[Graphic]
RICHARD B. FISHER
President
Federated Asia Pacific Growth Fund
President's Message
Dear Fellow Shareholder:
Federated Asia Pacific Growth Fund was created in 1996, and I am pleased to
present its fourth Annual Report. As of November 30, 1999, the fund's net assets
totaled $55 million with 59.5% of the fund's investments in Japan, whose
recovery has helped to fuel the fund's performance.
This report covers the 12-month reporting period from December 1, 1998 through
November 30, 1999. It begins with an interview with the fund's portfolio
manager, Alexandre de Bethmann, Vice President of Federated Global Investment
Management Corp. Following his discussion, which covers international economic
and market conditions and fund strategy, are three additional items of
shareholder interest. First is a series of graph showing the fund's investment
performance. Second is a complete listing of the fund's investments, and third
is the publication of the fund's financial statements.
This international stock fund provides investors significant long-term
opportunities from a well-researched portfolio of more than 100 corporations in
11 Asian and Pacific Rim countries. 1 The stocks selected, in many cases, are
issued by internationally recognized industry leaders whose average market
capitalization is over $2 billion. They are fundamentally strong companies that
are positioned to be stronger than ever as the Asian markets are recovering.
After an extended period of difficulty in the Asia Pacific region, investors are
being rewarded for their patience. An economic recovery in most Asian countries,
corporate restructuring and positive investor sentiment combined to produce
strong returns across the region. Shareholders in Federated Asia Pacific Growth
Fund, in particular, received an outstanding return. During the 12-month
reporting period, the fund's returns were more than double the return of the
fund's benchmark and far outpaced the average return of all Pacific region
funds.
1 Foreign investing involves special risks including currency risk, increased
volatility of foreign securities, and differences in auditing and other
financial standards.
Individual share class total return performance for the 12-month reporting
period is as follows: 2
<TABLE>
<CAPTION>
TOTAL RETURN NET ASSET VALUE INCREASE <S> <C> <C> Class A Shares 112.19% $6.40
to $13.58 = 112.19% Class B Shares 110.49% $6.29 to $13.24 = 110.49% Class C
Shares 110.46% $6.31 to $13.28 = 110.46%
</TABLE>
I recommend adding to your account on a regular basis to take advantage of price
fluctuations and to use the dollar-cost averaging method of investing. By
investing the same amount regularly, you buy more fund shares when prices are
low-and fewer when prices are high. 3
As we continue to emerge from a volatile period, I thank you for the patience
you have shown as a shareholder of Federated Asia Pacific Growth Fund.
Sincerely,
[Graphic]
Richard B. Fisher
President
January 15, 2000
2 Performance quoted is based on net asset value, represents past performance
and is no guarantee of future results. Investment return and principal value
will fluctuate so that an investor's shares, when redeemed, may be worth more or
less than their original cost. Total returns for the period, based on offering
price (i.e., less any applicable sales charge), for Class A, B, and C Shares
were 100.59%, 104.99%, and 109.46%, respectively.
3 Systematic investing does not assure a profit or protect against loss in
declining markets. Because dollar-cost averaging involves continuous investing
regardless of fluctuating price levels, investors should consider their
financial ability to continue purchases during periods of low price levels.
[Graphic]
ALEXANDRE DE BETHMANN
Vice President
Federated Global Investment Management Corp.
Investment Review
OVER THE PAST 12 MONTHS, INVESTORS IN THE ASIA PACIFIC REGION WERE HANDSOMELY
REWARDED FOR THEIR PATIENCE AFTER AN EXTENDED, DIFFICULT PERIOD. WHAT IS YOUR
REVIEW OF THE RECOVERY OF THE ASIA PACIFIC MARKET DURING THE FUND'S FISCAL YEAR?
The recovery of the Asia Pacific markets has been driven by three factors:
economic recovery in most Asian countries, corporate restructuring and large
capital inflows. Earlier in the year, economists began to forecast positive
economic growth from the Asia Pacific region for 1999 and accelerated growth
during 2000. This was not expected in 1998, when the consensus gross domestic
product ("GDP") growth forecast for the region was negative. The actual GDP
growth numbers were surprising on the upside in many countries later in 1998. As
a result, investor sentiment toward the Asian markets improved dramatically, as
evidenced by the return of capital flow. There were net inflows into the Asian
markets, while certain other regional markets suffered small outflows,
suggesting a reallocation of investors' portfolios into Asia. This trend
continued throughout 1999, as the global funds reassessed the region's favorable
potential.
IN THIS ENVIRONMENT, FEDERATED ASIA PACIFIC GROWTH FUND DELIVERED TRIPLE- DIGIT
RETURNS FOR THE YEAR. HOW DID THE FUND PERFORM COMPARED TO ITS BENCHMARK FOR THE
12-MONTH REPORTING PERIOD ENDED NOVEMBER 30, 1999?
For the fiscal year ended November 30, 1999, the fund's total return for Class A
Shares was 112.19%, based on net asset value. 1 The total returns for Class B
and C Shares, based on net asset value, were 110.49% and 110.46%, respectively.1
The fund's returns were more than double the 52.01% return of the Asia Pacific
market as measured by the fund's benchmark, the Morgan Stanley Capital
International Combined Asia Pacific Index,2 and far outpaced the 76.74% return
of the 56 Pacific Region funds tracked by Lipper Analytical Services, Inc.3
WHAT STRATEGIES CONTRIBUTED TO THE FUND'S SIGNIFICANT OUTPERFORMANCE DURING
THE 12-MONTH REPORTING PERIOD?
We continued to focus on attractively priced companies with solid financial
positions, improving market share, and good earnings growth. It is a strategy
that we have used consistently in our investment process and it has worked very
well for us. In addition, we were ahead of our competition in moving into the
cellular and Internet service providers for this region, as well as the Japanese
companies that supply components to the telecommunications industry. This
strategy has also worked out very well for us. We have had an overweighted
position in these industries for most of the year.
CAN YOU GIVE US A COUPLE OF EXAMPLES OF THESE COMPANIES?
PENTAFOUR SOFTWARE & EXPORTS, LTD. (0.84% of net assets): Pentafour is an Indian
software company and one of the largest multimedia/animation software companies.
It is the only non-U.S. company among the top five animators in the world with a
well-developed specialized infrastructure, an experienced team with high-end
skills and significant success in the U.S. market. Earnings growth is projected
to be over 40% in the multimedia business over the next two years, and yet the
stock is trading at a substantial discount to the industry. The stock has
doubled since our purchase a month ago, and we think it is just the beginning
for the re-rating of the stock.
The portfolio overweights telecommunications/Internet companies, such as NTT
MOBILE COMMUNICATIONS NETWORK, INC. (2.45% of net assets), Japan's dominant
cellular telephone operator, and the only operator to offer and operate a
nationwide cellular service, covering 98% of Japan's population. The company
registered 42% annual growth in operating profits, and 108% annual growth in
recurring profits in the last three years. Its Internet-related I-mode wireless
Internet portal service, is experiencing phenomenal growth. Launched nine months
ago, I-mode has already secured 2.5 million subscribers, which should grow to
4.8 million by March 2000.
1 Performance quoted is based on net asset value, represents past performance
and is no guarantee of future results. Investment return and principal value
will fluctuate so that an investor's shares, when redeemed, may be worth more or
less than their original cost. Total returns for the period, based on offering
price (i.e., less any applicable sales charge), for Class A, B, and C Shares
were 100.59%, 104.99%, and 109.46%, respectively.
2 The Morgan Stanley Capital International Combined Asia Pacific Index is an
unmanaged, market value-weighted average of the performance of securities listed
on the stock exchange of 13 countries in the Pacific and Asian regions.
Investments cannot be made in an index.
3 Lipper figures represent the average of the total returns reported by all of
the mutual funds designated by Lipper Analytical Services, Inc. as falling into
the category indicated. Lipper returns do not take sales charges into account.
WHAT COUNTRIES WERE REPRESENTED IN THE FUND'S PORTFOLIO AS OF NOVEMBER 30, 1999,
AND WHAT WERE THE FUND'S TOP TEN HOLDINGS?
<TABLE>
<CAPTION>
PERCENTAGE OF
COUNTRY NET ASSETS
<S> <C> Japan (developed) 59.50% Australia (developed) 9.53% Korea (emerging)
8.08% Singapore (developed) 7.25% India (emerging) 5.36% Hong Kong (developed)
5.18% Indonesia (emerging) 1.76% China (emerging) 0.51% Thailand (emerging)
0.49% Philippines (emerging) 0.41% Taiwan (emerging) 0.23%
</TABLE>
<TABLE>
<CAPTION>
PERCENTAGE OF
NAME COUNTRY INDUSTRY NET ASSETS
<S> <C> <C> <C>
Matsushita Communication Industrial Co., Ltd. Japan Electrical & Electronics
3.18%
Softbank Corp. Japan Business & Public Services 2.66%
NTT Mobile Communications Network, Inc. Japan Telecommunications 2.45%
Funai Electric Co., Ltd. Japan Electronic Components, Instruments 2.30%
Kyocera Corp. Japan Electronic Components, Instruments 2.28%
Koei Co., Ltd. Japan Business & Public Services 2.19%
Sony Corp. Japan Appliances & Household Durables 2.18%
Nikko Securities Co., Ltd. Japan Financial Services 2.17%
Murata Manufacturing Co., Ltd. Japan Electronic Components, Instruments 2.13%
Fujitsu Ltd. Japan Data Processing & Reproduction 2.09%
TOTAL 23.63%
</TABLE>
IN THE FUND'S LAST ANNUAL REPORT, AFTER A VERY DIFFICULT EXTENDED PERIOD FOR THE
ASIA PACIFIC MARKET, YOU MADE WHAT PROVED TO BE A PERFECTLY TIMED REMARK THAT
"THE BEST TIME TO INVEST IS WHEN THE PERCEPTION IS BLEAK." AS WE ENTER 2000
AFTER A STRONG 12-MONTH RECOVERY, DO THE SIGNS POINT TOWARD CONTINUED STRENGTH
IN THE REGION?
Yes, our outlook remains positive. Economic recovery in Asia is more than a
recovery from low market valuations. Better exports, stronger consumer
confidence, and increasing technology spending should point to further economic
growth. There are four drivers for improvement in corporate profitability in
this region: rationalization of business investments, lower costs, corporate
downsizing, and the emergence of new, high return business opportunities. These
major risks have diminished significantly, too, in this region: Chinese
devaluation, the collapse of the Japanese economy, and Indonesian political
instability.
Last Meeting of Shareholders
A Special Meeting of shareholders of Federated Asia Pacific Growth Fund (the
"Fund"), a portfolio of World Investment Series, Inc. was held on December 17,
1999. On September 7, 1999, the record date for the shareholders voting at the
meeting, there were 3,045,385 total outstanding shares.
The following items were considered by shareholders and the results of their
voting were as follows:
AGENDA ITEM 1
Elected Directors: 1
<TABLE>
<CAPTION>
WITHHELD
SHARES AUTHORITY
VOTED FOR TO VOTE
<S> <C> <C>
Thomas G. Bigley 2,093,715 107,216
Nicholas P. Constantakis 2,092,170 108,761
John F. Cunningham 2,091,693 109,238
J. Christopher Donahue 2,094,092 106,839
Charles F. Mansfield, Jr. 2,094,092 106,839
John E. Murray, Jr., J.D., S.J.D. 2,091,693 109,238
John S. Walsh 2,094,284 106,647
</TABLE>
1 The following Directors continued their terms as Directors: John F.
Donahue, John T. Conroy, William J. Copeland, Lawrence D. Ellis, M.D.,
Peter E. Madden and Marjorie P. Smuts.
Director elections will become effective January 1, 2000.
AGENDA ITEM 2
Made changes to the Fund's fundamental investment policies:
(a) Amended the Fund's fundamental investment policy regarding
diversification.
<TABLE>
<CAPTION>
ABSTENTIONS
AND BROKER
SHARES VOTED FOR SHARES VOTED AGAINST NON-VOTES
<S> <C> <C>
1,132,473 30,534 1,036,113
</TABLE>
(b) Amended the Fund's fundamental investment policy regarding borrowing money
and issuing senior securities.
<TABLE>
<CAPTION>
ABSTENTIONS
AND BROKER
SHARES VOTED FOR SHARES VOTED AGAINST NON-VOTES
<S> <C> <C>
1,210,080 59,901 937,950
</TABLE>
(c) Amended the Fund's fundamental investment policy regarding investments
in real estate.
<TABLE>
<CAPTION>
ABSTENTIONS
AND BROKER
SHARES VOTED FOR SHARES VOTED AGAINST NON-VOTES
<S> <C> <C>
1,220,370 36,685 943,876
</TABLE>
(d) Amended the Fund's fundamental investment policy regarding investments
in commodities.
<TABLE>
<CAPTION>
ABSTENTIONS
AND BROKER
SHARES VOTED FOR SHARES VOTED AGAINST NON-VOTES
<S> <C> <C>
1,200,765 42,855 957,311
</TABLE>
(e) Amended the Fund's fundamental investment policy regarding underwriting
securities.
<TABLE>
<CAPTION>
ABSTENTIONS
AND BROKER
SHARES VOTED FOR SHARES VOTED AGAINST NON-VOTES
<S> <C> <C>
1,237,811 30,392 932,728
</TABLE>
(f) Amended the Fund's fundamental investment policy regarding lending
assets.
<TABLE>
<CAPTION>
ABSTENTIONS
AND BROKER
SHARES VOTED FOR SHARES VOTED AGAINST NON-VOTES
<S> <C> <C>
1,214,863 43,193 942,875
</TABLE>
(g) Amended the Fund's fundamental investment policy regarding concentration of
the Fund's investments in the securities of companies in the same industry.
<TABLE>
<CAPTION>
ABSTENTIONS
AND BROKER
SHARES VOTED FOR SHARES VOTED AGAINST NON-VOTES
<S> <C> <C>
1,216,629 38,942 945,360
</TABLE>
(h) Amended, and made non-fundamental, the Fund's fundamental investment policy
regarding buying securities on margin.
<TABLE>
<CAPTION>
ABSTENTIONS
AND BROKER
SHARES VOTED FOR SHARES VOTED AGAINST NON-VOTES
<S> <C> <C>
1,208,424 44,679 947,828
</TABLE>
(i) Amended, and made non-fundamental, the Fund's fundamental investment policy
regarding pledging assets.
<TABLE>
<CAPTION>
ABSTENTIONS
AND BROKER
SHARES VOTED FOR SHARES VOTED AGAINST NON-VOTES
<S> <C> <C>
1,212,004 44,266 944,661
</TABLE>
AGENDA ITEM 3
Eliminated certain fundamental investment policies of the Fund:
(a) Removed the Fund's fundamental investment policy regarding selling
securities short.
<TABLE>
<CAPTION>
ABSTENTIONS
AND BROKER
SHARES VOTED FOR SHARES VOTED AGAINST NON-VOTES
<S> <C> <C>
1,217,786 41,593 941,552
</TABLE>
AGENDA ITEM 4
Approved an amendment to the Articles of Incorporation of World Investment
Series, Inc. to permit the Board of Directors to liquidate assets of a series or
class without seeking shareholder approval to the extent permitted under
Maryland law.
<TABLE>
<CAPTION>
ABSTENTIONS
AND BROKER
SHARES VOTED FOR SHARES VOTED AGAINST NON-VOTES
<S> <C> <C>
1,203,615 53,791 943,525
</TABLE>
Where in the World Should You Invest?
[Graphic]
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 EQUITY FUND
FEDERATED INTERNATIONAL HIGH INCOME FUND
FEDERATED INTERNATIONAL INCOME FUND
FEDERATED INTERNATIONAL SMALL COMPANY FUND
FEDERATED LATIN AMERICAN GROWTH FUND
FEDERATED WORLD UTILITY FUND
Federated employs highly qualified, experienced managers in global investing to
select countries and companies outside the U.S. for long-term growth potential.
Call your investment representative to buy shares of ten international equity
funds and two international income funds from Federated Securities Corp.
FOR MORE COMPLETE INFORMATION ABOUT ANY OF THESE FUNDS, CALL 1-800-341-7400 TO
ASK FOR A PROSPECTUS AND READ IT CAREFULLY BEFORE YOU INVEST.
Foreign investing involves special risks including currency risks, increased
volatility of foreign securities, and differences in auditing and other
financial standards.
Two Ways You May Seek to Invest for Success:
INITIAL INVESTMENT
IF YOU HAD MADE AN INITIAL INVESTMENT OF $4,000 IN THE CLASS A SHARES OF
FEDERATED ASIA PACIFIC GROWTH FUND ON 2/28/96, REINVESTED DIVIDENDS AND CAPITAL
GAINS, AND DID NOT REDEEM ANY SHARES, YOUR ACCOUNT WOULD HAVE BEEN WORTH $5,134
ON 11/30/99. YOU WOULD HAVE EARNED A 6.87% 1 AVERAGE ANNUAL TOTAL RETURN FOR THE
INVESTMENT LIFE SPAN.
One key to investing wisely is to reinvest all distributions in fund shares.
This increases the number of shares on which you can earn future dividends and
you gain the benefit of compounding.
As of 12/31/99, the Class A Shares' 1-year, and since inception (2/28/96)
average annual total returns were 115.56% and 10.48% respectively. Class B
Shares' 1-year and since inception (2/28/96) average annual total returns were
120.85% and 10.78% respectively. Class C Shares' 1-year and since inception
(2/28/96) average annual total returns were 125.08% and 11.45% respectively. 2
[Please see Appendix A1]
1 Total return represents the change in the value of an investment after
reinvesting all income and capital gains, and takes into account the 5.50% sales
charge applicable to an initial investment in Class A Shares. Data quoted
represents past performance and is no guarantee of future results. Investment
return and principal value will fluctuate, so that an investor's shares, when
redeemed, may be worth more or less than their original cost.
2 The total returns stated take into account all applicable sales charges. The
maximum sales charges and contingent deferred sales charges for the fund are as
follows: Class A Shares, 5.50% sales charge; Class B Shares, 5.50% contingent
deferred sales charge; Class C Shares, 1.00% contingent deferred sales charge.
ONE STEP AT A TIME
$1,000 INITIAL INVESTMENT AND SUBSEQUENT INVESTMENTS OF $1,000 EACH YEAR FOR
THREE YEARS (REINVESTING ALL DIVIDENDS AND CAPITAL GAINS) GREW TO $6,317.
With this approach, the key is consistency.
If you had started investing $1,000 annually in the Class A Shares of Federated
Asia Pacific Growth Fund on 2/28/96, reinvested your dividends and capital
gains, and did not redeem any shares, you would have invested only $4,000, but
your account would have reached a total value of $6,317 1 by 11/30/99. You would
have earned an average annual total return of 17.66%.
A practical investment plan helps you pursue income through a diversified
portfolio invested in stocks of corporations in the Asian and Pacific Rim
countries. Through systematic investing, you buy shares on a regular basis and
reinvest all earnings. An investment plan can work for you when you invest only
$1,000 annually. You can take it one step at a time. Put time, money, and
compounding to work.
[Please see Appendix A2]
1 This chart assumes that the subsequent annual investments are made on the last
day of each anniversary month. No method of investing can guarantee a profit or
protect against loss in down markets.
Federated Asia Pacific Growth Fund-Class A Shares
GROWTH OF A $10,000 INVESTMENT
The graph below illustrates the hypothetical investment of $10,000 1 in the
Federated Asia Pacific Growth Fund (Class A Shares) (the "Fund") from February
28, 1996 (start of performance) to November 30, 1999 compared to the Morgan
Stanley Capital International Combined Asia Pacific Index (MSCI-AP).2
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS 3 FOR THE PERIOD ENDED NOVEMBER 30, 1999
<S> <C>
1 Year 100.59%
Start of Performance (2/28/96) 6.87%
</TABLE>
[Please see Appendix A3]
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE PERFORMANCE. YOUR INVESTMENT RETURN
AND PRINCIPAL VALUE WILL FLUCTUATE SO WHEN SHARES ARE REDEEMED, THEY MAY BE
WORTH MORE OR LESS THAN THEIR ORIGINAL COST. MUTUAL FUNDS ARE NOT OBLIGATIONS OF
OR GUARANTEED BY ANY BANK AND ARE NOT FEDERALLY INSURED.
1 Represents a hypothetical investment of $10,000 in the Fund after deducting
the maximum sales charge of 5.50% ($10,000 investment minus $550 sales charge =
$9,450). The Fund's performance assumes the reinvestment of all dividends and
distributions. The MSCI-AP has been adjusted to reflect reinvestment of
dividends on securities in the index.
2 The MSCI-AP is not adjusted to reflect sales charges, expenses, or other fees
that the Securities and Exchange Commission requires to be reflected in the
Fund's performance. This index is unmanaged.
3 Total return quoted reflects all applicable sales charges.
Federated Asia Pacific Growth Fund-Class B Shares
GROWTH OF A $10,000 INVESTMENT
The graph below illustrates the hypothetical investment of $10,000 1 in the
Federated Asia Pacific Growth Fund (Class B Shares) (the "Fund") from February
28, 1996 (start of performance) to November 30, 1999 compared to the Morgan
Stanley Capital International Combined Asia Pacific Index (MSCI-AP).2
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS 3 FOR THE PERIOD ENDED NOVEMBER 30, 1999
<S> <C>
1 Year 104.99%
Start of Performance (2/28/96) 7.10%
</TABLE>
[Please see Appendix A4]
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE PERFORMANCE. YOUR INVESTMENT RETURN
AND PRINCIPAL VALUE WILL FLUCTUATE SO WHEN SHARES ARE REDEEMED, THEY MAY BE
WORTH MORE OR LESS THAN THEIR ORIGINAL COST. MUTUAL FUNDS ARE NOT OBLIGATIONS OF
OR GUARANTEED BY ANY BANK AND ARE NOT FEDERALLY INSURED.
1 Represents a hypothetical investment of $10,000 in the Fund. The ending value
of the Fund reflects a contingent deferred sales charge of 3.00% on any
redemption less than four years from the purchase date. The maximum contingent
deferred sales charge is 5.50% on any redemption less than one year from the
purchase date. The Fund's performance assumes the reinvestment of all dividends
and distributions. The MSCI-AP has been adjusted to reflect reinvestment of
dividends on securities in the index.
2 The MSCI-AP is not adjusted to reflect sales charges, expenses, or other fees
that the Securities and Exchange Commission requires to be reflected in the
Fund's performance. This index is unmanaged.
3 Total return quoted reflects all applicable contingent deferred sales charges.
Federated Asia Pacific Growth Fund-Class C Shares
GROWTH OF A $10,000 INVESTMENT
The graph below illustrates the hypothetical investment of $10,000 1 in the
Federated Asia Pacific Growth Fund (Class C Shares) (the "Fund") from February
28, 1996 (start of performance) to November 30, 1999 compared to the Morgan
Stanley Capital International Combined Asia Pacific Index (MSCI-AP).2
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS 3 FOR THE PERIOD ENDED NOVEMBER 30, 1999
<S> <C>
1 Year 109.46%
Start of Performance (2/28/96) 7.84%
</TABLE>
[Please see Appendix A5]
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE PERFORMANCE. YOUR INVESTMENT RETURN
AND PRINCIPAL VALUE WILL FLUCTUATE SO WHEN SHARES ARE REDEEMED, THEY MAY BE
WORTH MORE OR LESS THAN THEIR ORIGINAL COST. MUTUAL FUNDS ARE NOT OBLIGATIONS OF
OR GUARANTEED BY ANY BANK AND ARE NOT FEDERALLY INSURED.
1 Represents a hypothetical investment of $10,000 in the Fund. A 1.00%
contingent deferred sales charge would be applied on any redemption less than
one year from the purchase date. The Fund's performance assumes the reinvestment
of all dividends and distributions. The MSCI-AP has been adjusted to reflect
reinvestment of dividends on securities in the index.
2 The MSCI-AP is not adjusted to reflect sales charges, expenses, or other fees
that the Securities and Exchange Commission requires to be reflected in the
Fund's performance. This index is unmanaged.
3 Total return quoted reflects all applicable contingent deferred sales charges.
Portfolio of Investments
NOVEMBER 30, 1999
<TABLE>
<CAPTION>
VALUE IN
SHARES U.S. DOLLARS
<C> <S> <C>
COMMON STOCKS-98.4%
APPLIANCES & HOUSEHOLD
DURABLES-4.8%
2,530 Samsung Electronics Co. $ 523,787
45,000 Sharp Corp. 921,705
6,400 Sony Corp. 1,188,271
TOTAL 2,633,763
AUTOMOBILE-0.2%
70,000 Thai Rung Union 87,982
BANKING-6.1%
76,000 Asahi Bank Ltd. 533,818
34,700 Australia & New Zealand
Banking Group, Melbourne 249,799
28,000 DBS Group Holdings Ltd. 363,225
21,700 Kookmin Bank 361,277
32,500 Korea Technology Banking
Co. 442,959
104,000 Sakura Bank Ltd., Tokyo 771,354
113,000 Toyo Trust & Banking 601,660
TOTAL 3,324,092
BROADCASTING & PUBLISHING-
1.3%
4,000 Nippon Broadcasting System 294,710
22,100 Singapore Press Holdings
Ltd. 414,252
TOTAL 708,962
BUSINESS & PUBLIC
SERVICES-16.6%
10,000 Brambles Industries Ltd. 274,624
9,000 Capcom Co., Ltd. 531,362
2,000 1 China.com Corp., Class A 224,000
22,000 Daiwabo Information System
Co., Ltd. 607,299
6,000 ISB Corp. 206,297
500 1 InterQ Inc. 402,770
26,900 Koei Co., Ltd. 1,194,440
66,000 1 MediaRing.com Ltd. 65,195
4,900 NIIT Ltd. 265,292
<CAPTION>
VALUE IN
SHARES U.S. DOLLARS
<C> <S> <C>
COMMON STOCKS-continued
BUSINESS & PUBLIC
SERVICES-CONTINUED
22,800 Pentafour Software &
Exports Ltd. $ 455,869
2,100 Sanix, Inc. 233,115
15,500 Satyam Computer Services
Ltd. 684,921
239,000 1 Secure Network Solutions
Ltd. 806,254
2,000 Softbank Corp. 1,448,008
200 1 Softbank Technology Corp. 389,017
117,000 Solution 6 Holdings Ltd. 826,622
26,932 Sri Adhikari 417,677
TOTAL 9,032,762
CHEMICALS-1.6%
14,000 Enplas Corp. 532,246
67,500 Reliance Industries Ltd. 345,237
TOTAL 877,483
DATA PROCESSING &
REPRODUCTION-2.9%
32,000 Fujitsu Ltd. 1,137,973
4,220 Trigem Computer, Inc. 418,633
TOTAL 1,556,606
ELECTRICAL & ELECTRONICS-
8.0%
7,500 Cresco, Ltd. 854,659
17,500 Kumho Electric 573,647
4,730 1 Kumho Electric, Rights 57,123
9,000 Matsushita Communication
Industrial Co., Ltd. 1,732,895
12,000 1, 2 Mosel Vitelic, Inc., GDR 126,600
35,000 NEC Corp. 820,030
11,000 Yokowo, Co. Ltd. 220,443
TOTAL 4,385,397
ELECTRONIC COMPONENTS,
INSTRUMENTS-16.6%
340,000 ASM Pacific Technology
Ltd. 545,033
21,000 Aptech Ltd. 631,863
40,000 Chartered Semiconductor
Manufacturing 226,123
400 1 Chartered Semiconductor
Manufacturing, ADR 21,300
20,000 1 Creative Technology Ltd. 290,000
<CAPTION>
VALUE IN
SHARES U.S. DOLLARS
<C> <S> <C>
COMMON STOCKS-continued
ELECTRONIC COMPONENTS,
INSTRUMENTS-CONTINUED
215,000 Flextech Holdings Ltd. $ 204,701
2,000 Funai Electric Co. Ltd. 1,255,464
3,200 Hirose Electric 535,979
10,500 Hyundai Electronics
Industries Co. 215,570
7,606 1 Hyundai Electronics
Industries Co., Rights 41,335
10,300 Kyocera Corp. 1,245,572
8,000 Megachips Corp. 616,926
7,000 Murata Manufacturing Co.,
Ltd. 1,163,515
78,000 Natsteel Electronics Ltd. 322,583
23,000 Taiyo Yuden Co. 1,007,712
12,500 1 Telson Electronics Co.,
Ltd. 318,094
3,100 Tokyo Seimitsu Co., Ltd. 423,302
TOTAL 9,065,072
ENERGY SOURCES-0.9%
13,800 Broken Hill Proprietary
Co., Ltd. 151,492
15,000 1 Gas Authority of India
Ltd., GDR 142,313
29,000 PTT Exploration and
Production Public Co. 178,530
TOTAL 472,335
FINANCIAL SERVICES-6.3%
219,200 Challenger International
Ltd. 599,939
56,000 Daiwa Securities Co., Ltd. 802,083
9,100 Mycal Card, Inc. 438,037
95,000 Nikko Securities Co., Ltd. 1,185,225
96,000 Toho Bank Ltd. 436,642
TOTAL 3,461,926
FOOD & HOUSEHOLD PRODUCTS-
1.6%
7,400 Cheil Jedang Corp. 570,679
278,000 PT Indofood Sukses Makmur 304,983
TOTAL 875,662
FOREST PRODUCTS & PAPER-
0.6%
22,000 Hansol Paper Mfg. 322,622
<CAPTION>
VALUE IN
SHARES U.S. DOLLARS
<C> <S> <C>
COMMON STOCKS-continued
HEALTH & PERSONAL CARE-
3.0%
113,600 1 China Pharmaceutical
Enterprise and Investment
Corp. Ltd., Warrants $ 3,803
43,000 Chugai Pharmaceutical Co.,
Ltd. 469,306
119,000 1 Novogen Ltd. 234,805
1,716,000 Sa Sa International
Holdings 278,396
11,000 Takeda Chemical Industries 650,523
TOTAL 1,636,833
INDUSTRIAL COMPONENTS-1.9%
50,000 Furukawa Electric 535,881
59,000 Nippon Thompson 475,269
TOTAL 1,011,150
INSURANCE-0.6%
77,000 Dai Tokyo Fire and Marine 330,557
LEISURE & TOURISM-0.9%
5,000 Enix Corp. 467,115
MERCHANDISING-0.8%
4,000 Yamada Denki 412,594
METALS - NON FERROUS-0.6%
395,500 Mim Holdings Ltd. 329,774
METALS - STEEL-0.5%
152,000 Natsteel Ltd. 278,584
MULTI-INDUSTRY-1.1%
914,000 1 Benpres Holdings Corp. 129,298
39,000 Hutchison Whampoa 480,815
TOTAL 610,113
REAL ESTATE-2.4%
243,000 DBS Land Ltd. 474,287
150,000 1 Pacific Century CyberWorks
Ltd. 128,436
33,000 Pacific Century Regional
Developments Ltd. 212,080
494,000 Wing Tai Holdings, Ltd. 479,155
TOTAL 1,293,958
RECREATION, OTHER CONSUMER
GOODS-2.8%
4,500 Nintendo Corp. Ltd. 751,952
22,000 Sega Enterprises 773,712
TOTAL 1,525,664
<CAPTION>
VALUE IN
SHARES U.S. DOLLARS
<C> <S> <C>
COMMON STOCKS-continued
SOFTWARE-0.9%
26,070 1 Haansoft Inc. $ 517,240
TELECOMMUNICATIONS-8.3%
2,950,000 Champion Technology
Holdings Ltd. 172,826
90,000 1 China Telecom (Hong Kong)
Ltd. 480,912
528,500 1 Davnet Ltd. 528,133
800 1 Korea Thrunet Co. Ltd.,
Class A 44,500
38 NTT Mobile Communications
Network, Inc. 1,336,411
161,000 PT Indosat 225,048
51,800 PT Telekomunikasi
Indonesia, Class CS, ADR 437,063
4,600 Philippine Long Distance
Telephone Co. 94,244
200,000 PowerLan Ltd. 674,690
491,000 1 Pracom Ltd. 365,650
250,100 1 Westel Group Ltd. 159,189
TOTAL 4,518,666
TRANSPORTATION - ROAD &
RAIL-0.6%
100,000 Delgro Corporation Ltd. 312,407
TRANSPORTATION - SHIPPING-
1.4%
534,000 Cosco Pacific Ltd. 436,606
216,000 Neptune Orient Lines Ltd. 321,333
TOTAL 757,939
UTILITIES - ELECTRICAL &
GAS-0.7%
33,000 Cheung Kong 371,789
<CAPTION>
SHARES OR VALUE IN
PRINCIPAL AMOUNT U.S. DOLLARS
<C> <S> <C>
COMMON STOCKS-continued
WHOLESALE & INTERNATIONAL
TRADE-4.4%
230,000 Marubeni Corp. $ 896,999
14,000 Nitori Co. 570,755
1,000 Ryohin Keikaku Co. Ltd. 236,259
102,000 Uchida Yoko Co. Ltd. 731,470
TOTAL 2,435,483
TOTAL COMMON STOCKS
(IDENTIFIED COST
$37,892,767) 53,614,530
REPURCHASE AGREEMENT-5.4% 3
$ 2,970,000 J.P. Morgan & Co., Inc.,
5.71%, dated 11/30/1999,
due 12/1/1999 (at
amortized cost) 2,970,000
TOTAL INVESTMENTS
(IDENTIFIED COST
$40,862,767) 4 $ 56,584,530
</TABLE>
1 Non-income producing security.
2 Denotes a restricted security which is subject to restrictions on resale under
federal securities laws. These securities have been deemed liquid based upon
criteria approved by the fund's Board of Directors. At November 30, 1999, these
securities amounted to $126,600 which represents 0.2% of net assets.
3 The repurchase agreement is fully collateralized by U.S. government and/or
agency obligations based on market prices at the date of the portfolio. The
investment in the repurchase agreement is through participation in a joint
account with other Federated funds.
4 The cost of investments for federal tax purposes amounts to $41,001,478. The
net unrealized appreciation of investments on a federal tax basis amounts to
$15,583,052 which is comprised of $16,361,264 appreciation and $778,212
depreciation at November 30, 1999.
Note: The categories of investments are shown as a percentage of net assets
($54,514,945) at November 30, 1999.
The following acronyms and derivative terms are used throughout this portfolio:
ADR -American Depositary
Receipt
GDR -Global Depositary Receipt
Rights -Derivatives which are
convertible into equity upon the
occurrence of certain events.
See Notes which are an integral part of the Financial Statements
Statement of Assets and Liabilities
NOVEMBER 30, 1999
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS:
Total investments in
securities, at value
(identified cost
$40,862,767 and tax
cost $41,001,478) $ 56,584,530 Cash 4,376 Cash denominated in foreign currencies
(identified cost $16,742) 16,799 Income receivable 56,787 Receivable for shares
sold 770,764 Deferred organizational costs 14,640 TOTAL ASSETS 57,447,896
LIABILITIES: Payable for investments purchased $ 2,026,748 Payable for shares
redeemed 696,405 Payable for taxes withheld 135,753 Net payable for foreign
currency exchange contracts 2,169 Accrued expenses 71,876 TOTAL LIABILITIES
2,932,951 Net assets for 4,064,590 shares outstanding $ 54,514,945 NET ASSETS
CONSIST OF: Paid-in capital $ 40,593,932 Net unrealized appreciation of
investments and translation of assets and liabilities in foreign currency
15,719,300 Accumulated net realized loss on investments and foreign currency
transactions (1,785,668) Accumulated net operating loss (12,619) TOTAL NET
ASSETS $ 54,514,945 NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER
SHARE CLASS A SHARES: Net Asset Value Per Share ($25,882,793 / 1,905,271 shares
outstanding) $13.58 Offering Price Per Share (100/94.50 of $13.58) 1 $14.37
Redemption Proceeds Per Share $13.58 CLASS B SHARES: Net Asset Value Per Share
($16,413,860 / 1,239,586 shares outstanding) $13.24 Offering Price Per Share
$13.24 Redemption Proceeds Per Share (94.50/100 of $13.24) 1 $12.51 CLASS C
SHARES: Net Asset Value Per Share ($12,218,292 / 919,733 shares outstanding)
$13.28 Offering Price Per Share $13.28 Redemption Proceeds Per Share (99.00/100
of $13.28) 1 $13.15
</TABLE>
1 See "What Do Shares Cost?" in the Prospectus.
See Notes which are an integral part of the Financial Statements
Statement of Operations
YEAR ENDED NOVEMBER 30, 1999
<TABLE>
<CAPTION>
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends (net of foreign
taxes withheld of $19,031) $ 171,844
Interest 72,396 TOTAL INCOME 244,240 EXPENSES:
Investment adviser fee $ 249,853 Administrative personnel and services fee
185,000 Custodian fees 65,457 Transfer and dividend disbursing agent fees and
expenses 82,701 Directors'/Trustees' fees 1,671 Auditing fees 23,243 Legal fees
8,821 Portfolio accounting fees 82,947 Distribution services fee- Class B Shares
62,424 Distribution services fee- Class C Shares 23,477 Shareholder services
fee- Class A Shares 28,151 Shareholder services fee- Class B Shares 20,808
Shareholder services fee- Class C Shares 7,826 Share registration costs 44,817
Printing and postage 31,208 Insurance premiums 1,320 Taxes 1,826 Miscellaneous
15,755 TOTAL EXPENSES 937,305 Waiver and reimbursement: Waiver of investment
adviser fee $ (249,853) Reimbursement of other operating expenses (180,846)
TOTAL WAIVER AND REIMBURSEMENT (430,699) Net expenses 506,606 Net operating loss
(262,366) REALIZED AND UNREALIZED GAIN ON INVESTMENTS AND FOREIGN CURRENCY: Net
realized gain on investments and foreign currency transactions (net of foreign
taxes withheld of $217,580) 5,049,405 Net change in unrealized appreciation of
investments and translation of assets and liabilities in foreign currency
14,356,477 Net realized and unrealized gain on investments and foreign currency
19,405,882 Change in net assets resulting from operations $ 19,143,516
</TABLE>
See Notes which are an integral part of the Financial Statements
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30 1999 1998
<S> <C> <C>
INCREASE (DECREASE) IN NET
ASSETS
OPERATIONS:
Net operating loss $ (262,366) $ (74,553) Net realized gain (loss) on
investments and foreign currency transactions ($5,078,119 and ($4,986,850),
respectively, as computed for federal tax purposes) 5,049,405 (5,092,522) Net
change in unrealized appreciation of investments and translation of assets and
liabilities in foreign currency 14,356,477 2,916,524 CHANGE IN NET ASSETS
RESULTING FROM OPERATIONS 19,143,516 (2,250,551) SHARE TRANSACTIONS: Proceeds
from sale of shares 95,821,836 21,406,107 Cost of shares redeemed (71,557,870)
(19,462,204) CHANGE IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS 24,263,966
1,943,903 Change in net assets 43,407,482 (306,648) NET ASSETS: Beginning of
period 11,107,463 11,414,111 End of period $ 54,514,945 $ 11,107,463
</TABLE>
See Notes which are an integral part of the Financial Statements
Financial Highlights-Class A Shares
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30 1999 1998 1997 1996 1
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING
OF PERIOD $ 6.40 $ 7.81 $10.25 $10.00
INCOME FROM INVESTMENT
OPERATIONS:
Net operating loss (0.07) 2 (0.05) (0.03) (0.00) 3
Net realized and
unrealized gain (loss) on
investments and foreign
currency 7.25 (1.36) (2.41) 0.25
TOTAL FROM INVESTMENT
OPERATIONS 7.18 (1.41) (2.44) 0.25
NET ASSET VALUE, END OF
PERIOD $13.58 $ 6.40 $ 7.81 $10.25
TOTAL RETURN 4 112.19% (18.05%) (23.80%) 2.50%
RATIOS TO AVERAGE NET
ASSETS:
Expenses 1.85% 1.85% 1.85% 1.85% 5
Net operating loss (0.78%) (0.35%) (0.53%) -
Expense
waiver/reimbursement 6 1.90% 3.78% 4.77% 7.02% 5
SUPPLEMENTAL DATA:
Net assets, end of period
(000 omitted) $25,883 $6,345 $7,297 $4,593
Portfolio turnover 260% 347% 193% 99%
</TABLE>
1 Reflects operations for the period from February 28, 1996 (date of initial
public investment) to November 30, 1996.
2 Per share amount is based on average shares outstanding.
3 Per share amount does not round to ($0.01).
4 Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
5 Computed on an annualized basis.
6 This voluntary expense decrease is reflected in both the expense and the net
operating loss ratios shown above.
See Notes which are an integral part of the Financial Statements
Financial Highlights-Class B Shares
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30 1999 1998 1997 1996 1
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING
OF PERIOD $ 6.29 $ 7.73 $10.19 $10.00
INCOME FROM INVESTMENT
OPERATIONS:
Net operating loss (0.14) 2 (0.07) (0.08) (0.03)
Net realized and
unrealized gain (loss) on
investments and foreign
currency 7.09 (1.37) (2.38) 0.22
TOTAL FROM INVESTMENT
OPERATIONS 6.95 (1.44) (2.46) 0.19
NET ASSET VALUE, END OF
PERIOD $13.24 $6.29 $7.73 $10.19
TOTAL RETURN 3 110.49% (18.63%) (24.14%) 1.90%
RATIOS TO AVERAGE NET
ASSETS:
Expenses 2.60% 2.60% 2.60% 2.60% 4
Net operating loss (1.53%) (1.10%) (1.25%) (0.86%) 4
Expense
waiver/reimbursement 5 1.90% 3.78% 4.77% 7.02% 4
SUPPLEMENTAL DATA:
Net assets, end of period
(000 omitted) $16,414 $4,154 $3,606 $2,273
Portfolio turnover 260% 347% 193% 99%
</TABLE>
1 Reflects operations for the period from February 28, 1996 (date of initial
public investment) to November 30, 1996.
2 Per share amount is based on average shares outstanding.
3 Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
4 Computed on an annualized basis.
5 This voluntary expense decrease is reflected in both the expense and the net
operating loss ratios shown above.
See Notes which are an integral part of the Financial Statements
Financial Highlights-Class C Shares
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30 1999 1998 1997 1996 1
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING
OF PERIOD $ 6.31 $ 7.74 $10.20 $10.00
INCOME FROM INVESTMENT
OPERATIONS:
Net operating loss (0.16) 2 (0.08) (0.12) (0.05)
Net realized and
unrealized gain (loss) on
investments and foreign
currency 7.13 (1.35) (2.34) 0.25
TOTAL FROM INVESTMENT
OPERATIONS 6.97 (1.43) (2.46) 0.20
NET ASSET VALUE, END OF
PERIOD $13.28 $6.31 $7.74 $10.20
TOTAL RETURN 3 110.46% (18.48%) (24.12%) 2.00%
RATIOS TO AVERAGE NET
ASSETS:
Expenses 2.60% 2.60% 2.60% 2.60% 4
Net operating loss (1.53%) (1.10%) (1.22%) (0.90%) 4
Expense
waiver/reimbursement 5 1.90% 3.78% 4.77% 7.02% 4
SUPPLEMENTAL DATA:
Net assets, end of period
(000 omitted) $12,218 $608 $511 $397
Portfolio turnover 260% 347% 193% 99%
</TABLE>
1 Reflects operations for the period from February 28, 1996 (date of initial
public investment) to November 30, 1996.
2 Per share amount is based on average shares outstanding.
3 Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
4 Computed on an annualized basis.
5 This voluntary expense decrease is reflected in both the expense and the net
operating loss ratios shown above.
See Notes which are an integral part of the Financial Statements
Notes to Financial Statements
NOVEMBER 30, 1999
ORGANIZATION
World Investment Series, Inc. (the "Corporation") is registered under the
Investment Company Act of 1940, as amended (the "Act"), as an open-end,
management investment company. The Corporation consists of ten portfolios. The
financial statements included herein are only those of Federated Asia Pacific
Growth Fund (the "Fund"), a diversified portfolio. The financial statements of
the other portfolios are presented separately. The assets of each portfolio are
segregated and a shareholder's interest is limited to the portfolio in which
shares are held.
The Fund offers three classes of shares: Class A Shares, Class B Shares and
Class C Shares. The investment objective of the fund is to provide long-term
growth of capital.
SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS
Foreign and domestic equity securities are valued at the last sale price
reported on a national securities exchange or over-the-counter market. In the
absence of recorded sales for equity securities, they are valued according to
the mean between the last closing bid and asked prices. Short-term foreign and
domestic securities are valued at the prices provided by an independent pricing
service. However, short-term foreign and domestic securities with remaining
maturities of 60 days or less at the time of purchase may be valued at amortized
cost, which approximates fair market value.
REPURCHASE AGREEMENTS
It is the policy of the Fund to require the custodian bank to take possession,
to have legally segregated in the Federal Reserve Book Entry System, or to have
segregated within the custodian bank's vault, all securities held as collateral
under repurchase agreement transactions. Additionally, procedures have been
established by the Fund to monitor, on a daily basis, the market value of each
repurchase agreement's collateral to ensure that the value of collateral at
least equals the repurchase price to be paid under the repurchase agreement.
The Fund will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed by
the Fund's adviser to be creditworthy pursuant to the guidelines and/or
standards reviewed or established by the Board of Directors (the "Directors").
Risks may arise from the potential inability of counterparties to honor the
terms of the repurchase agreement. Accordingly, the Fund could receive less than
the repurchase price on the sale of collateral securities. The Fund, along with
other affiliated investment companies, may utilize a joint trading account for
the purpose of entering into one or more repurchase agreements.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS
Interest income and expenses are accrued daily. Bond premium and discount, if
applicable, are amortized as required by the Internal Revenue Code of 1986, as
amended (the "Code"). Dividend income and distributions to shareholders are
recorded on the ex-dividend date. Non-cash dividends included in dividend
income, if any, are recorded at fair value. The Fund offers multiple classes of
shares, which differ in their respective distribution and service fees. All
shareholders bear the common expenses of the Fund based on average daily net
assets of each class, without distinction between share classes. Dividends are
declared separately for each class. No class has preferential dividend rights;
differences in per share dividend rates are generally due to the differences in
separate class expenses.
Income and capital gain distributions are determined in accordance with income
tax regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments for foreign currency
transactions and net operating loss. The following reclassifications have been
made to the financial statements.
<TABLE>
<CAPTION>
INCREASE (DECREASE)
ACCUMULATED
NET REALIZED
LOSS ON
INVESTMENTS
AND FOREIGN
CURRENCY ACCUMULATED NET
PAID-IN CAPITAL TRANSACTIONS OPERATING LOSS
<S> <C> <C>
$(259,886) $(102,830) $362,716
</TABLE>
Net investment income, net realized gains/losses, and net assets were not
affected by this reclassification.
FEDERAL TAXES
It is the Fund's policy to comply with the provisions of the Code applicable to
regulated investment companies and to distribute to shareholders each year
substantially all of its income. Accordingly, no provision for federal tax is
necessary.
Withholding taxes on foreign interest and dividends have been provided for in
accordance with the applicable country's tax rules and rates.
At November 30, 1999, the Fund, for federal tax purposes, had a capital loss
carryforward of $1,646,959, which will reduce the Fund's taxable income arising
from future net realized gain on investments, if any, to the extent permitted by
the Code, and thus will reduce the amount of the distributions to shareholders
which would otherwise be necessary to relieve the Fund of any liability for
federal tax. Pursuant to the Code, such capital loss carryforward will expire in
2006.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
The Fund may engage in when-issued or delayed delivery transactions. The Fund
records when-issued securities on the trade date and maintains security
positions such that sufficient liquid assets will be available to make payment
for the securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date. Losses may occur on these transactions due to changes in market
conditions or the failure of counterparties to perform under the contract.
FOREIGN EXCHANGE CONTRACTS
The Fund may enter into foreign currency commitments for the delayed delivery of
securities or foreign currency exchange transactions. Purchased contracts are
used to acquire exposure to foreign currencies; whereas contracts to sell are
used to hedge the Fund's securities against currency fluctuations. Risks may
arise upon entering these transactions from the potential inability of
counterparties to meet the terms of their commitments and from unanticipated
movements in security prices or foreign exchange rates. The foreign currency
transactions are adjusted by the daily exchange rate of the underlying currency
and any gains or losses are recorded for financial statement purposes as
unrealized until the settlement date.
At November 30, 1999, the Fund had an outstanding foreign currency commitment as
set forth below:
<TABLE>
<CAPTION>
SETTLEMENT DATE CONTRACT TO RECEIVE IN EXCHANGE FOR CONTRACT AT VALUE UNREALIZED
DEPRECIATION
<S> <C> <C> <C> <C>
CONTRACT PURCHASED: 12/1/99 553,305 Singapore Dollars $331,420 $329,251 $(2,169)
</TABLE>
FOREIGN CURRENCY TRANSLATION
The accounting records of the Fund are maintained in U.S. dollars. All assets
and liabilities denominated in foreign currencies ("FC") are translated into
U.S. dollars based on the rates of exchange of such currencies against U.S.
dollars on the date of valuation. Purchases and sales of securities, income and
expenses are translated at the rate of exchange quoted on the respective date
that such transactions are recorded. The Fund does not isolate that portion of
the results of operations resulting from changes in foreign exchange rates on
investments from the fluctuations arising from changes in market prices of
securities held. Such fluctuations are included with the net realized and
unrealized gain or loss from investments.
Reported net realized foreign exchange gains or losses arise from sales of
portfolio securities, sales and maturities of short-term securities, sales of
FCs, currency gains or losses realized between the trade and settlement dates on
securities transactions, the difference between the amounts of dividends,
interest, and foreign withholding taxes recorded on the Fund's books, and the
U.S. dollar equivalent of the amounts actually received or paid. Net unrealized
foreign exchange gains and losses arise from changes in the value of assets and
liabilities other than investments in securities at fiscal year end, resulting
from changes in the exchange rate.
RESTRICTED SECURITIES
Restricted securities are securities that may only be resold upon registration
under federal securities laws or in transactions exempt from such registration.
In some cases, the issuer of restricted securities has agreed to register such
securities for resale, at the issuer's expense either upon demand by the Fund or
in connection with another registered offering of the securities. Many
restricted securities may be resold in the secondary market in transactions
exempt from registration. Such restricted securities may be determined to be
liquid under criteria established by the Directors. The Fund will not incur any
registration costs upon such resales. The Fund's restricted securities are
valued at the price provided by dealers in the secondary market or, if no market
prices are available, at the fair value as determined by the Fund's pricing
committee.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts of assets, liabilities, expenses and revenues reported in the
financial statements. Actual results could differ from those estimated.
OTHER
Investment transactions are accounted for on a trade date basis.
CAPITAL STOCK
At November 30, 1999, par value shares ($0.001 per share) authorized were as
follows:
<TABLE>
<CAPTION>
NUMBER OF SHARES OF
PAR VALUE CAPITAL
CLASS NAME STOCK AUTHORIZED <S> <C> Class A Shares 100,000,000 Class B Shares
100,000,000 Class C Shares 50,000,000 TOTAL 250,000,000
</TABLE>
Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30 1999 1998
CLASS A SHARES: SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
Shares sold 3,513,629 $ 37,092,463 1,537,695 $ 9,480,938
Shares redeemed (2,599,262) (26,900,386) (1,481,346) (8,972,254)
NET CHANGE RESULTING FROM
CLASS A
SHARE TRANSACTIONS 914,367 $ 10,192,077 56,349 $ 508,684
<CAPTION>
YEAR ENDED NOVEMBER 30 1999 1998
CLASS B SHARES: SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
Shares sold 4,590,130 $ 43,254,286 1,179,297 $ 7,632,317
Shares redeemed (4,010,557) (38,130,180) (985,742) (6,370,208)
NET CHANGE RESULTING FROM
CLASS B
SHARE TRANSACTIONS 579,573 $ 5,124,106 193,555 $ 1,262,109
<CAPTION>
YEAR ENDED NOVEMBER 30 1999 1998
CLASS C SHARES: SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
Shares sold 1,569,939 $ 15,475,087 681,864 $ 4,292,852
Shares redeemed (746,556) (6,527,304) (651,541) (4,119,742)
NET CHANGE RESULTING FROM
CLASS C
SHARE TRANSACTIONS 823,383 $8,947,783 30,323 $ 173,110
NET CHANGE RESULTING FROM
SHARE TRANSACTIONS 2,317,323 $ 24,263,966 280,227 $ 1,943,903
</TABLE>
INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISER FEE
Federated Global Investment Management Corp., the Fund's investment adviser (the
"Adviser"), receives for its services an annual investment Adviser fee equal to
1.10% of the Fund's average daily net assets. The Adviser may voluntarily choose
to waive any portion of its fee and/or reimburse certain operating expenses of
the Fund. The Adviser can modify or terminate this voluntary waiver and/or
reimbursement at any time at its sole discretion.
ADMINISTRATIVE FEE
Federated Services Company ("FServ"), under the Administrative Services
Agreement, provides the Fund with administrative personnel and services. The fee
paid to FServ is based on a scale that ranges from 0.15% to 0.075% of the
average aggregate daily net assets of all funds advised by subsidiaries of
Federated Investors, Inc., subject to $125,000 minimum per portfolio and $30,000
per each additional class.
DISTRIBUTION SERVICES FEE
The Fund has adopted a Distribution Plan (the "Plan") pursuant to Rule 12b-1
under the Act. Under the terms of the Plan, the Fund will compensate Federated
Securities Corp., ("FSC"), the principal distributor, from the net assets of the
Fund to finance activities intended to result in the sale of the Fund's Class A
Shares, Class B Shares, and Class C Shares. The Plan provides that the Fund may
incur distribution expenses according to the following schedule annually, to
compensate FSC.
<TABLE>
<CAPTION>
PERCENTAGE OF
AVERAGE DAILY NET
SHARE CLASS NAME ASSETS OF CLASS
<S> <C>
Class A Shares 0.25% Class B Shares 0.75% Class C Shares 0.75%
</TABLE>
Class A Shares did not incur a distribution services fee for the year ended
November 30, 1999, and has no present intention of paying or accruing a
distribution services fee.
SHAREHOLDER SERVICES FEE
Under the terms of a Shareholder Services Agreement with Federated Shareholder
Services Company ("FSSC"), the Fund will pay FSSC up to 0.25% of average daily
net assets of the Fund for the period. The fee paid to FSSC is used to finance
certain services for shareholders and to maintain shareholder accounts.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES
FServ, through its subsidiary FSSC, serves as transfer and dividend disbursing
agent for the Fund. The fee paid to FSSC is based on the size, type, and number
of accounts and transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES
FServ maintains the Fund's accounting records for which it receives a fee. The
fee is based on the level of the Fund's average daily net assets for the period,
plus out-of-pocket expenses.
ORGANIZATIONAL EXPENSES
Organizational expenses of $48,248 were borne initially by the Adviser. The Fund
has reimbursed the Adviser for these expenses. These expenses have been deferred
and are being amortized over the five-year period following the Fund's effective
date. For the fiscal year ended November 30, 1999, the Fund expensed $12,516 of
organizational expenses.
GENERAL
Certain of the Officers and Directors of the Corporation are Officers and
Directors or Trustees of the above companies.
INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities (and in-
kind contributions), for the fiscal year ended November 30, 1999, were as
follows:
<TABLE>
<CAPTION>
<S> <C>
Purchases $ 78,657,342
Sales $ 56,505,166
</TABLE>
CONCENTRATION OF CREDIT RISK
The Fund invests in securities of non-U.S. issuers. The political or economic
developments within a particular country or region may have an adverse effect on
the ability of domiciled issuers to meet their obligations. Additionally,
political or economic developments may have an effect on the liquidity and
volatility of portfolio securities and currency holdings.
LINE OF CREDIT AGREEMENT
Effective November 29, 1999 the Corporation entered into a $75,000,000 unsecured
committed revolving line of credit ("LOC") agreement with State Street
Corporation. The LOC was made available for extraordinary or emergency purposes,
primarily for financing redemption payments. Borrowings are charged interest at
a rate of 0.50% over the Federal Funds Rate. The LOC includes a commitment fee
of 0.08% per annum on the daily unused portion. The Corporation did not make any
borrowing under the LOC during the fiscal year ended November 30, 1999.
Report of Ernst & Young LLP, Independent Auditors
TO THE BOARD OF DIRECTORS OF WORLD INVESTMENT SERIES, INC.
AND SHAREHOLDERS OF FEDERATED ASIA PACIFIC GROWTH FUND:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of Federated Asia Pacific Growth Fund (the Fund)
(one of the portfolios constituting the World Investment Series, Inc.) as of
November 30, 1999, and the related statement of operations for the year then
ended, the statement of changes in net assets for each of the two years in the
period then ended, and the financial highlights for each of the periods
presented therein. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned as of November 30, 1999, by correspondence with the custodian and brokers
or other appropriate auditing procedures where replies from brokers were not
received. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Federated Asia Pacific Growth Fund of World Investment Series, Inc. at November
30, 1999, and the results of its operations for the year then ended, changes in
its net assets for each of the two years in the period then ended, and the
financial highlights for each of the periods presented therein, in conformity
with accounting principles generally accepted in the United States.
[Graphic]
Boston, Massachusetts
January 21, 2000
Directors
JOHN F. DONAHUE
THOMAS G. BIGLEY
JOHN T. CONROY, JR.
NICHOLAS P. CONSTANTAKIS
WILLIAM J. COPELAND
LAWRENCE D. ELLIS, M.D.
RICHARD B. FISHER
EDWARD L. FLAHERTY, JR., ESQ.
PETER E. MADDEN
CHARLES F. MANSFIELD, JR.
JOHN E. MURRAY, JR., J.D., S.J.D.
WESLEY W. POSVAR
MARJORIE P. SMUTS
Officers
JOHN F. DONAHUE
Chairman
RICHARD B. FISHER
President
J. CHRISTOPHER DONAHUE
Executive Vice President
EDWARD C. GONZALES
Executive Vice President
JOHN W. MCGONIGLE
Executive Vice President and Secretary
HENRY A. FRANTZEN
Chief Investment Officer
RICHARD J. THOMAS
Treasurer
JAMES O. PERRY
Assistant Secretary
Mutual funds are not bank deposits or obligations, are not guaranteed by any
bank, and are not insured or guaranteed by the U.S. government, the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other
government agency. Investment in mutual funds involves investment risk,
including the possible loss of principal.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the fund's prospectus which contains facts concerning
its objective and policies, management fees, expenses, and other information.
[Graphic]
Federated
World-Class Investment Manager
ANNUAL REPORT
AS OF NOVEMBER 30, 1999
Federated Asia Pacific Growth Fund
Established 1996
4TH ANNUAL REPORT
[Graphic]
Federated
Federated Asia Pacific Growth Fund
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
1-800-341-7400
WWW.FEDERATEDINVESTORS.COM
Federated Securities Corp., Distributor
Cusip 981487507
Cusip 981487606
Cusip 981487705
G01934-01 (1/00)
[Graphic]
Livelink (r) Version 8.0.2, Copyright (c) 1995-1998 Open Text Inc. All
rights reserved.
[Graphic]
RICHARD B. FISHER
President
Federated European Growth Fund
President's Message
Dear Fellow Shareholder:
Federated European Growth Fund was created in 1996, and I am pleased to present
its fourth Annual Report. As of November 30, 1999, the fund's $63.6 million
portfolio was broadly diversified across 75 stocks selected for their capital
appreciation potential, with the average holding representing approximately 1.3%
of the fund's total assets.
This report covers the 12-month period from December 1, 1998 through November
30, 1999. It begins with an interview with the fund's portfolio manager, Frank
Semack, Vice President of Federated Global Investment Management Corp. Following
his discussion covering international economic and market conditions and fund
strategy, are three additional items of shareholder interest. First is a series
of graphs showing the fund's long- term investment performance. Second is a
complete listing of the fund's holdings, and third is the publication of the
fund's financial statements.
The fund offers shareholders very significant long-term growth opportunities
from a select portfolio of stocks issued by European companies. 1 Overall, it
was a good year for European stocks. The fund's returns were highly positive and
ahead of the average European equity fund and the benchmark European index.
Individual share class total return performance for the 12-month reporting
period, including realized gains, is as follows:2
<TABLE>
<CAPTION>
TOTAL RETURN CAPITAL GAINS NET ASSET VALUE INCREASE
<S> <C> <C> <C>
Class A Shares 15.68% $0.60 $15.79 to $17.60 = 11.46%
Class B Shares 14.80% $0.60 $15.48 to $17.11 = 10.53%
Class C Shares 14.85% $0.60 $15.43 to $17.06 = 10.56%
</TABLE>
1 Foreign investing involves special risks including currency risk, increased
volatility of foreign securities, and differences in auditing and other
financial standards.
2 Performance quoted is based on net asset value, represents past performance
and is no guarantee of future results. Investment return and principal value
will fluctuate so that an investor's shares, when redeemed, may be worth more or
less than their original cost. Total returns for the period, based on the
offering price (i.e., less any applicable sales charge), for Class A, B, and C
Shares were 9.31%, 9.30%, and 13.85%, respectively.
Thank you for entrusting a portion of your wealth to this highly diversified
approach to the dynamic European market. Remember, reinvesting your dividends is
a convenient way to build the value of your account and help your money grow
through the benefit of compounding. My recommendation to all mutual fund
shareholders is to add to your investment account on a regular basis to take
advantage of price fluctuations and to use the dollar-cost averaging method of
investing. 3
Sincerely,
[Graphic]
Richard B. Fisher
President
January 15, 2000
3 Systematic investing does not assure a profit or protect against loss in
declining markets. Because dollar-cost averaging involves continuous investment
regardless of fluctuating price levels, investors should consider their
financial ability to continue purchases during periods of low price levels.
[Graphic]
FRANK SEMACK
Vice President
Federated Global Investment Management Corp.
Investment Review
WHAT WOULD YOU SAY WERE THE MOST SIGNIFICANT DEVELOPMENTS IN EUROPE DURING THE
FUND'S FISCAL YEAR?
January 1, 1999 marked the official launch of the euro as the single currency
for 11 of the European Union members, and in conjunction, the handing over of
the monetary policy reins to the European Central Bank. Just ahead of the euro's
introduction in January 1999, the fund's fiscal year started on a strong note in
December 1998 with the Morgan Stanley Capital International ("MSCI") Europe
Index 1 gaining some 14% in little over one month, in part due to lower interest
rates and also due to investors anticipating substantial portfolio shifts into
the Eurozone. As is often the case, it is much better to travel hopefully than
to arrive; both the MSCI Europe Index and the euro peaked in early January.
Following a brief, but sharp unwinding of the earlier gains through mid-
February 1999, the markets resumed their advance in local currency terms, but in
dollar terms, managed to do little more than fluctuate within a fairly narrow
range until November. For the most part, this reflected the euro's sustained
weakness, as the new currency depreciated more than 13% by July 1999. It then
staged a temporary recovery, only to fall back to new lows by the end of
November 1999. One reason for the decline was lower economic growth in Europe
relative to the United States (2.0% versus 3.5%) with correspondingly lower
interest rates. The European Central Bank cut interest rates in early April from
3.00% to 2.50%, and the Bank of England cut rates five times between the end of
1998 and the summer of 1999, from 6.75% to 5.00%. The sterling, however,
maintained its strength given the generally favorable economic and political
environment in the United Kingdom.
1 The MSCI Europe Index is an unmanaged, market value-weighted average of over
580 securities listed on the stock exchanges of 15 countries in the European
region. Investments cannot be made in an index.
CAN YOU GO INTO MORE DETAIL ON THE ECONOMIC PICTURE ACROSS EUROPE?
With regard to the United Kingdom, far from going into a mild recession, the
economy confounded consensus fears by growing in excess of 1.50%. Elsewhere in
Europe, the statistics were also often better than expected. Growth in France
proceeded at a healthy rate of 2.50%, and fundamentals slowly began to improve
in Germany, albeit slightly. Against this background, combined with the Federal
Reserve Board's tightening in the U.S. and sharply higher oil prices, both the
Bank of England and the European Central Bank reversed their interest rate
policies from September through the end of the reporting period. The Bank of
England raised its key rate in two installments to 5.50%, and the European
Central Bank hiked its repo rate back to 3.00% in early November 1999 citing
fears of inflation and increasing money supply. The impact on the equity markets
was negligible, however, as the increases having been fully discounted.
WHAT WERE THE MAJOR POLITICAL DEVELOPMENTS IN EUROPE DURING THE REPORTING
PERIOD?
Germany experienced major political developments during the reporting period.
Finance minister Oskar Lafontaine, who had done nothing in his few months in
office to endear himself to businessmen and investors, resigned in early March
1999, much to the relief of both the German and foreign markets. He was replaced
by the less controversial Hans Eichel. Even if the substance of the new
government's policies did not necessarily change for the better, the investment
community's perception of them certainly improved. The German chancellor Gerhard
Schroeder, nonetheless, continued to be beset by problems with the left wing of
his party and the government's visible lack of a coherent program contributed
heavily to the governing Social Democrats losing seven state and local elections
to the Christian Democrats in the fall of 1999. As a result, the German
regulatory environment remained uncertain. Pension and tax reforms seem to be on
hold for the time being and the government-orchestrated bailout of failed
building contractor Holzmann in November, revived fears of excessive state
intervention in business. Incidentally, this event was a key factor in driving
the euro to new lows in November 1999.
In France, by contrast, the sudden resignation, also in November 1999, of
finance minister Dominique Strauss-Kahn, amidst an alleged party financing
scandal, turned out to be a non-event. His successor, Christian Sautter, was not
expected to alter France's generally pro-business course.
HOW DID THE VARIOUS MARKET SECTORS PERFORM IN EUROPE?
Sector rotation was in full force, meaning that there was little in the way of
sustained trends throughout the year. The ultimate winners were largely
concentrated among technology, telecommunications and cyclical stocks. In terms
of a timeline, once the initial euphoria surrounding the euro faded, European
investors began to shift funds from pure growth stocks to cyclical stocks to
take advantage of record-wide disparities in valuations. In particular, we saw
outperformance early in the year in semiconductors, chemicals, steel,
engineering and paper as investors anticipated a pick-up in Asia. Oil stocks
were also strong as the price of oil rebounded from the lows of 1998. Insurance
stocks and pharmaceutical stocks suffered for much of the year because of rising
long-term bond yields related to higher yields in the U.S. and a lack of
interest in more defensive issues. To the extent that growth stocks had strong
performance, it was mainly driven by corporate activity and, later in the year,
a technology-led frenzy.
CAN YOU ELABORATE ON EUROPEAN CORPORATE ACTIVITY?
Many of the mergers and acquisitions announced last year were driven by the
introduction of the euro. Companies tried-and will continue to try-to position
themselves as pan-European players rather than local players, in danger of
losing out on market potential beyond their borders. In what will clearly be
seen as only the first phase of a long process, mergers and acquisitions last
year occurred predominantly at the country level. In our view, a shift toward
more cross-border transactions in 2000 is likely.
