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. 16 .................... X
------- ----
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
Amendment No. 17 ................................... X
------- ----
WORLD INVESTMENT SERIES, INC.
(Exact Name of Registrant as Specified in Charter)
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, Pennsylvania 15237-7000
(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) on ________________
pursuant to paragraph (b)(1)(v) 60 days after filing pursuant to paragraph
(a) (i)
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.
Copies to:
Matthew G. Maloney, Esquire
Dickstein Shapiro Morin & Oshinsky LLP
2101 L Street, N.W.
Washington, D.C. 20037
<PAGE>
CROSS-REFERENCE SHEET
This amendment to the Registration Statement of WORLD INVESTMENT SERIES,
INC., which is comprised of ten 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, (8) Federated International Growth Fund
consisting of three classes of shares (a) Class A Shares, (b) Class B Shares,
and (c) Class C Shares, (9) Federated Global Equity Income Fund consisting of
three classes of shares (a) Class A Shares, (b) Class B Shares, and Class C
Shares and (10) Federated Global Financial Services Fund consisting of three
classes of shares (a) Class A Shares, (b) Class B Shares, and (c) Class C
Shares. This filing relates to Federated Global Financial Services Fund only and
is comprised of the following (the remaining references to other portfolios have
been kept for easier cross reference):
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,9a-c,10a-c) Cover Page.
Item 2. Synopsis......................(1a-d, 2a-c,3a-c,4a-c,5a-c,6a-c,7a-c,
8a-c,9a-c,10a-c) Summary of Fund
Expenses.
Item 3. Condensed Financial
Information
..................(1a-d,2a-c,3a-c,
4a-c,5a-c,6a-c,7a-c,
8a-c,9a-c,10a-c) Performance
Information; (1a, 2a, 3a, 4a, 5a, 6a,
7a, 8a) Financial Highlights-Class A
Shares; (1b) Financial
Highlights-Class F Shares;
(1c,2b,3b,4b,5b,6b,7b,8b) Financial
Highlights-Class B Shares; (1d,2c,
3c,4c,5c,6c,7c,8c) Financial
Highlights-Class C Shares.
Item 4. General Description
of Registrant ...............(1a-d,2a-c,3a-c,4a-c,5a-c,6a-c,7a-c,
8a-c,9a-c,10a-c) General Information;
-------------
(1a-d,2a-c,3a-c,4a-c,5a-c,6a-c,7a-c,
8a-c,9a-c,10a-c) Investment
Information; (1a-d,2a-c,3a-c,4a-c,
5a-c,6a-c,7a-c,8a-c,9a-c,10a-c)
Investment Objective; (1a-d,2a-c,3a-c,
4a-c,5a-c,6a-c,7a-c,8a-c, 9a-c,10a-c)
Investment Policies; (1a-d) Risk
Factors and Investment Considerations;
(8a-c, 9a-c,10a-c) Risks of Futures
and Options Transactions; (8a-c,
9a-c )Risk Characteristics of Foreign
Securities; (8a-c, 9a-c,10a-c)
Currency Risks; (9a-c,10a-c)
Risk Factors Relating to Investing in
High Yield Securities; (7a-c, 8a-c,
9a-c,10a-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,9a-c,10a-c) Investment
Limitations.
Item 5. Management of the Fund........(1a-d,2a-c, 3a-c,4a-c,5a-c,6a-c,7a-c,
8a-c,9a-c,10a-c) Corporation
Information;
----------------------
(1a-d,2a-c,3a-c,4a-c,5a-c,6a-c,7a-c,
8a-c,9a-c,10a-c) Management of the
Corporation; (1a,c,d,
2a-c,3a-c,4a-c,5a-c,6a-c, 7a-c, 8a-c,
9a-c,10a-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, 9a-c,10a-c)
Administration of the Fund;
(8a-c,9a-c,10a-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,9a-c,10a-c) Brokerage
Transactions.
Item 6. Capital Stock and
Other Securities ............(1a-d,2a-c,3a-c,4a-c,5a-c,6a-c,7a-c,
8a-c,9a-c,10a-c) Dividends and
Distributions;
----------------
(1a-d,2a-c,3a-c,4a-c,5a-c,6a-c,7a-c,
8a-c,9a-c,10a-c) Account and Share
Information; (1a-d,2a-c,3a-c,4a-c,
5a-c,6a-c,7a-c,8a-c,9a-c,10a-c)
Shareholder Information;
(1a-d,2a-c,3a-c,4a-c,5a-c,6a-c,7a-c,
8a-c,9a-c,10a-c) Tax Information;
(1a-d,2a-c,3a-c,4a-c,5a-c,6a-c,7a-c,
8a-c,9a-c,10a-c) Federal Income Tax;
(1a-d,2a-c,3a-c,4a-c,5a-c,6a-c,7a-c,
8a-c,9a-c,10a-c) State and Local
Taxes; (1a-d) 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,9a-c,10a-c) Net Asset Value;
(1a,1c,1d,
2a-c,3a-c,4a-c,5a-c,6a-c,7a-c,8a-c,
9a-c,10a-c)
Investing in the Fund;
(1a-d,2a-c,3a-c,4a-c,5a-c,6a-c,7a-c,
8a-c,9a-c,10a-c)
Purchasing Shares;
(1a,2a,3a,4a,5a,6a,7a,8a,9a,10a) Class
A Shares; (1b) Investing in Class F
Shares;
(1c,2b,3b,4b,5b,6b,7b,8b,9b,10b) Class
B Shares;
(1d,2c,3c,4c,5c,6c,7c,8c,9c,10c) Class
C Shares;(1a-d,
2a-c,3a-c,4a-c,5a-c,6a-c,7a-c, 8a-c,
9a-c,10a-c) Systematic Investment
Program; (1a-d,
2a-c,3a-c,4a-c,5a-c,6a-c, 7a-c,
8a-c,9a-c,10a-c) Confirmations and
Account Statements.
Item 8. Redemption or Repurchase......(1a-d,2a-c,3a-c,4a-c,5a-c,6a-c,7a-c,
8a-c,9a-c,10a-c) Redeeming and
Exchanging Shares;
------------------------
(1a-d,2a-c,3a-c,4a-c,5a-c,6a-c,7a-c,
8a-c,9a-c,10a-c) Redeeming or
Exchanging Shares Through a
Financial Intermediary; (1a-d,2a-c,
3a-c,4a-c,5a-c,6a-c,7a-c,8a-c,9a-c,
10a-c) Redeeming or
Exchanging Shares by Telephone;
(1a-d,2a-c,3a-c,4a-c,5a-c,6a-c,7a-c,
8a-c,9a-c,10a-c) Redeeming or
Exchanging Shares by Mail; (1a-d,2a-c,
3a-c,4a-c,5a-c,6a-c,7a-c,8a-c, 9a-c,
10a-c) Requirements for
Redemption; (1a-d,2a-c,3a-c,4a-c,5a-c,
6a-c,7a-c,8a-c,9a-c,10a-c) Contingent
Deferred Sales Charge;
(1a-d,2a-c,3a-c,4a-c,5a-c,6a-c,7a-c,
8a-c,9a-c,10a-c) Eliminating the
Contingent Deferred Sales
Charge; (1a-d,2a-c,3a-c,4a-c,5a-c,
6a-c,7a-c,8a-c,9a-c,10a-c) Systematic
Withdrawal Program;
(1a-d, 2a-c,3a-c,4a-c,5a-c,6a-c,7a-c,
8a-c,9a-c,10a-c) Accounts With Low
Balances.
Item 9. Pending Legal Proceedings.....None
<PAGE>
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,9a-c,10a-c) Cover Page.
Item 11. Table of Contents.............(1a-d,2a-c,3a-c,4a-c,5a-c,6a-c,7a-c,
8a-c,9a-c,10a-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,9a-c,10a-c) General Information
About the Fund;
(1a-d,2a-c,3a-c,4a-c,5a-c,6a-c,7a-c,
8a-c,9a-c,10a-c) About Federated
Investors, Inc..
Item 13. Investment Objectives
and Policies..................(1a-d,2a-c,3a-c,4a-c,5a-c,6a-c,7a-c,
8a-c,9a-c,10a-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,9a-c,10a-c) World Investment
Series, Inc. Management;
(1a-d,2a-c,3a-c,4a-c,5a-c,6a-c,7a-c,
8a-c,9a-c,10a-c) 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,9a-c,10a-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,9a-c,10a-c) Investment Advisory
Services;
(1a-d,2a-c,3a-c,4a-c,5a-c,6a-c,7a-c,
8a-c,9a-c,10a-c) Other Services.
Item 17. Brokerage Allocation..........(1a-d,2a-c,3a-c,4a-c,5a-c,6a-c,7a-c,
8a-c, 9a-c,10a-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,9a-c,10a-c) Purchasing Shares;
(1a-d,2a-c,3a-c,4a-c,5a-c,6a-c,7a-c,
8a-c,9a-c,10a-c) Determining Net Asset
Value; (1a-d,2a-c,3a-c,4a-c,5a-c,6a-c,
7a-c, 8a-c,9a-c,10a-c) Redeeming
Shares.
Item 20. Tax Status....................(1a-d,2a-c,3a-c,4a-c,5a-c,6a-c,7a-c,
8a-c,9a-c,10a-c) Tax Status.
Item 21. Underwriters..................(1b-d,2a-c,3a-c,4a-c,5a-c,6a-c,7a-c,
8a-c, 9a-c,10a-c) Distribution Plan
and Shareholder Services
------------
Agreement.
<PAGE>
Item 22. Calculation of
Performance Data..............(1a-d,2a-c,3a-c,4a-c,5a-c,6a-c,7a-c,
8a-c,9a-c,10a-c) Total Return;
(1a-d,2a-c,3a-c,4a-c,5a-c,6a-c,7a-c,
8a-c,9a-c,10a-c) Yield; (1a-d,2a-c,
3a-c,4a-c,5a-c,6a-c,7a-c,
8a-c,9a-c,10a-c) Performance
Comparisons.
Item 23. Financial Statements..........(1a-d,2a-c,3a-c,4a-c,5a-c,6a-c,7a-c,
8a-c) The Financial Statements for
the fiscal year ended
--------------------
November 30, 1997 are hereby
incorporated by reference from the
Funds' Annual Reports dated
November 30, 1997. (9a-c,10a-c) To be
filed by amendment.
Federated Global Financial Services Fund
(A Portfolio of World Investment Series, Inc.)
Class A Shares, Class B Shares, Class C Shares
Prospectus
The shares of Federated Global Financial Services Fund (the "Fund") offered by
this prospectus represent interests in the Fund, which is a diversified
investment portfolio in World Investment Series, Inc. (the "Corporation"), an
open-end, management investment company (a mutual fund).
The Fund's investment objective is to provide long-term growth of capital. The
Fund invests primarily in equity securities of companies located throughout the
world that operate in the financial services industry.
The shares offered by this prospectus are not deposits or obligations of any
bank, are not endorsed or guaranteed by any bank, and are not insured by the
Federal Deposit Insurance Corporation, the Federal Reserve Board, or any other
government agency. Investment in these shares involves investment risks,
including the possible loss of principal.
This prospectus contains the information you should read and know before you
invest in Class A Shares, Class B Shares and Class C Shares of the Fund. Keep
this prospectus for future reference.
The Fund has also filed a Statement of Additional Information for Class A
Shares, Class B Shares and Class C Shares dated August __, 1998, 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 make inquiries about the Fund, contact your financial
institution. The Statement of Additional Information, material incorporated by
reference into this document, and other information regarding the Fund 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 August __, 1998
<PAGE>
Summary of Fund Expenses
<PAGE>
The Corporation was incorporated under the laws of the State of Maryland on
January 25, 1994. The Board of Directors ("Directors") has established three
classes of shares known as Class A Shares, Class B Shares and, Class C Shares
which represent interests in a single portfolio of securities. This prospectus
relates to the Class A Shares, Class B Shares and Class C Shares of the Fund
("Shares") which are designed to give institutions and individuals a convenient
means of seeking long-term growth of capital without undue risk through a
professionally managed, diversified portfolio comprised primarily of equity
securities of companies located throughout the world that operate in the
financial services industry. The Fund is not intended to provide a complete
investment program for an investor.
The Fund's current net asset value and offering price may be found in the mutual
funds section of local newspapers under "Federated" and the appropriate class
designation listing.
Calling the Fund Call the Fund at 1-800-341-7400.
Year 2000 Statement. Like other mutual funds and business organizations
worldwide, the Fund's service providers (among them, the adviser,the
sub-adviser, distributor, administrator and transfer agent) must ensure that
their computer systems are adjusted to properly process and calculate
date-related information from and after January 1, 2000. Many software programs
and, to a lesser extent, the computer hardware in use today cannot distinguish
the year 2000 from the year 1900. Such a design flaw could have a negative
impact in the handling of securities trades, pricing and accounting services.
The Fund and its service providers are actively working on necessary changes to
computer systems to deal with the Year 2000 issue and believe that systems will
be Year 2000 compliant when required. Analysis continues regarding the financial
impact of instituting a Year 2000 compliant program on the Fund's operations.
Investment Objective
The investment objective of the Fund is to provide long-term growth of capital.
The investment objective of the Fund cannot be changed without the approval of
the 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. Unless indicated otherwise, the investment
policies may be changed by the Directors without the approval of shareholders.
Shareholders will be notified before any material changes in these policies
become effective.
Investment Policies
The Fund will seek to achieve its investment objective by investing at least 65%
of its total assets in common and preferred stocks and warrants to acquire such
securities issued by financial services companies. A "financial services"
company is an entity in which (i) at least 50% of either the revenues or
earnings was derived from financial services activities, or (ii) at least 50% of
the assets was devoted to such activities, based on the company's most recent
fiscal year. The remainder of the Fund's assets may be invested in debt
securities issued by financial services companies and/or equity and debt
securities of companies outside of the financial services industry, which in the
opinion of the adviser and sub-adviser, stand to benefit from the developments
in the financial services industry.
Global Financial Services Industries Investments Examples of financial services
companies include commercial banks and savings institutions and loan
associations and their holding companies; consumer and industrial finance
companies; investment banks; insurance brokerages; securities brokerage and
investment advisory companies; real estate-related companies; leasing companies;
and a variety of firms in all segments of the insurance field such as
multi-line, property and casualty and life insurance holding companies.
The adviser and sub-adviser believe an accelerating rate of global economic
interdependence will lead to significant growth in the demand for financial
services. In addition, in the adviser's and sub-adviser's views, as the
industries evolve, opportunities will emerge for those companies positioned for
the future. Thus, the adviser and sub-adviser expect that banking and related
financial institution consolidation in the developed countries, increased demand
for retail borrowing in developing countries, a growing need for international
trade-based financing, a rising demand for sophisticated risk management, the
proliferating number of liquid securities markets around the world, and larger
concentrations of investable assets should lead to growth in financial service
companies that are positioned for the future.
Under normal market conditions, the Fund's portfolio will include issuers
located in at least three countries, although the adviser and sub-adviser expect
to invest in more than three countries. From time to time, the adviser and
sub-adviser may invest a majority of the Fund's assets in issuers in any one
country. Such exposure to a single market may increase the volatility of the
Fund.
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 potential.
In selecting securities, the adviser and sub-adviser typically evaluate industry
trends, a company's financial strength, its competitive position in domestic and
export markets, technology, recent developments and profitability, together with
overall growth prospects. Other considerations generally include quality and
depth of management, government regulation, and availability and cost of labor
and raw materials. Investment decisions are made without regard to arbitrary
criteria as to minimum asset size, debt-equity ratios or dividend history of
portfolio companies.
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 D by Standard & Poor's ("S&P") or Fitch IBCA, Inc. ("Fitch")
or as low as C by Moody's Investors Service, Inc. ("Moody's"), or, if unrated,
are of comparable quality as determined by the adviser and sub-adviser. Such
debt securities are commonly known as "junk bonds." The prices of fixed income
securities generally fluctuate inversely to the direction of interest rates.
Please refer to the Appendix in this prospectus for a description of these
ratings.
Warrants
The Fund may invest in warrants. Warrants are options to purchase common stock
at a specific price (usually at a premium above the market value of the optioned
common stock at issuance) valid for a specific period of time. Warrants may have
a life ranging from less than a year to twenty years or may be perpetual.
However, most warrants have expiration dates after which they are worthless. In
addition, if the market price of the common stock does not exceed the warrant's
exercise price during the life of the warrant, the warrant will expire as
worthless. Warrants have no voting rights, pay no dividends, and have no rights
with respect to the assets of the corporation issuing them. The percentage
increase or decrease in the market price of the warrant may tend to be greater
than the percentage increase or decrease in the market price of the optioned
common stock.
Convertible Securities
Convertible securities include a spectrum of securities which can be exchanged
for or converted into common stock. Convertible securities may include, but are
not limited to: convertible bonds or debentures; convertible preferred stock;
units consisting of usable bonds and warrants; or securities which cap or
otherwise limit returns to the convertible security holder, such as DECS-
(Dividend Enhanced Convertible Stock, or Debt Exchangeable for Common Stock when
issued as a debt security), LYONS- (Liquid Yield Option Notes, which are
corporate bonds that are purchased at prices below par with no coupons and are
convertible into stock), PERCS- (Preferred Equity Redemption Cumulative Stock
(an equity issue that pays a high cash dividend, has a cap price and mandatory
conversion to common stock at maturity), and PRIDES- (Preferred Redeemable
Increased Dividend Securities (which are essentially the same as DECS; the
difference is little more than who initially underwrites the issue).
Convertible securities are often rated below investment grade or not rated
because they fall below debt obligations and just above common equity in order
of preference or priority on the issuer's balance sheet. Hence, an issuer with
investment grade senior debt may issue convertible securities with ratings less
than investment grade or not rated. Convertible securities rated below
investment grade may be subject to some of the same risks as those inherent in
junk bonds. The Fund does not limit convertible securities by rating, and there
is no minimal acceptance rating for a convertible security to be purchased or
held in the Fund. Therefore, the Fund invests in convertible securities
irrespective of their ratings. This could result in the Fund purchasing and
holding, without limit, convertible securities rated below investment grade by
an NRSRO or in the Fund holding such securities where they have acquired a
rating below investment grade after the Fund has purchased it.
Zero Coupon Convertible Securities
Zero coupon convertible securities are securities which are issued at a discount
to their face amount and do not entitle the holder to any periodic payments of
interest prior to maturity. Rather, interest earned on zero coupon convertible
securities accretes at a stated yield until the security reaches its face amount
at maturity. Zero coupon convertible securities are convertible into a specific
number of shares of the issuer's common stock. In addition, zero coupon
convertible securities usually have put features that provide the holder with
the opportunity to put the bonds back to the issuer at a stated price before
maturity. Generally, the prices of zero coupon convertible securities may be
more sensitive to market interest rate fluctuations than conventional
convertible securities.
Federal income tax law requires the holder of a zero coupon convertible security
to recognize income with respect to the security prior to the receipt of cash
payments. To maintain its qualification as a regulated investment company and
avoid liability of federal income taxes, the Fund will be required to distribute
income accrued with respect to zero coupon convertible securities which it owns,
and may have to sell portfolio securities (perhaps at disadvantageous times) in
order to generate cash to satisfy these distribution requirements.
Real Estate Investment Trusts
The Fund may purchase interests in equity, mortgage and hybrid real estate
investment trusts. Hybrid real estate investment trusts have characteristics of
and may have risks associated with both equity and mortgage real estate
investment trusts. Equity and mortgage real estate investment trusts are
dependent upon management skill and are not diversified. Therefore, they are
subject to the risk of financing single projects. Real estate investment trusts
are also subject to heavy cash flow dependency, defaults by borrowers, and
self-liquidation. Additionally, equity real estate investment trusts may be
affected by any changes in the value of the underlying property owned by the
trusts, and mortgage real estate investment trusts may be affected by the
quality of any credit extended. The adviser and sub-adviser seek to mitigate
these risks by selecting real estate investment trusts diversified by sector
(shopping malls, apartment building complexes, and health care facilities) and
geographic location.
Investing in Securities of Other Investment Companies
The Fund may invest its assets in securities of other investment companies as an
efficient means of carrying out its investment policies. It should be noted that
investment companies incur certain expenses, such as management fees, and,
therefore, any investment by the Fund in shares of other investment companies
may be subject to such duplicate expenses.
Restricted and Illiquid Securities
The Fund may invest in restricted securities. Restricted securities are any
securities in which the Fund may invest pursuant to its investment objective and
policies but which are subject to restriction on resale under federal securities
law. Securities that can be traded without material 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. Under criteria
established by the Directors, certain restricted securities are determined to be
liquid. To the extent that restricted securities are not determined to be
liquid, the Fund will limit their purchase together with other illiquid
securities including non-negotiable time deposits and repurchase agreements
providing for settlement in more than seven days after notice to 15% of its net
assets.
Repurchase Agreements
Certain securities in which the Fund invests may be purchased pursuant to
repurchase agreements. Repurchase agreements are arrangements in which banks,
broker/dealers, and other recognized financial institutions sell U.S. government
securities or other securities to the Fund and agree at the time of sale to
repurchase them at a mutually agreed upon time and price. To the extent that the
original seller does not repurchase the securities from the Fund, the Fund could
receive less than the repurchase price on any sale of such securities.
When-Issued and Delayed Delivery Transactions
The Fund may purchase securities on a when-issued or delayed delivery basis.
These transactions are arrangements in which the Fund purchases securities with
payment and delivery scheduled for a future time. The seller's failure to
complete these transactions may cause the Fund to miss a price or yield
considered to be advantageous. Settlement dates may be a month or more after
entering into these transactions, and the market values of the securities
purchased may vary from the purchase prices.
The Fund may dispose of a commitment prior to settlement if the adviser and
sub-adviser deem it appropriate to do so. In addition, the Fund may enter into
transactions to sell its purchase commitments to third parties at current market
values and simultaneously acquire other commitments to purchase similar
securities at later dates. The Fund may realize short-term profits or losses
upon the sale of such commitments.
Lending of Portfolio Securities
In order to generate additional income, the Fund may lend its portfolio
securities to broker/dealers, banks, or other institutional borrowers of
securities. The Fund will only enter into loan arrangements with broker/dealers,
banks, or other institutions which the adviser and sub-adviser have determined
are creditworthy under guidelines established by the Directors and will receive
collateral in cash or United States government securities that will be
maintained in an amount equal to the current market value of the securities
loaned.
There is the risk that when lending portfolio securities, the securities may not
be available to the Fund on a timely basis and the Fund may, therefore, lose the
opportunity to sell the securities at a desirable price. In addition, in the
event that a borrower of securities would file for bankruptcy or become
insolvent, disposition of the securities may be delayed pending court action.
Temporary Investments
For temporary defensive purposes, when the adviser and sub-adviser determine
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, but not limited
to foreign and domestic money market instruments, short-term government and
corporate obligations, and repurchase agreements.
Forward Commitments
Forward commitments are contracts to purchase securities for a fixed price at a
date beyond customary settlement time. The Fund may enter into these contracts
if liquid securities in amounts sufficient to meet the purchase price are
segregated on the Fund's records at the trade date and maintained until the
transaction has been settled. Risk is involved if the value of the security
declines before settlement. Although the Fund enters into forward commitments
with the intention of acquiring the security, it may dispose of the commitment
prior to settlement and realize short-term profit or loss.
