funds Page 3
Agreement. FSS shall be entitled to rely on and may act upon advice of
counsel (who may be counsel for such FOF) on all matters, and shall be
without liability for any action reasonably taken or omitted pursuant to
such advice. Any person, even though also an officer, trustee, partner,
employee or agent of FSS, who may be or become a member of such FOF's
Board, officer, employee or agent of any FOF, shall be deemed, when
rendering services to such FOF or acting on any business of such FOF (other
than services or business in connection with the duties of FSS hereunder)
to be rendering such services to or acting solely for such FOF and not as
an officer, trustee, partner, employee or agent or one under the control or
direction of FSS even though paid by FSS.
This Section 6 shall survive termination of this Agreement.
7. No provision of this Agreement may be changed, waived, discharged or
terminated orally, but only by an instrument in writing signed by the party
against which an enforcement of the change, waiver, discharge or
termination is sought.
8. FSS is expressly put on notice of the limitation of liability as set forth
in the Declaration of Trust of each FOF that is a Massachusetts business
trust and agrees that the obligations assumed by each such FOF pursuant to
this Agreement shall be limited in any case to such FOF and its assets and
that FSS shall not seek satisfaction of any such obligations from the
shareholders of such FOF, the Trustees, Officers, Employees or Agents of
such FOF, or any of them.
9. The execution and delivery of this Agreement have been authorized by the
Trustees of FSS and signed by an authorized officer of FSS, acting as such,
and neither such authorization by such Trustees nor such execution and
delivery by such officer shall be deemed to have been made by any of them
individually or to impose any liability on any of them personally, and the
obligations of this Agreement are not binding upon any of the Trustees or
Shareholder Services Agreement
Fund of Funds Page 4
shareholders of FSS, but bind only the trust property of FSS as provided in
the Declaration of Trust of FSS.
10. Notices of any kind to be given hereunder shall be in writing (including
facsimile communication) and shall be duly given if delivered to any FOF
and to such FOF at the following address: Federated Investors Tower,
Pittsburgh, PA 15222-3779, Attention: President and if delivered to FSS
at Federated Investors Tower, Pittsburgh, PA 15222-3779, Attention:
President.
11. This Agreement constitutes the entire agreement between the parties hereto
and supersedes any prior agreement with respect to the subject hereof
whether oral or written. If any provision of this Agreement shall be held
or made invalid by a court or regulatory agency decision, statute, rule or
otherwise, the remainder of this Agreement shall not be affected thereby.
Subject to the provisions of Sections 3 and 4, hereof, this Agreement shall
be binding upon and shall inure to the benefit of the parties hereto and
their respective successors and shall be governed by Pennsylvania law;
provided, however, that nothing herein shall be construed in a manner
inconsistent with the Investment Company Act of 1940 or any rule or
regulation promulgated by the Securities and Exchange Commission
thereunder.
12. This Agreement may be executed by different parties on separate
counterparts, each of which, when so executed and delivered, shall be an
original, and all such counterparts shall together constitute one and the
same instrument.
13. This Agreement shall not be assigned by any party without the prior written
consent of FSS in the case of assignment by any FOF, or of the FOFs in the
case of assignment by FSS, except that any party may assign to a successor
all of or a substantial portion of its business to a party controlling,
controlled by, or under common control with such party. Nothing in this
Shareholder Services Agreement
Fund of Funds Page 5
Section 14 shall prevent FSS from delegating its responsibilities to
another entity to the extent provided herein.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.
Investment Companies (listed on Exhibit 1)
Attest: By:
John W. McGonigle John F. Donahue
Secretary Chairman
Federated Shareholder Services
Attest: By:
Secretary President
Exhibit 1
Federated International Growth Fund
Exhibit 15(i) under Form N-1A
Exhibit 1(iv) under Item 601/Reg. S-K
EXHIBIT V
to the
Distribution Plan
WORLD INVESTMENT SERIES, INC.
FEDERATED INTERNATIONAL GROWTH FUND
CLASS A SHARES
This Distribution Plan is adopted by between World Investment Series,
Inc. with respect to the Class of Shares of the Federated International
Growth Fund set forth above.
In compensation for the services provided pursuant to this Plan, FSC
will be paid a monthly fee computed at the annual rate of .25% of the
average aggregate net asset value of the Class A Shares of Federated
International Growth Fund held during the month.
Witness the due execution hereof this 1st day of March, 1997.
World Investment Series, Inc.
By: /s/ Richard B. Fisher
President
Exhibit 15(ii) under Form N-1A
Exhibit 1(v) under Item 601/Reg. S-K
EXHIBIT W
to the
Distribution Plan
WORLD INVESTMENT SERIES, INC.
FEDERATED INTERNATIONAL GROWTH FUND
CLASS B SHARES
This Distribution Plan is adopted by between World Investment Series,
Inc. with respect to the Class of Shares of the Federated International
Growth Fund set forth above.
In compensation for the services provided pursuant to this Plan, FSC
will be paid a monthly fee computed at the annual rate of .75% of the
average aggregate net asset value of the Class B Shares of Federated
International Growth Fund held during the month.
Witness the due execution hereof this 1st day of March, 1997.
World Investment Series, Inc.
By: /s/ Richard B. Fisher
President
Exhibit 15(iii) under Form N-1A
Exhibit 1(vi) under Item 601/Reg. S-K
EXHIBIT X
to the
Distribution Plan
WORLD INVESTMENT SERIES, INC.
FEDERATED INTERNATIONAL GROWTH FUND
CLASS C SHARES
This Distribution Plan is adopted by between World Investment Series,
Inc. with respect to the Class of Shares of the Federated International
Growth Fund set forth above.
In compensation for the services provided pursuant to this Plan, FSC
will be paid a monthly fee computed at the annual rate of .75% of the
average aggregate net asset value of the Class C Shares of Federated
International Growth Fund held during the month.
Witness the due execution hereof this 1st day of March, 1997.
World Investment Series, Inc.
By: /s/ Richard B. Fisher
President