Sectors with the highest levels of corporate activity in 1999 were
telecommunications, pharmaceuticals, insurance, banking and retail. In total,
merger and acquisition transactions involving European companies amounted to
over $1 trillion during the period from January through November 1999, a
substantial increase on the prior year figures.
To give you some specific examples, let me start with the banking sector, where
BNP won control of Paribas in France, and in Spain, Banco Santander and BCH, and
BBV and Argentaria agreed to two separate mergers. Merger speculation in Germany
involved each of the large banking organizations, namely COMMERZBANK, Deutsche
Bank, DRESDNER BANK and Hypo Vereinsbank.
In the telecommunications sector, Olivetti won a hostile bid for Telecom Italia,
and VODAFONE and Airtouch announced a proposed merger early in the year to
create a global cellular telephone powerhouse. This was replicated in the
telecommunications sector, where France Telecom set out to increase its stake in
German cellular operator E+ (only to be eventually trumped by KPN), Deutsche
Telekom acquired 100% of One2One in the United Kingdom, and MANNESMANN of
Germany bid for ORANGE in the United Kingdom in October. Following Mannesmann's
bid for Orange, merger speculation surrounded every telecommunications stock in
Europe. Vodafone Airtouch eventually made a $125 billion bid for Mannesmann in
response to the latter's foray into the United Kingdom, and to prevent it from
becoming a potent threat elsewhere in Europe.
Other corporate activity involved Renault and Nissan, BRITISH PETROLEUM, AMOCO
and Arco, ABB and Alstom, Veba and VIAG, TOTAL and Elf, CARREFOUR and Promodes,
and WalMart and Asda.
WHAT ARE YOUR GROSS DOMESTIC PRODUCT ("GDP") AND EARNINGS EXPECTATIONS FOR THE
YEAR 2000?
GDP and earnings growth estimates are much more optimistic for 2000 than they
were for 1999. As far as GDP is concerned, we expect Europe, as a whole, to grow
by around 2.90%, perhaps surpassing the GDP growth rates, with the United
Kingdom exhibiting a strong pick-up, from less than a 2.00% growth rate in 1999
to 2.90% in 2000. Short-term interest rates in the U.S. continue to exceed rates
in the Eurozone (5.50% versus 3.00%), with inflation in 2000 expected to be more
than one percentage point higher in the U.S. (2.70% versus 1.40%). Earnings
growth in Europe may be close to 15% based on current indications. As far as the
exchange rate is concerned, we expect the euro to strengthen, but probably not
before bottoming out below parity against the U.S. dollar.
HOW DID FEDERATED EUROPEAN GROWTH FUND PERFORM DURING ITS 1999 FISCAL YEAR?
As of November 30, 1999, the fund registered 12-month total returns of 15.68%
for Class A Shares, 14.80% for Class B Shares and 14.85% for Class C Shares,
based on net asset value. 2 These returns exceeded the 14.03% total return of
the 107 European region funds tracked by Lipper Analytical Services, Inc.3 The
fund also outperformed the 9.72% return of the European market, as measured by
the MSCI Europe Index.
HOW DID THE FUND'S SECTOR EXPOSURE CHANGE DURING THE REPORTING PERIOD?
The most significant sector change to the fund was the shift toward the retail
sector across Europe. We maintained our overweighted position in the
telecommunications sector, but on the other hand, we decreased our holdings in
selected pharmaceutical and financial names, particularly in the insurance
sector in the face of rising bond yields. Additionally, earlier in the fiscal
year, the fund added targeted stocks in specific cyclical sectors.
2 Performance quoted represents past performance and is no guarantee of future
results. Investment return and principal value will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than their original
cost. Total returns for the period, based on the offering price (i.e., less any
applicable sales charge), for Class A, B, and C Shares were 9.31%, 9.30%, and
13.85%, respectively.
3 Lipper figures represent the average of the total returns reported by all of
the mutual funds designated by Lipper Analytical Services, Inc. as falling into
the category indicated. Lipper returns do not take sales charges into account.
HOW WERE THE FUND'S ASSETS ALLOCATED AMONG SECTORS, AND WHAT WERE THE TOP TEN
HOLDINGS AS OF NOVEMBER 30, 1999?
<TABLE>
<CAPTION>
PERCENTAGE OF
SECTOR NET ASSETS
<S> <C>
Finance 17.5%
Capital Equipment 15.4%
Telecommunications 13.6%
Energy 10.0%
Services 10.0%
Consumer Goods 9.8%
Merchandising 8.9%
Broadcasting & Publishing 7.6%
Materials 4.3%
</TABLE>
<TABLE>
<CAPTION>
MARKET
PERCENTAGE OF
CAPITALIZATION
NAME COUNTRY NET ASSETS ($
BILLION)
<S> <C> <C>
<C>
TotalFina France 3.5% $
95.9
Mannesmann AG Germany 3.3% $
82.0
Nokia Oyj Finland 3.1%
$171.7
Telefonica SA Spain 2.3% $
67.9
STMicroelectronics NV, ADR France 2.3% $
38.7
Glaxo Wellcome PLC United Kingdom 2.2%
$108.7
Koninklijke (Royal) Philips Electronics NV Netherlands 2.1% $
41.3
Vivendi France 2.1% $
47.2
Union Electrica Fenosa SA Spain 2.0% $
5.1
Prudential Corp. United Kingdom 2.0% $
32.0
TOTAL
24.9%
</TABLE>
WHAT WERE SOME OF THE FUND'S RECENT STOCK PURCHASES?
Our recent purchases included the following:
HAYS (1.1% of net assets): Hays is a United Kingdom-based support services
company with strong, consistent revenue-driven earnings growth of 15%. The
company has a targeted acquisition and expansion strategy and successfully
leverages cross-selling opportunities between divisions.
BOUYGUES (2.0% of net assets): Bouygues is a French conglomerate with a valuable
cellular telecommunications business as well as interests in commercial
television and construction. Their telecommunications activities are of the
greatest interest in the current environment.
M6 (1.1% of net assets): M6 is a leading French private television channel,
targeting younger audiences. The company is a direct beneficiary of a new French
law limiting advertising on French state television channels. Strong advertising
growth in France is driving advertising prices higher, and hence, ongoing
earnings upgrades in the sector.
WHAT IS YOUR OUTLOOK FOR EUROPEAN MARKETS IN 2000?
As stated earlier, 2000 should see much better economic growth rates than 1999,
driven by an improved external environment and also by healthy domestic demand
reflected in recent business, consumer and construction surveys. The euro
continues to be an important factor, but its weakness has to be seen in the
context of low inflation in Europe. As such, it is a competitive boost for
European exporters and not much of a threat to macro-economic stability. As far
as equity flows are concerned, there may be a slowdown in December and January
because of millennium concerns, but we expect a strong resumption once any year
2000-related uncertainty has been cleared.
Last Meeting of Shareholders
A Special Meeting of shareholders of Federated European Growth Fund (the
"Fund"), a portfolio of World Investment Series, Inc., was held on December 17,
1999. On September 7, 1999, the record date for shareholders voting at the
meeting, there were 3,637,905 total outstanding shares.
The following items were considered by shareholders and the results of their
voting were as follows.
AGENDA ITEM 1
Elected Directors: 1
<TABLE>
<CAPTION>
SHARES SHARES
VOTED FOR WITHHELD
<S> <C> <C>
Thomas G. Bigley 2,723,016 54,769
Nicholas P. Constantakis 2,724,690 53,095
John F. Cunningham 2,724,690 53,095
J. Christopher Donahue 2,724,690 53,095
Charles F. Mansfield, Jr. 2,723,526 54,259
John E. Murray, Jr., J.D., S.J.D. 2,721,549 56,236
John S. Walsh 2,725,002 52,783
</TABLE>
1 The following Directors continued their terms as Directors: John F.
Donahue, John T. Conroy, William J. Copeland, Lawrence D. Ellis, M.D.,
Peter E. Madden and Marjorie P. Smuts.
Director elections will become effective January 1, 2000.
AGENDA ITEM 2
Made changes to the Fund's fundamental investment policies:
(a) Amended the Fund's fundamental investment policy regarding
diversification.
<TABLE>
<CAPTION>
ABSTENTIONS
SHARES VOTED AND BROKER
SHARES VOTED FOR AGAINST NON-VOTES
<S> <C> <C>
1,582,267 24,590 1,153,001
</TABLE>
(b) Amended the Fund's fundamental investment policy regarding borrowing money
and issuing senior securities.
<TABLE>
<CAPTION>
ABSTENTIONS
SHARES VOTED AND BROKER
SHARES VOTED FOR AGAINST NON-VOTES
<S> <C> <C>
1,746,320 35,916 995,549
</TABLE>
(c) Amended the Fund's fundamental investment policy regarding investments
in real estate.
<TABLE>
<CAPTION>
ABSTENTIONS
SHARES VOTED AND BROKER
SHARES VOTED FOR AGAINST NON-VOTES
<S> <C> <C>
1,754,671 31,596 991,518
</TABLE>
(d) Amended the Fund's fundamental investment policy regarding investments
in commodities.
<TABLE>
<CAPTION>
ABSTENTIONS
SHARES VOTED AND BROKER
SHARES VOTED FOR AGAINST NON-VOTES
<S> <C> <C>
1,742,478 44,931 990,376
</TABLE>
(e) Amended the Fund's fundamental investment policy regarding underwriting
securities.
<TABLE>
<CAPTION>
ABSTENTIONS
SHARES VOTED AND BROKER
SHARES VOTED FOR AGAINST NON-VOTES
<S> <C> <C>
1,746,814 38,040 992,931
</TABLE>
(f) Amended the Fund's fundamental investment policy regarding lending
assets.
<TABLE>
<CAPTION>
ABSTENTIONS
SHARES VOTED AND BROKER
SHARES VOTED FOR AGAINST NON-VOTES
<S> <C> <C>
1,734,605 48,208 994,972
</TABLE>
(g) Amended the Fund's fundamental investment policy regarding concentration of
the Fund's investments in the securities of companies in the same industry.
<TABLE>
<CAPTION>
ABSTENTIONS
SHARES VOTED AND BROKER
SHARES VOTED FOR AGAINST NON-VOTES
<S> <C> <C>
1,739,608 45,370 992,807
</TABLE>
(h) Amended and made non-fundamental, the Fund's fundamental investment policy
regarding buying securities on margin.
<TABLE>
<CAPTION>
ABSTENTIONS
SHARES VOTED AND BROKER
SHARES VOTED FOR AGAINST NON-VOTES
<S> <C> <C>
1,723,881 54,855 999,049
</TABLE>
(i) Amended and made non-fundamental, the Fund's fundamental investment policy
regarding pledging assets.
<TABLE>
<CAPTION>
ABSTENTIONS
SHARES VOTED AND BROKER
SHARES VOTED FOR AGAINST NON-VOTES
<S> <C> <C>
1,725,947 51,726 1,000,112
</TABLE>
AGENDA ITEM 3
Eliminated the Fund's fundamental investment policy regarding selling securities
short.
<TABLE>
<CAPTION>
ABSTENTIONS
SHARES VOTED AND BROKER
SHARES VOTED FOR AGAINST NON-VOTES
<S> <C> <C>
1,726,753 56,141 994,891
</TABLE>
AGENDA ITEM 4
Approved an amendment to the Articles of Incorporation of World Investment
Series, Inc. to permit the Board of Directors to liquidate assets of a series or
class without seeking shareholder approval to the extent permitted under
Maryland law.
<TABLE>
<CAPTION>
ABSTENTIONS
SHARES VOTED AND BROKER
SHARES VOTED FOR AGAINST NON-VOTES
<S> <C> <C>
1,727,008 64,603 986,174
</TABLE>
Two Ways You May Seek to Invest for Success:
INITIAL INVESTMENT:
IF YOU HAD MADE AN INITIAL INVESTMENT OF $4,000 IN THE CLASS A SHARES OF
FEDERATED EUROPEAN GROWTH FUND ON 2/28/96, REINVESTED YOUR DIVIDENDS AND CAPITAL
GAINS, AND DID NOT REDEEM ANY SHARES, YOUR ACCOUNT WOULD HAVE BEEN WORTH $7,380
ON 11/30/99. YOU WOULD HAVE EARNED A 17.83% 1 AVERAGE ANNUAL TOTAL RETURN FOR
THE INVESTMENT LIFE SPAN.
One key to investing wisely is to reinvest all distributions in fund shares.
This increases the number of shares on which you can earn future dividends and
you gain the benefit of compounding.
As of 12/31/99, the Class A Shares' 1-year and since inception (2/28/96) average
annual total returns were 20.57% and 21.30%, respectively. Class B Shares'
1-year and since inception (2/28/96) average annual total returns were 21.11%
and 21.71%, respectively. Class C Shares' 1-year and since inception (2/28/96)
average annual total returns were 25.72% and 22.09%, respectively. 2
[Graphic representation omitted. Please see Appendix A9.]
1 Total returns represent the change in the value of an investment after
reinvesting all income and capital gains, and take into account the 5.50% sales
charge applicable to an initial investment in Class A Shares. Data quoted
represents past performance and does not guarantee future results. Investment
return and principal value will fluctuate, so an investor's shares, when
redeemed, may be worth more or less than their original cost.
2 The total returns stated take into account all applicable sales charges. The
maximum sales charges and contingent deferred sales charges for the fund are as
follows: Class A Shares, 5.50% sales charge; Class B Shares, 5.50% contingent
deferred sales charge and Class C Shares, 1.00% contingent deferred sales
charge.
ONE STEP AT A TIME:
$1,000 INITIAL INVESTMENT AND SUBSEQUENT INVESTMENTS OF $1,000 EACH YEAR FOR
THREE YEARS (REINVESTING ALL DIVIDENDS AND CAPITAL GAINS) GREW TO $5,568.
With this approach, the key is consistency.
If you had started investing $1,000 annually in the Class A Shares of Federated
European Growth Fund on 2/28/96, reinvested your dividends and capital gains and
did not redeem any shares, you would have invested only $4,000, but your account
would have reached a total value of $5,568 1 by 11/30/99. You would have earned
an average annual total return of 15.18%.
A practical investment plan helps you pursue long-term capital growth through a
diversified portfolio primarily invested in equity securities of European
companies. Through systematic investing, you buy shares on a regular basis and
reinvest all earnings. An investment plan can work for you when you invest only
$1,000 annually. You can take it one step at a time. Put time, money, and
compounding to work.
[Graphic representation omitted. Please see Appendix A10.]
1 This chart assumes that the subsequent annual investments are made on the last
day of each anniversary month. No method of investing can guarantee a profit or
protect against loss in down markets.
Federated European Growth Fund-Class A Shares
GROWTH OF A $10,000 INVESTMENT
The graph below illustrates the hypothetical investment of $10,000 1 in
Federated European Growth Fund (Class A Shares) (the "Fund") from February 28,
1996 (start of performance) to November 30, 1999 compared to the Morgan Stanley
Capital International Europe Index (MSCI-EUROPE).2
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS 3 FOR THE PERIOD ENDED NOVEMBER 30, 1999
<S> <C>
1 Year 9.31%
Start of Performance (2/28/96) 17.83%
</TABLE>
[Graphic representation omitted. Please see Appendix A11.]
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE PERFORMANCE. YOUR INVESTMENT RETURN
AND PRINCIPAL VALUE WILL FLUCTUATE SO WHEN SHARES ARE REDEEMED, THEY MAY BE
WORTH MORE OR LESS THAN THEIR ORIGINAL COST. MUTUAL FUNDS ARE NOT OBLIGATIONS OF
OR GUARANTEED BY ANY BANK AND ARE NOT FEDERALLY INSURED.
1 Represents a hypothetical investment of $10,000 in the Fund after deducting
the maximum sales charge of 5.50% ($10,000 investment minus $550 sales charge =
$9,450). The Fund's performance assumes the reinvestment of all dividends and
distributions. The MSCI-EUROPE has been adjusted to reflect reinvestment of
dividends on securities in the index.
2 The MSCI-EUROPE is not adjusted to reflect sales charges, expenses, or other
fees that the Securities and Exchange Commission requires to be reflected in the
Fund's performance. This index is unmanaged.
3 Total return quoted reflects all applicable sales charges.
Federated European Growth Fund-Class B Shares
GROWTH OF A $10,000 INVESTMENT
The graph below illustrates the hypothetical investment of $10,000 1 in
Federated European Growth Fund (Class B Shares) (the "Fund") from February 28,
1996 (start of performance) to November 30, 1999 compared to the Morgan Stanley
Capital International Europe Index (MSCI-EUROPE).2
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS 3 FOR THE PERIOD ENDED NOVEMBER 30, 1999
<S> <C>
1 Year 9.30%
Start of Performance (2/28/96) 18.20%
</TABLE>
[Graphic representation omitted. Please see Appendix A12.]
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE PERFORMANCE. YOUR INVESTMENT RETURN
AND PRINCIPAL VALUE WILL FLUCTUATE SO WHEN SHARES ARE REDEEMED, THEY MAY BE
WORTH MORE OR LESS THAN THEIR ORIGINAL COST. MUTUAL FUNDS ARE NOT OBLIGATIONS OF
OR GUARANTEED BY ANY BANK AND ARE NOT FEDERALLY INSURED.
1 Represents a hypothetical investment of $10,000 in the Fund. The ending value
of the Fund reflects a contingent deferred sales charge of 3.00% on any
redemption less than four years from the purchase date. The maximum contingent
deferred sales charge is 5.50% on any redemption less than one year from the
purchase date. The Fund's performance assumes the reinvestment of all dividends
and distributions. The MSCI-EUROPE has been adjusted to reflect reinvestment of
dividends on securities in the index.
2 The MSCI-EUROPE is not adjusted to reflect sales charges, expenses, or other
fees that the Securities and Exchange Commission requires to be reflected in the
Fund's performance. This index is unmanaged.
3 Total return quoted reflects all applicable sales charges and contingent
deferred sales charges.
Federated European Growth Fund-Class C Shares
GROWTH OF A $10,000 INVESTMENT
The graph above illustrates the hypothetical investment of $10,000 1 in
Federated European Growth Fund (Class C Shares) (the "Fund") from February 28,
1996 (start of performance) to November 30, 1999 compared to the Morgan Stanley
Capital International Europe Index (MSCI-EUROPE).2
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS 3 FOR THE PERIOD ENDED NOVEMBER 30, 1999
<S> <C>
1 Year 13.85%
Start of Performance (2/28/96) 18.64%
</TABLE>
[Graphic representation omitted. Please see Appendix A13.]
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE PERFORMANCE. YOUR INVESTMENT RETURN
AND PRINCIPAL VALUE WILL FLUCTUATE SO WHEN SHARES ARE REDEEMED, THEY MAY BE
WORTH MORE OR LESS THAN THEIR ORIGINAL COST. MUTUAL FUNDS ARE NOT OBLIGATIONS OF
OR GUARANTEED BY ANY BANK AND ARE NOT FEDERALLY INSURED.
1 Represents a hypothetical investment of $10,000 in the Fund. A 1.00%
contingent deferred sales charge would be applied on any redemption less than
one year from the purchase date. The Fund's performance assumes the reinvestment
of all dividends and distributions. The MSCI-EUROPE has been adjusted to reflect
reinvestment of dividends on securities in the index.
2 The MSCI-EUROPE is not adjusted to reflect sales charges, expenses, or other
fees that the Securities and Exchange Commission requires to be reflected in the
Fund's performance. This index is unmanaged.
3 Total return quoted reflects all applicable sales charges and contingent
deferred sales charges.
Portfolio of Investments
NOVEMBER 30, 1999
<TABLE>
<CAPTION>
VALUE IN
SHARES U.S. DOLLARS
<C> <S> <C>
COMMON STOCKS-96.2%
APPLIANCES & HOUSEHOLD
DURABLES-2.1%
11,000 Koninklijke (Royal)
Philips Electronics NV $ 1,339,652
BANKING-10.1%
6,100 Alpha Credit Bank 490,012
40,276 Banco Pinto & Sotto Mayor 864,527
172,500 1 Banco Portugues do
Atlantico 693,609
40,549 Barclays PLC 1,170,372
91,000 Christiania Bank OG
Kreditkasse 420,021
15,100 Commerzbank AG, Frankfurt 490,749
23,600 Dresdner Bank AG,
Frankfurt 1,115,418
52,300 National Westminster Bank,
PLC, London 1,203,465
TOTAL 6,448,173
BROADCASTING & PUBLISHING-7.6%
12,000 1 Antenna Hungaria 218,606
48,800 Arnoldo Mondadori Editore
SPA 1,000,284
34,000 Class Editori SPA 322,419
20,000 Hachette Filipacchi Medias 1,029,920
2,090 M6 Metropole Television 688,726
4,700 Societe Europeenne des
Satellites 592,053
33,000 Wolters Kluwer NV 996,009
TOTAL 4,848,017
BUILDING MATERIALS &
COMPONENTS-0.9%
9,500 Ciments Francais, Class A 583,991
BUSINESS & PUBLIC
SERVICES-6.1%
45,000 Hays PLC 685,301
180,000 Rentokil Initial PLC 693,194
106,000 Reuters Group PLC 1,184,075
16,400 Vivendi 1,313,904
TOTAL 3,876,474
CONSTRUCTION & HOUSING-2.0%
2,700 Bouygues 1,246,183
<CAPTION>
VALUE IN
SHARES U.S. DOLLARS
<C> <S> <C>
COMMON STOCKS-continued
DATA PROCESSING &
REPRODUCTION-1.7%
20,200 CMG PLC $ 1,067,825
ELECTRICAL & ELECTRONICS-3.1%
14,130 Nokia Oyj 2,002,074
ELECTRONIC COMPONENTS,
INSTRUMENTS-4.8%
9,500 1 ASM Lithography Holding NV 923,854
6,000 1 SCM Microsystems, Inc. 359,767
11,500 STMicroelectronics NV, ADR 1,436,062
24,000 1 Tandberg Television ASA 312,671
TOTAL 3,032,354
ENERGY SOURCES-5.6%
77,476 BP Amoco PLC 791,319
75,000 Enterprise Oil PLC 538,194
16,744 TotalFina SA, Class B 2,229,024
TOTAL 3,558,537
FINANCIAL SERVICES-1.7%
95,600 Halifax Group PLC 1,093,056
FOREST PRODUCTS & PAPER-1.5%
8,500 Empresa Nacional de Celulosa 161,038
27,000 Metsa-Serla Oy, Class B 266,651
476,000 Rottneros AB 548,284
TOTAL 975,973
HEALTH & PERSONAL CARE-6.8%
220 Ares-Serono Group 381,911
25,100 AstraZeneca Group PLC 1,118,318
47,838 Glaxo Wellcome PLC 1,431,104
10,000 Rhone-Poulenc 619,766
55,218 Smithkline Beecham PLC 742,290
TOTAL 4,293,389
INDUSTRIAL COMPONENTS-0.7%
23,080 Continental AG 460,525
INSURANCE-5.7%
6,820 AXA 920,275
20,000 CNP Assurances 654,836
111,000 2 Norwich Union PLC 789,447
<CAPTION>
VALUE IN
SHARES U.S. DOLLARS
<C> <S> <C>
COMMON STOCKS-continued
INSURANCE-CONTINUED
76,534 Prudential Corp., PLC $ 1,263,165
TOTAL 3,627,723
LEISURE & TOURISM-2.9%
73,000 Carlton Communications PLC 642,580
15,000 Endemol Entertainment
Holding NV 652,266
120,000 1 TelePizza SA 551,441
TOTAL 1,846,287
MACHINERY & ENGINEERING-1.8%
163,600 2 Jot Automation Group Oyj 1,112,858
MERCHANDISING-8.9%
4,560 Carrefour SA 794,993
20,600 Centros Comerciales
Continente, SA 465,639
6,560 Etablissements Economiques
du Casino Guichard-Perrachon 819,744
300,000 Marks & Spencer PLC 1,210,339
5,030 Pinault-Printemps-Redoute SA 1,049,279
173,200 Sainsbury (J) PLC 856,199
18,500 Vendex KBB NV 488,456
TOTAL 5,684,649
METALS - STEEL-1.9%
22,490 1 Thyssen Krupp AG 591,538
42,000 Usinor Sacilor 643,347
TOTAL 1,234,885
MULTI-INDUSTRY-1.3%
7,500 Metallgesellschaft AG 138,692
300 Richemont (cie fin) 669,853
TOTAL 808,545
TELECOMMUNICATIONS-13.6%
37,528 British Telecommunication
PLC 752,838
50,439 Cable & Wireless
Communications PLC 640,645
9,000 1 Esat Telecom Group PLC, ADR 585,562
14,427 KPN NV 803,996
10,000 Mannesmann AG 2,079,995
38,200 1 Orange PLC 1,157,397
9,050 Tele Danmark AS, Class B 583,476
<CAPTION>
SHARES OR
PRINCIPAL VALUE IN
AMOUNT U.S. DOLLARS
<C> <S> <C>
COMMON STOCKS-continued
TELECOMMUNICATIONS-
CONTINUED
71,167 Telefonica SA $ 1,483,097
122,000 Vodafone Airtouch PLC 574,887
TOTAL 8,661,893
TRANSPORTATION - AIRLINES-
1.0%
30,000 Deutsche Lufthansa AG 660,882
UTILITIES - ELECTRICAL &
GAS-4.4%
38,000 Iberdrola SA 529,996
75,000 Union Electrica Fenosa SA 1,265,230
59,360 Viag AG 981,048
TOTAL 2,776,274
TOTAL COMMON STOCKS
(IDENTIFIED COST
$51,500,404) 61,240,219
PREFERRED STOCKS-0.9%
210 Porsche AG (identified
cost $586,777) 571,394
REPURCHASE AGREEMENT-1.1% 3
$ 695,000 J.P. Morgan & Co., Inc.,
5.71%, dated 11/30/1999,
due 12/1/1999 (at
amortized cost) 695,000
TOTAL INVESTMENTS
(IDENTIFIED COST
$52,782,181) 4 $ 62,506,613
</TABLE>
1 Non-income producing security.
2 Denotes a restricted security which is subject to restrictions on resale under
federal securities laws. These securities have been deemed liquid based upon
criteria approved by the fund's Board of Directors. At November 30, 1999, these
securities amounted to $1,902,305 which represents 3.0% of net assets.
3 The repurchase agreement is fully collateralized by U.S. government and/or
agency obligations based on market prices at the date of the portfolio. The
investment in the repurchase agreement is through participation in a joint
account with other Federated funds.
4 The cost of investments for federal tax purposes amounts to $52,820,022. The
net unrealized appreciation of investments on a federal tax basis amounts to
$9,686,591 which is comprised of $10,830,460 appreciation and $1,143,869
depreciation at November 30, 1999.
Note: The categories of investments are shown as a percentage of net assets
($63,644,542) at November 30, 1999.
The following acronym is used throughout this portfolio:
ADR -American Depositary Receipt
See Notes which are an integral part of the Financial Statements
Statement of Assets and Liabilities
NOVEMBER 30, 1999
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS:
Total investments in
securities, at value
(identified cost
$52,782,181 and tax
cost $52,820,022) $ 62,506,613
Income receivable 100,382
Receivable for investments
sold 1,118,485
Receivable for shares sold 416,103
Net receivable for foreign
currency exchange
contracts 1,857
Deferred organizational
costs 12,995
TOTAL ASSETS 64,156,435
LIABILITIES:
Payable for shares
redeemed $ 429,299
Payable to bank 7,019
Payable for taxes withheld 3,638
Accrued expenses 71,937
TOTAL LIABILITIES 511,893
Net assets for 3,658,812
shares outstanding $ 63,644,542
NET ASSETS CONSIST OF:
Paid-in capital $ 49,944,853
Net unrealized
appreciation of
investments and
translation of assets and
liabilities in foreign
currency 9,712,420
Accumulated net realized
gain on investments and
foreign currency
transactions 4,018,490
Net operating loss (31,221)
TOTAL NET ASSETS $ 63,644,542
NET ASSET VALUE, OFFERING
PRICE AND REDEMPTION
PROCEEDS PER SHARE
CLASS A SHARES:
Net Asset Value Per Share
($37,554,742 / 2,133,238
shares outstanding) $17.60
Offering Price Per Share
(100/94.50 of $17.60) 1 $18.62
Redemption Proceeds Per
Share $17.60
CLASS B SHARES:
Net Asset Value Per Share
($20,765,205 / 1,213,382
shares outstanding) $17.11
Offering Price Per Share $17.11
Redemption Proceeds Per
Share (94.50/100 of
$17.11) 1 $16.17
CLASS C SHARES:
Net Asset Value Per Share
($5,324,595 / 312,192
shares outstanding) $17.06
Offering Price Per Share $17.06
Redemption Proceeds Per
Share (99.00/100 of
$17.06) 1 $16.89
</TABLE>
1 See "What Do Shares Cost?" in the Prospectus.
See Notes which are an integral part of the Financial Statements
Statement of Operations
YEAR ENDED NOVEMBER 30, 1999
<TABLE>
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME:
Dividends (net of foreign
taxes withheld of
$122,202) $ 837,066
Interest 44,230
TOTAL INCOME 881,296
EXPENSES:
Investment adviser fee $ 585,373
Administrative personnel
and services fee 185,000
Custodian fees 96,361
Transfer and dividend
disbursing agent fees and
expenses 121,478
Directors'/Trustees' fees 1,854
Auditing fees 21,619
Legal fees 3,047
Portfolio accounting fees 80,567
Distribution services fee-
Class B Shares 144,602
Distribution services fee-
Class C Shares 30,513
Shareholder services fee-
Class A Shares 87,972
Shareholder services fee-
Class B Shares 48,201
Shareholder services fee-
Class C Shares 10,171
Share registration costs 38,494
Printing and postage 36,948
Taxes 3,348
Miscellaneous 14,337
TOTAL EXPENSES 1,509,885
WAIVER:
Waiver of investment
adviser fee (255,109)
Net expenses 1,254,776
Net operating loss (373,480)
REALIZED AND UNREALIZED
GAIN ON INVESTMENTS AND
FOREIGN CURRENCY:
Net realized gain on
investments and foreign
currency transactions 4,380,564
Net change in unrealized
appreciation of
investments and
translation of assets and
liabilities in foreign
currency 4,650,605
Net realized and
unrealized gain on
investments and foreign
currency 9,031,169
Change in net assets
resulting from operations $ 8,657,689
</TABLE>
See Notes which are an integral part of the Financial Statements
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30 1999 1998
<S> <C> <C>
INCREASE (DECREASE) IN NET
ASSETS
OPERATIONS:
Net investment income (net
operating loss) $ (373,480) $ 8,236
Net realized gain on
investments and foreign
currency transactions
($4,508,856 and
$2,436,500, respectively,
as computed for federal tax
purposes) 4,380,564 2,230,667
Net change in unrealized
appreciation of
investments and
translation of assets and
liabilities in foreign
currency 4,650,605 3,436,370
CHANGE IN NET ASSETS
RESULTING FROM OPERATIONS 8,657,689 5,675,273
DISTRIBUTIONS TO
SHAREHOLDERS:
Distributions from net
realized gains on
investments and foreign
currency transactions
Class A Shares (1,455,402) (537,759)
Class B Shares (704,605) (185,127)
Class C Shares (98,397) (23,411)
CHANGE IN NET ASSETS
RESULTING FROM
DISTRIBUTIONS
TO SHAREHOLDERS (2,258,404) (746,297)
SHARE TRANSACTIONS:
Proceeds from sale of shares 68,140,970 99,816,917
Net asset value of shares
issued to shareholders in
payment of
distributions declared 2,042,096 675,579
Cost of shares redeemed (73,859,459) (68,056,951)
CHANGE IN NET ASSETS
RESULTING FROM SHARE
TRANSACTIONS (3,676,393) 32,435,545
Change in net assets 2,722,892 37,364,521
NET ASSETS:
Beginning of period 60,921,650 23,557,129
End of period $ 63,644,542 $ 60,921,650
</TABLE>
See Notes which are an integral part of the Financial Statements
Financial Highlights-Class A Shares
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30 1999 1998 1997 1996 1
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING
OF PERIOD $15.79 $13.33 $11.80 $10.00
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income (net
operating loss) (0.06) 2 0.04 0.06 2 0.14
Net realized and
unrealized gain on
investments and
foreign currency 2.47 2.84 1.93 1.66
TOTAL FROM INVESTMENT
OPERATIONS 2.41 2.88 1.99 1.80
LESS DISTRIBUTIONS:
Distributions from net
investment income - - (0.09) -
Distributions from net
realized gain on
investments and foreign
currency transactions (0.60) (0.42) (0.37) -
TOTAL DISTRIBUTIONS (0.60) (0.42) (0.46) -
NET ASSET VALUE, END OF
PERIOD $17.60 $15.79 $13.33 $11.80
TOTAL RETURN 3 15.68% 22.13% 17.54% 18.00%
RATIOS TO AVERAGE NET
ASSETS:
Expenses 1.84% 1.85% 1.91% 1.75% 4
Net investment income (net
operating loss) (0.36%) 0.24% 0.50% 1.60% 4
Expense
waiver/reimbursement 5 0.44% 0.63% 2.79% 11.10% 4
SUPPLEMENTAL DATA:
Net assets, end of period
(000 omitted) $37,555 $40,543 $17,008 $3,318
Portfolio turnover 226% 175% 119% 58%
</TABLE>
1 Reflects operations for the period from February 28, 1996 (date of initial
public investment) to November 30, 1996.
2 Per share information is based on average shares outstanding.
3 Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
4 Computed on an annualized basis.
5 This voluntary expense decrease is reflected in both the expense and the net
investment income (net operating loss) ratios shown above.
See Notes which are an integral part of the Financial Statements
Financial Highlights-Class B Shares
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30 1999 1998 1997 1996 1
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING
OF PERIOD $15.48 $13.18 $11.74 $10.00
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income (net
operating loss) (0.16) 2 (0.00) 3 (0.03) 2 0.01
Net realized and
unrealized gain on
investments and
foreign currency 2.39 2.72 1.91 1.73
TOTAL FROM INVESTMENT
OPERATIONS 2.23 2.72 1.88 1.74
LESS DISTRIBUTIONS:
Distributions from net
investment income - - (0.07) -
Distributions from net
realized gain on
investments and foreign
currency transactions (0.60) (0.42) (0.37) -
TOTAL DISTRIBUTIONS (0.60) (0.42) (0.44) -
NET ASSET VALUE, END OF
PERIOD $17.11 $15.48 $13.18 $11.74
TOTAL RETURN 4 14.80% 21.14% 16.61% 17.40%
RATIOS TO AVERAGE NET
ASSETS:
Expenses 2.59% 2.60% 2.66% 2.50% 5
Net investment income (net
operating loss) (1.11%) (0.51%) (0.25%) 0.08% 5
Expense
waiver/reimbursement 6 0.44% 0.63% 2.79% 11.10% 5
SUPPLEMENTAL DATA:
Net assets, end of period
(000 omitted) $20,765 $17,952 $5,781 $1,215
Portfolio turnover 226% 175% 119% 58%
</TABLE>
1 Reflects operations for the period from February 28, 1996 (date of initial
public investment) to November 30, 1996.
2 Per share information is based on average share outstanding.
3 Per share amount does not round to ($0.01).
4 Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
5 Computed on an annualized basis.
6 This voluntary expense decrease is reflected in both the expense and the net
investment income (net operating loss) ratios shown above.
See Notes which are an integral part of the Financial Statements
Financial Highlights-Class C Shares
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30 1999 1998 1997 1996 1
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING
OF PERIOD $15.43 $13.15 $11.73 $10.00
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income (net
operating loss) (0.17) 2 (0.00) 3 (0.03) 2 0.01
Net realized and
unrealized gain on
investments and
foreign currency 2.40 2.70 1.90 1.72
TOTAL FROM INVESTMENT
OPERATIONS 2.23 2.70 1.87 1.73
LESS DISTRIBUTIONS:
Distributions from net
investment income - - (0.08) -
Distributions from net
realized gain on
investments and foreign
currency transactions (0.60) (0.42) (0.37) -
TOTAL DISTRIBUTIONS (0.60) (0.42) (0.45) -
NET ASSET VALUE, END OF
PERIOD $17.06 $15.43 $13.15 $11.73
TOTAL RETURN 4 14.85% 21.03% 16.55% 17.30%
RATIOS TO AVERAGE NET
ASSETS:
Expenses 2.59% 2.60% 2.66% 2.50% 5
Net investment income (net
operating loss) (1.11%) (0.51%) (0.23%) 0.09% 5
Expense
waiver/reimbursement 6 0.44% 0.63% 2.79% 11.06% 5
SUPPLEMENTAL DATA:
Net assets, end of period
(000 omitted) $5,325 $2,426 $768 $176
Portfolio turnover 226% 175% 119% 58%
</TABLE>
1 Reflects operations for the period from February 28, 1996 (date of initial
public investment) to November 30, 1996.
2 Per share information is based on average share outstanding.
3 Per share amount does not round to ($0.01).
4 Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
5 Computed on an annualized basis.
6 This voluntary expense decrease is reflected in both the expense and the net
investment income (net operating loss) ratios shown above.
See Notes which are an integral part of the Financial Statements
Notes to Financial Statements
NOVEMBER 30, 1999
ORGANIZATION
World Investment Series, Inc. (the "Corporation") is registered under the
Investment Company Act of 1940, as amended (the "Act"), as an open-end,
management investment company. The Corporation consists of ten portfolios. The
financial statements included herein are only those of Federated European Growth
Fund (the "Fund"), a diversified portfolio. The financial statements of the
other portfolios are presented separately. The assets of each portfolio are
segregated and a shareholder's interest is limited to the portfolio in which
shares are held.
The Fund offers three classes of shares: Class A Shares, Class B Shares and
Class C Shares. The investment objective of the Fund is to provide long-term
growth of capital.
SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS
Foreign and domestic equity securities are valued at the last sale price
reported on a national securities exchange or over-the-counter market. In the
absence of recorded sales for equity securities, they are valued according to
the mean between the last closing bid and asked prices. Short-term foreign and
domestic securities are valued at the prices provided by an independent pricing
service. However, short-term foreign and domestic securities with remaining
maturities of 60 days or less at the time of purchase may be valued at amortized
cost, which approximates fair market value.
REPURCHASE AGREEMENTS
It is the policy of the Fund to require the custodian bank to take possession,
to have legally segregated in the Federal Reserve Book Entry System, or to have
segregated within the custodian bank's vault, all securities held as collateral
under repurchase agreement transactions. Additionally, procedures have been
established by the Fund to monitor, on a daily basis, the market value of each
repurchase agreement's collateral to ensure that the value of collateral at
least equals the repurchase price to be paid under the repurchase agreement.
The Fund will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed by
the Fund's adviser to be creditworthy pursuant to the guidelines and/or
standards reviewed or established by the Board of Directors (the "Directors").
Risks may arise from the potential inability of counterparties to honor the
terms of the repurchase agreement. Accordingly, the Fund could receive less than
the repurchase price on the sale of collateral securities. The Fund, along with
other affiliated investment companies, may utilize a joint trading account for
the purpose of entering into one or more repurchase agreements.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS
Interest income and expenses are accrued daily. Bond premium and discount, if
applicable, are amortized as required by the Internal Revenue Code of 1986, as
amended (the "Code"). Dividend income and distributions to shareholders are
recorded on the ex-dividend date. Non-cash dividends included in dividend
income, if any, are recorded at fair value. The Fund offers multiple classes of
shares, which differ in their respective distribution and service fees. All
shareholders bear the common expenses of the Fund based on average daily net
assets of each class, without distinction between share classes. Dividends are
declared separately for each class. No class has preferential dividend rights;
differences in per share dividend rates are generally due to differences in
separate class expenses.
Income and capital gain distributions are determined in accordance with income
tax regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments for foreign currency
transactions and net operating loss. The following reclassifications have been
made to the financial statements.
<TABLE>
<CAPTION>
INCREASE (DECREASE)
ACCUMULATED NET REALIZED
GAIN ON INVESTMENTS AND
FOREIGN CURRENCY TRANSACTIONS NET OPERATING LOSS
<S> <C>
$(342,259) $342,259
</TABLE>
Net investment income, net realized gains (losses), and net assets were not
affected by this reclassification.
FEDERAL TAXES
It is the Fund's policy to comply with the provisions of the Code applicable to
regulated investment companies and to distribute to shareholders each year
substantially all of its income. Accordingly, no provision for federal tax is
necessary.
Withholding taxes on foreign interest and dividends have been provided for in
accordance with the applicable country's tax rules and rates.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
The Fund may engage in when-issued or delayed delivery transactions. The Fund
records when-issued securities on the trade date and maintains security
positions such that sufficient liquid assets will be available to make payment
for the securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date. Losses may occur on these transactions due to changes in market
conditions or the failure of counterparties to perform under the contract.
FOREIGN EXCHANGE CONTRACTS
The Fund may enter into foreign currency commitments for the delayed delivery of
securities or foreign currency exchange transactions. The Fund may enter into
foreign currency contract transactions to protect assets against adverse changes
in foreign currency exchange rates or exchange control regulations. Purchased
contracts are used to acquire exposure to foreign currencies; whereas, contracts
to sell are used to hedge the Fund's securities against currency fluctuations.
Risks may arise upon entering these transactions from the potential inability of
counterparties to meet the terms of their commitments and from unanticipated
movements in security prices or foreign exchange rates. The foreign currency
transactions are adjusted by the daily exchange rate of the underlying currency
and any gains or losses are recorded for financial statement purposes as
unrealized until the settlement date.
At November 30, 1999, the Fund had outstanding foreign currency commitments set
forth below:
<TABLE>
<CAPTION>
UNREALIZED
APPRECIATION
SETTLEMENT DATE CONTRACTS TO DELIVER IN EXCHANGE FOR CONTRACTS AT VALUE
(DEPRECIATION)
CONTRACTS SOLD:
<S> <C> <C> <C>
<C>
12/1/1999 412,529 euro Currency $419,158 $415,727
$ 3,431
12/2/1999 419,256 euro Currency $420,932 $422,506
$(1,574)
NET UNREALIZED APPRECIATION ON FOREIGN EXCHANGE CONTRACTS:
$ 1,857
</TABLE>
FOREIGN CURRENCY TRANSLATION
The accounting records of the Fund are maintained in U.S. dollars. All assets
and liabilities denominated in foreign currencies ("FC") are translated into
U.S. dollars based on the rate of exchange of such currencies against U.S.
dollars on the date of valuation. Purchases and sales of securities, income and
expenses are translated at the rate of exchange quoted on the respective date
that such transactions are recorded. The Fund does not isolate that portion of
the results of operations resulting from changes in foreign exchange rates on
investments from the fluctuations arising from changes in market prices of
securities held. Such fluctuations are included with the net realized and
unrealized gain or loss from investments.
Reported net realized foreign exchange gains or losses arise from sales of
portfolio securities, sales and maturities of short-term securities, sales of
FCs, currency gains or losses realized between the trade and settlement dates on
securities transactions, the difference between the amounts of dividends,
interest, and foreign withholding taxes recorded on the Fund's books, and the
U.S. dollar equivalent of the amounts actually received or paid. Net unrealized
foreign exchange gains and losses arise from changes in the value of assets and
liabilities other than investments in securities at fiscal year end, resulting
from changes in the exchange rate.
RESTRICTED SECURITIES
Restricted securities are securities that may only be resold upon registration
under federal securities laws or in transactions exempt from such registration.
In some cases, the issuer of restricted securities has agreed to register such
securities for resale, at the issuer's expense either upon demand by the Fund or
in connection with another registered offering of the securities. Many
restricted securities may be resold in the secondary market in transactions
exempt from registration. Such restricted securities may be determined to be
liquid under criteria established by the Directors. The Fund will not incur any
registration costs upon such resales. The Fund's restricted securities are
valued at the price provided by dealers in the secondary market or, if no market
prices are available, at the fair value as determined by the Fund's pricing
committee.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts of assets, liabilities, expenses and revenues reported in the
financial statements. Actual results could differ from those estimated.
OTHER
Investment transactions are accounted for on a trade date basis.
CAPITAL STOCK
At November 30, 1999, par value shares ($0.001 per share) authorized were as
follows:
<TABLE>
<CAPTION>
NUMBER OF PAR VALUE
SHARE CLASS NAME CAPITAL STOCK AUTHORIZED
<S> <C>
Class A Shares 100,000,000
Class B Shares 100,000,000
Class C Shares 100,000,000
TOTAL 300,000,000
</TABLE>
Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30 1999 1998
CLASS A SHARES: SHARES AMOUNT SHARES
AMOUNT
<S> <C> <C> <C>
<C>
Shares sold 1,985,022 $ 31,450,041 3,402,428 $
52,837,745
Shares issued to
shareholders in payment of
distributions declared 83,205 1,309,645
35,977 481,005
Shares redeemed (2,502,252) (39,556,935) (2,147,001)
(33,498,819)
NET CHANGE RESULTING FROM
CLASS A SHARE
TRANSACTIONS (434,025) $ (6,797,249) 1,291,404 $
19,819,931
<CAPTION>
YEAR ENDED NOVEMBER 30 1999 1998
CLASS B SHARES: SHARES AMOUNT SHARES
AMOUNT
<S> <C> <C> <C>
<C>
Shares sold 981,270 $ 15,029,609 1,811,616 $
27,679,163
Shares issued to
shareholders in payment of
distributions declared 41,728 643,449
13,211 174,502
Shares redeemed (969,066) (14,848,134) (1,104,050)
(16,670,573)
NET CHANGE RESULTING FROM
CLASS B SHARE
TRANSACTIONS 53,932 $ 824,924 720,777 $
11,183,092
<CAPTION>
YEAR ENDED NOVEMBER 30 1999 1998
CLASS C SHARES: SHARES AMOUNT
SHARES AMOUNT
<S> <C> <C> <C>
<C>
Shares sold 1,414,104 $ 21,661,320 1,284,262 $
19,300,009
Shares issued to
shareholders in payment of
distributions declared 5,794 89,002
1,523 20,072
Shares redeemed (1,264,995) (19,454,390) (1,186,882)
(17,887,559)
NET CHANGE RESULTING FROM
CLASS C SHARE
TRANSACTIONS 154,903 $ 2,295,932 98,903 $
1,432,522
NET CHANGE RESULTING FROM
SHARE TRANSACTIONS (225,190) $ (3,676,393) 2,111,084 $
32,435,545
</TABLE>
INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISER FEE
Federated Global Investment Management Corp., the Fund's investment adviser (the
"Adviser"), receives for its services an annual investment Adviser fee equal to
1.00% of the Fund's average daily net assets. The Adviser may voluntarily choose
to waive any portion of its fee. The Adviser can modify or terminate this
voluntary waiver at any time at its sole discretion.
ADMINISTRATIVE FEE
Federated Services Company ("FServ"), under the Administrative Services
Agreement, provides the Fund with administrative personnel and services. The fee
paid to FServ is based on a scale that ranges from 0.15% to 0.075% of the
average aggregate daily net assets of all funds advised by subsidiaries of
Federated Investors, Inc., subject to a $125,000 minimum per portfolio and
$30,000 per each additional class.
DISTRIBUTION SERVICES FEE
The Fund has adopted a Distribution Plan (the "Plan") pursuant to Rule 12b-1
under the Act. Under the terms of the Plan, the Fund will compensate Federated
Securities Corp. ("FSC"), the principal distributor, from the net assets of the
Fund to finance activities intended to result in the sale of the Fund's Class A
Shares, Class B Shares, and Class C Shares. The Plan provides that the Fund may
incur distribution expenses according to the following schedule annually, to
compensate FSC.
<TABLE>
<CAPTION>
PERCENTAGE OF AVERAGE
SHARE CLASS NAME DAILY NET ASSETS OF CLASS
<S> <C>
Class A Shares 0.25%
Class B Shares 0.75%
Class C Shares 0.75%
</TABLE>
Class A Shares did not incur a distribution services fee for the fiscal year
ended November 30, 1999, and has no present intention of paying or accruing a
distribution services fee.
SHAREHOLDER SERVICES FEE
Under the terms of a Shareholder Services Agreement with Federated Shareholder
Services Company ("FSSC"), the Fund will pay FSSC up to 0.25% of average daily
net assets of the Fund for the period. The fee paid to FSSC is used to finance
certain services for shareholders and to maintain shareholder accounts.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES
FServ, through its subsidiary FSSC, serves as transfer and dividend disbursing
agent for the Fund. The fee paid to FSSC is based on the size, type, and number
of accounts and transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES
FServ maintains the Fund's accounting records for which it receives a fee. The
fee is based on the level of the Fund's average daily net assets for the period,
plus out-of-pocket expenses.
ORGANIZATIONAL EXPENSES
Organizational expenses of $42,822 were borne initially by the Adviser. The Fund
has reimbursed the Adviser for these expenses. These expenses have been deferred
and are being amortized over the five-year period following the Fund's effective
date. For the fiscal year ended November 30, 1999, the Fund expensed $11,107 of
organizational expenses.
GENERAL
Certain of the Officers and Directors of the Corporation are Officers and
Directors or Trustees of the above companies.
INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities (and in-
kind contributions), for the fiscal year ended November 30, 1999, were as
follows:
<TABLE>
<CAPTION>
<S> <C>
Purchases $128,018,125
Sales $137,689,291
</TABLE>
CONCENTRATION OF CREDIT RISK
The Fund invests in securities of non-U.S. issuers. The political or economic
developments within a particular country or region may have an adverse effect on
the ability of domiciled issuers to meet their obligations. Additionally,
political or economic developments may have an effect on the liquidity and
volatility of portfolio securities and currency holdings.
At November 30, 1999, the diversification of countries was as follows:
<TABLE>
<CAPTION>
PERCENTAGE OF
COUNTRY NET ASSETS
<S> <C>
United Kingdom 30.6%
France 22.1%
Germany 11.1%
Netherlands 8.2%
Spain 7.0%
Finland 5.3%
Portugal 2.5%
Italy 2.1%
Switzerland 1.7%
United States 1.7%
Norway 1.2%
Denmark 0.9%
Ireland 0.9%
Luxembourg 0.9%
Sweden 0.9%
Greece 0.8%
Hungary 0.3%
</TABLE>
LINE OF CREDIT AGREEMENT
Effective November 29, 1999, the Corporation entered into a $75,000,000
unsecured committed revolving line of credit ("LOC") agreement with State Street
Corporation. The LOC was made available for extraordinary or emergency purposes,
primarily for financing redemption payments. Borrowings are charged interest at
a rate of 0.50% over the Federal Funds Rate. The LOC includes a commitment fee
of 0.08% per annum on the daily unused portion. The Corporation did not make any
borrowing under the LOC during the fiscal year ended November 30, 1999.
Report Of Ernst & Young LLP, Independent Auditors
TO THE BOARD OF DIRECTORS OF WORLD INVESTMENT SERIES, INC. AND
SHAREHOLDERS OF FEDERATED EUROPEAN GROWTH FUND:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of Federated European Growth Fund (the Fund) (one
of the portfolios constituting the World Investment Series, Inc.) as of November
30, 1999, and the related statement of operations for the year then ended, the
statement of changes in net assets for each of the two years in the period then
ended, and the financial highlights for each of the periods presented therein.
These financial statements and financial highlights are the responsibility of
the Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned as of November 30, 1999, by correspondence with the custodian and brokers
or other appropriate auditing procedures where replies from brokers were not
received. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Federated European Growth Fund of World Investment Series, Inc. at November 30,
1999, and the results of its operations for the year then ended, the changes in
its net assets for each of the two years in the period then ended, and the
financial highlights for each of the periods presented therein, in conformity
with accounting principles generally accepted in the United States.
/s/ Ernst & Young
[Graphic]
Boston, Massachusetts
January 21, 2000
Directors
JOHN F. DONAHUE
THOMAS G. BIGLEY
JOHN T. CONROY, JR.
NICHOLAS P. CONSTANTAKIS
WILLIAM J. COPELAND
LAWRENCE D. ELLIS, M.D.
RICHARD B. FISHER
EDWARD L. FLAHERTY, JR., ESQ.
PETER E. MADDEN
CHARLES F. MANSFIELD, JR.
JOHN E. MURRAY, JR., J.D., S.J.D.
WESLEY W. POSVAR
MARJORIE P. SMUTS
Officers
JOHN F. DONAHUE
Chairman
RICHARD B. FISHER
President
J. CHRISTOPHER DONAHUE
Executive Vice President
EDWARD C. GONZALES
Executive Vice President
JOHN W. MCGONIGLE
Executive Vice President and Secretary
HENRY A. FRANTZEN
Chief Investment Officer
RICHARD J. THOMAS
Treasurer
JAMES O. PERRY
Assistant Secretary
Mutual funds are not bank deposits or obligations, are not guaranteed by any
bank, and are not insured or guaranteed by the U.S. government, the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other
government agency. Investment in mutual funds involves investment risk,
including the possible loss of principal.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the fund's prospectus which contains facts concerning
its objective and policies, management fees, expenses, and other information.
[Graphic]
Federated
World-Class Investment Manager
ANNUAL REPORT
AS OF NOVEMBER 30, 1999
Federated European Growth Fund
Established 1996
4TH ANNUAL REPORT
[Graphic]
Federated
Federated European Growth Fund
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
1-800-341-7400
WWW.FEDERATEDINVESTORS.COM
Federated Securities Corp., Distributor
Cusip 981487861
Cusip 981487853
Cusip 981487846
G01979-01 (1/00)
[Graphic]
[Graphic]
RICHARD B. FISHER
President
Federated Emerging Markets Fund
President's Message
Dear Fellow Shareholder:
Federated Emerging Markets Fund was created in 1996, and I am pleased to present
its fourth Annual Report. The fund provides access to stock and bond investments
in 20-30 emerging markets offering shareholders significant long-term investment
opportunities from a select portfolio of many large and small company stocks. 1
The fund invests in countries located in Africa, Latin America, most of Asia and
parts of Europe. Currently, the fund's equity holdings represent 24 countries
and 168 corporations, and the fund's net assets totaled $60.5 million as of
November 30, 1999.
This report covers the 12-month reporting period from December 1, 1998 through
November 30, 1999. It begins with an interview with the fund's portfolio
manager, Chris Matyszewski, Vice President of Federated Global Investment
Management Corp. Following his discussion of emerging markets' economic and
market conditions, and fund's investment strategy are two additional items of
shareholder interest. First is a complete listing of the fund's investments, and
second is the publication of the fund's financial statements.
The fund's strong total return performance over the past 12 months reflects a
return of investor confidence to the emerging markets asset class in general and
the fund in particular. During the 12-month reporting period, the fund was able
to participate in gains that occurred as market leadership changed from sector
to sector. As a result, the fund outperformed the average emerging markets fund,
and the fund's benchmark index. Individual share class total return performance
for the 12-month reporting period follows. 2
<TABLE>
<CAPTION>
TOTAL RETURN NET ASSET VALUE INCREASE <S> <C> <C> Class A Shares 46.31% $8.40 to
$12.29 = 46.31% Class B Shares 45.20% $8.23 to $11.95 = 45.20% Class C Shares
45.44% $8.23 to $11.97 = 45.44%
</TABLE>
1 Foreign investing involves special risks including currency risk, increased
volatility of foreign securities, and differences in auditing and other
financial standards. In addition, emerging market structures may be less diverse
and mature, and their political systems may be less stable.
2 Performance quoted is based on net asset value, represents past performance
and is no guarantee of future results. Investment return and principal value
will fluctuate, so that an investor's shares, when redeemed, may be worth more
or less than their original cost. Total returns for the period, based on
offering price (i.e., less any applicable sales charge), for Class A, B, and C
Shares were 38.25%, 39.70%, and 44.44%, respectively.
Investing in emerging foreign markets, in which there is so much potential for
growth, is clearly a long-term proposition. There could be volatile periods of
negative returns, which we had experienced in the fund's previous fiscal year,
and strong gains, as we have experienced in this past fiscal year.
In this investment environment, I recommend that you add to your account on a
regular basis to take advantage of price fluctuations and to utilize the
dollar-cost averaging method of investing. By investing the same amount
regularly, you buy more fund shares when prices are low and fewer when prices
are high. Adding to your account regularly and reinvesting your annual dividends
in additional shares is a convenient, painless way to "pay yourself first" and
enjoy the benefit of compounding. 3
Thank you for your confidence in Federated Emerging Markets Fund. We will
continue to keep you up-to-date on the details of your investment. We appreciate
your entrusting a portion of your wealth with the fund.
Sincerely,
[Graphic]
Richard B. Fisher
President
January 15, 2000
3 Systematic investing does not assure a profit or protect against loss in
declining markets. Because dollar-cost averaging involves continuous investing
regardless of fluctuating price levels, investors should consider whether to
continue purchases during periods of low price levels.
[Graphic]
CHRISTOPHER MATYSZEWSKI
Vice President
Federated Global Investment Management Corp.
Investment Review
WHAT ARE YOUR COMMENTS ON THE EMERGING MARKETPLACE, WHICH RECORDED EXTREMELY
STRONG PERFORMANCE OVER THE FUND'S FISCAL YEAR?
Over the last 12 months, we have witnessed an amazing reversal in investor
sentiment, followed by substantial inflows of funds into emerging markets. By
November of 1998, rounds of global interest rate cuts were just beginning to
have an effect on equity prices, though at that time, the Russian ruble
devaluation and debt moratorium were fresh in investors' minds. Having
experienced the Asian crisis a year earlier, investors were not fully convinced
on the recovery in share prices.
Across emerging markets, though, the coordinated easing of global monetary
policy provided the necessary breathing room to begin restructuring. Countries
throughout Asia were in a position to improve their current account balances
while corporations focused on restructuring their balance sheets.
In addition, rising commodity prices benefited a number of export economies. In
Mexico, for example, the rebound in oil prices coupled with the promise of
stronger corporate earnings produced very attractive equity levels. The surge in
oil prices and optimism toward successful debt restructuring helped the Russian
equity markets.
A third factor contributing to a rebound in emerging economies was the strength
of the Japanese yen. From a level of approximately 123 yen to the U.S. dollar in
mid year 1999, the yen appreciated to 103 by the end of November. As an integral
part of the Pacific Rim economy, Japan was in a healthier position to purchase
emerging Asian markets' exports. Additionally, a stronger yen meant these
products were priced more competitively on the world market as compared to their
Japanese counterparts.
The year was not without trial, however. In January, Brazil's "Real Plan" was
finally abandoned, and the country's currency declined by over 40%. While sharp
equity market declines ensued, the newly appointed head of the central bank
helped to restore a considerable amount of confidence. Additionally, toward the
latter part of 1999, a positive outlook for corporate earnings in Indonesia was
overshadowed by banking scandal and clashing in East Timor and Aceh.
While much of 1999 was categorized by liquidity-driven rallies and a theme of
economic recovery, investors sought securities with strong earnings growth
potential by the fund's fiscal year end. Technology shares performed
particularly well in Asia, prompted by strong demand coming from the U.S. and
Europe, for quality products manufactured by globally competitive companies
based in countries such as Korea and Taiwan.
WHAT WERE THE FUND'S TOTAL RETURNS OVER THE 12-MONTH REPORTING PERIOD?
The fund recorded very strong 12-month returns across all share classes. Returns
for the fund, based on net asset value, were: Class A Shares, 46.31%; Class B
Shares, 45.20%; and Class C Shares 45.44%. 1 The fund's returns were greater
than the 42.36% average total return of the 180 emerging market mutual funds
tracked by Lipper Analytical Services, Inc.2 The fund's benchmark, the
International Finance Corporation ("IFC") Investable Composite Index, produced a
41.81% return.3
1 Performance quoted is based on net asset value, represents past performance
and is no guarantee of future results. Investment return and principal value
will fluctuate so that an investor's shares, when redeemed, may be worth more or
less than their original cost. Total returns for the period, based on offering
price (i.e., less any applicable sales charge), for Class A, B, and C Shares
were 38.25%, 39.70%, and 44.44%, respectively.
2 Lipper figures represent the average of the total returns reported by all of
the mutual funds designated by Lipper Analytical Services, Inc. as falling into
the category indicated. Lipper returns do not take sales charges into account.
3 IFC Investable Composite Index/Price Only is an investable, unmanaged market
capitalization-weighted, price-only index of over 1,000 securities in 26
emerging market countries. Investments cannot be made in an index.
AS A RISK-CONTROL MEASURE, THE FUND IS BROADLY DIVERSIFIED AMONG MARKETS AND
SECURITIES. WHAT COUNTRIES AND HOLDINGS EXERTED THE GREATEST INFLUENCE ON THE
FUND'S PERFORMANCE DURING THE 12-MONTH REPORTING PERIOD?
Over the course of our fiscal year, factors affecting emerging markets have
changed dramatically. Our sector diversification has allowed us to take
advantage of these changes.
Early in the year, the series of global interest rate cuts initiated recovery
rallies in which our financial stocks provided strong returns. By summer,
concerns toward the future direction of U.S. interest rates, coupled with
surging gold prices, provided an environment in which our cyclicals and resource
producers outperformed. By late fall, investors turned from simply buying the
recovery story in the asset class to buying earnings growth; the strong
performance of our technology-related stocks is evidence of this.
On a country basis, investing in those markets that placed emphasis on corporate
restructuring proved beneficial. In this regard, Korea was one of the top-
performing emerging markets. Additionally, our overweighted position in Turkey,
with its positive political changes, declining interest rates, and moves to
attract more direct foreign investment, provided the fund with strong returns.
WHAT WERE THE FUND'S COUNTRY ALLOCATIONS AS OF NOVEMBER 30, 1999?
The portfolio was well diversified across the following 25 countries:
<TABLE>
<CAPTION>
PERCENTAGE OF
COUNTRY NET ASSETS
<S> <C> Korea 15.32% Turkey 9.49% India 9.31% Mexico 9.09% Brazil 6.65%
South Africa 5.02%
United States 5.00%
China 4.56% Egypt 3.86% Thailand 3.55% Greece 3.45% Ghana 3.15% Taiwan 2.89%
Hungary 2.79% Poland 2.55%
Indonesia 2.04% Argentina 1.76% Malaysia 1.51% Philippines 1.50% Kenya 1.44%
Peru 1.18% Mauritius 1.12% Chile 0.59% Malawi 0.20% Zimbabwe 0.19%
</TABLE>
WHAT WERE THE FUND'S TOP HOLDINGS AS OF NOVEMBER 30, 1999?
<TABLE>
<CAPTION>
PERCENTAGE
NAME COUNTRY OF ASSETS INDUSTRY
<S> <C> <C> <C>
SSB Banks Ghana 2.69% Banking
Telefonos de Mexico SA, Class L, ADR Mexico 1.99% Telecommunications
Samsung Electronics Co. Korea 1.98% Appliances & Household Durables
Sri Adhikari Brothers Television Network, Ltd. India 1.83% Business & Public
Services
Software Solutions India 1.36% Business & Public Services
SK Telecom Co. Ltd. Korea 1.34% Telecommunications
China Telecom (Hong Kong) Ltd. China 1.32% Telecommunications
Serome Technology Korea 1.31% Business & Public Services
Satyam Computer Services Ltd. India 1.30% Business & Public Services
Hurriyet Gazetecilik ve Matbaacilik AS Turkey 1.17% Broadcasting & Publishing
TOTAL 16.29%
</TABLE>
AS WE LEAVE AN EXCEPTIONALLY STRONG YEAR FOR THE FUND AND ENTER THE YEAR 2000,
HOW BULLISH ARE YOU ON THE EMERGING MARKETPLACE AND WHY?
Entering the new millennium, we are extremely bullish on the emerging markets.
We see a number of factors driving up equity prices over the next several years.
In the forefront is the same theme that is driving up the stock prices in the
developed markets-technology. It would appear most emerging markets are three to
five years behind in the development cycle with regard to Internet, wireless,
biotechnology, and other technological advances benefiting the developed world
today. The enormous benefits that wireless/Internet technologies could bring to
the millions of people living in infrastructure-starved countries, such as India
and China, have yet to be realized.
Other factors benefiting the companies in which we invest in the emerging
markets are: improving exports and current account balances, corporate
restructuring, privatization, and financial deregulation.
The events that took place in 1998 translated into depreciating currencies in
most of the emerging markets. This resulted in lowering imports for most
countries and a boom for exporting countries with globally competitive
industries. The end result has been improving current account balances for a
large number of countries, particularly for exporting nations in Asia.
Corporate restructuring is a completely new theme in these markets. Finally, out
of necessity created by the downturn in 1998, the companies are focusing on
increasing shareholder returns through various measures such as increasing
productivity and cost cutting. A number of governments around the world are
accelerating the privatization process and transferring inefficiently run state
entities into efficient private hands.
Another theme that is gathering speed in the emerging markets is the
deregulation in the financial services segment. This should eventually lead to
better intermediation and competition in the industry, thereby lowering the cost
of funds for the rest of the economy.
Rapid changes are taking place in the emerging markets world that will have a
positive impact on peoples' lifestyles and the companies operating in these
markets. For us, this is a very convincing case for investment, and we are
excited about the future prospects.
Last Meeting of Shareholders
A Special Meeting of shareholders of Federated Emerging Markets Fund (the
"Fund"), a portfolio of World Investment Series, Inc., was held on December 17,
1999. On September 7, 1999, the record date for the shareholders voting at the
meeting, there were 4,785,336 total outstanding shares.
The following items were considered by shareholders and the results of their
voting were as follows:
AGENDA ITEM 1
Elected Directors: 1
<TABLE>
<CAPTION>
WITHHELD
SHARES AUTHORITY
VOTED FOR TO VOTE
<S> <C> <C>
Thomas G. Bigley 3,632,265 49,456
Nicholas P. Constantakis 3,632,043 49,678
John F. Cunningham 3,631,516 50,205
J. Christopher Donahue 3,632,081 49,640
Charles F. Mansfield, Jr. 3,631,516 50,205
John E. Murray, Jr., J.D., S.J.D. 3,632,265 49,456
John S. Walsh 3,630,635 51,086
</TABLE>
1 The following Directors continued their terms as Directors: John F.
Donahue, John T. Conroy, William J. Copeland, Lawrence D. Ellis, M.D.,
Peter E. Madden and Marjorie P. Smuts.
Director elections will become effective January 1, 2000.
AGENDA ITEM 2
Made changes to the Fund's fundamental investment policies:
(a) Amended the Fund's fundamental investment policy regarding
diversification.
<TABLE>
<CAPTION>
ABSTENTIONS
SHARES SHARES VOTED AND BROKER
VOTED FOR AGAINST NON-VOTES
<S> <C> <C>
2,639,118 71,873 900,826
</TABLE>
(b) Amended the Fund's fundamental investment policy regarding borrowing money
and issuing senior securities.
<TABLE>
<CAPTION>
ABSTENTIONS
SHARES SHARES VOTED AND BROKER
VOTED FOR AGAINST NON-VOTES
<S> <C> <C>
2,764,066 72,346 845,309
</TABLE>
(c) Amended the Fund's fundamental investment policy regarding investments
in real estate.