Foreign Currency Transactions
The Fund will enter into foreign currency transactions to obtain the necessary
currencies to settle securities transactions. Currency transactions may be
conducted either on a spot or cash basis at prevailing rates or through forward
foreign currency exchange contracts.
The Fund may also enter into foreign currency transactions to protect Fund
assets against adverse changes in foreign currency exchange rates or exchange
control regulations. Such changes could unfavorably affect the value of Fund
assets which are denominated in foreign currencies, such as foreign securities
or funds deposited in foreign banks, as measured in U.S. dollars. Although
foreign currency transactions may be used by the Fund to protect against a
decline in the value of one or more currencies, such efforts may also limit any
potential gain that might result from a relative increase in the value of such
currencies and might, in certain cases, result in losses to the Fund. 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 risk of imperfect correlation
between changes in the values of the currencies to which such transactions
relate and changes in the value of the currency or other asset or liability that
is the subject of the hedge.
Forward Foreign Currency Exchange Contracts
A forward foreign currency exchange contract ("forward contract") is an
obligation to purchase or sell an amount of a particular currency at a specific
price and on a future date agreed upon by the parties.
Generally, no commission charges or deposits are involved. At the time the Fund
enters into a forward contract, Fund assets with a value equal to the Fund's
obligation under the forward contract are segregated on the Fund's records and
are maintained until the contract has been settled. The Fund will generally
enter into a forward contract to provide the proper currency to settle a
securities transaction at the time the transaction occurs ("trade date"). The
period between the trade date and settlement date will vary between twenty-four
hours and sixty days, depending upon local custom.
The Fund may also protect against the decline of a particular foreign currency
by entering into a forward contract to sell an amount of that currency
approximating the value of all or a portion of the Fund's assets denominated in
that currency ("hedging"). The success of this type of short-term hedging
strategy is highly uncertain due to the difficulties of predicting short-term
currency market movements and of precisely matching forward contract amounts and
the constantly changing value of the securities involved. Although the adviser
and sub-adviser will consider the likelihood of changes in currency values when
making investment decisions, the adviser and sub-adviser believe that it is
important to be able to enter into forward contracts when it believes the
interests of the Fund will be served. The Fund will not enter into forward
contracts for hedging purposes in a particular currency in an amount in excess
of the Fund's assets denominated in that currency at the time the contract was
initiated, but as consistent with its other investment policies and as not
otherwise limited in its ability to use this strategy.
Options
The Fund may deal in options on foreign currencies, securities, and securities
indices, and on futures contracts involving these items, which options may be
listed for trading on an international securities exchange or traded
over-the-counter. The Fund may use options to manage interest rate and currency
risks. The Fund may also write covered call options and secured put options to
seek to generate income or lock in gains.
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 puts, there is the risk that the Fund may
be required to take delivery of the underlying asset at a disadvantageous price.
Over-the-counter options ("OTC options") differ from exchange traded options in
several respects. They are transacted directly with dealers and not with a
clearing corporation, and there is a risk of nonperformance by the dealer as a
result of the insolvency of such dealer or otherwise, in which event the Fund
may experience material losses. However, in writing options, the premium is paid
in advance by the dealer. OTC options, which may not be continuously liquid, are
available for a greater variety of assets, and with a wider range of expiration
dates and exercise prices, than are exchange traded options.
It is not certain that a secondary market for positions in options, or futures
contracts (see below), will exist at all times. Although the adviser and
sub-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.
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 options
thereon sold by the Fund are generally subject to segregation and coverage
requirements established by either the Commodities Futures Trading Commission
("CFTC") or the Securities and Exchange Commission ("SEC"), with the result
that, if the Fund does not hold the instrument underlying the futures contract
or option, the Fund will be required to segregate on an ongoing basis with its
custodian cash, U.S. government securities, or other liquid high grade debt
obligations in an amount at least equal to the Fund's obligations with respect
to such instruments.
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
decrease in market value of securities in its portfolio that might otherwise
result. When the Fund is not fully invested and anticipates a significant market
advance, it may enter into futures contracts to purchase the index in order to
gain rapid market exposure that may in part or entirely offset increases in the
cost of securities that it intends to purchase. In many of these transactions,
the Fund will purchase such securities upon termination of the futures position
but, depending on market conditions, a futures position may be terminated
without the corresponding purchases of common stock. The Fund may also invest in
securities index futures contracts when the adviser and sub-adviser believe such
investment is more efficient, liquid, or cost-effective than investing directly
in the securities underlying the index.
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 and sub-adviser
believe 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 futures and related options involves special consideration and risks,
for example, (1) the ability of the Fund to utilize futures successfully will
depend on the adviser's and sub-adviser's abilities to predict pertinent market
movements; (2) there might be imperfect correlation, or even no correlation,
between the change in market value of the securities held by the Fund and the
prices of the futures and options thereon relating to the securities purchased
or sold by the Fund. The use of futures and related options may reduce risk of
loss by wholly or partially offsetting the negative effect of unfavorable price
movements but they can also reduce the opportunity for gain by offsetting the
positive effect of favorable price movements in positions. No assurance can be
given that the adviser's and sub-adviser's judgment in this respect will be
correct.
It is not certain that a secondary market for positions in futures contracts or
for options will exist at all times. Although the adviser and sub-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
objective 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 subject to the futures contracts may not
correlate perfectly with the prices of the securities in the Fund's portfolio.
This may cause the futures contract and any related options to react differently
than the portfolio securities to market changes. In addition, the adviser and
sub-adviser could be incorrect in their expectations about the direction or
extent of market factors such as stock price movements. In these events, the
Fund may lose money on the futures contract or option.
It is not certain that a secondary market for positions in futures contracts or
for options will exist at all times. Although the adviser and sub-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.
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.
Swap agreements are sophisticated hedging 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 Fund may also suffer losses if
it is unable to terminate outstanding swap agreements to reduce its exposure
through offsetting transactions. When the Fund enters into a swap agreement,
assets of the Fund equal to the value of the swap agreement will be segregated
by the Fund.
Risk Characteristics of Foreign Securities
Investing in non-U.S. securities carries substantial risks in addition to those
associated with domestic investments. In an attempt to reduce some of these
risks, the Fund intends to diversify its investments broadly among foreign
countries which may include both developed and developing countries.
The Fund may take advantage of the unusual opportunities for higher returns
available from investing in developing countries. These investments carry
considerably more volatility and risk because they generally are associated with
less mature economies and less stable political systems.
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 limitations also may be imposed by the charters of individual
companies to prevent, among other concerns, violation of foreign investment
limitations.
Repatriation of investment income, capital, and the proceeds of sales by foreign
investors may require governmental registration and/or approval in some
countries. The Fund could be adversely affected by delays in, or a refusal to
grant, any required governmental registration or approval for such repatriation.
Any investment subject to such repatriation controls will be considered illiquid
if it appears reasonably likely that this process will take more than seven
days.
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 due to settlement problems could
cause the Fund to miss attractive investment opportunities. Inability to dispose
of a portfolio security due to settlement problems could result either in losses
to the Fund due to subsequent declines in value of the portfolio security or, if
the Fund has entered into a contract to sell the security, could result in
possible liability to the purchaser.
Currency Risks
Because the majority of the securities purchased by the Fund may be 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, as amended (the "Code"), the Fund is required to separately
account for the foreign currency component of gains or losses, which will
usually be viewed under the Code as items of ordinary and distributable income
or loss, thus affecting the Fund's distributable income. (See "Federal Income
Tax.")
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 will not convert its holdings of foreign
currencies to U.S. dollars daily. When the Fund converts its holdings to another
currency, it may incur conversion costs. Foreign exchange dealers may realize a
profit on the difference between the price at which they buy and sell
currencies.
Foreign Companies
Other differences between investing in foreign and U.S. companies include:
o less publicly available information about foreign issuers;
o credit risks associated with certain foreign governments;
o the lack of uniform accounting, auditing, and financial reporting standards
and practices or regulatory requirements comparable to those applicable to
U.S. companies;
o less readily available market quotations on foreign issues;
o differences in government regulation and supervision of foreign stock
exchanges, brokers, listed companies, and banks;
o differences in legal systems which may affect the ability to enforce
contractual obligations or obtain court judgments;
o 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;
o the likelihood that securities of foreign issuers may be less liquid or
more volatile;
o foreign brokerage commissions may be higher;
o unreliable mail service between countries;
o political or financial changes which adversely affect investments in some
countries;
o increased risk of delayed settlements of portfolio transactions or loss of
certificates for portfolio securities;
o certain markets may require payment for securities before delivery;
o religious and ethnic instability; and
o 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.
Risk Factors Relating to Investing in High Yield Securities
The debt securities in which the Fund invests may not be 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 loss of income and principal due to an issuer's default. To a greater
extent than investment grade bonds, lower-rated bonds tend to reflect short-term
corporate, economic, and market developments, as well as investor perceptions of
the issuer's credit quality. In addition, lower-rated bonds may be more
difficult to dispose of or to value than higher-rated, lower-yielding bonds.
The Fund's adviser and sub-adviser attempt to reduce the risks described above
through diversification of the portfolio and by credit analysis of each issuer
as well as by monitoring broad economic trends and corporate and legislative
developments.
Portfolio Turnover
The Fund does not attempt to set or meet any specific portfolio turnover rate,
since turnover is incidental to transactions undertaken in an attempt to achieve
the Fund's investment objective. High turnover rates may result in higher
brokerage commissions and capital gains. See "Tax Information" in this
prospectus.
Investment Limitations
The Fund will not:
n with 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; or
n borrow money, issue senior securities, or pledge assets, except that under
certain circumstances the Fund may borrow money and engage in reverse
repurchase transactions in amounts up to one-third of the value of its total
assets, including the amounts borrowed, and pledge its assets to secure such
borrowings.
The above investment limitations cannot be changed without shareholder approval.
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 Securities
Corp.) 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.
The Fund's net asset value ("NAV") per Share fluctuates and is based on the
market value of all securities and other assets of the Fund. The NAV 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.
All purchases, redemptions and exchanges are processed at the NAV next
determined after the request in proper form is received by the Fund. The NAV is
determined as of the close of trading on the New York Stock Exchange (normally
4:00 p.m., Eastern time) every day the New York Stock Exchange is open.
This prospectus offers three classes of Shares each with the characteristics
described below.
Class AClass BClass C
Minimum and Subsequent $1500/$100 $1500/$100 $1500/$100
Investment Amounts
Minimum and Subsequent $250/$100 $250/$100 $250/$100
Investment Amount
for Retirement Plans
Maximum Sales Charge 5.50%* None None
Maximum Contingent None 5.50 1.00%#
Deferred Sales
Charge**
Conversion Feature No Yes No * Class A Shares are sold at NAV, plus a sales
charge as follows:
Sales Charge Dealer
as a PercentageConcession as
Public Neta Percentage of
OfferingAmountPublic Offering
Amount of Transaction Price Invested 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 million 2.00% 2.04% 1.80%
$1 million or greater 0.00% 0.00% 0.25%
** Computed on the lesser of the NAV of the redeemed Shares at the time of
purchase or the NAV of the redeemed Shares at the time of redemption.
The following contingent deferred sales charge schedule applies to Class B
Shares:
Year of RedemptionContingent Deferred
After PurchaseSales 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 B Shares convert to Class A Shares (which pay lower ongoing expenses)
approximately eight years after purchase. See "Conversion of Class B Shares."
# The contingent deferred sales charge is assessed on Shares redeemed within one
year of their purchase date.
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 intermediary (such as a bank or broker/dealer) or by sending a wire or
check directly to the Fund. Financial intermediaries may impose different
minimum investment requirements on their customers. An account must be
established with a financial intermediary or by completing, signing, and
returning the new account form available from the Fund before Shares can be
purchased. Shareholders in certain other funds advised and distributed by
affiliates of Federated Investors, Inc. ("Federated Funds") may exchange their
Shares for Shares of the corresponding class of the Fund. The Fund reserves the
right to reject any purchase or exchange request.
In connection with any sale, Federated Securities Corp. may, from time to time,
offer certain items of nominal value to any shareholder or investor.
Purchasing Shares through a Financial Intermediary
Orders placed through a financial intermediary are considered received when the
Fund is notified of the purchase order or when payment is converted into federal
funds. Purchase orders through a 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 intermediaries must be
received by the financial intermediary 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 intermediary's responsibility to transmit orders promptly.
Financial intermediaries may charge fees for their services.
The financial intermediary which maintains investor accounts in Class B Shares
or Class C Shares with the Fund must do so on a fully disclosed basis unless it
accounts for share ownership periods used in calculating the contingent deferred
sales charge (see "Contingent Deferred Sales Charge"). In addition, advance
payments made to financial intermediaries may be subject to reclaim by the
distributor for accounts transferred to financial intermediaries which do not
maintain investor accounts on a fully disclosed basis and do not account for
share ownership periods.
Purchasing Shares by Wire
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 when State Street Bank receives payment by wire. Federal funds should
be wired as follows: Federated Shareholder Services Company, c/o State Street
Bank and Trust Company, Boston, MA 02266-8600; 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.
Purchasing Shares by Check
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, MA 02266-8600. Orders by mail are
considered received when payment by check is converted into federal funds
(normally the business day after the check is received).
Systematic Investment Program
Under this program, funds in a minimum amount of $50 may be automatically
withdrawn periodically from the shareholder's checking account at an Automated
Clearing House ("ACH") member and invested in the Fund. Shareholders should
contact their financial intermediary or the Fund to participate in this program.
Retirement Plans
Fund Shares can be purchased as an investment for retirement plans or IRA
accounts. For further details, contact the Fund and consult a tax adviser.
Class A Shares
Class A Shares are sold at NAV, plus a sales charge. However:
No sales charge is imposed for Class A Shares purchased:
n through financial intermediaries that do not receive sales charge dealer
concessions;
n by Federated Life Members; or
n through "wrap accounts" or similar programs under which clients pay a fee for
services.
In addition, the sales charge on Class A Shares can be reduced or eliminated by:
n purchasing in quantity;
n combining concurrent purchases of:
* Shares by you, your spouse, and your children under age 21, or
* Shares of the same class of two or more Federated Funds (other than money
market funds);
n accumulating purchases. In calculating the sales charge on an additional
purchase, you may count the current value of previous Share purchases still
invested in the Fund;
n signing a letter of intent to purchase a specific dollar amount of Shares
within 13 months; or
n using the reinvestment privilege within 120 days of redeeming Shares of an
equal or lesser amount.
Consult a financial intermediary or Federated Securities Corp. for details on
these programs. In order to eliminate the sales charge or receive sales charge
reductions, Federated Securities Corp. must be notified by the shareholder in
writing or by a financial intermediary at the time of purchase.
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 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
establishment of customer accounts and purchases of Shares. Class B Shares Class
B Shares are sold at NAV. Under certain circumstances, a contingent deferred
sales charge will be assessed at the time of a redemption. Orders for $250,000
or more of Class B Shares will automatically be invested in Class A Shares.
Conversion of Class B Shares
Class B Shares will automatically convert into Class A Shares after eight full
years from the purchase date. Such conversion will be on the basis of the
relative NAVs per Share, without the imposition of any charges. 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.
Class C Shares
Class C Shares are sold at NAV. A contingent deferred sales charge of 1.00% will
be charged on assets redeemed within the first full 12 months following
purchase.
Shares of the Fund may be redeemed for cash or exchanged for Shares of the same
class of other Federated Funds on days on which the Fund computes its NAV.
Shares are redeemed at NAV less any applicable contingent deferred sales charge.
However, in order to protect shareholders of the Fund from possible detrimental
effects of redemptions, the adviser and sub-adviser may cause a delay of two to
seven days in sending redemption proceeds during certain periods of market
volatility or for certain shareholders. Exchanges are made at NAV. Shareholders
who desire to automatically exchange Shares, of a like class, in a
pre-determined amount on a monthly, quarterly, or annual basis may take
advantage of a systematic exchange privilege. Information on this privilege is
available from the Fund or your financial intermediary. Depending upon the
circumstances, a capital gain or loss may be realized when Shares are redeemed
or exchanged.
Redeeming or Exchanging Shares through a Financial Intermediary
Shares of the Fund may be redeemed or exchanged by contacting your financial
intermediary before 4:00 p.m. (Eastern time). In order for these transactions to
be processed at that day's NAV, financial intermediaries (other than
broker/dealers) must transmit the request to the Fund before 4:00 p.m. (Eastern
time), while broker/dealers must transmit the request to the Fund before 5:00
p.m. (Eastern time). The financial intermediary is responsible for promptly
submitting transaction requests and providing proper written instructions.
Customary fees and commissions may be charged by the financial intermediary for
this service. Appropriate authorization forms for these transactions must be on
file with the Fund.
Redeeming or Exchanging Shares by Telephone
Shares acquired directly from the Fund may be redeemed in any amount, or
exchanged, by calling 1-800-341-7400. Appropriate authorization forms for these
transactions must be on file with the Fund. Shares held in certificate form must
first be returned to the Fund as described in the instructions under "Redeeming
or Exchanging Shares by Mail." Redemption proceeds will either 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 ACH will not be
wired until that method of payment has cleared.
Telephone instructions will be recorded. If reasonable procedures are not
followed by the Fund, it may be liable for losses due to unauthorized or
fraudulent telephone instructions. In the event of drastic economic or market
changes, a shareholder may experience difficulty in redeeming by telephone. If
this occurs, "Redeeming or Exchanging Shares By Mail" should be considered. The
telephone transaction privilege may be modified or terminated at any time.
Shareholders would be promptly notified.
Redeeming or Exchanging Shares by Mail
Shares may be redeemed in any amount, or exchanged, by mailing a written request
to: Federated Shareholder Services Company, Fund Name, Fund Class, P.O. Box
8600, Boston, MA 02266-8600. If share certificates have been issued, they must
accompany the written request. It is recommended that certificates be sent
unendorsed by registered or certified mail.
All written requests should state: Fund Name and the Share Class name; the
account name as registered with the Fund; the account number; and the number of
Shares to be redeemed or the dollar amount of the transaction. An exchange
request should also state the name of the Fund into which the exchange is to be
made. All owners of the account must sign the request exactly as the Shares are
registered. A check for redemption proceeds is normally mailed within one
business day, but in no event more than seven days, after receipt of a proper
written redemption request. Dividends are paid up to and including the day that
a redemption or exchange request is processed.
Requirements for Redemption
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.
Requirements for Exchange
Shareholders must exchange Shares having an NAV equal to the minimum investment
requirements of the fund into which the exchange is being made. Contact your
financial intermediary directly or the Fund for free information on and
prospectuses for the Federated Funds into which your Shares may be exchanged.
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 proceeds invested in the same class of
shares of the other fund. Signature guarantees will be required to exchange
between fund accounts not having identical shareholder registrations. The
exchange privilege may be modified or terminated at any time. Shareholders will
be notified of the modification or termination of the exchange privilege.
Systematic Withdrawal Program
Under this program, Shares are redeemed to provide for periodic withdrawal
payments in an amount directed by the shareholder of not less than $100. 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 intermediary or by calling the Fund.
Because participation in this program may reduce, and eventually deplete the
shareholder's investment in the Fund, payments under this program should not be
considered as yield or income. It is not advisable for shareholders to continue
to purchase Class A Shares subject to a sales charge while participating in this
program. A contingent deferred sales charge may be imposed on Class B and C
Shares.
Systematic Withdrawal Program ("SWP") on Class B Shares
A contingent deferred sales charge will not be charged on SWP redemptions on
Class B Shares if:
n Shares redeemed are 12% or less of the account value in a single year;
n the account is at least one year old;
n all dividends and capital gains distributions are reinvested; and
n the account has at least a $10,000 balance when the SWP is established
(multiple Class B Share accounts cannot be aggregated to meet this minimum
balance).
Contingent Deferred Sales Charge
The contingent deferred sales charge will be deducted from the redemption
proceeds otherwise payable to the shareholder and will be retained by the
distributor. 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. The contingent deferred sales charge will not be imposed with respect to
Shares acquired through the reinvestment of dividends or distributions of
long-term capital gains. In determining the applicability of the contingent
deferred sales charge, the required holding period for your new Shares received
through an exchange will include the period for which your original Shares were
held.
Eliminating the Contingent Deferred Sales Charge
Upon written notification to Federated Securities Corp. or the transfer agent,
no contingent deferred sales charge will be imposed on redemptions:
n following the death or disability, as defined in Section 72(m)(7) of the
Internal Revenue Code of 1986, of the last surviving shareholder;
n representing minimum required distributions from an Individual Retirement
Account or other retirement plan to a shareholder who has attained the age of
70 1/2;
n which are involuntary redemptions of shareholder accounts that do not comply
with the minimum balance requirements;
n which are qualifying redemptions of Class B Shares under a Systematic
Withdrawal Program;
n which are reinvested in the Fund under the reinvestment privilege;
n of Shares held by Directors, employees and sales representatives of the Fund,
the distributor, or affiliates of the Fund or distributor, employees of any
financial intermediary that sells Shares of the Fund pursuant to a sales
agreement with the distributor, and their immediate family members to the
extent that no payments were advanced for purchases made by these persons; and
n of Shares originally purchased through a bank trust department, an investment
adviser and sub-adviser registered under the Investment 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 intermediary, to the extent that no payments were advanced for
purchases made through such entities.
For more information regarding the elimination of the contingent deferred sales
charge through a Systematic Withdrawal Program, or any of the above provisions,
contact your financial intermediary or the Fund. The Fund reserves the right to
discontinue or modify these provisions.
Shareholders will be notified of such action.
Confirmations and Account Statements
Shareholders will receive detailed confirmations of transactions (except for
systematic program transactions). In addition, shareholders will receive
periodic statements reporting all account activity, including dividends paid.
The Fund will not issue share certificates.
Dividends and Distributions
Dividends are declared and paid annually to all shareholders invested in the
Fund on the record date. Net long-term capital gains realized by the Fund, if
any, will be distributed at least once every twelve months. Dividends and
distributions are automatically reinvested in additional Shares of the Fund on
payment dates at the ex-dividend date NAV without a sales charge, unless
shareholders request cash payments on the new account form or by contacting the
transfer agent.
Accounts with Low Balances
Due to the high cost of maintaining accounts with low balances, the Fund may
close an account by redeeming all Shares and paying the proceeds to the
shareholder if the account balance falls below the applicable minimum investment
amount. Retirement plan accounts and accounts where the balance falls below the
minimum due to NAV changes will not be closed in this manner. Before an account
is closed, the shareholder will be notified and allowed 30 days to purchase
additional Shares to meet the minimum.
Management of the Corporation
Board of Directors
The Corporation is managed by the 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 Directors handles the Directors' responsibilities between
meetings of the Directors.
Investment Adviser
Except as noted below with regard to the sub-adviser, investment decisions for
the Fund are made by Federated Global Research Corp., the Fund's adviser (the
"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 1.00% of the
Fund's average daily net assets. Under the terms of an Advisory Agreement, which
provides for the voluntary waiver of the advisory fee by the Adviser, the
Adviser may voluntarily waive some or all of its fee. This does not include
reimbursement to the Fund of any expenses incurred by shareholders who use the
transfer agent's subaccounting facilities.
The Adviser can terminate this voluntary waiver at any time at its sole
discretion.
Sub-Adviser
Under the terms of the Sub-Advisory Agreement between the Adviser and Federated
Advisers (the "Sub-Adviser"), the Sub-Adviser will provide the Adviser such
investment advice, statistical and other factual information as may, from time
to time, be reasonably requested by the Adviser.