<TABLE>
<CAPTION>
ABSTENTIONS
SHARES SHARES VOTED AND BROKER
VOTED FOR AGAINST NON-VOTES
<S> <C> <C>
2,776,680 63,903 841,138
</TABLE>
(d) Amended the Fund's fundamental investment policy regarding investments
in commodities.
<TABLE>
<CAPTION>
ABSTENTIONS
SHARES SHARES VOTED AND BROKER
VOTED FOR AGAINST NON-VOTES
<S> <C> <C>
2,761,522 75,573 844,626
</TABLE>
(e) Amended the Fund's fundamental investment policy regarding underwriting
securities.
<TABLE>
<CAPTION>
ABSTENTIONS
SHARES SHARES VOTED AND BROKER
VOTED FOR AGAINST NON-VOTES
<S> <C> <C>
2,768,122 69,503 844,096
</TABLE>
(f) Amended the Fund's fundamental investment policy regarding lending
assets.
<TABLE>
<CAPTION>
ABSTENTIONS
SHARES SHARES VOTED AND BROKER
VOTED FOR AGAINST NON-VOTES
<S> <C> <C>
2,759,115 77,346 845,260
</TABLE>
(g) Amended the Fund's fundamental investment policy regarding concentration of
the Fund's investments in the securities of companies in the same industry.
<TABLE>
<CAPTION>
ABSTENTIONS
SHARES SHARES VOTED AND BROKER
VOTED FOR AGAINST NON-VOTES
<S> <C> <C>
2,774,087 65,468 842,166
</TABLE>
(h) Amended, and made non-fundamental, the Fund's fundamental investment policy
regarding buying securities on margin.
<TABLE>
<CAPTION>
ABSTENTIONS
SHARES SHARES VOTED AND BROKER
VOTED FOR AGAINST NON-VOTES
<S> <C> <C>
2,745,192 92,456 844,073
</TABLE>
(i) Amended, and made non-fundamental, the Fund's fundamental investment policy
regarding pledging assets.
<TABLE>
<CAPTION>
ABSTENTIONS
SHARES SHARES VOTED AND BROKER
VOTED FOR AGAINST NON-VOTES
<S> <C> <C>
2,753,127 86,215 842,379
</TABLE>
AGENDA ITEM 3
Eliminated certain fundamental investment policies of the Fund:
Removed the Fund's fundamental investment policy regarding selling securities
short.
<TABLE>
<CAPTION>
ABSTENTIONS
SHARES SHARES VOTED AND BROKER
VOTED FOR AGAINST NON-VOTES
<S> <C> <C>
2,758,084 75,249 848,388
</TABLE>
AGENDA ITEM 4
Approved an amendment to the Articles of Incorporation of World Investment
Series, Inc. to permit the Board of Directors to liquidate assets of a series or
class without seeking shareholder approval to the extent permitted under
Maryland law.
<TABLE>
<CAPTION>
ABSTENTIONS
SHARES SHARES VOTED AND BROKER
VOTED FOR AGAINST NON-VOTES
<S> <C> <C>
2,722,844 107,559 851,318
</TABLE>
Where in the World Should You Invest?
[Graphic]
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 EQUITY FUND
FEDERATED INTERNATIONAL HIGH INCOME FUND
FEDERATED INTERNATIONAL INCOME FUND
FEDERATED INTERNATIONAL SMALL COMPANY FUND
FEDERATED LATIN AMERICAN GROWTH FUND
FEDERATED WORLD UTILITY FUND
Federated employs highly qualified, experienced managers in global investing
to select countries and companies outside the U.S. for long-term
growth potential
Call your investment representative to buy shares of 10 international equity
funds and two international income funds from Federated Securities Corp.
FOR MORE COMPLETE INFORMATION ABOUT ANY OF THESE FUNDS, CALL 1-800-341-7400 TO
ASK FOR A PROSPECTUS AND READ IT CAREFULLY BEFORE YOU INVEST.
Foreign investing involves special risks including currency risks, increased
volatility of foreign securities, and differences in auditing and other
financial standards.
Federated Emerging Markets Fund-Class A Shares
GROWTH OF A $10,000 INVESTMENT
The graph below illustrates the hypothetical investment of $10,000 1 in the
Federated Emerging Markets Fund (Class A Shares) (the "Fund") from February 28,
1996 (start of performance) to November 30, 1999 compared to the International
Finance Corporation Investable Composite Index (IFCIC).2
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS 3 FOR THE PERIOD ENDED NOVEMBER 30, 1999
<S> <C>
1 Year 38.25%
Start of Performance (2/28/96) 4.07%
</TABLE>
[Please see Appendix A6]
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE PERFORMANCE. YOUR INVESTMENT RETURN
AND PRINCIPAL VALUE WILL FLUCTUATE SO WHEN SHARES ARE REDEEMED, THEY MAY BE
WORTH MORE OR LESS THAN THEIR ORIGINAL COST. MUTUAL FUNDS ARE NOT OBLIGATIONS OF
OR GUARANTEED BY ANY BANK AND ARE NOT FEDERALLY INSURED.
1 Represents a hypothetical investment of $10,000 in the Fund after deducting
the maximum sales charge of 5.50% ($10,000 investment minus $550 sales charge =
$9,450). The Fund's performance assumes the reinvestment of all dividends and
distributions. The IFCIC has been adjusted to reflect reinvestment of dividends
on securities in the index.
2 The IFCIC is not adjusted to reflect sales charges, expenses, or other fees
that the Securities and Exchange Commission requires to be reflected in the
Fund's performance. The index is unmanaged.
3 Total return quoted reflects all applicable sales charges.
Federated Emerging Markets Fund-Class B Shares
GROWTH OF A $10,000 INVESTMENT
The graph below illustrates the hypothetical investment of $10,000 1 in the
Federated Emerging Markets Fund (Class B Shares) (the "Fund") from February 28,
1996 (start of performance) to November 30, 1999 compared to the International
Finance Corporation Investable Composite Index (IFCIC).2
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS 3 FOR THE PERIOD ENDED NOVEMBER 30, 1999
<S> <C>
1 Year 39.70%
Start of Performance (2/28/96) 4.15%
</TABLE>
[Please see Appendix A7]
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE PERFORMANCE. YOUR INVESTMENT RETURN
AND PRINCIPAL VALUE WILL FLUCTUATE SO WHEN SHARES ARE REDEEMED, THEY MAY BE
WORTH MORE OR LESS THAN THEIR ORIGINAL COST. MUTUAL FUNDS ARE NOT OBLIGATIONS OF
OR GUARANTEED BY ANY BANK AND ARE NOT FEDERALLY INSURED.
1 Represents a hypothetical investment of $10,000 in the Fund. The ending value
of the Fund reflects a contingent deferred sales charge of 3.00% on any
redemption less than four years from the purchase date. The maximum contingent
deferred sales charge is 5.50% on any redemption less than one year from the
purchase date. The Fund's performance assumes the reinvestment of all dividends
and distributions. The IFCIC has been adjusted to reflect reinvestment of
dividends on securities in the index.
2 The IFCIC is not adjusted to reflect sales charges, expenses, or other fees
that the Securities and Exchange Commission requires to be reflected in the
Fund's performance. The index is unmanaged.
3 Total return quoted reflects all applicable contingent deferred sales charges.
Federated Emerging Markets Fund-Class C Shares
GROWTH OF A $10,000 INVESTMENT
The graph below illustrates the hypothetical investment of $10,000 1 in the
Federated Emerging Markets Fund (Class C Shares) (the "Fund") from February 28,
1996 (start of performance) to November 30, 1999 compared to the International
Finance Corporation Investable Composite Index (IFCIC).2
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS 3 FOR THE PERIOD ENDED NOVEMBER 30, 1999
<S> <C>
1 Year 44.44%
Start of Performance (2/28/96) 4.90%
</TABLE>
[Please see Appendix A8]
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE PERFORMANCE. YOUR INVESTMENT RETURN
AND PRINCIPAL VALUE WILL FLUCTUATE SO WHEN SHARES ARE REDEEMED, THEY MAY BE
WORTH MORE OR LESS THAN THEIR ORIGINAL COST. MUTUAL FUNDS ARE NOT OBLIGATIONS OF
OR GUARANTEED BY ANY BANK AND ARE NOT FEDERALLY INSURED.
1 Represents a hypothetical investment of $10,000 in the Fund. A 1.00%
contingent deferred sales charge would be applied on any redemption less than
one year from the purchase date. The Fund's performance assumes the reinvestment
of all dividends and distributions. The IFCIC has been adjusted to reflect
reinvestment of dividends on securities in the index.
2 The IFCIC is not adjusted to reflect sales charges, expenses, or other fees
that the Securities and Exchange Commission requires to be reflected in the
Fund's performance. The index is unmanaged.
3 Total return quoted reflects all applicable contingent deferred sales charges.
Portfolio of Investments
NOVEMBER 30, 1999
<TABLE>
<CAPTION>
VALUE IN
SHARES U.S. DOLLARS
<C> <S> <C>
COMMON STOCKS-91.6%
APPLIANCES & HOUSEHOLD
DURABLES-3.2%
202,000 Guangdong Kelon Electrical
Holdings Co., Ltd., Class H $ 174,261
50,840 Mirae Co. 385,932
5,800 Samsung Electronics Co. 1,200,776
1,336,300 Vestel Elektronik Sanayi
ve Ticaret AS 180,558
TOTAL 1,941,527
AUTOMOBILE-2.1%
9,000,000 Anadolu Isuzu Otomotiv
Sanayi Ve Ticaret AS 317,045
15,000,000 Ford Otomotiv Sanayi AS 340,208
20,690 1 North American Bus
Industries 401,548
500,000 PT Astra International Tbk 228,982
TOTAL 1,287,783
BANKING-14.3%
5,037 Alpha Credit Bank SA 404,622
26,819 Banco Santiago, ADR 548,113
3,000 Bank Slaski SA w Katowicach 170,563
482,000 Citic Ka Wah Bank Ltd. 169,117
120,000 Commerce Asset - Holding
Berhad 262,105
28,000 Commercial International
Bank Egypt 360,205
81,500 Corporation Bank 217,340
182,900 Grupo Financiero Banamex
Accival, SA de CV, Class O 616,397
600,000 Grupo Financiero Bancomer,
SA de CV 222,906
10,000 Housing & Commercial Bank,
Korea 280,354
40,000 Korea Technology Banking Co. 545,180
75,000 Malayan Banking Berhad 256,579
62,800 Mauritius Commercial Bank 229,016
7,200 Misr International Bank 151,676
7,200 National Societe Generale
Bank 96,945
11,000 OTP Bank RT 519,527
370,154 1 PT Bank Pan Indonesia Tbk,
Warrants 8,602
24,500 Shinhan Bank 285,314
2,785,276 1 SSB Banks 1,628,720
277,500 State Bank of Mauritius Ltd. 176,138
<CAPTION>
VALUE IN
SHARES U.S. DOLLARS
<C> <S> <C>
COMMON STOCKS-continued
BANKING-CONTINUED
269,000 Thai Farmers Bank PCL $ 362,255
15,000,000 Turkiye Garanti Bankasi AS 162,142
28,000 Unibanco Uniao de Bancos
Brasileiros SA, GDR 659,750
18,990,000 Yapi ve Kredi Bankasi AS 348,229
TOTAL 8,681,795
BEVERAGE & TOBACCO-2.7%
128,000 Beijing Enterprises
Holdings Ltd. 198,597
6,400,000 Erciyas Biracilik Ve Malt
Sanayii AS 222,366
80,000 Fomento Economico
Mexicano, SA de CV 299,756
14,480 1 Guinness Ghana Ltd. 4,063
307,000 La Tondena Distillers, Inc. 250,842
146,000 PT Hanjaya Mandala
Sampoerna Tbk 333,315
293,672 Sasini Tea & Coffee Ltd. 169,105
407,447 Union de Cervecerias
Backus y Johnston SAA,
Class I 161,134
TOTAL 1,639,178
BROADCASTING & PUBLISHING-2.8%
11,100 Grupo Televisa SA, GDR 541,819
55,473,830 Hurriyet Gazetecilik ve
Matbaacilik AS 706,721
143,000,000 Sabah Yayincilik AS 469,247
TOTAL 1,717,787
BUILDING MATERIALS &
COMPONENTS-3.1%
30,000 Apasco SA de CV 199,979
59,500 Cemex SA de CV 291,153
360,000 China Merchants Holdings
International Co., Ltd. 292,023
85,200 Siam City Cement PCL 404,309
23,200 Suez Cement Co. 376,890
2,600 Titan Cement Co. SA 306,112
TOTAL 1,870,466
BUSINESS & PUBLIC
SERVICES-13.2%
2,632,000 Culturecom Holdings Ltd. 157,585
70,358 Dimension Data Holdings Ltd. 364,402
31,080 1 Haansoft Inc. 616,640
539,280 1 Home Finance Co. Ltd. 119,451
12,000 1 Insung Information 448,221
25,000 1 Interlink Systems Co. Ltd. 534,829
<CAPTION>
VALUE IN
SHARES U.S. DOLLARS
<C> <S> <C>
COMMON STOCKS-continued
BUSINESS & PUBLIC
SERVICES-CONTINUED
10,000 1 LG Ad, Inc. $ 550,356
6,000 NIIT Ltd. 324,847
10,000 Pentafour Software &
Exports Ltd. 199,942
112,000 1 SQL Star International Ltd. 664,827
17,863 Satyam Computer Services Ltd. 789,339
12,600 1 Serome Technology Inc. 792,357
6,800 Softbank SA 197,298
28,400 Software Solutions 824,879
71,463 Sri Adhikari Brothers
Television Network Ltd. 1,108,290
2,500,000 Tansas Izmir Buyuksehir
Belediyesi Ic ve Dis
Ticaret AS 332,970
TOTAL 8,026,233
CHEMICALS-1.6%
8,800 Egyptian Financial &
Industrial Co. 70,835
31,700 Grasim Industries Ltd. 324,997
635,000 Thai Petrochemical
Industry PCL 289,118
18,600 Tisza Vegyi Kombinat Rt. 302,667
TOTAL 987,617
CONSTRUCTION & HOUSING-0.9%
28,400 1 Budimex SA 167,471
19,522 Hydrobudowa SA 128,419
200,000 Road Builder (M) Holdings
Berhad 236,842
TOTAL 532,732
DATA PROCESSING &
REPRODUCTION-2.0%
60,000 1, 2 Acer, Inc., GDR 684,000
5,360 Trigem Computer, Inc. 531,723
TOTAL 1,215,723
ELECTRICAL & ELECTRONICS-3.9%
26,800 Endesa SA, ADR 358,450
8,100 1 Infoquest SA 209,854
3,500 Intracom SA 154,903
17,500 Kumho Electric 573,647
4,730 1 Kumho Electric, Rights 57,123
6,000,000 Netas Telekomunik 347,447
37,000 Shin Corp. PCL 235,373
<CAPTION>
VALUE IN
SHARES U.S. DOLLARS
<C> <S> <C>
COMMON STOCKS-continued
ELECTRICAL & ELECTRONICS-
CONTINUED
545,000 Stone Electronic
Technology Ltd. $ 228,063
1,400 1 Visualsoft (India) Ltd. 198,526
TOTAL 2,363,386
ELECTRONIC COMPONENTS,
INSTRUMENTS-3.6%
100 Aptech Ltd. 3,009
62,181 1 Computer Configurations
Holdings Ltd. 238,519
9,751 1 Hyundai Electronics
Industries Co., Rights 52,992
1,380,000 1 Music Corp. 208,683
40,000 1 Siliconware Precision
Industries Co., GDR 531,000
15,300 1 Taiwan Semiconductor
Manufacturing Co., ADR 547,931
22,000 1 Telson Electronics Co. Ltd. 559,845
TOTAL 2,141,979
ENERGY EQUIPMENT &
SERVICES-0.3%
15,300 Tubos de Acero de Mexico
SA, ADR 192,206
ENERGY SOURCES-0.8%
26,300 Bharat Petroleum Corp. Ltd. 229,341
27,000 1, 2 Polski Koncern Naftowy SA,
GDR 280,800
TOTAL 510,141
FINANCIAL SERVICES-2.7%
9,650,000 Alarko Holding AS 316,659
2,000,000 Celestial Asia Securities
Holdings Ltd. 213,738
60,000,000 1 Dogan Yayin Holding AS 515,379
37,000 1, 2 Lakah Group, GDR 224,775
500,000 National Finance PCL 166,731
100,000 1 Theta Group Ltd. 192,603
TOTAL 1,629,885
FOOD & HOUSEHOLD PRODUCTS-2.6%
3,075 Britannia Industries 57,118
9,000 Cheil Jedang Corp. 694,069
9,440 Goody's SA 286,539
71,500 Innscor Africa Ltd. 27,140
32,100 1 International Food
Industries Co. (Hostess) 380,064
120,000 PT Indofood Sukses Makmur Tbk 131,647
TOTAL 1,576,577
<CAPTION>
VALUE IN
SHARES U.S. DOLLARS
<C> <S> <C>
COMMON STOCKS-continued
FOREST PRODUCTS & PAPER-0.3%
8,800 Aracruz Celulose SA, ADR $ 179,300
INSURANCE-1.7%
10,000,000 Aksigorta AS 400,529
11,000 1 Enterprise Insurance Co. Ltd. 6,108
12,990 Interamerican Life
Insurance Co. SA 465,984
116,394 Swan Insurance Co., Ltd. 171,161
TOTAL 1,043,782
MERCHANDISING-3.8%
364,400 Big C Supercenter PCL 207,975
109,000 1 Cifra SA de CV, Class V 205,944
13,400 Companhia Brasileira de
Distribuicao Grupo Pao de
Acucar, ADR 357,613
800,000 Migros Turk TAS 328,144
61,100 Organizacion Soriana SA de
CV, Class B 282,120
1,500,000 PT Matahari Putra Prima Tbk 169,172
310,000 PT Tempo Scan Pacific Tbk 206,596
575,400 Profurn Ltd. 568,089
TOTAL 2,325,653
METALS - NON FERROUS-3.6%
221,942 1 Aluworks Ghana Ltd. 163,212
116,400 Billiton PLC 557,650
41,532 Cia de Minas Buenaventura
SA, Class B 342,777
17,500 Grupo Mexico SA, Class B 72,445
18,770 Impala Platinum Holdings Ltd. 683,540
42,200 KGHM Polska Miedz SA 231,002
53,971 Minsur SA 112,907
TOTAL 2,163,533
MINING-0.1%
483,461 Athi River Mining Ltd. 35,932
MISCELLANEOUS MATERIALS &
COMMODITIES-0.5%
5,250 Hellas Can, SA 278,472
<CAPTION>
VALUE IN
SHARES U.S. DOLLARS
<C> <S> <C>
COMMON STOCKS-continued
MULTI-INDUSTRY-4.1%
130,000 Alfa, SA, Class A $ 564,377
101,000 Citic Pacific Ltd. 273,746
1,280,000 Enka Holding Yatirim AS 370,610
364,000 First Philippine Holdings
Corp., Class B 297,415
130,000 Grupo Carso SA de CV 604,394
12,280,000 Haci Omer Sabanci Holding AS 397,035
TOTAL 2,507,577
REAL ESTATE-1.4%
200,000 China Resources
Enterprises Ltd. 252,366
153,000 1 Consorcio Ara SA de CV 204,628
1,820,000 1 Filinvest Land, Inc. 157,585
337,000 MBK Properties and
Development PCL 209,625
TOTAL 824,204
TELECOMMUNICATIONS-12.0%
150,000 1 China Telecom (Hong Kong) Ltd. 801,519
1,500 Dacom Corp. 375,243
20,300 1 MobiNil 692,832
950 1 Korea Thrunet Co. Ltd.,
Class A 52,844
78,900 Matav RT 478,799
20,000 PT Telekomunikasi
Indonesia, ADR 168,750
350 SK Telecom Co. Ltd. 808,842
32,000 Tele Norte Leste
Participacoes SA, ADR 570,000
17,800 Telecom Argentina Stet -
France Telecom SA, ADR 522,875
6,000 1 Telecomunicacoes
Brasileiras SA, ADR 544,500
13,000 Telefonos de Mexico SA,
Class L, ADR 1,203,313
71,000 1 Telekomunikacja Polska SA 383,649
6,210 Videsh Sanchar Nigam Ltd. 267,779
2,500 Zee Telefilms Ltd. 393,477
TOTAL 7,264,422
TEXTILES & APPAREL-0.1%
40,500 Madura Coats Ltd. 36,203
<CAPTION>
VALUE IN
SHARES U.S. DOLLARS
<C> <S> <C>
COMMON STOCKS-continued
TRANSPORTATION - AIRLINES-1.1%
100,000 Air Mauritius Ltd. $ 108,811
4,079,000 Kenya Airways Ltd. 426,062
100,000 Thai Airways International PCL 142,362
TOTAL 677,235
TRANSPORTATION - SHIPPING-0.3%
5,352 1 Hyundai Merchant Marine,
Rights 1,339
110,000 Malaysian International
Shipping BHD 163,553
TOTAL 164,892
UTILITIES - ELECTRICAL &
GAS-1.5%
69,300 Companhia Paranaense de
Energia-Copel, ADR 532,744
180,400 Eastern Water Resources
Development and Management
PCL 148,077
225,000 Kenya Power & Lighting Co.
Ltd. 250,084
TOTAL 930,905
WHOLESALE & INTERNATIONAL
TRADE-1.3%
198,825 Ferreyros SA 104,270
2,475,900 Interfresh Ltd. 87,499
488,174 Metro Cash and Carry Ltd. 459,848
21,830 1, 2 Press Corp., GDR 120,065
TOTAL 771,682
TOTAL COMMON STOCKS
(IDENTIFIED COST $47,173,626) 55,518,807
PREFERRED STOCKS-2.0%
ENERGY SOURCES-0.9%
2,700,000 Petroleo Brasileiro SA,
Preference 545,760
METALS - STEEL-0.6%
17,000,000 Gerdau SA, Preference 336,108
TELECOMMUNICATIONS-0.5%
6,300,000 Telesp Celular
Participacoes SA, Series B 305,197
TOTAL PREFERRED STOCKS
(IDENTIFIED COST $720,373) 1,187,065
<CAPTION>
FOREIGN
CURRENCY
PAR AMOUNT
OR PRINCIPAL VALUE IN
AMOUNT U.S. DOLLARS
<C> <S> <C>
CORPORATE BONDS-0.0%
METALS - STEEL-0.0%
10,100 Companhia Vale Do Rio Doce,
Conv. Deb., 12/31/1999 $ 53
MISCELLANEOUS MATERIALS &
COMMODITIES-0.0%
1,000 National Aluminum Co.
Ltd., Deb., 14.50%,
6/22/2005 230
TOTAL CORPORATE BONDS
(IDENTIFIED COST $79) 283
REPURCHASE AGREEMENT-5.0% 3
$ 3,000,000 J.P. Morgan & Co., Inc.,
5.71%, dated 11/30/1999,
due 12/1/1999 (at
amortized cost) 3,000,000
TOTAL INVESTMENTS
(IDENTIFIED COST
$50,894,078) 4 $ 59,706,155
</TABLE>
1 Non-income producing security.
2 Denotes a restricted security which is subject to restrictions on resale under
federal securities laws. These securities have been deemed liquid based upon
criteria approved by the fund's Board of Directors. At November 30, 1999, these
securities amounted to $1,309,640 which represents 2.2% of net assets.
3 The repurchase agreement is fully collateralized by U.S. government and/or
agency obligations based on market prices at the date of the portfolio. The
investment in the repurchase agreement is through participation in a joint
account with other Federated funds.
4 The cost of investments for federal tax purposes amounts to $51,375,757. The
net unrealized appreciation of investments on a federal tax basis amounts to
$8,330,398 which is comprised of $11,149,747 appreciation and $2,819,349
depreciation at November 30, 1999.
Note: The categories of investments are shown as a percentage of net assets
($60,571,093) at November 30, 1999.
The following acronyms and derivative terms are used throughout this portfolio:
ADR -American Depositary Receipt GDR -Global Depositary Receipt Rights
- -Derivatives which are convertible into equity upon the occurrence of certain
events.
Warrants -Derivatives which grant the owner the right to purchase the underlying
equity at a specified price.
See Notes which are an integral part of the Financial Statements
Statement of Assets and Liabilities
NOVEMBER 30, 1999
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS:
Total investments in
securities, at value
(identified cost
$50,894,078 and tax
cost $51,375,757) $ 59,706,155 Cash 1,516 Cash denominated in foreign currencies
(identified cost $700,955) 699,295 Income receivable 71,551 Receivable for
investments sold 2,750,277 Receivable for shares sold 51,328 Net receivable for
foreign currency exchange contracts 1,558 Deferred organizational costs 12,023
TOTAL ASSETS 63,293,703 LIABILITIES: Payable for investments purchased $
1,930,047 Payable for shares redeemed 514,160 Payable for taxes withheld 197,790
Accrued expenses 80,613 TOTAL LIABILITIES 2,722,610 Net assets for 4,960,862
shares outstanding $ 60,571,093 NET ASSETS CONSIST OF: Paid-in capital $
66,671,811 Net unrealized appreciation of investments and translation of assets
and liabilities in foreign currency 8,799,183 Accumulated net realized loss on
investments and foreign currency transactions (14,541,091) Accumulated net
operating loss (358,810) TOTAL NET ASSETS $ 60,571,093 NET ASSET VALUE, OFFERING
PRICE AND REDEMPTION PROCEEDS PER SHARE CLASS A SHARES: Net Asset Value Per
Share ($46,075,937 / 3,748,471 shares outstanding) $12.29 Offering Price Per
Share (100/94.50 of $12.29) 1 $13.01 Redemption Proceeds Per Share $12.29 CLASS
B SHARES: Net Asset Value Per Share ($12,457,735 / 1,042,133 shares outstanding)
$11.95 Offering Price Per Share $11.95 Redemption Proceeds Per Share (94.50/100
of $11.95) 1 $11.29 CLASS C SHARES: Net Asset Value Per Share ($2,037,421 /
170,258 shares outstanding) $11.97 Offering Price Per Share $11.97 Redemption
Proceeds Per Share (99.00/100 of $11.97) 1 $11.85
</TABLE>
1 See "What Do Shares Cost?" in the Prospectus.
See Notes which are an integral part of the Financial Statements
Statement of Operations
YEAR ENDED NOVEMBER 30, 1999
<TABLE>
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME:
Dividends (net of foreign
taxes withheld of $94,384) $ 1,168,996
Interest 79,751 TOTAL INCOME 1,248,747 EXPENSES:
Investment adviser fee $ 630,976 Administrative personnel and services fee
185,000 Custodian fees 296,866 Transfer and dividend disbursing agent fees and
expenses 156,837 Directors'/Trustees' fees 2,296 Auditing fees 21,765 Legal fees
7,982 Portfolio accounting fees 89,150 Distribution services fee- Class B Shares
84,354 Distribution services fee- Class C Shares 15,318 Shareholder services
fee- Class A Shares 92,957 Shareholder services fee- Class B Shares 28,118
Shareholder services fee- Class C Shares 5,106 Share registration costs 29,174
Printing and postage 47,361 Insurance premiums 1,349 Taxes 3,777 Miscellaneous
18,217 TOTAL EXPENSES 1,716,603 WAIVER: Waiver of investment adviser fee
(296,222) Net expenses 1,420,381 Net operating loss (171,634) REALIZED AND
UNREALIZED GAIN ON INVESTMENTS AND FOREIGN CURRENCY: Net realized gain on
investments and foreign currency transactions (net of foreign taxes withheld of
$657,021) 10,228,831 Net change in unrealized appreciation of investments and
translation of assets and liabilities in foreign currency 8,770,479 Net realized
and unrealized gain on investments and foreign currency 18,999,310 Change in net
assets resulting from operations $ 18,827,676
</TABLE>
See Notes which are an integral part of the Financial Statements
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED NOVEMBER 30 1999 1998
INCREASE (DECREASE) IN NET
ASSETS
OPERATIONS:
Net investment income (net operating loss) $ (171,634) $ 39,525 Net realized
gain (loss) on investments and foreign currency transactions ($10,253,629 and
$(20,651,562), respectively, as computed
for federal tax purposes) 10,228,831 (22,632,585) Net change in unrealized
appreciation of investments and translation of assets and liabilities in foreign
currency 8,770,479 3,529,082 CHANGE IN NET ASSETS RESULTING FROM OPERATIONS
18,827,676 (19,063,978) SHARE TRANSACTIONS: Proceeds from sale of shares
50,482,615 36,333,951 Cost of shares redeemed (53,497,435) (44,913,771) CHANGE
IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS (3,014,820) (8,579,820) Change
in net assets 15,812,856 (27,643,798) NET ASSETS: Beginning of period 44,758,237
72,402,035 End of period $ 60,571,093 $ 44,758,237
</TABLE>
See Notes which are an integral part of the Financial Statements
Financial Highlights-Class A Shares
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
YEAR ENDED NOVEMBER 30 1999 1998 1997 1996 1
NET ASSET VALUE, BEGINNING
OF PERIOD $ 8.40 $11.64 $11.10 $10.00
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income (net
operating loss) (0.01) 0.03 0.01 0.02
Net realized and
unrealized gain (loss) on
investments and foreign
currency 3.90 (3.27) 0.53 2 1.08
TOTAL FROM INVESTMENT
OPERATIONS 3.89 (3.24) 0.54 1.10
NET ASSET VALUE, END OF
PERIOD $12.29 $ 8.40 $11.64 $11.10
TOTAL RETURN 3 46.31% (28.02%) 4.86% 11.00%
RATIOS TO AVERAGE NET
ASSETS:
Expenses 2.61% 2.59% 2.14% 1.97% 4
Net investment income (net
operating loss) (0.15%) 0.30% 0.13% 0.31% 4
Expense
waiver/reimbursement 5 0.59% 0.25% 0.65% 3.34% 4
SUPPLEMENTAL DATA:
Net assets, end of period
(000 omitted) $46,076 $32,002 $48,525 $17,327
Portfolio turnover 289% 163% 102% 32%
</TABLE>
1 Reflects operations for the period from February 28, 1996 (date of initial
public investment) to November 30, 1996.
2 The amount shown in this caption for a share outstanding did not correspond
with the aggregate net realized and unrealized gain (loss) on investments and
foreign currency for the period ended due to the timing of sales and repurchases
of Fund shares in relation to fluctuating market values of the investments of
the Fund.
3 Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
4 Computed on an annualized basis.
5 This voluntary expense decrease is reflected in both the expense and the net
investment income (net operating loss) ratios shown above.
See Notes which are an integral part of the Financial Statements
Financial Highlights-Class B Shares
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
YEAR ENDED NOVEMBER 30 1999 1998 1997 1996 1
NET ASSET VALUE, BEGINNING
OF PERIOD $ 8.23 $11.50 $11.04 $10.00
INCOME FROM INVESTMENT
OPERATIONS:
Net operating loss (0.13) (0.08) (0.04) (0.02)
Net realized and
unrealized gain (loss) on
investments and foreign
currency 3.85 (3.19) 0.50 2 1.06
TOTAL FROM INVESTMENT
OPERATIONS 3.72 (3.27) 0.46 1.04
NET ASSET VALUE, END OF
PERIOD $11.95 $ 8.23 $11.50 $11.04
TOTAL RETURN 3 45.20% (28.56%) 4.17% 10.40%
RATIOS TO AVERAGE NET
ASSETS:
Expenses 3.36% 3.34% 2.89% 2.72% 4
Net operating loss (0.90%) (0.45%) (0.69%) (0.71%) 4
Expense
waiver/reimbursement 5 0.59% 0.25% 0.65% 3.34% 4
SUPPLEMENTAL DATA:
Net assets, end of period
(000 omitted) $12,458 $10,884 $19,951 $3,747
Portfolio turnover 289% 163% 102% 32%
</TABLE>
1 Reflects operations for the period from February 28, 1996 (date of initial
public investment) to November 30, 1996.
2 The amount shown in this caption for a share outstanding did not correspond
with the aggregate net realized and unrealized gain (loss) on investments and
foreign currency for the period ended due to the timing of sales and repurchases
of Fund shares in relation to fluctuating market values of the investments of
the Fund.
3 Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
4 Computed on an annualized basis.
5 This voluntary expense decrease is reflected in both the expense and the net
operating loss ratios shown above.
See Notes which are an integral part of the Financial Statements
Financial Highlights-Class C Shares
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
YEAR ENDED NOVEMBER 30 1999 1998 1997 1996 1
NET ASSET VALUE, BEGINNING
OF PERIOD $ 8.23 $11.50 $11.05 $10.00
INCOME FROM INVESTMENT
OPERATIONS:
Net operating loss (0.15) (0.09) (0.04) (0.02)
Net realized and
unrealized gain (loss) on
investments and foreign
currency 3.89 (3.18) 0.49 2 1.07
TOTAL FROM INVESTMENT
OPERATIONS 3.74 (3.27) 0.45 1.05
NET ASSET VALUE, END OF
PERIOD $11.97 $ 8.23 $11.50 $11.05
TOTAL RETURN 3 45.44% (28.62%) 4.07% 10.50%
RATIOS TO AVERAGE NET
ASSETS:
Expenses 3.36% 3.34% 2.89% 2.72% 4
Net operating loss (0.90%) (0.45%) (0.65%) (0.77%) 4
Expense
waiver/reimbursement 5 0.59% 0.25% 0.65% 3.34% 4
SUPPLEMENTAL DATA:
Net assets, end of period
(000 omitted) $2,037 $1,872 $3,943 $847
Portfolio turnover 289% 163% 102% 32%
</TABLE>
1 Reflects operations for the period from February 28, 1996 (date of initial
public investment) to November 30, 1996.
2 The amount shown in this caption for a share outstanding did not correspond
with the aggregate net realized and unrealized gain (loss) on investments and
foreign currency for the period ended due to the timing of sales and repurchases
of Fund shares in relation to fluctuating market values of the investments of
the Fund.
3 Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
4 Computed on an annualized basis.
5 This voluntary expense decrease is reflected in both the expense and the net
operating loss ratios shown above.
See Notes which are an integral part of the Financial Statements
Notes to Financial Statements
NOVEMBER 30, 1999
ORGANIZATION
World Investment Series, Inc. (the "Corporation") is registered under the
Investment Company Act of 1940, as amended (the "Act"), as an open-end,
management investment company. The Corporation consists of ten portfolios. The
financial statements included herein are only those of Federated Emerging
Markets Fund (the "Fund"), a diversified portfolio. The financial statements of
the other portfolios are presented separately. The assets of each portfolio are
segregated and a shareholder's interest is limited to the portfolio in which
shares are held.
The Fund offers three classes of shares: Class A Shares, Class B Shares, and
Class C Shares. The investment objective of the Fund is to provide long-term
growth of capital.
SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS
Foreign equity securities are valued according to the last sale price reported
in the market in which they are primarily traded. If no sale on a recognized
exchange is reported or if the security is traded over-the- counter, the foreign
securities are valued at the mean between the last closing bid and asked prices.
Short-term securities are valued at the prices provided by an independent
pricing service. However, short-term securities with remaining maturity of 60
days or less at the time of purchase may be valued at amortized cost, which
approximates fair market value.
REPURCHASE AGREEMENTS
It is the policy of the Fund to require the custodian bank to take possession,
to have legally segregated in the Federal Reserve Book Entry System, or to have
segregated within the custodian bank's vault, all securities held as collateral
under repurchase agreement transactions. Additionally, procedures have been
established by the Fund to monitor, on a daily basis, the market value of each
repurchase agreement's collateral to ensure that the value of collateral at
least equals the repurchase price to be paid under the repurchase agreement.
The Fund will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed by
the Fund's adviser to be creditworthy pursuant to the guidelines and/or
standards reviewed or established by the Board of Directors (the "Directors").
Risks may arise from the potential inability of counterparties to honor the
terms of the repurchase agreement. Accordingly, the Fund could receive less than
the repurchase price on the sale of collateral securities. The Fund, along with
other affiliated investment companies, may utilize a joint trading account for
the purpose of entering into one or more repurchase agreements.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS
Interest income and expenses are accrued daily. Bond premium and discount, if
applicable, are amortized as required by the Internal Revenue Code of 1986, as
amended (the "Code"). Dividend income and distributions to shareholders are
recorded on the ex-dividend date. Non-cash dividends included in dividend
income, if any, are recorded at fair value. The Fund offers multiple classes of
shares, which differ in their respective distribution and service fees. All
shareholders bear the common expenses of the Fund based on average daily net
assets of each class, without distinction between share classes. Dividends are
declared separately for each class. No class has preferential dividend rights;
differences in per share dividend rates are generally due to differences in
separate class expenses.
Income and capital gain distributions are determined in accordance with income
tax regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments for foreign currency
transactions. The following reclassifications have been made to the financial
statements.
<TABLE>
<CAPTION>
INCREASE (DECREASE)
ACCUMULATED NET
REALIZED LOSS ON
INVESTMENTS AND
FOREIGN CURRENCY ACCUMULATED NET
PAID-IN CAPITAL TRANSACTIONS OPERATING LOSS
<S> <C> <C>
$(448,892) $632,062 $(183,170)
</TABLE>
Net investment income, net realized gains (losses) and net assets were not
affected by this reclassification.
FEDERAL TAXES
It is the Fund's policy to comply with the provisions of the Code applicable to
regulated investment companies and to distribute to shareholders each year
substantially all of its income. Accordingly, no provision for federal tax is
necessary.
Withholding taxes on foreign interest and dividends have been provided for in
accordance with the applicable country's tax rules and rates.
At November 30, 1999, the Fund, for federal tax purposes, had a capital loss
carryforward of $14,046,073, which will reduce the Fund's taxable income arising
from future net realized gain on investments, if any, to the extent permitted by
the Code, and thus will reduce the amount of the distributions to shareholders
which would otherwise be necessary to relieve the Fund of any liability for
federal tax. Pursuant to the Code, such capital loss carryforward will expire as
follows:
<TABLE>
<CAPTION>
EXPIRATION YEAR EXPIRATION AMOUNT
<S> <C>
2003 $ 1,565,048 1
2006 $12,481,025
</TABLE>
1 Capital loss carryforward is attributable to the acquisition of the assets of
The Blanchard Worldwide Emerging Market Fund and is limited to $391,262 that can
be used in future periods to offset income arising from net realized gains.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
The Fund may engage in when-issued or delayed delivery transactions. The Fund
records when-issued securities on the trade date and maintains security
positions such that sufficient liquid assets will be available to make payment
for the securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date. Losses may occur on these transactions due to changes in market
conditions or the failure of counterparties to perform under the contract.
FOREIGN EXCHANGE CONTRACTS
The Fund may enter into foreign currency commitments for the delayed delivery of
securities or foreign currency exchange transactions. The Fund may enter into
foreign currency contract transactions to protect assets against adverse changes
in foreign currency exchange rates or exchange control regulations. Purchased
contracts are used to acquire exposure to foreign currencies; whereas contracts
to sell are used to hedge the Fund's securities against currency fluctuations.
Risks may arise upon entering these transactions from the potential inability of
counterparties to meet the terms of their commitments and from unanticipated
movements in security prices or foreign exchange rates. The foreign currency
transactions are adjusted by the daily exchange rate of the underlying currency
and any gains or losses are recorded for financial statement purposes as
unrealized until the settlement date.
At November 30, 1999, the Fund had outstanding foreign currency commitments set
forth below:
<TABLE>
<CAPTION>
IN EXCHANGE CONTRACTS UNREALIZED
SETTLEMENT DATE CONTRACTS TO DELIVER FOR AT VALUE APPRECIATION
CONTRACTS SOLD:
<S> <C> <C> <C> <C>
12/1/1999 19,014 British Pound Sterling $30,584 $30,321 $263
12/2/1999 21,208 British Pound Sterling 34,113 33,819 294
12/2/1999 731,490,470 Indonesian Rupiah 100,895 99,998 897
12/3/1999 23,892 British Pound Sterling 38,204 38,100 104
NET UNREALIZED APPRECIATION ON FOREIGN EXCHANGE CONTRACTS: $1,558
</TABLE>
FOREIGN CURRENCY TRANSLATION
The accounting records of the Fund are maintained in U.S. dollars. All assets
and liabilities denominated in foreign currencies ("FC") are translated into
U.S. dollars based on the rates of exchange of such currencies against U.S.
dollars on the date of valuation. Purchases and sales of securities, income and
expenses are translated at the rate of exchange quoted on the respective date
that such transactions are recorded. The Fund does not isolate that portion of
the results of operations resulting from changes in foreign exchange rates on
investments from the fluctuations arising from changes in market prices of
securities held. Such fluctuations are included with the net realized and
unrealized gain or loss from investments.
Reported net realized foreign exchange gains or losses arise from sales of
portfolio securities, sales and maturities of short-term securities, sales of
FCs, currency gains or losses realized between the trade and settlement dates on
securities transactions, the difference between the amounts of dividends,
interest, and foreign withholding taxes recorded on the Fund's books, and the
U.S. dollar equivalent of the amounts actually received or paid. Net unrealized
foreign exchange gains and losses arise from changes in the value of assets and
liabilities other than investments in securities at fiscal year end, resulting
from changes in the exchange rate.
RESTRICTED SECURITIES
Restricted securities are securities that may only be resold upon registration
under federal securities laws or in transactions exempt from such registration.
In some cases, the issuer of restricted securities has agreed to register such
securities for resale, at the issuer's expense either upon demand by the Fund or
in connection with another registered offering of the securities. Many
restricted securities may be resold in the secondary market in transactions
exempt from registration. Such restricted securities may be determined to be
liquid under criteria established by the Directors. The Fund will not incur any
registration costs upon such resales. The Fund's restricted securities are
valued at the price provided by dealers in the secondary market or, if no market
prices are available, at the fair value as determined by the Fund's pricing
committee.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts of assets, liabilities, expenses and revenues reported in the
financial statements. Actual results could differ from those estimated.
OTHER
Investment transactions are accounted for on a trade date basis.
CAPITAL STOCK
At November 30, 1999, par value shares ($0.001 per share) authorized were as
follows:
<TABLE>
<CAPTION>
NUMBER OF PAR VALUE
CLASS NAME CAPITAL STOCK AUTHORIZED
<S> <C> Class A Shares 100,000,000 Class B Shares 100,000,000 Class C Shares
100,000,000 TOTAL 300,000,000
</TABLE>
Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30 1999 1998
CLASS A SHARES: SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
Shares sold 4,209,107 $ 44,005,028 3,094,151 $ 32,142,225
Shares redeemed (4,270,739) (43,904,255) (3,449,888) (35,473,078)
NET CHANGE RESULTING FROM
CLASS A SHARE
TRANSACTIONS (61,632) $ 100,773 (355,737) $ (3,330,853)
<CAPTION>
YEAR ENDED NOVEMBER 30 1999 1998
CLASS B SHARES: SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
Shares sold 561,635 $ 5,909,875 306,994 $ 3,184,513
Shares redeemed (842,656) (8,437,675) (717,998) (7,271,596)
NET CHANGE RESULTING FROM
CLASS B SHARE
TRANSACTIONS (281,021) $ (2,527,800) (411,004) $ (4,087,083)
<CAPTION>
YEAR ENDED NOVEMBER 30 1999 1998
CLASS C SHARES: SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
Shares sold 57,391 $ 567,712 94,488 $ 1,007,213
Shares redeemed (114,622) (1,155,505) (210,000) (2,169,097)
NET CHANGE RESULTING FROM
CLASS C SHARE
TRANSACTIONS (57,231) $ (587,793) (115,512) $ (1,161,884)
NET CHANGE RESULTING FROM
SHARE TRANSACTIONS (399,884) $ (3,014,820) (882,253) $ (8,579,820)
</TABLE>
INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISER FEE
Federated Global Investment Management Corp., the Fund's investment adviser (the
"Adviser"), receives for its services an annual investment Adviser fee equal to
1.25% of the Fund's average daily net assets. The Adviser may voluntarily choose
to waive any portion of its fee. The Adviser can modify or terminate this
voluntary waiver at any time at its sole discretion.
ADMINISTRATIVE FEE
Federated Services Company ("FServ"), under the Administrative Services
Agreement, provides the Fund with administrative personnel and services. The fee
paid to FServ is based on a scale that ranges from 0.15% to 0.075% of the
average aggregate daily net assets of all funds advised by subsidiaries of
Federated Investors, Inc., subject to a $125,000 minimum per portfolio and
$30,000 per each additional class.
DISTRIBUTION SERVICES FEE
The Fund has adopted a Distribution Plan (the "Plan") pursuant to Rule 12b-1
under the Act. Under the terms of the Plan, the Fund will compensate Federated
Securities Corp. ("FSC"), the principal distributor, from the net assets of the
Fund to finance activities intended to result in the sale of the Fund's Class A
Shares, Class B Shares, and Class C Shares. The Plan provides that the Fund may
incur distribution expenses according to the following schedule annually, to
compensate FSC.
<TABLE>
<CAPTION>
PERCENTAGE OF AVERAGE
SHARE CLASS NAME DAILY NET ASSETS OF CLASS
<S> <C>
Class A Shares 0.25% Class B Shares 0.75% Class C Shares 0.75%
</TABLE>
Class A Shares did not incur a distribution services fee for the fiscal year
ended November 30, 1999, and has no present intention of paying or accruing a
distribution services fee.
SHAREHOLDER SERVICES FEE
Under the terms of a Shareholder Services Agreement with Federated Shareholder
Services Company ("FSSC"), the Fund will pay FSSC up to 0.25% of average daily
net assets of the Fund for the period. The fee paid to FSSC is used to finance
certain services for shareholders and to maintain shareholder accounts.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES
FServ, through its subsidiary FSSC, serves as transfer and dividend disbursing
agent for the Fund. The fee paid to FSSC is based on the size, type, and number
of accounts and transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES
FServ maintains the Fund's accounting records for which it receives a fee. The
fee is based on the level of the Fund's average daily net assets for the period,
plus out-of-pocket expenses.
ORGANIZATIONAL EXPENSES
Organizational expenses of $48,748 were borne initially by the Adviser. The Fund
has reimbursed the Adviser for these expenses. These expenses have been deferred
and are being amortized over the five-year period following the Fund's effective
date. For the fiscal year ended November 30, 1999, the Fund expensed $15,415 of
organizational expenses.
GENERAL
Certain of the Officers and Directors of the Corporation are Officers and
Directors or Trustees of the above companies.
INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities (and in-
kind contributions), for the fiscal year ended November 30, 1999, were as
follows:
<TABLE>
<CAPTION>
<S> <C>
Purchases $138,630,922
Sales $149,455,129
</TABLE>
CONCENTRATION OF CREDIT RISK
The Fund invests in securities of non-U.S. issuers. The political or economic
developments within a particular country or region may have an adverse effect on
the ability of domiciled issuers to meet their obligations. Additionally,
political or economic developments may have an effect on the liquidity and
volatility of portfolio securities and currency holdings.
LINE OF CREDIT AGREEMENT
Effective November 29, 1999, the Corporation entered into a $75,000,000
unsecured committed revolving line of credit ("LOC") agreement with State Street
Corporation. The LOC was made available for extraordinary or emergency purposes,
primarily for financing redemption payments. Borrowings are charged interest at
a rate of 0.50% over the Federal Funds Rate. The LOC includes a commitment fee
of 0.08% per annum on the daily unused portion. The Corporation did not make any
borrowing under the LOC during the fiscal year ended November 30, 1999.
SUBSEQUENT EVENT (UNAUDITED)
An N-14 filing occurred on December 14, 1999 and a proxy has been mailed to
existing shareholders in the Federated Latin American Growth Fund requesting the
approval of a merger of the Federated Latin American Growth Fund into the
Federated Emerging Markets Fund. The results of shareholder voting are expected
by February 11, 2000.
Report of Ernst & Young LLP, Independent Auditors
TO THE BOARD OF DIRECTORS OF WORLD INVESTMENT SERIES, INC. AND
SHAREHOLDERS OF FEDERATED EMERGING MARKETS FUND:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments of Federated Emerging Markets Fund (the Fund) (one
of the portfolios constituting World Investment Series, Inc.) as of November 30,
1999, and the related statement of operations for the year then ended, the
statement of changes in net assets for each of the two years in the period then
ended, and financial highlights for each of the periods presented therein. These
financial statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned as of November 30, 1999, by correspondence with the custodian and brokers
or other appropriate auditing procedures where replies from brokers were not
received. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Federated Emerging Markets Fund of World Investment Series, Inc., at November
30, 1999, and the results of its operations for the year then ended, the changes
in its net assets for each of the two years in the period then ended, and the
financial highlights for the periods presented therein, in conformity with
accounting principles generally accepted in the United States.
[Graphic]
Boston, Massachusetts
January 21, 2000
Directors
JOHN F. DONAHUE
THOMAS G. BIGLEY
JOHN T. CONROY, JR.
NICHOLAS P. CONSTANTAKIS
WILLIAM J. COPELAND
LAWRENCE D. ELLIS, M.D.
RICHARD B. FISHER
EDWARD L. FLAHERTY, JR., ESQ.
PETER E. MADDEN
CHARLES F. MANSFIELD, JR.
JOHN E. MURRAY, JR., J.D., S.J.D.
WESLEY W. POSVAR
MARJORIE P. SMUTS
Officers
JOHN F. DONAHUE
Chairman
RICHARD B. FISHER
President
J. CHRISTOPHER DONAHUE
Executive Vice President
EDWARD C. GONZALES
Executive Vice President
JOHN W. MCGONIGLE
Executive Vice President and Secretary
HENRY A. FRANTZEN
Chief Investment Officer
RICHARD J. THOMAS
Treasurer
JAMES O. PERRY
Assistant Secretary
Mutual funds are not bank deposits or obligations, are not guaranteed by any
bank, and are not insured or guaranteed by the U.S. government, the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other
government agency. Investment in mutual funds involves investment risk,
including the possible loss of principal.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the fund's prospectus which contains facts concerning
its objective and policies, management fees, expenses, and other information.
[Graphic]
Federated
World-Class Investment Manager
ANNUAL REPORT
AS OF NOVEMBER 30, 1999
Federated Emerging Markets Fund
Established 1996
4TH ANNUAL REPORT
[Graphic]
Federated
Federated Emerging Markets Fund
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
1-800-341-7400
WWW.FEDERATEDINVESTORS.COM
Federated Securities Corp., Distributor
Cusip 981487804
Cusip 981487887
Cusip 981487879
G01967-01 (1/00)
[Graphic]
Livelink (r) Version 8.0.2, Copyright (c) 1995-1998 Open Text Inc. All
rights reserved.
[Graphic]
RICHARD B. FISHER
President
Federated Global Financial Services Fund
President's Message
Dear Fellow Shareholder:
Federated Global Financial Services Fund was created in 1998, and I am pleased
to present its second Annual Report. As of November 30, 1999, the fund's net
assets of $16.9 million were invested in over 100 issues, of which 54% was
invested in domestic securities and 48% was invested in securities outside of
the United States. This fund offers investors the opportunity for capital
appreciation and dividend growth by investing in financial services
companies-including banks, insurance companies, brokerage firms and asset
management companies-across as many as five regional markets, including the
United States, Asia, Europe, Latin America and Eastern Europe. The fund may be
ideal for investors seeking some international exposure but not willing to take
the risks associated with investing exclusively outside the United States. 1
This report covers the 12-month reporting period from December 1, 1998 through
November 30, 1999. It begins with an interview with the fund's portfolio
manager, Marc Halperin, Vice President of Federated Global Investment Management
Corp. Following his discussion which covers the fund's objective and strategy
and market conditions, are two additional items of shareholder interest. First
is a complete listing of the fund's investments, and second is the publication
of the fund's financial statements.
Federated Global Financial Services Fund offers investors a unique, timely
opportunity to invest in a sector that is evolving and experiencing rapid
growth-and the majority of financial services are actually based outside of the
United States.
The fund's performance has been positive over its past fiscal year, as it
outpaced the return of the average global financial services fund. Of course, it
is important to remember that the true measure of this fund's performance is
clearly in years rather than months. There will be periods of short-term
fluctuation and negative as well as positive returns.
1 Foreign investing involves special risks including currency risk, increased
volatility of foreign securities, and differences in auditing and other
financial standards. In addition, funds whose investments are concentrated in a
specific industry may be subject to a higher degree of market risk than funds
whose investments are diversified.
Individual share class total return performance for the 12-month reporting
period, including realized gains, is as follows: 2
<TABLE>
<CAPTION>
TOTAL RETURN CAPITAL GAINS NET ASSET VALUE INCREASE
<S> <C> <C> <C>
Class A Shares 10.87% $0.08 $11.99 to $13.21 = 10.18%
Class B Shares 9.96% $0.08 $11.98 to $13.09 = 9.27%
Class C Shares 10.13% $0.08 $11.98 to $13.11 = 9.43%
</TABLE>
I recommend adding to your account on a regular basis to take advantage of price
fluctuations and to use the dollar-cost averaging method of investing. 3 By
investing the same amount regularly, you buy more fund shares when prices are
low and fewer when prices are high. Adding to your account is a convenient,
painless way to "pay yourself first" and enjoy the benefit of compounding. You
may add to your investment account at any time and thus increase the number of
shares you own for potential future income.
I would also like to point out that the U.S. market's performance, although very
positive, has been surpassed by the market returns in many other nations. In
Federated Global Financial Services Fund, you have an opportunity to increase
your international exposure and long-term capital appreciation.
Thank you for your investment in Federated Global Financial Services Fund and
for the confidence you have placed in our firm.
Sincerely,
[Graphic]
Richard B. Fisher
President
January 15, 2000
2 Performance quoted is based on net asset value, represents past performance
and is no guarantee of future results. Investment return and principal value
will fluctuate so that an investor's shares, when redeemed, may be worth more or
less than their original cost. Total returns for the period, based on offering
price (i.e., less any applicable sales charge), for Class A, B and C Shares were
4.76%, 4.46%, and 9.13%, respectively.
3 Systematic investing does not assure a profit or protect against loss in
declining markets. Because dollar-cost averaging involves continuous investment,
regardless of fluctuating price levels, investors should consider their
financial ability to continue purchases during periods of low price levels.
[Graphic]
MARC HALPERIN
Vice President
Federated Global Investment Management Corp.
Investment Review
WHAT IS YOUR REVIEW OF THE GLOBAL FINANCIAL SERVICES MARKETPLACE DURING THE
FUND'S FISCAL YEAR?
Rising interest rates in the United States served to dampen the performance of
the financial services sector globally. Nevertheless, the economic recovery in
Southeast Asia continued with the region's two largest economies, Hong Kong and
Singapore, posting strong market gains. Japan also moved briskly out of its
recession, spurred on by an unprecedented campaign of restructuring by Japanese
banks and corporations. After three years of outperformance and a dramatic
period of restructuring and consolidation, European financial services generally
underperformed their local indexes.
HOW DID THE FUND PERFORM OVER THE 12-MONTH REPORTING PERIOD COMPARED TO ITS
BENCHMARK?
For the fiscal year ended November 30, 1999, the fund's total returns, based on
net asset value, for Class A, B and C Shares were 10.87%, 9.96% and 10.13%,
respectively. 1 These returns far outpaced the 3.95% total return of the 64
global financial services funds tracked by Lipper Analytical Services, Inc.2 The
fund's benchmark, the Morgan Stanley Capital International All Country World
Finance Index, produced a total return of 7.65%.3
1 Performance quoted represents past performance and is no guarantee of future
results. Investment return and principal value will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than their original
cost. Total returns for the period, based on offering price (i.e., less any
applicable sales charge), for Class A, B and C Shares were 4.76%, 4.46% and
9.13%, respectively.
2 Lipper figures represent the average of the total returns reported by all of
the mutual funds designated by Lipper Analytical Services, Inc. as falling into
the category indicated. These figures do not take sales charges into account.
3 The Morgan Stanley Capital International All Country World Finance Index is a
medium-cap to large-cap unmanaged index comprising the banking, financial
services, insurance and real estate industries. It is diversified across 46
countries and more than 400 companies. All values are expressed in U.S. dollars.
Investments cannot be made in an index.
HOW ARE THE FUND'S HOLDINGS SELECTED?
The fund maintains a diversified portfolio of financial services sector stocks.
The fund invests in banks, insurance, securities/brokerage, consumer finance and
asset management companies around the world. Stock selection is focused on
fundamental, bottom-up research. We prefer companies with strong business
franchises and sound asset quality with reputable management. The bias in the
portfolio is for stocks with a market capitalization of $1 billion and above,
although we may hold smaller companies that meet our investment criteria.
WHAT WERE THE FUND'S TOP TEN HOLDINGS AS OF NOVEMBER 30, 1999?
<TABLE>
<CAPTION>
PERCENTAGE OF
NAME COUNTRY NET ASSETS
<S> <C> <C>
Citigroup, Inc. United States 2.32%
HSBC Holdings PLC Hong Kong 2.09%
Wells Fargo & Co. United States 2.08%
Mellon Financial Corp. United States 1.94%
Cheung Kong Hong Kong 1.73%
Sun Hung Kai Properties Ltd. Hong Kong 1.73%
Standard Chartered PLC United Kingdom 1.73%
Wharf Holdings Ltd. Hong Kong 1.71%
Washington Mutual, Inc. United States 1.71%
SouthTrust Corp. United States 1.59%
TOTAL 18.63%
</TABLE>
WHAT WERE THE FUND'S REGIONAL BREAKDOWNS AND COUNTRY ALLOCATIONS AS OF NOVEMBER
30, 1999?
<TABLE>
<CAPTION>
PERCENTAGE OF
REGION NET ASSETS
<S> <C>
United States & Canada 54.1%
Asia Pacific 29.4%
Europe 15.3%
Australia 2.7%
Middle East 0.3%
<CAPTION>
PERCENTAGE OF
COUNTRY NET ASSETS
<S> <C>
United States 53.5%
Hong Kong 12.8%
Japan 9.1%
United Kingdom 5.1%
Singapore 4.5%
France 4.1%
Australia 2.7%
Germany 2.0%
Indonesia 1.8%
Italy 1.0%
Austria 0.8%
Spain 0.8%
Thailand 0.8%
Canada 0.6%
Netherlands 0.6%
Switzerland 0.6%
Ireland 0.3%
Israel 0.3%
Taiwan, Province of China 0.3%
Korea, Republic of 0.1%
</TABLE>
WHAT WAS THE STRATEGY BEHIND THE FUND'S REGIONAL ALLOCATIONS?
European financial stocks are now, in our view, fully valued. Therefore, we are
overweighted in both the United States and Asia, and underweighted in Europe.
WHAT WERE SOME OF THE FUND'S RECENT PORTFOLIO ADDITIONS?
Our recent purchases included the following:
DBS GROUP HOLDINGS (0.77% of net assets): This is the largest bank in Singapore,
with a major presence in Thailand, Hong Kong and the Philippines. DBS recently
hired an international management team and should benefit from improving
economies across the Asian region. With improving asset quality and lower loan
loss provisions, earnings are set to accelerate.
FIRST VIRGINIA BANK, INC. (1.33% of net assets): As the largest independent
bank in the Washington, DC area, First Virginia has an outstanding balance
sheet and is massively overcapitalized (Tier 1 Capital 12.1%). It has
extremely attractive valuations as follows: price to earnings ratio: 13X;
price to book value: 1.88X; current dividend yield: 3.70%.
AS WE ENTER THE YEAR 2000, WHAT IS YOUR OUTLOOK FOR GLOBAL FINANCIAL SERVICES
STOCKS AND YOUR CURRENT STRATEGY?
We remain positive about financial services stocks in the year 2000. The United
States banking industry still has too much capital, too many people, and too
much capacity. Consolidation, therefore, is inevitable. The outlook for Asia is
also upbeat. We expect the economic recovery in that region to continue with the
financial institutions becoming a major beneficiary. Banks should continue to
see their nonperforming loans fall, provisioning levels decline, and earnings
and fee-based businesses accelerate.
Last Meeting of Shareholders
A Special Meeting of shareholders of Federated Global Financial Services Fund
(the "Fund"), a portfolio of World Investment Series, Inc., was held on December
17, 1999. On September 7, 1999, the record date for shareholders voting at the
meeting, there were 1,156,477 total outstanding shares.
The following items were considered by shareholders and the results of their
voting were as follows:
AGENDA ITEM 1
Elected Directors: 1
<TABLE>
<CAPTION>
SHARES SHARES
VOTED FOR WITHHELD
<S> <C> <C>
Thomas G. Bigley 861,346 8,848
Nicholas P. Constantakis 861,346 8,848
John F. Cunningham 861,346 8,848
J. Christopher Donahue 861,180 9,014
Charles F. Mansfield, Jr. 861,346 8,848
John E. Murray, Jr., J.D., S.J.D. 861,346 8,848
John S. Walsh 861,180 9,014
</TABLE>
1 The following Directors continued their terms as Directors: John F.
Donahue, John T. Conroy, William J. Copeland, Lawrence D. Ellis, M.D.,
Peter E. Madden and Marjorie P. Smuts.
Director elections will become effective January 1, 2000.
AGENDA ITEM 2
Made changes to the Fund's fundamental investment policies:
(a) Amended the Fund's fundamental investment policy regarding borrowing money
and issuing senior securities.
<TABLE>
<CAPTION>
SHARES ABSTENTIONS
VOTED AND BROKER
SHARES VOTED FOR AGAINST NON-VOTES
<S> <C> <C>
339,044 7,882 523,268
</TABLE>
(b) Amended the Fund's fundamental investment policy regarding investments
in real estate.
<TABLE>
<CAPTION>
SHARES ABSTENTIONS
VOTED AND BROKER
SHARES VOTED FOR AGAINST NON-VOTES
<S> <C> <C>
334,846 8,251 527,097
</TABLE>
(c) Amended the Fund's fundamental investment policy regarding investments
in commodities.
<TABLE>
<CAPTION>
SHARES ABSTENTIONS
VOTED AND BROKER
SHARES VOTED FOR AGAINST NON-VOTES
<S> <C> <C>
333,779 14,379 522,036
</TABLE>
(d) Amended the Fund's fundamental investment policy regarding underwriting
securities.
<TABLE>
<CAPTION>
SHARES ABSTENTIONS
VOTED AND BROKER
SHARES VOTED FOR AGAINST NON-VOTES
<S> <C> <C>
337,892 7,311 524,991
</TABLE>
(e) Amended the Fund's fundamental investment policy regarding lending
assets.
<TABLE>
<CAPTION>
SHARES ABSTENTIONS
VOTED AND BROKER
SHARES VOTED FOR AGAINST NON-VOTES
<S> <C> <C>
342,701 13,015 514,478
</TABLE>
(f) Amended the Fund's fundamental investment policy regarding concentration of
the Fund's investments in the securities of companies in the same industry.
<TABLE>
<CAPTION>
SHARES ABSTENTIONS
VOTED AND BROKER
SHARES VOTED FOR AGAINST NON-VOTES
<S> <C> <C>
338,770 7,955 523,469
</TABLE>
(g) Amended and made non-fundamental, the Fund's fundamental investment policy
regarding buying securities on margin.
<TABLE>
<CAPTION>
SHARES ABSTENTIONS
VOTED AND BROKER
SHARES VOTED FOR AGAINST NON-VOTES
<S> <C> <C>
327,663 15,946 526,585
</TABLE>
(h) Amended and made non-fundamental, the Fund's fundamental investment policy
regarding pledging assets.
<TABLE>
<CAPTION>
SHARES ABSTENTIONS
VOTED AND BROKER
SHARES VOTED FOR AGAINST NON-VOTES
<S> <C> <C>
329,600 14,183 526,411
</TABLE>
AGENDA ITEM 3
Eliminated the Fund's fundamental investment policy regarding selling securities
short.
<TABLE>
<CAPTION>
SHARES ABSTENTIONS
VOTED AND BROKER
SHARES VOTED FOR AGAINST NON-VOTES
<S> <C> <C>
331,403 18,439 520,352
</TABLE>
AGENDA ITEM 4
Approved an amendment to the Articles of Incorporation of World Investment
Series, Inc. to permit the Board of Directors to liquidate assets of a series or
class without seeking shareholder approval to the extent permitted under
Maryland law.
<TABLE>
<CAPTION>
SHARES ABSTENTIONS
VOTED AND BROKER
SHARES VOTED FOR AGAINST NON-VOTES
<S> <C> <C>
329,464 27,480 513,250
</TABLE>
Federated Global Financial Services Fund - Class A Shares
GROWTH OF A $10,000 INVESTMENT
The graph below illustrates the hypothetical investment of $10,000 1 in the
Federated Global Financial Services Fund (Class A Shares) (the "Fund") from
September 30, 1998 (start of performance), to November 30, 1999, compared to the
Morgan Stanley Capital International All Country World Finance Index (MSCI-WFI).
2
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS 3 FOR THE PERIOD ENDED NOVEMBER 30, 1999
<S> <C>
1 Year 4.76%
Start of Performance (9/30/98) 21.55%
</TABLE>
[Graphic representation omitted. Please see Appendix A17.]
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE PERFORMANCE. YOUR INVESTMENT RETURN
AND PRINCIPAL VALUE WILL FLUCTUATE SO WHEN SHARES ARE REDEEMED, THEY MAY BE
WORTH MORE OR LESS THAN THEIR ORIGINAL COST. MUTUAL FUNDS ARE NOT OBLIGATIONS OF
OR GUARANTEED BY ANY BANK AND ARE NOT FEDERALLY INSURED.
1 Represents a hypothetical investment of $10,000 in the Fund after deducting
the maximum sales charge of 5.50% ($10,000 investment minus $550 sales charge =
$9,450). The Fund's performance assumes the reinvestment of all dividends and
distributions. The MSCI-WFI has been adjusted to reflect reinvestment of
dividends on securities in the index.
2 The MSCI-WFI is not adjusted to reflect sales charges, expenses, or other fees
that the Securities and Exchange Commission requires to be reflected in the
Fund's performance. The index is unmanaged.
3 Total return quoted reflects all applicable sales charges.
Federated Global Financial Services Fund - Class B Shares
GROWTH OF A $10,000 INVESTMENT
The graph below illustrates the hypothetical investment of $10,000 1 in the
Federated Global Financial Services Fund (Class B Shares) (the "Fund") from
September 30, 1998 (start of performance), to November 30, 1999, compared to the
Morgan Stanley Capital International All Country World Finance Index
(MSCI-WFI).2
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS 3 FOR THE PERIOD ENDED NOVEMBER 30, 1999
<S> <C>
1 Year 4.46%
Start of Performance (9/30/98) 22.65%
</TABLE>
[Graphic representation omitted. Please see Appendix A18.]
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE PERFORMANCE. YOUR INVESTMENT RETURN
AND PRINCIPAL VALUE WILL FLUCTUATE SO WHEN SHARES ARE REDEEMED, THEY MAY BE
WORTH MORE OR LESS THAN THEIR ORIGINAL COST. MUTUAL FUNDS ARE NOT OBLIGATIONS OF
OR GUARANTEED BY ANY BANK AND ARE NOT FEDERALLY INSURED.
1 Represents a hypothetical investment of $10,000 in the Fund. The ending value
of the Fund reflects a contingent deferred sales charge of 4.75% on any
redemption less than two years from the purchase date. The maximum contingent
deferred sales charge is 5.50% on any redemption less than one year from the
purchase date. The Fund's performance assumes the reinvestment of all dividends
and distributions. The MSCI-WFI has been adjusted to reflect reinvestment of
dividends on securities in the index.
2 The MSCI-WFI is not adjusted to reflect sales charges, expenses, or other fees
that the Securities and Exchange Commission requires to be reflected in the
Fund's performance. The index is unmanaged.
3 Total return quoted reflects all applicable sales charges and contingent
deferred sales charges.
Federated Global Financial Services Fund - Class C Shares
GROWTH OF A $10,000 INVESTMENT
The graph below illustrates the hypothetical investment of $10,000 1 in the
Federated Global Financial Services Fund (Class C Shares) (the "Fund") from
September 30, 1998 (start of performance), to November 30, 1999, compared to the
Morgan Stanley Capital International All Country World Finance Index
(MSCI-WFI).2
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS 3 FOR THE PERIOD ENDED NOVEMBER 30, 1999
<S> <C>
1 Year 9.13%
Start of Performance (9/30/98) 26.73%
</TABLE>
[Graphic representation omitted. Please see Appendix A19.]
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE PERFORMANCE. YOUR INVESTMENT RETURN
AND PRINCIPAL VALUE WILL FLUCTUATE SO WHEN SHARES ARE REDEEMED, THEY MAY BE
WORTH MORE OR LESS THAN THEIR ORIGINAL COST. MUTUAL FUNDS ARE NOT OBLIGATIONS OF
OR GUARANTEED BY ANY BANK AND ARE NOT FEDERALLY INSURED.
1 Represents a hypothetical investment of $10,000 in the Fund. A 1.00%
contingent deferred sales charge would be applied on any redemption less than
one year from the purchase date. The Fund's performance assumes the reinvestment
of all dividends and distributions. The MSCI-WFI has been adjusted to reflect
reinvestment of dividends on securities in the index.
2 The MSCI-WFI is not adjusted to reflect sales charges, expenses, or other fees
that the Securities and Exchange Commission requires to be reflected in the
Fund's performance. The index is unmanaged.
3 Total return quoted reflects all applicable sales charges and contingent
deferred sales charges.
Portfolio of Investments
NOVEMBER 30, 1999
<TABLE>
<CAPTION>
VALUE IN
SHARES U.S. DOLLARS
<S> <C> <C>
COMMON STOCKS-92.7%
APPLIANCES & HOUSEHOLD
DURABLES-1.8%
4,000 Sharp Corp. $ 81,929
1,200 Sony Corp. 222,801
TOTAL 304,730
BANKING-27.6%
5,421 Amsouth Bancorporation 122,311
20,422 Australia & New Zealand
Banking Group Ltd.,
Melbourne 147,014
26,136 Banca Intesa SPA 111,675
12,434 Banco Santander Central
Hispano, SA 136,706
2,490 Bank Austria AG 131,763
5,636 Bank of Ireland 46,573
2,510 Banque Nationale de Paris 230,180
2,661 Barclays PLC 76,805
3,550 City National Corp. 128,022
4,100 Comerica, Inc. 217,300
2,142 Commonwealth Bank of
Australia 35,366
1,120 Credit Commerical De
France 136,570
5,940 Cullen Frost Bankers, Inc. 169,290
10,000 DBS Group Holdings Ltd. 129,723
790 DEX 130,245
42,800 Dah Sing Financial Group 181,307
3,000 Dresdner Bank Ag,
Frankfurt 141,790
1,700 Eaton Vance Corp. 61,094
1,500 First Tennessee National
Corp. 49,312
6,116 Fleet Boston Financial
Corp. 231,261
5,000 Fuji Bank, Ltd., Tokyo 60,023
19,000 Guoco Group 57,246
26,711 HSBC Holdings PLC 352,524
6,400 Macquarie Bank Ltd. 95,526
9,020 Mellon Financial Corp. 328,666
3,817 National Westminster Bank,
PLC, London 87,832
28,000 Overseas Union Bank Ltd. 129,961
<CAPTION>
VALUE IN
SHARES U.S. DOLLARS
<S> <C> <C>
COMMON STOCKS-continued
BANKING-CONTINUED
10,000 Sakura Bank Ltd., Tokyo $ 74,169
21,470 Standard Chartered PLC 292,727
7,550 Wells Fargo Co. 351,075
9,192 Westpac Banking Corp.
Ltd., Sydney 61,930
43,000 Wing Hang Bank Ltd. 165,544
TOTAL 4,671,530
BANKS (MAJOR REGIONAL)-5.1%
3,840 Bank One Corporation 135,360
8,500 KeyCorp 229,500
4,100 PNC Bank Corp. 228,575
1,400 Republic New York Corp. 98,963
5,440 Summit Bancorp 177,480
TOTAL 869,878
BANKS (MONEY CENTER)-2.8%
3,310 BankAmerica Corp 193,635
2,675 Chase Manhattan Corp. 206,644
2,000 First Union Corp. 77,375
TOTAL 477,654
BANKS (REGIONAL)-5.7%
6,250 Compass Bancshares, Inc. 158,594
2,400 First Security Corp. 67,500
4,950 First Virginia Bank, Inc. 224,606
12,500 Hibernia Corp., Class A 158,594
3,520 Keystone Financial, Inc. 82,720
6,940 SouthTrust Corp. 269,359
TOTAL 961,373
BEVERAGES & TOBACCO-0.5%
35,000 PT Hanjaya Mandala
Sampoerna 79,904
BROADCASTING & PUBLISHING-2.3%
20,600 BEC World Public Company
Ltd. 126,818
1,000 Nippon Broadcasting System 73,677
30,000 Television Broadcasting 195,069
TOTAL 395,564
<CAPTION>
VALUE IN
SHARES U.S. DOLLARS
<S> <C> <C>
COMMON STOCKS-continued
BUSINESS & PUBLIC
SERVICES-0.8%
420 1 Equant NV, ADR $ 39,585
800 Sanix, Inc. 88,806
TOTAL 128,391
DATA PROCESSING &
REPRODUCTION-0.6%
3,000 Fujitsu Ltd. 106,685
ELECTRICAL & ELECTRONICS-0.7%
900 Lucent Technologies, Inc. 65,756
1,800 1 Orckit Communications,
Inc. 52,200
TOTAL 117,956
ELECTRONIC COMPONENTS,
INSTRUMENTS-0.7%
65,000 Clipsal Industries Ltd. 66,950
450 Motorola, Inc. 51,413
TOTAL 118,363
ENERGY SOURCES-0.4%
2,700 1 Canadian Natural
Resources, Ltd. 61,184
FINANCIAL (DIVERSIFIED)-
5.5%
1,200 American Express Co. 181,575
2,640 Fannie Mae 175,890
7,000 Franklin Resources, Inc. 220,062
1,960 Morgan Stanley Dean Witter
Co. 236,425
4,400 Waddell & Reed Financial,
Inc., Class A 109,175
TOTAL 923,127
FINANCIAL SERVICES-4.5%
29,854 Colonial Ltd. 119,143
16,000 Nikko Securities Co. Ltd. 199,617
10,880 Pioneer Group, Inc. 161,840
7,450 Raymond James Financial,
Inc. 140,153
30,000 Toho Bank Ltd. 136,451
TOTAL 757,204
HEALTH & PERSONAL CARE-0.7%
2,000 Takeda Chemical Industries 118,277
INSURANCE-8.8%
6,400 Alleanza Assicurazioni 58,369
648 Allianz AG 189,866
1,465 Axa 197,684
<CAPTION>
VALUE IN
SHARES U.S. DOLLARS
<S> <C> <C>
COMMON STOCKS-continued
INSURANCE-CONTINUED
15,000 Dai Tokyo Fire and Marine $ 64,394
1,990 Fortis NV 68,244
5,950 Lincoln National Corp. 248,041
3,840 MBIA Insurance Corp. 192,000
2,980 Marsh & McLennan Cos., Inc. 234,303
100,000 Pacific Century Insurance 55,366
3,582 Prudential Corp. PLC 59,119
200 Zurich Allied AG 114,598
TOTAL 1,481,984
INSURANCE (MULTI-LINE)-5.0%
2,037 American International
Group, Inc. 210,320
1,000 CIGNA Corp. 82,250
7,275 Citigroup, Inc. 391,941
3,380 Hartford Financial
Services Group, Inc. 157,804
TOTAL 842,315
INVESTMENT
BANKING/BROKERAGE-0.4%
1,754 Bear Stearns Cos., Inc. 71,565
LEISURE & TOURISM-0.8%
100,000 Hong Kong Land Holding Ltd. 141,000
MERCHANDISING-1.0%
90,000 PT Ramayana Lestari
Sentosa 57,519
157,500 PT Tempo Scan Pacific Tbk 104,964
TOTAL 162,483
MULTI-INDUSTRY-1.3%
33,500 Swire Pacific Ltd., Class A 192,809
800 Tyco International Ltd. 32,050
TOTAL 224,859
REAL ESTATE-8.4%
81,000 DBS Land Ltd. 158,096
137,000 Hang Lung Development Co. 142,001
30,000 Henderson Land Development
Co. Ltd. 162,235
450,000 PT Jaya Real Property Tbk 58,442
272,000 Sino Land Co. 130,458
32,086 Sun Hung Kai Properties
Ltd. 292,292
<CAPTION>
SHARES OR
PRINCIPAL VALUE IN
AMOUNT U.S. DOLLARS
<S> <C> <C>
COMMON STOCKS-continued
REAL ESTATE-CONTINUED
2,500 Trizec Hahn Corp. $ 41,194
114,171 Wharf Holdings Ltd. 289,599
143,000 Wing Tai Holdings, Ltd. 138,703
TOTAL 1,413,020
SAVING & LOAN COMPANIES-1.7%
9,945 Washington Mutual, Inc. 288,405
TELECOMMUNICATIONS-0.7%
2,200 1 ASE Test Ltd. 48,950
250 1 Korea Thrunet Co. Ltd.,
Class A 13,906
1,300 1 RCN Corp. 58,663
TOTAL 121,519
TRANSPORTATION - ROAD &
RAIL-1.3%
3,650 Kansas City Southern
Industries, Inc. 217,403
UTILITIES - ELECTRICAL &
GAS-1.7%
26,000 Cheung Kong 292,925
WHOLESALE & INTERNATIONAL
TRADE-1.9%
15,000 Itochu Corp. 89,592
58,000 Marubeni Corp. 226,200
TOTAL 315,792
TOTAL COMMON STOCKS
(IDENTIFIED COST
$14,023,054) 15,665,090
REPURCHASE AGREEMENT-9.1% 2
$ 1,545,000 J.P. Morgan & Co., Inc.,
5.71%, dated 11/30/1999,
due 12/1/1999
(AT AMORTIZED COST) 1,545,000
TOTAL INVESTMENTS
(IDENTIFIED COST
$15,568,054) 3 $ 17,210,090
</TABLE>
1 Non-income producing security.
2 The repurchase agreement is fully collateralized by U.S. government and/or
agency obligations based on market prices at the date of the portfolio. The
investment in the repurchase agreement is through participation in a joint
account with other Federated funds.
3 The cost of investments for federal tax purposes amounts to $15,568,268. The
net unrealized appreciation of investments on a federal tax basis amounts to
$1,641,822 which is comprised of $2,353,778 appreciation and $711,956
depreciation at November 30, 1999.
Note: The categories of investments are shown as a percentage of net assets
($16,900,741) at November 30, 1999.
The following acronym is used throughout this portfolio:
ADR -American Depositary Receipt
See Notes which are an integral part of the Financial Statements
Statement of Assets and Liabilities
NOVEMBER 30, 1999
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS:
Total investments in
securities, at value
(identified cost
$15,568,054 and tax
cost $15,568,268) $ 17,210,090
Cash 1,501
Cash denominated in
foreign currencies
(identified cost $5,705) 5,707
Income receivable 29,850
Receivable for shares sold 163,615
TOTAL ASSETS 17,410,763
LIABILITIES:
Payable for investments
purchased $ 446,183
Payable for shares
redeemed 23,954
Payable for taxes withheld 514
Accrued expenses 39,371
TOTAL LIABILITIES 510,022
Net assets for 1,286,608
shares outstanding $ 16,900,741
NET ASSETS CONSIST OF:
Paid-in capital $ 14,938,467
Net unrealized
appreciation of
investments and
translation of assets and
liabilities in foreign
currency 1,641,397
Accumulated net realized
gain on investments and
foreign currency
transactions 338,051
Accumulated net operating
loss (17,174)
TOTAL NET ASSETS $ 16,900,741
NET ASSET VALUE, OFFERING
PRICE AND REDEMPTION
PROCEEDS PER SHARE
CLASS A SHARES:
Net Asset Value Per Share
($6,333,076 / 479,386
shares outstanding) $13.21
Offering Price Per Share
(100/94.50 of $13.21) 1 $13.98
Redemption Proceeds Per
Share $13.21
CLASS B SHARES:
Net Asset Value Per Share
($9,563,010 / 730,613
shares outstanding) $13.09
Offering Price Per Share $13.09
Redemption Proceeds Per
Share (94.50/100 of
$13.09) 1 $12.37
CLASS C SHARES:
Net Asset Value Per Share
($1,004,655 / 76,609
shares outstanding) $13.11
Offering Price Per Share $13.11
Redemption Proceeds Per
Share (99.00/100 of
$13.11) 1 $12.98
</TABLE>
1 See "What Do Shares Cost?" in the Prospectus.
See Notes which are an integral part of the Financial Statements
Statement of Operations
YEAR ENDED NOVEMBER 30, 1999
<TABLE>
<CAPTION>
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends (net of foreign
taxes withheld of $9,995) $ 230,918
Interest 43,097
TOTAL INCOME 274,015
EXPENSES:
Investment adviser fee $ 114,212
Administrative personnel
and services fee 185,000
Custodian fees 18,125
Transfer and dividend
disbursing agent fees and
expenses 48,104
Auditing fees 14,167
Legal fees 6,652
Portfolio accounting fees 71,974
Distribution services fee-
Class B Shares 47,432
Distribution services fee-
Class C Shares 5,007
Shareholder services fee-
Class A Shares 11,073
Shareholder services fee-
Class B Shares 15,810
Shareholder services fee-
Class C Shares 1,669
Share registration costs 56,674
Printing and postage 19,077
Insurance premiums 1,498
Miscellaneous 3,907
TOTAL EXPENSES 620,381
WAIVERS AND
REIMBURSEMENTS:
Waiver of investment
adviser fee $ (114,212)
Reimbursement of other
operating expenses (270,489)
TOTAL WAIVERS AND
REIMBURSEMENTS (384,701)
Net expenses 235,680
Net investment income 38,335
REALIZED AND UNREALIZED
GAIN ON INVESTMENTS AND
FOREIGN CURRENCY:
Net realized gain on
investments and foreign
currency transactions 282,608
Net change in unrealized
appreciation of
investments and
translation of assets and
liabilities in foreign
currency 654,937
Net realized and
unrealized gain on
investments and foreign
currency 937,545
Change in net assets
resulting from operations $ 975,880
</TABLE>
See Notes which are an integral part of the Financial Statements
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
NOVEMBER 30, NOVEMBER 30,
1999 1998 1
<S> <C> <C>
INCREASE (DECREASE) IN NET
ASSETS
OPERATIONS:
Net investment income $ 38,335 $ 7,002
Net realized gain on
investments and foreign
currency
transactions ($338,266 and
$46,202 respectively, as
computed for federal
tax purposes) 282,608 39,152
Net change in unrealized
appreciation of
investments and
translation of assets and
liabilities in foreign
currency 654,937 986,460
CHANGE IN NET ASSETS
RESULTING FROM OPERATIONS 975,880 1,032,614
DISTRIBUTIONS TO
SHAREHOLDERS:
Distributions from net
realized gains on
investments and foreign
currency transactions
Class A Shares (26,326) -
Class B Shares (17,518) -
Class C Shares (2,376) -
CHANGE IN NET ASSETS
RESULTING FROM
DISTRIBUTIONS
TO SHAREHOLDERS (46,220) -
SHARE TRANSACTIONS:
Proceeds from sale of
shares 15,301,925 7,814,821
Net asset value of shares
issued to shareholders in
payment of distributions
declared 23,764 -
Cost of shares redeemed (5,702,680) (2,500,188)
CHANGE IN NET ASSETS
RESULTING FROM
SHARE TRANSACTIONS 9,623,009 5,314,633
Change in net assets 10,552,669 6,347,247
NET ASSETS:
Beginning of period 6,348,072 825
End of period $ 16,900,741 $ 6,348,072
</TABLE>
1 Reflects operations for the period from September 30, 1998 (date of initial
public investment) to November 30, 1998.
See Notes which are an integral part of the Financial Statements
Financial Highlights - Class A Shares
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
NOVEMBER 30, NOVEMBER 30,
1999 1998 1
<S> <C> <C>
NET ASSET VALUE, BEGINNING
OF PERIOD $11.99 $10.00
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income 0.09 2 0.01 2
Net realized and
unrealized gain on
investments and foreign
currency 1.21 1.98
TOTAL FROM INVESTMENT
OPERATIONS 1.30 1.99
LESS DISTRIBUTIONS:
Distributions from net
realized gain on
investments and foreign
currency transactions (0.08) -
NET ASSET VALUE, END OF
PERIOD $13.21 $11.99
TOTAL RETURN 3 10.87% 19.90%
RATIOS TO AVERAGE NET
ASSETS:
Expenses 1.60% 1.60% 4
Net investment income 0.79% 0.85% 4
Expense
waiver/reimbursement 5 3.37% 11.49% 4
SUPPLEMENTAL DATA:
Net assets, end of period
(000 omitted) $6,333 $4,094
Portfolio turnover 53% 12%
</TABLE>
1 Reflects operations for the period from September 30, 1998 (date of initial
public investment) to November 30, 1998.
2 Per share information is based on average shares outstanding.
3 Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
4 Computed on an annualized basis.
5 This voluntary expense decrease is reflected in both the expense and the net
investment income ratios shown above.
See Notes which are an integral part of the Financial Statements
Financial Highlights - Class B Shares
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
NOVEMBER 30, NOVEMBER 30,
1999 1998 1
<S> <C> <C>
NET ASSET VALUE, BEGINNING
OF PERIOD $11.98 $10.00
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income 0.01 2 0.00 2, 3
Net realized and
unrealized gain on
investments and foreign
currency 1.18 1.98
TOTAL FROM INVESTMENT
OPERATIONS 1.19 1.98
LESS DISTRIBUTIONS:
Distributions from net
realized gain on
investments and foreign
currency transactions (0.08) -
NET ASSET VALUE, END OF
PERIOD $13.09 $11.98
TOTAL RETURN 4 9.96% 19.80%
RATIOS TO AVERAGE NET
ASSETS:
Expenses 2.35% 2.35% 5
Net investment income 0.04% 0.10% 5
Expense
waiver/reimbursement 6 3.37% 11.49% 5
SUPPLEMENTAL DATA:
Net assets, end of period
(000 omitted) $9,563 $1,911
Portfolio turnover 53% 12%
</TABLE>
1 Reflects operations for the period from September 30, 1998 (date of initial
public investment) to November 30, 1998.
2 Per share information is based on average shares outstanding.
3 Per share amount does not round to $0.01.
4 Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
5 Computed on an annualized basis.
6 This voluntary expense decrease is reflected in both the expense and the net
investment income ratios shown above.
See Notes which are an integral part of the Financial Statements
Financial Highlights - Class C Shares
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
NOVEMBER 30, NOVEMBER 30,
1999 1998 1
<S> <C> <C>
NET ASSET VALUE, BEGINNING
OF PERIOD $11.98 $10.00
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income 0.01 2 0.00 2, 3
Net realized and
unrealized gain on
investments and foreign
currency 1.20 1.98
TOTAL FROM INVESTMENT
OPERATIONS 1.21 1.98
LESS DISTRIBUTIONS:
Distributions from net
realized gain on
investments and foreign
currency transactions (0.08) -
NET ASSET VALUE, END OF
PERIOD $13.11 $11.98
TOTAL RETURN 4 10.13% 19.80%
RATIOS TO AVERAGE NET
ASSETS:
Expenses 2.35% 2.35% 5
Net investment income 0.04% 0.10% 5
Expense
waiver/reimbursement 6 3.37% 11.49% 5
SUPPLEMENTAL DATA:
Net assets, end of period
(000 omitted) $1,005 $343
Portfolio turnover 53% 12%
</TABLE>
1 Reflects operations for the period from September 30, 1998 (date of initial
public investment) to November 30, 1998.
2 Per share information is based on average shares outstanding.
3 Per share amount does not round to $0.01.
4 Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
5 Computed on an annualized basis.
6 This voluntary expense decrease is reflected in both the expense and the net
investment income ratios shown above.
See Notes which are an integral part of the Financial Statements
Notes to Financial Statements
NOVEMBER 30, 1999
ORGANIZATION
World Investment Series, Inc. (the "Corporation") is registered under the
Investment Company Act of 1940, as amended (the "Act"), as an open-end,
management investment company. The Corporation consists of ten portfolios. The
financial statements included herein are only those of Federated Global
Financial Services Fund (the "Fund"), a diversified portfolio. The financial
statements of the other portfolios are presented separately. The assets of each
portfolio are segregated and a shareholder's interest is limited to the
portfolio in which shares are held.
The Fund offers three classes of shares: Class A Shares, Class B Shares, and
Class C Shares. The investment objective of the Fund is to provide long-term
growth of capital.
SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS
Listed equity securities are valued at the last sale price reported on a
national securities exchange. Short-term securities are valued at the prices
provided by an independent pricing service. However, short-term securities with
remaining maturities of 60 days or less at the time of purchase may be valued at
amortized cost, which approximates fair market value. With respect to valuation
of foreign securities, trading in foreign cities may be completed at times which
vary from the closing of the New York Stock Exchange. Therefore, foreign
securities are valued at the latest closing price on the exchange on which they
are traded prior to the closing of the New York Stock Exchange. Foreign
securities quoted in foreign currencies are translated into U.S. dollars at the
foreign exchange rate in effect at noon, eastern time, on the day the value of
the foreign security is determined.
REPURCHASE AGREEMENTS
It is the policy of the Fund to require the custodian bank to take possession,
to have legally segregated in the Federal Reserve Book Entry System, or to have
segregated within the custodian bank's vault, all securities held as collateral
under repurchase agreement transactions. Additionally, procedures have been
established by the Fund to monitor, on a daily basis, the market value of each
repurchase agreement's collateral to ensure that the value of collateral at
least equals the repurchase price to be paid under the repurchase agreement.
The Fund will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed by
the Fund's adviser to be creditworthy pursuant to the guidelines and/or
standards reviewed or established by the Board of Directors (the "Directors").
Risks may arise from the potential inability of counterparties to honor the
terms of the repurchase agreement. Accordingly, the Fund could receive less than
the repurchase price on the sale of collateral securities. The Fund, along with
other affiliated investment companies, may utilize a joint trading account for
the purpose of entering into one or more repurchase agreements.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS
Interest income and expenses are accrued daily. Bond premium and discount, if
applicable, are amortized as required by the Internal Revenue Code of 1986, as
amended (the "Code"). Dividend income and distributions to shareholders are
recorded on the ex-dividend date. Non-cash dividends included in dividend
income, if any, are recorded at fair value. The Fund offers multiple classes of
shares, which differ in their respective distribution and service fees. All
shareholders bear the common expenses of the Fund based on average daily net
assets of each class, without distinction between share classes. Dividends are
declared separately for each class. No class has preferential dividend rights;
differences in per share dividend rates are generally due to differences in
separate class expenses.
Income and capital gain distributions are determined in accordance with income
tax regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments for foreign currency
transactions. The following reclassifications have been made to the financial
statements.
<TABLE>
<CAPTION>
INCREASE (DECREASE)
ACCUMULATED NET REALIZED
GAIN ON INVESTMENTS AND ACCUMULATED NET
FOREIGN CURRENCY TRANSACTIONS OPERATING LOSS
<S> <C>
$55,509 $(55,509)
</TABLE>
Net investment income, net realized gains (losses), and net assets were not
affected by this reclassification.
FEDERAL TAXES
It is the Fund's policy to comply with the provisions of the Code applicable to
regulated investment companies and to distribute to shareholders each year
substantially all of its income. Accordingly, no provision for federal tax is
necessary.
Withholding taxes on foreign interest and dividends have been provided for in
accordance with the applicable country's tax rules and rates.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
The Fund may engage in when-issued or delayed delivery transactions. The Fund
records when-issued securities on the trade date and maintains security
positions such that sufficient liquid assets will be available to make payment
for the securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date. Losses may occur on these transactions due to changes in market
conditions or the failure of counterparties to perform under the contract.
FOREIGN EXCHANGE CONTRACTS
The Fund may enter into foreign currency commitments for the delayed delivery of
securities or foreign currency exchange transactions. The Fund may enter into
foreign currency contract transactions to protect assets against adverse changes
in foreign currency exchange rates or exchange control regulations. Purchased
contracts are used to acquire exposure to foreign currencies; whereas contracts
to sell are used to hedge the Fund's securities against currency fluctuations.
Risks may arise upon entering these transactions from the potential inability of
counterparties to meet the terms of their commitments and from unanticipated
movements in security prices or foreign exchange rates. The foreign currency
transactions are adjusted by the daily exchange rate of the underlying currency
and any gains or losses are recorded for financial statement purposes as
unrealized until the settlement date. At November 30, 1999, the Fund had no
outstanding foreign currency commitments.
FOREIGN CURRENCY TRANSLATION
The accounting records of the Fund are maintained in U.S. dollars. All assets
and liabilities denominated in foreign currencies ("FC") are translated into
U.S. dollars based on the rates of exchange of such currencies against U.S.
dollars on the date of valuation. Purchases and sales of securities, income and
expenses are translated at the rate of exchange quoted on the respective date
that such transactions are recorded. The Fund does not isolate that portion of
the results of operations resulting from changes in foreign exchange rates on
investments from the fluctuations arising from changes in market prices of
securities held. Such fluctuations are included with the net realized and
unrealized gain or loss from investments.
Reported net realized foreign exchange gains or losses arise from sales of
portfolio securities, sales and maturities of short-term securities, sales of
FCs, currency gains or losses realized between the trade and settlement dates on
securities transactions, the difference between the amounts of dividends,
interest, and foreign withholding taxes recorded on the Fund's books, and the
U.S. dollar equivalent of the amounts actually received or paid. Net unrealized
foreign exchange gains and losses arise from changes in the value of assets and
liabilities other than investments in securities at fiscal year end, resulting
from changes in the exchange rate.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts of assets, liabilities, expenses and revenues reported in the
financial statements. Actual results could differ from those estimated.
OTHER
Investment transactions are accounted for on a trade basis.
CAPITAL STOCK
At November 30, 1999, par value shares ($0.001 per share) authorized were as
follows:
<TABLE>
<CAPTION>
NUMBER OF PAR VALUE
CLASS NAME CAPITAL STOCK AUTHORIZED
<S> <C>
Class A Shares 100,000,000
Class B Shares 100,000,000
Class C Shares 100,000,000
TOTAL 300,000,000
</TABLE>
<TABLE>
<CAPTION>
INITIAL SHARE CAPITAL
CLASS NAME SHARES AMOUNT
<S> <C> <C>
Class A Shares 32.5 $325
Class B Shares 25.0 $250
Class C Shares 25.0 $250
TOTAL 82.5 $825
</TABLE>
Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
YEAR ENDED PERIOD
ENDED
NOVEMBER 30,1999 NOVEMBER 30, 1998
1
CLASS A SHARES: SHARES AMOUNT SHARES
AMOUNT
<S> <C> <C> <C>
<C>
Shares sold 455,958 $ 5,757,599 562,999.5 $
5,709,657
Shares issued to
shareholders in payment of
distributions declared 505 6,189
- - -
Shares redeemed (318,686) (3,915,384) (221,423.0)
(2,470,458)
NET CHANGE RESULTING FROM
CLASS A
SHARE TRANSACTIONS 137,777 $ 1,848,404 341,576.5 $
3,239,199
<CAPTION>
YEAR ENDED PERIOD
ENDED
NOVEMBER 30,1999 NOVEMBER 30, 1998
1
CLASS B SHARES: SHARES AMOUNT SHARES
AMOUNT
<S> <C> <C> <C>
<C>
Shares sold 704,800 $ 8,841,323 159,648 $
1,768,406
Shares issued to
shareholders in payment of
distributions declared 1,303 15,948
- - -
Shares redeemed (134,984) (1,687,785) (179)
(2,008)
NET CHANGE RESULTING FROM
CLASS B
SHARE TRANSACTIONS 571,119 $ 7,169,486 159,469 $
1,766,398
<CAPTION>
YEAR ENDED PERIOD
ENDED
NOVEMBER 30,1999 NOVEMBER 30, 1998
1
CLASS C SHARES: SHARES AMOUNT SHARES
AMOUNT
<S> <C> <C> <C>
<C>
Shares sold 55,959 $ 703,003 30,948 $
336,758
Shares issued to
shareholders in payment of
distributions declared 162 1,627
- - -
Shares redeemed (8,162) (99,511) (2,323)
(27,722)
NET CHANGE RESULTING FROM
CLASS C
SHARE TRANSACTIONS 47,959 $ 605,119 28,625 $
309,036
NET CHANGE RESULTING FROM
SHARE TRANSACTIONS 756,855 $ 9,623,009 529,670.5 $
5,314,633
</TABLE>
1 For the period from September 30, 1998 (date of initial public investment) to
November 30, 1998.
INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISER FEE
Federated Global Investment Management Corp., the Fund's investment adviser (the
"Adviser"), receives for its services an annual investment Adviser fee equal to
1.00% of the Fund's average daily net assets. The Adviser may voluntarily choose
to waive any portion of its fee and/or reimburse certain operating expenses of
the Fund. The Adviser can modify or terminate this voluntary waiver and/or
reimbursement at any time at its sole discretion.
The sub-adviser agreement between the Adviser and Federated Investment
Management Company (the "Sub-Adviser") terminated on March 31, 1999. The Sub-
Adviser received an allocable portion of the Fund's Adviser fee. Such allocation
was based on the amount of U.S. securities which the Sub-Adviser managed for the
Fund. The fee was paid by the Adviser and was not an incremental Fund expense.
ADMINISTRATIVE FEE
Federated Services Company ("FServ"), under the Administrative Services
Agreement, provides the Fund with administrative personnel and services. The fee
paid to FServ is based on a scale that ranges from 0.15% to 0.075% of the
average aggregate daily net assets of all funds advised by subsidiaries of
Federated Investors, Inc., subject to a $125,000 minimum per portfolio and
$30,000 per each additional class.
DISTRIBUTION SERVICES FEE
The Fund has adopted a Distribution Plan (the "Plan") pursuant to Rule 12b-1
under the Act. Under the terms of the Plan, the Fund will compensate Federated
Securities Corp. ("FSC"), the principal distributor, from the net assets of the
Fund to finance activities intended to result in the sale of the Fund's Class A,
Class B and Class C Shares. The Plan provides that the Fund may incur
distribution expenses according to the following schedule annually, to
compensate FSC.
<TABLE>
<CAPTION>
PERCENTAGE OF AVERAGE
SHARE CLASS NAME DAILY NET ASSETS OF CLASS
<S> <C>
Class A Shares 0.25%
Class B Shares 0.75%
Class C Shares 0.75%
</TABLE>
Class A Shares did not incur a distribution services fee for the fiscal year
ended November 30, 1999, and has no present intention of paying or accruing the
distribution services fee.
SHAREHOLDER SERVICES FEE
Under the terms of a Shareholder Services Agreement with Federated Shareholder
Services Company ("FSSC"), the Fund will pay FSSC up to 0.25% of average daily
net assets of the Fund for the period. The fee paid to FSSC is used to finance
certain services for shareholders and to maintain shareholder accounts.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES
FServ, through its subsidiary FSSC, serves as transfer and dividend disbursing
agent for the Fund. The fee paid to FSSC is based on the size, type, and number
of accounts and transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES
FServ maintains the Fund's accounting records for which it receives a fee. The
fee is based on the level of the Fund's average daily net assets for the period,
plus out-of-pocket expenses.
GENERAL
Certain of the Officers and Directors of the Corporation are Officers and
Directors or Trustees of the above companies.
INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities (and in-
kind contributions), for the fiscal year ended November 30, 1999, were as
follows:
<TABLE>
<CAPTION>
<S> <C>
Purchases $ 14,336,863
Sales $ 5,567,051
</TABLE>
CONCENTRATION OF CREDIT RISK
The Fund invests in securities of non-U.S. issuers. The political or economic
developments within a particular country or region may have an adverse effect on
the ability of domiciled issuers to meet their obligations. Additionally,
political or economic developments may have an effect on the liquidity and
volatility of portfolio securities and currency holdings.
LINE OF CREDIT AGREEMENT
Effective November 29, 1999, the Corporation entered into a $75,000,000
unsecured committed revolving line of credit ("LOC") agreement with State Street
Corporation. The LOC was made available for extraordinary or emergency purposes,
primarily for financing redemption payments. Borrowings are charged interest at
a rate of 0.50% over the Federated Funds Rate. The LOC includes a commitment fee
of 0.08% per annum on the daily unused portion. The Corporation did not make any
borrowing under the LOC during the fiscal year ended November 30, 1999.
Report of Ernst & Young LLP, Independent Auditors
TO THE BOARD OF DIRECTORS OF WORLD INVESTMENT SERIES, INC. AND SHAREHOLDERS
OF FEDERATED GLOBAL FINANCIAL SERVICES FUND:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments of Federated Global Financial Services Fund (the
Fund) (one of the portfolios constituting the World Investment Series, Inc.) as
of November 30, 1999, and the related statement of operations for the year then
ended, the statement of changes in net assets and the financial highlights for
each of the periods presented therein. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned as of November 30, 1999, by correspondence with the custodian and brokers
or other appropriate auditing procedures where replies from brokers were not
received. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Federated Global Financial Services Fund of World Investment Series, Inc. at
November 30, 1999, and the results of its operations for the year then ended,
the changes in its net assets and the financial highlights for each of the
periods presented therein, in conformity with accounting principles generally
accepted in the United States.
[Graphic]
/s/ Ernst & Young
Boston, Massachusetts
January 21, 2000
Directors
JOHN F. DONAHUE
THOMAS G. BIGLEY
JOHN T. CONROY, JR.
NICHOLAS P. CONSTANTAKIS
WILLIAM J. COPELAND
LAWRENCE D. ELLIS, M.D.
RICHARD B. FISHER
EDWARD L. FLAHERTY, JR., ESQ.
PETER E. MADDEN
CHARLES F. MANSFIELD, JR.
JOHN E. MURRAY, JR., J.D., S.J.D.
WESLEY W. POSVAR
MARJORIE P. SMUTS
Officers
JOHN F. DONAHUE
Chairman
RICHARD B. FISHER
President
J. CHRISTOPHER DONAHUE
Executive Vice President
EDWARD C. GONZALES
Executive Vice President
JOHN W. MCGONIGLE
Executive Vice President and Secretary
HENRY A. FRANTZEN
Chief Investment Officer
RICHARD J. THOMAS
Treasurer
JAMES O. PERRY
Assistant Secretary
Mutual funds are not bank deposits or obligations, are not guaranteed by any
bank, and are not insured or guaranteed by the U.S. government, the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other
government agency. Investment in mutual funds involves investment risk,
including the possible loss of principal.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the fund's prospectus which contains facts concerning
its objective and policies, management fees, expenses, and other information.
[Graphic]
Federated
World-Class Investment Manager
ANNUAL REPORT AS OF NOVEMBER 30, 1999
Federated Global Financial Services Fund
Established 1998
2ND ANNUAL REPORT
[Graphic]
Federated
Federated Global Financial Services Fund
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
1-800-341-7400
WWW.FEDERATEDINVESTORS.COM
Federated Securities Corp., Distributor
Cusip 981487663
Cusip 981487655
Cusip 981487648
G02455-03 (1/00)
[Graphic]
[Graphic]
Richard B. Fisher
President
Federated International Growth Fund
President's Message
Dear Shareholder:
Federated International Growth Fund was created in 1997, and I am pleased to
present its third Annual Report. As of November 30, 1999, the fund's net assets
totaled $54 million and were invested in shares of five international equity
funds all managed by Federated Global Investment Management Corp., which
include:
Federated Asia Pacific Growth Fund;
Federated Emerging Markets Fund;
Federated European Growth Fund;
Federated International Small Company Fund; and
Federated Latin American Growth Fund.
This "fund of funds" approach offers shareholders significant long-term growth
opportunities by investing in as many as five different international stock
mutual funds, and provides an extremely high level of diversification, far
beyond what a single regional international fund can achieve. This $54 million
fund gives investors one-investment access to a world of regions, industries,
companies (both large-cap and small-cap), and markets (both developed and
emerging). The fund's management performs all of the research and quantitative
work needed to allocate the fund's assets in the various international arenas. 1
This report covers the 12-month reporting period from December 1, 1998 through
November 30, 1999. It begins with an interview with the fund's portfolio
manager, Alexandre de Bethmann, Vice President of Federated Global Investment
Management Corp. Following his discussion, which presents his outlook on
international economic and market conditions and the fund's strategy, you will
find two additional items of shareholder interest. First is a complete listing
of the fund's equity investments, and second is the publication of the fund's
financial statements.
1 Foreign investing involves special risks including currency risk, increased
volatility of foreign securities, and differences in auditing and other
financial standards.
While it was a strong year for international equity investors in general, it was
a particularly strong year for shareholders of Federated International Growth
Fund. The fund's holdings in Federated Asia Pacific Growth Fund and Federated
International Small Company Fund resulted in very strong returns that were
considerably higher than the returns of the average international equity fund
and the Morgan Stanley Capital International Europe, Australia, and Far East
("EAFE") Index for the same period. 2 Individual share class total return
performance for the 12-month reporting period, including income distributions,
is as follows:3
<TABLE>
<CAPTION>
TOTAL RETURN INCOME NET ASSET VALUE INCREASE
<S> <C> <C> <C>
Class A Shares 48.44% $0.0620 $8.38 to $12.35 = 47.37%
Class B Shares 47.33% $0.0022 $8.31 to $12.24 = 47.29%
Class C Shares 47.45% $0.0017 $8.33 to $12.28 = 47.42%
</TABLE>
I strongly recommend that you add to your account on a regular basis to take
advantage of price fluctuations and dollar-cost averaging method of investing, 4
and thus increasing the number of shares you own for potential future income.
Thank you for your investment in Federated's "fund of funds" and for the
confidence you have placed in our firm.
Sincerely,
[Graphic]
Richard B. Fisher
President
January 15, 2000
2 The EAFE Index is a market capitalization-weighted foreign securities index
widely used to measure the performance of the European, Australian, New Zealand
and Far Eastern stock markets. The index is unmanaged and investments cannot be
made in an index.
3 Performance quoted is based on net asset value, represents past performance,
and is no guarantee of future results. Investment return and principal value
will fluctuate so that an investor's shares, when redeemed, may be worth more or
less than their original cost. Total returns for the period, based on offering
price (i.e., less any applicable sales charge), for Class A, B and C Shares were
40.24%, 41.83%, and 46.45% respectively.
4 Systematic investing does not assure a profit or protect against loss in
declining markets. Because dollar-cost averaging involves continuous investment
regardless of fluctuating price levels, investors should consider their
financial ability to continue purchases during periods of low price levels.
[Graphic]
Alexandre de Bethmann
Vice President
Federated Global Investment Management Corp.
Investment Review
WHAT IS YOUR ANALYSIS OF THE FUND'S FISCAL YEAR, WHICH SAW A STRONG
ENVIRONMENT ACROSS EUROPE AND A SIGNIFICANT RECOVERY IN THE ASIA PACIFIC AND
LATIN AMERICAN MARKETS?
International equity markets as measured by the EAFE Index showed good
appreciation. Markets in Europe were driven by the technology,
telecommunications, and media sectors while anecdotal evidence of economic
bottoming in Japan helped the market recover strongly. Other positive factors in
Japan included company restructurings, mergers and acquisitions, and the
emergence of "New Japan" companies. In Eastern Europe, Greece was the big winner
given the convergence theme in front of acceptance into the European community.
In Asia, economic recovery plus fund flow into technology in Hong Kong,
Singapore and Korea helped drive those markets higher. The fund benefited by its
investments in funds with exposure in these regions.
IT WAS A VERY STRONG YEAR FOR FEDERATED INTERNATIONAL GROWTH FUND. HOW DID
THE FUND PERFORM DURING THE REPORTING PERIOD COMPARED TO THE OVERALL
INTERNATIONAL EQUITY MARKET?
For the fiscal year ended November 30, 1999, the fund's Class A, B, and C Shares
produced total returns, based on net asset value, of 48.44%, 47.33%, and 47.45%,
respectively. 1 These returns were considerably higher than the 29.01% return of
the Lipper International Funds Average,2 and the 21.10% total return of the EAFE
Index for the same period.
WHAT ACCOUNTED FOR THE FUND'S OUTPERFORMANCE VERSUS ITS PEER GROUP AND THE EAFE
INDEX?
The fund's performance was driven by strong growth from the Federated Asia
Pacific Growth Fund and the Federated International Small Company Fund. As of
November 30, 1999 the total returns, based on net asset value, for the Class A
Shares of each of the following funds to which the Fund was exposed during the
12-month reporting period were:
<TABLE>
<CAPTION>
<S> <C>
Federated Asia Pacific Growth Fund 112.19%
Federated Emerging Markets Fund 46.31%
Federated European Growth Fund 15.68%
Federated International Small Company Fund 103.45%
Federated Latin American Growth Fund 17.78%
</TABLE>
HOW WERE THE FUND'S ASSETS DIVERSIFIED AMONG THE FIVE DIFFERENT FEDERATED-
MANAGED INTERNATIONAL MUTUAL FUNDS AT THE END OF THE REPORTING PERIOD?
As of November 30, 1999, the assets of Federated International Growth Fund were
allocated as follows:
<TABLE>
<CAPTION>
Percentage of
Net Assets
<S> <C>
Federated International Small Company Fund 35.12%
Federated European Growth Fund 32.73%
Federated Asia Pacific Growth Fund 10.85%
Federated Emerging Markets Fund 4.37%
Federated Latin American Growth Fund 4.16%
</TABLE>
1 Performance quoted is based on net asset value, represents past performance,
and is no guarantee of future results. Investment return and principal value
will fluctuate so that an investor's shares, when redeemed, may be worth more or
less than their original cost. Total returns for the period, based on offering
price (i.e., less any applicable sales charge), for Class A, B and C Shares were
40.24% 41.83%, and 46.45%, respectively.
2 Lipper figures represent the average of the total returns reported by all of
the mutual funds designated by Lipper Analytical Services, Inc. as falling into
the category indicated. These figures do not take sales charges into account.
The top two holdings per individual fund as of November 30, 1999 were as
follows:
<TABLE>
<CAPTION>
PERCENTAGE OF
FUND
NAME COUNTRY NET ASSETS
<S>
<C> <C> <C>
Matsushita Communication Industrial Co.,
Ltd. Japan 3.18%
Federated Asia Pacific Growth Fund Softbank
Corp. Japan 2.66%
Total Fina SA, Class
B France 3.50%
Federated European Growth Fund Mannesmann
AG Germany 3.27%
Federated International Small Company Fund ARM Holdings PLC,
ADR United Kingdom 2.14%
Trend Micro
Inc. Japan 1.57%
Telefonos de Mexico, Class L,
ADR Mexico 12.29%
Federated Latin American Growth Fund Cemex SA de CV, Class
B Mexico 5.33%
Ghana 2.69%
Federated Emerging Markets Fund SSB Banks Telefonos de Mexico SA, Class
L, ADR Mexico 1.99%
</TABLE>
AS WE LEAVE A STRONG YEAR FOR THE INTERNATIONAL MARKETPLACE, WHAT IS YOUR
OUTLOOK FOR INTERNATIONAL EQUITIES IN THE YEAR 2000, AND HOW ARE YOU
STRUCTURING THE FUND'S ALLOCATIONS?
We continue to stress that stock selection remains a critical part of our
investment process. With that, we continue to remain bullish on the technology,
telecommunications and media sectors on a global basis. Key themes within the
technology sector include finding situations that are leveraged to the growth in
mobile handsets, growth in bandwidth capital expenditures, and a new round of
information technology spending as the year 2000 overhang will be behind us.
Finally, we also continue to remain bullish on the economic recovery in Asia and
Japan.
Last Meeting of Shareholders
A Special Meeting of the shareholders of Federated International Growth Fund
(the "Fund"), a portfolio of World Investment Series, Inc. was held on December
17, 1999. On September 7, 1999, the record date for the shareholders voting at
the meeting, there were 3,878,447 total outstanding shares.
The following items were considered by shareholders and the results of their
voting were as follows:
AGENDA ITEM 1
Elected Directors: 1
<TABLE>
<CAPTION>
SHARES WITHHELD
VOTED AUTHORITY
FOR TO VOTE
<S> <C> <C>
Thomas G. Bigley 3,669,787 25,625
Nicholas P. Constantakis 3,669,287 26,125
John F. Cunningham 3,669,787 25,625
J. Christopher Donahue 3,669,647 25,765
Charles F. Mansfield, Jr. 3,669,787 25,625
John E. Murray, Jr., J.D., S.J.D. 3,669,647 25,765
John S. Walsh 3,668,734 26,678
</TABLE>
1 The following Directors continued their terms as Directors: John F.
Donahue, John T. Conroy, William J. Copeland, Lawrence D. Ellis, M.D.,
Peter E. Madden, and Marjorie P. Smuts.
Director elections will become effective January 1, 2000.
AGENDA ITEM 2
Made changes to the Fund's fundamental investment policies:
(a) Amended the Fund's fundamental investment policy regarding borrowing money
and issuing senior securities.
<TABLE>
<CAPTION>
ABSTENTIONS
SHARES SHARES VOTED AND BROKER
VOTED FOR AGAINST NON-VOTES
<S> <C> <C>
2,484,068 57,313 1,154,031
</TABLE>
(b) Amended the Fund's fundamental investment policy regarding investments
in real estate.
<TABLE>
<CAPTION>
ABSTENTIONS
SHARES SHARES VOTED AND BROKER
VOTED FOR AGAINST NON-VOTES
<S> <C> <C>
2,511,108 30,330 1,153,974
</TABLE>
(c) Amended the Fund's fundamental investment policy regarding investments
in commodities.
<TABLE>
<CAPTION>
ABSTENTIONS
SHARES SHARES VOTED AND BROKER
VOTED FOR AGAINST NON-VOTES
<S> <C> <C>
2,508,513 32,838 1,154,061
</TABLE>
(d) Amended the Fund's fundamental investment policy regarding underwriting
securities.
<TABLE>
<CAPTION>
ABSTENTIONS
SHARES SHARES VOTED AND BROKER
VOTED FOR AGAINST NON-VOTES
<S> <C> <C>
2,529,811 29,263 1,136,338
</TABLE>
(e) Amended the Fund's fundamental investment policy regarding lending
assets.
<TABLE>
<CAPTION>
ABSTENTIONS
SHARES SHARES VOTED AND BROKER
VOTED FOR AGAINST NON-VOTES
<S> <C> <C>
2,528,702 29,417 1,137,293
</TABLE>
(f) Amended the Fund's fundamental investment policy regarding concentration of
the Fund's investments in the securities of companies in the same industry.
<TABLE>
<CAPTION>
ABSTENTIONS
SHARES SHARES VOTED AND BROKER
VOTED FOR AGAINST NON-VOTES
<S> <C> <C>
2,533,787 25,911 1,135,714
</TABLE>
(g) Amended, and made non-fundamental, the Fund's fundamental investment policy
regarding buying securities on margin.
<TABLE>
<CAPTION>
ABSTENTIONS
SHARES SHARES VOTED AND BROKER
VOTED FOR AGAINST NON-VOTES
<S> <C> <C>
2,504,902 37,207 1,153,303
</TABLE>
(h) Amended, and made non-fundamental, the Fund's fundamental investment policy
regarding pledging assets.
<TABLE>
<CAPTION>
ABSTENTIONS
SHARES SHARES VOTED AND BROKER
VOTED FOR AGAINST NON-VOTES
<S> <C> <C>
2,476,857 34,453 1,184,102
</TABLE>
AGENDA ITEM 3
Eliminated certain fundamental investment policies of the Fund:
Removed the Fund's fundamental investment policy regarding selling securities
short.
<TABLE>
<CAPTION>
ABSTENTIONS
SHARES SHARES VOTED AND BROKER
VOTED FOR AGAINST NON-VOTES
<S> <C> <C>
2,523,722 32,961 1,138,729
</TABLE>
AGENDA ITEM 4
Approved an amendment to the Articles of Incorporation of World Investment
Series, Inc. to permit the Board of Directors to liquidate assets of a series or
class without seeking shareholder approval to the extent permitted under
Maryland law.
<TABLE>
<CAPTION>
ABSTENTIONS
SHARES SHARES VOTED AND BROKER
VOTED FOR AGAINST NON-VOTES
<S> <C> <C>
2,499,640 59,023 1,136,749
</TABLE>
Federated International Growth Fund-Class A Shares
GROWTH OF A $10,000 INVESTMENT
The graph below illustrates the hypothetical investment of $10,000 1 in the
Federated International Growth Fund (Class A Shares) (the "Fund") from July 1,
1997 (start of performance) to November 30, 1999, compared to the Morgan Stanley
Capital International All Country World EX U.S. Index (MSCI- ACW) and the Morgan
Stanley Capital International Europe Australia Far East Index (MSCI-EAFE).2
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS 3 FOR THE PERIOD ENDED NOVEMBER 30, 1999
<S> <C>
1 Year 40.24%
Start of Performance (7/1/97) 7.22%
</TABLE>
[Please see Appendix A20]
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE PERFORMANCE. YOUR INVESTMENT RETURN
AND PRINCIPAL VALUE WILL FLUCTUATE, SO WHEN SHARES ARE REDEEMED, THEY MAY BE
WORTH MORE OR LESS THAN THEIR ORIGINAL COST. MUTUAL FUNDS ARE NOT OBLIGATIONS OF
OR GUARANTEED BY ANY BANK AND ARE NOT FEDERALLY INSURED.
1 Represents a hypothetical investment of $10,000 in the Fund after deducting
the maximum sales charge of 5.50% ($10,000 investment minus $550 sales charge =
$9,450). The Fund's performance assumes the reinvestment of all dividends and
distributions. The MSCI-ACW and the MSCI-EAFE have been adjusted to reflect
reinvestment of dividends on securities in the indexes.
2 The MSCI-ACW and the MSCI-EAFE are not adjusted to reflect sales charges,
expenses, or other fees that the Securities and Exchange Commission requires to
be reflected in the Fund's performance. These indexes are unmanaged.
3 Total return quoted reflects all applicable sales charges.
Federated International Growth Fund-Class B Shares
GROWTH OF A $10,000 INVESTMENT
The graph below illustrates the hypothetical investment of $10,000 1 in the
Federated International Growth Fund (Class B Shares) (the "Fund") from July 1,
1997 (start of performance) to November 30, 1999, compared to the Morgan Stanley
Capital International All Country World EX U.S. Index (MSCI- ACW) and the Morgan
Stanley Capital International Europe Australia Far East Index (MSCI-EAFE).2
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS 3 FOR THE PERIOD ENDED NOVEMBER 30, 1999
<S> <C>
1 Year 41.83%
Start of Performance (7/1/97) 7.46%
</TABLE>
[Please see Appendix A21]
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE PERFORMANCE. YOUR INVESTMENT RETURN
AND PRINCIPAL VALUE WILL FLUCTUATE, SO WHEN SHARES ARE REDEEMED, THEY MAY BE
WORTH MORE OR LESS THAN THEIR ORIGINAL COST. MUTUAL FUNDS ARE NOT OBLIGATIONS OF
OR GUARANTEED BY ANY BANK AND ARE NOT FEDERALLY INSURED.
1 Represents a hypothetical investment of $10,000 in the Fund. The ending value
of the Fund reflects a contingent deferred sales charge of 4.00% on any
redemption less than three years from the purchase date. The maximum contingent
deferred sales charge is 5.50% on any redemption less than one year from the
purchase date. The Fund's performance assumes the reinvestment of all dividends
and distributions. The MSCI-ACW and the MSCI- EAFE have been adjusted to reflect
reinvestment of dividends on securities in the indexes.
2 The MSCI-ACW and the MSCI-EAFE are not adjusted to reflect sales charges,
expenses, or other fees that the Securities and Exchange Commission requires to
be reflected in the Fund's performance. These indexes are unmanaged.
3 Total return quoted reflects all applicable contingent deferred sales charges.
Federated International Growth Fund-Class C Shares
GROWTH OF A $10,000 INVESTMENT
The graph below illustrates the hypothetical investment of $10,000 1 in the
Federated International Growth Fund (Class C Shares) (the "Fund") from July 1,
1997 (start of performance) to November 30, 1999, compared to the Morgan Stanley
Capital International All Country World EX U.S. Index (MSCI- ACW) and the Morgan
Stanley Capital International Europe Australia Far East Index (MSCI-EAFE).2
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS 3 FOR THE PERIOD ENDED NOVEMBER 30, 1999
<S> <C>
1 Year 46.45%
Start of Performance (7/1/97) 9.10%
</TABLE>
[Please see Appendix A22]
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE PERFORMANCE. YOUR INVESTMENT RETURN
AND PRINCIPAL VALUE WILL FLUCTUATE, SO WHEN SHARES ARE REDEEMED, THEY MAY BE
WORTH MORE OR LESS THAN THEIR ORIGINAL COST. MUTUAL FUNDS ARE NOT OBLIGATIONS OF
OR GUARANTEED BY ANY BANK AND ARE NOT FEDERALLY INSURED.
1 Represents a hypothetical investment of $10,000 in the Fund. A 1.00%
contingent deferred sales charge would be applied on any redemption less than
one year from the purchase date. The Fund's performance assumes the reinvestment
of all dividends and distributions. The MSCI-ACW and the MSCI- EAFE have been
adjusted to reflect reinvestment of dividends on securities in the indexes.
2 The MSCI-ACW and the MSCI-EAFE are not adjusted to reflect sales charges,
expenses, or other fees that the Securities and Exchange Commission requires to
be reflected in the Fund's performance. These indexes are unmanaged.
3 Total return quoted reflects all applicable contingent deferred sales charges.
Portfolio of Investments
NOVEMBER 30, 1999
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL VALUE IN
AMOUNT U.S. DOLLARS
<S> <C> <C>
MUTUAL FUND SHARES-87.2%
431,213 Federated Asia Pacific
Growth Fund, Class A $ 5,855,867
191,868 Federated Emerging Markets
Fund, Class A 2,358,056
1,004,098 Federated European Growth
Fund, Class A 17,672,127
539,050 Federated International
Small Company Fund, Class A 18,958,375
213,837 Federated Latin American
Growth Fund, Class A 2,245,288
TOTAL MUTUAL FUND SHARES
(IDENTIFIED COST
$31,044,198) 47,089,713
REPURCHASE AGREEMENT-10.4%
1
$ 5,605,000 J.P. Morgan & Co., Inc.,
5.71%, dated 11/30/1999,
due 12/1/1999
(AT AMORTIZED COST) 5,605,000
TOTAL INVESTMENTS
(IDENTIFIED COST
$36,649,198) 2 $ 52,694,713
</TABLE>
1 The repurchase agreement is fully collateralized by U.S. government and/or
agency obligations based on market prices at the date of the portfolio. The
investment in the repurchase agreement is through participation in a joint
account with other Federated funds.
2 The cost of investments for federal tax purposes amounts to $36,687,363. The
net unrealized appreciation of investments on a federal tax basis amounts to
$16,007,350 which is comprised of $16,007,350 appreciation and $0 depreciation
at November 30, 1999.
Note: The categories of investments are shown as a percentage of net assets
($53,986,198) at November 30, 1999.
See Notes which are an integral part of the Financial Statements
Statement of Assets and Liabilities
NOVEMBER 30, 1999
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS:
Investment in repurchase
agreement $ 5,605,000
Investments in underlying
funds 47,089,713
Total investments in
securities, at value
(identified cost
$36,649,198 and tax
cost $36,687,363) $ 52,694,713
Cash 4,037
Income receivable 889
Receivable for shares sold 1,281,408
Deferred organizational
costs 24,145
TOTAL ASSETS 54,005,192
LIABILITIES:
Payable for shares
redeemed 7,610
Accrued expenses 11,384
TOTAL LIABILITIES 18,994
Net assets for 4,381,968
shares outstanding $ 53,986,198
NET ASSETS CONSIST OF:
Paid-in capital $ 42,504,847
Net unrealized
appreciation of
investments 16,045,515
Accumulated net realized
loss on investments (4,567,960)
Undistributed net
investment income 3,796
TOTAL NET ASSETS $ 53,986,198
NET ASSET VALUE, OFFERING
PRICE AND REDEMPTION
PROCEEDS PER SHARE
CLASS A SHARES:
Net Asset Value Per Share
($39,385,521 / 3,189,649
shares outstanding) $12.35
Offering Price Per Share
(100/94.50 of $12.35) 1 $13.07
Redemption Proceeds Per
Share $12.35
CLASS B SHARES:
Net Asset Value Per Share
($12,317,020 / 1,006,352
shares outstanding) $12.24
Offering Price Per Share $12.24
Redemption Proceeds Per
Share (94.50/100 of
$12.24) 1 $11.57
CLASS C SHARES:
Net Asset Value Per Share
($2,283,657 / 185,967
shares outstanding) $12.28
Offering Price Per Share $12.28
Redemption Proceeds Per
Share (99.00/100 of
$12.28) 1 $12.16
</TABLE>
1 See "What Do Shares Cost?" in the Prospectus.
See Notes which are an integral part of the Financial Statements
Statement of Operations
YEAR ENDED NOVEMBER 30, 1999
<TABLE>
<CAPTION>
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends $ 201,139
Interest 55,736
TOTAL INCOME 256,875
EXPENSES:
Administrative personnel
and services fee $ 185,000
Custodian fees 6,383
Transfer and dividend
disbursing agent fees and
expenses 77,805
Directors'/Trustees' fees 1,541
Auditing fees 15,552
Legal fees 8,754
Portfolio accounting fees 79,265
Distribution services fee-
Class B Shares 68,658
Distribution services fee-
Class C Shares 10,337
Shareholder services fee-
Class A Shares 61,993
Shareholder services fee-
Class B Shares 22,886
Shareholder services fee-
Class C Shares 3,446
Share registration costs 33,489
Printing and postage 37,980
Insurance premiums 1,311
Taxes 2,669
Miscellaneous 14,115
TOTAL EXPENSES 631,184
WAIVERS AND
REIMBURSEMENTS:
Waiver of shareholder
services fee-Class A
Shares $ (61,993)
Waiver of shareholder
services fee-Class B
Shares (22,886)
Waiver of shareholder
services fee-Class C
Shares (3,446)
Reimbursement of other
operating expenses (437,577)
TOTAL WAIVERS AND
REIMBURSEMENTS (525,902)
Net expenses 105,282
Net investment income 151,593
REALIZED AND UNREALIZED
GAIN ON INVESTMENTS:
Net realized gain on
investments 314,023
Net change in unrealized
appreciation of
investments 14,901,475
Net realized and
unrealized gain on
investments 15,215,498
Change in net assets
resulting from operations $ 15,367,091
</TABLE>
See Notes which are an integral part of the Financial Statements
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30 1999 1998
<S> <C> <C>
INCREASE (DECREASE) IN NET
ASSETS
OPERATIONS:
Net investment income $ 151,593 $ 61,049
Net realized gain (loss) on
investments ($274,266 and
$(4,375,819),
respectively, as computed
for federal tax purposes) 314,023 (4,808,525)
Net change in unrealized
appreciation of
investments 14,901,475 3,171,935
CHANGE IN NET ASSETS
RESULTING FROM OPERATIONS 15,367,091 (1,575,541)
DISTRIBUTIONS TO
SHAREHOLDERS:
Distributions from net
investment income
Class A Shares (145,393) (74,360)
Class B Shares (2,171) (26,124)
Class C Shares (233) (4,552)
CHANGE IN NET ASSETS
RESULTING FROM
DISTRIBUTIONS
TO SHAREHOLDERS (147,797) (105,036)
SHARE TRANSACTIONS:
Proceeds from sale of
shares 32,174,691 24,330,884
Net asset value of shares
issued to shareholders in
payment of
distributions declared 92,098 77,461
Cost of shares redeemed (22,306,048) (10,199,585)
CHANGE IN NET ASSETS
RESULTING FROM SHARE
TRANSACTIONS 9,960,741 14,208,760
Change in net assets 25,180,035 12,528,183
NET ASSETS:
Beginning of period 28,806,163 16,277,980
End of period (including
undistributed net
investment income of
$3,796
and $0, respectively) $ 53,986,198 $ 28,806,163
</TABLE>
See Notes which are an integral part of the Financial Statements
Financial Highlights-Class A Shares
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30 1999 1998 1997 1
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING
OF PERIOD $ 8.38 $ 8.73 $10.00
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income (net
operating loss) 0.07 0.04 2 (0.01)
Net realized and
unrealized gain (loss) on
investments 3.96 (0.33) (1.26)
TOTAL FROM INVESTMENT
OPERATIONS 4.03 (0.29) (1.27)
LESS DISTRIBUTIONS:
Distributions from net
investment income (0.06) (0.06) -
NET ASSET VALUE, END OF
PERIOD $12.35 $ 8.38 $ 8.73
TOTAL RETURN 3 48.44% (3.37%) (12.70%)
RATIOS TO AVERAGE NET
ASSETS:
Expenses 0.07% 0.08% 0.07% 4
Net investment income (net
operating loss) 0.65% 0.51% (0.01%) 4
Expense
waiver/reimbursement 5 1.49% 1.92% 4.32% 4
SUPPLEMENTAL DATA:
Net assets, end of period
(000 omitted) $39,386 $19,440 $10,562
Portfolio turnover 12% 31% 3%
</TABLE>
1 Reflects operations for the period from July 1, 1997 (date of initial public
investment) to November 30, 1997.
2 Per share information is based on average shares outstanding.
3 Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
4 Computed on an annualized basis.
5 This voluntary expense decrease is reflected in both the expense and the net
investment income (net operating loss) ratios shown above.
See Notes which are an integral part of the Financial Statements
Financial Highlights-Class B Shares
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30 1999 1998 1997 1
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING
OF PERIOD $ 8.31 $ 8.71 $10.00
INCOME FROM INVESTMENT
OPERATIONS:
Net operating loss (0.00) 2 (0.02) 3 (0.01)
Net realized and
unrealized gain (loss) on
investments 3.93 (0.34) (1.28)
TOTAL FROM INVESTMENT
OPERATIONS 3.93 (0.36) (1.29)
LESS DISTRIBUTIONS:
Distributions from net
investment income (0.00) 2 (0.04) -
NET ASSET VALUE, END OF
PERIOD $12.24 $ 8.31 $ 8.71
TOTAL RETURN 4 47.33% (4.14%) (12.90%)
RATIOS TO AVERAGE NET
ASSETS:
Expenses 0.82% 0.83% 0.82% 5
Net operating loss (0.10%) (0.24%) (0.77%) 5
Expense
waiver/reimbursement 6 1.49% 1.92% 2.78% 5
SUPPLEMENTAL DATA:
Net assets, end of period
(000 omitted) $12,317 $8,212 $5,036
Portfolio turnover 12% 31% 3%
</TABLE>
1 Reflects operations for the period from July 1, 1997 (date of initial public
investment) to November 30, 1997.
2 Per share amount does not round to $(0.01).
3 Per share information is based on average shares outstanding.
4 Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
5 Computed on an annualized basis.
6 This voluntary expense decrease is reflected in both the expense and the net
operating loss ratios shown above.
See Notes which are an integral part of the Financial Statements
Financial Highlights-Class C Shares
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30 1999 1998 1997 1
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING
OF PERIOD $ 8.33 $ 8.72 $10.00
INCOME FROM INVESTMENT
OPERATIONS:
Net operating loss (0.00) 2 (0.02) 3 (0.01)
Net realized and
unrealized gain (loss) on
investments 3.95 (0.33) (1.27)
TOTAL FROM INVESTMENT
OPERATIONS 3.95 (0.35) (1.28)
LESS DISTRIBUTIONS:
Distributions from net
investment income (0.00) 2 (0.04) -
NET ASSET VALUE, END OF
PERIOD $12.28 $ 8.33 $ 8.72
TOTAL RETURN 4 47.45% (3.99%) (12.80%)
RATIOS TO AVERAGE NET
ASSETS:
Expenses 0.82% 0.83% 0.82% 5
Net operating loss (0.10%) (0.24%) (0.77%) 5
Expense
waiver/reimbursement 6 1.49% 1.92% 2.69% 5
SUPPLEMENTAL DATA:
Net assets, end of period
(000 omitted) $2,284 $1,154 $680
Portfolio turnover 12% 31% 3%
</TABLE>
1 Reflects operations for the period from July 1, 1997 (date of initial public
investment) to November 30, 1997.
2 Per share amount does not round to $(0.01).
3 Per share information is based on average shares outstanding.
4 Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
5 Computed on an annualized basis.
6 This voluntary expense decrease is reflected in both the expense and the net
operating loss ratios shown above.
See Notes which are an integral part of the Financial Statements
Notes to Financial Statements
NOVEMBER 30, 1999
ORGANIZATION
World Investment Series, Inc. (the "Corporation") is registered under the
Investment Company Act of 1940, as amended (the "Act") as an open-end,
management investment company. The Corporation consists of ten portfolios. The
financial statements included herein are only those of Federated International
Growth Fund (the "Fund"), a diversified portfolio. The financial statements of
the other portfolios are presented separately. The assets of each portfolio are
segregated and a shareholder's interest is limited to the portfolio in which
shares are held.
The Fund offers three classes of shares: Class A Shares, Class B Shares and
Class C Shares. The investment objective of the Fund is to provide long-term
growth of capital. The Fund pursues its investment objective by investing in
shares of other open-end management investment companies for which affiliates of
Federated Investors, Inc. serve as investment adviser, transfer and dividend
disbursing agent, portfolio accountant, and principal underwriter (the
"Federated Funds," herein referred to as the "underlying funds") that invest
primarily in foreign equity securities. The underlying funds in which the Fund
will invest include, but are not limited to, Federated Asia Pacific Growth Fund,
Federated Emerging Markets Fund, Federated European Growth Fund, Federated
International Small Company Fund and Federated Latin American Growth Fund.
SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS
Investments in other open-end regulated investment companies are valued at net
asset value. Short-term securities are valued at the prices provided by an
independent pricing service. However, short-term securities with remaining
maturities of 60 days or less at the time of purchase may by valued at amortized
cost, which approximates fair market value.
REPURCHASE AGREEMENTS
It is the policy of the Fund to require the custodian bank to take possession,
to have legally segregated in the Federal Reserve Book Entry System, or to have
segregated within the custodian bank's vault, all securities held as collateral
under repurchase agreement transactions. Additionally, procedures have been
established by the Fund to monitor, on a daily basis, the market value of each
repurchase agreement's collateral to ensure that the value of collateral at
least equals the repurchase price to be paid under the repurchase agreement.
The Fund will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed by
the Fund's adviser to be creditworthy pursuant to the guidelines and/or
standards reviewed or established by the Board of Directors (the "Directors").
Risks may arise from the potential inability of counterparties to honor the
terms of the repurchase agreement. Accordingly, the Fund could receive less than
the repurchase price on the sale of collateral securities. The Fund, along with
other affiliated investment companies, may utilize a joint trading account for
the purpose of entering into one or more repurchase agreements.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS
Interest income and expenses are accrued daily. Bond premium and discount, if
applicable, are amortized as required by the Internal Revenue Code of 1986, as
amended (the "Code"). Dividend income and distributions to shareholders are
recorded on the ex-dividend date. Non-cash dividends included in dividend
income, if any, are recorded at fair value. The Fund offers multiple classes of
shares, which differ in their respective distribution and service fees. All
shareholders bear the common expenses of the Fund based on average daily net
assets of each class, without distinction between share classes. Dividends are
declared separately for each class. No class has preferential dividend rights;
differences in per share dividend rates are generally due to differences in
separate class expenses.
FEDERAL TAXES
It is the Fund's policy to comply with the provisions of the Code applicable to
regulated investment companies and to distribute to shareholders each year
substantially all of its income. Accordingly, no provision for federal tax is
necessary.
At November 30, 1999, the Fund, for federal tax purposes, had a capital loss
carryforward of $4,101,553, which will reduce the Fund's taxable income arising
from future net realized gain on investments, if any, to the extent permitted by
the Code, and thus will reduce the amount of the distributions to shareholders
which would otherwise be necessary to relieve the Fund of any liability for
federal tax. Pursuant to the Code, such capital loss carryforward will expire in
2006.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
The Fund may engage in when-issued or delayed delivery transactions. The Fund
records when-issued securities on the trade date and maintains security
positions such that sufficient liquid assets will be available to make payment
for the securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date. Losses may occur on these transactions due to changes in market
conditions or the failure of counterparties to perform under the contact.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts of assets, liabilities, expenses and revenues reported in the
financial statements. Actual results could differ from those estimated.
OTHER
Investment transactions are accounted for on a trade date basis.
CAPITAL STOCK
At November 30, 1999, par value shares ($0.001 per share) authorized were as
follows:
<TABLE>
<CAPTION>
NUMBER OF PAR VALUE
CLASS NAME CAPITAL STOCK AUTHORIZED
<S> <C>
Class A Shares 100,000,000
Class B Shares 100,000,000
Class C Shares 100,000,000
TOTAL 300,000,000
</TABLE>
Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30 1999 1998
CLASS A SHARES: SHARES AMOUNT SHARES
AMOUNT
<S> <C> <C> <C>
<C>
Shares sold 2,660,753 $ 26,693,042 2,050,819 $
18,284,432
Shares issued to
shareholders in payment of
distributions declared 10,444 89,817
5,647 48,958
Shares redeemed (1,800,577) (17,702,441) (947,847)
(8,348,289)
NET CHANGE RESULTING FROM
CLASS A
SHARE TRANSACTIONS 870,620 $ 9,080,418 1,108,619 $
9,985,101
<CAPTION>
YEAR ENDED NOVEMBER 30 1999 1998
CLASS B SHARES: SHARES AMOUNT SHARES
AMOUNT
<S> <C> <C> <C>
<C>
Shares sold 273,359 $ 2,722,015 583,808 $
5,216,521
Shares issued to
shareholders in payment of
distributions declared 241 2,065
2,839 24,563
Shares redeemed (255,138) (2,367,708) (176,735)
(1,554,919)
NET CHANGE RESULTING FROM
CLASS B
SHARE TRANSACTIONS 18,462 $ 356,372 409,912 $
3,686,165
<CAPTION>
YEAR ENDED NOVEMBER 30 1999 1998
CLASS C SHARES: SHARES AMOUNT SHARES
AMOUNT
<S> <C> <C> <C>
<C>
Shares sold 257,750 $ 2,759,634 93,113 $
829,931
Shares issued to
shareholders in payment of
distributions declared 25 216
454 3,940
Shares redeemed (210,253) (2,235,899) (33,030)
(296,377)
NET CHANGE RESULTING FROM
CLASS C
SHARE TRANSACTIONS 47,522 $ 523,951 60,537 $
537,494
NET CHANGE RESULTING FROM
SHARE TRANSACTIONS 936,604 $ 9,960,741 1,579,068 $
14,208,760
</TABLE>
INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISER FEE
Federated Global Investment Management Corp. is the Fund's investment adviser
(the "Adviser"). The Adviser fee is contingent upon the grant of certain
exemptive relief from the Securities and Exchange Commission. If the Fund were
paying or accruing the Adviser fee, the Fund would be able to pay up to 1.25% of
its average daily net assets which are invested in individual stocks, bonds or
money market investments, and not on those assets invested in shares of the
underlying funds. If an asset allocation fee were to be charged to the Fund, it
could range up to an annual fee of 0.20% of the average daily net assets
invested in the underlying funds. The Fund did not pay or accrue the asset
allocation fee during the fiscal year ended November 30, 1999.
ADMINISTRATIVE FEE
Federated Services Company ("FServ"), under the Administrative Services
Agreement, provides the Fund with administrative personnel and services. The fee
paid to FServ is based on a scale that ranges from 0.15% to 0.075% of the
average aggregate daily net assets of all funds advised by subsidiaries of
Federated Investors, Inc., subject to a $125,000 minimum per portfolio and
$30,000 per each additional class.
DISTRIBUTION SERVICES FEE
The Fund has adopted a Distribution Plan (the "Plan") pursuant to Rule 12b-1
under the Act. Under the terms of the Plan, the Fund will compensate Federated
Securities Corp. ("FSC"), the principal distributor, from the net assets of the
Fund to finance activities intended to result in the sale of the Fund's Class A
Shares, Class B Shares, and Class C Shares. The Plan provides that the Fund may
incur distribution expenses according to the following schedule annually, to
compensate FSC.
<TABLE>
<CAPTION>
PERCENTAGE OF
AVERAGE DAILY
SHARE CLASS NAME NET ASSETS OF CLASS
<S> <C>
Class A Shares 0.25%
Class B Shares 0.75%
Class C Shares 0.75%
</TABLE>
Class A Shares did not pay or accrue the 12b-1 fee during the fiscal year ended
November 30, 1999, and has no present intention of paying or accruing a
distribution services fee.
SHAREHOLDER SERVICES FEE
Under the terms of a Shareholder Services Agreement with Federated Shareholder
Services Company ("FSSC"), the Fund will pay FSSC up to 0.25% of average daily
net assets of the Fund for the period. The fee paid to FSSC is used to finance
certain services for shareholders and to maintain shareholder accounts. FSSC may
voluntarily choose to waive any portion of its fee. FSSC can modify or terminate
this voluntary waiver at any time at its sole discretion.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES
FServ, through its subsidiary FSSC, serves as transfer and dividend disbursing
agent for the Fund. The fee paid to FSSC is based on the size, type, and number
of accounts and transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES
FServ maintains the Fund's accounting records for which it receives a fee. The
fee is based on the level of the Fund's average daily net assets for the period,
plus out-of-pocket expenses.
ORGANIZATIONAL EXPENSES
Organizational expenses of $42,732 were borne initially by the Adviser. The Fund
has reimbursed the Adviser for these expenses. These expenses have been deferred
and are being amortized over the five-year period following the Fund's effective
date. For the fiscal year ended November 30, 1999, the Fund expensed $9,258 of
organizational expenses.
GENERAL
Certain of the Officers and Directors of the Corporation are Officers and
Directors or Trustees of the above companies.
INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities (and in-
kind contributions), for the fiscal year ended November 30, 1999, were as
follows:
<TABLE>
<CAPTION>
<S> <C>
Purchases $ 8,560,198
Sales $ 4,150,000
</TABLE>
LINE OF CREDIT AGREEMENT
Effective November 29, 1999 the Corporation entered into a $75,000,000 unsecured
committed revolving line of credit ("LOC") agreement with State Street
Corporation. The LOC was made available for extraordinary or emergency purposes,
primarily for financing redemption payments. Borrowings are charged interest at
a rate of 0.50% over the Federal Funds Rate. The LOC includes a commitment fee
of 0.08% per annum on the daily unused portion. The Corporation did not make any
borrowing under the LOC during the fiscal year ended November 30, 1999.
Report of Ernst & Young LLP, Independent Auditors
TO THE BOARD OF DIRECTORS OF WORLD INVESTMENT SERIES, INC. AND
SHAREHOLDERS OF FEDERATED INTERNATIONAL GROWTH FUND:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of Federated International Growth Fund (the Fund)
(one of the portfolios constituting the World Investment Series, Inc.) as of
November 30, 1999, and the related statement of operations for the year then
ended, the statement of changes in net assets for each of the two years in the
period then ended, and financial highlights for each of the periods presented
therein. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned as of November 30, 1999, by correspondence with the custodian and brokers
or other appropriate auditing procedures where replies from brokers were not
received. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Federated International Growth Fund of World Investment Series, Inc. at November
30, 1999, and the results of its operations for the year then ended, the changes
in its net assets for each of the two years in the period then ended, and the
financial highlights for each of the periods presented therein, in conformity
with accounting principles generally accepted in the United States.
[Graphic]
Boston, Massachusetts
January 21, 2000
Directors
JOHN F. DONAHUE
THOMAS G. BIGLEY
JOHN T. CONROY, JR.
NICHOLAS P. CONSTANTAKIS
WILLIAM J. COPELAND
LAWRENCE D. ELLIS, M.D.
RICHARD B. FISHER
EDWARD L. FLAHERTY, JR., ESQ.
PETER E. MADDEN
CHARLES F. MANSFIELD, JR.
JOHN E. MURRAY, JR., J.D., S.J.D.
WESLEY W. POSVAR
MARJORIE P. SMUTS
Officers
JOHN F. DONAHUE
Chairman
RICHARD B. FISHER
President
J. CHRISTOPHER DONAHUE
Executive Vice President
EDWARD C. GONZALES
Executive Vice President
JOHN W. MCGONIGLE
Executive Vice President and Secretary
HENRY A. FRANTZEN
Chief Investment Officer
RICHARD J. THOMAS
Treasurer
JAMES O. PERRY
Assistant Secretary
Mutual funds are not bank deposits or obligations, are not guaranteed by any
bank, and are not insured or guaranteed by the U.S. government, the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other
government agency. Investment in mutual funds involves investment risk,
including the possible loss of principal.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the fund's prospectus which contains facts concerning
its objective and policies, management fees, expenses, and other information.
AS OF NOVEMBER 30, 1999
[Graphic]
Federated
World-Class Investment Manager
ANNUAL REPORT
Federated International Growth Fund
Established 1997
3RD ANNUAL REPORT
[Graphic]
Federated
Federated International Growth Fund
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
1-800-341-7400
WWW.FEDERATEDINVESTORS.COM
Federated Securities Corp., Distributor
Cusip 981487739
Cusip 981487721
Cusip 981487713
G02270-01 (1/00)
[Graphic]
ANNUAL REPORT
[Graphic]
Richard B. Fisher
President
Federated International High Income Fund
President's Message
Dear Fellow Shareholder:
Federated International High Income Fund was created in 1996, and I am pleased
to present its fourth Annual Report. As of November 30, 1999, the fund's $95.9
million in net assets were invested in 48 government bonds and 38 international
corporate issues across 37 countries. The fund offers shareholders significant
income opportunities from a select portfolio of carefully researched
international bonds issued by companies and governments outside the
U.S.-primarily in the emerging markets. 1
This report covers the 12-month reporting period from December 1, 1998 through
November 30, 1999. It begins with an interview with Robert M. Kowit, Vice
President, who co-manages the fund with Micheal W. Casey, Vice President, both
of Federated Global Investment Management Corp. Following their discussion
covering international economic and market conditions and fund's strategy are
two additional items of shareholder interest. First is a complete listing of the
fund's international bond investments, and second is the publication of the
fund's financial statements.
Over the 12-month reporting period, the fund's returns were positive as the
emerging markets significantly outperformed the developed markets. A strong
income stream helped temper a decline in the fund's net asset value, which
reflected overall price declines in the bond's developed market holdings.
1 Foreign investing involves special risks including currency risk, increased
volatility of foreign securities, and differences in auditing and other
financial standards. In addition, emerging markets structures may be less
diverse and mature, and their political systems may be less stable.
Individual share class total return performance for the 12-month reporting
period, including income distributions, is as follow: 2
<TABLE>
<CAPTION>
TOTAL RETURN INCOME NET ASSET VALUE CHANGE <S> <C> <C> <C> Class A Shares 7.55%
$0.78 $7.99 to $7.71 = (3.50%) Class B Shares 6.73% $0.72 $7.99 to $7.71 =
(3.50%) Class C Shares 6.73% $0.72 $7.99 to $7.71 = (3.50%)
</TABLE>
If you are not already doing so, I invite you to join the many shareholders who
reinvest their monthly dividends and add to their accounts to compound their
shares and own more shares for potential future income. I recommend adding to
your account on a regular basis to take advantage of price fluctuations and to
use the dollar-cost averaging method of investing. 3 Plus by investing the same
amount regularly, you buy more fund shares when prices are low and fewer when
prices are high.
Thank you for your investment in Federated International High Income Fund and
for the confidence you have shown by investing a portion of your wealth in the
fund.
Sincerely,
[Graphic]
Richard B. Fisher
President
January 15, 2000
2 Performance quoted is based on net asset value, represents past performance
and is no guarantee of future results. Investment return and principal value
will fluctuate so that an investor's shares, when redeemed, may be worth more or
less than their original cost. Total returns for the period, based on offering
price (i.e., less any applicable sales charge), for Class A, B, and C Shares
were 2.66%, 1.42%, and 5.76%, respectively.
3 Systematic investing does not assure a profit or protect against loss in
declining markets. Because dollar-cost averaging involves continuous investment
regardless of fluctuating price levels, investors should consider their
financial ability to continue purchases during periods of low price levels.
[Graphic]
Robert M. Kowit
Vice President
Federated Global Investment Management Corp.
[Graphic]
Micheal W. Casey
Vice President
Federated Global Investment Management Corp.
Investment Review
WHAT IS YOUR REVIEW OF THE 12-MONTH REPORTING PERIOD, IN WHICH THE EMERGING BOND
MARKETS OUTPERFORMED THE DEVELOPED MARKETS?
For 1999, the recovery in the emerging markets has been driven in large part by
the recovery in oil and commodity prices. The J.P. Morgan Emerging Markets Bond
Index was up by over 23% year-to-date, while the Goldman Sachs Commodity Index
was up over 36%. 1 Most emerging economies are dependent on commodity exports to
earn dollars to service their international debt. Higher prices have implied
better credit quality and improved bond performance.
During the year, developed market debt suffered the double impact of lower bond
prices and a stronger U.S. dollar. Most developed bond markets also suffered
from the fear of the Federal Reserve Board and European Central Bank being in a
tightening mode. In addition to these factors, the U.S. dollar was much stronger
against all major currencies except the Japanese yen, which caused the developed
bond markets to post lower returns than the weak U.S. bond markets.
1 The J.P. Morgan Emerging Market Bond Index is an unmanaged index that tracks
the total returns of external currency denominated debt instruments of 14
emerging markets countries. The Goldman Sachs Commodity Index is an unmanaged
index comprised of commodity sector returns, representing an unleveraged,
long-only investment in commodity futures that is broadly diversified across the
spectrum of commodities. Investments cannot be made in an index.
IN THIS ENVIRONMENT, HOW DID FEDERATED INTERNATIONAL HIGH INCOME FUND PERFORM
FOR SHAREHOLDERS OVER THE REPORTING PERIOD?
For the 12-month reporting period ended November 30, 1999, the fund's returns,
based on net asset value, were: Class A Shares, 7.55%; Class B Shares, 6.73%;
and Class C Shares, 6.73%. 2 These returns were greater than the (3.44%) return
of the developed markets as measured by the J.P. Morgan Non-Dollar Bond Index3
("JPM-NDBI") and lagged the 16.52% return of the more aggressive emerging bond
markets as measured by the J.P. Morgan Emerging Market Bond Index ("JPM-EMB").
The total return of all emerging market debt funds as tracked by Lipper
Analytical Services, Inc. was 15.30%.4
WHAT WERE THE FUND'S INCOME DISTRIBUTIONS DURING THE 12-MONTH REPORTING PERIOD
ENDED NOVEMBER 30, 1999?
The fund paid a very strong income stream over the reporting period totaling
$0.78 per share for Class A Shares, $0.72 per share for Class B Shares, and
$0.72 per share for Class C Shares.
From a yield perspective, the fund's 30-day SEC yield as of November 30, 1999
was 10.73% for Class A Shares, 9.95% for Class B Shares and 9.95% for Class C
Shares. 5
2 Performance quoted is based on net asset value, represents past performance
and is no guarantee of future results. Investment return and principal value
will fluctuate so that an investor's shares, when redeemed, may be worth more or
less than their original cost. Total returns for the period, based on offering
price (i.e., less any applicable sales charge), for Class A, B, and C Shares
were 2.66%, 1.42%, and 5.76%, respectively.
3 The J.P. Morgan Non-Dollar Bond Index is a total return, unmanaged trade-
weighted index of over 360 government and high-grade bonds in 12 developed
countries. Investments cannot be made in an index.
4 Lipper figures represent the average of the total returns reported by all of
the mutual funds designated by Lipper Analytical Services, Inc. as falling into
the category indicated. Lipper figures do not take sales charges into account.
5 The 30-day SEC yield, based on offering price for Class A Shares was 10.24%.
THE FUND MAINTAINS A GENERAL ALLOCATION OF 20%-30% TO THE DEVELOPED MARKETS
AND 70%-80% TO THE EMERGING MARKETS. WHAT ADJUSTMENTS HAVE YOU MADE TO THE
FUND'S ALLOCATION AND WHY?
The fund stayed within these parameters during the reporting period, but we
increased the fund's allocation to various emerging markets countries such as
Brazil, Kazakhstan, and Turkey. The fund uses developed market debt to moderate
the high volatility of its emerging market holdings. Over the last year, the
weekly volatility of return has been 7.77% for the fund compared to 13.78% for
the JPM-EMB.
BRAZIL AND MEXICO WERE THE FUND'S LARGEST COUNTRY COMMITMENTS. WHAT DO YOU
LIKE ABOUT THOSE COUNTRIES' BOND MARKETS?
Brazil has suffered a serious shock at the start of the year as the currency was
devalued by almost 100%-from just over one to the U.S. dollar to two to the U.S.
dollar. There were fears that a weaker local currency would greatly increase the
cost of imports and result in tremendous inflation. Brazil and its new Central
Bank director responded very well to this challenge, and the markets started to
correct after a sharp sell off. We established positions in large liquid
sovereign issues with high coupons. One of the larger holdings in the fund is
the Brazilian bond 14.50% maturing on 10/15/2009 (4.91% of net assets) which was
bought at a discount and is now trading at a premium where it yields 13.03% to
maturity and has a 13.43% current yield.
Mexico presented a similar story of a depressed market recovering during the
year. When Brazil devalued, Mexico also came under pressure. In addition, Mexico
had suffered from the low price of oil-one of its major exports. As the price of
oil recovered, so did the value of Mexican bonds. One of the fund's Mexican
holdings is the Mexican bond 11.375% maturing on 9/15/2016 (1.72% of net assets)
which was trading at just under par early in the year. Although most U.S. bonds
moved down in price over the year, these bonds ended the year at a premium, with
a yield to maturity of 9.66% and a current yield of 9.97%.
WHAT WERE THE FUND'S TOP FIVE GOVERNMENT AND CORPORATE HOLDINGS AS OF NOVEMBER
30, 1999?
The fund's top five international government holdings were:
<TABLE>
<CAPTION>
PERCENTAGE OF
COUNTRY/COUPON/MATURITY NET ASSETS
<S> <C>
Brazil (emerging), 14.50%, due 10/15/2009 4.91% Turkey (emerging), 12.375%, due
06/15/2009 4.34% Brazil (emerging), 10.125%, due 05/15/2027 4.17% Argentina
(emerging), 11.375%, due 01/30/2017 2.94% Kazakhstan (emerging), 13.625%, due
10/18/2004 2.67% TOTAL 19.03%
</TABLE>
The fund's top five international corporate holdings were:
<TABLE>
<CAPTION>
NAME/COUNTRY/COUPON/MATURI PERCENTAGE OF
TY NET ASSETS
<S> <C>
Endesa, Chile (emerging),
8.50%, due 4/01/2009 2.63%
Clearnet, Canada
(developed), SR. Dis. Note
due 08/13/2007 2.62%
Premier Intl., United
Kingdom (developed), 12%,
due 09/01/2009 2.10%
Huntsman ICI, United
States (developed),
10.125%, due 07/01/2009 1.63%
Advanced Agro, Thailand
(emerging), 13.00%, due
11/15/2007 1.61%
TOTAL 10.59%
</TABLE>
WHAT IS YOUR OUTLOOK FOR THE EMERGING AND DEVELOPED BOND MARKETS, AND YOUR
STRATEGY FOR THE FUND AS WE ENTER THE YEAR 2000?
2000 could be a year in which both components of the fund do very well. The
emerging markets are expected to continue their performance of 1999, and the
developed markets would benefit substantially if the U.S. dollar weakens as
global growth outstrips U.S. growth and the U.S. trade deficits continue.
Last Meeting of Shareholders
A Special Meeting of shareholders of Federated International High Income Fund
(the "Fund"), a portfolio of World Investment Series, Inc. was held on December
17, 1999. On September 7, 1999, the record date for the shareholders voting at
the meeting, there were 12,521,359 total outstanding shares.
The following items were considered by shareholders and the results of their
voting were as follows:
AGENDA ITEM 1
Elected Directors: 1
<TABLE>
<CAPTION>
WITHHELD
SHARES AUTHORITY
VOTED FOR TO VOTE
<S> <C> <C>
Thomas G. Bigley 7,383,134 235,419
Nicholas P. Constantakis 7,383,068 235,485
John F. Cunningham 7,383,134 235,419
J. Christopher Donahue 7,383,134 235,419
Charles F. Mansfield, Jr. 7,383,134 235,419
John E. Murray, Jr., J.D., S.J.D. 7,375,882 242,671
John S. Walsh 7,381,829 236,724
</TABLE>
1 The following Directors continued their terms as Directors: John F.
Donahue, John T, Conroy, William P. Copeland, Lawrence D. Ellis, M.D.,
Peter E. Madden and Marjorie P. Smuts.
Director elections will become effective January 1, 2000.
AGENDA ITEM 2
Made changes to the Fund's fundamental investment policies:
(a) Amended the Fund's fundamental investment policy regarding
diversification.
<TABLE>
<CAPTION>
SHARES ABSTENTIONS
VOTED AND BROKER
SHARES VOTED FOR AGAINST NON-VOTES
<S> <C> <C>
5,151,220 306,456 2,160,877
</TABLE>
(b) Amended the Fund's fundamental investment policy regarding borrowing money
and issuing senior securities.
<TABLE>
<CAPTION>
SHARES ABSTENTIONS
VOTED AND BROKER
SHARES VOTED FOR AGAINST NON-VOTES
<S> <C> <C>
5,527,941 334,202 1,756,410
</TABLE>
(c) Amended the Fund's fundamental investment policy regarding investments
in real estate.
<TABLE>
<CAPTION>
SHARES ABSTENTIONS
VOTED AND BROKER
SHARES VOTED FOR AGAINST NON-VOTES
<S> <C> <C>
5,531,918 336,920 1,749,715
</TABLE>
(d) Amended the Fund's fundamental investment policy regarding investments
in commodities.
<TABLE>
<CAPTION>
SHARES ABSTENTIONS
VOTED AND BROKER
SHARES VOTED FOR AGAINST NON-VOTES
<S> <C> <C>
5,403,458 440,440 1,774,655
</TABLE>
(e) Amended the Fund's fundamental investment policy regarding underwriting
securities.
<TABLE>
<CAPTION>
SHARES ABSTENTIONS
VOTED AND BROKER
SHARES VOTED FOR AGAINST NON-VOTES
<S> <C> <C>
5,534,387 327,030 1,757,136
</TABLE>
(f) Amended the Fund's fundamental investment policy regarding lending
assets.
<TABLE>
<CAPTION>
SHARES ABSTENTIONS
VOTED AND BROKER
SHARES VOTED FOR AGAINST NON-VOTES
<S> <C> <C>
5,493,305 382,470 1,742,778
</TABLE>
(g) Amended the Fund's fundamental investment policy regarding concentration of
the Fund's investments in the securities of companies in the same industry.
<TABLE>
<CAPTION>
SHARES ABSTENTIONS
VOTED AND BROKER
SHARES VOTED FOR AGAINST NON-VOTES
<S> <C> <C>
5,578,946 316,655 1,722,952
</TABLE>
(h) Amended, and made non-fundamental, the Fund's fundamental investment policy
regarding buying securities on margin.
<TABLE>
<CAPTION>
SHARES ABSTENTIONS
VOTED AND BROKER
SHARES VOTED FOR AGAINST NON-VOTES
<S> <C> <C>
5,332,102 482,485 1,803,966
</TABLE>
(i) Amended, and made non-fundamental, the Fund's fundamental investment policy
regarding pledging assets.
<TABLE>
<CAPTION>
SHARES ABSTENTIONS
VOTED AND BROKER
SHARES VOTED FOR AGAINST NON-VOTES
<S> <C> <C>
5,346,640 463,125 1,808,788
</TABLE>
AGENDA ITEM 3
Eliminated certain fundamental investment policies of the Fund:
Removed the Fund's fundamental investment policy regarding selling securities
short.
<TABLE>
<CAPTION>
SHARES ABSTENTIONS
VOTED AND BROKER
SHARES VOTED FOR AGAINST NON-VOTES
<S> <C> <C>
5,384,411 410,676 1,823,466
</TABLE>
AGENDA ITEM 4
Approved an amendment to the Articles of Incorporation of World Investment
Series, Inc. to permit the Board of Directors to liquidate assets of a series or
class without seeking shareholder approval to the extent permitted under
Maryland law.
<TABLE>
<CAPTION>
SHARES ABSTENTIONS
VOTED AND BROKER
SHARES VOTED FOR AGAINST NON-VOTES
<S> <C> <C>
5,384,407 492,573 1,741,572
</TABLE>
Federated International High Income Fund - Class A Shares
GROWTH OF A $10,000 INVESTMENT
The graph below illustrates the hypothetical investment of $10,000 1 in the
Federated International High Income Fund (Class A Shares) (the "Fund") from
October 2, 1996 (start of performance) to November 30, 1999 compared to the
J.P. Morgan Emerging Market Bond Index (JPM-EMB).2
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS 3 FOR THE PERIOD ENDED NOVEMBER 30, 1999
<S> <C>
1 Year 2.66%
Start of Performance (10/2/96) 1.09%
</TABLE>
[Please see Appendix A23]
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE PERFORMANCE. YOUR INVESTMENT RETURN
AND PRINCIPAL VALUE WILL FLUCTUATE SO WHEN SHARES ARE REDEEMED, THEY MAY BE
WORTH MORE OR LESS THAN THEIR ORIGINAL COST. MUTUAL FUNDS ARE NOT OBLIGATIONS OF
OR GUARANTEED BY ANY BANK AND ARE NOT FEDERALLY INSURED.
1 Represents a hypothetical investment of $10,000 in the Fund after deducting
the maximum sales charge of 4.50% ($10,000 investment minus $450 sales charge =
$9,550). The Fund's performance assumes the reinvestment of all dividends and
distributions. The JPM-EMB has been adjusted to reflect reinvestment of
dividends on securities in the index.
2 The JPM-EMB is not adjusted to reflect sales charges, expenses, or other fees
that the Securities and Exchange Commission requires to be reflected in the
Fund's performance. The index is unmanaged.
3 Total return quoted reflects all applicable sales charges.
Federated International High Income Fund - Class B Shares
GROWTH OF A $10,000 INVESTMENT
The graph below illustrates the hypothetical investment of $10,000 1 in the
Federated International High Income Fund (Class B Shares) (the "Fund") from
October 2, 1996 (start of performance) to November 30, 1999 compared to the
J.P. Morgan Emerging Market Bond Index (JPM-EMB).2
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS 3 FOR THE PERIOD ENDED NOVEMBER 30, 1999
<S> <C>
1 Year 1.42%
Start of Performance (10/2/96) 1.08%
</TABLE>
[Please see Appendix A24]
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE PERFORMANCE. YOUR INVESTMENT RETURN
AND PRINCIPAL VALUE WILL FLUCTUATE SO WHEN SHARES ARE REDEEMED, THEY MAY BE
WORTH MORE OR LESS THAN THEIR ORIGINAL COST. MUTUAL FUNDS ARE NOT OBLIGATIONS OF
OR GUARANTEED BY ANY BANK AND ARE NOT FEDERALLY INSURED.
1 Represents a hypothetical investment of $10,000 in the Fund. The ending value
of the Fund reflects a contingent deferred sales charge of 3.00% on any
redemption less than four years from the purchase date. The maximum contingent
deferred sales charge is 5.50% on any redemption less than one year from the
purchase date. The Fund's performance assumes the reinvestment of all dividends
and distributions. The JPM-EMB has been adjusted to reflect reinvestment of
dividends on securities in the index.
2 The JPM-EMB is not adjusted to reflect sales charges, expenses, or other fees
that the Securities and Exchange Commission requires to be reflected in the
Fund's performance. The index is unmanaged.
3 Total return quoted reflects all applicable contingent deferred sales charges.
Federated International High Income Fund - Class C Shares
GROWTH OF A $10,000 INVESTMENT
The graph below illustrates the hypothetical investment of $10,000 1 in the
Federated International High Income Fund (Class C Shares) (the "Fund") from
October 2, 1996 (start of performance) to November 30, 1999 compared to the
J.P. Morgan Emerging Market Bond Index (JPM-EMB).2
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS 3 FOR THE PERIOD ENDED NOVEMBER 30, 1999
<S> <C>
1 Year 5.76%
Start of Performance (10/2/96) 1.79%
</TABLE>
[Please see Appendix A25]
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE PERFORMANCE. YOUR INVESTMENT RETURN
AND PRINCIPAL VALUE WILL FLUCTUATE SO WHEN SHARES ARE REDEEMED, THEY MAY BE
WORTH MORE OR LESS THAN THEIR ORIGINAL COST. MUTUAL FUNDS ARE NOT OBLIGATIONS OF
OR GUARANTEED BY ANY BANK AND ARE NOT FEDERALLY INSURED.
1 Represents a hypothetical investment of $10,000 in the Fund. A 1.00%
contingent deferred sales charge would be applied on any redemption less than
one year from the purchase date. The Fund's performance assumes the reinvestment
of all dividends and distributions. The JPM-EMB has been adjusted to reflect
reinvestment of dividends on securities in the index.
2 The JPM-EMB is not adjusted to reflect sales charges, expenses, or other fees
that the Securities and Exchange Commission requires to be reflected in the
Fund's performance. The index is unmanaged.
3 Total return quoted reflects all applicable contingent deferred sales charges.
Portfolio of Investments
NOVEMBER 30, 1999
<TABLE>
<CAPTION>
SHARES OR
FOREIGN
CURRENCY VALUE IN
PAR AMOUNT U.S. DOLLARS
<C> <S> <C>
COMMON STOCK-0.1%
TELECOMMUNICATIONS &
CELLULAR-0.1%
2,500 1 Jazztel PLC, Warrants
(identified cost $0) $ 125,969
CORPORATE BONDS-34.7%
BEVERAGE & TOBACCO-0.8%
1,000,000 2 Sampoerna International
Finance Co., Sr. Note,
Series 144 A,
8.375%, 6/15/2006 728,940
BROADCAST RADIO & TV-0.8%
1,000,000 Globo Communicacoes Part,
Sr. Note, 10.625%,
12/5/2008 780,640
BUILDING & DEVELOPMENT-
1.6%
500,000 Cemex SA, Bond, 12.75%,
7/15/2006 552,262
1,000,000 2, 3 Cemex SA, Series 144A,
9.625%, 10/1/2009 1,007,500
TOTAL 1,559,762
CHEMICALS & PLASTICS-1.6%
1,500,000 2 Huntsman ICI Corp., Sr.
Sub., 10.125%, 7/1/2009 1,566,799
CONGLOMERATES-0.6%
2,253,472,222 1 Dharmala 9,241
350,000 Mechala Group Jamaica,
Company Guarantee, Series
REGS, 12.00%, 2/15/2002 131,250
1,000,000 Mechala Group Jamaica,
Note, Series B, 12.75%,
12/30/1999 395,000
TOTAL 535,491
CONTAINER & GLASS
PRODUCTS-0.7%
750,000 Vicap SA, Sr. Note,
11.375%, 5/15/2007 672,008
FINANCIAL INTERMEDIARIES-
4.1%
12,000,000 Baden Wurt L-Finance NV,
Sr. Note, Series E, MTN,
13.50%, 6/22/2001 367,842
1,300,000 Bancomext Trust, Bank
Guarantee, 11.25%,
5/30/2006 1,368,250
1,260,000 Brierley Investments Ltd.,
Bond, 9.00%, 3/15/2002 640,438
127,000 Nykredit, Mtg. Bond,
8.00%, 10/1/2029 17,623
301,666,667 1 Polysindo 4,947
1,098,333,333 1 Polysindo International
Finance Co. BV, 3/16/2000 18,013
1,500,000 2, 3 PTC International Finance
II, Company Guarantee,
Series 144 A,
11.25%, 12/1/2009 1,511,624
TOTAL 3,928,737
<CAPTION>
FOREIGN
CURRENCY VALUE IN
PAR AMOUNT U.S. DOLLARS
<C> <S> <C>
CORPORATE BONDS-continued
FOOD & DRUG RETAILERS-2.1%
2,000,000 2, 3 Premier Intl. Foods PLC,
12.00%, 9/1/2009 $ 2,010,000
FOREST PRODUCTS-2.9%
1,300,000 Grupo Industrial Durango
SA de CV, 12.625%, 8/1/2003 1,278,940
800,000 Indah Kiat Intl. Finance,
Company Guarantee, 11.875%
6/15/2002 704,000
950,000 Indah Kiat Intl. Finance,
Company Guarantee, 12.50%,
6/15/2006 769,500
TOTAL 2,752,440
INDUSTRIAL PRODUCTS &
EQUIPMENT-2.0%
2,300,000 Advance Agro Public Co.,
Unsub., 13.00%, 11/15/2007 1,541,000
500,000 2, 3 Globo Communicacoes Part,
10.625%, 12/5/2008 401,875
TOTAL 1,942,875
OIL & GAS-1.0%
1,100,000 Perez Companc, Series
REGS, 9.00%, 5/1/2006 992,750
SUPRANATIONAL-0.7%
350,000,000 European Bank for
Reconstruction and
Development, Bond,
10.00%, 5/2/2002 316,110
200,000 European Investment Bank,
Bond, 12.00%, 2/15/2000 321,993
TOTAL 638,103
SURFACE TRANSPORTATION-
0.5%
800,000 Air Canada, 7.25%,
10/1/2007 505,538
TECHNOLOGY SERVICES-1.1%
1,000,000 Samsung Electron America,
Series REGS, 9.75%,
5/1/2003 1,036,250
TELECOMMUNICATIONS &
CELLULAR-11.6%
5,200,000 Clearnet Communications,
Inc., Sr. Disc. Note,
8/13/2007 2,517,497
1,000,000 Esat Telecom Group PLC,
11.875%, 11/1/2009 1,066,182
1,435,000 2, 3 Grupo Televisa SA, Sr.
Disc. Note, 13.25%,
5/15/2008 1,287,913
500,000 2 Jazztel PLC, 14.00%,
4/1/2009 524,030
3,200,000 Microcell
Telecommunications, Sr.
Disc. Note,
11.125%, 10/15/2007 1,435,075
500,000 Netia Holdings, Company
Guarantee, 10.25%,
11/1/2007 422,758
1,300,000 Philippine Long Distance
Telephone Co., Deb.,
10.625%, 6/2/2004 1,327,916
1,500,000 Philippine Long Distance
Telephone Co., Sr. Note,
Series E, MTN,
8.35%, 3/6/2017 1,179,450
5,250,000 Telkom SA Ltd., 10.00%,
3/31/2008 656,275
1,300,000 Viatel, Inc., 11.15%,
4/15/2008 663,132
TOTAL 11,080,228
<CAPTION>
FOREIGN
CURRENCY VALUE IN
PAR AMOUNT U.S. DOLLARS
<C> <S> <C>
CORPORATE BONDS-continued
UTILITIES-2.6%
2,500,000 2, 3 Endesa Nacional
Electricidad SA, 8.50%,
4/1/2009 $ 2,517,900
TOTAL CORPORATE BONDS
(IDENTIFIED COST
$39,177,513) 33,248,461
SOVEREIGN GOVERNMENTS-
60.7%
3,000,000 Argentina, Government of,
Bond, 11.375%, 1/30/2017 2,820,000
1,000,000 Argentina, Government of,
Global Bond Deb., 9.75%,
9/19/2027 832,500
5,000,000 Brazil, Government of,
10.125%, 5/15/2027 4,000,000
2,000,000 Brazil, Government of,
11.625%, 4/15/2004 1,910,000
4,512,000 Brazil, Government of,
14.50%, 10/15/2009 4,710,528
1,500,000 Colombia, Government of,
Bond, 9.75%, 4/23/2009 1,312,500
1,000,000 Colombia, Government of,
Bond, 10.875%, 3/9/2004 990,000
1,250,000 Colombia, Government of,
Unsub., 8.625%, 4/1/2008 1,031,250
1,081,801 Croatia, Government of,
Bond, 6.456%, 7/31/2006 951,998
66,000,000 Czech, Government of,
Bond, 14.85%, 2/6/2003 2,250,481
6,000,000 Denmark, Government of,
Bond, 7.00%, 11/10/2024 907,680
3,000,000 Denmark, Government of,
Bond, 8.00%, 3/15/2006 462,373
1,050,000 France, Government of,
8.50%, 4/25/2023 1,395,683
1,000,000 Germany, Government of,
Bond, 6.00%, 6/20/2016 1,069,726
75,000,000 Greece, Government of,
Bond, 11.90%, 12/31/2003 236,045
270,000,000 Greece, Government of,
Bond, 8.60%, 3/26/2008 927,844
100,000,000 Greece, Government of,
Floating Rate Note,
12.50%, 12/27/2002 315,400
385,000,000 Greece, Government of,
Series, 12.40%, 11/26/2003 1,209,928
150,000,000 Hungary, Government of,
Bond, 13.50%, 1/12/2001 596,463
100,000,000 Hungary, Government of,
Bond, 14.00%, 6/24/2002 408,398
172,500,000 Hungary, Government of,
Bond, 14.00%, 12/12/2002 720,027
903,798 Italy, Government of,
Bond, 10.50%, 9/1/2005 1,152,893
1,750,000 Jordan, Government of,
Bond, 5.50%, 12/23/2023 1,170,400
2,500,000 2, 3 Kazakhstan, Government of,
Bond, 13.625%, 10/18/2004 2,556,250
1,500,000 Lesotho Water Authority,
Bond, 12.50%, 4/15/2002 237,072
2,600,000 Lesotho Water Authority,
Foreign Gov't. Guarantee,
13.00%, 9/15/2010 376,418
1,100,000 Mexico, Government of,
Bond, 10.375%, 2/17/2009 1,145,100
1,500,000 Mexico, Government of,
Bond, 11.375%, 9/15/2016 1,653,750
2,000,000 Mexico, Government of,
Bond, 9.875%, 1/15/2007 2,040,000
<CAPTION>
FOREIGN
CURRENCY
PAR AMOUNT
OR PRINCIPAL VALUE IN
AMOUNT U.S. DOLLARS
<C> <S> <C>
SOVEREIGN GOVERNMENTS-
continued
1,250,000 Morocco - R & C A, Foreign
Gov't. Guarantee, 1/1/2009 $ 1,106,250
317,646 Netherlands, Government
of, Bond, 8.25%, 2/15/2007 378,367
453,780 Netherlands, Government
of, Bond, 8.50%, 6/1/2006 541,896
500,000 New South Wales, State of,
Local Gov't. Guarantee,
12.60%, 5/1/2006 412,708
5,000,000 Norway, Government of,
Bond, 9.50%, 10/31/2002 680,058
1,500,000 Panama, Government of,
Bond, 8.875%, 9/30/2027 1,265,625
750,000 Philippines, Government
of, 9.875%, 1/15/2019 763,125
5,500,000 Poland, Government of,
Bond, 10.00%, 6/12/2004 1,191,354
3,500,000 Poland, Government of,
Bond, 12.00%, 10/12/2003 795,959
1,500,000 Poland, Government of,
Bond, 12.00%, 2/12/2002 339,011
1,000,000 Poland, Government of,
Bond, 12.00%, 6/12/2002 224,950
4,000,000 Poland, Government of,
Bond, 12.00%, 6/12/2003 902,150
1,000,000 Qatar, Government of,
9.50%, 5/21/2009 1,046,280
3,500,000 South Africa, Government
of, Bond, 13.50%,
9/15/2015 539,856
2,000,000 South Africa, Government
of, Bond, 12.50%,
1/15/2002 320,593
1,000,000 South Africa, Government
of, Sr. Unsub., 9.125%,
5/19/2009 1,022,500
1,000,000 Turkey, Government of,
Note, 12.00%, 12/15/2008 1,040,000
4,000,000 Turkey, Government of, Sr.
Unsub., 12.375%, 6/15/2009 4,160,000
3,300,000 Venezuela, Government of,
Bond, 9.25%, 9/15/2027 2,116,125
TOTAL SOVERIGN
GOVERNMENTS (IDENTIFIED
COST $60,442,668) 58,237,514
REPURCHASE AGREEMENT-1.7%
4
$ 1,630,000 J.P. Morgan & Co., Inc.,
5.71%, dated 11/30/1999,
due 12/1/1999 (at
amortized cost) 1,630,000
TOTAL INVESTMENTS
(IDENTIFIED COST
$101,250,181) 5 $ 93,241,944
</TABLE>
1 Non-income producing security.
2 Denotes a restricted security which is subject to restrictions on resale under
federal securities laws. At November 30, 1999, these securities amounted to
$14,112,831 which represents 14.7% of net assets. Included in these amounts,
securities which have been deemed liquid amounted to $11,293,062 which
represents 11.8% of net assets.
3 Denotes a restricted security that has been deemed liquid by criteria approved
by the Fund's Board of Directors.
4 The repurchase agreement is fully collateralized by U.S. government and/or
agency obligations based on market prices at the date of the portfolio. The
investment in the repurchase agreement is through participation in a joint
account with other Federated funds.
5 The cost of investments for federal tax purposes amounts to $101,273,381. The
net unrealized depreciation of investments on a federal tax basis amounts to
$8,031,437 which is comprised of $1,339,350 appreciation and $9,370,787
depreciation at November 30, 1999.
Note: The categories of investments are shown as a percentage of net assets
($95,919,134) at November 30, 1999.
The following acronym is used throughout this portfolio:
MTN -Medium Term Note
See Notes which are an integral part of the Financial Statements
Statement of Assets and Liabilities
NOVEMBER 30, 1999
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS:
Total investments in
securities, at value
(identified cost
$101,250,181 and tax
cost $101,273,381) $ 93,241,944 Cash 2,473 Cash denominated in foreign
currencies (identified cost $239,539) 236,339 Income receivable 2,900,272
Receivable for investments sold 2,707,053 Receivable for shares sold 1,035,151
Deferred organizational costs 20,002 TOTAL ASSETS 100,143,234 LIABILITIES:
Payable for investments purchased $ 3,237,447 Payable for shares redeemed
318,997 Income distribution payable 522,874 Payable for taxes withheld 47,695
Accrued expenses 97,087 TOTAL LIABILITIES 4,224,100 Net assets for 12,448,425
shares outstanding $ 95,919,134 NET ASSETS CONSIST OF: Paid-in capital $
116,968,374 Net unrealized depreciation of investments and translation of assets
and liabilities in foreign currency (7,864,073) Accumulated net realized loss on
investments and foreign currency transactions (12,414,960) Accumulated
distributions in excess of net investment income (770,207) TOTAL NET ASSETS $
95,919,134 NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE
CLASS A SHARES: Net Asset Value Per Share ($17,792,739 / 2,309,120 shares
outstanding) $7.71 Offering Price Per Share (100/95.50 of $7.71) 1 $8.07
Redemption Proceeds Per Share $7.71 CLASS B SHARES: Net Asset Value Per Share
($71,880,653 / 9,328,732 shares outstanding) $7.71 Offering Price Per Share
$7.71 Redemption Proceeds Per Share (94.50/100 of $7.71) 1 $7.29 CLASS C SHARES:
Net Asset Value Per Share ($6,245,742 / 810,573 shares outstanding) $7.71
Offering Price Per Share $7.71 Redemption Proceeds Per Share (99.00/100 of
$7.71) 1 $7.63
</TABLE>
1 See "What Do Shares Cost?" in the Prospectus.
See Notes which are an integral part of the Financial Statements
Statement of Operations
YEAR ENDED NOVEMBER 30, 1999
<TABLE>
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME:
Interest (net of foreign taxes withheld of $42,320) $ 12,436,170 EXPENSES:
Investment adviser fee $ 810,000 Administrative personnel and services fee
185,000 Custodian fees 68,702 Transfer and dividend disbursing agent fees and
expenses 145,843 Directors'/Trustees' fees 2,110 Auditing fees 21,656 Legal fees
3,950 Portfolio accounting fees 84,386 Distribution services fee- Class B Shares
540,902 Distribution services fee- Class C Shares 52,489 Shareholder services
fee- Class A Shares 40,440 Shareholder services fee- Class B Shares 180,799
Shareholder services fee- Class C Shares 17,496 Share registration costs 39,538
Printing and postage 43,615 Insurance premiums 1,500 Taxes 8,785 Miscellaneous
15,080 TOTAL EXPENSES 2,262,291 WAIVER: Waiver of investment adviser fee
(753,311) Net expenses 1,508,980 Net investment income 10,927,190 REALIZED AND
UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY: Net realized loss on
investments and foreign currency transactions (11,742,170) Net change in
unrealized appreciation of investments and translation of assets and liabilities
in foreign currency 7,020,034 Net realized and unrealized loss on investments
and foreign currency (4,722,136) Change in net assets resulting from operations
$ 6,205,054
</TABLE>
See Notes which are an integral part of the Financial Statements
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30 1999 1998
<S> <C> <C>
INCREASE (DECREASE) IN NET
ASSETS
OPERATIONS:
Net investment income $ 10,927,190 $ 8,583,767 Net realized loss on investments
and foreign currency transactions ($(9,858,320) and $(2,542,891), respectively,
as computed for federal tax purposes) (11,742,170) (3,462,957) Net change in
unrealized appreciation (depreciation) of investments and translation of assets
and liabilities in foreign currency 7,020,034 (11,762,681) CHANGE IN NET ASSETS
RESULTING FROM OPERATIONS 6,205,054 (6,641,871) DISTRIBUTIONS TO SHAREHOLDERS:
Distributions from net investment income Class A Shares (1,625,090) (1,068,975)
Class B Shares (6,725,976) (6,559,668) Class C Shares (657,826) (854,790)
Distributions from net realized gains on investments and foreign currency
transactions Class A Shares - (2,557) Class B Shares - (14,211) Class C Shares -
(1,879) Distributions from paid-in capital: Class A Shares (131,312) - Class B
Shares (543,479) - Class C Shares (53,154) - CHANGE IN NET ASSETS RESULTING FROM
DISTRIBUTIONS TO SHAREHOLDERS (9,736,837) (8,502,080) SHARE TRANSACTIONS:
Proceeds from sale of shares 45,603,157 59,262,958 Net asset value of shares
issued to shareholders in payment of distributions declared 2,735,426 2,695,479
Cost of shares redeemed (38,504,202) (22,236,754) CHANGE IN NET ASSETS RESULTING
FROM SHARE TRANSACTIONS 9,834,381 39,721,683 Change in net assets 6,302,598
24,577,732 NET ASSETS: Beginning of period 89,616,536 65,038,804 End of period $
95,919,134 $ 89,616,536
</TABLE>
See Notes which are an integral part of the Financial Statements
Financial Highlights - Class A Shares
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30 1999 1998 1997 1996 1
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING
OF PERIOD $7.99 $9.50 $10.12 $10.00
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income 0.93 2 0.94 1.18 0.17 2
Net realized and
unrealized gain (loss) on
investments and foreign
currency transactions (0.37) (1.49) (0.78) 0.13
TOTAL FROM INVESTMENT
OPERATIONS 0.56 (0.55) 0.40 0.30
LESS DISTRIBUTIONS:
Distributions from net
investment income (0.78) (0.96) (1.02) (0.17)
Distributions in excess of
net investment income - - - (0.01) 3
Distributions from paid-in
capital 4 (0.06) 2 - - -
Distributions from net
realized gain on
investments and foreign
currency transactions - (0.00) 5 - -
TOTAL DISTRIBUTIONS (0.84) (0.96) (1.02) (0.18)
NET ASSET VALUE, END OF
PERIOD $7.71 $7.99 $9.50 $10.12
TOTAL RETURN 6 7.55% (5.95%) 4.02% 2.99%
RATIOS TO AVERAGE NET
ASSETS:
Expenses 0.96% 0.82% 0.75% 0.75% 7
Net investment income 12.09% 11.07% 10.54% 9.19% 7
Expense
waiver/reimbursement 8 0.79% 0.99% 2.03% 8.46% 7
SUPPLEMENTAL DATA:
Net assets, end of period
(000 omitted) $17,793 $11,052 $9,073 $599
Portfolio turnover 87% 128% 93% 0%
</TABLE>
1 Reflects operations for the period from October 2, 1996 (date of initial
public offering) to November 30, 1996.
2 Per share information is based on the average number of shares outstanding.
3 Distributions in excess of net investment income were a result of certain book
and tax timing differences. These distributions did not represent a return of
capital for federal income tax purposes.
4 Represents a return of capital for federal income tax purposes.
5 Per share amount does not round to $(0.01).
6 Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
7 Computed on an annualized basis.
8 This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
See Notes which are an integral part of the Financial Statements
Financial Highlights - Class B Shares
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30 1999 1998 1997 1996 1
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING
OF PERIOD $7.99 $9.50 $10.12 $10.00
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income 0.88 2 0.89 0.96 0.18 2
Net realized and
unrealized gain (loss) on
investments and foreign
currency transactions (0.38) (1.50) (0.63) 0.11
TOTAL FROM INVESTMENT
OPERATIONS 0.50 (0.61) 0.33 0.29
LESS DISTRIBUTIONS:
Distributions from net
investment income (0.72) (0.90) (0.95) (0.17)
Distributions from paid-in
capital 3 (0.06) 2 - - -
Distributions from net
realized gain on
investments and foreign
currency transactions - (0.00) 4 - -
TOTAL DISTRIBUTIONS (0.78) (0.90) (0.95) (0.17)
NET ASSET VALUE, END OF
PERIOD $7.71 $7.99 $9.50 $10.12
TOTAL RETURN 5 6.73% (6.67%) 3.24% 2.87%
RATIOS TO AVERAGE NET
ASSETS:
Expenses 1.71% 1.57% 1.50% 1.50% 6
Net investment income 11.34% 10.37% 9.73% 8.92% 6
Expense
waiver/reimbursement 7 0.79% 0.99% 2.03% 8.46% 6
SUPPLEMENTAL DATA:
Net assets, end of period
(000 omitted) $71,881 $70,458 $49,929 $5,397
Portfolio turnover 87% 128% 93% 0%
</TABLE>
1 Reflects operations for the period from October 2, 1996 (date of initial
public offering) to November 30, 1996.
2 Per share information is based on the average number of shares outstanding.
3 Represents a return of capital for federal income tax purposes.
4 Per share amount does not round to $(0.01).
5 Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
6 Computed on an annualized basis.
7 This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
See Notes which are an integral part of the Financial Statements
Financial Highlights - Class C Shares
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30 1999 1998 1997 1996 1
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING
OF PERIOD $7.99 $9.50 $10.12 $10.00
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income 0.88 2 0.85 0.98 0.17 2
Net realized and
unrealized gain (loss) on
investments and foreign
currency transactions (0.38) (1.46) (0.65) 0.12
TOTAL FROM
INVESTMENT OPERATIONS 0.50 (0.61) 0.33 0.29
LESS DISTRIBUTIONS:
Distributions from net
investment income (0.72) (0.90) (0.95) (0.17)
Distributions from paid-in
capital 3 (0.06) 2 - - -
Distributions from net
realized gain on
investments and foreign
currency transactions - (0.00) 4 - -
TOTAL DISTRIBUTIONS (0.78) (0.90) (0.95) (0.17)
NET ASSET VALUE, END OF
PERIOD $7.71 $7.99 $9.50 $10.12
TOTAL RETURN 5 6.73% (6.67%) 3.24% 2.87%
RATIOS TO AVERAGE NET
ASSETS:
Expenses 1.71% 1.57% 1.50% 1.50% 6
Net investment income 11.34% 10.35% 10.04% 8.67% 6
Expense
waiver/reimbursement 7 0.79% 0.99% 2.03% 8.46% 6
SUPPLEMENTAL DATA:
Net assets, end of period
(000 omitted) $6,246 $8,106 $6,037 $83
Portfolio turnover 87% 128% 93% 0%
</TABLE>
1 Reflects operations for the period from October 2, 1996 (date of initial
public offering) to November 30, 1996.
2 Per share information is based on the average number of shares outstanding.
3 Represents a return of capital for federal income tax purposes.
4 Per share amount does not round to $(0.01).
5 Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
6 Computed on an annualized basis.
7 This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
See Notes which are an integral part of the Financial Statements
Notes to Financial Statements
NOVEMBER 30,1999
ORGANIZATION
World Investment Series, Inc. (the "Corporation") is registered under the
Investment Company Act of 1940, as amended (the "Act"), as an open-end,
management investment company. The Corporation consists of ten portfolios. The
financial statements included herein are only those of Federated International
High Income Fund (the "Fund"), a diversified portfolio. The financial statements
of the other portfolios are presented separately. The assets of each portfolio
are segregated and a shareholder's interest is limited to the portfolio in which
shares are held. The investment objective of the Fund is to seek a high level of
current income.
The Fund offers three classes of shares: Class A Shares, Class B Shares and
Class C Shares.
SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS
U.S. government securities, listed corporate bonds, (other fixed income and
asset-backed securities), and unlisted securities and private placement
securities are generally valued at the mean of the latest bid and asked price as
furnished by an independent pricing service. Short-term securities are valued at
the prices provided by an independent pricing service. However, short-term
securities with remaining maturities of 60 days or less at the time of purchase
may be valued at amortized cost, which approximates fair market value. With
respect to valuation of foreign securities, trading in foreign cities may be
completed at times which vary from the closing of the New York Stock Exchange.
Therefore, foreign securities are valued at the latest closing price on the
exchange on which they are traded prior to the closing of the New York Stock
Exchange. Foreign securities quoted in foreign currencies are translated into
U.S. dollars at the foreign exchange rate in effect at noon, eastern time, on
the day the value of the foreign security is determined.
REPURCHASE AGREEMENTS
It is the policy of the Fund to require the custodian bank to take possession,
to have legally segregated in the Federal Reserve Book Entry System, or to have
segregated within the custodian bank's vault, all securities held as collateral
under repurchase agreement transactions. Additionally, procedures have been
established by the Fund to monitor, on a daily basis, the market value of each
repurchase agreement's collateral to ensure that the value of collateral at
least equals the repurchase price to be paid under the repurchase agreement.
The Fund will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed by
the Fund's adviser to be creditworthy pursuant to the guidelines and/or
standards reviewed or established by the Board of Directors (the "Directors").
Risks may arise from the potential inability of counterparties to honor the
terms of the repurchase agreement. Accordingly, the Fund could receive less than
the repurchase price on the sale of collateral securities. The Fund, along with
other affiliated investment companies, may utilize a joint trading account for
the purpose of entering into one or more repurchase agreements.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS
Interest income and expenses are accrued daily. Bond premium and discount, if
applicable, are amortized as required by the Internal Revenue Code of 1986, as
amended (the "Code"). Dividend income and distributions to shareholders are
recorded on the ex-dividend date. Non-cash dividends included in dividend
income, if any, are recorded at fair value. The Fund offers multiple classes of
shares, which differ in their respective distribution and service fees. All
shareholders bear the common expenses of the Fund based on average daily net
assets of each class, without distinction between share classes. Dividends are
declared separately for each class. No class has preferential dividend rights;
differences in per share dividend rates are generally due to differences in
separate class expenses.
Income and capital gain distributions are determined in accordance with income
tax regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments for foreign currency
transactions. The following reclassifications have been made to the financial
statements.
<TABLE>
<CAPTION>
INCREASE/(DECREASE)
ACCUMULATED NET ACCUMULATED
REALIZED LOSS ON DISTRIBUTIONS
INVESTMENTS AND IN EXCESS OF
FOREIGN CURRENCY NET INVESTMENT
TRANSACTIONS INCOME
<S> <C>
$1,883,850 $(1,883,850)
</TABLE>
Net investment income, net realized gain (loss) and net assets were not affected
by this reclassification.
FEDERAL TAXES
It is the Fund's policy to comply with the provisions of the Code applicable to
regulated investment companies and to distribute to shareholders each year
substantially all of its income. Accordingly, no provision for federal tax is
necessary.
Withholding taxes on foreign interest and dividends have been provided for in
accordance with the applicable country's tax rules and rates.
At November 30 1999, the Fund, for federal tax purposes, had a capital loss
carryforward of $12,401,211, which will reduce the Fund's taxable income arising
from future net realized gains on investments, if any, to the extent permitted
by the Code, and thus will reduce the amount of the distributions to
shareholders which would otherwise be necessary to relieve the Fund of any
liability for federal tax. Pursuant to the Code, such capital loss carryforward
will expire as follows:
<TABLE>
<CAPTION>
EXPIRATION YEAR EXPIRATION AMOUNT
<S> <C>
2006 $2,542,891
2007 $9,858,320
</TABLE>
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
The Fund may engage in when-issued or delayed delivery transactions. The Fund
records when-issued securities on the trade date and maintains security
positions such that sufficient liquid assets will be available to make payment
for the securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date. Losses may occur on these transactions due to changes in market
conditions or the failure of counterparties to perform under the contract.
FOREIGN EXCHANGE CONTRACTS
The Fund may enter into foreign currency commitments for the delayed delivery of
securities or foreign currency exchange transactions. The Fund may enter into
foreign currency contract transactions to protect assets against adverse changes
in foreign currency exchange rates or exchange control regulations. Purchased
contracts are used to acquire exposure to foreign currencies; whereas contracts
to sell are used to hedge the Fund's securities against currency fluctuations.
Risks may arise upon entering these transactions from the potential inability of
counterparties to meet the terms of their commitments and from unanticipated
movements in security prices or foreign exchange rates. The foreign currency
transactions are adjusted by the daily exchange rate of the underlying currency
and any gains or losses are recorded for financial statement purposes as
unrealized until the settlement date. At November 30, 1999, the Fund had no
outstanding foreign currency commitments.
FOREIGN CURRENCY TRANSLATION
The accounting records of the Fund are maintained in U.S. dollars. All assets
and liabilities denominated in foreign currencies ("FC") are translated into
U.S. dollars based on the rates of exchange of such currencies against U.S.
dollars on the date of valuation. Purchases and sales of securities, income and
expenses are translated at the rate of exchange quoted on the respective date
that such transactions are recorded. The Fund does not isolate that portion of
the results of operations resulting from changes in foreign exchange rates on
investments from the fluctuations arising from changes in market prices of
securities held. Such fluctuations are included with the net realized and
unrealized gain or loss from investments.
Reported net realized foreign exchange gains or losses arise from sales of
portfolio securities, sales and maturities of short-term securities, sales of
FCs, currency gains or losses realized between the trade and settlement dates on
securities transactions, the difference between the amounts of dividends,
interest, and foreign withholding taxes recorded on the Fund's books, and the
U.S. dollar equivalent of the amounts actually received or paid. Net unrealized
foreign exchange gains and losses arise from changes in the value of assets and
liabilities other than investments in securities at fiscal year end, resulting
from changes in the exchange rate.
RESTRICTED SECURITIES
Restricted securities are securities that may only be resold upon registration
under federal securities laws or in transactions exempt from such registration.
In some cases, the issuer of restricted securities has agreed to register such
securities for resale, at the issuer's expense either upon demand by the Fund or
in connection with another registered offering of the securities. Many
restricted securities may be resold in the secondary market in transactions
exempt from registration. Such restricted securities may be determined to be
liquid under criteria established by the Directors. The Fund will not incur any
registration costs upon such resales. The Fund's restricted securities are
valued at the price provided by dealers in the secondary market or, if no market
prices are available, at the fair value as determined by the Fund's pricing
committee.
Additional information on each restricted security held at November 30, 1999 is
as follows:
<TABLE>
<CAPTION>
ACQUISITION ACQUISITION
SECURITY DATE COST
<S> <C> <C>
Huntsman ICI Corp. 7/22/1999 $1,548,947
Jazztel PLC 4/1/1999 539,537
Sampoerna International Finance Co. 7/28/1999 740,000
</TABLE>
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts of assets, liabilities, expenses and revenues reported in the
financial statements. Actual results could differ from those estimated.
OTHER
Investment transactions are accounted for on a trade date basis.
CAPITAL STOCK
At November 30, 1999, par value shares ($0.001 per share) authorized were as
follows:
<TABLE>
<CAPTION>
NUMBER OF PAR VALUE
SHARE CLASS NAME CAPITAL STOCK AUTHORIZED
<S> <C>
Class A Shares 100,000,000 Class B Shares 100,000,000 Class C Shares 100,000,000
TOTAL 300,000,000
</TABLE>
Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30 1999 1998
CLASS A SHARES: SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
Shares sold 2,849,099 $22,174,915 936,322 $7,944,196
Shares issued to
shareholders in payment of
distributions declared 63,306 489,301 45,021 382,483
Shares redeemed (1,986,043) (15,363,119) (553,678) (4,809,928)
NET CHANGE RESULTING FROM
CLASS A SHARE
TRANSACTIONS 926,362 $7,301,097 427,665 $3,516,751
<CAPTION>
YEAR ENDED NOVEMBER 30 1999 1998
CLASS B SHARES: SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
Shares sold 2,775,564 $21,581,257 4,969,213 $44,146,311
Shares issued to
shareholders in payment of
distributions declared 250,505 1,936,099 224,076 1,913,388
Shares redeemed (2,512,932) (19,426,004) (1,634,221) (13,647,738)
NET CHANGE RESULTING FROM
CLASS B SHARE
TRANSACTIONS 513,137 $4,091,352 3,559,068 $32,411,961
<CAPTION>
YEAR ENDED NOVEMBER 30 1999 1998
CLASS C SHARES: SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
Shares sold 237,307 $1,846,985 787,334 $7,172,451
Shares issued to
shareholders in payment of
distributions declared 40,084 310,026 46,643 399,608
Shares redeemed (481,064) (3,715,079) (455,208) (3,779,088)
NET CHANGE RESULTING FROM
CLASS C SHARE
TRANSACTIONS (203,673) $(1,558,068) 378,769 $3,792,971
NET CHANGE RESULTING FROM
SHARE TRANSACTIONS 1,235,826 $9,834,381 4,365,502 $39,721,683
</TABLE>
INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISER FEE
Federated Global Investment Management Corp., the Fund's investment adviser (the
"Adviser"), receives for its services an annual investment adviser fee equal to
0.85% of the Fund's average daily net assets. The Adviser may voluntarily choose
to waive any portion of its fee. The Adviser can modify or terminate this
voluntary waiver at any time at its sole discretion.
ADMINISTRATIVE FEE
Federated Services Company ("FServ"), under the Administrative Services
Agreement, provides the Fund with administrative personnel and services. The fee
paid to FServ is based on a scale that ranges from 0.15% to 0.075% of the
average aggregate daily net assets of all funds advised by subsidiaries of
Federated Investors, Inc., subject to a $125,000 minimum per portfolio and
$30,000 per each additional class.
DISTRIBUTION SERVICES FEE
The Fund has adopted a Distribution Plan (the "Plan") pursuant to Rule 12b-1
under the Act. Under the terms of the Plan, the Fund will compensate Federated
Securities Corp. ("FSC"), the principal distributor, from the net assets of the
Fund to finance activities intended to result in the sale of the Fund's Class A
Shares, Class B Shares, and Class C Shares. The Plan provides that the Fund may
incur distribution expenses according to the following schedule annually, to
compensate FSC.
<TABLE>
<CAPTION>
Percentage of Average Daily
SHARE CLASS NAME Net Assets of Class
<S> <C> Class A Shares 0.25% Class B Shares 0.75% Class C Shares 0.75%
</TABLE>
Class A Shares did not incur a distribution services fee for the fiscal year
ended November 30, 1999, and has no present intention of paying or accruing a
distribution services fee.
SHAREHOLDER SERVICES FEE
Under the terms of a Shareholder Services Agreement with Federated Shareholder
Services Company ("FSSC"), the Fund will pay FSSC up to 0.25% of average daily
net assets of the Fund for the period. The fee paid to FSSC is used to finance
certain services for shareholders and to maintain shareholder accounts.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES
FServ, through its subsidiary FSSC, serves as transfer and dividend disbursing
agent for the Fund. The fee paid to FSSC is based on the size, type, and number
of accounts and transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES
FServ maintains the Fund's accounting records for which it receives a fee. The
fee is based on the level of the Fund's average daily net assets for the period,
plus out-of-pocket expenses.
ORGANIZATIONAL EXPENSES
Organizational and start-up administrative service expenses of $48,027 were
borne initially by the Adviser. The Fund has reimbursed the Adviser for these
expenses. These expenses have been deferred and are being amortized over the
five-year period following the Fund's effective date. For the fiscal year ended
November 30, 1999, the Fund expensed $11,249 of organizational expenses.