Sub-Advisory Fees
For its services under the Sub-Advisory Agreement, the Sub-Adviser receives an
allocable portion of the Fund's advisory fee. Such allocation is based on the
amount of U.S. securities which the Sub-Adviser manages for the Fund. This fee
is paid by the Adviser out of its resources and is not an incremental Fund
expense.
Adviser's and Sub-Adviser's Backgrounds
Federated Global Research Corp., incorporated in Delaware on May 12, 1995, is a
registered investment adviser under the Investment Advisers Act of 1940.
Federated Advisers, a Delaware business trust organized on April 11, 1989, is a
registered investment adviser under the Investment Advisers Act of 1940.
The Adviser and Sub-Adviser are subsidiaries of Federated Investors, Inc. All of
the Class A (voting) shares of Federated Investors, Inc. are owned by a trust,
the trustees of which are John F. Donahue, Chairman and Trustee of Federated
Investors, Inc., Mr. Donahue's wife, and Mr. Donahue's son, J. Christopher
Donahue, who is President and Trustee of Federated Investors, Inc. Prior to
September 1995, the Adviser had not served as an investment adviser to mutual
funds.
Federated Global Research Corp., Federated Advisers and other subsidiaries of
Federated Investors, Inc. 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 $120
billion invested across more than 300 funds under management and/or
administration by its subsidiaries, as of December 31, 1997, Federated
Investors, Inc. 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 4,000 financial institutions nationwide.
Richard J. Lazarchic has been portfolio manager of the Fund since August 1998,
and performs the overall allocation of the assets of the Fund among the various
asset categories. In allocating the Fund's assets, Mr. Lazarchic evaluates the
market environment and economic outlook, utilizing the services of the Adviser's
Investment Strategy Committee. Mr. Lazarchic joined Federated Investors in March
1998 as a Vice President of the Fund's Adviser. From May 1979 through October
1997, Mr. Lazarchic was employed with American Express Financial Corp.,
initially as an Analyst and then as a Vice President/Senior Portfolio Manager.
Mr. Lazarchic is a Chartered Financial Analyst. He received his M.B.A. from Kent
State University.
Drew J. Collins has been portfolio manager of the Fund since August 1998. Mr.
Collins joined Federated Investors, Inc. in 1995 as a Senior Vice President of
the Fund's Adviser. Mr. Collins served as Vice President/Portfolio Manager of
international equity portfolios at Arnhold and 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 University of Pennsylvania.
Scott B. Schermerhorn has been portfolio manager of the Fund since August 1998,
and manages the domestic stock asset category for the Fund. Mr. Schermerhorn
joined Federated Investors in 1996 as a Vice President of the Fund's
Sub-Adviser. From 1990 through 1996, Mr. Schermerhorn was a Senior Vice
President and Senior Investment Officer at J W Seligman & Co., Inc. Mr.
Schermerhorn received his M.B.A. in Finance and International Business from
Seton Hall University.
The Corporation, the Adviser and the Sub-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 the 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.
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, Inc..
The distributor may offer to pay financial institutions an amount equal to 1.00%
of the NAV 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.
The distributor will pay dealers an amount equal to 5.50% of the NAV of Class B
Shares purchased by their clients or customers. These payments will be made
directly by the distributor from its assets, and will not be made from the
assets of the Fund. Dealers may voluntarily waive receipt of all or any portion
of these payments. The distributor may pay a portion of the distribution fee
discussed below to financial institutions that waive all or any portion of the
advance payments.
Distribution Plan 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 institutions such as banks,
fiduciaries, custodians for public funds, investment advisers, and broker/
dealers to provide sales services or distribution-related support services as
agents for their clients or customers. With respect to Class B Shares, because
distribution fees to be paid by the Fund to the distributor may not exceed an
annual rate of 0.75% of Class B Shares' average daily net assets, it will take
the distributor a number of years to recoup the expenses it has incurred for its
sales services and distribution-related support services pursuant to the
Distribution Plan.
The Distribution Plan is a compensation type Plan. As such, the Fund makes no
payments to the distributor except as described above. Therefore, the Fund does
not pay for unreimbursed expenses of the distributor, including amounts expended
by the distributor in excess of amounts received by it from the Fund, interest,
carrying or other financing charges in connection with excess amounts expended,
or the distributor's overhead expenses. However, the distributor may be able to
recover such amounts or may earn a profit from future payments made by Shares
under the Distribution Plan.
In addition, the Fund has entered into a Shareholder Services Agreement with
Federated Shareholder Services, a subsidiary of Federated Investors, Inc., 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"). 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.
Other Payments to Financial Institutions
Federated Securities Corp. will pay financial institutions, at the time of
purchase of Class A Shares, an amount equal to O.50% of the NAV of Class A
Shares purchased by their clients or customers under certain qualified
retirement plans as approved by Federated Securities Corp. (Such payments are
subject to a reclaim from the financial institution should the assets leave the
program within 12 months after purchase.)
Furthermore, with respect to Class A Shares, Class B Shares, and Class C Shares,
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 Adviser or its affiliates.
Administration of the Fund
Administrative Services
Federated Services Company, a subsidiary of Federated Investors, Inc., provides
administrative personnel and services (including certain legal and financial
reporting services) necessary to operate the Fund. Federated Services Company
provides these at an annual rate which relates to the average aggregate daily
net assets of all Federated Funds as specified below:
Maximum Average Aggregate
Fee Daily Net Assets
0.150%on the first $250 million 0.125%on the next $250 million 0.100%on the
next $250 million
0.075%on assets in excess of $750 million
The administrative fee received during any fiscal year shall be at least
$125,000 per portfolio and $30,000 per each additional class of Shares.
Federated Services Company may choose voluntarily to waive a portion of its fee.
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 SEC 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.
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 use 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 these criteria, the Adviser may give consideration to those
firms which have sold or are selling Shares of the Fund and other funds
distributed by Federated Securities Corp. The Adviser makes decisions on
portfolio transactions and selects brokers and dealers subject to review by the
Directors.
Each share of the Fund gives the shareholder one vote in Director elections and
other matters submitted to shareholders for vote. All Shares of each portfolio
or class in the Fund have equal voting rights, except that in matters affecting
only a particular portfolio or class, only Shares of that portfolio or class are
entitled to vote.
Directors may be removed by the Directors or by shareholders at a special
meeting. A special meeting of shareholders shall be called by the Directors upon
the written request of shareholders owning at least 10% of the Fund's
outstanding Shares of all series entitled to vote.
Federal Income Tax
The Fund will pay no federal income tax because it expects to meet requirements
of the Internal Revenue 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.
No federal income tax is due on any dividends earned in an IRA or qualified
retirement plan until distributed.
Due to differences in the book and tax treatment of fixed income securities
denominated in foreign currencies, it is difficult to project currency effects
on an interim basis. Therefore, to the extent that currency fluctuations cannot
be anticipated, a portion of distributions to shareholders could later be
designated as a return of capital, rather than income, for income tax purposes,
which may be of particular concern to simple trusts.
If more than 50% of the value of the Fund's assets at the end of the tax year is
represented by stock or securities of foreign corporations, the Fund intends to
qualify for certain Internal Revenue Code stipulations that would allow
shareholders to claim a foreign tax credit or deduction on their U.S. income tax
returns. The Internal Revenue Code may limit a shareholder's ability to claim a
foreign tax credit. Furthermore, shareholders who elect to deduct their portion
of the Fund's foreign taxes rather than take the foreign tax credit must itemize
deductions on their income tax returns.
State and Local Taxes
Shareholders are urged to consult their own tax advisers regarding the status of
their accounts under state and local tax laws.
From time to time, the Fund advertises its total return and yield for each class
of Shares.
Total return represents the change, over a specific period of time, in the value
of an investment in each class of Shares after reinvesting all income and
capital gains distributions. It is calculated by dividing that change by the
initial investment and is expressed as a percentage.
The yield of each class of Shares is calculated by dividing the net investment
income per share (as defined by the SEC) earned by each class of Shares over a
thirty day period by the maximum offering price per share of each class on the
last day of the period. This number is then annualized using semi-annual
compounding. The yield does not necessarily reflect income actually earned by
each class of Shares, and therefore, may not correlate to the dividends or other
distributions paid to shareholders.
The performance information reflects the effect of non-recurring charges, such
as the maximum sales charge or contingent deferred sales charges, which, if
excluded, would increase the total return and yield.
Total return and yield will be calculated separately for Class A Shares, Class B
Shares and Class C Shares.
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.
<PAGE>
Standard and Poor's 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, or economic conditions will likely impair capacity or willingness to
pay interest and repay principal. The B rating category is also used for debt
subordinated to senior debt that is assigned an actual or implied BB or BB-
rating.
CCC--Debt rated CCC has a currently identifiable vulnerability to default, and
is dependent upon favorable business, financial, and economic conditions to meet
timely payment of interest and repayment of principal. In the event of adverse
business, financial, or economic conditions, it is not likely to have the
capacity to pay interest and repay principal. The CCC rating category is also
used for debt subordinated to senior debt that is assigned an actual or implied
B or B- rating.
CC--The rating CC typically is applied to debt subordinated to senior debt that
is assigned an actual or implied CCC debt rating.
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.
CI--The rating CI is reserved for income bonds on which no interest is being
paid.
D--Debt rated D is in payment default. The D rating category is used when
interest payments or principal payments are not made on the date due even if the
applicable grace period has not expired, unless Standard & Poor's Ratings Group
believes that such payments will be made during such grace period. The D rating
also will be used upon the filing of a bankruptcy petition if debt service
payments are jeopardized.
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.
Together with the Aaa group, they comprise what are generally known as high
grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risks appear somewhat larger than in Aaa securities.
A--Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment sometime in the future.
Baa--Bonds which are rated Baa are considered as medium grade obligations (i.e.,
they are neither highly protected nor poorly secured). Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Ba--Bonds which are Ba are judged to have speculative elements; their future
cannot be considered as well assured. Of ten 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 a 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 marked shortcomings.
C--Bonds which are rated C are the lowest rated class of bonds, and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
Fitch IBCA, Inc. Long-Term Debt Rating Definitions
AAA--Bonds considered to be investment grade and of the highest credit quality.
The obligor has an exceptionally strong ability to pay interest and repay
principal, which is unlikely to be affected by reasonably foreseeable events.
AA--Bonds considered to be investment grade and of very high credit quality. The
obligor's ability to pay interest and repay principal is very strong, although
not quite as strong as bonds rated AAA. Because bonds rated in the AAA and AA
categories are not significantly vulnerable to foreseeable future developments,
short-term debt of these issuers is generally rated F-1+.
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 be identified which could assist the
obligor in satisfying its debt service requirements.
B--Bonds are considered highly speculative. While bonds in this class are
currently meeting debt service requirements, the probability of continued timely
payment of principal and interest reflects the obligor's limited margin of
safety and the need for reasonable business and economic activity throughout the
life of the issue.
CCC--Bonds have certain identifiable characteristics which, if not remedied, may
lead to default. The ability to meet obligations requires an advantageous
business and economic environment.
CC--Bonds are minimally protected. Default in payment of interest and/or
principal seems probable over time.
C--Bonds are in imminent default in payment of interest or principal.
DDD, DD, and D--Bonds are in default on interest and/or principal payments. Such
bonds are extremely speculative and should be valued on the basis of their
ultimate recovery value in liquidation or reorganization of the obligor. DDD
represents the highest potential for recovery on these bonds, and D represents
the lowest potential for recovery.
Moody's Investors Service, Inc. Commercial Paper Ratings
Prime-1--Issuers rated Prime-1 (or related supporting institutions) have a
superior capacity for repayment of short-term promissory obligations. Prime-1
repayment capacity will normally be evidenced by the following characteristics:
o Leading market positions in well established industries.
o High rates of return on funds employed.
o Conservative capitalization structure with moderate reliance on debt and ample
asset protection.
o Broad margins in earning coverage of fixed financial charges and high internal
cash generation.
o Well established access to a range of financial markets and assured sources of
alternate liquidity.
Prime-2--Issuers rated Prime-2 (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 be
more affected by external conditions. Ample alternate liquidity is maintained.
Standard and Poor's Commercial Paper Ratings
A-1--This designation indicates that the degree of safety regarding timely
payment is strong. Those issues determined to possess extremely strong safety
characteristics are denoted with a plus sign (+) designation.
A-2--Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high as for
issues designated A-1.
Fitch IBCA, Inc. Commercial Paper Rating Definitions
FITCH-1--(Highest Grade) Commercial paper assigned this rating is regarded as
having the strongest degree of assurance for timely payment.
FITCH-2--(Very Good Grade) Issues assigned this rating reflect an assurance of
timely payment only slightly less in degree than the strongest issues.
<PAGE>
Federated Global Financial Services Fund
(A Portfolio of World Investment Series, Inc.)
Class A Shares, Class B Shares, Class C Shares
Prospectus
August __, 1998
An Open-End, Diversified Management Investment Company
Federated Global Financial Services Fund
Class A Shares
Class B Shares
Class C Shares
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
Distributor
Federated Securities Corp.
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Investment Adviser
Federated Global Research Corp.
175 Water Street
New York, NY 10038-4965
Sub-Adviser
Federated Advisers
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Custodian
State Street Bank and Trust Company
P.O. Box 8600
Boston, MA 02266-8600
Transfer Agent and Dividend Disbursing Agent
Federated Shareholder Services Company
P.O. Box 8600
Boston, MA 02266-8600
Independent Auditors
Ernst & Young LLP
One Oxford Centre
Pittsburgh, PA 15219
Cusip 981487___
Cusip 981487___
Cusip 981487___
G00440-__ (8/98)
Federated Global Financial Services 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 for
Class A Shares, Class B Shares, and Class C Shares of Federated Global Financial
Services Fund (the "Fund"), dated August __, 1998. You may request a 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.
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
Statement dated August __, 1998
Cusip 981487___
Cusip 981487___
Cusip 981487___
402140___ (8/98)
<PAGE>
General Information About the Fund 1
Investment Objective and Policies of the Fund 1
Types of Investments 1
Convertible Securities 1
Investing in Securities of Other Investment
Companies 1
When-Issued and Delayed Delivery Transactions 2
Repurchase Agreements 2
Lending of Portfolio Securities 2
Portfolio Turnover 2
Investment Limitations 2
World Investment Series, Inc. Management 4
Fund Ownership
Directors Compensation
Investment Advisory Services
Adviser to the Fund
Advisory Fees
Brokerage Transactions
Other Services
Fund Administration
Custodian and Portfolio Accountant
Transfer Agent and Dividend Disbursing Agent
Independent Auditors
Purchasing Shares
Quantity Discounts and Accumulated Purchases
Concurrent Purchases
Letter of Intent
Reinvestment Privilege
Conversion of Class B Shares
Distribution Plan and Shareholder
Services Agreement
Conversion to Federal Funds
Purchases by Sales Representatives, Fund
Directors, and Employees
Determining Net Asset Value
Determining Market Value of Securities
Trading in Foreign Securities
Redeeming Shares
Redemption in Kind
Contingent Deferred Sales Charge
Tax Status
The Funds' Tax Status
Foreign Taxes
Shareholders' Tax Status
Total Return
Yield
Performance Information
Economic and Market Information
About Federated Investors, Inc.
Mutual Fund Market
Institutional Clients
Bank Marketing
Broker/Delaers and Bank Broker/Dealer
Subsidiaries
<PAGE>
The Fund is a portfolio in World Investment Series, Inc. (the "Corporation")
which was established as a corporation under the laws of the state of Maryland
on January 25, 1994.
Shares of the Fund are offered in 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 the above-mentioned Shares.
The Fund's investment objective is to provide long-term capital growth.
Types of Investments
The Fund will seek to achieve its investment objective by investing at least 65%
of its total assets in equity securities of domestic and foreign companies
located throughout the world that operate in the financial services industry.
Convertible Securities
Dividend Enhanced Convertible Securities ("DECS"), or similar instruments
marketed under different names, offer a substantial dividend advantage with the
possibility of unlimited upside potential if the price of the underlying common
stock exceeds a certain level. DECS convert to common stock at maturity. The
amount received is dependent on the price of the common stock at the time of
maturity. DECS contain two call options at different strike prices. The DECS
participate with the common stock up to the first call price. They are
effectively capped at that point unless the common stock rises above a second
price point, at which time they participate with unlimited upside potential.
Preferred Equity Redemption Cumulative Stock ("PERCS"), or similar instruments
marketed under different names, offer a substantial dividend advantage, but
capital appreciation potential is limited to a predetermined level. PERCS are
less risky and less volatile than the underlying common stock because their
superior income mitigates declines when the common stock falls, while the cap
price limits gains when the common stock rises.
Real Estate Investment Trusts
The Fund may purchase interests in equity, mortgage and hybrid real estate
investment trusts. Equity real estate investment trusts purchase or lease real
estate. They generate income primarily from rental income and realize capital
gains or losses from appreciated or depreciated property values. Mortgage real
estate investment trusts are interests in real estate mortgages and generate
income from interest payments on mortgage loans.
Investing in Securities of Other Investment Companies
The Fund may invest in the securities of affiliated money market funds as an
efficient means of managing the Fund's uninvested cash.
Sovereign Debt Obligations
The Fund may purchase sovereign debt instruments issued or guaranteed by foreign
governments or their agencies, including debt of countries with emerging markets
or developing countries. Sovereign debt may be in the form of conventional
securities or other types of debt instruments, such as loans or loan
participations. Sovereign debt of emerging market or developing countries may
involve a high degree of risk, and may be in default or present the risk of
default. Governmental entities responsible for repayment of the debt may be
unable or unwilling to repay principal and interest when due, and may require
renegotiation or rescheduling of debt payments. In addition, prospects for
repayment of principal and interest may depend on political as well as economic
factors. The Fund may also invest in debt obligations of supranational entities,
which include international organizations designed or supported by governmental
entities to promote economic reconstruction or development, and international
banking institutions and related government agencies. Examples of these include,
but are not limited to, the International Bank for Reconstruction and
Development (World Bank), European Investment Bank and Inter-American
Development Bank.
When-Issued and Delayed Delivery Transactions
These transactions are made to secure what is considered to be an advantageous
price and yield for the Fund. No fees or other expenses, other than normal
transaction costs, are incurred. However, liquid assets of the Fund sufficient
to make payment for the securities to be purchased are segregated on the Fund's
records at the trade date. These assets are marked to market daily and are
maintained until the transaction has been settled. The Fund does not intend to
engage in when-issued and delayed delivery transactions to an extent that would
cause the segregation of more than 20% of the total value of its assets.
Lending 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.
Repurchase Agreements
The Fund or its custodian will take possession of the securities subject to
repurchase agreements, and these securities will be marked to market daily. To
the extent that the original seller does not repurchase the securities from the
Fund, the Fund could receive less than the repurchase price on any sale of such
securities. In the event that such a defaulting seller filed for bankruptcy or
became insolvent, disposition of such securities by the Fund might be delayed
pending court action. The Fund believes that under the regular procedures
normally in effect for custody of the Fund's portfolio securities subject to
repurchase agreements, a court of competent jurisdiction would rule in favor of
the Fund and allow retention or disposition of such securities. The Fund will
only enter into repurchase agreements with banks and other recognized financial
institutions, such as broker/dealers which are deemed by the Fund's adviser to
be creditworthy.
Reverse Repurchase Agreements
The Fund may also enter into reverse repurchase agreements. These transactions
are similar to borrowing cash. In a reverse repurchase agreement, the Fund
transfers possession of a portfolio instrument to another person, such as a
financial institution, broker, or dealer, in return for a percentage of the
instrument's market value in cash, and agrees that on a stipulated date in the
future, the Fund will repurchase the portfolio instrument by remitting the
original consideration plus interest at an agreed upon rate. The use of reverse
repurchase agreements may enable the Fund to avoid selling portfolio instruments
at a time when a sale may be deemed to be disadvantageous, but the ability to
enter into reverse repurchase agreements does not ensure that the Fund will be
able to avoid selling portfolio instruments at a disadvantageous time.
When effecting reverse repurchase agreements, liquid assets of the Fund, in a
dollar amount sufficient to make payment for the obligations to be purchased,
are segregated at the trade date. These securities are marked to market daily
and are maintained until the transaction is settled.
Restricted and Illiquid Securities
The ability of the Directors to determine the liquidity of certain restricted
securities is permitted under a Securities and Exchange Commission ("SEC") staff
position set forth in the adopting release for Rule 144A under the Securities
Act of 1933. The Directors consider the following criteria in determining the
liquidity of certain restricted securities:
o the frequency of trades and quotes for the security;
o the number of dealers willing to purchase or sell the security and the
number of other potential buyers; o dealer undertakings to make a market in
the security; and o the 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 and 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
The Fund may attempt to hedge all or a portion of its portfolio or gain
relatively rapid, liquid, and cost-effective exposure to certain markets by
buying and selling futures contracts and options on futures contracts.
Futures Contracts
The Fund may engage 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 securities 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
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
unanticipated 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. The
Fund may also invest in securities index futures contracts when the investment
adviser believes such investment is more efficient, liquid, or cost-effective
than investing directly in the securities underlying the index.
Stock Index Options
The Fund may purchase put options on stock indices listed on national
securities exchanges or traded in the over-the-counter market. A stock index
fluctuates with changes in the market values of the stocks included in the
index.
The effectiveness of purchasing stock index options will depend upon the
extent to which price movements in the Fund's portfolio correlate with price
movements of the stock index selected. Because the value of an index option
depends upon movements in the level of the index rather than the price of a
particular stock, whether the Fund will realize a gain or loss from the
purchase of options on an index depends upon movements in the level of stock
prices in the stock market generally or, in the case of certain indices, in an
industry or market segment, rather than movements in the price of a particular
stock. Accordingly, successful use by the Fund of options on stock indices
will be subject to the ability of the investment adviser to predict correctly
movements in the direction of the stock market generally or of a particular
industry.
Put Options on Financial Futures Contracts
The Fund may purchase listed or over-the-counter put options on financial
futures contracts. The Fund would use these options only to protect portfolio
securities against decreases in value resulting from market factors such as
anticipated increase in interest rates, or when the investment adviser
believes such investment is more efficient, liquid or cost-effective than
investing directly in the futures contract or the underlying securities or
when such futures contracts or securities are unavailable for investment upon
favorable terms.
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. 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 will be large enough to offset both the premium paid
by the Fund for the original option plus the realized 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.
The Fund may write listed or over-the counter put options on financial futures
contracts to hedge its portfolio or when the investment adviser believes such
investment is more efficient, liquid or cost-effective than investing directly
in the futures contract or the underlying securities or when such futures
contracts or securities are unavailable for investment upon favorable terms.
When the Fund writes a put option 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 Financial and Stock Index Futures Contracts
In addition to purchasing put options on futures, the Fund may write listed
call options or over-the-counter call options on financial and stock index
futures contracts (including cash-settled stock index options), to hedge its
portfolio against an increase in market interest rates, a decrease in stock
prices, or when the investment adviser believes such investment is more
efficient, liquid or cost-effective than investing directly in the futures
contract or the underlying securities or when such futures contracts or
securities are unavailable for investment upon favorable terms. 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 stock prices fall or market interest rates rise and cause the
price of futures to decrease, 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 futures 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 substantially
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 may then substantially offset the realized 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 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 generally 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 plus the unrealized loss or
minus the unrealized gain on those open positions, adjusted for the
correlation 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 its 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 initial margin in futures transactions does
not involve the borrowing of funds 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.
Purchasing Put and Call Options on Portfolio Securities
The Fund may purchase put and call 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. A call option gives the Fund, in return for a premium, the
right to buy the underlying securities from the seller.
Writing Covered Put and Call Options on Portfolio Securities
The Fund may write covered put and call options to generate income and thereby
protect against price movements in particular securities in the Fund's
portfolio. As the 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. As the writer of a put option,
the Fund has the obligation to purchase a security from the purchaser of the
option upon the exercise of the option.
The Fund may only write 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). In the case of put options, the Fund will segregate liquid
assets with a value equal to or greater than the exercise price of the
underlying securities.
Over-the-Counter Options
The Fund may purchase and write over-the-counter options ("OTC options") on
portfolio securities or in securities indexes in negotiated transactions with
the buyers or writers of the options when options on the portfolio securities
held by the Fund or when the securities indexes are 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 OTC 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
investment 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 investment 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 rate 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 investment adviser and the Fund believe such obligations do not constitute
senior securities under the Investment Company Act of 1940 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 possibly 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 investment 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 investment
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 investment 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 investment 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 the securities of issuers domiciled 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.
Emerging securities markets are substantially smaller, less developed, less
liquid and more volatile than the major securities markets. The limited size of
emerging securities markets and limited trading volume in issuers compared to
the volume of trading in U.S. securities could cause price to be erratic for
reasons apart from factors that affect the quality of the securities. For
example, limited market size may cause prices to be unduly influenced by traders
who control large positions. Adverse publicity and investors' perceptions,
whether or not based on fundamental analysis, may decrease the value and
liquidity of portfolio securities in these markets. In addition, securities
traded in certain emerging markets may be subject to risks due to the
inexperience of financial intermediaries, a lack of modern technology, the lack
of a sufficient capital base to expand business operations, and the possibility
of permanent or temporary termination of trading.
Settlement mechanisms in emerging securities markets may be less efficient and
less reliable than in more developed markets. In such emerging securities
markets there may be share registration and delivery delays or failures.
Portfolio Turnover
It is not anticipated that the portfolio trading engaged in by the Fund will
result in its annual rate of portfolio turnover exceeding 100%. The Fund's
investment adviser does not anticipate that portfolio turnover will result in
adverse tax consequences. However, relatively high portfolio turnover may result
in high transaction costs to the Fund.
<PAGE>
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 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 more than 25% of its total assets in securities of
issuers having their principal business activities in one industry, except the
financial services industry.
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 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 other 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 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 association having capital, surplus, and undivided profits in excess
of $100,000,000 at the time of investment to be "cash items."
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, Inc., 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. Mr. Donahue is the
father of J. Christopher Donahue, Executive Vice President of the Corporation.
Thomas G. Bigley
15 Old Timber Trail
Pittsburgh, PA
Birthdate: February 3, 1934
Director
Director, Member of Executive Committee, Children's Hospital of Pittsburgh;
formerly, Senior Partner, Ernst & Young LLP; Director, MED 3000 Group, Inc.;
Director, Member of Executive Committee,, 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.
Nicholas P. Constantakis
175 Woodshire Drive
Pittsburgh, PA
Birthdate: September 3, 1939
Director
Formerly, Partner, Anderson Worldwide SC; Director or Trustee of the Funds.
<PAGE>
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.; Director or Trustee
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 Director
Executive Vice President and Trustee, Federated Investors, Inc.; 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.
<PAGE>
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.
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; 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 and U.S. Space Foundation ; 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; 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, Inc., 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, Director and Chairman of the Corporation.
Edward C. Gonzales
Federated Investors Tower
Pittsburgh, PA
Birthdate: October 22, 1930
Executive Vice President
Vice Chairman, Treasurer, and Trustee, Federated Investors, Inc.; 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, Inc.;
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; 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 Obligations Trust II; Money Market Trust;
Municipal Securities Income Trust; Newpoint Funds; RIMCO Monument Funds;
Targeted Duration Trust; Tax-Free Instruments Trust; The Planters Funds; 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; WCT Funds; and World Investment Series,
Inc.
Fund Ownership
Officers and Directors as a group own less than 1% of the Fund's outstanding
shares.
AGGREGATE
NAME, COMPENSATION
POSITION WITH FROM TOTAL COMPENSATION PAID
Trust Trust*# FROM FUND COMPLEX+
John F. Donahue, $0 $-0- for the Corporation and
Chairman and Director 56 other investment companies
Thomas G. Bigley $1,149 $111,222 for the Corporation and
Director 56 other investment companies
John T. Conroy, Jr., $1,265 $122,362 for the Corporation and
Director 56 other investment companies
Nicholas P. Constantakis $0 $0 for the Corporation and
Director 34 other investment companies
William J. Copeland, $1,265 $122,362 for the Corporation and
Director 56 other investment companies
James E. Dowd, $1,265 $122,362 for the Corporation and
Director 56 other investment companies
Lawrence D. Ellis, M.D.,$1,149 $111,222 for the Corporation and
Director 56 other investment companies
Richard B. Fisher, $0 $-0- for the Corporation and
President and Director 6 investment companies
Edward L. Flaherty, Jr.,$1,265 $122,362 for the Corporation and
Director 56 other investment companies
Peter E. Madden, $1,149 $111,222 for the Corporation and
Director 56 other investment companies
John E. Murray, Jr., $1,149 $111,222 for the Corporation and
Director 56 other investment companies Complex
Wesley W. Posvar, $1,149 $111,222 for the Corporation and
Director 56 other investment companies
Marjorie P. Smuts, $1,149 $111,222 for the Corporation and
Director 56 other investment companies
* Information is furnished for the fiscal year ended November 30, 1997.
# The aggregate compensation provided is for the Corporation, which is comprised
of eight portfolios.
The information provided is for the last calendar year end.
Adviser to the Fund
The Fund's investment adviser is Federated Global Research Corp. (the
"Adviser"). It is a subsidiary of Federated Investors, Inc. All the voting
securities of Federated Investors, Inc. are owned by a trust, the trustees of
which are John F. Donahue, his wife, and his son, J. Christopher Donahue.
The Adviser shall not be liable to the Fund or any shareholder for any losses
that may be sustained in the purchase, holding, or sale of any security or for
anything done or omitted by it except acts or omissions involving willful
misfeasance, bad faith, gross negligence, or reckless disregard of the duties
imposed upon it by its contract with the Fund.
Advisory Fees
For its advisory services, the Adviser receives an annual investment advisory
fee as described in the prospectus.
Sub-Adviser to the Fund
The Fund's sub-adviser is Federated Advisers (the "Sub-Adviser"). It is a
subsidiary of Federated Investors, Inc.. All the voting securities of Federated
Investors, Inc. are owned by a trust, the trustees of which are John F. Donahue,
his wife, and his son, J. Christopher Donahue.
The Sub-Adviser shall not be liable to the Fund or any shareholder for any
losses that may be sustained in the purchase, holding, or sale of any security
or for anything done or omitted by it except acts or omissions involving willful
misfeasance, bad faith, gross negligence, or reckless disregard of the duties
imposed upon it by its contract with the Fund.
Sub-Advisory Fees
For its sub-advisory services, the Sub-Adviser receives an annual investment
sub-advisory fee as described in the prospectus.
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
the 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.
Fund Administration
Federated Services Company, a subsidiary of Federated Investors, Inc., 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 and Dividend Disbursing 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 the 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.
Except under certain circumstances described in the prospectus, Shares are sold
at their net asset value (plus a sales charge, if applicable) on days the New
York Stock Exchange is open for business. The procedure for purchasing Shares is
explained in the prospectus under "Investing in the Fund" and "Purchasing
Shares." For further information on any of the programs listed below, please
contact your financial intermediary or Federated Securities Corp.
Quantity Discounts and Accumulated Purchases
As described in the prospectus, larger purchases of the same Share class reduce
or eliminate the sales charge paid. For example, the Fund will combine all Class
A Share purchases made on the same day by the investor, the investor's spouse,
and the investor's children under age 21 when it calculates the sales charge. In
addition, the sales charge, if applicable, is reduced for purchases made at one
time by a trustee or fiduciary for a single trust estate or a single fiduciary
account.
If an additional purchase into the same Share class 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 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 intermediary at the
time the purchase is made that Class A Shares are already owned or that
purchases are being combined. The Fund will reduce or eliminate the sales charge
after it confirms the purchases.
Concurrent Purchases
Shareholders have the privilege of combining concurrent purchases of the same
Share class of two or more funds in the Federated Complex in calculating the
applicable sales charge.
To receive a sales charge reduction or elimination, Federated Securities Corp.
must be notified by the shareholder in writing or by his financial intermediary
at the time the concurrent purchases are made. The Fund will reduce or eliminate
the sales charge after it confirms the purchases.
Letter of Intent
A shareholder can sign a letter of intent committing to purchase a certain
amount of the same Share class within a 13-month period in order to combine such
purchases in calculating the applicable sales charge. The Fund's custodian will
hold Shares in escrow equal to the maximum applicable sales charge. If the
shareholder completes the commitment, the escrowed Shares will be released to
their account. If the commitment is not completed within 13 months, the
custodian will redeem an appropriate number of escrowed Shares to pay for the
applicable sales charge.
While this letter of intent will not obligate the shareholder to purchase Class
A 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
Funds, excluding money market accounts, will be aggregated to provide a purchase
credit towards fulfillment of the letter of intent. The letter may be dated as
of a prior date to include any purchase made within the past 90 days. Prior
trade prices will not be adjusted.
Reinvestment Privilege
The reinvestment privilege is available for all Shares of the Fund within the
same Share class.
Class A shareholders who redeem from the Fund may reinvest the redemption
proceeds back into the same Share class at the next determined net asset value
without any sales charge. The original Shares must have been subject to a sales
charge and the reinvestment must be within 120 days.
Similarly, Class C shareholders who redeem may reinvest their redemption
proceeds in the same Share class within 120 days. Class B Shares also may be
reinvested within 120 days of redemption, although such reinvestment will be
made into Class A Shares. Shareholders would not be entitled to a reimbursement
of the contingent deferred sales charge if paid at the time of redemption on any
Share class. However, reinvested Shares would not be subject to a contingent
deferred sales charge, if otherwise applicable, upon later redemption.
In addition, if Shares were reinvested through a financial intermediary, the
financial intermediary would not be entitled to an advanced payment from
Federated Securities Corp. on the reinvested Shares, if otherwise applicable.
Federated Securities Corp. must be notified by the shareholder in writing or by
his financial intermediary of the reinvestment in order to eliminate a sales
charge or a contingent deferred sales charge. If the shareholder redeems Shares
in the Fund, there may be tax consequences.
Conversion of Class B Shares
Class B Shares will automatically convert into Class A Shares on or around the
15th of the month eight full years from the purchase date. For purposes of
conversion to Class A Shares, Shares purchased through the reinvestment of
dividends and distributions paid on Class B Shares will be considered to be held
in a separate sub-account. Each time any Class B Shares in the shareholder's
account (other than those in the sub-account) convert to Class A Shares, an
equal pro rata portion of the Class B Shares in the sub-account will also
convert to Class A Shares. The conversion of Class B Shares to Class A Shares is
subject to the continuing availability of a ruling from the Internal Revenue
Service or an opinion of counsel that such conversions will not constitute
taxable events for federal tax purposes. There can be no assurance that such
ruling or opinion will be available, and the conversion of Class B Shares to
Class A Shares will not occur if such a 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.
Distribution Plan and Shareholder Services Agreement
These arrangements permit the payment of fees to financial institutions, the
distributor, and Federated Shareholder Services, to stimulate distribution
activities and to cause services to be provided to shareholders by a
representative who has knowledge of the shareholder's particular circumstances
and goals. These activities and services may include, but are not limited to,
marketing efforts; providing office space, equipment, telephone facilities, and
various clerical, supervisory, computer, and other personnel as necessary or
beneficial to establish and maintain shareholder accounts and records;
processing purchase and redemption transactions and automatic investments of
client account cash balances; answering routine client inquiries; and assisting
clients in changing dividend options, account designations, and addresses.
By adopting the Distribution Plan, 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, Fund Directors, and Employees
The following individuals and their immediate family members may buy Class A
Shares at net asset value without a sales charge:
o Directors, employees, and sales representatives of the Fund, Federated
Global Research Corp., and Federated Securities Corp. and its
affiliates;
o Federated Life Members (Class A Shares only);
o any associated person of an investment dealer who has a sales agreement
with Federated Securities Corp.; and o trusts, pensions, or profit-sharing
plans for these individuals.
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.
The Fund's net asset value per Share fluctuates and is based on the market value
of all securities and other assets of the Fund. The net asset value for each
class of Shares may differ due to the variance in daily net income realized by
each class.
Dividend income is recorded on the ex-dividend date, except certain dividends
from foreign securities where the ex-dividend date may have passed, are recorded
as soon as the Fund is informed of the ex-dividend date.
Net asset value is not determined 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, Martin Luther King, Jr. Day, Presidents' Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day, and
Christmas Day.
Determining Market Value of Securities
Market values of the Fund's portfolio securities, other than options, are
determined as follows:
o for equity securities, according to the last reported sale price in the
market in which they are primarily traded (either a national securities
exchange or the over-the-counter market), if available;
o in the absence of recorded sales for equity securities, according to the
mean between the last closing bid and asked prices; o for bonds and other
fixed income securities, as determined by an independent pricing service; o
for short-term obligations, according to the prices as furnished by an
independent pricing service, except that short-term obligations with
remaining maturities of less than 60 days at the time of purchase may be
valued at amortized cost; and o for all other securities, at fair value as
determined in good faith by the Directors.
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 Fund will value futures contracts and options at their market values
established by the exchanges on which they are traded at the close of trading on
such exchanges unless the Directors determine in good faith that another method
of valuing such investments is necessary.
Trading in Foreign Securities
Trading in foreign securities may be completed at times which vary from the
closing of the New York Stock Exchange. In computing the net asset value, the
Fund values foreign securities at the latest closing price on the exchange on
which they are traded immediately prior to the closing of the New York Stock
Exchange. Certain foreign currency exchange rates may also be determined at the
latest rate prior to the closing of the New York Stock Exchange. Foreign
securities quoted in foreign currencies are translated into U.S. dollars at
current rates. Occasionally, events that affect these values and exchange rates
may occur between the times at which they are determined and the closing of the
New York Stock Exchange. If such events materially affect the value of portfolio
securities, these securities may be valued at their fair value as determined in
good faith by the Directors, although the actual calculation may be done by
others.
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 "Redeeming and Exchanging Shares." Although the transfer agent
does not charge for telephone redemptions, it reserves the right to charge a fee
for the cost of wire-transferred redemptions of less than $5,000.
Redemption in Kind
Although the Fund intends to redeem Shares in cash, it reserves the right under
certain circumstances to pay the redemption price in whole or in part by a
distribution of securities from the Fund's portfolio.
Redemption in kind will be made in conformity with applicable SEC rules, taking
such securities at the same value employed in determining net asset value and
selecting the securities in a manner the Directors determine to be fair and
equitable.
The Fund has elected to be governed by Rule 18f-1 of the Investment Company Act
of 1940 under which the Fund is obligated to redeem Shares for any shareholder
in cash up to the lesser of $250,000 or 1% of the Fund's net asset value during
any 90-day period.
Redemption in kind is not as liquid as a cash redemption. If redemption is made
in 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.
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; (3) Shares held for fewer than six years with respect to Class B
Shares and for less than one full year from the date of purchase with respect to
Class C Shares on a first-in, first-out basis.
The Fund's Tax Status
The Fund will pay no federal income tax because it expects to meet the
requirements of Subchapter M of the Internal Revenue Code applicable to
regulated investment companies and to receive the special tax treatment afforded
to such companies. To qualify for this treatment, the Fund must, among other
requirements:
o derive at least 90% of its gross income from dividends, interest, and gains
from the sale of securities; o invest in securities within certain statutory
limits; and o distribute to its shareholders at least 90% of its net income
earned during the year.
However, the Fund may invest in the stock of certain foreign corporations which
would constitute a Passive Foreign Investment Company (PFIC). Federal income
taxes may be imposed on the Fund upon disposition of PFIC investments.
Foreign Taxes
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.
The average annual total return for all classes of Shares of the Fund is the
average compounded rate of return for a given period that would equate a $1,000
initial investment to the ending redeemable value of that investment. The ending
redeemable value is computed by multiplying the number of Shares owned at the
end of the period by the 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, adjusted over the period by any additional Shares, assuming a
reinvestment of all dividends and distributions. Any applicable contingent
deferred sales charge is deducted from the ending value of the investments based
on the lesser of the original purchase price or the offering price of Shares
redeemed.
The yield for all classes of Shares of the Fund is determined by dividing the
net investment income per Share (as defined by the SEC) earned by any class of
Shares over a thirty-day period by the maximum offering price per Share of any
class of Shares 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 any class of Shares 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 any class
of Shares, the performance will be reduced for those shareholders paying those
fees.
The performance of each class of Shares depends upon such variables as:
o portfolio quality;
o average portfolio maturity;
o type of instruments in which the portfolio is invested; o changes in
interest rates and market value of portfolio securities; o changes in the
Fund's or a class of Shares' expenses; and o various other factors.
The Fund's performance fluctuates on a daily basis largely because net earnings
and net asset value per Share fluctuate daily. Both net earnings and net asset
value per Share are factors in the computation of yield and total return.
Investors may use financial publications and/or indices to obtain a more
complete view of the Fund's performance. When comparing performance investors
should consider all relevant factors such as the composition of any index used,
prevailing market conditions, portfolio compositions of other funds, and methods
used to value portfolio securities and compute offering price. The financial
publications and/or indices which the Fund uses in advertising may include:
o MSCI All Country World Finance Index --is a medium- to large- cap index
comprising the banking, financial services, insurance and real estate
industries, and is diversified across 46 countries and more than 400
companies.
o Lipper Analytical Services, Inc. --ranks funds in various fund categories
by making comparative calculations using total return. Total return
assumes the reinvestment of all capital gains distributions and income
dividends and takes into account any change in net asset value over a
specific period of time.
o Europe, Australia, and Far East (EAFE) is a market capitalization weighted
foreign securities index, which is widely used to measure the performance
of European, Australian, New Zealand and Far Eastern stock markets. The
index covers approximately 1,020 companies drawn from 18 countries in the
above regions. The index values its securities daily in both U.S. dollars
and local currency and calculates total returns monthly. EAFE U.S. dollar
total return is a net dividend figure less Luxembourg withholding tax. The
EAFE is monitored by Capital International, S.A., Geneva, Switzerland.
o Standard & Poor's Daily Stock Price Index of 500 Common Stocks, a
composite index of common stocks in industry, transportation, and
financial and public utility companies, can be used to compare to the
total returns of funds whose portfolios are invested primarily in common
stocks. In addition, the Standard & Poor's index assumes reinvestments of
all dividends paid by stocks listed on its index. Taxes due on any of
these distributions are not included, nor are brokerage or other fees
calculated in Standard & Poor's figures.
o Morningstar, 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.
o Dow Jones Composite Average or its component averages--an unmanaged index
composed of 30 blue-chip industrial corporation stocks (Dow Jones
Industrial Average), 15 utilities company stocks (Dow Jones Utilities
Average), and 20 transportation company stocks. Comparisons of performance
assume reinvestment of dividends.
o Dow Jones World Industry Index or its component indices, including, among
others, the utility sector.
o Standard & Poor's 500 Stock Index or its component indices--an unmanaged
index composed of 400 industrial stocks, 40 financial stocks, 40 utilities
stocks, and 20 transportation stocks. Comparisons of performance assume
reinvestment of dividends.
o The New York Stock Exchange composite or component indices--unmanaged
indices of all industrial, utilities, transportation, and finance stocks
listed on the New York Stock Exchange.
o Financial Times Actuaries Indices--including the FTA-World Index (and
components thereof), which are based on stocks in major world equity
markets.
o Lipper-Mutual Fund Performance Analysis and Lipper-Fixed Income Fund
Performance Analysis--measure of total return and average current yield
for the mutual fund industry. Rank individual mutual fund performance over
specified time periods, assuming reinvestment of all distributions,
exclusive of any applicable sales charges.
o Value Line Mutual Fund Survey, published by Value Line Publishing,
Inc.--analyzes price, yield, risk, and total return for equity and fixed
income mutual funds. The highest rating is one, and ratings are effective
for two weeks.
o Mutual Fund Source Book, published by Morningstar, Inc.--analyzes price,
yield, risk, and total return for equity and fixed income funds. o CDA Mutual
Fund Report, published by CDA Investment Technologies, Inc.--analyzes price,
current yield, risk, total return, and average rate
of return (average annual compounded growth rate) over specified time
periods for the mutual fund industry. o Value Line Index--an unmanaged index
which follows the stocks of approximately 1,700 companies. o Wilshire 5000
Equity Index--represents the return on the market value of all common equity
securities for which daily pricing is available.
Comparisons of performance assume reinvestment of dividends.
o Historical data supplied by the research departments of First Boston
Corporation, the J. P. Morgan companies, Salomon Brothers, Merrill
Lynch, Pierce, Fenner & Smith, Smith Barney Shearson and Bloomberg L.P.
o Financial publications: The Wall Street Journal, Business Week, Changing
Times, Financial World, Forbes, Fortune and Money magazines, among
others--provide performance statistics over specified time periods.
o Morgan Stanley Capital International World Indices, including, among
others, the Morgan Stanley Capital International Europe, Australia, Far
East Index ( "EAFE Index"). The EAFE index is an unmanaged index of more
than 1,000 companies of Europe, Australia and the Far East.
o Consumer Price Index (or Cost of Living Index), published by the U.S.
Bureau of Labor Statistics--a statistical measure of change, over time, in
the price of goods and services in major expenditure groups.
o Strategic Insight Mutual Fund Research and Consulting, ranks funds in
various fund categories by making comparative calculations using total
return. Total return assumes the reinvestment of all capital gains
distributions and income dividends and takes into account any change in
net asset value over a specific period of time.
Advertisements and sales literature for all four classes of Shares may quote
total returns which are calculated on non-standardized base periods. These total
returns also represent the historic change in the value of an investment in
either class of Shares based on quarterly reinvestment of dividends over a
specified period of time.
From time to time as it deems appropriate, the Fund may advertise the
performance of a class of Shares using charts, graphs, and descriptions,
compared to federally insured bank products including certificates of deposit
and time deposits and to money market funds using the Lipper Analytical Services
money market instruments average.
Advertisements may quote performance information which does not reflect the
effect of various sales charges on Class A Shares, Class B Shares and Class C
Shares.
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.
Federated Investors, Inc. 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, Inc. has more than 27 years'
experience. As of December 31, 1997, Federated managed 29 equity funds totaling
approximately $11.7 billion in assets across growth, value, equity income,
international, index and sector (i.e. utility) styles. Federated's
value-oriented management style combines quantitative and qualitative analysis
and features a structured, computer-assisted composite modeling system that was
developed in the 1970s.
J. Thomas Madden, Executive Vice President, oversees Federated Investors, Inc.'s
equity and high yield corporate bond management while William D. Dawson,
Executive Vice President, oversees Federated Investors, Inc.'s domestic fixed
income management. Henry A. Frantzen, Executive Vice President, oversees the
management of Federated Investors, Inc.'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 $4.4 trillion to the more than 6,700 funds available.*
Federated Investors, Inc., through its subsidiaries, distributes mutual funds
for a variety of investment applications. Specific markets include:
Institutional Clients
Federated Investors, Inc. meets the needs of approximately 900 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 Timothy C. Pillion, Senior 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 ratings 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, Federated Securities Corp.