GENERAL
Certain of the Officers and Directors of the Corporation are Officers and
Directors or Trustees of the above companies.
INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities (and in-
kind contributions), for the fiscal year ended November 30, 1999, were as
follows:
<TABLE>
<CAPTION>
<S> <C>
Purchases $93,906,222
Sales $79,187,395
</TABLE>
CONCENTRATION OF CREDIT RISK
The Fund invests in securities of non-U.S. issuers. The political or economic
developments within a particular country or region may have an adverse effect on
the ability of domiciled issuers to meet their obligations. Additionally,
political or economic developments may have an effect on the liquidity and
volatility of portfolio securities and currency holdings.
At November 30, 1999, the diversification of countries was as follows:
<TABLE>
<CAPTION>
PERCENTAGE OF
COUNTRY NET ASSETS
<S> <C> Argentina 4.9% Australia 0.4% Brazil 12.3% Canada 4.7% Chile 2.6%
Colombia 3.5% Croatia 1.0%
Czech Republic 2.3%
Denmark 1.5%
France 1.5% Germany 1.5% Greece 2.8% Hungary 1.8% Indonesia 2.3% Ireland 1.1%
Italy 1.2% Jamaica 0.5% Jordan 1.2% Kazakhstan 2.7% Korea 1.4% Luxembourg 1.6%
Mexico 11.5% Morocco 1.2%
Netherlands 1.0%
New Zealand 0.7%
Norway 0.7%
Panama 1.3%
Philippines 3.4%
Poland 4.0%
Qatar 1.1%
South Africa 3.3%
Spain 0.6%
Thailand 1.6%
Turkey 5.4%
United Kingdom 2.4%
Venezuela 2.2%
United States 4.0%
</TABLE>
LINE OF CREDIT AGREEMENT
Effective November 29, 1999 the Corporation entered into a $75,000,000 unsecured
committed revolving line of credit ("LOC") agreement with State Street
Corporation. The LOC was made available for extraordinary emergency purposes,
primarily for financing redemption payments. Borrowings are charged interest at
a rate of 0.50% over the Federal Funds Rate. The LOC includes a commitment fee
of 0.08% per annum on the daily unused portion. The Corporation did not make any
borrowing under the LOC during the fiscal year ended November 30, 1999.
Report of Ernst & Young LLP, Independent Auditors
TO THE BOARD OF DIRECTORS OF WORLD INVESTMENT SERIES, INC. AND
SHAREHOLDERS OF FEDERATED INTERNATIONAL HIGH INCOME FUND:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of Federated International High Income Fund (the
Fund) (one of the portfolios constituting the World Investment Series, Inc.) as
of November 30, 1999, and the related statement of operations for the year then
ended, the statement of changes in net assets for each of the two years in the
period then ended, and the financial highlights for each of the periods
presented therein. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned as of November 30, 1999, by correspondence with the custodian and brokers
or other appropriate auditing procedures where replies from brokers were not
received. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Federated International High Income Fund of World Investment Series, Inc. at
November 30, 1999, and the results of its operations for the year then ended,
the changes in its net assets for each of the two years in the period then
ended, and the financial highlights for each of the periods presented therein,
in conformity with accounting principles generally accepted in the United
States.
[Graphic]
Boston, Massachusetts
January 21, 2000
Directors
JOHN F. DONAHUE
THOMAS G. BIGLEY
JOHN T. CONROY, JR.
NICHOLAS P. CONSTANTAKIS
WILLIAM J. COPELAND
LAWRENCE D. ELLIS, M.D.
RICHARD B. FISHER
EDWARD L. FLAHERTY, JR., ESQ.
PETER E. MADDEN
CHARLES F. MANSFIELD, JR.
JOHN E. MURRAY, JR., J.D., S.J.D.
WESLEY W. POSVAR
MARJORIE P. SMUTS
Officers
JOHN F. DONAHUE
Chairman
RICHARD B. FISHER
President
J. CHRISTOPHER DONAHUE
Executive Vice President
EDWARD C. GONZALES
Executive Vice President
JOHN W. MCGONIGLE
Executive Vice President and Secretary
HENRY A. FRANTZEN
Chief Investment Officer
RICHARD J. THOMAS
Treasurer
JAMES O. PERRY
Assistant Secretary
Mutual funds are not bank deposits or obligations, are not guaranteed by any
bank, and are not insured or guaranteed by the U.S. government, the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other
government agency. Investment in mutual funds involves investment risk,
including the possible loss of principal.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the fund's prospectus which contains facts concerning
its objective and policies, management fees, expenses, and other information.
AS OF NOVEMBER 30, 1999
[Graphic]
Federated
World-Class Investment Manager
ANNUAL REPORT
Federated International High Income Fund
Established 1996
4TH ANNUAL REPORT
[Graphic]
Federated
Federated International High Income Fund
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
1-800-341-7400
WWW.FEDERATEDINVESTORS.COM
Federated Securities Corp., Distributor
Cusip 981487762
Cusip 981487754
Cusip 981487747
G01949-01 (1/00)
[Graphic]
Livelink (r) Version 8.0.2, Copyright (c) 1995-1998 Open Text Inc. All
rights reserved.
[Graphic]
RICHARD B. FISHER
President
Federated International Small Company Fund
President's Message
Dear Fellow Shareholder:
Federated International Small Company Fund was created in 1996, and I am pleased
to present its fourth Annual Report. This fund is managed to bring shareholders
significant long-term opportunities from a well-researched portfolio of
small-cap international stocks. 1 These stocks are in one or more key areas that
have experienced spectacular investment growth recently: domestic consumption,
product and service leaders, technology and downstream beneficiaries of global
trade. As of November 30, 1999, this $1.1 billion fund was invested in more than
270 small-cap stocks in 34 countries across 3 continents.
This report covers the 12-month reporting period from December 1, 1998 through
November 30, 1999. It begins with an interview with the fund's portfolio
manager, Leonardo A. Vila, Vice President of Federated Global Investment
Management Corp. Following his discussion, which covers international economic
and market conditions and fund strategy, are three additional items of
shareholder interest. First is a series of graphs showing the fund's investment
performance. Second is a complete listing of the fund's global investments and
third is the publication of the fund's financial statements.
Broad diversification and outstanding stock selection continued to be the
hallmarks of this fund. In particular, the fund's weighting in Asia and
technology holdings helped the fund produce triple-digit total return
performance for the year. In fact, the fund's returns were nearly six times
higher than the 17.64% return of the small-cap international market, as
represented by the Morgan Stanley Capital International ("MSCI") Small Cap World
ex-US Index. 2 The fund also significantly outperformed the 57.88% return of the
68 small-cap international funds tracked by Lipper Analytical Services, Inc.3
1 Small-cap stocks have historically experienced greater volatility than
average. Foreign investing involves special risks including currency risk,
increased volatility of foreign securities and differences in auditing and other
financial standards.
2 The MSCI Small Cap World ex-U.S. Index is an unmanaged index of companies
in 23 developed markets with U.S. dollar market capitalizations of $200-
$800 million. Investments cannot be made in an index.
3 Lipper figures represent the average of the total returns reported by all of
the mutual funds designated by Lipper Analytical Services, Inc. as falling into
the category indicated. Lipper figures do not take sales charges into account.
Individual share class total return performance for the 12-month reporting
period, including realized gains, is as follows: 4
<TABLE>
<CAPTION>
TOTAL RETURN CAPITAL GAIN NET ASSET VALUE INCREASE
<S> <C> <C> <C>
Class A Shares 103.45% $0.28 $17.56 to $35.17 = 100.28%
Class B Shares 102.11% $0.28 $17.20 to $34.21 = 98.90%
Class C Shares 102.11% $0.28 $17.19 to $34.19 = 98.89%
</TABLE>
While this fund has provided shareholders with very strong returns since it
began operation on February 28, 1996, I want to remind you that international
small company investing can be volatile. There could be periods of negative
short-term fluctuation, as well as the positive returns we have experienced
since the fund's inception. Our group of global investment managers are
optimistic about many countries' economic outlooks and continued enthusiasm for
capitalism.
In this investment environment, I recommend that you add to your account on a
regular basis to take advantage of price fluctuations by using the dollar- cost
averaging method of investing, and to consider increasing a portion of your
international investable dollars in the world's attractive markets. 5
Thank you for participating in Federated International Small Company Fund. We
hope that you are pleased with the fund's continued strong performance.
Sincerely,
[Graphic]
Richard B. Fisher
President
January 15, 2000
4 Performance quoted is based on net asset value, represents past performance
and is no guarantee of future results. Investment return and principal value
will fluctuate so that an investor's shares, when redeemed, may be worth more or
less than their original cost. Total returns, based on offering price (i.e.,
less any applicable sales charge), for Class A, B, and C Shares were 92.28%,
96.61% and 101.11%, respectively.
5 Systematic investing does not assure a profit or protect against loss in
declining markets. Because dollar-cost averaging involves continuous investing
regardless of fluctuating price levels, investors should consider their
financial ability to continue purchases during periods of low price levels.
[Graphic]
Leonardo A. Vila
Vice President
Federated Global Investment Management Corp.
Investment Review
WHAT IS YOUR REVIEW OF THE FUND'S FISCAL YEAR, WHICH SAW FAVORABLE ECONOMIC
CONDITIONS AND VERY STRONG PERFORMANCE FROM INTERNATIONAL SMALL-CAP STOCKS?
This past fiscal year was another fantastic year for the international small-
cap asset class. Small companies outside of the U.S. continued to grow their
businesses faster than their U.S. peers. Favorable low interest rate
environments, continuing deregulation, mergers and acquisitions for
consolidation, and diversification were key economic themes carried throughout
the world. Clearly, the restructuring process in Asia, particularly in Japan,
has led to great stock performances of many small companies. In fact, the MSCI
Pacific Small Cap Index returned 39.00% during this fiscal year in U.S. dollars
versus the 1.50% return delivered by the MSCI Europe Small Cap Index. Not
surprisingly, the United Kingdom, which did not adopt the euro, performed very
well (25.80% as measured by the MSCI United Kingdom Small Cap Index) versus the
MSCI Europe Small Cap Index. 1
1 The MSCI Small Cap Indexes include stocks having market capitalizations
between U.S. $200-800 million. These indexes track small-cap performance
worldwide by defining a consistent market capitalization range across 23
developed markets. These indexes are unmanaged and investments cannot be made in
an index.
FEDERATED INTERNATIONAL SMALL COMPANY FUND DELIVERED +100% RETURNS FOR THE
12-MONTH REPORTING PERIOD, WHICH WAS OUTSTANDING IN BOTH ABSOLUTE AND RELATIVE
PERFORMANCE. BY HOW MUCH DID THE FUND'S RETURNS SURPASS THOSE OF THE
INTERNATIONAL SMALL-CAP STOCK MARKET AND THE AVERAGE INTERNATIONAL SMALL-CAP
FUND?
For the fiscal year ended November 30, 1999, the fund's total returns, based on
net asset value, were 103.45%, 102.11% and 102.11% for Class A, B and C Shares,
respectively. 2 These returns were nearly six times higher than the 17.64%
return of the small-cap international market, as represented by the MSCI Small
Cap World ex-US Index. The fund also significantly outperformed the 57.88%
return of the 68 small company international funds as tracked by Lipper
Analytical Services, Inc.
WHAT STRATEGIES AND HOLDINGS ACCOUNTED FOR THE FUND'S OUTPERFORMANCE?
The fund's timely asset movement from Europe to Asia at the beginning of this
year is the first reason for its outstanding performance. The fund's weightings
in Japan and Korea led the gains. Huge gains were also realized by investments
in companies benefiting from the continuing growth in the technology, cellular
equipment and services industries. Technology in Europe has tended to lag the
U.S. by three to five years; however, in the past 16 months, we have witnessed a
surge in technology initial public offerings in Europe at unprecedented levels.
Why is this important? Because during our research process, we have discovered
the increasing adoption rate of technology into corporate environments.
With respect to individual holdings, strong performances in U.S. dollars were
turned in during the period by JOT Automation Group Oyj (0.90% of net assets)
+370%, a Finnish company that manufactures robotics for the assembly, testing
and packaging of cellular phones; Eidos PLC (0.76% of net assets) +503%, a
British company that designs and sells video games, best known for "Tomb
Raider"; Vestas Wind Systems A/S (1.11% of net assets) +229% a Danish windmill
manufacturer benefiting from the push for renewable energy; and Don Quijote Co.,
Ltd. (0.67% of net assets) +453% a Japanese convenience retail store that
targets late-night shoppers.
2 Performance quoted represents past performance and is no guarantee of future
results. Investment return and principal value will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than their original
cost. Total returns, based on offering price (i.e., less any applicable sales
charge), for Class A, B and C Shares were 92.28%, 96.61%, and 101.11%,
respectively.
CAN YOU DISCUSS A FEW NOTEWORTHY ADDITIONS TO THE PORTFOLIO DURING THE REPORTING
PERIOD?
Our recent purchases included the following:
ERG LIMITED (Australia) (0.31% of net assets): ERG manufactures, markets,
installs and services automated fare collection equipment and systems. ERG also
manufacturers smart card systems and services, manufactures and markets
telecommunication equipment, and offers telecommunications and broadband
infrastructure services.
IPSOS (France) (0.45% of net assets): IPSOS is an advertising research company
dedicated to advertising testing, marketing, media, public opinion and social
research.
NICE SYSTEMS LTD. (Israel) (0.14% of net assets): NICE Systems develops,
manufactures and markets telephone and video recording equipment. The company's
products digitally record incoming and outgoing telephone calls and allows the
user to search for and retrieve them. NICE also produces systems that
continuously record video and audio from multiple locations.
SAILOR PEN CO. LTD. (Japan) (0.57% of net assets): Sailor Pen is transforming
itself from a world-famous pen company into a global manufacturer of CD Rom
production equipment and retrieval equipment.
WHERE WERE THE FUND'S ASSETS INVESTED AS OF NOVEMBER 30, 1999?
The portfolio was well-diversified across the following 34 countries.
<TABLE>
<CAPTION>
PERCENTAGE OF
COUNTRY NET ASSETS
<S> <C>
Japan 29.4%
United Kingdom 13.2%
Germany 6.4%
Australia 6.3%
Hong Kong 6.0%
Sweden 5.9%
Canada 4.1%
Greece 3.6%
France 3.5%
Singapore 3.1%
Switzerland 3.0%
Korea 2.7%
Finland 2.5%
South Africa 1.8%
Denmark 1.3%
Netherlands 1.2%
Ireland 1.1%
Egypt 1.0%
Israel 0.8%
India 0.6%
China 0.5%
Spain 0.5%
United States 0.5%
Norway 0.4%
Austria 0.2%
Turkey 0.2%
Hungary 0.1%
Mexico 0.1%
Philippines 0.1%
Thailand 0.1%
Belgium 0.0% 1
Brazil 0.0% 1
Indonesia 0.0% 1
Portugal 0.0% 1
</TABLE>
1 Amount represents less than 0.1%.
WHAT WERE THE FUND'S TOP TEN HOLDINGS AS OF NOVEMBER 30, 1999?
<TABLE>
<CAPTION>
PERCENTAGE OF
NAME COUNTRY NET ASSETS
INDUSTRY
<S> <C> <C>
<C>
ARM Holdings PLC ADR United Kingdom 2.14% Electronic
Components, Instruments
Trend Micro, Inc. Japan 1.57% Electrical &
Electronics
Baltimore Technologies PLC United Kingdom 1.54% Business & Public
Services
Intershop Communications AG Germany 1.30% Business & Public
Services
Trafficmaster PLC United Kingdom 1.29% Business & Public
Services
Yamada Denki Japan 1.17%
Merchandising
Secure Network Solutions Ltd. Australia 1.12% Business & Public
Services
Vestas Wind Systems A/S Denmark 1.11% Energy
Sources
Trans Cosmos Inc. Japan 1.02% Business & Public
Services
Solution 6 Holdings Ltd. Australia 1.02% Business & Public
Services
TOTAL
13.28%
</TABLE>
AFTER A SPECTACULAR FISCAL YEAR FOR THE FUND, WHAT IS YOUR OUTLOOK FOR
INTERNATIONAL SMALL-CAP STOCKS, AND WHAT THEMES ARE DRIVING YOUR STRATEGY AS
WE ENTER THE YEAR 2000?
As more European companies integrate technology into their businesses,
particularly Internet-related initiatives, the demand for specialization and
expertise in the design and implementation of those strategic systems should
continue. The key drivers: specialization and expertise. This is the core
competency of small-cap companies, which is why demand for their services and
products should continue next year. If one believes that, even though
technology-related stocks did so well this year, companies have held back
e-commerce projects and expenditures because of year 2000 concerns (i.e., budget
constraints, management focus, resource allocations, etc.), imagine the pent-up
demand for these information technology services and products in the new
millennium!
The fund's investment style and focus of bottom-up investing in growth stocks is
critical to its continued success. Broadly, we expect to continue to invest in
those themes that we have implemented since the beginning: domestic consumption,
product and service leaders, technology-related stocks, and downstream
beneficiaries of global trade.
Last Meeting of Shareholders
A Special Meeting of shareholders of Federated International Small Company Fund
(the "Fund"), a portfolio of World Investment Series, Inc., was held on December
17, 1999. On September 7, 1999, the record date for shareholders voting at the
meeting, there were 27,647,321 total outstanding shares.
The following items were considered by shareholders and the results of their
voting were as follows.
AGENDA ITEM 1
Elected Directors: 1
<TABLE>
<CAPTION>
SHARES SHARES
VOTED FOR WITHHELD
<S> <C> <C>
Thomas G. Bigley 17,613,389 446,346
Nicholas P. Constantakis 17,619,555 440,180
John F. Cunningham 17,617,153 442,582
J. Christopher Donahue 17,616,065 443,670
Charles F. Mansfield, Jr. 17,623,299 436,436
John E. Murray, Jr., J.D., S.J.D. 17,613,677 446,058
John S. Walsh 17,613,150 446,585
</TABLE>
1 The following Directors continued their terms as Directors: John F.
Donahue, John T. Conroy, William J. Copeland, Lawrence D. Ellis, M.D.,
Peter E. Madden and Marjorie P. Smuts.
Director elections will become effective January 1, 2000.
AGENDA ITEM 2
Made changes to the Fund's fundamental investment policies:
(a) Amended the Fund's fundamental investment policy regarding
diversification.
<TABLE>
<CAPTION>
ABSTENTIONS
SHARES AND BROKER
SHARES VOTED FOR VOTED AGAINST NON-VOTES
<S> <C> <C>
9,620,541 558,542 7,696,900
</TABLE>
(b) Amended the Fund's fundamental investment policy regarding borrowing money
and issuing senior securities.
<TABLE>
<CAPTION>
ABSTENTIONS
SHARES AND BROKER
SHARES VOTED FOR VOTED AGAINST NON-VOTES
<S> <C> <C>
10,885,047 498,840 6,675,848
</TABLE>
(c) Amended the Fund's fundamental investment policy regarding investments
in real estate.
<TABLE>
<CAPTION>
ABSTENTIONS
SHARES AND BROKER
SHARES VOTED FOR VOTED AGAINST NON-VOTES
<S> <C> <C>
10,953,159 438,640 6,667,936
</TABLE>
(d) Amended the Fund's fundamental investment policy regarding investments
in commodities.
<TABLE>
<CAPTION>
ABSTENTIONS
SHARES AND BROKER
SHARES VOTED FOR VOTED AGAINST NON-VOTES
<S> <C> <C>
10,866,927 516,281 6,676,527
</TABLE>
(e) Amended the Fund's fundamental investment policy regarding underwriting
securities.
<TABLE>
<CAPTION>
ABSTENTIONS
SHARES AND BROKER
SHARES VOTED FOR VOTED AGAINST NON-VOTES
<S> <C> <C>
10,950,067 433,366 6,676,302
</TABLE>
(f) Amended the Fund's fundamental investment policy regarding lending
assets.
<TABLE>
<CAPTION>
ABSTENTIONS
SHARES AND BROKER
SHARES VOTED FOR VOTED AGAINST NON-VOTES
<S> <C> <C>
10,859,350 513,775 6,686,610
</TABLE>
(g) Amended the Fund's fundamental investment policy regarding concentration of
the Fund's investments in the securities of companies in the same industry.
<TABLE>
<CAPTION>
ABSTENTIONS
SHARES AND BROKER
SHARES VOTED FOR VOTED AGAINST NON-VOTES
<S> <C> <C>
10,994,865 391,411 6,673,459
</TABLE>
(h) Amended and made non-fundamental, the Fund's fundamental investment policy
regarding buying securities on margin.
<TABLE>
<CAPTION>
ABSTENTIONS
SHARES AND BROKER
SHARES VOTED FOR VOTED AGAINST NON-VOTES
<S> <C> <C>
10,747,001 583,780 6,728,954
</TABLE>
(i) Amended and made non-fundamental, the Fund's fundamental investment policy
regarding pledging assets.
<TABLE>
<CAPTION>
ABSTENTIONS
SHARES AND BROKER
SHARES VOTED FOR VOTED AGAINST NON-VOTES
<S> <C> <C>
10,802,955 537,946 6,718,834
</TABLE>
AGENDA ITEM 3
Eliminated the Fund's fundamental investment policy regarding selling securities
short.
<TABLE>
<CAPTION>
ABSTENTIONS
SHARES AND BROKER
SHARES VOTED FOR VOTED AGAINST NON-VOTES
<S> <C> <C>
10,864,963 537,946 6,718,834
</TABLE>
AGENDA ITEM 4
Approved an amendment to the Articles of Incorporation of World Investment
Series, Inc. to permit the Board of Directors to liquidate assets of a series or
class without seeking shareholder approval to the extent permitted under
Maryland law.
<TABLE>
<CAPTION>
ABSTENTIONS
SHARES AND BROKER
SHARES VOTED FOR VOTED AGAINST NON-VOTES
<S> <C> <C>
10,368,001 1,014,823 6,676,911
</TABLE>
Where in the World Should You Invest?
[Graphic]
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 EQUITY FUND FEDERATED INTERNATIONAL HIGH INCOME FUND FEDERATED
INTERNATIONAL INCOME FUND FEDERATED INTERNATIONAL SMALL COMPANY FUND FEDERATED
LATIN AMERICAN GROWTH FUND FEDERATED WORLD UTILITY FUND
Federated employs highly qualified, experienced managers in global investing to
select countries and companies outside the U.S. for long-term growth potential.
Call your investment representative to buy shares of ten international equity
funds and two international income funds from Federated Securities Corp.
FOR MORE COMPLETE INFORMATION ABOUT ANY OF THESE FUNDS, CALL 1-800-341-7400 TO
ASK FOR A PROSPECTUS AND READ IT CAREFULLY BEFORE YOU INVEST.
Foreign investing involves special risks including currency risks, increased
volatility of foreign securities and differences in auditing and other financial
standards.
Two Ways You May Seek to Invest for Success:
INITIAL INVESTMENT:
IF YOU HAD MADE AN INITIAL INVESTMENT OF $4,000 IN THE CLASS A SHARES OF
FEDERATED INTERNATIONAL SMALL COMPANY FUND ON 2/28/96, REINVESTED YOUR DIVIDENDS
AND CAPITAL GAINS, AND DID NOT REDEEM ANY SHARES, YOUR ACCOUNT WOULD HAVE BEEN
WORTH $13,571 ON 11/30/99. YOU WOULD HAVE EARNED A 38.26% 1 AVERAGE ANNUAL TOTAL
RETURN FOR THE INVESTMENT LIFE SPAN.
One key to investing wisely is to reinvest all distributions in fund shares.
This increases the number of shares on which you can earn future dividends, and
you gain the benefit of compounding.
As of 12/31/99, the Class A Shares' average annual 1-year and since inception
(2/28/96) total returns were 113.72% and 42.92%, respectively. Class B Shares'
average annual one-year and since inception (2/28/96) total returns were 119.12%
and 43.68%, respectively. Class C Shares' average annual 1-year and since
inception (2/28/96) total returns were 123.58% and 43.93%, respectively. 2
[Graphic representation omitted. Please see Appendix A26.]
1 Total return represents the change in the value of an investment after
reinvesting all income and capital gains, and takes into account the 5.50% sales
charge applicable to an initial investment in Class A Shares. Data quoted
represents past performance and does not guarantee future results. Investment
return and principal value will fluctuate, so an investor's shares, when
redeemed, may be worth more or less than their original cost.
2 The total returns stated takes into account all applicable sales charges. The
maximum sales charges and contingent deferred sales charges for the fund are as
follows: Class A Shares, 5.50% sales charge; Class B Shares, 5.50% contingent
deferred sales charge and Class C Shares, 1.00% contingent deferred sales
charge.
ONE STEP AT A TIME:
$1,000 INITIAL INVESTMENT AND SUBSEQUENT INVESTMENTS OF $1,000 EACH YEAR FOR
THREE YEARS GREW TO $9,662.
With this approach, the key is consistency.
If you had started investing $1,000 annually in Class A Shares of Federated
International Small Company Fund on 2/28/96, reinvested your dividends and
capital gains, and did not redeem any shares, you would have invested only
$4,000 but your account would have reached a total value of $9,662 1 by
11/30/99. You would have earned an average annual total return of 42.87%.
A practical investment plan helps you pursue long-term capital growth through a
diversified portfolio primarily invested in small capitalization equity
securities of non-U.S. issuers. Through systematic investing, you buy shares on
a regular basis and reinvest all earnings. An investment plan can work for you
when you invest only $1,000 annually. You can take it one step at a time. Put
time, money, and compounding to work.
[Graphic representation omitted. Please see Appendix A27.]
1 This chart assumes that the subsequent annual investments are made on the last
day of each anniversary month. No method of investing can guarantee a profit or
protect against loss in down markets.
Federated International Small Company Fund-Class A Shares
GROWTH OF A $10,000 INVESTMENT
The graph below illustrates the hypothetical investment of $10,000 1 in
Federated International Small Company Fund (Class A Shares) (the "Fund") from
February 28, 1996 (start of performance) to November 30, 1999 compared to the
Morgan Stanley Capital International Small Cap World ex-U.S. Index (MSCI-SCW).2
AVERAGE ANNUAL TOTAL RETURNS 3 FOR THE
PERIOD ENDED NOVEMBER 30, 1999
1 Year 92.28%
Start of Performance (2/28/96) 38.26%
[Graphic representation omitted. Please see Appendix A28.]
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE PERFORMANCE. YOUR INVESTMENT RETURN
AND PRINCIPAL VALUE WILL FLUCTUATE SO WHEN SHARES ARE REDEEMED, THEY MAY BE
WORTH MORE OR LESS THAN THEIR ORIGINAL COST. MUTUAL FUNDS ARE NOT OBLIGATIONS OF
OR GUARANTEED BY ANY BANK AND ARE NOT FEDERALLY INSURED.
1 Represents a hypothetical investment of $10,000 in the Fund after deducting
the maximum sales charge of 5.50% ($10,000 investment minus $550 sales charge =
$9,450). The Fund's performance assumes the reinvestment of all dividends and
distributions. The MSCI-SCW has not been adjusted to reflect reinvestment of
dividends on securities in the index.
2 The MSCI-SCW is not adjusted to reflect sales charges, expenses, or other fees
that the Securities and Exchange Commission requires to be reflected in the
Fund's performance. This index is unmanaged.
3 Total return quoted reflects all applicable sales charges.
Federated International Small Company Fund-Class B Shares
GROWTH OF A $10,000 INVESTMENT
The graph below illustrates the hypothetical investment of $10,000 1 in
Federated International Small Company Fund (Class B Shares) (the "Fund") from
February 28, 1996 (start of performance) to November 30, 1999 compared to the
Morgan Stanley Capital International Small Cap World ex-U.S. Index (MSCI- SCW).2
AVERAGE ANNUAL TOTAL RETURNS 3 FOR THE
PERIOD ENDED NOVEMBER 30, 1999
1 Year 96.61%
Start of Performance (2/28/96) 39.01%
[Graphic representation omitted. Please see Appendix A29.]
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE PERFORMANCE. YOUR INVESTMENT RETURN
AND PRINCIPAL VALUE WILL FLUCTUATE SO WHEN SHARES ARE REDEEMED, THEY MAY BE
WORTH MORE OR LESS THAN THEIR ORIGINAL COST. MUTUAL FUNDS ARE NOT OBLIGATIONS OF
OR GUARANTEED BY ANY BANK AND ARE NOT FEDERALLY INSURED.
1 Represents a hypothetical investment of $10,000 in the Fund. The ending value
of the Fund reflects a contingent deferred sales charge of 3.00% on any
redemption less than four years from the purchase date. The maximum contingent
deferred sales charge is 5.50% on any redemption less than one year from the
purchase date. The Fund's performance assumes the reinvestment of all dividends
and distributions. The MSCI-SCW has not been adjusted to reflect reinvestment of
dividends on securities in the index.
2 The MSCI-SCW is not adjusted to reflect sales charges, expenses, or other fees
that the Securities and Exchange Commission requires to be reflected in the
Fund's performance. This index is unmanaged.
3 Total return quoted reflects all applicable sales charges and contingent
deferred sales charges.
Federated International Small Company Fund-Class C Shares
GROWTH OF A $10,000 INVESTMENT
The graph below illustrates the hypothetical investment of $10,000 1 in
Federated International Small Company Fund (Class C Shares) (the "Fund") from
February 28, 1996 (start of performance) to November 30, 1999 compared to the
Morgan Stanley Capital International Small Cap World ex-U.S. Index (MSCI- SCW).2
AVERAGE ANNUAL TOTAL RETURNS 3 FOR THE
PERIOD ENDED NOVEMBER 30, 1999
1 Year 101.11%
Start of Performance (2/28/96) 39.31%
[Graphic representation omitted. Please see Appendix A30.]
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE PERFORMANCE. YOUR INVESTMENT RETURN
AND PRINCIPAL VALUE WILL FLUCTUATE SO WHEN SHARES ARE REDEEMED, THEY MAY BE
WORTH MORE OR LESS THAN THEIR ORIGINAL COST. MUTUAL FUNDS ARE NOT OBLIGATIONS OF
OR GUARANTEED BY ANY BANK AND ARE NOT FEDERALLY INSURED.
1 Represents a hypothetical investment of $10,000 in the Fund. A 1.00%
contingent deferred sales charge would be applied on any redemption less than
one year from the purchase date. The Fund's performance assumes the reinvestment
of all dividends and distributions. The MSCI-SCW has not been adjusted to
reflect reinvestment of dividends on securities in the index.
2 The MSCI-SCW is not adjusted to reflect sales charges, expenses, or other fees
that the Securities and Exchange Commission requires to be reflected in the
Fund's performance. This index is unmanaged.
3 Total return quoted reflects all applicable sales charges and contingent
deferred sales charges.
Portfolio of Investments
NOVEMBER 30, 1999
<TABLE>
<CAPTION>
VALUE IN
SHARES U.S. DOLLARS
<C> <S> <C>
COMMON STOCKS-99.7%
APPLIANCES & HOUSEHOLD
DURABLES-0.7%
634,000 Mirae Co. $ 4,812,766
20,000,000 Vestel Elektronik Sanayi
ve Ticaret AS 2,702,364
TOTAL 7,515,130
AUTOMOBILE-0.8%
45,900 Aucnet, Inc. 4,058,156
15,518 1 Edscha AG 198,606
300,000 Kanamoto Co., Ltd. 1,821,308
71,600 Nokian Renkaat 2,449,658
44,072 1 North American Bus
Industries 855,343
TOTAL 9,383,071
BANKING-1.0%
100 HDFC Bank Ltd. 267
298,000 Korea Technology Banking
Co. 4,061,591
1,436,848 1 PT Bank Pan Indonesia,
Warrants 37,321
401,000 Suruga Bank, Ltd. 7,409,804
TOTAL 11,508,983
BEVERAGE & TOBACCO-0.6%
74,000 Q' sai Co., Ltd. 5,052,311
120,500 Whatman PLC 1,777,437
TOTAL 6,829,748
BROADCASTING & PUBLISHING-
2.8%
1,256,000 ABS-CBN Broadcasting Corp. 1,363,219
994,000 APN News & Media Ltd. 2,024,579
119,300 1 Cinar Corp. 1,632,919
202,500 HIT Entertainment PLC 4,908,332
14,004 Intertainment AG 1,354,803
17,100 Kadokawa Shoten Publishing
Co., Ltd. 6,366,619
161,000 1 MIH Holdings Ltd. 1,042,324
<CAPTION>
VALUE IN
SHARES U.S. DOLLARS
<C> <S> <C>
COMMON STOCKS-continued
BROADCASTING & PUBLISHING-
CONTINUED
193,900 Nasionale Pers Beperk,
Class N $ 1,726,066
282,000 Newfoundland Capital Corp.
Ltd. 1,868,248
57,000 Shobunsha Publications
Inc. 4,093,227
242,700 Talentum 4,647,036
TOTAL 31,027,372
BUSINESS & PUBLIC
SERVICES-21.8%
168,000 1 A-Com AB 2,547,250
125,000 Arrk Corp. 4,236,456
363,250 1 Baltimore Technologies PLC 17,088,066
16,276 1 Brokat Infosystems AG 2,616,140
55,000 1 Business Objects SA, ADR 4,867,500
29,400 Cheil Communications, Inc. 2,662,929
104,100 Connecta 3,352,539
101,466 1 Consodata SA 3,272,074
167,000 Daiwabo Information System
Co., Ltd. 4,609,955
42,300 1 Data Fellows OYJ 1,037,987
325,500 1 Descartes Systems Group
Inc. 3,328,650
105,000 1 Easynet Group PLC 1,816,705
43,500 1 EBookers, ADR 1,000,500
75,150 1 Effnet Group AB 2,402,539
26,000 Falck A/S 2,588,379
117,700 1 Framtidsfabriken AB 9,822,169
11,500 FI Systems 2,607,552
81,650 1 GFK AG 2,715,331
305,000 1, 2 Guardian IT 3,672,079
235,000 1 Humax Co. Ltd. 3,983,394
29,012 1 Intercall 877,105
160,000 1 Interlink Systems Co. Ltd. 3,422,903
71,265 Intershop Communications
AG 14,507,090
88,758 1 IPSOS 5,044,745
837,500 1 Ixchange Technology
Holdings Ltd. 2,236,587
105,600 Koei Co. 4,688,954
389,998 Lang Corp. Ltd. 1,774,871
2,831,481 1 LibertyOne Ltd. 3,514,364
<CAPTION>
VALUE IN
SHARES U.S. DOLLARS
<C> <S> <C>
COMMON STOCKS-continued
BUSINESS & PUBLIC
SERVICES-CONTINUED
2,007,000 1 MediaRing.com Ltd. $ 1,982,517
164,500 1 MGI Software Corp. 2,134,912
144,200 1 Microforum, Inc., Warrants 53,890
38,000 1 NICE Systems Ltd., ADR 1,555,625
26,500 Nichii Gakkan 5,469,473
88,750 1 Neopost SA 3,666,949
92,000 Pentafour Software &
Export Ltd. 1,839,470
50,612 1 Pixelpark AG 3,162,262
40,500 Plaza Create 2,824,795
1,046,196 Saatchi & Saatchi PLC 5,121,730
2,247,696 1 Sausage Software Ltd. 6,108,912
3,152,000 1 Scoot.com PLC 4,674,492
3,700,000 1 Secure Network Solutions
Ltd. 12,481,764
736,000 Sembcorp Logistics Ltd. 2,868,670
578,000 Skillsgroup 2,013,931
1,602,000 Solution 6 Holdings Ltd. 11,318,369
122,000 Sumisho Computer Systems
Corp. 9,108,503
1,397,000 Taylor Nelson 5,792,087
993,000 1 Trafficmaster PLC 14,330,558
49,700 Trans Cosmos, Inc. 11,327,079
142,500 1 Trintech Group PLC, ADR 5,272,500
62,000 Venture Link Co. Ltd. 6,273,393
94,500 Warehouse SA 2,520,734
100,000 Zuken, Inc. 4,116,116
TOTAL 242,313,544
CHEMICALS-0.4%
145,000 Grasim Industries Ltd. 1,486,580
101,680 1 Petzetakis SA 2,057,574
33,600 1 Petzetakis SA, Rights 403,833
TOTAL 3,947,987
CONSTRUCTION & HOUSING-
0.2%
23,914 Abengoa SA 508,978
5,295 Finpro 26,627
289,000 Ultraframe 1,797,330
TOTAL 2,332,935
<CAPTION>
VALUE IN
SHARES U.S. DOLLARS
<C> <S> <C>
COMMON STOCKS-continued
DATA PROCESSING &
REPRODUCTION-1.8%
360,823 1 DOCdata NV $ 2,890,773
21,300 1, 2 Gretag Imaging Group 2,652,620
3,762,000 Legend Holdings Ltd. 8,767,424
176,420 1 Modern Times Group, Class B 5,868,226
TOTAL 20,179,043
ELECTRICAL & ELECTRONICS-
9.6%
398,050 1 BE Semiconductor
Industries NV 4,512,765
30,000 Densei-Lambda K.K. 1,290,830
1,400,200 Eastern Communications
Co., Ltd. 887,727
654,541 ERG Ltd. 3,416,245
541,000 FI Group PLC 5,486,807
193,000 Filtronic PLC 5,629,065
60,500 1 Gilat Satellite Networks 4,654,719
62,300 1 Icon Medialab
International AB 6,773,332
62,500 1 Ideal Group SA 2,228,618
85,000 1 Independent Energy
Holdings PLC, ADR 2,300,313
61,500 1 Infoquest SA 1,593,338
209,400 1 IXLA Ltd., 3/31/2000,
Options Contract 213,253
2,208,000 1 IXLA Ltd. 2,628,083
753,000 Japan Radio Co. 8,469,816
14,400 Obic Co., Ltd. 10,185,176
168,000 1 PMJ Automec Oyj 1,323,941
112,000 1 Research in Motion Ltd. 5,783,788
533,800 RM PLC 6,384,180
130,000 Shibaura Mechatronics
Corp. 1,679,356
16,150,000 Stone Electronic
Technology 6,758,192
1,000,000 1 Timeless Software Ltd. 663,104
81,900 Trend Micro, Inc. 17,458,913
310,000 Yokowo, Co. Ltd. 6,212,486
TOTAL 106,534,047
<CAPTION>
VALUE IN
SHARES U.S. DOLLARS
<C> <S> <C>
COMMON STOCKS-continued
ELECTRONIC COMPONENTS,
INSTRUMENTS-13.8%
14,500 1 4M Technologies Holding SA $ 4,172,432
25,019 1 ADVA AG Optical Networking 3,403,740
160,900 1 ARM Holdings PLC, ADR 23,813,200
19,350 Avex, Inc. 6,025,787
29,550 1 CE Consumer Electronic AG 2,575,884
113,000 1 Certicom Corp. 3,531,970
120,000 1 Creative Technology Ltd. 1,740,000
250,000 1 Comtec System Co. Ltd. 3,450,507
114,465 Daou Technology Inc. 3,278,187
2,163,000 Datacraft Asia Ltd. 10,468,920
95,125 1 Eidos PLC 8,464,361
2,040,000 Flextech Holdings Ltd. 1,942,278
13,600 Funai Electric Co. Ltd. 8,537,158
134,500 1 Genesis Microchip, Inc. 2,521,875
37,000 1 GFT Ges Fuer
Technologiecon AG 2,610,072
3,389,000 1 Great Wall Technology Co. 2,858,164
34,000 Honda Tsushin Kogyo Co.
Ltd. 2,201,091
96,000 1 Industrial & Financial
Systems 1,331,453
45,000 Information Highway AB 3,157,617
16,349 1 Integra - Net SA 1,598,143
1,477,480 1, 2 JOT Automation Group Oyj 10,050,276
456,500 1 Kingston Communication
(Hull) PLC 5,081,144
1,174 1 Kudelski SA 5,419,939
109,700 1 Linne Group AB 2,823,731
62,000 Megachips Corp. 4,781,178
115,000 Mitsumi Electric 3,061,545
342,000 1 Perlos OYJ 6,031,381
806 Phonak Holding AG 1,383,974
205,800 1 Readsoft AB 2,781,735
<CAPTION>
VALUE IN
SHARES U.S. DOLLARS
<C> <S> <C>
COMMON STOCKS-continued
ELECTRONIC COMPONENTS,
INSTRUMENTS-CONTINUED
8,000 SEZ Holding AG $ 3,094,534
26,212 Sopra SA 1,854,342
64,770 1 Steag Hamatech AG 2,734,895
205,700 1 Telelogic AB 4,303,550
122,500 1 Telson Electronics Co.
Ltd. 3,117,317
TOTAL 154,202,380
ENERGY EQUIPMENT &
SERVICES-0.5%
15,150 Micronas Semiconductor
Holding AG 3,716,272
100,000 1 Precision Drilling Corp. 2,153,972
TOTAL 5,870,244
ENERGY SOURCES-1.4%
177,200 1 Canadian Hunter
Exploration Ltd. 2,498,403
16,134,178 1 Providence Resources PLC 243,884
78,100 1 Vestas Wind Systems A/S 12,376,676
TOTAL 15,118,963
FINANCIAL SERVICES-3.9%
1,407,800 Challenger International
Ltd. 3,853,077
125,000 Diamond Lease Co. Ltd. 2,038,411
25,100 Drake Beam Morin Japan,
Inc. 7,594,479
412,000 Ichiyoshi Securities Co.,
Ltd. 2,472,931
71,200 Mycal Card, Inc. 3,427,281
96,200 Nissin Co. Ltd. 5,008,694
56,000 Pasona Softbank, Inc. 5,996,366
115,000 Ricoh Leasing Co. Ltd. 3,038,951
108,600 Sanyo Electric Credit Co.,
Ltd. 4,598,124
134,925 1 Tecis Holding AG 5,778,751
TOTAL 43,807,065
FOOD & HOUSEHOLD PRODUCTS-
4.3%
167,700 Britannia Industries 3,115,036
12,300 C Two-Network Co., Ltd. 3,383,271
50,000 Chipita International 1,738,437
64,560 1 DO & CO Restaurants &
Catering AG 2,700,003
<CAPTION>
VALUE IN
SHARES U.S. DOLLARS
<C> <S> <C>
COMMON STOCKS-continued
FOOD & HOUSEHOLD PRODUCTS-
CONTINUED
89,250 Goody's SA $ 2,709,065
35,500 Hokuto Corp. 2,367,946
159,894 Kamps AG 11,198,751
111,925 1 Kamps AG, Rights 7,387,901
72,000 Rock Field Co. 3,182,868
26,300 Royal Canin 1,799,609
88,000 Saizeriya Co., Ltd. 8,731,274
TOTAL 48,314,161
FOREST PRODUCTS & PAPER-
1.1%
305,400 Canfor Corp. 3,309,866
183,500 Metsa-Serla Oy, Class B 1,812,236
158,600 Nexfor, Inc. 770,531
2,761,345 Rotternos AB 3,180,675
260,000 1 Tembec, Inc., Class A 2,649,997
TOTAL 11,723,305
HEALTH & PERSONAL CARE-
4.7%
38,400 1 Biovail Corp.
International 2,671,200
16,640,000 China Pharmaceutical
Enterprise and Investment
Corp. Ltd. 2,892,423
1,664,000 1 China Pharmaceutical
Enterprise and Investment
Corp. Ltd., Warrants 55,706
56,000 Colin Corp. 8,416,917
960 Disetronic Holdings AG 4,117,995
1,712 Glaxo India Ltd. 31,081
55,500 Kobayashi Pharmaceutical
Co. Ltd. 5,375,805
70,000 Medical Support Co. 5,054,276
218,000 Nestor Healthcare Group
PLC 2,377,814
9,446,000 Quality Healthcare 3,831,184
160,000 Sarantis SA 6,181,110
322,000 1 Shire Pharmaceuticals
Group PLC 3,445,432
109,000 Sysmex Corp. 3,319,417
195,500 1 Taro Pharmaceutical
Industries Ltd. 2,761,438
135,000 Zeltia SA 2,333,192
TOTAL 52,864,990
<CAPTION>
VALUE IN
SHARES U.S. DOLLARS
<C> <S> <C>
COMMON STOCKS-continued
INDUSTRIAL COMPONENTS-0.7%
658,000 Nippon Thompson $ 5,300,457
15,400 Swisslog Holding AG 2,731,493
TOTAL 8,031,950
INSURANCE-0.3%
85,020 Interamerican Life
Insurance Co. SA 3,049,881
LEISURE & TOURISM-0.7%
22,300 1 Infogrames Entertainment 2,831,575
163,500 1 Rapala Normark 774,405
3,965,000 Shaw Brothers (Hong Kong)
Ltd. 4,135,261
TOTAL 7,741,241
MACHINERY & ENGINEERING-
2.4%
102,000 BT Industries AB 1,918,195
132,500 Innotech Corp. 5,258,608
144,000 Kewill Systems PLC 2,709,629
161,000 Meiki Co. Ltd. 3,795,864
229,300 Nitto Kohki Co. Ltd. 5,631,416
143,100 Rokas SA 7,107,725
TOTAL 26,421,437
MERCHANDISING-4.1%
3,911,000 China Everbright Ltd. 2,920,723
30,200 Don Quijote Co., Ltd. 7,446,535
120,900 Elkjop Norge ASA 2,362,617
2,716,000 Esprit Asia Holdings Ltd. 2,745,200
6,460,200 Giordano International
Ltd. 6,446,475
22,420 1 Interdiscount Hldg. 3,602,937
5,338,600 Profurn Ltd. 5,270,771
7,000 Selecta Group 2,377,508
126,000 Yamada Denki 12,996,709
TOTAL 46,169,475
<CAPTION>
VALUE IN
SHARES U.S. DOLLARS
<C> <S> <C>
COMMON STOCKS-continued
METALS - NON FERROUS-0.3%
1,402,900 Breakwater Resources Ltd. $ 3,241,055
METALS - STEEL-0.4%
1,413,540 SA Iron & Steel Industrial
Corp., Ltd. 4,667,187
MISCELLANEOUS MATERIALS &
COMMODITIES-0.3%
81,550 Maillis 2,937,905
MULTI-INDUSTRY-0.2%
180,428 Corp Fin Reunida 2,151,005
REAL ESTATE-2.0%
271,000 Fuso Lexel, Inc. 4,339,408
26,000 Goldcrest Co., Ltd. 3,805,688
2,128,000 Golden Land Property
Development PLC 982,532
5,380,000 Hong Kong Construction
Holdings Ltd. 1,991,567
3,443,000 Kerry Properties Ltd. 4,100,657
1,016,000 Pacific Century Regional
Developments Ltd. 6,529,485
TOTAL 21,749,337
RECREATION, OTHER CONSUMER
GOODS-2.9%
449,620 Aristocrat Leisure Ltd. 5,695,044
206,000 1 Corporacion Interamericana
de Entretenimiento SA 684,407
61,875 Folli-Follie 3,006,910
56,000 Happinet Corp. 3,306,253
64,000 Right On Co. 5,909,917
288,000 Sailor Pen Co. Ltd. 6,365,735
238,029 1 Zapf Creation AG 7,016,304
TOTAL 31,984,570
TECHNOLOGY-0.6%
80,000 1 Cyber Com Consulting Group
Scandinavia AB 582,981
537,000 1 Imagination Technologies
Group PLC 2,825,878
1,000,000 1 Techniche Ltd. 3,023,374
TOTAL 6,432,233
<CAPTION>
VALUE IN
SHARES U.S. DOLLARS
<C> <S> <C>
COMMON STOCKS-continued
TELECOMMUNICATIONS-9.4%
19,953 1 Alten $ 2,704,476
1,343,000 Asia Satellite
Telecommunications
Holdings Ltd. 4,046,379
82,800 1 Autonomy Corp. 3,291,300
26,025 1 Avenir Telecom 3,291,449
50,000 1 Clearnet Communications,
Inc. 1,291,024
149,500 1 Clearnet Communications,
Inc., Class A 3,905,688
4,254,000 City Telecom (HK) Ltd. 4,053,254
2,214,000 1 CSE Systems & Engineering
Ltd. 1,673,180
103,497 1 Detron Group NV 1,392,393
703,345 1 ITG Group PLC 6,449,136
2,662,000 Keppel Telecom & Transport 3,785,885
16,300 1 Korea Thrunet Co. Ltd.,
Class A 906,688
8 Mobilephone
Telecommunications
International Ltd. 6,090,673
315,554 1 MobiNil 10,769,745
34,000 Moshi Moshi Hotline, Inc. 4,676,065
9,300 NRJ SA 4,245,548
6,063,830 One. Tel Ltd. 7,989,429
460,000 Pace Micro Technology PLC 3,491,645
1,003,280 PowerLan Ltd. 3,384,514
498,000 Protel International Ltd. 1,774,437
229,900 1 SwitchCore AB 8,160,532
82,000 1, 2 Tandberg ASA 1,831,356
501,300 1 Teligent AB 6,068,865
120,948 Tiletipos SA 3,300,386
100,790 1 Tiletipos SA, Rights 618,050
1,290 UNISOFT SA 37,733
157,550 1 Versatel Telecom
International NV 4,445,587
1,582,000 1 Westel Group Ltd. 1,006,942
TOTAL 104,682,359
<CAPTION>
VALUE IN
SHARES U.S. DOLLARS
<C> <S> <C>
COMMON STOCKS-continued
TEXTILES & APPAREL-1.7%
26,000 Fast Retailing Co. Ltd. $ 9,705,782
418,000 Matalan 9,281,898
TOTAL 18,987,680
TRANSPORTATION - AIRLINES-
0.3%
5,000,000 1 China Southern Airlines
Co. Ltd. 1,281,144
205,800 1 Westjet Airlines Ltd. 2,013,671
TOTAL 3,294,815
TRANSPORTATION - SHIPPING-
0.8%
2,818,000 Cosco Pacific Ltd. 2,304,037
2,249,059 Neptune Orient Lines Ltd. 3,345,817
13,500,000 Shanghai Haixing Shipping,
Co. 3,180,970
TOTAL 8,830,824
UTILITIES - ELECTRICAL &
GAS-0.1%
6,790,000 1 Shandong International
Power Development Co.,
Ltd. 944,209
WHOLESALE & INTERNATIONAL
TRADE-3.1%
3,106,000 Li & Fung Ltd. 7,138,621
7,786 1 Medion AG 2,393,133
5,117,000 Metro Cash and Carry Ltd. 4,820,091
84,000 Misumi Corp. 6,230,169
198,000 Nitori Co. 8,072,106
240,000 Toyo Corp. 5,658,431
TOTAL 34,312,551
TOTAL COMMON STOCKS
(IDENTIFIED COST
$683,017,233) 1,109,102,682
<CAPTION>
SHARES OR
PRINCIPAL VALUE IN
AMOUNT U.S. DOLLARS
<C> <S> <C>
PREFERRED STOCKS-0.0%
CONSTRUCTION & HOUSING-
0.0%
169,000 Construtora Sultepa SA,
Preference $ 191,246
TELECOMMUNICATIONS-0.0%
198,325,732 1 Tele Centro Oeste Celular
Participacoes SA 273,446
TOTAL PREFERRED STOCKS
(IDENTIFIED COST
$621,743) 464,692
REPURCHASE AGREEMENT-0.5%
3
$ 5,740,000 J.P. Morgan & Co., Inc.,
5.71%, dated 11/30/1999,
due 12/1/1999
(at amortized cost) 5,740,000
TOTAL INVESTMENTS
(IDENTIFIED COST
$689,378,976) 4 $ 1,115,307,374
</TABLE>
1 Non-income producing security.
2 Denotes a restricted security which is subject to restrictions on resale under
federal securities laws. These securities have been deemed liquid based upon
criteria approved by the fund's Board of Directors. At November 30, 1999, these
securities amounted to $18,206,331 which represents 1.6% of net assets.
3 The repurchase agreement is fully collateralized by U.S. government and/or
agency obligations based on market prices at the date of the portfolio. The
investment in the repurchase agreement is through participation in a joint
account with other Federated funds.
4 The cost of investments for federal tax purposes amounts to $690,859,082. The
net unrealized appreciation of investments on a federal tax basis amounts to
$424,448,292 which is comprised of $440,576,451 appreciation and $16,128,159
depreciation at November 30, 1999.
Note: The categories of investments are shown as a percentage of net assets
($1,112,875,213) at November 30, 1999.
The following acronym is used throughout this portfolio:
ADR -American Depositary Receipt
See Notes which are an integral part of the Financial Statements
Statement of Assets and Liabilities
NOVEMBER 30, 1999
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS:
Total investments in
securities, at value
(identified cost
$689,378,976 and tax
cost $690,859,082) $ 1,115,307,374
Cash 4,264
Cash denominated in
foreign currencies
(identified cost $398,661) 397,552
Income receivable 483,754
Receivable for investments
sold 7,053,438
Net receivable for foreign
currency exchange
contracts 12,161
Receivable for shares sold 8,933,755
Deferred organizational
costs 14,574
TOTAL ASSETS 1,132,206,872
LIABILITIES:
Payable for investments
purchased $ 8,327,442
Payable for shares
redeemed 9,450,867
Payable for taxes withheld 536,248
Accrued expenses 1,017,102
TOTAL LIABILITIES 19,331,659
Net assets for 32,125,232
shares outstanding $ 1,112,875,213
NET ASSETS CONSIST OF:
Paid-in capital $ 570,481,655
Net unrealized
appreciation of
investments and
translation of assets and
liabilities in foreign
currency 425,908,269
Accumulated net realized
gain on investments and
foreign currency
transactions 118,296,085
Accumulated net operating
loss (1,810,796)
TOTAL NET ASSETS $ 1,112,875,213
NET ASSET VALUE, OFFERING
PRICE AND REDEMPTION
PROCEEDS PER SHARE:
CLASS A SHARES:
Net Asset Value Per Share
($506,116,924 / 14,388,718
shares outstanding) $35.17
Offering Price Per Share
(100/94.50 of $35.17) 1 $37.22
Redemption Proceeds Per
Share $35.17
CLASS B SHARES:
Net Asset Value Per Share
($462,524,327 / 13,518,479
shares outstanding) $34.21
Offering Price Per Share $34.21
Redemption Proceeds Per
Share (94.50/100 of
$34.21) 1 $32.33
CLASS C SHARES:
Net Asset Value Per Share
($144,233,962 / 4,218,035
shares outstanding) $34.19
Offering Price Per Share $34.19
Redemption Proceeds Per
Share (99.00/100 of
$34.19) 1 $33.85
</TABLE>
1 See "What Do Shares Cost?" in the Prospectus.
See Notes which are an integral part of the Financial Statements
Statement of Operations
YEAR ENDED NOVEMBER 30, 1999
<TABLE>
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME:
Dividends (net of foreign
taxes withheld of
$392,428) $ 4,413,411
Interest 1,540,983
TOTAL INCOME 5,954,394
EXPENSES:
Investment adviser fee $ 7,636,667
Administrative personnel
and services fee 464,859
Custodian fees 1,195,043
Transfer and dividend
disbursing agent fees and
expenses 1,032,389
Directors'/Trustees' fees 4,856
Auditing fees 22,021
Legal fees 5,050
Portfolio accounting fees 164,255
Distribution services fee-
Class B Shares 2,066,817
Distribution services fee-
Class C Shares 580,378
Shareholder services fee-
Class A Shares 644,871
Shareholder services fee-
Class B Shares 688,939
Shareholder services fee-
Class C Shares 193,459
Share registration costs 108,671
Printing and postage 188,653
Insurance premiums 2,548
Taxes 37,957
Miscellaneous 31,636
TOTAL EXPENSES 15,069,069
Net operating loss (9,114,675)
REALIZED AND UNREALIZED
GAIN ON INVESTMENTS AND
FOREIGN CURRENCY:
Net realized gain on
investments and foreign
currency transactions (net
of foreign taxes withheld
of $702,253) 131,618,106
Net change in unrealized
appreciation of
investments and
translation of assets and
liabilities in foreign
currency 368,102,747
Net realized and
unrealized gain on
investments and
foreign currency 499,720,853
Change in net assets
resulting from operations $ 490,606,178
</TABLE>
See Notes which are an integral part of the Financial Statements
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30 1999 1998
<S> <C> <C>
INCREASE (DECREASE) IN NET
ASSETS
OPERATIONS:
Net operating loss $ (9,114,675) $ (5,038,761)
Net realized gain on
investments and foreign
currency transactions
($129,930,928 and
$17,745,082, respectively,
as computed for federal
tax purposes) 131,618,106 8,268,645
Net change in unrealized
appreciation of
investments and
translation of assets and
liabilities in foreign
currency 368,102,747 46,830,198
CHANGE IN NET ASSETS
RESULTING FROM OPERATIONS 490,606,178 50,060,082
DISTRIBUTIONS TO
SHAREHOLDERS:
Distributions from net
realized gain on
investments and foreign
currency transactions
Class A Shares (2,408,765) -
Class B Shares (3,131,436) -
Class C Shares (807,825) -
CHANGE IN NET ASSETS
RESULTING FROM
DISTRIBUTIONS
TO SHAREHOLDERS (6,348,026) -
SHARE TRANSACTIONS:
Proceeds from sale of
shares 895,563,251 343,889,639
Net asset value of shares
issued to shareholders in
payment of
distributions declared 5,607,305 -
Cost of shares redeemed (657,706,270) (248,855,119)
CHANGE IN NET ASSETS
RESULTING FROM SHARE
TRANSACTIONS 243,464,286 95,034,520
Change in net assets 727,722,438 145,094,602
NET ASSETS:
Beginning of period 385,152,775 240,058,173
End of period $ 1,112,875,213 $ 385,152,775
</TABLE>
See Notes which are an integral part of the Financial Statements
Financial Highlights-Class A Shares
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30 1999 1998 1997 1996 1
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING
OF PERIOD $17.56 $14.25 $12.26 $10.00
INCOME FROM INVESTMENT
OPERATIONS:
Net operating loss (0.26) 2 (0.17) 2 (0.11) (0.02)
Net realized and
unrealized gain on
investments and
foreign currency 18.15 3.48 2.10 2.28
TOTAL FROM INVESTMENT
OPERATIONS 17.89 3.31 1.99 2.26
LESS DISTRIBUTIONS:
Distributions from net
realized gain on
investments and foreign
currency transactions (0.28) - - -
NET ASSET VALUE, END OF
PERIOD $35.17 $17.56 $14.25 $12.26
TOTAL RETURN 3 103.45% 23.23% 16.23% 22.60%
RATIOS TO AVERAGE NET
ASSETS:
Expenses 2.03% 1.95% 2.12% 1.97% 4
Net operating loss (1.05%) (0.97%) (1.08%) (0.48%) 4
Expense
waiver/reimbursement 5 - - 0.21% 3.38% 4
SUPPLEMENTAL DATA:
Net assets, end of period
(000 omitted) $506,117 $147,490 $91,707 $16,399
Portfolio turnover 321% 380% 286% 174%
</TABLE>
1 Reflects operations for the period from February 28, 1996 (date of initial
public investment) to November 30, 1996.
2 Per share information is based on average shares outstanding.
3 Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
4 Computed on an annualized basis.
5 This voluntary expense decrease is reflected in both the expense and the net
operating loss ratios shown above.
See Notes which are an integral part of the Financial Statements
Financial Highlights-Class B Shares
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30 1999 1998 1997 1996 1
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING
OF PERIOD $17.20 $14.07 $12.20 $10.00
INCOME FROM INVESTMENT
OPERATIONS:
Net operating loss (0.41) 2 (0.29) 2 (0.12) (0.04)
Net realized and
unrealized gain on
investments and foreign
currency 17.70 3.42 1.99 2.24
TOTAL FROM INVESTMENT
OPERATIONS 17.29 3.13 1.87 2.20
LESS DISTRIBUTIONS:
Distributions from net
realized gain on
investments and foreign
currency transactions (0.28) - - -
NET ASSET VALUE, END OF
PERIOD $34.21 $17.20 $14.07 $12.20
TOTAL RETURN 3 102.11% 22.25% 15.33% 22.00%
RATIOS TO AVERAGE NET
ASSETS:
Expenses 2.78% 2.70% 2.87% 2.72% 4
Net operating loss (1.80%) (1.72%) (1.81%) (1.61%) 4
Expense
waiver/reimbursement 5 - - 0.17% 3.38% 4
SUPPLEMENTAL DATA:
Net assets, end of period
(000 omitted) $462,524 $189,965 $120,939 $16,721
Portfolio turnover 321% 380% 286% 174%
</TABLE>
1 Reflects operations for the period from February 28, 1996 (date of initial
public investment) to November 30, 1996.
2 Per share information is based on average shares outstanding.
3 Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
4 Computed on an annualized basis.
5 This voluntary expense decrease is reflected in both the expense and the net
operating loss ratios shown above.
See Notes which are an integral part of the Financial Statements
Financial Highlights-Class C Shares
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30 1999 1998 1997 1996 1
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING
OF PERIOD $17.19 $14.06 $12.19 $10.00
INCOME FROM INVESTMENT
OPERATIONS:
Net operating loss (0.42) 2 (0.29) 2 (0.12) (0.05)
Net realized and
unrealized gain on
investments and
foreign currency 17.70 3.42 1.99 2.24
TOTAL FROM INVESTMENT
OPERATIONS 17.28 3.13 1.87 2.19
LESS DISTRIBUTIONS:
Distributions from net
realized gain on
investments and foreign
currency transactions (0.28) - - -
NET ASSET VALUE, END OF
PERIOD $34.19 $17.19 $14.06 $12.19
TOTAL RETURN 3 102.11% 22.26% 15.34% 21.90%
RATIOS TO AVERAGE NET
ASSETS:
Expenses 2.78% 2.70% 2.87% 2.72% 4
Net operating loss (1.80%) (1.72%) (1.85%) (1.58%) 4
Expense
waiver/reimbursement 5 - - 0.17% 3.38% 4
SUPPLEMENTAL DATA:
Net assets, end of period
(000 omitted) $144,234 $47,697 $27,412 $3,040
Portfolio turnover 321% 380% 286% 174%
</TABLE>
1 Reflects operations for the period from February 28, 1996 (date of initial
public investment) to November 30, 1996.
2 Per share information is based on average shares outstanding.
3 Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
4 Computed on an annualized basis.
5 This voluntary expense decrease is reflected in both the expense and the net
operating loss ratios shown above.
See Notes which are an integral part of the Financial Statements
Notes to Financial Statements
NOVEMBER 30, 1999
ORGANIZATION
World Investment Series, Inc. (the "Corporation") is registered under the
Investment Company Act of 1940, as amended (the "Act"), as an open-end,
management investment company. The Corporation consists of ten portfolios. The
financial statements included herein are only those of Federated International
Small Company Fund (the "Fund"), a diversified portfolio. The financial
statements of the other portfolios are presented separately. The assets of each
portfolio are segregated and a shareholder's interest is limited to the
portfolio in which shares are held.
The Fund offers three classes of shares: Class A Shares, Class B Shares and
Class C Shares. The investment objective of the Fund is to provide long-term
growth of capital.
SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS
Foreign equity securities are valued at the last sale price reported in the
market in which they are primarily traded. If no sale on the recognized exchange
is reported or the security is traded over-the-counter, the foreign securities
are valued at the mean between the last closing bid and asked prices. Short-term
securities are valued at the prices provided by an independent pricing service.
However, short-term foreign and domestic securities with remaining maturities of
60 days or less at the time of purchase may be valued at amortized cost, which
approximates fair market value.
REPURCHASE AGREEMENTS
It is the policy of the Fund to require the custodian bank to take possession,
to have legally segregated in the Federal Reserve Book Entry System, or to have
segregated within the custodian bank's vault, all securities held as collateral
under repurchase agreement transactions. Additionally, procedures have been
established by the Fund to monitor, on a daily basis, the market value of each
repurchase agreement's collateral to ensure that the value of collateral at
least equals the repurchase price to be paid under the repurchase agreement.
The Fund will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed by
the Fund's adviser to be creditworthy pursuant to the guidelines and/or
standards reviewed or established by the Board of Directors (the "Directors").
Risks may arise from the potential inability of counterparties to honor the
terms of the repurchase agreement. Accordingly, the Fund could receive less than
the repurchase price on the sale of collateral securities. The Fund, along with
other affiliated investment companies may utilize a joint trading account for
the purpose of entering into one or more repurchase agreements.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS
Interest income and expenses are accrued daily. Bond premium and discount, if
applicable, are amortized as required by the Internal Revenue Code of 1986, as
amended (the "Code"). Dividend income and distributions to shareholders are
recorded on the ex-dividend date. Non-cash dividends included in dividend
income, if any, are recorded at fair value. The Fund offers multiple classes of
shares, which differ in their respective distribution and service fees. All
shareholders bear the common expenses of the Fund based on average daily net
assets of each class, without distinction between share classes. Dividends are
declared separately for each class. No class has preferential dividend rights;
differences in per share dividend rates are generally due to differences in
separate class expenses.
Income and capital gain distributions are determined in accordance with income
tax regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments for foreign currency
transactions. The following reclassifications have been made to the financial
statements.
<TABLE>
<CAPTION>
INCREASE (DECREASE)
ACCUMULATED
NET REALIZED
GAIN ON INVESTMENTS
AND FOREIGN ACCUMULATED
PAID-IN CURRENCY NET OPERATING
CAPITAL TRANSACTIONS LOSS
<S> <C> <C>
$1,448 $(7,342,813) $7,341,365
</TABLE>
Net investment income, net realized gains/losses, and net assets were not
affected by this reclassification.
FEDERAL TAXES
It is the Fund's policy to comply with the provisions of the Code applicable to
regulated investment companies and to distribute to shareholders each year
substantially all of its income. Accordingly, no provision for federal tax is
necessary.
Withholding taxes on foreign interest and dividends have been provided for in
accordance with the applicable country's tax rules and rates.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
The Fund may engage in when-issued or delayed delivery transactions. The Fund
records when-issued securities on the trade date and maintains security
positions such that sufficient liquid assets will be available to make payment
for the securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date. Losses may occur on these transactions due to changes in market
conditions or the failure of counterparties to perform under the contract.
FOREIGN EXCHANGE CONTRACTS
The Fund may enter into foreign currency commitments for the delayed delivery of
securities or foreign currency exchange transactions. The Fund may enter into
foreign currency contract transactions to protect assets against adverse changes
in foreign currency exchange rates or exchange control regulations. Purchased
contracts are used to acquire exposure to foreign currencies; whereas contracts
to sell are used to hedge the Fund's securities against currency fluctuations.
Risks may arise upon entering these transactions from the potential inability of
counterparties to meet the terms of their commitments and from unanticipated
movements in security prices or foreign exchange rates. The foreign currency
transactions are adjusted by the daily exchange rate of the underlying currency
and any gains or losses are recorded for financial statement purposes as
unrealized until the settlement date.