* source: Investment Company Institute
PART C. OTHER INFORMATION.
Item 24. Financial Statements and Exhibits:
(a) Financial Statements:
(1) (1a-d, 2a-c, 3a-c, 4a-c, 5a-c, 6a-c, 7a-c, 8a-c) The
Financial Statements for the fiscal year ended November 30,
1997, are hereby incorporated by reference from the Funds'
Annual Reports dated November 30, 1997.
(2), (9a-c), 10(a-c) 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) Conformed copy of Exhibit H to the Investment Advisory
Contract of the Registrant; (10)
(v) Conformed copy of Exhibit I to Investment Advisory Contract
of the Registrant; (13)
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. 10 on Form N-1A filed January 30, 1997. (File Nos. 33-52149
and 811-7141)
10. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 12 on Form N-1A filed November 26, 1997. (File Nos. 33-52149
and 811-7141)
11. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 13 on Form N-1A filed December 23, 1997. (File Nos. 33-52149
and 811-7141)
13. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 15 on Form N-1A filed January 28, 1998. (File Nos. 33-52149
and 811-7141)
<PAGE>
(vi) Conformed copy of Exhibit J and Exhibit K to
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; (9) (iv)
Conformed copy of Exhibit Z and Exhibit AA to
Distributor's Contract of the Registrant; (13) (v)
Conformed copy of Exhibit BB and Exhibit CC to
Distributor's Contract of the Registrant;+ (vi)
Conformed copy of Distributor's Contract (Class B
Shares); + (vii) 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;
(8) (i) Conformed copy of Custodian Agreement of the
Registrant; (3)
(ii) Conformed copy of Custodian Fee Schedule; (10)
(iii) Addendum to Custodian Fee Schedule; (10)
(iv) Conformed copy of Domestic Custodian Fee
Schedule; (11)
(v) Conformed copy of Global Custodian Fee
Schedule; (11)
+ All exhibits have been filed electronically.
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)
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. 10 on Form N-1A filed January 30, 1997. (File Nos. 33-52149
and 811-7141)
9. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 11 on Form N-1A filed May 21, 1997. (File Nos. 33-52149 and
811-7141)
10. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 12 on Form N-1A filed November 26, 1997. (File Nos. 33-52149
and 811-7141)
11. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 13 on Form N-1A filed December 23, 1997. (File Nos. 33-52149
and 811-7141)
<PAGE>
(vi) Addendum to Global Custodian Fee Schedule; (11)
(9) (i) Conformed copy of Amended and Restated Shareholder Services
Agreement; +
(ii) Conformed copy of Agreement for Fund Accounting Services,
Administrative Services, Transfer Agency Services, and Custody
Services Procurement; (7)
(iii) Conformed copy of the Amended and Restated Agreement for Fund
Accounting Services, Administrative Services, Transfer
Agency Services, and Custody Services Procurement; +
(iv) Conformed copy of Schedule A to Principal
Shareholder Servicer's Agreement (Class B Shares); + (v)
Conformed copy of Scheule A to Shareholder Services
Agreement (Class B Shares); +
(vi) The responses described in Item 24(b)6 are hereby incorporated by
reference;
(vii) 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) Conformed Copy of Consent of Independent Auditors; (13)
(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)
- ----------------------------------------
+ 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. 10 on Form N-1A filed January 30, 1997. (File Nos. 33-52149
and 811-7141)
9. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 11 on Form N-1A filed May 21, 1997. (File Nos. 33-52149 and
811-7141)
11. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 13 on Form N-1A filed December 23, 1997. (File Nos. 33-52149
and 811-7141)
(iii) Conformed Copy of Exhibits V, W, and X to the Rule
12b-1 Distribution Plan of the Registrant; (9) (iv)
Conformed copy of Exhibit Y and Exhibit Z to the 12b-1
Distribution Plan of the Registrant; (13) (v) Conformed
copy of Exhibit AA and Exhibit BB to the 12b-1
Distribution Plan of the Registrant;+ (vi) Conformed
copy of Shedule A to the Distribution Plan (Class B
Shares)of the Registrant; +
(16) (i) Copy of Schedule for Computation of Fund Performance Data for
World Utility Fund; (3)
(ii) 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)
(iii) Copy of Schedule for Computation of Fund Performance Data for
Federated International High Income Fund; (8)
(iv) Copy of Schedule for Computation of Fund
Performance Data for Federated
International Growth Fund; (12)
(17) Copy of Financial Data Schedules; (13)
(18) Conformed Copy of Multiple Class Plan; (5)
(i) Multiple Class Plan (18f-3) Exhibits:+ (19)
Conformed copy of Power of Attorney; +
(i) Amendment to Schedule 1 to Limited Power of Attorney;+
+ All exhibits have been filed electronically.
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. 10 on Form N-1A filed January 30, 1997. (File Nos. 33-52149
and 811-7141)
12. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 14 on Form N-1A filed December 31, 1997. (File Nos. 33-52149
and 811-7141)
<PAGE>
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 May 15, 1998
-------------- ------------------
Shares of capital stock
($0.001 per Share par value)
Federated World Utility Fund
a) Class A Shares 2,173
b) Class B Shares 1,914
c) Class C Shares 592
d) Class F Shares 604
Federated Asia Pacific Growth Fund
a) Class A Shares 1,790
b) Class B Shares 2,062
c) Class C Shares 1,143
Federated Emerging Markets Fund
a) Class A Shares 5,287
b) Class B Shares 4,683
c) Class C Shares 1,676
Federated European Growth Fund
a) Class A Shares 2,100
b) Class B Shares 2,281
c) Class C Shares 1,208
Federated International Small Company Fund
a) Class A Shares 8,211
b) Class B Shares 15,490
c) Class C Shares 3,346
Federated Latin American Growth Fund
a) Class A Shares 2,848
b) Class B Shares 2,830
c) Class C Shares 1,276
Federated International High Income Fund
a) Class A Shares 1,594
b) Class B Shares 4,881
c) Class C Shares 1,429
Federated International Growth Fund
a) Class A Shares 2,638
b) Class B Shares 2,251
c) Class C Shares 1,210
Federated Global Equity Income Fund
a) Class A Shares 0
b) Class B Shares 0
c) Class C Shares 0
Federated Global Financial Services Fund
a) Class A Shares Not currently effective
b) Class B Shares Not currently effective
c) Class C Shares Not currently effective
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 "CORPORATION INFORMATION - Management of the
Corporation" in Part A. The affiliations with the Registrant of four of
the Trustees and one of the Officers of the investment adviser and
sub-adviser are included in Part B of this Registration Statement under
"WORLD INVESTMENT SERIES, INC. MANAGEMENT." The remaining Trustee of
the investment adviser and sub-adviser, his position with the
investment adviser and sub-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 and sub-adviser are:
Executive Vice Presidents: William D. Dawson, III
Henry A. Frantzen
J. Thomas Madden
Senior Vice Presidents: Joseph M. Balestrino
Drew J. Collins
Jonathan C. Conley
Deborah A. Cunningham
Mark E. Durbiano
Sandra L. McInerney
J. Alan Minteer
Susan M. Nason
Mary Jo Ochson
Robert J. Ostrowski
Vice Presidents: Todd A. Abraham
J. Scott Albrecht
Randall S. Bauer
David A. Briggs
Micheal W. Casey
Kenneth J. Cody
Alexandre de Bethmann
Michael P. Donnelly
Linda A. Duessel
Donald T. Ellenberger
Kathleen M. Foody-Malus
Thomas M. Franks
Edward C. Gonzales
James E. Grefenstette
Susan R. Hill
Stephen A. Keen
Robert K. Kinsey
Robert M. Kowit
Jeff A. Kozemchak
Steven Lehman
Marian R. Marinack
Charles A. Ritter
Scott B. Schermerhorn
Frank Semack
Aash M. Shah
Christopher Smith
William F. Stotz
Tracy P. Stouffer
Edward J. Tiedge
Paige M. Wilhelm
Jolanta M. Wysocka
Assistant Vice Presidents: Stefanie L. Bachhuber
Arthur J. Barry
Robert E. Cauley
Lee R. Cunningham, II
Paul S. Drotch
Salvatore A. Esposito
Donna M. Fabiano
John T. Gentry
William R. Jamison
Constantine Kartsonsas
Natalie F. Metz
Joseph M. Natoli
Keith J. Sabol
John Sheehy
Michael W. Sirianni
Gregg S. Tenser
Leonardo A. Vila
Lori A. Wolff
Secretary: Stephen A. Keen
Treasurer: Thomas R. Donahue
Assistant Secretaries: Thomas R. Donahue
Richard B. Fisher
Christine I. McGonigle
Assistant Treasurer: Richard B. Fisher
The business address of each of the Officers of the investment adviser
and sub-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, acts as principal underwriter for the following open-end investment
companies, including the Registrant:
111 Corcoran 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 Core Trust; 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.; 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; Regions
Funds; RIMCO Monument Funds; SouthTrust Vulcan Funds; Star Funds; Targeted
Duration Trust; Tax-Free Instruments Trust; The Planters Funds; The Virtus
Funds; The Wachovia Funds; The Wachovia Municipal 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.; 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 Distributor With Registrant
Richard B. Fisher Director, Chairman, Chief President and
Federated Investors Tower Executive Officer, Chief Director
Pittsburgh, PA 15222-3779 Operating Officer, Asst.
Secretary and Asst.
Treasurer, Federated
Securities Corp.
Edward C. Gonzales Director, Executive Vice Executive Vice
Federated Investors Tower President, Federated, President
Pittsburgh, PA 15222-3779 Securities Corp.
Thomas R. Donahue Director, Assistant Secretary
Federated Investors Tower and Assistant Treasurer
Pittsburgh, PA 15222-3779 Federated Securities Corp
James F. Getz President-Broker/Dealer, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
John B. Fisher President-Institutional Sales, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
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
<PAGE>
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
Ernest G. Anderson 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
David J. Callahan Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
<PAGE>
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
Marc C. Danile 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
Raymond Hanley 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
<PAGE>
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
Charlene H. Jennings 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
Michael W. Koenig Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Michael R. Manning 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
Alec H. Neilly 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
Paul V. Riordan Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
<PAGE>
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
Colin B. Starks 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
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
<PAGE>
Terri E. Bush Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Beth C. Dell Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
David L. Immonen Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Renee L. Martin Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Robert M. Rossi 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
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 Investor Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
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) 1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Federated Global Research Corp. 175 Water Street
(Adviser) New York, NY 10038-4965
Federated Advisers Federated Investors Tower
(Sub-Adviser) 1001 Liberty Avenue
Pittsburgh, PA 15222-3779
State Street Bank and Trust Company P.O. Box 8600
(Custodian) Boston, MA 02266-8600
Item 31. Not applicable.
<PAGE>
Item 32. Undertakings:
Registrant hereby undertakes to furnish each person to whom a
prospectus is delivered with a copy of the Registrant's latest
annual report to shareholders, upon request and without charge.
Registrant hereby undertakes to comply with the provisions of
Section 16(c) of the 1940 Act with respect to the removal of
Directors and the calling of special shareholder meetings by
shareholders.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant, WORLD INVESTMENT SERIES, INC.,
certifies that it 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 10th day of June,
1998.
WORLD INVESTMENT SERIES, INC.
BY: /s/Karen M. Brownlee
Karen M. Brownlee, Assistant Secretary
Attorney in Fact for John F. Donahue
June 10, 1998
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 June 10, 1998
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* Executive Vice
President, Secretary, and
Treasurer
(Principal Financial and
Accounting Officer)
Thomas G. Bigley* Director
John T. Conroy, Jr.* Director
Nicholas P. Constantakis* Director
William J. Copeland* Director
James E. Dowd* Director
Lawrence D. Ellis, M.D.* Director
Edward L. Flaherty, Jr.* Director
Peter E. Madden* Director
John E. Murray, Jr.* Director
Wesley W. Posvar* Director
Marjorie P. Smuts* Director
* By Power of Attorney
Exhibit 5(vi) under Form N-1A
Exhibit 10 under Item 601/Reg. S-K
EXHIBIT J
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 1% of the average daily net assets of
the Fund.
The portion of the fee based upon the average daily net assets of the Fund
shall be accrued daily at the rate of 1/365th of 1.25 of 1% applied to the daily
net assets of the Fund.
The advisory fee so accrued shall be paid to Adviser daily.
Witness the due execution hereof this 1st day of June, 1997.
Federated Global Research Corp.
By: /s/ Stephen A. Keen
Name: Stephen A. Keen
Title: Vice President
World Investment Series, Inc.
By: /s/ John W. McGonigle
Name: John W. McGonigle
Title: Executive Vice President
<PAGE>
EXHIBIT K
to the
Investment Advisory Contract
WORLD INVESTMENT SERIES, INC.
Federated Global Financial Services 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 1.00 of 1% of the average daily net assets of
the Fund.
The portion of the fee based upon the average daily net assets of the Fund
shall be accrued daily at the rate of 1/365th of 1.00 of 1% applied to the daily
net assets of the Fund.
The advisory fee so accrued shall be paid to Adviser daily.
Witness the due execution hereof this 1st day of June, 1998.
WORLD INVESTMENT SERIES, INC.
By: /s/ John W. McGonigle
Name: John W. McGonigle
Title: Executive Vice President
FEDERATED GLOBAL RESEARCH CORP.
By: /s/ Stephen A. Keen
Name: Stephen A. Keen
Title: Vice President
Exhibit 6(v) under Form N-1A
Exhibit 1 under Item 601/Reg. S-K
Exhibit BB
to the
Distributor's Contract
WORLD INVESTMENT SERIES, INC.
Federated Global Financial Services 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 datedDistibutor's Contract Date between World Investment Series, Inc.
and Federated Securities Corp., World Investment Series, Inc. executes and
delivers this Exhibit on behalf of the Federated Global Financial Services Fund,
and with respect to the Class A Shares thereof, first set forth in this Exhibit.
<PAGE>
Witness the due execution hereof this 1st day of June, 1998.
WORLD INVESTMENT SERIES, INC.
By: /s/ John W. McGonigle
Name: John W. McGonigle
Title: Executive Vice President
FEDERATED SECURITIES CORP.
By: /s/ Byron F. Bowman
Name: Byron F. Bowman
Title: Vice President
<PAGE>
Exhibit CC
to the
Distributor's Contract
WORLD INVESTMENT SERIES, INC.
Federated Global Financial Services 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 datedDistibutor's Contract Date between World Investment Series, Inc.
and Federated Securities Corp., World Investment Series, Inc. executes and
delivers this Exhibit on behalf of the Federated Global Financial Services Fund,
and with respect to the Class C Shares thereof, first set forth in this Exhibit.
Witness the due execution hereof this 1st day of June, 1998.
WORLD INVESTMENT SERIES, INC.
By: /s/ John W. McGonigle
Name: John W. McGonigle
Title: Executive Vice President
FEDERATED SECURITIES CORP.
By: /s/ Byron F. Bowman
Name: Byron F. Bowman
Title: Vice President
Exhibit 9(iii) under Form N-1A
Exhibit 10 under Item 601/Reg. S-K
AMENDED & RESTATED
AGREEMENT
for
FUND ACCOUNTING SERVICES,
ADMINISTRATIVE SERVICES,
TRANSFER AGENCY SERVICES
and
CUSTODY SERVICES PROCUREMENT
AGREEMENT made as of March 1, 1996, and amended and restated as of
September 1, 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 (the "Investment Company"), on behalf of the portfolios
(individually referred to herein as a "Fund" and collectively as "Funds")
of the Investment Company, and FEDERATED SERVICES COMPANY, a Pennsylvania
corporation, having its principal office and place of business at
Federated Investors Tower, Pittsburgh, Pennsylvania 15222-3779 on behalf
of itself and its subsidiaries (the "Company").
WHEREAS, the Investment Company is registered as an open-end management
investment company under the Investment Company Act of 1940, as amended
(the "1940 Act"), with authorized and issued shares of capital stock or
beneficial interest ("Shares");
WHEREAS, the Investment Company may desire to retain the Company as
fund accountant to provide fund accounting services (as herein defined)
including certain pricing, accounting and recordkeeping services for each
of the Funds, including any classes of shares issued by any Fund
("Classes") if so indicated on Exhibit 1, and the Company desires to
accept such appointment;
WHEREAS, the Investment Company may desire to appoint the Company as
its administrator to provide it with administrative services (as herein
defined), if so indicated on Exhibit, and the Company desires to accept
such appointment;
WHEREAS, the Investment Company may desire to appoint the Company as
its transfer agent and dividend disbursing agent to provide it with
transfer agency services (as herein defined) if so indicated on Exhibit 1,
and agent in connection with certain other activities, and the Company
desires to accept such appointment; and
WHEREAS, the Investment Company may desire to appoint the Company as
its agent to select, negotiate and subcontract for custodian services from
an approved list of qualified banks if so indicated on Exhibit 1, and the
Company desires to accept such appointment; and
NOW THEREFORE, in consideration of the premises and mutual covenants
herein contained, and intending to be legally bound hereby, the parties
hereto agree as follows:
SECTION ONE: Fund Accounting.
Article 1. Appointment.
The Investment Company hereby appoints the Company to provide certain
pricing and accounting services to the Funds, and/or the Classes, for the
period and on the terms set forth in this Agreement. The Company accepts
such appointment and agrees to furnish the services herein set forth in
return for the compensation as provided in Article 3 of this Section.
Article 2. The Company's Duties.
Subject to the supervision and control of the Investment Company's
Board of Trustees or Directors ("Board"), the Company will assist the
Investment Company with regard to fund accounting for the Investment
Company, and/or the Funds, and/or the Classes, and in connection therewith
undertakes to perform the following specific services;
A. Value the assets of the Funds using: primarily, market quotations,
including the use of matrix pricing, supplied by the independent
pricing services selected by the Company in consultation with the
adviser, or sources selected by the adviser, and reviewed by the
board; secondarily, if a designated pricing service does not provide a
price for a security which the Company believes should be available by
market quotation, the Company may obtain a price by calling brokers
designated by the investment adviser of the fund holding the security,
or if the adviser does not supply the names of such brokers, the
Company will attempt on its own to find brokers to price those
securities; thirdly, for securities for which no market price is
available, the Pricing Committee of the Board will determine a fair
value in good faith. Consistent with Rule 2a-4 of the 40 Act,
estimates may be used where necessary or appropriate. The Company's
obligations with regard to the prices received from outside pricing
services and designated brokers or other outside sources, is to
exercise reasonable care in the supervision of the pricing agent. The
Company is not the guarantor of the securities prices received from
such agents and the Company is not liable to the Fund for potential
errors in valuing a Fund's assets or calculating the net asset value
per share of such Fund or Class when the calculations are based upon
such prices. All of the above sources of prices used as described are
deemed by the Company to be authorized sources of security prices. The
Company provides daily to the adviser the securities prices used in
calculating the net asset value of the fund, for its use in preparing
exception reports for those prices on which the adviser has comment.
Further, upon receipt of the exception reports generated by the
adviser, the Company diligently pursues communication regarding
exception reports with the designated pricing agents;
B. Determine the net asset value per share of each Fund and/or Class, at
the time and in the manner from time to time determined by the Board and
as set forth in the Prospectus and Statement of Additional Information
("Prospectus") of each Fund;
C. Calculate the net income of each of the Funds, if any;
D. Calculate realized capital gains or losses of each of the Funds resulting
from sale or disposition of assets, if any;
E. Maintain the general ledger and other accounts, books and financial
records of the Investment Company, including for each Fund, and/or
Class, as required under Section 31(a) of the 1940 Act and the Rules
thereunder in connection with the services provided by the Company;
F. Preserve for the periods prescribed by Rule 31a-2 under the 1940 Act the
records to be maintained by Rule 31a-1 under the 1940 Act in connection
with the services provided by the Company. The Company further agrees
that all such records it maintains for the Investment Company are the
property of the Investment Company and further agrees to surrender
promptly to the Investment Company such records upon the Investment
Company's request;
G. At the request of the Investment Company, prepare various reports or
other financial documents in accordance with generally accepted
accounting principles as required by federal, state and other applicable
laws and regulations; and
H. Such other similar services as may be reasonably requested by the
Investment Company.
The foregoing, along with any additional services that the Company shall
agree in writing to perform for the Investment Company under this Section One,
shall hereafter be referred to as "Fund Accounting Services."
Article 3. Compensation and Allocation of Expenses.
A. The Funds will compensate the Company for Fund Accounting Services in
accordance with the fees agreed upon from time to time between the
parties hereto. Such fees do not include out-of-pocket disbursements of
the Company for which the Funds shall reimburse the Company.
Out-of-pocket disbursements shall include, but shall not be limited to,
the items agreed upon between the parties from time to time.
B. The Fund and/or the Class, and not the Company, shall bear the cost of:
custodial expenses; membership dues in the Investment Company Institute
or any similar organization; transfer agency expenses; investment
advisory expenses; Prospectuses, reports and notices; administrative
expenses; interest on borrowed money; brokerage commissions; taxes and
fees payable to federal, state and other governmental agencies; fees of
Trustees or Directors of the Investment Company; independent auditors
expenses; legal and audit department expenses billed to the Company for
work performed related to the Investment Company, the Funds, or the
Classes; law firm expenses; organizational expenses; or other expenses
not specified in this Article 3 which may be properly payable by the
Funds and/or Classes.
C. The compensation and out-of-pocket expenses attributable to the Fund
shall be accrued by the Fund and shall be paid to the Company no less
frequently than monthly, and shall be paid daily upon request of the
Company. The Company will maintain detailed information about the
compensation and out-of-pocket expenses by Fund and Class.
D. Any schedule of compensation agreed to hereunder, as may be adjusted
from time to time, shall be dated and signed by a duly authorized
officer of the Investment Company and/or the Funds and a duly authorized
officer of the Company.
E. The fee for the period from the effective date of this Agreement with
respect to a Fund or a Class to the end of the initial month shall be
prorated according to the proportion that such period bears to the full
month period. Upon any termination of this Agreement before the end of
any month, the fee for such period shall be prorated according to the
proportion which such period bears to the full month period. For
purposes of determining fees payable to the Company, the value of the
Fund's net assets shall be computed at the time and in the manner
specified in the Fund's Prospectus.
F. The Company, in its sole discretion, may from time to time subcontract
to, employ or associate with itself such person or persons as the
Company may believe to be particularly suited to assist it in performing
Fund Accounting Services. Such person or persons may be affiliates of
the Company, third-party service providers, or they may be officers and
employees who are employed by both the Company and the Investment
Company; provided, however, that the Company shall be as fully
responsible to each Fund for the acts and omissions of any such
subcontractor as it is for its own acts and omissions. The compensation
of such person or persons shall be paid by the Company and no obligation
shall be incurred on behalf of the Investment Company, the Funds, or the
Classes in such respect.
SECTION TWO: ADMINISTRATIVE SERVICES.
Article 4. Appointment.
The Investment Company hereby appoints the Company as Administrator for the
period on the terms and conditions set forth in this Agreement. The Company
hereby accepts such appointment and agrees to furnish the services set forth in
Article 5 of this Agreement in return for the compensation set forth in Article
9 of this Agreement.
Article 5. The Company's Duties.