At November 30, 1999, the Fund had outstanding foreign currency commitments as
set forth below:
<TABLE>
<CAPTION>
UNREALIZED
CONTRACTS
TO CONTRACTS APPRECIATION
SETTLEMENT DATE DELIVER/RECEIVE IN
EXCHANGE FOR AT VALUE (DEPRECIATION)
<S> <C>
<C> <C> <C>
CONTRACT PURCHASED:
12/1/1999 4,092,423 Australian Dollar
$2,610,966 $2,604,827 $(6,139)
CONTRACTS SOLD:
12/1/1999 254,521 Canadian Dollar
172,439 172,943 (504)
12/1/1999 1,508,116 Euro Currency
1,532,352 1,519,804 12,548
12/1/1999 274,724 Pound Sterling
441,894 438,088 3,806
12/1/1999 3,462,770 Swedish Krona
406,429 407,002 (573)
12/2/1999 191,576 Pound Sterling
308,150 305,496 2,654
12/3/1999 84,630 Pound Sterling
135,324 134,955 369
NET UNREALIZED APPRECIATION ON FOREIGN
EXCHANGE
CONTRACTS:
$12,161
</TABLE>
FOREIGN CURRENCY TRANSLATION
The accounting records of the Fund are maintained in U.S. dollars. All assets
and liabilities denominated in foreign currencies ("FC") are translated into
U.S. dollars based on the rates of exchange of such currencies against U.S.
dollars on the date of valuation. Purchases and sales of securities, income and
expenses are translated at the rate of exchange quoted on the respective date
that such transactions are recorded. The Fund does not isolate that portion of
the results of operations resulting from changes in foreign exchange rates on
investments from the fluctuations arising from changes in market prices of
securities held. Such fluctuations are included with the net realized and
unrealized gain or loss from investments.
Reported net realized foreign exchange gains or losses arise from sales of
portfolio securities, sales and maturities of short-term securities, sales of
FCs, currency gains or losses realized between the trade and settlement dates on
securities transactions, the difference between the amounts of dividends,
interest, and foreign withholding taxes recorded on the Fund's books, and the
U.S. dollar equivalent of the amounts actually received or paid. Net unrealized
foreign exchange gains and losses arise from changes in the value of assets and
liabilities other than investments in securities at fiscal year end, resulting
from changes in the exchange rate.
RESTRICTED SECURITIES
Restricted securities are securities that may only be resold upon registration
under federal securities laws or in transactions exempt from such registration.
In some cases, the issuer of restricted securities has agreed to register such
securities for resale, at the issuer's expense either upon demand by the Fund or
in connection with another registered offering of the securities. Many
restricted securities may be resold in the secondary market in transactions
exempt from registration. Such restricted securities may be determined to be
liquid under criteria established by the Directors. The Fund will not incur any
registration costs upon such resales. The Fund's restricted securities are
valued at the price provided by dealers in the secondary market or, if no market
prices are available, at the fair value as determined by the Fund's pricing
committee.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts of assets, liabilities, expenses and revenues reported in the
financial statements. Actual results could differ from those estimated.
OTHER
Investment transactions are accounted for on a trade date basis.
CAPITAL STOCK
At November 30, 1999, par value shares ($0.001 per share) authorized were as
follows:
<TABLE>
<CAPTION>
NUMBER OF PAR VALUE
CLASS NAME CAPITAL STOCK AUTHORIZED
<S> <C>
Class A Shares 100,000,000
Class B Shares 100,000,000
Class C Shares 100,000,000
TOTAL 300,000,000
</TABLE>
Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30 1999
1998
CLASS A SHARES: SHARES AMOUNT
SHARES AMOUNT
<S> <C> <C> <C>
<C>
Shares sold 24,254,356 $ 608,752,260 12,150,368
$ 213,991,576
Shares issued to
shareholders in payment of
distributions declared 110,993 2,000,099
- - -
Shares redeemed (18,375,105) (463,768,227)
(10,185,264) (179,653,387)
NET CHANGE RESULTING FROM
CLASS A SHARE
TRANSACTIONS 5,990,244 $ 146,984,132 1,965,104
$ 34,338,189
<CAPTION>
YEAR ENDED NOVEMBER 30 1999
1998
CLASS B SHARES: SHARES AMOUNT
SHARES AMOUNT
<S> <C> <C> <C>
<C>
Shares sold 7,129,755 $ 170,058,067 5,336,407
$ 95,444,129
Shares issued to
shareholders in payment of
distributions declared 162,104 2,859,519
- - -
Shares redeemed (4,817,613) (111,397,855)
(2,890,107) (49,477,133)
NET CHANGE RESULTING FROM
CLASS B SHARE
TRANSACTIONS 2,474,246 $ 61,519,731 2,446,300
$ 45,966,996
<CAPTION>
YEAR ENDED NOVEMBER 30 1999
1998
CLASS C SHARES: SHARES AMOUNT
SHARES AMOUNT
<S> <C> <C> <C>
<C>
Shares sold 5,126,323 $ 116,752,924 1,987,879
$ 34,453,934
Shares issued to
shareholders in payment of
distributions declared 42,410 747,687
- - -
Shares redeemed (3,724,929) (82,540,188)
(1,163,723) (19,724,599)
NET CHANGE RESULTING FROM
CLASS C SHARE
TRANSACTIONS 1,443,804 $ 34,960,423 824,156
$ 14,729,335
NET CHANGE RESULTING FROM
SHARE TRANSACTIONS 9,908,294 $ 243,464,286 5,235,560
$ 95,034,520
</TABLE>
INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISER FEE
Federated Global Investment Management Corp., the Fund's investment adviser
(the "Adviser"), receives for its services an annual investment Adviser fee
equal to 1.25% of the Fund's average daily net assets.
ADMINISTRATIVE FEE
Federated Services Company ("FServ"), under the Administrative Services
Agreement, provides the Fund with administrative personnel and services. The fee
paid to FServ is based on a scale that ranges from 0.15% to 0.075% of the
average aggregate daily net assets of all funds advised by subsidiaries of
Federated Investors, Inc., subject to a $125,000 minimum per portfolio and
$30,000 per each additional class.
DISTRIBUTION SERVICES FEE
The Fund has adopted a Distribution Plan (the "Plan") pursuant to Rule 12b-1
under the Act. Under the terms of the Plan, the Fund will compensate Federated
Securities Corp. ("FSC"), the principal distributor, from the net assets of the
Fund to finance activities intended to result in the sale of the Fund's Class A
Shares, Class B Shares and Class C Shares. The Plan provides that the Fund may
incur distribution expenses according to the following schedule annually, to
compensate FSC.
<TABLE>
<CAPTION>
PERCENTAGE OF AVERAGE
SHARE CLASS NAME DAILY NET ASSETS OF CLASS
<S> <C>
Class A Shares 0.25%
Class B Shares 0.75%
Class C Shares 0.75%
</TABLE>
Class A Shares did not incur a distribution services fee for the fiscal year
ended November 30, 1999, and has no present intention of paying or accruing the
distribution services fee.
SHAREHOLDER SERVICES FEE
Under the terms of a Shareholder Services Agreement with Federated Shareholder
Services Company ("FSSC"), the Fund will pay FSSC up to 0.25% of average daily
net assets of the Fund for the period. The fee paid to FSSC is used to finance
certain services for shareholders and to maintain shareholder accounts.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES
FServ, through its subsidiary FSSC, serves as transfer and dividend disbursing
agent for the Fund. The fee paid to FSSC is based on the size, type, and number
of accounts and transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES
FServ maintains the Fund's accounting records for which it receives a fee. The
fee is based on the level of the Fund's average daily net assets for the period,
plus out-of-pocket expenses.
ORGANIZATIONAL EXPENSES
Organizational expenses of $47,932 were borne initially by the Adviser. The Fund
has reimbursed the Adviser for these expenses. These expenses have been deferred
and are being amortized over the five-year period following the Fund's effective
date. For the fiscal year ended November 30, 1999, the Fund expensed $12,458 of
organizational expenses.
GENERAL
Certain of the Officers and Directors of the Corporation are Officers and
Directors or Trustees of the above companies.
INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities (and in-
kind contributions), for the fiscal year ended November 30, 1999, were as
follows:
Purchases $ 2,135,744,972
Sales $ 1,900,879,728
CONCENTRATION OF CREDIT RISK
The Fund invests in securities of non-U.S. issuers. The political or economic
developments within a particular country or region may have an adverse effect on
the ability of domiciled issuers to meet their obligations. Additionally,
political or economic developments may have an effect on the liquidity and
volatility of portfolio securities and currency holdings.
LINE OF CREDIT AGREEMENT
Effective November 29, 1999, the Corporation entered into a $75,000,000
unsecured committed revolving line of credit ("LOC") agreement with State Street
Corporation. The LOC was made available for extraordinary or emergency purposes,
primarily for financing redemption payments. Borrowings are charged interest at
a rate of 0.50% over the Federal Funds Rate. The LOC includes a commitment fee
of 0.08% per annum on the daily unused portion. The Corporation did not make any
borrowing under the LOC during the fiscal year ended November 30, 1999.
Report of Ernst & Young LLP, Independent Auditors
TO THE BOARD OF DIRECTORS OF WORLD INVESTMENT SERIES, INC. AND
SHAREHOLDERS OF FEDERATED INTERNATIONAL SMALL COMPANY FUND:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of Federated International Small Company Fund (the
Fund) (one of the portfolios constituting the World Investment Series, Inc.) as
of November 30, 1999, and the related statement of operations for the year then
ended, the statement of changes in net assets for each of the two years in the
period then ended, and the financial highlights for each of the periods
presented therein. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned as of November 30, 1999, by correspondence with the custodian and brokers
or other appropriate auditing procedures where replies from brokers were not
received. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Federated International Small Company Fund of World Investment Series, Inc. at
November 30, 1999, and the results of its operations for the year then ended,
the changes in its net assets for each of the two years in the period then
ended, and the financial highlights for each of the periods presented therein,
in conformity with accounting principles generally accepted in the United
States.
[Graphic]
Boston, Massachusetts
January 21, 2000
Directors
JOHN F. DONAHUE
THOMAS G. BIGLEY
JOHN T. CONROY, JR.
NICHOLAS P. CONSTANTAKIS
WILLIAM J. COPELAND
LAWRENCE D. ELLIS, M.D.
RICHARD B. FISHER
EDWARD L. FLAHERTY, JR., ESQ.
PETER E. MADDEN
CHARLES F. MANSFIELD, JR.
JOHN E. MURRAY, JR., J.D., S.J.D.
WESLEY W. POSVAR
MARJORIE P. SMUTS
Officers
JOHN F. DONAHUE
Chairman
RICHARD B. FISHER
President
J. CHRISTOPHER DONAHUE
Executive Vice President
EDWARD C. GONZALES
Executive Vice President
JOHN W. MCGONIGLE
Executive Vice President and Secretary
HENRY A. FRANTZEN
Chief Investment Officer
RICHARD J. THOMAS
Treasurer
JAMES O. PERRY
Assistant Secretary
Mutual funds are not bank deposits or obligations, are not guaranteed by any
bank, and are not insured or guaranteed by the U.S. government, the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other
government agency. Investment in mutual funds involves investment risk,
including the possible loss of principal.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the fund's prospectus which contains facts concerning
its objective and policies, management fees, expenses, and other information.
[Graphic]
Federated
World-Class Investment Manager
Federated International Small Company Fund
Established 1996
4TH ANNUAL REPORT
ANNUAL REPORT
AS OF NOVEMBER 30, 1999
[Graphic]
Federated
Federated International Small Company Fund
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
1-800-341-7400
WWW.FEDERATEDINVESTORS.COM
Federated Securities Corp., Distributor
Cusip 981487838
Cusip 981487820
Cusip 981487812
G01968-01 (1/00)
[Graphic]
[Graphic]
RICHARD B. FISHER
President
Federated Latin American Growth Fund
President's Message
Dear Fellow Shareholder:
Federated Latin American Growth Fund was created in 1996, and I am pleased to
present its fourth Annual Report. This Latin American fund has provided
shareholders with significant long-term opportunities from an extremely
well-researched $11 million portfolio of more than 40 securities across 5 Latin
American countries, of which 86% was invested in Brazil and Mexico. 1 The median
market capitalization of the fund's holdings was over $1.7 billion.
This report covers the 12-month reporting period from December 1, 1998 through
November 30, 1999. It begins with an interview with the fund's portfolio
manager, Alexandre de Bethmann, Vice President of Federated Global Investment
Management Corp. Following his discussion which covers international economic
and market conditions and fund strategy, are two additional items of shareholder
interest. First is a complete listing of the fund's investments, and second is
the publication of the fund's financial statements.
The past year has certainly been a brighter period for investors in the Latin
American marketplace, as an improved economic and political environment has
caused investor confidence in the region to return. While the fund's returns
were positive during the reporting period, they did not match the return of the
overall Latin American region because of the fund's focus on higher quality,
liquid stocks. The market did not reward this conservative, bottom- up approach.
Individual share class total return performance for the 12-month reporting
period, including income distributions, is as follows: 2
<TABLE>
<CAPTION>
TOTAL RETURN INCOME NET ASSET VALUE INCREASE
<S> <C> <C> <C>
Class A Shares 17.78% $0.17 $9.10 to $10.50 = 15.38%
Class B Shares 16.88% $0.06 $8.92 to $10.35 = 16.03%
Class C Shares 16.77% $0.05 $8.95 to $10.39 = 16.09%
</TABLE>
1 Foreign investing involves special risks including currency risk, increased
volatility of foreign securities and differences in auditing and other financial
standards.
2 Performance quoted is based on net asset value, represents past performance
and is no guarantee of future results. Investment return and principal value
will fluctuate, so that an investor's shares, when redeemed, may be worth more
or less than their original cost. Total returns for the period, based on
offering price (i.e., less any applicable sales charge), for Class A, B, and C
Shares were 11.30%, 11.38%, and 15.77%, respectively.
I recommend that you consider adding to your account on a regular basis to take
advantage of price fluctuations and to use the dollar-cost averaging method of
investing. By investing the same amount on a regular basis, you will buy more
fund shares when prices are low, and less when prices are high.
3
The Board of Directors of the fund has agreed to recommend to shareholders a
plan of reorganization whereby the fund's assets will be exchanged for shares of
Federated Emerging Markets Fund. Federated Latin American Growth Fund will then
distribute its holdings in Federated Emerging Markets Fund, pro rata, to the
shareholders of Federated Latin American Growth Fund in complete liquidation.
Given the overlap in the two fund's positions, you will still have the benefit
of significant exposure to the Latin American markets but with the added benefit
of additional diversity through exposure to the other emerging markets. The
shareholder meeting to consider this reorganization is scheduled for February
11, 2000. Assuming the shareholders approve of the reorganization into Federated
Emerging Markets Fund, this fund will be available for you to invest in
(systematically or otherwise) through the scheduled meeting date of February 11,
2000. Thereafter we urge you to continue to allocate a portion of your assets to
the Latin American region by continuing to invest in Federated Emerging Markets
Fund. Please consult your investment representative with any questions or
concerns.
Thank you for entrusting a portion of your wealth in Federated Latin American
Growth Fund, and we welcome your comments.
Sincerely,
[Graphic]
Richard B. Fisher
President
January 15, 2000
3 Systematic investing does not assure a profit or protect against loss in
declining markets. Because dollar-cost averaging involves continuous investing
regardless of fluctuating price levels, investors should consider their
financial ability to continue purchases during periods of low price levels.
[Graphic]
ALEXANDRE DE BETHMANN
Vice President
Federated Global Investment Management Corp.
Investment Review
WHAT ARE YOUR COMMENTS ON THE ECONOMIC AND POLITICAL DEVELOPMENTS IN LATIN
AMERICA THAT MADE AN IMPACT ON THE REGION'S PERFORMANCE?
Latin America continued to recover during the fund's fiscal year. The major
markets in the region have illustrated better economic and political progress as
well as improved earnings growth. Many investor concerns are behind us now. The
major issues included the following: Mexican elections, presidential elections
in Argentina, and fiscal reform in Brazil. Moreover, the recoveries in both oil
and steel prices benefited the region. The decline in interest rates and
better-than-expected growth combined with the attractive valuations to bring
investors back into the region.
IN THIS IMPROVED ENVIRONMENT, HOW DID FEDERATED LATIN AMERICAN GROWTH FUND
PERFORM COMPARED TO THE OVERALL LATIN AMERICAN MARKET FOR THE 12-MONTH PERIOD
ENDED NOVEMBER 30, 1999?
For the fiscal year ended November 30, 1999, the fund delivered total returns,
based on net asset value, of 17.78%, 16.88%, and 16.77% for Class A, B, and C
Shares, respectively. 1 For the same period, the total return of the Morgan
Stanley Capital International Latin American-Free Index was 27.67%,2 and the
total return of the Lipper Latin American Funds Average was 23.25%.3
1 Performance quoted represents past performance and is no guarantee of future
results. Investment return and principal value will fluctuate, so that an
investor's shares, when redeemed, may be worth more or less than their original
cost. Total returns for the period, based on offering price (i.e., less any
applicable sales charge), for Class A, B, and C Shares were 11.30%, 11.38%, and
15.77%, respectively.
2 The Morgan Stanley Capital International Latin American-Free Index is an
unmanaged, market value-weighted average of the performance of securities listed
on the stock exchanges of seven countries in the Latin American region.
Investments cannot be made in an index.
3 Lipper figures represent the average of the total returns reported by all of
the mutual funds designated by Lipper Analytical Services, Inc. as falling into
the category indicated. Lipper returns do not take sales charges into account.
WHAT ACCOUNTED FOR THE FUND'S UNDERPERFORMANCE?
Increased volatility characterized the Latin American markets, particularly
during the first half of the year, following the devaluation of the Brazilian
currency in January. Over the reporting period, Federated Latin American Growth
Fund underperformed its benchmark index as we focused on higher quality, liquid
stocks which we felt would fare better during periods of extreme volatility. The
market, however, did not reward this conservative, bottom-up approach. We will
remain focused on fundamentals and will maintain a portfolio that minimizes the
risk to shareholder's capital.
WHAT WAS YOUR STRATEGY WITH REGARD TO COUNTRY ALLOCATIONS, AND WHAT WERE THE
FUND'S TOP TEN HOLDINGS AS OF NOVEMBER 30, 1999?
During the reporting period, the Latin American region exhibited both earnings
and economic recovery. This was particularly evident in Mexico and Brazil.
Mexico continues to stand alone as the country with +3.00% gross domestic
product growth in 1999, and fiscal fundamentals for Mexico remain strong. Brazil
is coming out of its recession more rapidly than expected. Accordingly, a less
painful Brazilian recession coupled with larger-than- expected reductions in
inflation have improved the outlook. Therefore, we remained overweighted in
Mexico and Brazil to capitalize on their more attractive fundamentals.
As of November 30, 1999, the country allocations and top ten holdings were as
follows:
<TABLE>
<CAPTION>
PERCENTAGE OF
COUNTRY NET ASSETS
<S> <C>
Mexico 48.7%
Brazil 37.6%
Chile 7.5%
Argentina 4.0%
Peru 2.7%
</TABLE>
<TABLE>
<CAPTION>
PERCENTAGE OF
COMPANY COUNTRY NET ASSETS
INDUSTRY
<S> <C> <C>
<C>
Telefonos de Mexico SA
Class L, ADR Mexico 12.29%
Telecommunications
Cemex SA de CV, CPO Mexico 5.33% Building Materials &
Components
Petroleo Brasileiro SA
Preference Brazil 5.08% Energy
Sources
Organizacion Soriana SA de
CV, Class B Mexico 4.41%
Merchandising
Grupo Televisa SA, GDR Mexico 3.75% Broadcasting &
Publishing
Companhia Brasileira de
Distribuicao Grupo Pao de
Acucar, ADR Brazil 3.67%
Retail
Usinas Siderugicas de
Minas Gerais SA,
Preference Brazil 3.39%
Metals-Steel
Fomerto Economico
Mexicano, SA de CV, UDB Mexico 3.29% Beverages &
Tobacco
Alfa, SA, Class A Mexico 3.17%
Multi-Industry
Grupo Modelo SA de CV,
Class C Mexico 3.13% Beverages &
Tobacco
TOTAL
47.51%
</TABLE>
WHAT IS YOUR SECURITY SELECTION STRATEGY IN THE CURRENT ENVIRONMENT, AND WHAT
WERE SOME OF THE FUND'S MOST RECENT PURCHASES THAT EXEMPLIFY THIS STRATEGY?
We remained focused on attractively valued, liquid securities with solid
financial positions, superior market share, and well-defined long-term
strategies. In addition, these securities have high earnings visibility and
strong management capabilities.
We increased our exposure to TELEFONOS DE MEXICO SA (12.29% of net assets), the
largest telecommunications provider in Mexico with superior operating
fundamentals. We added to our position in GRUPO TELEVISA SA (3.76% of net
assets), the dominant Spanish language media company in Mexico with a solid
balance sheet and growing operating cash flow.
AS WE REACH THE END OF A MUCH-IMPROVED YEAR FOR LATIN AMERICA, WHAT DO YOU
FORESEE FOR THE REGION IN THE YEAR 2000?
We see significant upside in the Latin American stock markets in 2000. In
addition to a more favorable global environment, economic data and corporate
earnings throughout the region should support continued multiple expansion.
Last Meeting of Shareholders
A Special Meeting of shareholders of Federated Latin American Growth Fund (the
"Fund"), a portfolio of World Investment Series, Inc., was held on December 17,
1999. On December 7, 1999, the record date for shareholders voting at the
meeting, there were 1,139,869 total outstanding shares.
The following items were considered by shareholders and the results of their
voting were as follows.
AGENDA ITEM 1
Elected Directors:1
<TABLE>
<CAPTION>
SHARES SHARES
VOTED FOR WITHHELD
<S> <C> <C>
Thomas G. Bigley 892,198 12,601
Nicholas P. Constantakis 892,198 12,601
John F. Cunningham 892,198 12,601
J. Christopher Donahue 892,198 12,601
Charles F. Mansfield, Jr. 892,198 12,601
John E. Murray, Jr., J.D., S.J.D. 892,198 12,601
John S. Walsh 891,738 13,061
</TABLE>
1 The following Directors continued their terms as Directors: John F.
Donahue, John T. Conroy, William J. Copeland, Lawrence D. Ellis, M.D.,
Peter E. Madden and Marjorie P. Smuts.
Director elections will become effective January 1, 2000.
AGENDA ITEM 2
Made changes to the Fund's fundamental investment policies:
(a) Amended the Fund's fundamental investment policy regarding
diversification.
<TABLE>
<CAPTION>
SHARES ABSTENTIONS
VOTED AND BROKER
SHARES VOTED FOR AGAINST NON-VOTES
<S> <C> <C>
500,168 7,006 392,844
</TABLE>
(b) Amended the Fund's fundamental investment policy regarding borrowing money
and issuing senior securities.
<TABLE>
<CAPTION>
SHARES ABSTENTIONS
VOTED AND BROKER
SHARES VOTED FOR AGAINST NON-VOTES
<S> <C> <C>
549,647 10,969 344,183
</TABLE>
(c) Amended the Fund's fundamental investment policy regarding investments
in real estate.
<TABLE>
<CAPTION>
SHARES ABSTENTIONS
VOTED AND BROKER
SHARES VOTED FOR AGAINST NON-VOTES
<S> <C> <C>
556,001 8,380 340,418
</TABLE>
(d) Amended the Fund's fundamental investment policy regarding investments
in commodities.
<TABLE>
<CAPTION>
SHARES ABSTENTIONS
VOTED AND BROKER
SHARES VOTED FOR AGAINST NON-VOTES
<S> <C> <C>
549,159 14,939 340,701
</TABLE>
(e) Amended the Fund's fundamental investment policy regarding underwriting
securities.
<TABLE>
<CAPTION>
SHARES ABSTENTIONS
VOTED AND BROKER
SHARES VOTED FOR AGAINST NON-VOTES
<S> <C> <C>
554,768 8,608 341,423
</TABLE>
(f) Amended the Fund's fundamental investment policy regarding lending
assets.
<TABLE>
<CAPTION>
SHARES ABSTENTIONS
VOTED AND BROKER
SHARES VOTED FOR AGAINST NON-VOTES
<S> <C> <C>
549,344 14,664 340,791
</TABLE>
(g) Amended the Fund's fundamental investment policy regarding concentration of
the Fund's investments in the securities of companies in the same industry.
<TABLE>
<CAPTION>
SHARES ABSTENTIONS
VOTED AND BROKER
SHARES VOTED FOR AGAINST NON-VOTES
<S> <C> <C>
552,001 12,895 339,903
</TABLE>
(h) Amended and made non-fundamental, the Fund's fundamental investment policy
regarding buying securities on margin.
<TABLE>
<CAPTION>
SHARES ABSTENTIONS
VOTED AND BROKER
SHARES VOTED FOR AGAINST NON-VOTES
<S> <C> <C>
537,138 19,380 348,281
</TABLE>
(i) Amended and made non-fundamental, the Fund's fundamental investment policy
regarding pledging assets.
<TABLE>
<CAPTION>
SHARES ABSTENTIONS
VOTED AND BROKER
SHARES VOTED FOR AGAINST NON-VOTES
<S> <C> <C>
540,813 19,839 344,147
</TABLE>
AGENDA ITEM 3
Eliminated the Fund's fundamental investment policy regarding selling securities
short.
<TABLE>
<CAPTION>
SHARES ABSTENTIONS
VOTED AND BROKER
SHARES VOTED FOR AGAINST NON-VOTES
<S> <C> <C>
547,290 18,013 339,496
</TABLE>
AGENDA ITEM 4
Approved an amendment to the Articles of Incorporation of World Investment
Series, Inc. to permit the Board of Directors to liquidate assets of a series or
class without seeking shareholder approval to the extent permitted under
Maryland law.
<TABLE>
<CAPTION>
SHARES ABSTENTIONS
VOTED AND BROKER
SHARES VOTED FOR AGAINST NON-VOTES
<S> <C> <C>
545,264 20,864 338,671
</TABLE>
Federated Latin American Growth Fund-Class A Shares
GROWTH OF A $10,000 INVESTMENT
The graph below illustrates the hypothetical investment of $10,000 1 in
Federated Latin American Growth Fund (Class A Shares) (the "Fund") from February
28, 1996 (start of performance) to November 30, 1999 compared to the Morgan
Stanley Capital International Latin American-Free Index (MSCI- LAF).2
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS 3 FOR THE PERIOD ENDED NOVEMBER 30, 1999
<S> <C>
1 Year 11.30%
Start of Performance (2/28/96) 1.47%
</TABLE>
[Graphic representation omitted. Please see Appendix A31.]
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE PERFORMANCE. YOUR INVESTMENT RETURN
AND PRINCIPAL VALUE WILL FLUCTUATE SO WHEN SHARES ARE REDEEMED, THEY MAY BE
WORTH MORE OR LESS THAN THEIR ORIGINAL COST. MUTUAL FUNDS ARE NOT OBLIGATIONS OF
OR GUARANTEED BY ANY BANK AND ARE NOT FEDERALLY INSURED.
1 Represents a hypothetical investment of $10,000 in the Fund after deducting
the maximum sales charge of 5.50% ($10,000 investment minus $550 sales charge =
$9,450). The Fund's performance assumes the reinvestment of all dividends and
distributions. The MSCI-LAF has been adjusted to reflect reinvestment of
dividends on securities in the index.
2 The MSCI-LAF is not adjusted to reflect sales charges, expenses, or other fees
that the Securities and Exchange Commission requires to be reflected in the
Fund's performance. This index is unmanaged.
3 Total return quoted reflects all applicable sales charges.
Federated Latin American Growth Fund-Class B Shares
GROWTH OF A $10,000 INVESTMENT
The graph below illustrates the hypothetical investment of $10,000 1 in
Federated Latin American Growth Fund (Class B Shares) (the "Fund") from February
28, 1996 (start of performance) to November 30, 1999 compared to the Morgan
Stanley Capital International Latin American-Free Index (MSCI- LAF).2
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS 3 FOR THE PERIOD ENDED NOVEMBER 30, 1999
<S> <C>
1 Year 11.38%
Start of Performance (2/28/96) 1.41%
</TABLE>
[Graphic representation omitted. Please see Appendix A32.]
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE PERFORMANCE. YOUR INVESTMENT RETURN
AND PRINCIPAL VALUE WILL FLUCTUATE SO WHEN SHARES ARE REDEEMED, THEY MAY BE
WORTH MORE OR LESS THAN THEIR ORIGINAL COST. MUTUAL FUNDS ARE NOT OBLIGATIONS OF
OR GUARANTEED BY ANY BANK AND ARE NOT FEDERALLY INSURED.
1 Represents a hypothetical investment of $10,000 in the Fund. The ending value
of the Fund reflects a contingent deferred sales charge of 3.00% on any
redemption less than four years from the purchase date. The maximum contingent
deferred sales charge is 5.50% on any redemption less than one year from the
purchase date. The Fund's performance assumes the reinvestment of all dividends
and distributions. The MSCI-LAF has been adjusted to reflect reinvestment of
dividends on securities in the index.
2 The MSCI-LAF is not adjusted to reflect sales charges, expenses, or other fees
that the Securities and Exchange Commission requires to be reflected in the
Fund's performance. This index is unmanaged.
3 Total return quoted reflects all applicable sales charges and contingent
deferred sales charges.
Federated Latin American Growth Fund-Class C Shares
GROWTH OF A $10,000 INVESTMENT
The graph below illustrates the hypothetical investment of $10,000 1 in
Federated Latin American Growth Fund (Class C Shares) (the "Fund") from February
28, 1996 (start of performance) to November 30, 1999 compared to the Morgan
Stanley Capital International Latin American-Free Index (MSCI- LAF).2
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS 3 FOR THE PERIOD ENDED NOVEMBER 30, 1999
<S> <C>
1 Year 15.77%
Start of Performance (2/28/96) 2.19%
</TABLE>
[Graphic representation omitted. Please see Appendix A33.]
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE PERFORMANCE. YOUR INVESTMENT RETURN
AND PRINCIPAL VALUE WILL FLUCTUATE SO WHEN SHARES ARE REDEEMED, THEY MAY BE
WORTH MORE OR LESS THAN THEIR ORIGINAL COST. MUTUAL FUNDS ARE NOT OBLIGATIONS OF
OR GUARANTEED BY ANY BANK AND ARE NOT FEDERALLY INSURED.
1 Represents a hypothetical investment of $10,000 in the Fund. A 1.00%
contingent deferred sales charge would be applied on any redemption less than
one year from the purchase date. The Fund's performance assumes the reinvestment
of all dividends and distributions. The MSCI-LAF has been adjusted to reflect
reinvestment of dividends on securities in the index.
2 The MSCI-LAF is not adjusted to reflect sales charges, expenses, or other fees
that the Securities and Exchange Commission requires to be reflected in the
Fund's performance. This index is unmanaged.
3 Total return quoted reflects all applicable sales charges and contingent
deferred sales charges.
Portfolio of Investments
NOVEMBER 30, 1999
<TABLE>
<CAPTION>
VALUE IN
SHARES U.S. DOLLARS
<C> <S> <C>
COMMON STOCKS-77.8%
AEROSPACE & MILITARY
TECHNOLOGY-1.9%
29,100 Linea Aerea Nacional Chile
SA, ADR $ 210,975
BANKING-3.7%
63,200 1 Grupo Financiero Banamex
Accival, SA de CV, Class O 212,992
563,000 Grupo Financiero Bancomer,
SA de CV 209,160
TOTAL 422,152
BEVERAGES & TOBACCO-8.7%
100,000 Fomento Economico
Mexicano, SA de CV, UDB 374,695
123,700 Grupo Modelo SA de CV,
Class C 356,486
6,800 Vina Concha Y Toro, ADR 255,425
TOTAL 986,606
BROADCASTING & PUBLISHING-
3.7%
8,750 1 Grupo Televisa SA, GDR 427,110
BUILDING MATERIALS &
COMPONENTS-5.3%
124,000 Cemex SA de CV, CPO 606,772
BUSINESS & PUBLIC
SERVICES-1.2%
1,400,000 1 Companhia de Saneamento
Basico do Estado de Sao
Paulo 135,848
9,816 1 Companhia de Saneamento
Basico do Estado de Sao
Paulo, Rights 147
TOTAL 135,995
CONSTRUCTION & HOUSING-
2.0%
67,700 Corporacion GEO, SA de CV,
Class B 229,954
ENERGY EQUIPMENT &
SERVICES-1.8%
11,900 2 Chilectra SA, ADR 206,027
FOREST PRODUCTS & PAPER-
2.4%
13,200 Aracruz Cellulose, ADR 268,950
HEALTH & PERSONAL CARE-
1.6%
50,000 Kimberly-Clark de Mexico
SA 187,613
MERCHANDISING-7.3%
177,000 1 Cifra SA de CV, Class V 334,423
108,600 1 Organizacion Soriana SA de
CV, Class B 501,444
TOTAL 835,867
<CAPTION>
VALUE IN
SHARES U.S. DOLLARS
<C> <S> <C>
COMMON STOCKS-continued
METALS - NON FERROUS-4.3%
37,000 Cia de Minas Buenaventura
SA, Class B $ 305,373
6,000 Sociedad Quimica Y Minera
De Chile, ADR 170,625
346 Sociedad Quimica Y Minera
De Chile, Class A, ADR 9,688
TOTAL 485,686
MULTI-INDUSTRY-3.2%
83,000 1 Alfa, SA, Class A 360,333
RETAIL-3.7%
15,650 Companhia Brasileira de
Distribuicao Grupo Pao de
Acucar, ADR 417,660
TELECOMMUNICATIONS-25.1%
44,000 1 Carso Global Telecom SA,
Class A-1 345,611
4,300 Tele Centro Sul
Participacoes SA, ADR 293,475
10,000 Tele Norte Leste
Participacoes SA, ADR 178,125
7,850 Telecom Argentina SA, ADR 230,594
8,400 Telefonica de Argentina
SA, ADR 221,025
15,100 Telefonos de Mexico SA,
Class L, ADR 1,397,694
5,800 Telemig Celular
Participacoes SA, ADR 192,125
TOTAL 2,858,649
UTILITIES - ELECTRICAL &
GAS-1.9%
28,000 Companhia Paranaense de
Energia-Copel, ADR 215,250
TOTAL COMMON STOCKS
(IDENTIFIED COST
$6,691,587) 8,855,599
PREFERRED STOCKS-22.7%
BANKING-2.1%
42,700,000 Banco Bradesco SA,
Preference 238,827
ENERGY SOURCES-5.1%
2,860,000 Petroleo Brasileiro SA,
Preference 578,100
FOREST PRODUCTS & PAPER-
2.1%
7,100,000 Votorantim Celulose e
Papel SA, Preference 237,861
METALS - STEEL-8.0%
510,000,000 Cia de Acos Especiais
Itabira-Acesita,
Preference 212,279
16,000,000 Gerdau S.A., Preference 316,336
91,000 1 Usinas Siderurgicas de
Minas Gerais SA,
Preference 385,401
TOTAL 914,016
TELECOMMUNICATIONS-1.3%
37,519 Telecomunicacoes De Rio
Janiero SA, Preference 863
<CAPTION>
SHARES OR
FOREIGN
CURRENCY VALUE IN
PAR AMOUNT U.S. DOLLARS
<C> <S> <C>
PREFERRED STOCKS-continued
TELECOMMUNICATIONS-
CONTINUED
1,500,000 1 Telecomunicacoes de Sao
Paulo SA, Preference $ 144,380
TOTAL 145,243
UTILITIES - ELECTRICAL &
GAS-4.1%
10,000,000 Centrais Eletricas
Brasileiras SA,
Preference, Series B 207,076
5,000,000 Eletropaulo Metropolitana
de Sao Paulo SA,
Preference, Class B 260,120
TOTAL 467,196
TOTAL PREFERRED STOCKS
(IDENTIFIED COST
$1,988,274) 2,581,243
CORPORATE BONDS-0.0%
MINING-0.0%
5,800 Companhia Vale Do Rio Doce,
Conv. Deb., 12/31/1999
(identified cost $58) 30
TOTAL INVESTMENTS
(IDENTIFIED COST
$8,679,919) 3 $ 11,436,872
</TABLE>
1 Non-income producing security.
2 Denotes a restricted security which is subject to restrictions on resale under
federal securities laws. These securities have been deemed liquid based upon
criteria approved by the fund's Board of Directors. At November 30, 1999, these
securities amounted to $206,027 which represents 1.8% of net assets.
3 The cost of investments for federal tax purposes amounts to $8,883,928. The
net unrealized appreciation of investments on a federal tax basis amounts to
$2,552,944 which is comprised of $2,766,028 appreciation and $213,084
depreciation at November 30, 1999.
Note: The categories of investments are shown as a percentage of net assets
($11,374,423) at November 30, 1999.
The following acronyms are used throughout this portfolio:
ADR -American Depositary Receipt
GDR -Global Depositary Receipt
See Notes which are an integral part of the Financial Statements
Statement of Assets and Liabilities
NOVEMBER 30, 1999
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS:
Total investments in
securities, at value
(identified cost
$8,679,919 and tax cost
$8,883,928) $ 11,436,872
Cash denominated in
foreign currencies
(identified cost $2,325) 2,325
Income receivable 38,083
Receivable for investments
sold 226,777
Receivable for shares sold 47,743
Deferred organizational
costs 16,101
TOTAL ASSETS 11,767,901
LIABILITIES:
Payable for investments
purchased $ 232,409
Payable for shares
redeemed 19,251
Payable to Bank 112,947
Payable for taxes withheld 5,272
Accrued expenses 23,599
TOTAL LIABILITIES 393,478
Net assets for 1,089,898
shares outstanding $ 11,374,423
NET ASSETS CONSIST OF:
Paid-in capital $ 18,221,148
Net unrealized
appreciation of
investments and
translation of assets and
liabilities in
foreign currency 2,744,276
Accumulated net realized
loss on investments and
foreign currency
transactions (9,591,001)
TOTAL NET ASSETS $ 11,374,423
NET ASSET VALUE, OFFERING
PRICE AND REDEMPTION
PROCEEDS PER SHARE
CLASS A SHARES:
Net Asset Value Per Share
($6,572,241 / 625,981
shares outstanding) $10.50
Offering Price Per Share
(100/94.50 of $10.50) 1 $11.11
Redemption Proceeds Per
Share $10.50
CLASS B SHARES:
Net Asset Value Per Share
($4,157,801 / 401,908
shares outstanding) $10.35
Offering Price Per Share $10.35
Redemption Proceeds Per
Share (94.50/100 of
$10.35) 1 $9.78
CLASS C SHARES:
Net Asset Value Per Share
($644,381 / 62,009 shares
outstanding) $10.39
Offering Price Per Share $10.39
Redemption Proceeds Per
Share (99.00/100 of
$10.39) 1 $10.29
</TABLE>
1 See "What Do Shares Cost?" in the Prospectus.
See Notes which are an integral part of the Financial Statements
Statement of Operations
YEAR ENDED NOVEMBER 30, 1999
<TABLE>
<CAPTION>
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends (net of foreign
taxes withheld of $33,422) $ 284,606
Interest 23,212
TOTAL INCOME 307,818
EXPENSES:
Investment adviser fee $ 141,175
Administrative personnel
and services fee 185,000
Custodian fees 24,539
Transfer and dividend
disbursing agent fees and
expenses 86,781
Directors'/Trustees' fees 995
Auditing fees 21,882
Legal fees 3,010
Portfolio accounting fees 79,211
Distribution services fee-
Class B Shares 29,221
Distribution services fee-
Class C Shares 4,422
Shareholder services fee-
Class A Shares 17,000
Shareholder services fee-
Class B Shares 9,740
Shareholder services fee-
Class C Shares 1,474
Share registration costs 28,194
Printing and postage 33,186
Insurance premiums 2,420
Taxes 2,343
Miscellaneous 17,871
TOTAL EXPENSES 688,464
WAIVER AND REIMBURSEMENT:
Waiver of investment
adviser fee $ (141,175)
Reimbursement of other
operating expenses (273,983)
TOTAL WAIVER AND
REIMBURSEMENT (415,158)
Net expenses 273,306
Net investment income 34,512
REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY:
Net realized loss on
investments and foreign
currency transactions (1,319,969)
Net change in unrealized
appreciation of
investments and
translation of assets and
liabilities in foreign
currency 2,741,624
Net realized and
unrealized gain on
investments and foreign
currency 1,421,655
Change in net assets
resulting from operations $ 1,456,167
</TABLE>
See Notes which are an integral part of the Financial Statements
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30 1999 1998
<S> <C> <C>
INCREASE (DECREASE) IN NET
ASSETS
OPERATIONS:
Net investment income $ 34,512 $ 240,289
Net realized loss on
investments and foreign
currency transactions
($(1,478,492) and
$(1,309,472),
respectively, as computed
for federal tax purposes) (1,319,969) (7,074,994)
Net change in unrealized
appreciation of
investments and
translation of assets and
liabilities in foreign
currency 2,741,624 (672,967)
CHANGE IN NET ASSETS
RESULTING FROM OPERATIONS 1,456,167 (7,507,672)
DISTRIBUTIONS TO
SHAREHOLDERS:
Distributions from net
investment income
Class A Shares (104,938) -
Class B Shares (28,654) -
Class C Shares (3,607) -
CHANGE IN NET ASSETS
RESULTING FROM
DISTRIBUTIONS
TO SHAREHOLDERS (137,199) -
SHARE TRANSACTIONS:
Proceeds from sale of
shares 17,175,041 14,496,314
Net asset value of shares
issued to shareholders in
payment of
distributions declared 118,259 -
Cost of shares redeemed (19,064,037) (20,604,271)
CHANGE IN NET ASSETS
RESULTING FROM SHARE
TRANSACTIONS (1,770,737) (6,107,957)
Change in net assets (451,769) (13,615,629)
NET ASSETS:
Beginning of period 11,826,192 25,441,821
End of period (including
undistributed net
investment income of $0 and
$80,225, respectively) $ 11,374,423 $ 11,826,192
</TABLE>
See Notes which are an integral part of the Financial Statements
Financial Highlights - Class A Shares
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30 1999 1998
1997 1996 1
<S> <C> <C>
<C> <C>
NET ASSET VALUE, BEGINNING
OF PERIOD $ 9.10 $13.39
$11.56 $10.00
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income (net
operating loss) 0.06 2 0.19 2
(0.06) 0.12
Net realized and
unrealized gain (loss) on
investments and
foreign currency 1.51 (4.48) 2.38
3 1.44
TOTAL FROM INVESTMENT
OPERATIONS 1.57 (4.29)
2.32 1.56
LESS DISTRIBUTIONS:
Distributions from net
investment income (0.17) -
(0.08) -
Distributions from net
realized gain on
investments and foreign
currency transactions - -
(0.41) -
TOTAL DISTRIBUTIONS (0.17) -
(0.49) -
NET ASSET VALUE, END OF
PERIOD $10.50 $ 9.10
$13.39 $11.56
TOTAL RETURN 4 17.78% (32.04)%
20.76% 15.60%
RATIOS TO AVERAGE NET
ASSETS:
Expenses 2.12% 2.00%
2.17% 1.97% 5
Net investment income (net
operating loss) 0.60% 1.59%
(0.32%) 1.49% 5
Expense
waiver/reimbursement 6 3.68% 2.20%
1.91% 6.96% 5
SUPPLEMENTAL DATA:
Net assets, end of period
(000 omitted) $6,572 $6,400
$14,847 $4,836
Portfolio turnover 127% 201%
79% 38%
</TABLE>
1 Reflects operations for the period from February 28, 1996 (date of initial
public investment) to November 30, 1996.
2 Per share information is based on average shares outstanding.
3 The amount shown in this caption for a share outstanding did not correspond
with the aggregate net realized and unrealized gain (loss) on investments and
foreign currency for the period ended due to the timing of sales and repurchases
of fund shares in relation to fluctuating market values of the investments of
the fund.
4 Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
5 Computed on an annualized basis.
6 This voluntary expense decrease is reflected in both the expense and the net
investment income (net operating loss) ratios shown above.
See Notes which are an integral part of the Financial Statements
Financial Highlights - Class B Shares
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30 1999 1998
1997 1996 1
<S> <C> <C>
<C> <C>
NET ASSET VALUE, BEGINNING
OF PERIOD $ 8.92 $13.24
$11.50 $10.00
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income (net
operating loss) (0.01) 2 0.09 2
(0.04) (0.05)
Net realized and
unrealized gain (loss) on
investments and foreign
currency 1.50 (4.41) 2.24
3 1.55
TOTAL FROM INVESTMENT
OPERATIONS 1.49 (4.32)
2.20 1.50
LESS DISTRIBUTIONS:
Distributions from net
investment income (0.06) -
(0.05) -
Distributions from net
realized gain on
investments and foreign
currency transactions - -
(0.41) -
TOTAL DISTRIBUTIONS (0.06) -
(0.46) -
NET ASSET VALUE, END OF
PERIOD $10.35 $ 8.92
$13.24 $11.50
TOTAL RETURN 4 16.88% (32.63%)
19.72% 15.00%
RATIOS TO AVERAGE NET
ASSETS:
Expenses 2.87 % 2.75%
2.93% 2.72% 5
Net investment income (net
operating loss) (0.15%) 0.84%
(1.29%) (1.20%) 5
Expense
waiver/reimbursement 6 3.68% 2.20%
1.90% 6.96% 5
SUPPLEMENTAL DATA:
Net assets, end of period
(000 omitted) $4,158 $4,704
$8,814 $1,355
Portfolio turnover 127% 201%
79% 38%
</TABLE>
1 Reflects operations for the period from February 28, 1996 (date of initial
public investment) to November 30, 1996.
2 Per share information is based on average shares outstanding.
3 The amount shown in this caption for a share outstanding did not correspond
with the aggregate net realized and unrealized gain (loss) on investments and
foreign currency for the period ended due to the timing of sales and repurchases
of fund shares in relation to fluctuating market values of the investments of
the fund.
4 Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
5 Computed on an annualized basis.
6 This voluntary expense decrease is reflected in both the expense and the net
investment income (net operating loss) ratios shown above.
See Notes which are an integral part of the Financial Statements
Financial Highlights - Class C Shares
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30 1999 1998 1997
1996 1
<S> <C> <C> <C>
<C>
NET ASSET VALUE, BEGINNING
OF PERIOD $ 8.95 $13.27 $11.48
$10.00
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income (net
operating loss) (0.01) 2 0.09 2 (0.04)
(0.08)
Net realized and
unrealized gain (loss) on
investments and foreign
currency 1.50 (4.41) 2.27 3
1.56
TOTAL FROM INVESTMENT
OPERATIONS 1.49 (4.32) 2.23
1.48
LESS DISTRIBUTIONS:
Distributions from net
investment income (0.05) -
(0.03) -
Distributions from net
realized gain on
investments and foreign
currency transactions - -
(0.41) -
TOTAL DISTRIBUTIONS (0.05) -
(0.44) -
NET ASSET VALUE, END OF
PERIOD $10.39 $ 8.95 $13.27
$11.48
TOTAL RETURN 4 16.77% (32.55%) 19.97%
14.80%
RATIOS TO AVERAGE NET
ASSETS:
Expenses 2.87% 2.75% 2.93%
2.72% 5
Net investment income (net
operating loss) (0.15%) 0.84% (1.23%)
(1.30%) 5
Expense
waiver/reimbursement 6 3.68% 2.20% 1.90%
6.96% 5
SUPPLEMENTAL DATA:
Net assets, end of period
(000 omitted) $644 $723 $1,781
$260
Portfolio turnover 127% 201%
79% 38%
</TABLE>
1 Reflects operations for the period from February 28, 1996 (date of initial
public investment) to November 30, 1996.
2 Per share information is based on average shares outstanding.
3 The amount shown in this caption for a share outstanding did not correspond
with the aggregate net realized and unrealized gain (loss) on investment and
foreign currency for the period ended due to the timing of sales and repurchases
of fund shares in relation to fluctuating market values of the investments of
the fund.
4 Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
5 Computed on an annualized basis.
6 This voluntary expense decrease is reflected in both the expense and the net
investment income (net operating loss) ratios shown above.
See Notes which are an integral part of the Financial Statements
Notes to Financial Statements
NOVEMBER 30, 1999
ORGANIZATION
World Investment Series, Inc. (the "Corporation") is registered under the
Investment Company Act of 1940, as amended (the "Act"), as an open-end,
management investment company. The Corporation consists of ten portfolios. The
financial statements included herein are only those of Federated Latin American
Growth Fund (the "Fund"), a diversified portfolio. The financial statements of
the other portfolios are presented separately. The assets of each portfolio are
segregated and a shareholder's interest is limited to the portfolio in which
shares are held.
The Fund offers three classes of shares: Class A Shares, Class B Shares and
Class C Shares. The investment objective of the Fund is to provide long-term
growth of capital.
SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS
Foreign equity securities are valued at the last sales price reported on a
national securities exchange or the over-the-counter market. In the absence of
recorded sales for equity securities, they are recorded according to the mean
between the last closing bid and asked prices. Fixed-income securities are
valued at the latest bid prices as furnished by an independent pricing service.
Short-term foreign and domestic securities are valued at the prices provided by
an independent pricing service. However, short-term foreign and domestic
securities with remaining maturities of 60 days or less at the time of purchase
may be valued at amortized cost, which approximates fair market value.
REPURCHASE AGREEMENTS
It is the policy of the Fund to require the custodian bank to take possession,
to have legally segregated in the Federal Reserve Book Entry System, or to have
segregated within the custodian bank's vault, all securities held as collateral
under repurchase agreement transactions. Additionally, procedures have been
established by the Fund to monitor, on a daily basis, the market value of each
repurchase agreement's collateral to ensure that the value of collateral at
least equals the repurchase price to be paid under the repurchase agreement.
The Fund will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed by
the Fund's adviser to be creditworthy pursuant to the guidelines and/or
standards reviewed or established by the Board of Directors (the "Directors").
Risks may arise from the potential inability of counterparties to honor the
terms of the repurchase agreement. Accordingly, the Fund could receive less than
the repurchase price on the sale of collateral securities. The Fund, along with
other affiliated investment companies, may utilize a joint trading account for
the purpose of entering into one or more repurchase agreements.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS
Interest income and expenses are accrued daily. Bond premium and discount, if
applicable, are amortized as required by the Internal Revenue Code of 1986, as
amended (the "Code"). Dividend income and distributions to shareholders are
recorded on the ex-dividend date. Non-cash dividends included in dividend
income, if any, are recorded at fair value. The Fund offers multiple classes of
shares, which differ in their respective distribution and service fees. All
shareholders bear the common expenses of the Fund based on average daily net
assets of each class, without distinction between share classes. Dividends are
declared separately for each class. No class has preferential dividend rights;
differences in per share dividend rates are generally due to differences in
separate class expenses.
Income and capital gain distributions are determined in accordance with income
tax regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments for foreign currency
transactions. The following reclassifications have been made to the financial
statements.
<TABLE>
<CAPTION>
INCREASE (DECREASE)
ACCUMULATED NET DISTRIBUTIONS IN
REALIZED LOSS ON EXCESS OF NET
INVESTMENTS AND FOREIGN INVESTMENT
PAID-IN CAPITAL CURRENCY TRANSACTIONS INCOME
<S> <C> <C>
$(78,539) $56,077 $22,462
</TABLE>
Net investment income, net realized gains/losses, and net assets were not
affected by this reclassification.
FEDERAL TAXES
It is the Fund's policy to comply with the provisions of the Code applicable to
regulated investment companies and to distribute to shareholders each year
substantially all of its income. Accordingly, no provision for federal tax is
necessary.
Withholding taxes on foreign interest and dividends have been provided for in
accordance with the applicable country's tax rules and rates.
At November 30, 1999, the Fund, for federal tax purposes, had a capital loss
carryforward of $9,267,061 which will reduce the Fund's taxable income arising
from future net realized gain on investments, if any, to the extent permitted by
the Code, and thus will reduce the amount of the distributions to shareholders
which would otherwise be necessary to relieve the Fund of any liability for
federal tax. Pursuant to the Code, such capital loss carryforward will expire as
follows:
<TABLE>
<CAPTION>
EXPIRATION YEAR EXPIRATION AMOUNT
<S> <C>
2005 $1,309,472
2006 6,479,097
2007 1,478,492
</TABLE>
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
The Fund may engage in when-issued or delayed delivery transactions. The Fund
records when-issued securities on the trade date and maintains security
positions such that sufficient liquid assets will be available to make payment
for the securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date. Losses may occur on these transactions due to changes in market
conditions or the failure of counterparties to perform under the contract.
FOREIGN EXCHANGE CONTRACTS
The Fund may enter into foreign currency commitments for the delayed delivery of
securities or foreign currency exchange transactions. The Fund may enter into
foreign currency contract transactions to protect assets against adverse changes
in foreign currency exchange rates or exchange control regulations. Purchased
contracts are used to acquire exposure to foreign currencies; whereas contracts
to sell are used to hedge the Fund's securities against currency fluctuations.
Risks may arise upon entering these transactions from the potential inability of
counterparties to meet the terms of their commitments and from unanticipated
movements in security prices or foreign exchange rates. The foreign currency
transactions are adjusted by the daily exchange rate of the underlying currency
and any gains or losses are recorded for financial statement purposes as
unrealized until the settlement date. At November 30, 1999, the Fund had no
outstanding foreign currency commitments.
FOREIGN CURRENCY TRANSLATION
The accounting records of the Fund are maintained in U.S. dollars. All assets
and liabilities denominated in foreign currencies ("FC") are translated into
U.S. dollars based on the rates of exchange of such currencies against U.S.
dollars on the date of valuation. Purchases and sales of securities, income and
expenses are translated at the rate of exchange quoted on the respective date
that such transactions are recorded. The Fund does not isolate that portion of
the results of operations resulting from changes in foreign exchange rates on
investments from the fluctuations arising from changes in market prices of
securities held. Such fluctuations are included with the net realized and
unrealized gain or loss from investments.
Reported net realized foreign exchange gains or losses arise from sales of
portfolio securities, sales and maturities of short-term securities, sales of
FCs, currency gains or losses realized between the trade and settlement dates on
securities transactions, the difference between the amounts of dividends,
interest, and foreign withholding taxes recorded on the Fund's books, and the
U.S. dollar equivalent of the amounts actually received or paid. Net unrealized
foreign exchange gains and losses arise from changes in the value of assets and
liabilities other than investments in securities at fiscal year end, resulting
from changes in the exchange rate.
RESTRICTED SECURITIES
Restricted securities are securities that may only be resold upon registration
under federal securities laws or in transactions exempt from such registration.
In some cases, the issuer of restricted securities has agreed to register such
securities for resale, at the issuer's expense either upon demand by the Fund or
in connection with another registered offering of the securities. Many
restricted securities may be resold in the secondary market in transactions
exempt from registration. Such restricted securities may be determined to be
liquid under criteria established by the Directors. The Fund will not incur any
registration costs upon such resales. The Fund's restricted securities are
valued at the price provided by dealers in the secondary market or, if no market
prices are available, at the fair value as determined by the Fund's pricing
committee.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts of assets, liabilities, expenses and revenues reported in the
financial statements. Actual results could differ from those estimated.
OTHER
Investment transactions are accounted for on a trade date basis.
CAPITAL STOCK
At November 30, 1999, par value shares ($0.001 per share) authorized were as
follows:
<TABLE>
<CAPTION>
NUMBER OF PAR VALUE
SHARE CLASS NAME CAPITAL STOCK AUTHORIZED
<S> <C>
Class A Shares 100,000,000
Class B Shares 100,000,000
Class C Shares 50,000,000
TOTAL 250,000,000
</TABLE>
Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30 1999 1998
CLASS A SHARES: SHARES AMOUNT SHARES
AMOUNT
<S> <C> <C> <C>
<C>
Shares sold 1,280,363 $ 12,102,215 996,001 $
10,742,935
Shares issued to
shareholders in payment of
distributions declared 11,120 88,604
- - -
Shares redeemed (1,368,750) (12,883,327) (1,401,334)
(14,621,996)
NET CHANGE RESULTING FROM
CLASS A SHARE
TRANSACTIONS (77,267) $ (692,508) (405,333) $
(3,879,061)
<CAPTION>
YEAR ENDED NOVEMBER 30 1999 1998
CLASS B SHARES: SHARES AMOUNT SHARES
AMOUNT
<S> <C> <C> <C>
<C>
Shares sold 504,041 $ 4,748,328 298,474 $
3,058,028
Shares issued to
shareholders in payment of
distributions declared 3,311 26,222
- - -
Shares redeemed (632,803) (5,731,722) (436,856)
(4,645,411)
NET CHANGE RESULTING FROM
CLASS B SHARE
TRANSACTIONS (125,451) $ (957,172) (138,382) $
(1,587,383)
<CAPTION>
YEAR ENDED NOVEMBER 30 1999 1998
CLASS C SHARES: SHARES AMOUNT SHARES
AMOUNT
<S> <C> <C> <C>
<C>
Shares sold 34,061 $ 324,498 58,373
$ 695,351
Shares issued to
shareholders in payment of
distributions declared 431 3,433
- - -
Shares redeemed (53,224) (448,988) (111,802)
(1,336,864)
NET CHANGE RESULTING FROM
CLASS C SHARE
TRANSACTIONS (18,732) $ (121,057) (53,429)
$ (641,513)
NET CHANGE RESULTING FROM
SHARE TRANSACTIONS (221,450) $ (1,770,737) (597,144) $
(6,107,957)
</TABLE>
INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISER FEE
Federated Global Investment Management Corp., the Fund's investment adviser (the
"Adviser"), receives for its services an annual investment Adviser fee equal to
1.25% of the Fund's average daily net assets. The Adviser may voluntarily choose
to waive any portion of its fee and/or reimburse certain operating expenses of
the Fund. The Adviser can modify or terminate this voluntary waiver and/or
reimbursement at any time at its sole discretion.
ADMINISTRATIVE FEE
Federated Services Company ("FServ"), under the Administrative Services
Agreement, provides the Fund with administrative personnel and services. The fee
paid to FServ is based on a scale that ranges from 0.15% to 0.075% of average
aggregate daily net assets of all funds advised by subsidiaries of Federated
Investors, Inc., subject to a $125,000 minimum per portfolio and $30,000 per
each additional class.
DISTRIBUTION SERVICES FEE
The Fund has adopted a Distribution Plan (the "Plan") pursuant to Rule 12b-1
under the Act. Under the terms of the Plan, the Fund will compensate Federated
Securities Corp. ("FSC"), the principal distributor, from the net assets of the
Fund to finance activities intended to result in the sale of the Fund's Class A
Shares, Class B Shares, and Class C Shares. The Plan provides that the Fund may
incur distribution expenses according to the following schedule annually, to
compensate FSC.
<TABLE>
<CAPTION>
PERCENTAGE OF AVERAGE
SHARE CLASS NAME DAILY NET ASSETS OF CLASS
<S> <C>
Class A Shares 0.25%
Class B Shares 0.75%
Class C Shares 0.75%
</TABLE>
Class A Shares did not incur a distribution services fee for the fiscal year
ended November 30, 1999, and has no present intention of paying or accruing the
distribution services fee.
SHAREHOLDER SERVICES FEE
Under the terms of a Shareholder Services Agreement with Federated Shareholder
Services Company ("FSSC"), the Fund will pay FSSC up to 0.25% of average daily
net assets of the Fund for the period. The fee paid to FSSC is used to finance
certain services for shareholders and to maintain shareholder accounts.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES
FServ, through its subsidiary FSSC, serves as transfer and dividend disbursing
agent for the Fund. The fee paid to FSSC is based on the size, type, and number
of accounts and transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES
FServ maintains the Fund's accounting records for which it receives a fee. The
fee is based on the level of the Fund's average daily net assets for the period,
plus out-of-pocket expenses.
ORGANIZATIONAL EXPENSES
Organizational expenses of $53,789 were borne initially by the Adviser. The Fund
has reimbursed the Adviser for these expenses. These expenses have been deferred
and are being amortized over the five-year period following the Fund's effective
date. For fiscal year ended November 30, 1999, the Fund expensed $13,764 of
organizational expenses.
GENERAL
Certain of the Officers and Directors of the Corporation are Officers and
Directors or Trustees of the above companies.
INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities (and in-
kind contributions), for the fiscal year ended November 30, 1999, were as
follows:
<TABLE>
<CAPTION>
<S> <C>
Purchases $ 13,667,939
Sales $ 14,778,911
</TABLE>
CONCENTRATION OF CREDIT RISK
The Fund invests in securities of non-U.S. issuers. The political or economic
developments within a particular country or region may have an adverse effect on
the ability of domiciled issuers to meet their obligations. Additionally,
political or economic developments may have an effect on the liquidity and
volatility of portfolio securities and currency holdings.
LINE OF CREDIT AGREEMENT
Effective November 29, 1999 the Corporation entered into a $75,000,000 unsecured
committed revolving line of credit ("LOC") agreement with State Street
Corporation. The LOC was made available for extraordinary or emergency purposes,
primarily for financing redemption payments. Borrowings are charged interest at
a rate of 0.50% over the Federal Funds Rate. The LOC includes a commitment fee
of 0.08% per annum on the daily unused portion. The Corporation did not make any
borrowing under the LOC during the fiscal year ended November 30, 1999.
SUBSEQUENT EVENT (UNAUDITED)
An N-14 filing occurred on December 14, 1999 and a proxy has been mailed to
existing shareholders in the Federated Latin American Growth Fund requesting the
approval of a merger of the Federated Latin American Growth Fund into the
Federated Emerging Markets Fund. The results of shareholder voting are expected
by February 11, 2000.
Report of Ernst & Young LLP, Independent Auditors
TO THE BOARD OF DIRECTORS OF WORLD INVESTMENT SERIES, INC. AND
SHAREHOLDERS OF FEDERATED LATIN AMERICAN GROWTH FUND:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of Federated Latin American Growth Fund (the Fund)
(one of the portfolios constituting the World Investment Series, Inc.) as of
November 30, 1999, and the related statement of operations for the year then
ended, the statement of changes in net assets for each of the two years in the
period then ended, and the financial highlights for each of the periods
presented therein. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned as of November 30, 1999, by correspondence with the custodian and brokers
or other appropriate auditing procedures where replies from brokers were not
received. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Federated Latin American Growth Fund of World Investment Series, Inc. at
November 30, 1999, and the results of its operations for the year then ended,
the changes in its net assets for each of the two years in the period then
ended, and the financial highlights for each of the periods presented therein,
in conformity with accounting principles generally accepted in the United
States..
[Graphic]
Boston, Massachusetts
January 21, 2000
Directors
JOHN F. DONAHUE
THOMAS G. BIGLEY
JOHN T. CONROY, JR.
NICHOLAS P. CONSTANTAKIS
WILLIAM J. COPELAND
LAWRENCE D. ELLIS, M.D.
RICHARD B. FISHER
EDWARD L. FLAHERTY, JR., ESQ.
PETER E. MADDEN
CHARLES F. MANSFIELD
JOHN E. MURRAY, JR., J.D., S.J.D.
WESLEY W. POSVAR
MARJORIE P. SMUTS
Officers
JOHN F. DONAHUE
Chairman
RICHARD B. FISHER
President
J. CHRISTOPHER DONAHUE
Executive Vice President
EDWARD C. GONZALES
Executive Vice President
JOHN W. MCGONIGLE
Executive Vice President and Secretary
HENRY A. FRANTZEN
Chief Investment Officer
RICHARD J. THOMAS
Treasurer
JAMES O. PERRY
Assistant Secretary
Mutual funds are not bank deposits or obligations, are not guaranteed by any
bank, and are not insured or guaranteed by the U.S. government, the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other
government agency. Investment in mutual funds involves investment risk,
including the possible loss of principal.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the fund's prospectus which contains facts concerning
its objective and policies, management fees, expenses, and other information.
[Graphic]
Federated
World-Class Investment Manager ANNUAL REPORT AS OF NOVEMBER 30, 1999 Federated
Latin American Growth Fund
Established 1996
4TH ANNUAL REPORT
[Graphic]
Federated
Federated Latin American Growth Fund
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
1-800-341-7400
WWW.FEDERATEDINVESTORS.COM
Federated Securities Corp., Distributor
Cusip 981487796
Cusip 981487788
Cusip 981487770
G01940-01 (1/00)
[Graphic]
[Graphic]
RICHARD B. FISHER
President
Federated World Utility Fund
President's Message
Dear Fellow Shareholder:
Federated World Utility Fund was created in 1994, and I am pleased to present
its sixth Annual Report. As of November 30, 1999, the fund's net assets totaled
$115.9 million and were invested in over 75 stocks (both domestic and
international holdings) in 17 countries. This fund provides shareholders with
opportunities for income and capital growth by owning a diversified portfolio of
stocks and convertible securities in the electric, natural gas, water, and
telecommunications sectors in the U.S. and around the world. 1
This report covers the 12-month reporting period from December 1, 1998 through
November 30, 1999. It begins with an interview with the fund's portfolio
manager, Richard Lazarchic, Vice President of Federated Global Investment
Management Corp. Following his discussion are three additional items of
shareholder interest. First is a series of graphs showing the fund's long-term
investment performance. Second is a complete listing of the fund's global
investments, and third is the publication of the fund's financial statements.
Consistent with the extremely favorable environment for telecommunications-
related utilities worldwide, the fund has had another very strong year in 1999.
It recorded double-digit total return performance that was considerably greater
than that of the average utility fund. Individual share class total return
performance for the 12-month reporting period, including income distributions
and realized gains, is as follows: 2
<TABLE>
<CAPTION>
TOTAL RETURN INCOME CAPITAL GAINS NET ASSET VALUE INCREASE
<S> <C> <C> <C> <C>
Class A Shares 31.41% $0.04 $1.30 $16.24 to $19.61 = 20.75%
Class B Shares 30.57% $0.00 $1.30 $16.19 to $19.47 = 20.26%
Class C Shares 30.46% $0.00 $1.30 $16.21 to $19.48 = 20.17%
</TABLE>
1 Funds whose investments are concentrated in a specific industry may be subject
to a higher degree of market risk than funds whose investments are diversified.
Foreign investing involves special risks including currency risk, increased
volatility of foreign securities, and differences in auditing and other
financial standards.
2 Performance quoted is based on net asset value, represents past performance
and is no guarantee of future results. Investment return and principal value
will fluctuate so that an investor's shares, when redeemed, may be worth more or
less than their original cost. Total returns for the period, based on offering
price (i.e., less any applicable sales charge), for Class A, B and C Shares were
24.15%, 25.07% and 29.46%, respectively.
We trust that you were pleased with the continued positive performance of your
investment in Federated World Utility Fund. The fund's $115.9 million in net
assets remain focused on the U.S. for defensive purposes and includes a
combination of value-oriented electric and natural gas stocks and growth-
intensive telecommunications holdings.