As Administrator, and subject to the supervision and control of the Board and
in accordance with Proper Instructions (as defined hereafter) from the
Investment Company, the Company will provide facilities, equipment, and
personnel to carry out the following administrative services for operation of
the business and affairs of the Investment Company and each of its portfolios:
A. prepare, file, and maintain the Investment Company's governing documents
and any amendments thereto, including the Charter (which has already
been prepared and filed), the By-laws and minutes of meetings of the
Board and Shareholders;
B. prepare and file with the Securities and Exchange Commission and the
appropriate state securities authorities the registration statements for
the Investment Company and the Investment Company's shares and all
amendments thereto, reports to regulatory authorities and shareholders,
prospectuses, proxy statements, and such other documents all as may be
necessary to enable the Investment Company to make a continuous offering
of its shares;
C. prepare, negotiate, and administer contracts (if any) on behalf of the
Investment Company with, among others, the Investment Company's
investment advisers and distributors, subject to any applicable
restrictions of the Board or the 1940 Act;
D. calculate performance data of the Investment Company for dissemination
to information services covering the investment company industry;
E. prepare and file the Investment Company's tax returns;
F. coordinate the layout and printing of publicly disseminated
prospectuses and reports;
G. perform internal audit examinations in accordance with a charter to be
adopted by the Company and the Investment Company;
H. assist with the design, development, and operation of the Investment
Company and the Funds;
I. provide individuals reasonably acceptable to the Board for nomination,
appointment, or election as officers of the Investment Company, who will
be responsible for the management of certain of the Investment Company's
affairs as determined by the Investment Company's Board; and
J. consult with the Investment Company and its Board on matters
concerning the Investment Company and its affairs.
The foregoing, along with any additional services that the Company shall
agree in writing to perform for the Investment Company under this Section Two,
shall hereafter be referred to as "Administrative Services."
Article 6. Records.
The Company shall create and maintain all necessary books and records in
accordance with all applicable laws, rules and regulations, including but not
limited to records required by Section 31(a) of the Investment Company act of
1940 and the rules thereunder, as the same may be amended from time to time,
pertaining to the Administrative Services performed by it and not otherwise
created and maintained by another party pursuant to contract with the Investment
Company. Where applicable, such records shall be maintained by the Company for
the periods and in the places required by Rule 31a-2 under the 1940 Act. The
books and records pertaining to the Investment Company which are in the
possession of the Company shall be the property of the Investment Company. The
Investment Company, or the Investment Company's authorized representatives,
shall have access to such books and records at all times during the Company's
normal business hours. Upon the reasonable request of the Investment Company,
copies of any such books and records shall be provided promptly by the Company
to the Investment Company or the Investment Company's authorized
representatives.
Article 7. Duties of the Fund.
The Fund assumes full responsibility for the preparation, contents and
distribution of its own offering document and for complying with all applicable
requirements the 1940 Act, the Internal Revenue Code, and any other laws, rules
and regulations of government authorities having jurisdiction.
Article 8. Expenses.
The Company shall be responsible for expenses incurred in providing office
space, equipment, and personnel as may be necessary or convenient to provide the
Administrative Services to the Investment Company, including the compensation of
the Company employees who serve as trustees or directors or officers of the
Investment Company. The Investment Company shall be responsible for all other
expenses incurred by the Company on behalf of the Investment Company, including
without limitation postage and courier expenses, printing expenses, travel
expenses, registration fees, filing fees, fees of outside counsel and
independent auditors, or other professional services, organizational expenses,
insurance premiums, fees payable to persons who are not the Company's employees,
trade association dues, and other expenses properly payable by the Funds and/or
the Classes.
Article 9. Compensation.
For the Administrative Services provided, the Investment Company hereby
agrees to pay and the Company hereby agrees to accept as full compensation for
its services rendered hereunder an administrative fee at an annual rate per
Fund, as specified below.
The compensation and out of pocket expenses attributable to the Fund shall be
accrued by the Fund and paid to the Company no less frequently than monthly, and
shall be paid daily upon request of the Company. The Company will maintain
detailed information about the compensation and out of pocket expenses by the
Fund.
Max. Admin. Average Daily Net Assets
Fee of the Funds
.150% on the first $250 million
.125% on the next $250 million
.100% on the next $250 million
.075% on assets in excess of $750 million
(Average Daily Net Asset break-points are on a complex-wide basis)
However, in no event shall the administrative fee received during any year of
the Agreement be less than, or be paid at a rate less than would aggregate
$125,000 per Fund and $30,000 per Class. The minimum fee set forth above in this
Article 9 may increase annually upon each March 1 anniversary of this Agreement
over the minimum fee during the prior 12 months, as calculated under this
agreement, in an amount equal to the increase in Pennsylvania Consumer Price
Index (not to exceed 6% annually) as last reported by the U.S. Bureau of Labor
Statistics for the twelve months immediately preceding such anniversary.
Article 10. Responsibility of Administrator.
A. The Company shall not be liable for any error of judgment or mistake of law
or for any loss suffered by the Investment Company in connection with the
matters to which this Agreement relates, except a loss resulting from
willful misfeasance, bad faith or gross negligence on its part in the
performance of its duties or from reckless disregard by it of its
obligations and duties under this Agreement. The Company shall be entitled
to rely on and may act upon advice of counsel (who may be counsel for the
Investment Company) 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, director, trustee, partner, employee or agent
of the Company, who may be or become an officer, director, trustee,
partner, employee or agent of the Investment Company, shall be deemed, when
rendering services to the Investment Company or acting on any business of
the Investment Company (other than services or business in connection with
the duties of the Company hereunder) to be rendering such services to or
acting solely for the Investment Company and not as an officer, director,
trustee, partner, employee or agent or one under the control or direction
of the Company even though paid by the Company.
B. The Company shall be kept indemnified by the Investment Company and be
without liability for any action taken or thing done by it in performing
the Administrative Services in accordance with the above standards. In
order that the indemnification provisions contained in this Article 10
shall apply, however, it is understood that if in any case the Investment
Company may be asked to indemnify or hold the Company harmless, the
Investment Company shall be fully and promptly advised of all pertinent
facts concerning the situation in question, and it is further understood
that the Company will use all reasonable care to identify and notify the
Investment Company promptly concerning any situation which presents or
appears likely to present the probability of such a claim for
indemnification against the Investment Company. The Investment Company
shall have the option to defend the Company against any claim which may be
the subject of this indemnification. In the event that the Investment
Company so elects, it will so notify the Company and thereupon the
Investment Company shall take over complete defense of the claim, and the
Company shall in such situation initiate no further legal or other expenses
for which it shall seek indemnification under this Article. The Company
shall in no case confess any claim or make any compromise in any case in
which the Investment Company will be asked to indemnify the Company except
with the Investment Company's written consent.
SECTION THREE: Transfer Agency Services.
Article 11. Terms of Appointment.
Subject to the terms and conditions set forth in this Agreement, the
Investment Company hereby appoints the Company to act as, and the Company
agrees to act as, transfer agent and dividend disbursing agent for each
Fund's Shares, and agent in connection with any accumulation, open-account
or similar plans provided to the shareholders of any Fund
("Shareholder(s)"), including without limitation any periodic investment
plan or periodic withdrawal program.
Article 12. Duties of the Company.
The Company shall perform the following services in accordance with
Proper Instructions as may be provided from time to time by the Investment
Company as to any Fund:
A. Purchases
(1) The Company shall receive orders and payment for the purchase of
shares and promptly deliver payment and appropriate documentation
therefore to the custodian of the relevant Fund, (the
"Custodian"). The Company shall notify the Fund and the Custodian
on a daily basis of the total amount of orders and payments so
delivered.
(2) Pursuant to purchase orders and in accordance with the Fund's
current Prospectus, the Company shall compute and issue the
appropriate number of Shares of each Fund and/or Class and hold
such Shares in the appropriate Shareholder accounts.
(3) In the event that any check or other order for the purchase of
Shares of the Fund and/or Class is returned unpaid for any reason,
the Company shall debit the Share account of the Shareholder by
the number of Shares that had been credited to its account upon
receipt of the check or other order, promptly mail a debit advice
to the Shareholder, and notify the Fund and/or Class of its
action. In the event that the amount paid for such Shares exceeds
proceeds of the redemption of such Shares plus the amount of any
dividends paid with respect to such Shares, the Fund and/the Class
or its distributor will reimburse the Company on the amount of
such excess.
B. Distribution
(1) Upon notification by the Funds of the declaration of any
distribution to Shareholders, the Company shall act as Dividend
Disbursing Agent for the Funds in accordance with the provisions
of its governing document and the then-current Prospectus of the
Fund. The Company shall prepare and mail or credit income, capital
gain, or any other payments to Shareholders. As the Dividend
Disbursing Agent, the Company shall, on or before the payment date
of any such distribution, notify the Custodian of the estimated
amount required to pay any portion of said distribution which is
payable in cash and request the Custodian to make available
sufficient funds for the cash amount to be paid out. The Company
shall reconcile the amounts so requested and the amounts actually
received with the Custodian on a daily basis. If a Shareholder is
entitled to receive additional Shares by virtue of any such
distribution or dividend, appropriate credits shall be made to the
Shareholder's account; and
(2) The Company shall maintain records of account for each Fund and Class
and advise the Investment Company, each Fund and Class and its
Shareholders as to the foregoing.
C. Redemptions and Transfers
(1) The Company shall receive redemption requests and redemption
directions and, if such redemption requests comply with the
procedures as may be described in the Fund Prospectus or set forth
in Proper Instructions, deliver the appropriate instructions
therefor to the Custodian. The Company shall notify the Funds on a
daily basis of the total amount of redemption requests processed
and monies paid to the Company by the Custodian for redemptions.
(2) At the appropriate time upon receiving redemption proceeds from
the Custodian with respect to any redemption, the Company shall
pay or cause to be paid the redemption proceeds in the manner
instructed by the redeeming Shareholders, pursuant to procedures
described in the then-current Prospectus of the Fund.
(3) If any certificate returned for redemption or other request for
redemption does not comply with the procedures for redemption
approved by the Fund, the Company shall promptly notify the
Shareholder of such fact, together with the reason therefor, and
shall effect such redemption at the price applicable to the date
and time of receipt of documents complying with said procedures.
(4) The Company shall effect transfers of Shares by the registered
owners thereof.
(5) The Company shall identify and process abandoned accounts and
uncashed checks for state escheat requirements on an annual basis
and report such actions to the Fund.
D. Recordkeeping
(1) The Company shall record the issuance of Shares of each Fund,
and/or Class, and maintain pursuant to applicable rules of the
Securities and Exchange Commission ("SEC") a record of the total
number of Shares of the Fund and/or Class which are authorized,
based upon data provided to it by the Fund, and issued and
outstanding. The Company shall also provide the Fund on a regular
basis or upon reasonable request with the total number of Shares
which are authorized and issued and outstanding, but shall have no
obligation when recording the issuance of Shares, except as
otherwise set forth herein, to monitor the issuance of such Shares
or to take cognizance of any laws relating to the issue or sale of
such Shares, which functions shall be the sole responsibility of
the Funds.
(2) The Company shall establish and maintain records pursuant to
applicable rules of the SEC relating to the services to be
performed hereunder in the form and manner as agreed to by the
Investment Company or the Fund to include a record for each
Shareholder's account of the following:
(a) Name, address and tax identification number (and whether such
number has been certified);
(b) Number of Shares held;
(c) Historical information regarding the account, including
dividends paid and date and price for all transactions;
(d) Any stop or restraining order placed against the account;
(e) Information with respect to withholding in the case of a
foreign account or an account for which withholding is
required by the Internal Revenue Code;
(f) Any dividend reinvestment order, plan application, dividend
address and correspondence relating to the current
maintenance of the account;
(g) Certificate numbers and denominations for any Shareholder
holding certificates;
(h) Any information required in order for the Company to perform
the calculations contemplated or required by this Agreement.
(3) The Company shall preserve any such records required to be
maintained pursuant to the rules of the SEC for the periods
prescribed in said rules as specifically noted below. Such record
retention shall be at the expense of the Company, and such records
may be inspected by the Fund at reasonable times. The Company may,
at its option at any time, and shall forthwith upon the Fund's
demand, turn over to the Fund and cease to retain in the Company's
files, records and documents created and maintained by the Company
pursuant to this Agreement, which are no longer needed by the
Company in performance of its services or for its protection. If
not so turned over to the Fund, such records and documents will be
retained by the Company for six years from the year of creation,
during the first two of which such documents will be in readily
accessible form. At the end of the six year period, such records
and documents will either be turned over to the Fund or destroyed
in accordance with Proper Instructions.
E. Confirmations/Reports
(1) The Company shall furnish to the Fund periodically the following
information:
(a) A copy of the transaction register;
(b) Dividend and reinvestment blotters;
(c) The total number of Shares issued and outstanding in each
state for "blue sky" purposes as determined according to
Proper Instructions delivered from time to time by the Fund
to the Company;
(d) Shareholder lists and statistical information;
(e) Payments to third parties relating to distribution
agreements, allocations of sales loads, redemption fees, or
other transaction- or sales-related payments;
(f) Such other information as may be agreed upon from time to
time.
(2) The Company shall prepare in the appropriate form, file with the
Internal Revenue Service and appropriate state agencies, and, if
required, mail to Shareholders, such notices for reporting
dividends and distributions paid as are required to be so filed
and mailed and shall withhold such sums as are required to be
withheld under applicable federal and state income tax laws, rules
and regulations.
(3) In addition to and not in lieu of the services set forth above,
the Company shall:
(a) Perform all of the customary services of a transfer agent,
dividend disbursing agent and, as relevant, agent in connection
with accumulation, open-account or similar plans (including
without limitation any periodic investment plan or periodic
withdrawal program), including but not limited to: maintaining
all Shareholder accounts, mailing Shareholder reports and
Prospectuses to current Shareholders, withholding taxes on
accounts subject to back-up or other withholding (including
non-resident alien accounts), preparing and filing reports on
U.S. Treasury Department Form 1099 and other appropriate forms
required with respect to dividends and distributions by federal
authorities for all Shareholders, preparing and mailing
confirmation forms and statements of account to Shareholders for
all purchases and redemptions of Shares and other conformable
transactions in Shareholder accounts, preparing and mailing
activity statements for Shareholders, and providing Shareholder
account information; and
(b) provide a system which will enable the Fund to monitor the
total number of Shares of each Fund (and/or Class) sold in
each state ("blue sky reporting"). The Fund shall by Proper
Instructions (i) identify to the Company those transactions
and assets to be treated as exempt from the blue sky
reporting for each state and (ii) verify the classification
of transactions for each state on the system prior to
activation and thereafter monitor the daily activity for
each state. The responsibility of the Company for each
Fund's (and/or Class's) state blue sky registration status
is limited solely to the recording of the initial
classification of transactions or accounts with regard to
blue sky compliance and the reporting of such transactions
and accounts to the Fund as provided above.
F. Other Duties
(1) The Company shall answer correspondence from Shareholders relating
to their Share accounts and such other correspondence as may from
time to time be addressed to the Company;
(2) The Company shall prepare Shareholder meeting lists, mail proxy
cards and other material supplied to it by the Fund in connection
with Shareholder meetings of each Fund; receive, examine and
tabulate returned proxies, and certify the vote of the
Shareholders;
(3) The Company shall establish and maintain faclities and procedures
for safekeeping of check forms and facsimile signature imprinting
devices, if any; and for the preparation or use, and for keeping
account of, such forms and devices.
The foregoing, along with any additional services that the Company shall
agree in writing to perform for the Investment Company under this Section Three,
shall hereafter be referred to as "Transfer Agency Services."
Article 13. Duties of the Investment Company.
A. Compliance
The Investment Company or Fund assume full responsibility for the
preparation, contents and distribution of their own and/or their
classes' Prospectus and for complying with all applicable requirements
of the Securities Act of 1933, as amended (the "1933 Act"), the 1940 Act
and any laws, rules and regulations of government authorities having
jurisdiction.
Distributions
The Fund shall promptly inform the Company of the declaration of any
dividend or distribution on account of any Fund's shares.
Article 14. Compensation and Expenses.
A. Annual Fee
For performance by the Company pursuant to Section Three of this
Agreement, the Investment Company and/or the Fund agree to pay the
Company an annual maintenance fee for each Shareholder account as agreed
upon between the parties and as may be added to or amended from time to
time. Such fees may be changed from time to time subject to written
agreement between the Investment Company and the Company. Pursuant to
information in the Fund Prospectus or other information or instructions
from the Fund, the Company may sub-divide any Fund into Classes or other
sub-components for recordkeeping purposes. The Company will charge the
Fund the same fees for each such Class or sub-component the same as if
each were a Fund.
B. Reimbursements
In addition to the fee paid under Article 7A above, the Investment
Company and/or Fund agree to reimburse the Company for out-of-pocket
expenses or advances incurred by the Company for the items agreed upon
between the parties, as may be added to or amended from time to time. In
addition, any other expenses incurred by the Company at the request or
with the consent of the Investment Company and/or the Fund, will be
reimbursed by the appropriate Fund.
C. Payment
The compensation and out-of-pocket expenses shall be accrued by the Fund
and shall be paid to the Company no less frequently than monthly, and
shall be paid daily upon request of the Company. The Company will
maintain detailed information about the compensation and out-of-pocket
expenses by Fund and Class.
D. Any schedule of compensation agreed to hereunder, as may be adjusted
from time to time, shall be dated and signed by a duly authorized
officer of the Investment Company and/or the Funds and a duly authorized
officer of the Company.
SECTION FOUR: Custody Services Procurement.
Article 15. Appointment.
The Investment Company hereby appoints Company as its agent to evaluate
and obtain custody services from a financial institution that (i) meets
the criteria established in Section 17(f) of the 1940 Act and (ii) has
been approved by the Board as eligible for selection by the Company as a
custodian (the "Eligible Custodian"). The Company accepts such
appointment.
Article 16. The Company and Its Duties.
Subject to the review, supervision and control of the Board, the
Company shall:
A. evaluate and obtain custody services from a financial institution that
meets the criteria established in Section 17(f) of the 1940 Act and
has been approved by the Board as being eligible for selection by the
Company as an Eligible Custodian;
B. negotiate and enter into agreements with Eligible Custodians for the
benefit of the Investment Company, with the Investment Company as a
party to each such agreement. The Company may, as paying agent, be a
party to any agreement with any such Eligible Custodian;
C. establish procedures to monitor the nature and the quality of the
services provided by Eligible Custodians;
D. monitor and evaluate the nature and the quality of services provided
by Eligible Custodians;
E. periodically provide to the Investment Company (i) written reports on
the activities and services of Eligible Custodians; (ii) the nature and
amount of disbursements made on account of the each Fund with respect to
each custodial agreement; and (iii) such other information as the Board
shall reasonably request to enable it to fulfill its duties and
obligations under Sections 17(f) and 36(b) of the 1940 Act and other
duties and obligations thereof;
F. periodically provide recommendations to the Board to enhance Eligible
Custodian's customer services capabilities and improve upon fees being
charged to the Fund by Eligible Custodian; and
The foregoing, along with any additional services that Company shall
agree in writing to perform for the Fund under this Section Four, shall
hereafter be referred to as "Custody Services Procurement."
Article 17. Fees and Expenses.
A. Annual Fee
For the performance of Custody Services Procurement by the Company
pursuant to Section Four of this Agreement, the Investment Company
and/or the Fund agree to compensate the Company in accordance with the
fees agreed upon from time to time.
B. Reimbursements
In addition to the fee paid under Section 11A above, the Investment
Company and/or Fund agree to reimburse the Company for out-of-pocket
expenses or advances incurred by the Company for the items agreed upon
between the parties, as may be added to or amended from time to time. In
addition, any other expenses incurred by the Company at the request or
with the consent of the Investment Company and/or the Fund, will be
reimbursed by the appropriate Fund.
C. Payment
The compensation and out-of-pocket expenses shall be accrued by the Fund
and shall be paid to the Company no less frequently than monthly, and
shall be paid daily upon request of the Company. The Company will
maintain detailed information about the compensation and out-of-pocket
expenses by Fund.
D. Any schedule of compensation agreed to hereunder, as may be adjusted
from time to time, shall be dated and signed by a duly authorized
officer of the Investment Company and/or the Funds and a duly authorized
officer of the Company.
Article 18. Representations.
The Company represents and warrants that it has obtained all required
approvals from all government or regulatory authorities necessary to enter
into this arrangement and to provide the services contemplated in Section
Four of this Agreement.
SECTION FIVE: General Provisions.
Article 19. Proper Instructions.
As used throughout this Agreement, a "Proper Instruction" means a
writing signed or initialed by one or more person or persons as the Board
shall have from time to time authorized. Each such writing shall set forth
the specific transaction or type of transaction involved. Oral
instructions will be deemed to be Proper Instructions if (a) the Company
reasonably believes them to have been given by a person previously
authorized in Proper Instructions to give such instructions with respect
to the transaction involved, and (b) the Investment Company, or the Fund,
and the Company promptly cause such oral instructions to be confirmed in
writing. Proper Instructions may include communications effected directly
between electro-mechanical or electronic devices provided that the
Investment Company, or the Fund, and the Company are satisfied that such
procedures afford adequate safeguards for the Fund's assets. Proper
Instructions may only be amended in writing.
Article 20. Assignment.
Except as provided below, neither this Agreement nor any of the rights
or obligations under this Agreement may be assigned by either party
without the written consent of the other party.
A. This Agreement shall inure to the benefit of and be binding upon the
parties and their respective permitted successors and assigns.
B. With regard to Transfer Agency Services, the Company may without further
consent on the part of the Investment Company subcontract for the
performance of Transfer Agency Services with
(1) its subsidiary, Federated Shareholder Service Company, a Delaware
business trust, which is duly registered as a transfer agent
pursuant to Section 17A(c)(1) of the Securities Exchange Act of
1934, as amended, or any succeeding statute ("Section 17A(c)(1)");
or
(2) such other provider of services duly registered as a transfer agent
under Section 17A(c)(1) as Company shall select.
The Company shall be as fully responsible to the Investment Company for
the acts and omissions of any subcontractor as it is for its own acts
and omissions.
C. With regard to Fund Accounting Services, Administrative Services and
Custody Procurement Services, the Company may without further consent on
the part of the Investment Company subcontract for the performance of
such services with Federated Administrative Services, a wholly-owned
subsidiary of the Company.
D. The Company shall upon instruction from the Investment Company
subcontract for the performance of services under this Agreement with an
Agent selected by the Investment Company, other than as described in B.
and C. above; provided, however, that the Company shall in no way be
responsible to the Investment Company for the acts and omissions of the
Agent.
Article 21. Documents.
A. In connection with the appointment of the Company under this Agreement,
the Investment Company shall file with the Company the following
documents: (1) A copy of the Charter and By-Laws of the Investment
Company and all amendments thereto;
(2) A copy of the resolution of the Board of the Investment Company
authorizing this Agreement;
(3) Printed documentation from the recordkeeping system representing
outstanding Share certificates of the Investment Company or the Funds;
(4) All account application forms and other documents relating to
Shareholders accounts; and
(5) A copy of the current Prospectus for each Fund.
B. The Fund will also furnish from time to time the following documents:
(1) Each resolution of the Board of the Investment Company authorizing the
original issuance of each Fund's, and/or Class's Shares;
(2) Each Registration Statement filed with the SEC and amendments thereof
and orders relating thereto in effect with respect to the sale of
Shares of any Fund, and/or Class;
(3) A certified copy of each amendment to the governing document and the
By-Laws of the Investment Company;
(4) Certified copies of each vote of the Board authorizing officers to
give Proper Instructions to the Custodian and agents for fund
accountant, custody services procurement, and shareholder
recordkeeping or transfer agency services;
(5) Such other certifications, documents or opinions which the Company
may, in its discretion, deem necessary or appropriate in the proper
performance of its duties; and
(6) Revisions to the Prospectus of each Fund.
Article 22. Representations and Warranties.
A. Representations and Warranties of the Company
The Company represents and warrants to the Fund that:
(1) it is a corporation duly organized and existing and in good standing
under the laws of the Commonwealth of Pennsylvania;
(2) It is duly qualified to carry on its business in each jurisdiction
where the nature of its business requires such qualification, and in
the Commonwealth of Pennsylvania;
(3) it is empowered under applicable laws and by its Articles of
Incorporation and By-Laws to enter into and perform this Agreement;
(4) all requisite corporate proceedings have been taken to authorize it to
enter into and perform its obligations under this Agreement;
(5) it has and will continue to have access to the necessary facilities,
equipment and personnel to perform its duties and obligations under
this Agreement;
(6) it is in compliance with federal securities law requirements and in
good standing as an administrator and fund accountant; and
B. Representations and Warranties of the Investment Company
The Investment Company represents and warrants to the Company that:
(1) It is an investment company duly organized and existing and in good
standing under the laws of its state of organization;
(2) It is empowered under applicable laws and by its Charter and By-Laws
to enter into and perform its obligations under this Agreement;
(3) All corporate proceedings required by said Charter and By-Laws have
been taken to authorize it to enter into and perform its obligations
under this Agreement;
(4) The Investment Company is an open-end investment company registered
under the 1940 Act; and
(5) A registration statement under the 1933 Act will be effective, and
appropriate state securities law filings have been made and will
continue to be made, with respect to all Shares of each Fund being
offered for sale.
Article 23. Standard of Care and Indemnification.
A. Standard of Care
With regard to Sections One, Three and Four, the Company shall be held
to a standard of reasonable care in carrying out the provisions of this
Contract. The Company shall be entitled to rely on and may act upon
advice of counsel (who may be counsel for the Investment Company) on all
matters, and shall be without liability for any action reasonably taken
or omitted pursuant to such advice, provided that such action is not in
violation of applicable federal or state laws or regulations, and is in
good faith and without negligence.
B. Indemnification by Investment Company
The Company shall not be responsible for and the Investment Company or
Fund shall indemnify and hold the Company, including its officers,
directors, shareholders and their agents, employees and affiliates,
harmless against any and all losses, damages, costs, charges, counsel
fees, payments, expenses and liabilities arising out of or attributable
to:
(1) The acts or omissions of any Custodian, Adviser, Sub-adviser or other
party contracted by or approved by the Investment Company or Fund,
(2) The reliance on or use by the Company or its agents or subcontractors
of information, records and documents in proper form which
(a) are received by the Company or its agents or subcontractors
and furnished to it by or on behalf of the Fund, its
Shareholders or investors regarding the purchase, redemption
or transfer of Shares and Shareholder account information;
(b) are received by the Company from independent pricing services
or sources for use in valuing the assets of the Funds; or
(c) are received by the Company or its agents or subcontractors
from Advisers, Sub-advisers or other third parties
contracted by or approved by the Investment Company of Fund
for use in the performance of services under this Agreement;
(d) have been prepared and/or maintained by the Fund or its
affiliates or any other person or firm on behalf of the
Investment Company.
(3) The reliance on, or the carrying out by the Company or its agents or
subcontractors of Proper Instructions of the Investment Company or the
Fund.
(4) The offer or sale of Shares in violation of any requirement under
the federal securities laws or regulations or the securities laws
or regulations of any state that such Shares be registered in such
state or in violation of any stop order or other determination or
ruling by any federal agency or any state with respect to the
offer or sale of such Shares in such state.
Provided, however, that the Company shall not be protected by this
Article 23.B. from liability for any act or omission resulting
from the Company's willful misfeasance, bad faith, negligence or
reckless disregard of its duties or failure to meet the standard
of care set forth in 23.A. above.
C. Reliance
At any time the Company may apply to any officer of the Investment
Company or Fund for instructions, and may consult with legal counsel
with respect to any matter arising in connection with the services to be
performed by the Company under this Agreement, and the Company and its
agents or subcontractors shall not be liable and shall be indemnified by
the Investment Company or the appropriate Fund for any action reasonably
taken or omitted by it in reliance upon such instructions or upon the
opinion of such counsel provided such action is not in violation of
applicable federal or state laws or regulations. The Company, its agents
and subcontractors shall be protected and indemnified in recognizing
stock certificates which are reasonably believed to bear the proper
manual or facsimile signatures of the officers of the Investment Company
or the Fund, and the proper countersignature of any former transfer
agent or registrar, or of a co-transfer agent or co-registrar.
D. Notification
In order that the indemnification provisions contained in this Article
23 shall apply, upon the assertion of a claim for which either party may
be required to indemnify the other, the party seeking indemnification
shall promptly notify the other party of such assertion, and shall keep
the other party advised with respect to all developments concerning such
claim. The party who may be required to indemnify shall have the option
to participate with the party seeking indemnification in the defense of
such claim. The party seeking indemnification shall in no case confess
any claim or make any compromise in any case in which the other party
may be required to indemnify it except with the other party's prior
written consent.
Article 24. Term and Termination of Agreement.
This Agreement shall be effective from September 1, 1997, and shall
continue until February 28, 2003 (`Term"). Thereafter, the Agreement will
continue for 18 month terms. The Agreement can be terminated by either
party upon 18 months notice to be effective as of the end of such 18 month
period. In the event, however, of willful misfeasance, bad faith,
negligence or reckless disregard of its duties by the Company, the
Investment Company has the right to terminate the Agreement upon 60 days
written notice, if Company has not cured such willful misfeasance, bad
faith, negligence or reckless disregard of its duties within 60 days. The
termination date for all original or after-added Investment companies
which are, or become, a party to this Agreement. shall be coterminous.
Investment Companies that merge or dissolve during the Term, shall cease
to be a party on the effective date of such merger or dissolution.
Should the Investment Company exercise its rights to terminate, all
out-of-pocket expenses associated with the movement of records and
materials will be borne by the Investment Company or the appropriate Fund.
Additionally, the Company reserves the right to charge for any other
reasonable expenses associated with such termination. The provisions of
Articles 10 and 23 shall survive the termination of this Agreement.
Article 25. Amendment.
This Agreement may be amended or modified by a written agreement
executed by both parties.
Article 26. Interpretive and Additional Provisions.
In connection with the operation of this Agreement, the Company and the
Investment Company may from time to time agree on such provisions
interpretive of or in addition to the provisions of this Agreement as may
in their joint opinion be consistent with the general tenor of this
Agreement. Any such interpretive or additional provisions shall be in a
writing signed by both parties and shall be annexed hereto, provided that
no such interpretive or additional provisions shall contravene any
applicable federal or state regulations or any provision of the Charter.
No interpretive or additional provisions made as provided in the preceding
sentence shall be deemed to be an amendment of this Agreement.
Article 27. Governing Law.
This Agreement shall be construed and the provisions hereof interpreted
under and in accordance with the laws of the Commonwealth of Massachusetts
Article 28. Notices.
Except as otherwise specifically provided herein, Notices and other
writings delivered or mailed postage prepaid to the Investment Company at
Federated Investors Tower, Pittsburgh, Pennsylvania, 15222-3779, or to the
Company at Federated Investors Tower, Pittsburgh, Pennsylvania,
15222-3779, or to such other address as the Investment Company or the
Company may hereafter specify, shall be deemed to have been properly
delivered or given hereunder to the respective address.
Article 29. Counterparts.
This Agreement may be executed simultaneously in two or more counterparts,
each of which shall be deemed an original. Article 30. Limitations of Liability
of Trustees and Shareholders of the Company.
The execution and delivery of this Agreement have been authorized by
the Trustees of the Company and signed by an authorized officer of the
Company, acting as such, and neither such authorization by such Trustees
nor such execution and delivery by such officer shall be deemed to have
been made by any of them individually or to impose any liability on any of
them personally, and the obligations of this Agreement are not binding
upon any of the Trustees or Shareholders of the Company, but bind only the
appropriate property of the Fund, or Class, as provided in the Declaration
of Trust.
Article 31. Merger of Agreement.
This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement with respect to the subject
hereof whether oral or written.
Article 32. Successor Agent.
If a successor agent for the Investment Company shall be appointed by
the Investment Company, the Company shall upon termination of this
Agreement deliver to such successor agent at the office of the Company all
properties of the Investment Company held by it hereunder. If no such
successor agent shall be appointed, the Company shall at its office upon
receipt of Proper Instructions deliver such properties in accordance with
such instructions.
In the event that no written order designating a successor agent or
Proper Instructions shall have been delivered to the Company on or before
the date when such termination shall become effective, then the Company
shall have the right to deliver to a bank or trust company, which is a
"bank" as defined in the 1940 Act, of its own selection, having an
aggregate capital, surplus, and undivided profits, as shown by its last
published report, of not less than $2,000,000, all properties held by the
Company under this Agreement. Thereafter, such bank or trust company shall
be the successor of the Company under this Agreement.
Article 33. Force Majeure.
The Company shall have no liability for cessation of services hereunder
or any damages resulting therefrom to the Fund as a result of work
stoppage, power or other mechanical failure, natural disaster,
governmental action, communication disruption or other impossibility of
performance.
Article 34. Assignment; Successors.
This Agreement shall not be assigned by either party without the prior
written consent of the other party, except that either party may assign
all of or a substantial portion of its business to a successor, or to a
party controlling, controlled by, or under common control with such party.
Nothing in this Article 34 shall prevent the Company from delegating its
responsibilities to another entity to the extent provided herein.
Article 35. Severability.
In the event any provision of this Agreement is held illegal, void or
unenforceable, the balance shall remain in effect.
Article 36. Limitations of Liability of Trustees and Shareholders of the
Investment Company.
The execution and delivery of this Agreement have been authorized by
the Trustees of the Investment Company and signed by an authorized officer
of the Investment Company, acting as such, and neither such authorization
by such Trustees nor such execution and delivery by such officer shall be
deemed to have been made by any of them individually or to impose any
liability on any of them personally, and the obligations of this Agreement
are not binding upon any of the Trustees or Shareholders of the Investment
Company, but bind only the property of the Fund, or Class, as provided in
the Declaration of Trust.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their names and on their behalf under their seals by and
through their duly authorized officers, as of the day and year first above
written.
INVESTMENT COMPANIES
(listed on Exhibit 1)
By: /s/ S. Elliott Cohan
Name: S. Elliott Cohan
Title: Assistant Secretary
FEDERATED SERVICES COMPANY
By: /s/ Thomas J. Ward
Name: Thomas J. Ward
Title: Secretary
Exhibit 15(v) under Form N-1A
Exhibit 1 under Item 601/Reg. S-K
EXHIBIT AA
to the
Distribution Plan
WORLD INVESTMENT SERIES, INC.
Federated Global Financial Services Fund
Class A Shares
This Distribution Plan is adopted by WORLD INVESTMENT SERIES, INC. with
respect to the Class of Shares of Federated Global Financial Services 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
Global Financial Services Fund held during the month.
Witness the due execution hereof this 1st day of June, 1998.
WORLD INVESTMENT SERIES, INC.
By: /s/ John W. McGonigle
Name: John W. McGonigle
Title: Executive Vice President
<PAGE>
EXHIBIT BB
to the
Distribution Plan
WORLD INVESTMENT SERIES, INC.
Federated Global Financial Services Fund
Class C Shares
This Distribution Plan is adopted by WORLD INVESTMENT SERIES, INC. with
respect to the Class of Shares of Federated Global Financial Services 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
Global Financial Services Fund held during the month.
Witness the due execution hereof this 1st day of June, 1998.
WORLD INVESTMENT SERIES, INC.
By: /s/ John W. McGonigle
Name: John W. McGonigle
Title: Executive Vice President
Exhibit 19 under Form N-1A
Exhibit 10 under Item 601/Reg. S-K
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and appoints
the Secretary and Assistant Secretary of WORLD INVESTMENT SERIES, INC. and the
Deputy General Counsel of Federated Services Company, and each of them, their
true and lawful attorneys-in-fact and agents, with full power of substitution
and resubstitution for them and in their names, place and stead, in any and all
capacities, to sign any and all documents to be filed with the Securities and
Exchange Commission pursuant to the Securities Act of 1933, the Securities
Exchange Act of 1934 and the Investment Company Act of 1940, by means of the
Securities and Exchange Commission's electronic disclosure system known as
EDGAR; and to file the same, with all exhibits thereto and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, and each of them, full power and authority to
sign and perform each and every act and thing requisite and necessary to be done
in connection therewith, as fully to all intents and purposes as each of them
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue thereof.
SIGNATURES TITLE DATE
/s/John F. Donahue Chairman and Director June 2, 1998
- ---------------------------------
John F. Donahue (Chief Executive Officer)
/s/Richard B. Fisher President and Director June 2, 1998
- ---------------------------------
Richard B. Fisher
/s/John W. McGonigle Treasurer, Executive June 2, 1998
John W. McGonigle Vice President and Secretary
(Principal Financial and
Accounting Officer)
/s/Thomas G. Bigley Director June 2, 1998
Thomas G. Bigley
/s/Nicholas P. Constantakis Director June 2, 1998
Nicholas P. Constantakis
/s/John T. Conroy, Jr. Director June 2, 1998
- ---------------------------------
John T. Conroy, Jr.
<PAGE>
SIGNATURES TITLE DATE
/s/William J. Copeland Director June 2, 1998
William J. Copeland
/s/James E. Dowd Director June 2, 1998
James E. Dowd
/s/Lawrence D. Ellis, M.D. Director June 2, 1998
- ---------------------------------
Lawrence D. Ellis, M.D.
/s/Edward L. Flaherty, Jr. Director June 2, 1998
- ---------------------------------
Edward L. Flaherty, Jr.
/s/Peter E. Madden Director June 2, 1998
Peter E. Madden
/s/John E. Murray, Jr. Director June 2, 1998
- ---------------------------------
John E. Murray, Jr.
/s/Wesley W. Posvar Director June 2, 1998
Wesley W. Posvar
/s/Marjorie P. Smuts Director June 2, 1998
Marjorie P. Smuts
Sworn to and subscribed before me this 2nd day of June, 1998
/s/ Cheri S. Good
Notary Public
Exhibit 19(i) under Form N-1A
Exhibit 10 under Item 601/Reg. S-K
Amendment to Schedule 1
to Limited Power of Attorney
dated as of November 20, 1995
(as revised June 1, 1998)
by World Investment Series, Inc.
(the Corporation "), acting on
behalf of each of the series portfolios
listed below, and appointing
Federated Global Research Corp.
the attorney-in-fact of the
Corporation
List of Series Portfolios
Federated Asia Pacific Growth Fund
Federated Emerging Markets Fund
Federated European Growth Fund
Federated Global Equity Income Fund
Federated Global Financial Services Fund
Federated International Growth Fund
Federated International High Income Fund
Federated International Small Company Fund
Federated Latin American Growth Fund
Federated World Utility Fund
Exhibit 6(vi) under Form N-1A
Exhibit 1 under Item 601/Reg. S-K
Schedule A
Date: 10/24/97 DISTRIBUTOR'S CONTRACT
Federated American Leaders Fund, Inc.
Class B Shares
Federated Equity Funds
Federated Aggressive Growth Fund
Class B Shares
Federated Growth Strategies Fund
Class B Shares
Federated Small Cap Strategies Fund
Class B Shares
Federated Capital Appreciation Fund
Class B Shares
Federated Equity Income Fund, Inc.
Class B Shares
Federated Fund for U.S. Government Securities, Inc.
Class B Shares
Federated Government Income Securities, Inc.
Class B Shares
Federated High Income Bond Fund, Inc.
Class B Shares
Federated Municipal Opportunities Fund, Inc.
Class B Shares
Federated Municipal Securities Fund, Inc.
Class B Shares
Federated Stock and Bond Fund, Inc.
Class B Shares
Federated Utility Fund, Inc.
Class B Shares
Fixed Income Securities, Inc.
Federated Strategic Income Fund
Class B Shares
International Series, Inc.
Federated International Equity Fund
Class B Shares
Federated International Income Fund
Class B Shares
<PAGE>
Investment Series Funds, Inc.
Federated Bond Fund
Class B Shares
Liberty U.S. Government Money Market Trust
Class B Shares
Municipal Securities Income Trust
Federated Pennsylvania Municipal Income Fund
Class B Shares
World Investment Series, Inc.
Federated World Utility Fund
Class B Shares
Federated Asia Pacific Growth Fund
Class B Shares
Federated Emerging Markets Fund
Class B Shares
Federated European Growth Fund
Class B Shares
Federated International Small Company Fund
Class B Shares
Federated Latin American Growth Fund
Class B Shares
Federated International High Income Fund
Class B Shares
Federated International Growth Fund
Class B Shares
The following Funds were added as of December 1, 1997:
Municipal Securities Income Trust
Federated California Municipal Income Fund
Class B Shares
World Investment Series, Inc.
Federated Global Equity Income Fund
Class B Shares
The following Funds were added as of March 1, 1998:
Federated Stock Trust
Class B Shares
<PAGE>
The following Funds were added as of June 1, 1998:
World Investment Series, Inc.
Federated Global Financial Services Fund
Class B Shares
Exhibit 9(i) under Form N-1A
Exhibit 10 under Item 601/Reg. S-K
Automated Government Money Trust
Cash Trust Series, Inc.:
Government Cash Series
Municipal Cash Series
Prime Cash Series
Treasury Cash Series
Federated Adjustable Rate U.S. Government Fund, Inc.
Federated American Leaders Fund, Inc.
Class A Shares
Class C Shares
Class F Shares
Federated ARMs Fund
Institutional Service Shares
Institutional Shares
Federated Core Trust:
High Yield Bond Portfolio
Federated Equity Funds:
Federated Aggressive Growth Fund
Class A Shares
Class C Shares
Federated Capital Appreciation Fund
Class A Shares
Class C Shares
Federated Growth Strategies Fund
Class A Shares
Class C Shares
Federated Small Cap Strategies Fund
Class A Shares
Class C Shares
Federated Equity Income Fund, Inc.
Class A Shares
Class C Shares
Class F Shares
Federated Fund for U.S. Government Securities, Inc.
Class A Shares
Class C Shares
Federated GNMA Trust
Institutional Service Shares
Institutional Shares
Federated Government Income Securities, Inc.
Class A Shares
Class C Shares
Class F Shares
Federated Government Trust"
Automated Government Cash Reserves
Automated Treasury Cash Reserves
U.S. Treasury Cash Reserves
Institutional Service Shares
Institutional Shares
<PAGE>
Federated High Income Bond Fund, Inc.
Class A Shares
Class C Shares
Federated High Yield Trust
Federated Income Securities Trust:
Federated Short-Term Income Fund
Institutional Service Shares
Institutional Shares
Federated Intermediate Income Fund
Institutional Service Shares
Institutional Shares
Federated Income Trust
Institutional Service Shares
Institutional Shares
Federated Index Trust:
Federated Max-Cap Fund
Class C Shares
Institutional Service Shares
Institutional Shares
Federated Mid-Cap Fund
Federated Mini-Cap Fund
Class C Shares
Institutional Shares
Federated Institutional Trust:
Federated Institutional Short-Term Government Fund
Institutional Service Shares
Institutional Shares
Federated Investment Trust:
Federated Bond Index Fund
Institutional Shares
Institutional Service Shares
Federated Master Trust
Federated Municipal Opportunities Fund, Inc.
Class A Shares
Class C Shares
Class F Shares
Federated Municipal Securities Fund, Inc.
Class A Shares
Class C Shares
Federated Municipal Trust:
Alabama Municipal Cash Trust
Arizona Municipal Cash Trust
Institutional Service Shares
California Municipal Cash Trust
Institutional Service Shares
Institutional Shares
Connecticut Municipal Cash Trust
Institutional Service Shares
Florida Municipal Cash Trust
Cash II Shares
Institutional Shares
Georgia Municipal Cash Trust
Maryland Municipal Cash Trust
Massachusetts Municipal Cash Trust
Institutional Service Shares
Boston 1784 Funds Shares
Michigan Municipal Cash Trust
Institutional Service Shares
Institutional Shares
Minnesota Municipal Cash Trust
Cash Series Shares
Institutional Shares
New Jersey Municipal Cash Trust
Institutional Service Shares
Institutional Shares
New York Municipal Cash Trust
Cash II Shares
Institutional Service Shares
North Carolina Municipal Cash Trust
Ohio Municipal Cash Trust
Cash II Shares
Institutional Shares
Institutional Service Shares
Pennsylvania Municipal Cash Trust
Cash Series Shares
Institutional Service Shares
Institutional Shares
Tennessee Municipal Cash Trust
Institutional Shares
Institutional Service Shares
Virginia Municipal Cash Trust
Institutional Service Shares
Institutional Shares
Federated Short-Term Municipal Trust
Institutional Service Shares
Institutional Shares
Federated Short-Term U.S. Government Trust
Federated Stock and Bond Fund, Inc.
Class A Shares
Class C Shares
Federated Stock Trust
Class A Shares
Class C Shares
Federated Tax-Free Trust
Federated U.S. Government Bond Fund
Federated U.S. Government Securities Fund: 1-3 Years
Institutional Service Shares
Institutional Shares
Federated U.S. Government Securities Fund: 2-5 Years
Institutional Service Shares
Institutional Shares
<PAGE>
Federated U. S. Government Securities Fund: 5-10 Years
Institutional Service Shares
Institutional Shares
Fixed Income Securities, Inc.:
Federated Limited Term Fund
Class A Shares
Class F Shares
Federated Limited Term Municipal Fund
Class A Shares
Class F Shares
Federated Strategic Income Fund
Class A Shares
Class C Shares
Class F Shares
Federated Total Return Series, Inc.:
Federated Limited Duration Government Fund
Institutional Shares
Institutional Service Shares
Federated Total Return Bond Fund
Institutional Shares
Institutional Service Shares
Federated Total Return Government Fund
Institutional Shares
Institutional Service Shares
Federated Total Return Limited Duration Fund
Institutional Shares
Institutional Service Shares
Federated Utility Fund, Inc.
Class A Shares
Class C Shares
Class F Shares
Intermediate Municipal Trust:
Federated Intermediate Municipal Trust
Federated Pennsylvania Intermediate Municipal Trust
International Series, Inc.:
Federated International Equity Fund
Class A Shares
Class C Shares
Federated International Income Fund
Class A Shares
Class C Shares
Investment Series Funds, Inc.:
Federated Bond Fund
Class A Shares
Class C Shares
Class F Shares
Edward D. Jones & Co. Daily Passport Cash Trust
Liberty Term Trust, Inc. -- 1999
Liberty U.S. Government Money Market Trust
Class A Shares
Liquid Cash Trust
Managed Series Trust:
Federated Aggressive Growth Fund
Institutional Shares
Select Shares
Federated Managed Growth and Income Fund
Institutional Shares
Select Shares
Federated Managed Growth Fund
Institutional Shares
Select Shares
Federated Managed Income Fund
Institutional Shares
Select Shares
Money Market Management, Inc.
Money Market Obligations Trust:
Automated Cash Management Trust
Cash II Shares
Institutional Shares
Government Obligations Fund
Institutional Shares
Institutional Service Shares
Government Obligations Tax-Managed Fund
Institutional Shares
Institutional Service Shares
Prime Obligations Fund
Institutional Shares
Institutional Service Shares
Tax-Free Obligations Fund
Institutional Shares
Institutional Service Shares
Treasury Obligations Fund
Institutional Capital Shares
Institutional Shares
Institutional Service Shares
Money Market Obligations Trust II:
Municipal Obligations Fund
Institutional Capital Shares
Institutional Service Shares
Institutional Shares
Prime Cash Obligations Fund
Institutional Capital Shares
Institutional Service Shares
Institutional Shares
Prime Value Obligations Fund
Institutional Capital Shares
Institutional Service Shares
Institutional Shares
Money Market Trust
<PAGE>
Municipal Securities Income Trust:
Federated California Municipal Income Fund
Class F Shares
Federated Michigan IntermediateMunicipal Trust
Federated New York Municipal Income Fund
Class F Shares
Federated Ohio Municipal Income Fund
Class F Shares
Federated Pennsylvania Municipal Income Fund
Class A Shares
Tax-Free Instruments Trust
Institutional Service Shares
Investment Shares
Trust for Government Cash Reserves
Trust for Short-Term U.S. Government Securities
Trust for U.S. Treasury Obligations
World Investment Series, Inc.:
Federated Asia Pacific Growth Fund
Class A Shares
Class C Shares
Federated Emerging Markets Fund
Class A Shares
Class C Shares
Federated European Growth Fund
Class A Shares
Class C Shares
Federated Global Equity Income Fund
Class A Shares
Class C Shares
Federated Global Financial Services Fund
Class A Shares
Class C Shares
Federated International Growth Fund
Class A Shares
Class C Shares
Federated International High Income Fund
Class A Shares
Class C Shares
Federated International Small Company Fund
Class A Shares
Class C Shares
Federated Latin American Growth Fund
Class A Shares
Class C Shares
Federated World Utility Fund
Class A Shares
Class C Shares
Class F Shares
Exhibit 9(iv) under Form N-1A
Exhibit 10 under Item 601/Reg. S-K
Schedule A
Date: 10/24/97 PRINCIPAL SHAREHOLDER SERVICER'S AGREEMENT
Federated American Leaders Fund, Inc.
Class B Shares
Federated Equity Funds
Federated Aggressive Growth Fund
Class B Shares
Federated Growth Strategies Fund
Class B Shares
Federated Small Cap Strategies Fund
Class B Shares
Federated Capital Appreciation Fund
Class B Shares
Federated Equity Income Fund, Inc.
Class B Shares
Federated Fund for U.S. Government Securities, Inc.
Class B Shares
Federated Government Income Securities, Inc.
Class B Shares
Federated High Income Bond Fund, Inc.
Class B Shares
Federated Municipal Opportunities Fund, Inc.
Class B Shares
Federated Municipal Securities Fund, Inc.
Class B Shares
Federated Stock and Bond Fund, Inc.
Class B Shares
Federated Utility Fund, Inc.
Class B Shares
Fixed Income Securities, Inc.
Federated Strategic Income Fund
Class B Shares
International Series, Inc.
Federated International Equity Fund
Class B Shares
Federated International Income Fund
Class B Shares
<PAGE>
Investment Series Funds, Inc.
Federated Bond Fund
Class B Shares
Liberty U.S. Government Money Market Trust
Class B Shares
Municipal Securities Income Trust
Federated Pennsylvania Municipal Income Fund
Class B Shares
World Investment Series, Inc.
Federated World Utility Fund
Class B Shares
Federated Asia Pacific Growth Fund
Class B Shares
Federated Emerging Markets Fund
Class B Shares
Federated European Growth Fund
Class B Shares
Federated International Small Company Fund
Class B Shares
Federated Latin American Growth Fund
Class B Shares
Federated International High Income Fund
Class B Shares
Federated International Growth Fund
Class B Shares
The following Funds were added as of December 1, 1997:
Municipal Securities Income Trust
Federated California Municipal Income Fund
Class B Shares
World Investment Series, Inc.
Federated Global Equity Income Fund
Class B Shares
The following Funds were added as of March 1, 1998:
Federated Stock Trust
Class B Shares
<PAGE>
The following Funds were added as of June 1, 1998:
World Investment Series, Inc.
Federated Global Financial Services Fund
Class B Shares
Exhibit 9(v) under Form N-1A
Exhibit 10 under Item 601/Reg. S-K
Schedule A
Date: 10/24/97 SHAREHOLDER SERVICES AGREEMENT
Federated American Leaders Fund, Inc.
Class B Shares
Federated Equity Funds
Federated Aggressive Growth Fund
Class B Shares
Federated Growth Strategies Fund
Class B Shares
Federated Small Cap Strategies Fund
Class B Shares
Federated Capital Appreciation Fund
Class B Shares
Federated Equity Income Fund, Inc.
Class B Shares
Federated Fund for U.S. Government Securities, Inc.
Class B Shares
Federated Government Income Securities, Inc.
Class B Shares
Federated High Income Bond Fund, Inc.
Class B Shares
Federated Municipal Opportunities Fund, Inc.
Class B Shares
Federated Municipal Securities Fund, Inc.
Class B Shares
Federated Stock and Bond Fund, Inc.
Class B Shares
Federated Utility Fund, Inc.
Class B Shares
Fixed Income Securities, Inc.
Federated Strategic Income Fund
Class B Shares
International Series, Inc.
Federated International Equity Fund
Class B Shares
Federated International Income Fund
Class B Shares
<PAGE>
Investment Series Funds, Inc.
Federated Bond Fund
Class B Shares
Liberty U.S. Government Money Market Trust
Class B Shares
Municipal Securities Income Trust
Federated Pennsylvania Municipal Income Fund
Class B Shares
World Investment Series, Inc.
Federated World Utility Fund
Class B Shares
Federated Asia Pacific Growth Fund
Class B Shares
Federated Emerging Markets Fund
Class B Shares
Federated European Growth Fund
Class B Shares
Federated International Small Company Fund
Class B Shares
Federated Latin American Growth Fund
Class B Shares
Federated International High Income Fund
Class B Shares
Federated International Growth Fund
Class B Shares
The following Funds were added as of December 1, 1997:
Municipal Securities Income Trust
Federated California Municipal Income Fund
Class B Shares
World Investment Series, Inc.
Federated Global Equity Income Fund
Class B Shares
The following Funds were added as of March 1, 1998:
Federated Stock Trust
Class B Shares
<PAGE>
The following Funds were added as of June 1, 1998:
World Investment Series, Inc.
Federated Global Financial Services Fund
Class B Shares
Exhibit 15(vi) under Form N-1A
Exhibit 1 under Item 601/Reg. S-K
Schedule A
Date: 10/24/97 DISTRIBUTION PLAN
Federated American Leaders Fund, Inc.
Class B Shares
Federated Equity Funds
Federated Aggressive Growth Fund
Class B Shares
Federated Growth Strategies Fund
Class B Shares
Federated Small Cap Strategies Fund
Class B Shares
Federated Capital Appreciation Fund
Class B Shares
Federated Equity Income Fund, Inc.
Class B Shares
Federated Fund for U.S. Government Securities, Inc.
Class B Shares
Federated Government Income Securities, Inc.
Class B Shares
Federated High Income Bond Fund, Inc.
Class B Shares
Federated Municipal Opportunities Fund, Inc.
Class B Shares
Federated Municipal Securities Fund, Inc.
Class B Shares
Federated Stock and Bond Fund, Inc.
Class B Shares
Federated Utility Fund, Inc.
Class B Shares
Fixed Income Securities, Inc.
Federated Strategic Income Fund
Class B Shares
International Series, Inc.
Federated International Equity Fund
Class B Shares
Federated International Income Fund
Class B Shares
<PAGE>
Investment Series Funds, Inc.
Federated Bond Fund
Class B Shares
Liberty U.S. Government Money Market Trust
Class B Shares
Municipal Securities Income Trust
Federated Pennsylvania Municipal Income Fund
Class B Shares
World Investment Series, Inc.
Federated World Utility Fund
Class B Shares
Federated Asia Pacific Growth Fund
Class B Shares
Federated Emerging Markets Fund
Class B Shares
Federated European Growth Fund
Class B Shares
Federated International Small Company Fund
Class B Shares
Federated Latin American Growth Fund
Class B Shares
Federated International High Income Fund
Class B Shares
Federated International Growth Fund
Class B Shares
The following Funds were added as of December 1, 1997:
Municipal Securities Income Trust
Federated California Municipal Income Fund
Class B Shares
World Investment Series, Inc.
Federated Global Equity Income Fund
Class B Shares
The following Funds were added as of March 1, 1998:
Federated Stock Trust
Class B Shares
<PAGE>
The following Funds were added as of June 1, 1998:
World Investment Series, Inc.
Federated Global Financial Services Fund
Class B Shares
Exhibit 18(i) under Form N-1A
Exhibit 10 under Item 601/Reg. S-K
List of Companies (or Portfolios) with Select Shares
Federated Managed Aggressive Growth Fund (a portfolio of Managed Series Trust)
Federated Managed Growth Fund (a portfolio of Managed Series Trust) Federated
Managed Growth & Income Fund (a portfolio of Managed Series Trust) Federated
Managed Income Fund (a portfolio of Managed Series Trust)
<PAGE>
List of Companies (or Portfolios) with Class A Shares
Federated Aggressive Growth Fund (a portfolio of Federated Equity Funds)
Federated American Leaders Fund, Inc. Federated Asia Pacific Growth Fund (a
portfolio of World Investment Series, Inc.) Federated Bond Fund (a portfolio of
Investment Series Funds, Inc.) Federated California Municipal Income Fund (a
portfolio of Municipal Securities Income Trust) Federated Capital Appreciation
Fund (a portfolio of Federated Equity Funds) Federated Emerging Markets Fund (a
portfolio of World Investment Series, Inc.)
Federated Equity Income Fund, Inc.
Federated European Growth Fund (a portfolio of World Investment Series, Inc.)
Federated Fund for U.S. Government Securities, Inc.
Federated Global Equity Income Fund (a portfolio of World Investment Series,
Inc.)
Federated Global Financial Services Fund (a portfolio of World Investment
Series, Inc.)
Federated Government Income Securities, Inc.
Federated Growth Strategies Funds (a portfolio of Federated Equity Funds)
Federated High Income Bond Fund, Inc.
Federated International Equity Fund (a portfolio of International Series, Inc.)
Federated International Growth Fund (a portfolio of World Investment
Series, Inc.)
Federated International High Income Fund (a portfolio of World Investment
Series, Inc.)
Federated International Income Fund (a portfolio of International Series, Inc.)
Federated International Small Company Fund (a portfolio of World Investment
Series, Inc.)
Federated Latin American Growth Fund (a portfolio of World Investment
Series, Inc.)
Federated Limited Term Fund (a portfolio of Fixed Income Securities, Inc.) (1)
Federated Limited Term Municipal Fund (a portfolio of Fixed Income
Securities, Inc.) (1)
Federated Municipal Opportunities Fund, Inc.
Federated Municipal Securities Fund, Inc.
Federated Pennsylvania Municipal Income Fund (a portfolio of Municipal
Securities Income Trust)
Federated Small Cap Strategies Fund (a portfolio of Federated Equity Funds)
Federated Strategic Income Fund (a portfolio of Fixed Income
Securities, Inc.) (1)
Federated Stock and Bond Fund, Inc.
Federated Stock Trust
Federated Utility Fund, Inc.
Federated World Utility Fund (a portfolio of World Investment Series, Inc.)
Liberty U.S. Government Money Market Trust (1)
NOTE:(1)A Distribution Fee of 0.25% of average net assets will be charged
on these shares.
(2) No Initial Sales Load payable upon sales of this Fund.
<PAGE>
List of Companies (or Portfolios) with Class B Shares
Federated Aggressive Growth Fund (a portfolio of Federated Equity Funds)
Federated American Leaders Fund, Inc. Federated Asia Pacific Growth Fund (a
portfolio of World Investment Series, Inc.) Federated Bond Fund (a portfolio of
Investment Series Funds, Inc.) Federated California Municipal Income Fund (a
portfolio of Municipal Securities Income Trust) Federated Capital Appreciation
Fund (a portfolio of Federated Equity Funds) Federated Emerging Markets Fund (a
portfolio of World Investment Series, Inc.)
Federated Equity Income Fund, Inc.
Federated European Growth Fund (a portfolio of World Investment Series, Inc.)
Federated Fund for U.S. Government Securities, Inc.
Federated Global Equity Income Fund (a portfolio of World Investment
Series, Inc.)
Federated Global Financial Services Fund (a portfolio of World Investment
Series, Inc.)
Federated Government Income Securities, Inc.
Federated Growth Strategies Funds (a portfolio of Federated Equity Funds)
Federated High Income Bond Fund, Inc.
Federated International Equity Fund (a portfolio of International Series, Inc.)
Federated International Growth Fund (a portfolio of World Investment
Series, Inc.)
Federated International High Income Fund (a portfolio of World Investment
Series, Inc.)
Federated International Income Fund (a portfolio of International Series, Inc.)
Federated International Small Company Fund (a portfolio of World Investment
Series, Inc.)
Federated Latin American Growth Fund (a portfolio of World Investment
Series, Inc.)
Federated Municipal Opportunities Fund, Inc.
Federated Municipal Securities Fund, Inc.
Federated Pennsylvania Municipal Income Fund (a portfolio of Municipal
Securities Income Trust) Federated Small Cap Strategies Fund (a portfolio of
Federated Equity Funds) Federated Strategic Income Fund (a portfolio of Fixed
Income Securities, Inc.)
Federated Stock and Bond Fund, Inc.
Federated Stock Trust
Federated Utility Fund, Inc.
Federated World Utility Fund (a portfolio of World Investment Series, Inc.)
Liberty U.S. Government Money Market Trust
<PAGE>
List of Companies (or Portfolios) with Class C Shares
Federated Aggressive Growth Fund (a portfolio of Federated Equity Funds)
Federated American Leaders Fund, Inc. Federated Asia Pacific Growth Fund (a
portfolio of World Investment Series, Inc.) Federated Bond Fund (a portfolio of
Investment Series Funds, Inc.) Federated Capital Appreciation Fund (a portfolio
of Federated Equity Funds) Federated Emerging Markets Fund (a portfolio of World
Investment Series, Inc.) Federated Equity Income Fund, Inc. Federated European
Growth Fund (a portfolio of World Investment Series, Inc.) Federated Fund for
U.S. Government Securities, Inc. Federated Global Equity Income Fund (a
portfolio of World Investment Series, Inc.) Federated Global Financial Services
Fund (a portfolio of World Investment Series, Inc.) Federated Government Income
Securities, Inc. Federated Growth Strategies Funds (a portfolio of Federated
Equity Funds) Federated High Income Bond Fund, Inc. Federated International
Equity Fund (a portfolio of International Series, Inc.) Federated International
Growth Fund (a portfolio of World Investment Series, Inc.) Federated
International High Income Fund (a portfolio of World Investment Series, Inc.)
Federated International Income Fund (a portfolio of International Series, Inc.)
Federated International Small Company Fund (a portfolio of World Investment
Series, Inc.) Federated Latin American Growth Fund (a portfolio of World
Investment Series, Inc.) Federated Max-Cap Fund (a portfolio of Federated Index
Trust) Federated Mini-Cap Fund (a portfolio of Federated Index Trust) Federated
Municipal Opportunities Fund, Inc. Federated Municipal Securities Fund, Inc.
Federated Small Cap Strategies Fund (a portfolio of Federated Equity Funds)
Federated Strategic Income Fund (a portfolio of Fixed Income Securities, Inc.)
Federated Stock and Bond Fund, Inc. Federated Stock Trust Federated Utility
Fund, Inc. Federated World Utility Fund (a portfolio of World Investment Series,
Inc.)
<PAGE>
List of Companies (or Portfolios) with Class F Shares
Federated American Leaders Fund, Inc.
Federated Bond Fund (a portfolio of Investment Series Funds, Inc.)
Federated Equity Income Fund, Inc.
Federated Government Income Securities, Inc.
Federated Limited Term Fund (a portfolio of Fixed Income Securities, Inc.) (1)
Federated Limited Term Municipal Fund (a portfolio of Fixed Income
Securities, Inc.) (1)
Federated Municipal Opportunities Fund, Inc.
Federated New York Municipal Income Fund (a portfolio of Municipal Securities
Income Trust) Federated Ohio Municipal Income Fund (a portfolio of Municipal
Securities Income Trust) Federated Strategic Income Fund (a portfolio of Fixed
Income Securities, Inc.) Federated World Utility Fund (a portfolio of World
Investment Series, Inc.)
Federated Utility Fund, Inc.
<PAGE>
List of Companies (or Portfolios) with Institutional Shares
Automated Cash Management Trust (a portfolio of Money Market Obligations Trust)
California Municipal Cash Trust (a portfolio of Federated Municipal Trust)
Federated ARMs Fund Federated Bond Index Fund (a portfolio of Federated
Investment Trust) Federated GNMA Trust Federated Income Trust Federated
Institutional Short Duration Government Fund (a portfolio of Federated Municipal
Trust) Federated Intermediate Income Fund (a portfolio of Federated Income
Securities Trust) Federated Intermediate Municipal Trust (a portfolio of
Intermediate Municipal Trust) Federated Limited Duration Government Fund (a
portfolio of Federated Total Return Series, Inc.) Federated Managed Aggressive
Growth Fund (a portfolio of Managed Series Trust) Federated Managed Growth Fund
(a portfolio of Managed Series Trust) Federated Managed Growth & Income fund (a
portfolio of Managed Series Trust) Federated Managed Income Fund (a portfolio of
Managed Series Trust) Federated Max-Cap Fund (a portfolio of Federated Index
Trust) Federated Mini-Cap Fund (a portfolio of Federated Index Trust) Federated
Short-Term Income Fund (a portfolio of Federated Income Securities Trust)
Federated Short-Term Municipal Trust Federated Total Return Bond Fund (a
portfolio of Federated Total Return Series, Inc.) Federated Total Return Limited
Duration Fund (a portfolio of Federated Total Return Series, Inc.) 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 Florida
Municipal Cash Trust (a portfolio of Federated Municipal Trust) Government
Obligations Tax-Managed Fund (a portfolio of Money Market Obligations Trust)
Government Obligations Fund (a portfolio of Money Market Obligations Trust)
Michigan Municipal Cash Trust (a portfolio of Federated Municipal Trust)
Minnesota Municipal Cash Trust (a portfolio of Federated Municipal Trust)
Municipal Obligations Fund (a portfolio of Money Market Obligations Trust II)
New Jersey Municipal Cash Trust (a portfolio of Federated Municipal Trust) Ohio
Municipal Cash Trust (a portfolio of Federated Municipal Trust) Pennsylvania
Municipal Cash Trust (a portfolio of Federated Municipal Trust) Prime Cash
Obligations Fund (a portfolio of Money Market Obligations Trust II) Prime
Obligations Fund (a portfolio of Money Market Obligations Trust) Prime Value
Obligations Fund (a portfolio of Money Market Obligations Trust II) Tax-Free
Obligations Fund (a portfolio of Money Market Obligations Trust) Tennessee
Municipal Cash Trust (a portfolio of Federated Municipal Trust) Treasury
Obligations Fund (a portfolio of Money Market Obligations Trust) U.S. Treasury
Cash Reserves (a portfolio of Federated Government Trust) Virginia Municipal
Cash Trust (a portfolio of Federated Municipal Trust)
<PAGE>
List of Companies (or Portfolios) with Institutional Service Shares
Arizona Municipal Cash Trust (a portfolio of Federated Municipal Trust)
Automated Cash Management Trust (a portfolio of Money Market Obligations Trust)
California Municipal Cash Trust (a portfolio of Federated Municipal Trust)
Connecticut Municipal Cash Trust (a portfolio of Federated Municipal Trust)
Federated ARMs Fund Federated Bond Index Fund (a portfolio of Federated
Investment Trust) Federated GNMA Trust Federated Income Trust Federated
Institutional Short Duration Government Fund (a portfolio of Federated
Institutional Trust) Federated Intermediate Income Fund (a portfolio of
Federated Income Securities Trust) Federated Limited Duration Government Fund (a
portfolio of Federated Total Return Series, Inc.) Federated Short-Term Income
Fund (a portfolio of Federated Income Securities Trust) Federated Short Term
Municipal Trust Federated Stock Trust Federated Total Return Bond Fund (a
portfolio of Federated Total Return Series, Inc.) Federated Total Return
Govenment Fund (a portfolio of Federated Total Return Series, Inc.) Federated
Total Return Limited Duration Fund (a portfolio of Federated Total Return
Series, Inc.) Federated Max Cap Fund (a portfolio of Federated Index Trust)
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
Government Obligations Fund (a portfolio of Money Market Obligation Fund)
Government Obligations Tax-Managed Fund (a portfolio of Money Market Obligations
Trust) Massachusetts Municipal Cash Trust (a portfolio of Federated Municipal
Trust) Michigan Municipal Cash Trust (a portfolio of Federated Municipal Trust)
New Jersey Municipal Cash Trust (a portfolio of Federated Municipal Trust) New
York Municipal Cash Trust (a portfolio of Federated Municipal Trust) Ohio
Municipal Cash Trust (a portfolio of Federated Municipal Trust) Pennsylvania
Municipal Cash Trust (a portfolio of Federated Municipal Trust) Prime
Obligations Fund (a portfolio of Money Market Obligations Trust) Tax-Free
Instruments Trust Tax-Free Obligations Fund (a portfolio of Money Market
Obligations Trust) Tennessee Municipal Cash Trust (added as of 03/01/96)
Treasury Obligations Fund (a portfolio of Money Market Obligations Trust)
Virginia Municipal Cash Trust (a portfolio of Federated Municipal Trust) U.S.
Treasury Cash Reserves (a portfolio of Federated Government Trust)
<PAGE>
List of Companies (or Portfolios) with Cash II Shares
Automated Cash Management Trust (a portfolio of Money Market Obligations Trust)
Florida Muncipal Cash Trust (a portfolio of Federated Municipal Trust) New York
Municipal Cash Trust (a portfolio of Federated Municipal Trust) Ohio Municipal
Cash Trust (a portfolio of Federated Municipal Trust)
<PAGE>
List of Companies (or Portfolios) with Investment Shares
Tax-Free Instruments Trust
<PAGE>
List of Companies (or Portfolios) with Cash Series Shares
Minnesota Municipal Cash Trust (a portfolio of Federated Municipal Trust)
Pennsylvania Municipal Cash Trust (a portfolio of Federated Municipal Trust)
<PAGE>
List of Companies (or Portfolios) with 1784 Funds Shares
Massachusetts Municipal Cash Trust (a portfolio of Federated Municipal Trust)
<PAGE>
List of Companies (or Portfolios) with Institutional Capital Shares)
Municipal Obligations Fund (a portfolio of Money Market Obligations Trust II)
Prime Cash Obligations Fund (a portfolio of Money Market Obligations Trust II)
Prime Value Obligations Fund (a portfolio of Money Market Obligations Trust II)
Treasury Obligations Fund (a portfolio of Money Market Obligations Trust)