Thank you for joining the growing number of shareholders who have entrusted this
global utility fund with a portion of their wealth. Remember, adding to your
investment account and reinvesting your dividends in additional shares is a
convenient, painless way to "pay yourself first" and enjoy the benefit of
compounding from the shares you buy today.
We welcome your comments and suggestions.
Sincerely,
[Graphic]
Richard B. Fisher
President
January 15, 2000
[Graphic]
RICHARD LAZARCHIC
Vice President
Federated Global Investment Management Corp.
Investment Review
WHAT ARE YOUR COMMENTS ON GLOBAL UTILITY STOCKS, WHICH RECORDED ANOTHER PERIOD
OF STRONG PERFORMANCE DURING THE FUND'S FISCAL YEAR?
Utilities have never had the kind of divergence that was seen this year.
Telecommunications entities-especially the faster growing Internet or
bandwidth-related issues-helped lead the equity market upward, while the old,
trusty, high-yield electric utilities acted like they had the plague. The fund
was fortunate to hold many more of the former issues, which has allowed us to
show superior performance this year.
International utility markets virtually mirrored those in the U.S. However, due
to varying stages of development in different sectors of the varying markets and
different regulations involved, there were some radical differences in
performance globally and in the U.S. The end result, though, was
telecommunications, yes and electric, natural gas and water, no. Geographically,
performance was fairly level with a variety of outperformers and underperformers
in all regions of the world and in both the developed as well as emerging
markets.
In the U.S., traditional utilities, like power and gas, will continue to face
difficult market conditions this year. We expect that rates will rise this year
which, in turn, will put pressure on utility companies' fundamentals for two
reasons. First, utility companies tend to run relatively high levels of debt to
the capital-intensive nature of their industry. Therefore, as interest rate
hikes increase the cost of debt, operating cash flows decline. Second, utilities
operate in a regulated environment. Government regulators limit utilities'
ability to pass through cost increases and often lengthen the consolidation
process. While many utility companies have done an excellent job of navigating
these challenges, the market will likely favor telecommunications stocks over
utility stocks for most of the year.
IN THIS FAVORABLE ENVIRONMENT, HOW DID FEDERATED WORLD UTILITY FUND PERFORM OVER
THE 12-MONTH REPORTING PERIOD?
For the 12-month reporting period ended November 30, 1999, the fund delivered
strong total returns of 31.41%, 30.57% and 30.46%, based on net asset value, for
Class A, B and C Shares, respectively. 1 These returns were considerably greater
than the 16.96% total return of the 100 utility funds tracked by Lipper
Analytical Services, Inc. for the same period.2 They were also similar to the
33.37% total return of the fund's benchmark, the FT/S&P Global Utility Index3
which is heavily weighted toward the telecommunications area.
Although we continue to feel that telecommunications issues will lead the market
next year, we will continue to pare back on some of these higher performing
issues and put the money into selected electric and natural gas related stocks.
These latter names seem to have been neglected in the move toward large
capitalization growth companies and now represent true value in the marketplace.
Thus, we continue to utilize a barbell approach anchored by value-oriented
electric utilities, with the bulk of the portfolio in faster growing
telecommunication stocks-especially those that give us a way to play the latest
industrial revolution called the Internet.
WHAT WERE SOME OF THE FUND'S RECENT UTILITY PURCHASES?
Our recent purchases included the following:
CORNING, INC. (1.94% of net assets): This historic consumer products company is
becoming a large player in the telecommunications area. It is the leading
worldwide supplier of optical fiber to the telecommunications industry and, with
two recent acquisitions, is heavily involved in the optical switching area and
LED's (flat panel glass displays). All three areas are expected to grow revenues
at 30%-50%.
CONSTELLATION ENERGY GROUP (1.45% of net assets): This mid-Atlantic electric
utility company is growing its generation business, as well as developing a
prominent national energy trading presence through its partial ownership of
Orion's power-generating unit, in which it has exclusive trading rights. It also
received a good rate order from the Maryland Utility Commission that includes
open access for all customers starting on July 1, 2000.
DTE ENERGY CO. (1.66% of net assets): DTE is an upper-midwest utility company
operating primarily in Michigan. Although automobile manufacturing is an
important part of their business, the near-term interest in the company comes
from its non-regulated businesses. This includes coal marketing and
transportation, and energy service, and its acquisition of MCN Energy, a natural
gas long distance carrier with 1.2 million customers throughout Michigan and
with investments in non-regulated areas.
GLOBAL CROSSING LTD. (1.36% of net assets): This firm is a growing
telecommunications company that is building and operating a global Internet
Protocol-based data centric network that will span five continents and be able
to address 80% of the world's international traffic. Two of these underseas or
land-based networks will probably spin off as separate entities next year along
with Global Center, the domestic Internet carrier it inherited with its Frontier
acquisition.
1 Performance quoted represents past performance and is no guarantee of future
results. Investment return and principal value will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than their original
cost. Total returns for the period, based on offering price (i.e., less any
applicable sales charge), for Class A, B and C Shares were 24.15%, 25.07% and
29.46%, respectively.
2 Lipper figures represent the average of the total returns reported by all of
the mutual funds designated by Lipper Analytical Services, Inc. as falling into
the category indicated. These figures do not take sales charges into account.
3 FT/S&P Global Utility Index is an unmanaged, market cap-weighted index of
approximately 174 utility securities from 24 countries, both developed and
emerging markets. Investments cannot be made in an index.
WHAT WERE THE FUND'S TOP 10 HOLDINGS AS OF NOVEMBER 30, 1999?
<TABLE>
<CAPTION>
PERCENTAGE
OF
NAME COUNTRY INDUSTRY NET ASSETS
<S> <C> <C> <C>
MCI Worldcom, Inc. U.S. Major U.S.
Telecommunications 4.28%
GTE Corp. U.S. Major U.S.
Telecommunications 4.06%
SBC Communications, Inc. U.S. Major U.S.
Telecommunications 3.71%
Reliant Energy, Inc. U.S. Electric Utilities - South 2.81%
British Telecom. PLC United
Kingdom Telecommunications 2.06%
Tyco International, Ltd. U.S. Multi-Industry 1.97%
Corning, Inc. U.S. Electronic Components, Instruments 1.94%
Lucent Technologies, Inc. U.S. Technology 1.80%
Duke Energy Corp. U.S. Electric Utilities - South 1.75%
DDI Corp. Japan Non U.S. Utilities 1.75%
TOTAL 26.13%
</TABLE>
WHAT IS YOUR CURRENT STRATEGY FOR THE FUND'S REGION, SECTOR AND COUNTRY
WEIGHTINGS?
As you can see, we are most heavily weighted in the United States and in
telecommunications stocks. Although this may be modified due to continued
changes within the sectors and within the regions, we envision increasing our
foreign exposure this coming year with possibly less focus on telecommunications
companies. However, as long as the world continues to grow at an accelerated
pace and inflation remains low, we see no compelling reason to vary from last
year's very successful strategy.
As of November 30, 1999, the fund's regional and country weights were as
follows:
<TABLE>
<CAPTION>
PERCENTAGE OF
REGION NET ASSETS
<S> <C>
United States 66.98%
Europe 15.40%
Japan 10.87%
Canada 1.71%
Asia (ex-Japan) 1.24%
<CAPTION>
PERCENTAGE OF
COUNTRY NET ASSETS
<S> <C>
United States 71.8%
Japan 10.9%
United Kingdom 6.2%
Netherlands 2.0%
Canada 1.8%
Germany 1.7%
Spain 1.5%
France 1.2%
Israel 1.0%
Italy 1.0%
Belgium 0.9%
Finland 0.6%
Sweden 0.6%
India 0.5%
Australia 0.4%
Norway 0.4%
Singapore 0.3%
</TABLE>
AS WE ENTER THE YEAR 2000, WITH TELECOMMUNICATIONS AND INTERNET-RELATED STOCKS
CONTINUING TO SOAR, WHAT IS YOUR OUTLOOK FOR THE WORLD UTILITIES MARKETPLACE?
There is no black and white, or right or wrong way to play the world utility
marketplace. However, as history has taught us, we need to take advantage of
what is put before us. Just as a company would not start up a fixed-line
telecommunications network today in a developing country due to the time and
cost involved, it is not necessarily a good idea for an electric utility to
control all aspects of providing power from generation to the final user.
We must look into the future and envision the next step in the evolution of all
aspects of the worldwide utility universe and be in front of the developments in
both the electric and telecommunications industries that drive the bulk of the
utility universe.
On the electric side, the industry is becoming substantially more competitive
with increased deregulation and privatization. We also expect more consolidation
within the industry and the substantial unbundling of services which will change
the traditional integrated utilities into a more horizontal structure along the
lines of generation, distribution and transmission companies. Within the
generation side, there is a trend toward newer, smaller units and towards the
use of natural gas. Companies are gaining more expertise in one of these three
specializations and are also having more success in deregulated areas outside of
the electric utility field, or in other forms of regulated utility areas like
telecommunications or utility trading.
The telecommunications industry has rapidly evolved due to changes brought about
by technology, especially as it relates to the use of the Internet and the
exploding volume of data involved. Equipment is becoming smaller, faster, and
more mobile. Companies are consolidating due to the tremendous costs involved,
which need to be spread over larger volumes of customers and transactions.
Due to these and many more changes, the industry has grown at a double-digit
rate and has already spawned over 125 companies with market capitalizations of
over $1 billion. This growth should persevere as technology improvements
continue to drive demand and lower operating costs to a point where new
entrants, led by large pools of capital, can build the next generation of
ultra-high capacity networks. Additionally, we believe mobile and data use will
ultimately displace fixed voice traffic and networks linking the personal
computer, television, and other electronic organizers over a non- fixed wire
network. These advances will utilize radio waves and satellites with nationwide
and worldwide footprints involving companies not currently known as
telecommunications companies.
Last Meeting of Shareholders
A Special Meeting of shareholders of Federated World Utility Fund (the "Fund"),
a portfolio of World Investment Series, Inc., was held on December 17, 1999. On
September 7, 1999, the record date for shareholders voting at the meeting, there
were 5,675,729 total outstanding shares.
The following items were considered by shareholders and the results of their
voting were as follows.
AGENDA ITEM 1
Elected Directors: 1
<TABLE>
<CAPTION>
SHARES SHARES
VOTED FOR WITHHELD
<S> <C> <C>
Thomas G. Bigley 2,992,288 83,030
Nicholas P. Constantakis 2,993,610 81,708
John F. Cunningham 2,992,055 83,263
J. Christopher Donahue 2,988,705 86,613
Charles F. Mansfield, Jr. 2,991,885 83,433
John E. Murray, Jr., J.D., S.J.D. 2,992,989 82,329
John S. Walsh 2,992,288 83,030
</TABLE>
1 The following Directors continued their terms as Directors: John F.
Donahue, John T. Conroy, William J. Copeland, Lawrence D. Ellis, M.D.,
Peter E. Madden and Marjorie P. Smuts.
Director elections will become effective January 1, 2000.
AGENDA ITEM 2
Made changes to the Fund's fundamental investment policies:
(a) Amended the Fund's fundamental investment policy regarding
diversification.
<TABLE>
<CAPTION>
SHARES ABSTENTIONS
VOTED AND BROKER
SHARES VOTED FOR AGAINST NON-VOTES
<S> <C> <C>
2,213,103 55,849 806,366
</TABLE>
(b) Amended the Fund's fundamental investment policy regarding borrowing money
and issuing senior securities.
<TABLE>
<CAPTION>
SHARES ABSTENTIONS
VOTED AND BROKER
SHARES VOTED FOR AGAINST NON-VOTES
<S> <C> <C>
2,167,531 91,124 816,663
</TABLE>
(c) Amended the Fund's fundamental investment policy regarding investments
in real estate.
<TABLE>
<CAPTION>
SHARES ABSTENTIONS
VOTED AND BROKER
SHARES VOTED FOR AGAINST NON-VOTES
<S> <C> <C>
2,175,495 91,489 808,334
</TABLE>
(d) Amended the Fund's fundamental investment policy regarding investments
in commodities.
<TABLE>
<CAPTION>
SHARES ABSTENTIONS
VOTED AND BROKER
SHARES VOTED FOR AGAINST NON-VOTES
<S> <C> <C>
2,143,229 124,740 807,349
</TABLE>
(e) Amended the Fund's fundamental investment policy regarding underwriting
securities.
<TABLE>
<CAPTION>
SHARES ABSTENTIONS
VOTED AND BROKER
SHARES VOTED FOR AGAINST NON-VOTES
<S> <C> <C>
2,164,069 95,231 816,018
</TABLE>
(f) Amended the Fund's fundamental investment policy regarding lending
assets.
<TABLE>
<CAPTION>
SHARES ABSTENTIONS
VOTED AND BROKER
SHARES VOTED FOR AGAINST NON-VOTES
<S> <C> <C>
2,163,271 101,024 811,023
</TABLE>
(g) Amended the Fund's fundamental investment policy regarding concentration of
the Fund's investments in the securities of companies in the same industry.
<TABLE>
<CAPTION>
SHARES ABSTENTIONS
VOTED AND BROKER
SHARES VOTED FOR AGAINST NON-VOTES
<S> <C> <C>
2,208,243 66,979 800,096
</TABLE>
(h) Amended and made non-fundamental, the Fund's fundamental investment policy
regarding buying securities on margin.
<TABLE>
<CAPTION>
SHARES ABSTENTIONS
VOTED AND BROKER
SHARES VOTED FOR AGAINST NON-VOTES
<S> <C> <C>
2,141,114 120,679 813,525
</TABLE>
(i) Amended and made non-fundamental, the Fund's fundamental investment policy
regarding pledging assets.
<TABLE>
<CAPTION>
SHARES ABSTENTIONS
VOTED AND BROKER
SHARES VOTED FOR AGAINST NON-VOTES
<S> <C> <C>
2,151,976 105,792 817,550
</TABLE>
AGENDA ITEM 3
Approved an amendment to the Articles of Incorporation of World Investment
Series, Inc. to permit the Board of Directors to liquidate assets of a series or
class without seeking shareholder approval to the extent permitted under
Maryland law.
<TABLE>
<CAPTION>
SHARES ABSTENTIONS
VOTED AND BROKER
SHARES VOTED FOR AGAINST NON-VOTES
<S> <C> <C>
2,135,709 125,512 814,097
</TABLE>
Where in the World Should You Invest?
[Graphic]
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 EQUITY FUND
FEDERATED INTERNATIONAL HIGH INCOME FUND
FEDERATED INTERNATIONAL INCOME FUND
FEDERATED INTERNATIONAL SMALL COMPANY FUND
FEDERATED LATIN AMERICAN GROWTH FUND
FEDERATED WORLD UTILITY FUND
Federated employs highly qualified, experienced managers in global investing
to select countries and companies outside the U.S. for long-term
growth potential
Call your investment representative to buy shares of ten international equity
funds and two international income funds from Federated Securities Corp.
FOR MORE COMPLETE INFORMATION ABOUT ANY OF THESE FUNDS, CALL 1-800-341-7400 TO
ASK FOR A PROSPECTUS AND READ IT CAREFULLY BEFORE YOU INVEST.
Foreign investing involves special risks including currency risks, increased
volatility of foreign securities, and differences in auditing and other
financial standards.
Two Ways You May Seek to Invest for Success:
INITIAL INVESTMENT
IF YOU MADE AN INITIAL INVESTMENT OF $6,000 IN THE CLASS A SHARES OF FEDERATED
WORLD UTILITY FUND ON 4/22/94, REINVESTED YOUR DIVIDENDS AND CAPITAL GAINS, AND
DID NOT REDEEM ANY SHARES, YOUR ACCOUNT WOULD HAVE BEEN WORTH $14,766 ON
11/30/99. YOU WOULD HAVE EARNED A 17.42% 1 AVERAGE ANNUAL TOTAL RETURN FOR THE
INVESTMENT LIFE SPAN.
One key to investing wisely is to reinvest all distributions in fund shares.
This increases the number of shares on which you can earn future dividends, and
you gain the benefit of compounding.
As of 12/31/99, the Class A Shares' average annual 1-year, 5-year and since
inception (4/22/94) total returns were 31.63%, 23.41% and 19.40%, respectively.
Class B Shares' average annual 1-year and since inception (7/27/95) total
returns were 32.75% and 23.71%, respectively. Class C Shares' average annual
1-year and since inception (7/27/95) total returns were 37.20% and 23.89%,
respectively. 2
[Graphic representation omitted. Please see Appendix A34.]
1 Total return represents the change in the value of an investment after
reinvesting all income and capital gains, and takes into account the 4.50% sales
charge applicable to an initial investment in Class A Shares that was in effect
prior to October 1, 1994. As of October 1, 1994, the maximum sales charge was
5.50%. Data quoted represents past performance and does not guarantee future
results. Investment return and principal value will fluctuate, so that an
investor's shares, when redeemed, may be worth more or less than their original
cost.
2 The total return stated takes into account all applicable sales charges. The
maximum sales charges and contingent deferred sales charges for the fund are as
follows: Class A Shares, 5.50% sales charge; Class B Shares, 5.50% contingent
deferred sales charge and Class C Shares, 1.00% contingent deferred sales
charge.
ONE STEP AT A TIME
$1,000 INITIAL INVESTMENT AND SUBSEQUENT INVESTMENTS OF $1,000 EACH YEAR FOR
FIVE YEARS (REINVESTING ALL DIVIDENDS AND CAPITAL GAINS) GREW TO $10,828.
With this approach, the key is consistency.
If you had started investing $1,000 annually in Class A Shares of Federated
World Utility Fund on 4/22/94, reinvested your dividends and capital gains, and
did not redeem any shares, you would have invested only $6,000, but your account
would have reached a total value of $10,828 1 by 11/30/99. You would have earned
an average annual total return of 17.43%.
A practical investment plan helps you pursue long-term performance from domestic
and international utility securities. Through systematic investing, you buy
shares on a regular basis and reinvest all earnings. An investment plan can work
for you when you invest only $1,000 annually. You can take it one step at a
time. Put time, money and compounding to work.
[Graphic representation omitted. Please see Appendix A35.]
1 This chart assumes that the subsequent annual investments are made on the last
day of the anniversary month. No method of investing can guarantee a profit or
protect against loss in down markets.
Federated World Utility Fund - Class A Shares
GROWTH OF A $10,000 INVESTMENT
The graph below illustrates the hypothetical investment of $10,000 1 in
Federated World Utility Fund (Class A Shares) (the "Fund") from April 22, 1994
(start of performance) to November 30, 1999 compared to the Standard & Poor's
500 Index (S&P 500),2 FT/S&P Global Utility Index (FTGU)2 and the Lipper Utility
Funds Average (LUFA).3
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS 4 FOR THE PERIOD ENDED NOVEMBER 30, 1999
<S> <C>
1 Year 24.15%
5 Years 20.22%
Start of Performance (4/22/94) 17.19%
</TABLE>
[Graphic representation omitted. Please see Appendix A36.]
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE PERFORMANCE. YOUR INVESTMENT RETURN
AND PRINCIPAL VALUE WILL FLUCTUATE SO WHEN SHARES ARE REDEEMED, THEY MAY BE
WORTH MORE OR LESS THAN THEIR ORIGINAL COST. MUTUAL FUNDS ARE NOT OBLIGATIONS OF
OR GUARANTEED BY ANY BANK AND ARE NOT FEDERALLY INSURED.
1 Represents a hypothetical investment of $10,000 in the Fund after deducting
the maximum sales charge of 4.50% ($10,000 investment minus $450 sales charge =
$9,550) that was in effect prior to October 1, 1994. As of October 1, 1994, the
maximum sales charge was 5.50%. The Fund's performance assumes the reinvestment
of all dividends and distributions. The S&P 500, FTGU and LUFA have been
adjusted to reflect reinvestment of dividends on securities in the indexes and
average.
2 The S&P 500 and the FTGU are not adjusted to reflect sales charges, expenses,
or other fees that the Securities and Exchange Commission requires to be
reflected in the Fund's performance. The indexes are unmanaged.
3 The LUFA represents the average of the total returns reported by all of the
mutual funds designated by Lipper Analytical Services, Inc. as falling into the
category indicated, and is not adjusted to reflect any sales charges. However,
these total returns are reported net of expenses or other fees that the
Securities and Exchange Commission requires to be reflected in a fund's
performance.
4 Total return quoted reflects all applicable sales charges.
Federated World Utility Fund - Class B Shares
GROWTH OF A $10,000 INVESTMENT
The graph below illustrates the hypothetical investment of $10,000 1 in
Federated World Utility Fund (Class B Shares) (the "Fund") from July 27, 1995
(start of performance) to November 30, 1999 compared to the Standard & Poor's
500 Index (S&P 500),2 FT/S&P Global Utility Index (FTGU)2 and the Lipper Utility
Funds Average (LUFA).3
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS 4 FOR THE PERIOD ENDED NOVEMBER 30, 1999
<S> <C>
1 Year 25.07%
Start of Performance (7/27/95) 20.85%
</TABLE>
[Graphic representation omitted. Please see Appendix A37.]
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE PERFORMANCE. YOUR INVESTMENT RETURN
AND PRINCIPAL VALUE WILL FLUCTUATE SO WHEN SHARES ARE REDEEMED, THEY MAY BE
WORTH MORE OR LESS THAN THEIR ORIGINAL COST. MUTUAL FUNDS ARE NOT OBLIGATIONS OF
OR GUARANTEED BY ANY BANK AND ARE NOT FEDERALLY INSURED.
1 Represents a hypothetical investment of $10,000 in the Fund. The ending value
of the Fund reflects a contingent deferred sales charge of 2.00% on any
redemption less than five years from the purchase date. The maximum contingent
deferred sales charge is 5.50% on any redemption less than one year from the
purchase date. The Fund's performance assumes the reinvestment of all dividends
and distributions. The S&P 500, FTGU and LUFA have been adjusted to reflect
reinvestment of dividends on securities in the indexes and average.
2 The S&P 500 and the FTGU are not adjusted to reflect sales charges, expenses,
or other fees that the Securities and Exchange Commission requires to be
reflected in the Fund's performance. The indexes are unmanaged.
3 The LUFA represents the average of the total returns reported by all of the
mutual funds designated by Lipper Analytical Services, Inc. as falling into the
category indicated, and is not adjusted to reflect any sales charges. However,
these total returns are reported net of expenses or other fees that the
Securities and Exchange Commission requires to be reflected in a fund's
performance.
4 Total return quoted reflects all applicable sales charges and contingent
deferred sales charges.
Federated World Utility Fund - Class C Shares
GROWTH OF A $10,000 INVESTMENT
The graph below illustrates the hypothetical investment of $10,000 1 in
Federated World Utility Fund (Class C Shares) (the "Fund") from July 27, 1995
(start of performance) to November 30, 1999 compared to the Standard & Poor's
500 Index (S&P 500),2 FT/S&P Global Utility Index (FTGU)2 and the Lipper Utility
Funds Average (LUFA).3
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS 4 FOR THE PERIOD ENDED NOVEMBER 30, 1999
<S> <C>
1 Year 29.46%
Start of Performance (7/27/95) 21.04%
</TABLE>
[Graphic representation omitted. Please see Appendix A38.]
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE PERFORMANCE. YOUR INVESTMENT RETURN
AND PRINCIPAL VALUE WILL FLUCTUATE SO WHEN SHARES ARE REDEEMED, THEY MAY BE
WORTH MORE OR LESS THAN THEIR ORIGINAL COST. MUTUAL FUNDS ARE NOT OBLIGATIONS OF
OR GUARANTEED BY ANY BANK AND ARE NOT FEDERALLY INSURED.
1 Represents a hypothetical investment of $10,000 in the Fund. A 1.00%
contingent deferred sales charge would be applied on any redemption less than
one year from the purchase date. The Fund's performance assumes the reinvestment
of all dividends and distributions. The S&P 500, FTGU and LUFA have been
adjusted to reflect reinvestment of dividends on securities in the indexes and
average.
2 The S&P 500 and the FTGU are not adjusted to reflect sales charges, expenses,
or other fees that the Securities and Exchange Commission requires to be
reflected in the Fund's performance. The indexes are unmanaged.
3 The LUFA represents the average of the total returns reported by all of the
mutual funds designated by Lipper Analytical Services, Inc. as falling into the
category indicated, and is not adjusted to reflect any sales charges. However,
these total returns are reported net of expenses or other fees that the
Securities and Exchange Commission requires to be reflected in a fund's
performance.
4 Total return quoted reflects all applicable sales charges and contingent
deferred sales charges.
Portfolio of Investments
NOVEMBER 30, 1999
<TABLE>
<CAPTION>
VALUE IN
SHARES U.S. DOLLARS
<S> <C> <C>
COMMON STOCKS-99.9%
BASIC INDUSTRY-1.9%
18,500 Bowater, Inc. $ 906,500
24,500 International Paper Co. 1,278,594
TOTAL 2,185,094
BUSINESS & PUBLIC
SERVICES-1.0%
388,000 MediaRing.com Ltd. 383,267
7,000 Sanix, Inc. 777,052
TOTAL 1,160,319
CELLULAR TELEPHONE-2.3%
7,500 1 NEXTEL Communications,
Inc., Class A 743,438
410,490 Vodafone Group PLC 1,934,306
TOTAL 2,677,744
CONSUMER DURABLES-1.5%
9,500 Sony Corp. 1,763,839
ELECTRIC UTILITIES:
CENTRAL-1.8%
42,000 CMS Energy Corp. 1,396,500
40,000 DPL, Inc. 715,000
TOTAL 2,111,500
ELECTRIC UTILITIES: EAST-
3.3%
51,000 DQE, Inc. 1,877,437
60,000 Peco Energy Co. 1,976,250
TOTAL 3,853,687
ELECTRIC UTILITIES: SOUTH-
7.1%
40,000 Duke Energy Corp. 2,027,500
45,000 Entergy Corp. 1,240,313
131,000 Reliant Energy, Inc. 3,250,438
46,500 Texas Utilities Co. 1,665,281
TOTAL 8,183,532
ELECTRIC UTILITIES: WEST-
2.7%
75,000 P G & E Corp. 1,678,125
43,000 Pinnacle West Capital
Corp. 1,427,063
TOTAL 3,105,188
<CAPTION>
VALUE IN
SHARES U.S. DOLLARS
<S> <C> <C>
COMMON STOCKS-continued
ELECTRICAL & ELECTRONICS-
5.0%
5,000 Nokia Oyj, Class A, ADR $ 690,937
38,000 1 Orckit Communications,
Inc. 1,102,000
4,600 1 Qualcomm, Inc. 1,666,637
14,000 Telefonaktiebolaget LM
Ericsson, Class B, ADR 674,625
25,600 1 Tellabs, Inc. 1,660,800
TOTAL 5,794,999
ELECTRONIC COMPONENTS,
INSTRUMENTS-3.9%
24,000 Corning, Inc. 2,248,500
3,600 1 JDS Uniphase Corp. 823,500
11,500 Kyocera Corp. 1,390,687
TOTAL 4,462,687
ENERGY EQUIPMENT &
SERVICES-1.3%
14,000 Halliburton Co. 541,625
30,000 1 Petroleum Geo-Services,
ADR 468,750
16,000 Tidewater, Inc. 511,000
TOTAL 1,521,375
ENERGY SOURCES-3.4%
18,400 Coastal Corp. 648,600
130,000 ENI SPA 712,680
31,600 Enron Corp. 1,202,775
66,500 1 Gas Authority of India
Ltd., PLC 630,919
335,000 Oil Search Ltd. 441,381
25,000 Union Pacific Resources
Group, Inc. 326,563
TOTAL 3,962,918
FINANCE-1.6%
4,500 Orix Corp. 734,712
33,000 Toyota Motor Credit Corp. 1,121,666
TOTAL 1,856,378
HEALTH & PERSONAL CARE-
0.8%
31,500 Fort James Corp. 905,625
<CAPTION>
VALUE IN
SHARES U.S. DOLLARS
<S> <C> <C>
COMMON STOCKS-continued
MAJOR
U.S. TELECOMMUNICATIONS-
14.2%
25,750 AT&T Corp. $ 1,438,781
22,000 BellSouth Corp. 1,016,125
64,500 GTE Corp. 4,708,500
60,000 1 MCI Worldcom, Inc. 4,961,250
82,776 SBC Communications, Inc. 4,299,179
TOTAL 16,423,835
MULTI-INDUSTRY-4.4%
24,500 Allied-Signal, Inc. 1,465,406
9,000 Suez Lyonnaise des Eaux 1,326,904
57,000 Tyco International Ltd. 2,283,562
TOTAL 5,075,872
NON-U.S. UTILITIES-1.7%
146 DDI Corp. 2,022,300
PRODUCER MANUFACTURING-
1.7%
9,500 Mannesmann AG 1,975,995
RAILROADS-1.0%
76,000 Railtrack Group PLC 1,169,516
TECHNOLOGY-9.2%
23,200 1 CIENA Corp. 1,019,350
5,000 1 Cisco Systems, Inc. 445,937
14,300 1 Equant NV, ADR 1,347,775
19,750 1 E-Tek Dynamics, Inc. 1,481,250
28,500 Lucent Technologies, Inc. 2,082,281
16,000 Motorola, Inc. 1,828,000
8,800 1 SDL, Inc. 1,432,200
1,000 Softbank Corp. 724,004
5,000 1 Teligent AB, Class A 282,813
TOTAL 10,643,610
<CAPTION>
VALUE IN
SHARES U.S. DOLLARS
<S> <C> <C>
COMMON STOCKS-continued
TELECOMMUNICATIONS-23.4%
19,500 BCE, Inc. $ 1,311,748
119,163 British Telecommunication
PLC 2,390,492
55,000 BroadWing, Inc. 1,601,875
19,000 1 COLT Telecom Group PLC 718,071
30,000 CenturyTel, Inc. 1,380,000
36,000 1 Global Crossing Ltd. 1,570,500
33,500 1 Global TeleSystems Group,
Inc. 1,069,906
50,000 1 ICG Communications, Inc. 946,875
50,000 1 Intermedia Communications,
Inc. 1,393,750
33 Japan Telecom Co., Ltd. 1,296,724
12,500 KDD Corp. 1,731,421
26,300 1 NEXTLINK Communications,
Inc. 1,315,000
31 NTT Mobile Communication
Network, Inc. 1,090,230
37,500 1 Qwest Communications
International, Inc. 1,282,031
23,000 1 RCN Corp. 1,037,875
84,800 Telefonica SA 1,767,200
12,600 Telephone and Data System,
Inc. 1,678,163
3,900 1 United Pan-Europe
Communications NV, Class A
Shares 383,197
5,500 1 United Pan-Europe
Communications NV, ADR 532,125
12,000 1 VoiceStream Wireless Corp. 1,107,000
29,800 1 WinStar Communications,
Inc. 1,512,350
TOTAL 27,116,533
UTILITIES - ELECTRICAL &
GAS-6.7%
145,000 Centrica PLC 437,014
24,000 Cinergy Corp. 607,500
57,000 Constellation Energy Group 1,677,938
58,000 DTE Energy Co. 1,917,625
37,000 El Paso Energy Corp. 1,424,500
103,900 1 Enel SPA 459,656
23,000 Montana Power Co. 710,125
67,000 National Grid Co. PLC 514,442
TOTAL 7,748,800
TOTAL COMMON STOCKS
(IDENTIFIED COST
$96,128,503) 115,721,346
<CAPTION>
PRINCIPAL VALUE IN
AMOUNT U.S. DOLLARS
<S> <C> <C>
REPURCHASE AGREEMENT-2.9%
2
$ 3,365,000 J.P. Morgan & Co., Inc.,
5.71%, dated 11/30/1999,
due 12/1/1999
(AT AMORTIZED COST) $ 3,365,000
TOTAL INVESTMENTS
(IDENTIFIED COST
$99,493,503) 3 $ 119,086,346
</TABLE>
1 Non-income producing security.
2 The repurchase agreement is fully collateralized by U.S. government and/or
agency obligations based on market prices at the date of the portfolio. The
investments in the repurchase agreements is through participation in a joint
account with other Federated funds.
3 The cost of investments for federal tax purposes amounts to $99,882,100. The
net unrealized appreciation of investments on a federal tax basis amounts to
$19,204,246 which is comprised of $23,778,811 appreciation and $4,574,565
depreciation at November 30, 1999.
Note: The categories of investments are shown as a percentage of net assets
($115,861,397) at November 30, 1999.
The following acronym is used throughout this portfolio:
ADR -American Depositary Receipt
See Notes which are an integral part of the Financial Statements
Statement of Assets and Liabilities
NOVEMBER 30, 1999
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS:
Total investments in
securities, at value
(identified cost
$99,493,503 and tax
cost $99,882,100) $ 119,086,346
Cash 1,425
Cash denominated in
foreign currencies
(identified cost $5,424) 5,424
Income receivable 206,817
Receivable for investments
sold 301,908
Receivable for shares sold 547,847
TOTAL ASSETS 120,149,767
LIABILITIES:
Payable for investments
purchased $ 3,960,547
Payable for shares
redeemed 228,400
Payable for taxes withheld 1,905
Accrued expenses 97,518
TOTAL LIABILITIES 4,288,370
Net assets for 5,926,785
shares outstanding $ 115,861,397
NET ASSETS CONSIST OF:
Paid-in capital $ 80,697,012
Net unrealized
appreciation of
investments and
translation of assets and
liabilities in foreign
currency 19,592,300
Accumulated net realized
gain on investments and
foreign currency
transactions 15,711,070
Net operating loss (138,985)
TOTAL NET ASSETS $ 115,861,397
NET ASSET VALUE, OFFERING
PRICE AND REDEMPTION
PROCEEDS PER SHARE
CLASS A SHARES:
Net Asset Value Per Share
($65,070,810 / 3,317,999
shares outstanding) $19.61
Offering Price Per Share
(100/94.50 of $19.61) 1 $20.75
Redemption Proceeds Per
Share $19.61
CLASS B SHARES:
Net Asset Value Per Share
($43,969,269 / 2,258,695
shares outstanding) $19.47
Offering Price Per Share $19.47
Redemption Proceeds Per
Share (94.50/100 of
$19.47) 1 $18.40
CLASS C SHARES:
Net Asset Value Per Share
($6,821,318 / 350,091
shares outstanding) $19.48
Offering Price Per Share $19.48
Redemption Proceeds Per
Share (99.00/100 of
$19.48) 1 $19.29
</TABLE>
1 See "What Do Shares Cost?" in the Prospectus.
See Notes which are an integral part of the Financial Statements
Statement of Operations
YEAR ENDED NOVEMBER 30, 1999
<TABLE>
<CAPTION>
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends (net of foreign
taxes withheld of $36,103) $ 1,402,624
Interest 220,255
TOTAL INCOME 1,622,879
EXPENSES:
Investment adviser fee $ 888,332
Administrative personnel
and services fee 192,397
Custodian fees 36,223
Transfer and dividend
disbursing agent fees and
expenses 149,449
Directors'/Trustees' fees 2,303
Auditing fees 26,349
Legal fees 14,584
Portfolio accounting fees 85,343
Distribution services fee-
Class B Shares 244,928
Distribution services fee-
Class C Shares 35,712
Distribution services fee-
Class F Shares 1 27,284
Shareholder services fee-
Class A Shares 120,861
Shareholder services fee-
Class B Shares 81,643
Shareholder services fee-
Class C Shares 11,904
Shareholder services fee-
Class F Shares 1 7,673
Share registration costs 47,880
Printing and postage 55,410
Insurance premiums 2,011
Taxes 6,696
Miscellaneous 32,784
TOTAL EXPENSES 2,069,766
WAIVERS:
Waiver of investment
adviser fee $ (324,969)
Waiver of distribution
services fee-Class F
Shares 1 (27,284)
TOTAL WAIVERS (352,253)
Net expenses 1,717,513
Net operating loss (94,634)
REALIZED AND UNREALIZED
GAIN ON INVESTMENTS AND
FOREIGN CURRENCY:
Net realized gain on
investments and foreign
currency transactions 15,963,051
Net change in unrealized
appreciation of
investments and
translation of assets and
liabilities in foreign
currency 8,167,969
Net realized and
unrealized gain on
investments and foreign
currency 24,131,020
Change in net assets
resulting from operations $ 24,036,386
</TABLE>
1 Reflects operations for the period from December 1, 1998 to February 28, 1999.
On March 1, 1999, Class F Shares were reclassified as Class A Shares.
See Notes which are an integral part of the Financial Statements
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30 1999 1998
<S> <C> <C>
INCREASE (DECREASE) IN NET
ASSETS
OPERATIONS:
Net investment income (net
operating loss) $ (94,634) $ 839,139
Net realized gain on
investments and foreign
currency transactions
($16,270,614 and
$5,269,145, respectively,
as computed for federal tax
purposes) 15,963,051 4,756,296
Net change in unrealized
appreciation of
investments and
translation of assets and
liabilities in foreign
currency 8,167,969 4,575,698
CHANGE IN NET ASSETS
RESULTING FROM OPERATIONS 24,036,386 10,171,133
DISTRIBUTIONS TO
SHAREHOLDERS:
Distributions from net
investment income
Class A Shares - (406,244)
Class B Shares - (185,403)
Class C Shares - (24,143)
Class F Shares - (199,273)
Distributions from net
realized gain on
investments and foreign
currency transactions
Class A Shares (2,321,648) (636,415)
Class B Shares (1,829,263) (482,016)
Class C Shares (272,174) (60,899)
Class F Shares (948,328) 1 (331,248)
CHANGE IN NET ASSETS
RESULTING FROM
DISTRIBUTIONS
TO SHAREHOLDERS (5,371,413) (2,325,641)
SHARE TRANSACTIONS:
Proceeds from sale of
shares 81,045,813 20,601,669
Net asset value of shares
issued to shareholders in
payment of
distributions declared 4,734,104 1,993,595
Cost of shares redeemed (54,340,186) (12,856,840)
CHANGE IN NET ASSETS
RESULTING FROM SHARE
TRANSACTIONS 31,439,731 9,738,424
Change in net assets 50,104,704 17,583,916
NET ASSETS:
Beginning of period 65,756,693 48,172,777
End of period (including
undistributed net
investment income of
$0 and
$4,651, respectively) $ 115,861,397 $ 65,756,693
</TABLE>
1 Reflects changes in net assets for the period from December 1, 1998 to
February 28, 1999. On March 1, 1999, Class F Shares were reclassified as Class A
Shares.
See Notes which are an integral part of the Financial Statements
Financial Highlights - Class A Shares
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30 1999 1998 1997 1996
1995
<S> <C> <C> <C> <C>
<C>
NET ASSET VALUE, BEGINNING
OF PERIOD $16.24 $14.16 $12.69 $10.96 $
9.67
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income 0.03 0.23 0.28 0.43
0.42
Net realized and
unrealized gain on
investments and foreign
currency 4.68 2.55 2.00 1.67
1.27
TOTAL FROM INVESTMENT
OPERATIONS 4.71 2.78 2.28 2.10
1.69
LESS
DISTRIBUTIONS:
Distributions from net
investment income (0.04) (0.26) (0.38) (0.37)
(0.40)
Distributions from net
realized gain on
investments and foreign
currency transactions (1.30) (0.44) (0.43) -
- -
TOTAL DISTRIBUTIONS (1.34) (0.70) (0.81) (0.37)
(0.40)
NET ASSET VALUE, END OF
PERIOD $19.61 $16.24 $14.16 $12.69
$10.96
TOTAL RETURN 1 31.41% 20.42% 19.08% 19.54%
17.94%
RATIOS TO AVERAGE NET
ASSETS:
Expenses 1.61% 1.52% 1.40% 1.05%
0.25%
Net investment income 0.21% 1.71% 2.16% 3.87%
4.39%
Expense
waiver/reimbursement 2 0.37% 0.81% 1.49% 3.11%
4.78%
SUPPLEMENTAL
DATA:
Net assets, end of period
(000 omitted) $65,071 $28,022 $20,394 $12,671
$8,875
Portfolio turnover 169% 139% 52% 50%
46%
</TABLE>
1 Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
2 This expense decrease is reflected in both the expense and the net investment
income ratios shown above. For the period ended November 30, 1995, the adviser
waived all of its adviser fee (1.00%) and reimbursed other operating expenses
(0.34%), to comply with certain state expenses limitations. The remainder of the
reimbursement was voluntary.
See Notes which are an integral part of the Financial Statements
Financial Highlights - Class B Shares
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30 1999 1998 1997 1996
1995 1
<S> <C> <C> <C> <C>
<C>
NET ASSET VALUE, BEGINNING
OF PERIOD $16.19 $14.12 $12.68 $10.95
$10.53
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income (net
operating loss) (0.07) 0.12 0.21 0.35
0.11
Net realized and
unrealized gain on
investments and foreign
currency 4.65 2.54 1.95 1.67
0.41
TOTAL FROM INVESTMENT
OPERATIONS 4.58 2.66 2.16 2.02
0.52
LESS
DISTRIBUTIONS:
Distributions from net
investment income - (0.15) (0.29) (0.29)
(0.10)
Distributions from net
realized gain on
investments and foreign
currency transactions (1.30) (0.44) (0.43) -
- -
TOTAL DISTRIBUTIONS (1.30) (0.59) (0.72) (0.29)
(0.10)
NET ASSET VALUE, END OF
PERIOD $19.47 $16.19 $14.12 $12.68
$10.95
TOTAL RETURN 2 30.57 % 19.53% 18.04% 18.79%
5.00 %
RATIOS TO AVERAGE NET
ASSETS:
Expenses 2.36 % 2.27% 2.15% 1.80%
1.00% 3
Net investment income (net
operating loss) (0.54% ) 0.96% 1.36% 3.18%
2.99% 3
Expense
waiver/reimbursement 4 0.37 % 0.81% 1.49% 3.11%
4.78% 3
SUPPLEMENTAL
DATA:
Net assets, end of period
(000 omitted) $43,969 $22,793 $15,177 $4,091
$1,068
Portfolio turnover 169 % 139% 52% 50%
46%
</TABLE>
1 Reflects operations for the period from July 27, 1995 (date of initial public
investment) to November 30, 1995.
2 Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
3 Computed on an annualized basis.
4 This expense decrease is reflected in both the expense and the net investment
income (net operating loss) ratios shown above. For the period ended November
30, 1995, the adviser waived all of its adviser fee (1.00%) and reimbursed other
operating expenses (0.34%), to comply with certain state expenses limitations.
The remainder of the reimbursement was voluntary.
See Notes which are an integral part of the Financial Statements
Financial Highlights - Class C Shares
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30 1999 1998 1997 1996 1995
1
<S> <C> <C> <C> <C>
<C>
NET ASSET VALUE, BEGINNING
OF PERIOD $16.21 $14.14 $12.67 $10.95
$10.53
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income (net
operating loss) (0.06) 0.12 0.19 0.33
0.15
Net realized and
unrealized gain on
investments and foreign
currency 4.63 2.54 2.00 1.68
0.37
TOTAL FROM INVESTMENT
OPERATIONS 4.57 2.66 2.19 2.01
0.52
LESS
DISTRIBUTIONS:
Distributions from net
investment income - (0.15) (0.29) (0.29) (0.10)
Distributions from net
realized gain on
investments and foreign
currency transactions (1.30) (0.44) (0.43) -
- -
TOTAL DISTRIBUTIONS (1.30) (0.59) (0.72) (0.29) (0.10)
NET ASSET VALUE, END OF
PERIOD $19.48 $16.21 $14.14 $12.67
$10.95
TOTAL RETURN 2 30.46% 19.50% 18.24% 18.61% 4.92%
RATIOS TO AVERAGE NET
ASSETS:
Expenses 2.36% 2.27% 2.15% 1.80% 1.00%
3
Net investment income (net
operating loss) (0.54% ) 0.96% 1.39% 3.17% 3.03%
3
Expense
waiver/reimbursement 4 0.37% 0.81% 1.49% 3.11% 4.77%
3
SUPPLEMENTAL
DATA:
Net assets, end of period
(000 omitted) $6,821 $3,276 $1,923 $1,072
$374
Portfolio turnover 169% 139% 52% 50% 46%
</TABLE>
1 Reflects operations for the period from July 27, 1995 (date of initial public
investment) to November 30, 1995.
2 Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
3 Computed on an annualized basis.
4 This expense decrease is reflected in both the expense and the net investment
income (net operating loss) ratios shown above. For the period ended November
30, 1995, the adviser waived all of its adviser fee (1.00%) and reimbursed other
operating expenses (0.34%), to comply with certain state expenses limitations.
The remainder of the reimbursement was voluntary.
See Notes which are an integral part of the Financial Statements
Financial Highlights - Class F Shares
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
PERIOD
ENDED
FEBRUARY 28, YEAR ENDED
NOVEMBER 30,
1999 1 1998 1997
1996 1995 1994 2
<S> <C> <C> <C>
<C> <C> <C>
NET ASSET VALUE, BEGINNING
OF PERIOD $16.24 $14.16 $12.70
$10.96 $ 9.66 $10.04
INCOME FROM
INVESTMENT
OPERATIONS:
Net investment income 0.01 0.24 0.29
0.43 0.43 0.21
Net realized and
unrealized gain (loss) on
investments and
foreign currency 1.33 2.54 1.98
1.67 1.25 (0.43)
TOTAL FROM
INVESTMENT OPERATIONS 1.34 2.78 2.27
2.10 1.68 (0.22)
LESS
DISTRIBUTIONS:
Distributions from net
investment income (0.03 ) (0.26) (0.38)
(0.36) (0.38) (0.16)
Distributions from net
realized gain
on investments and foreign
currency transactions (1.30 ) (0.44) (0.43)
- - - -
TOTAL DISTRIBUTIONS (1.33 ) (0.70) (0.81)
(0.36) (0.38) (0.16)
NET ASSET VALUE, END
OF PERIOD $16.25 $16.24 $14.16
$12.70 $10.96 $ 9.66
TOTAL RETURN 3 8.79 % 20.42% 18.99%
19.55% 17.79% (3.07%)
RATIOS TO AVERAGE NET
ASSETS:
Expenses 1.59% 4 1.52% 1.40%
1.07% 0.50% 0.50% 4
Net investment income 0.22% 4 1.71% 2.17%
3.87% 4.19% 4.59% 4
Expense
waiver/reimbursement 5 0.66% 4 1.06% 1.74%
3.34% 4.78% 4.43% 4
SUPPLEMENTAL
DATA:
Net assets, end of period
(000 omitted) $12,672 $11,666 $10,679
$8,396 $6,028 $4,821
Portfolio turnover 31% 139% 52%
50% 46% 7%
</TABLE>
1 Reflects operations for the period from December 1, 1998 to February 28, 1999.
On March 1, 1999, Class F Shares were reclassified as Class A Shares.
2 Reflects operations for the period from April 22, 1994 (date of initial public
investment) to November 30, 1994. For the period from the start of business,
March 28, 1994 to April 21, 1994, Class F Shares had no public investment.
3 Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
4 Computed on an annualized basis.
5 This expense decrease is reflected in both the expense and the net investment
income ratios shown above. For the periods ended November 30, 1995 and 1994, the
adviser waived all of its investment adviser fee, 1.00% and 1.00%, respectively,
and reimbursed other operating expenses, 0.34% and 0.86%, respectively, to
comply with certain state expenses limitations. The remainder of the
reimbursement was voluntary.
See Notes which are an integral part of the Financial Statements
Notes to Financial Statements
NOVEMBER 30, 1999
ORGANIZATION
World Investment Series, Inc. (the "Corporation") is registered under the
Investment Company Act of 1940, as amended (the "Act"), as an open-end,
management investment company. The Corporation consists of ten portfolios. The
financial statements included herein are only those of Federated World Utility
Fund (the "Fund"), a diversified portfolio. The financial statements of the
other portfolios are presented separately. The assets of each portfolio are
segregated and a shareholder's interest is limited to the portfolio in which
shares are held.
The Fund offers three classes of shares: Class A Shares, Class B Shares, and
Class C Shares. Prior to March 1, 1999, the Fund offered a fourth class of
shares, Class F Shares. On March 1, 1999, Class F Shares were reclassified as
Class A Shares. The Fund's investment objective is to provide total return.
SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS
Market values of the Fund's foreign and domestic equity securities are
determined according to the last reported sale price on a recognized securities
exchange, if available. If unavailable, or if the securities trade
over-the-counter, the securities are generally valued according to the mean
between the last closing bid and asked prices. Short-term foreign and domestic
securities are valued at the prices provided by an independent pricing service.
However, short-term foreign and domestic securities with remaining maturities of
60 days or less at the time of purchase may be valued at amortized cost, which
approximates fair market value.
REPURCHASE AGREEMENTS
It is the policy of the Fund to require the custodian bank to take possession,
to have legally segregated in the Federal Reserve Book Entry System, or to have
segregated within the custodian bank's vault, all securities held as collateral
under repurchase agreement transactions. Additionally, procedures have been
established by the Fund to monitor, on a daily basis, the market value of each
repurchase agreement's collateral to ensure that the value of collateral at
least equals the repurchase price to be paid under the repurchase agreement.
The Fund will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed by
the Fund's adviser to be creditworthy pursuant to the guidelines and/or
standards reviewed or established by the Board of Directors (the "Directors").
Risks may arise from the potential inability of counterparties to honor the
terms of the repurchase agreement. Accordingly, the Fund could receive less than
the repurchase price on the sale of collateral securities. The Fund, along with
other affiliated investment companies, may utilize a joint trading account for
the purpose of entering into one or more repurchase agreements.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS
Interest income and expenses are accrued daily. Bond premium and discount, if
applicable, are amortized as required by the Internal Revenue Code of 1986, as
amended (the "Code"). Dividend income and distributions to shareholders are
recorded on the ex-dividend date. Non-cash dividends included in dividend
income, if any, are recorded at fair value. The Fund offers multiple classes of
shares, which differ in their respective distribution and service fees. All
shareholders bear the common expenses of the Fund based on average daily net
assets of each class, without distinction between share classes. Dividends are
declared separately for each class. No class has preferential dividend rights;
differences in per share dividend rates are generally due to differences in
separate class expenses.
Income and capital gain distributions are determined in accordance with income
tax regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments for foreign currency
transactions. The following reclassifications have been made to the financial
statements.
<TABLE>
<CAPTION>
INCREASE (DECREASE)
ACCUMULATED NET
REALIZED GAIN
ON INVESTMENTS AND NET
FOREIGN CURRENCY OPERATING
PAID-IN CAPITAL TRANSACTIONS LOSS
<S> <C> <C>
$(166,256) $215,258 $(49,002)
</TABLE>
Net investment income, net realized gain/losses, and net assets were not
affected by this reclassification.
FEDERAL TAXES
It is the Fund's policy to comply with the provisions of the Code applicable to
regulated investment companies and to distribute to shareholders each year
substantially all of its income. Accordingly, no provision for federal tax is
necessary.
Withholding taxes on foreign interest and dividends have been provided for in
accordance with the applicable country's tax rules and rates.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
The Fund may engage in when-issued or delayed delivery transactions. The Fund
records when-issued securities on the trade date and maintains security
positions such that sufficient liquid assets will be available to make payment
for the securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date. Losses may occur on these transactions due to changes in market
conditions or the failure of counterparties to perform under the contract.
FOREIGN EXCHANGE CONTRACTS
The Fund may enter into foreign currency commitments for the delayed delivery of
securities or foreign currency exchange transactions. The Fund may enter into
foreign currency contract transactions to protect assets against adverse changes
in foreign currency exchange rates or exchange control regulations. Purchased
contracts are used to acquire exposure to foreign currencies; whereas contracts
to sell are used to hedge the securities against currency fluctuations. Risks
may arise upon entering these transactions from the potential inability of
counterparties to meet the terms of their commitments and from unanticipated
movements in security prices or foreign exchange rates. The foreign currency
transactions are adjusted by the daily exchange rate of the underlying currency
and any gains or losses are recorded for financial statement purposes as
unrealized until the settlement date. At November 30, 1999, the Fund had no
outstanding foreign currency commitments.
FOREIGN CURRENCY TRANSLATION
The accounting records of the Fund are maintained in U.S. dollars. All assets
and liabilities denominated in foreign currencies ("FC") are translated into
U.S. dollars based on the rates of exchange of such currencies against U.S.
dollars on the date of valuation. Purchases and sales of securities, income and
expenses are translated at the rate of exchange quoted on the respective date
that such transactions are recorded. The Fund does not isolate that portion of
the results of operations resulting from changes in foreign exchange rates on
investments from the fluctuations arising from changes in market prices of
securities held. Such fluctuations are included with the net realized and
unrealized gain or loss from investments.
Reported net realized foreign exchange gains or losses arise from sales of
portfolio securities, sales and maturities of short-term securities, sales of
FCs, currency gains or losses realized between the trade and settlement dates on
securities transactions, the difference between the amounts of dividends,
interest, and foreign withholding taxes recorded on the Fund's books, and the
U.S. dollar equivalent of the amounts actually received or paid. Net unrealized
foreign exchange gains and losses arise from changes in the value of assets and
liabilities other than investments in securities at fiscal year end, resulting
from changes in the exchange rate.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts of assets, liabilities, expenses and revenues reported in the
financial statements. Actual results could differ from those estimated.
OTHER
Investment transactions are accounted for on a trade date basis.
CAPITAL STOCK
At November 30, 1999, par value shares ($0.001 per share) authorized were as
follows:
<TABLE>
<CAPTION>
NUMBER OF PAR VALUE
CLASS NAME CAPITAL STOCK AUTHORIZED
<S> <C>
Class A Shares 200,000,000
Class B Shares 100,000,000
Class C Shares 100,000,000
TOTAL 400,000,000
</TABLE>
Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30 1999 1998
CLASS A SHARES: SHARES AMOUNT SHARES
AMOUNT
<S> <C> <C> <C>
<C>
Shares sold 2,252,972 $ 53,363,120 674,271 $
10,358,556
Shares issued to
shareholders in payment of
distributions declared 138,771 2,105,391 63,845
908,693
Shares redeemed (799,200) (33,311,972) (452,824)
(7,011,945)
NET CHANGE RESULTING FROM
CLASS A
SHARE TRANSACTIONS 1,592,543 $ 22,156,539 285,292 $
4,255,304
<CAPTION>
YEAR ENDED NOVEMBER 30 1999 1998
CLASS B SHARES: SHARES AMOUNT SHARES
AMOUNT
<S> <C> <C> <C>
<C>
Shares sold 1,119,611 $ 19,106,919 482,173 $
7,384,627
Shares issued to
shareholders in payment of
distributions declared 108,531 1,642,078 42,810
602,399
Shares redeemed (376,905) (6,504,935) (192,078)
(2,972,663)
NET CHANGE RESULTING FROM
CLASS B
SHARE TRANSACTIONS 851,237 $ 14,244,062 332,905 $
5,014,363
<CAPTION>
YEAR ENDED NOVEMBER 30 1999 1998
CLASS C SHARES: SHARES AMOUNT SHARES
AMOUNT
<S> <C> <C> <C>
<C>
Shares sold 198,302 $ 3,440,959 83,159 $
1,286,705
Shares issued to
shareholders in payment of
distributions declared 16,370 248,016 5,453
76,836
Shares redeemed (66,625) (1,168,143) (22,587)
(335,483)
NET CHANGE RESULTING FROM
CLASS C
SHARE TRANSACTIONS 148,047 $ 2,520,832 66,025 $
1,028,058
<CAPTION>
PERIOD ENDED YEAR ENDED
FEBRUARY 28, 1999 1 NOVEMBER 30, 1998
CLASS F SHARES: SHARES AMOUNT SHARES
AMOUNT
<S> <C> <C> <C>
<C>
Shares sold 55,364 $ 5,134,815 103,149 $
1,571,781
Shares issued to
shareholders in payment of
distributions declared 48,754 738,619 28,598
405,667
Shares redeemed (822,654) (13,355,136) (167,605)
(2,536,749)
NET CHANGE RESULTING FROM
CLASS F
SHARE TRANSACTIONS (718,536) $ (7,481,702) (35,858) $
(559,301)
NET CHANGE RESULTING FROM
SHARE TRANSACTIONS 1,873,291 $ 31,439,731 648,364 $
9,738,424
</TABLE>
1 On March 1, 1999, Class F Shares were reclassified as Class A Shares.
INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISER FEE
Federated Global Investment Management Corp., the Fund's investment adviser (the
"Adviser"), receives for its services an annual investment advisory fee equal to
1.00% of the Fund's average daily net assets. The Adviser may voluntarily choose
to waive any portion of its fee. The Adviser can modify or terminate this
voluntary waiver at any time at its sole discretion.
ADMINISTRATIVE FEE
Federated Services Company ("FServ"), under the Administrative Services
Agreement, provides the Fund with administrative personnel and services. The fee
paid to FServ is based on a scale that ranges from 0.15% to 0.075% of average
aggregate daily net assets of all funds advised by subsidiaries of Federated
Investors, Inc., subject to a $125,000 minimum per portfolio and $30,000 per
each additional class.
DISTRIBUTION SERVICES FEE
The Fund has adopted a Distribution Plan (the "Plan") pursuant to Rule 12b-1
under the Act. Under the terms of the Plan, the Fund will compensate Federated
Securities Corp. ("FSC"), the principal distributor, from the net assets of the
Fund to finance activities intended to result in the sale of the Fund's Class B
Shares and Class C Shares. The Plan provides that the Fund may incur
distribution expenses according to the following schedule annually, to
compensate FSC.
<TABLE>
<CAPTION>
PERCENTAGE OF AVERAGE
SHARE CLASS NAME DAILY NET ASSETS OF CLASS
<S> <C>
Class B Shares 0.75%
Class C Shares 0.75%
</TABLE>
The distributor may voluntarily choose to waive any portion of its fee. The
distributor can modify or terminate this voluntary waiver at any time at its
sole discretion.
SHAREHOLDER SERVICES FEE
Under the terms of a Shareholder Services Agreement with Federated Shareholder
Services Company ("FSSC"), the Fund will pay FSSC up to 0.25% of average daily
net assets of the Fund for the period. The fee paid to FSSC is used to finance
certain services for shareholders and to maintain shareholder accounts.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES
FServ, through its subsidiary FSSC, serves as transfer and dividend disbursing
agent for the Fund. The fee paid to FSSC is based on the size, type, and number
of accounts and transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES
FServ maintains the Fund's accounting records for which it receives a fee. The
fee is based on the level of the Fund's average daily net assets for the period,
plus out-of-pocket expenses.
ORGANIZATIONAL EXPENSES
Organizational expenses of $75,061 and start-up administrative expenses of
$39,069 were borne initially by the Adviser. The Fund has reimbursed the Adviser
for these expenses. These expenses have been deferred and are being amortized
over the five-year period following the Fund's effective date. For the fiscal
year ended November 30, 1999, the Fund expensed $12,320 of organizational
expenses. At November 30, 1999, the Fund's organizational and start-up
administrative expenses were fully amortized.
GENERAL
Certain of the Officers and Directors of the Corporation are Officers and
Directors or Trustees of the above companies.
INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities (and in-
kind contributions), for the fiscal year ended November 30, 1999, were as
follows:
<TABLE>
<CAPTION>
<S> <C>
Purchases $ 171,189,371
Sales $ 143,456,281
</TABLE>
CONCENTRATION OF CREDIT RISK
The Fund invests in securities of non-U.S. issuers. The political or economic
developments within a particular country or region may have an adverse effect on
the ability of domiciled issuers to meet their obligations. Additionally,
political or economic developments may have an effect on the liquidity and
volatility of portfolio securities and currency holdings.
LINE OF CREDIT AGREEMENT
Effective November 29, 1999, the Corporation entered into a $75,000,000
unsecured committed revolving line of credit ("LOC") agreement with State Street
Corporation. The LOC was made available for extraordinary or emergency purposes,
primarily for financing redemption payments. Borrowings are charged interest at
a rate of 0.50% over the Federated Funds Rate. The LOC includes a commitment fee
of 0.08% per annum on the daily unused portion. The Corporation did not make any
borrowing under the LOC during the fiscal year ended November 30, 1999.
Report of Ernst & Young LLP, Independent Auditors
TO THE BOARD OF DIRECTORS OF WORLD INVESTMENT SERIES, INC.
AND SHAREHOLDERS OF FEDERATED WORLD UTILITY FUND:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments of Federated World Utility Fund (the Fund) (one of
the portfolios constituting World Investment Series, Inc.) as of November 30,
1999, and the related statement of operations for the year then ended, the
statement of changes in net assets for each of the two years in the period then
ended, and financial highlights for each of the periods presented therein. These
financial statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned as of November 30, 1999, by correspondence with the custodian and brokers
or other appropriate auditing procedures where replies from brokers were not
received. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Federated World Utility Fund of World Investment Series, Inc. at November 30,
1999, and the results of its operations for the year then ended, changes in its
net assets for each of the two years in the period then ended, and the financial
highlights for the periods presented therein, in conformity with accounting
principles generally accepted in the United States. /s/ Ernst & Young [Graphic]
Boston, Massachusetts
January 21, 2000
Directors
JOHN F. DONAHUE
THOMAS G. BIGLEY
JOHN T. CONROY, JR.
NICHOLAS P. CONSTANTAKIS
WILLIAM J. COPELAND
LAWRENCE D. ELLIS, M.D.
RICHARD B. FISHER
EDWARD L. FLAHERTY, JR., ESQ.
PETER E. MADDEN
CHARLES F. MANSFIELD, JR.
JOHN E. MURRAY, JR., J.D., S.J.D.
WESLEY W. POSVAR
MARJORIE P. SMUTS
Officers
JOHN F. DONAHUE
Chairman
RICHARD B. FISHER
President
J. CHRISTOPHER DONAHUE
Executive Vice President
EDWARD C. GONZALES
Executive Vice President
JOHN W. MCGONIGLE
Executive Vice President and Secretary
HENRY A. FRANTZEN
Chief Investment Officer
RICHARD J. THOMAS
Treasurer
JAMES O. PERRY
Assistant Secretary
Mutual funds are not bank deposits or obligations, are not guaranteed by any
bank, and are not insured or guaranteed by the U.S. government, the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other
government agency. Investment in mutual funds involves investment risk,
including the possible loss of principal.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the fund's prospectus which contains facts concerning
its objective and policies, management fees, expenses, and other information.
[Graphic]
Federated
World-Class Investment Manager
ANNUAL REPORT
AS OF NOVEMBER 30, 1999
Federated World Utility Fund
Established 1994
6TH ANNUAL REPORT
[Graphic]
Federated
Federated World Utility Fund
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
1-800-341-7400
WWW.FEDERATEDINVESTORS.COM
Federated Securities Corp., Distributor
Cusip 981487309
Cusip 981487408
Cusip 981487101
G00259-06 (1/00)
[Graphic]
[Graphic]
RICHARD B. FISHER
President
Federated Global Equity Income Fund
President's Message
Dear Fellow Shareholder:
Federated Global Equity Income Fund was created in 1998, and I am pleased to
present its second Annual Report. As of November 30, 1999, the fund's net assets
were $36 million and were invested in more than 100 common stocks in 18
countries. 1 The fund is managed for long-term growth of capital, and offers
shareholders significant opportunities for capital appreciation and income by
investing in stocks from around the world.
This report covers the 12-month reporting period from December 1, 1998 through
November 30, 1999. It begins with an interview with the fund's portfolio
manager, Richard J. Lazarchic, Vice President of Federated Global Investment
Management Corp. Following his discussion covering the fund's objective and
strategy, and market conditions are two additional items of shareholder
interest. First is a complete listing of the fund's investments, and second is
the publication of the fund's financial statements.
It was a good year for global stocks in general and the fund in particular. As
Richard states, technology and telecommunication companies are examples of how
companies-and investors-are benefiting from a more capitalistic world. The
fund's returns were highly positive and well ahead of the average global equity
income fund and the fund's benchmark index. Individual share class total return
performance for the 12-month reporting period, including income distributions
and realized gains, is as follows: 2
<TABLE>
<CAPTION>
TOTAL RETURN INCOME CAPITAL GAIN NET ASSET VALUE INCREASE
<S> <C> <C> <C> <C>
Class A Shares 36.34% $0.01 $0.01 $10.55 to $14.36 = 36.11%
Class B Shares 35.62% $0.01 $0.01 $10.55 to $14.29 = 35.45%
Class C Shares 35.43% $0.01 $0.01 $10.55 to $14.27 = 35.26%
</TABLE>
1 Foreign investing involves special risks including currency risk, increased
volatility of foreign securities, and differences in auditing and other
financial standards.
2 Performance quoted is based on net asset value, represents past performance
and is no guarantee of future results. Investment return and principal value
will fluctuate so that an investor's shares, when redeemed, may be worth more or
less than their original cost. Total returns for the period, based on offering
price (i.e., less any applicable sales charge), for Class A, B and C Shares were
28.89%, 30.12%, and 34.43%, respectively.
I recommend adding to your account on a regular basis to take advantage of price
fluctuations and to use the dollar-cost averaging method of investing. 3 By
investing the same amount on a regular basis, you buy more fund shares when
prices are low and fewer when prices are high. Adding to your account is a
convenient, painless way to "pay yourself first" and enjoy the benefit of
compounding. You may add to your investment account at any time and thus
increase the number of shares you own for potential future income.
I would also like to point out that the U.S. market's performance, although very
positive, has been surpassed by the market returns in many other nations. In
Federated Global Equity Income Fund, you have an opportunity to increase your
international exposure. The stocks in the fund have not only been generous
income-paying issues, but offer the potential for long-term capital
appreciation.
Thank you for your investment in Federated Global Equity Income Fund and for the
confidence you have placed in our firm.
Sincerely,
[Graphic]
RICHARD B. FISHER
President
January 15, 2000
3 Systematic investing does not assure a profit or protect against loss in
declining markets. Because dollar-cost averaging involves continuous investment
regardless of fluctuating price levels, investors should consider their
financial ability to continue purchases during periods of low price levels.
[Graphic]
RICHARD J. LAZARCHIC, CFA
Vice President
Federated Global Investment Management Corp.
Investment Review
WHAT ARE YOUR COMMENTS ON THE POSITIVE ENVIRONMENT FOR GLOBAL EQUITIES OVER THE
FUND'S FISCAL YEAR?
Global equities continued their comeback from last year's summer financial
meltdown. Results have been narrow in scope with the largest positive changes
coming from two prime areas-technology and telecommunications. The fund
performed well because of its positioning in the two above-mentioned sectors,
both of which are being driven ultimately by the Internet. As individuals and
businesses continue to want fast and efficient ways to use this medium, new
sectors emerge and grow at a rapid rate. However, some of the best movers
geographically this year have come from areas that severely underperformed in
the prior year, for example the Far East and, more recently, Latin America.
We see this growth continuing after the millennium change, and we expect to have
a large part of the fund invested in the technology and the communications
sectors. We also expect that this will mean an expanding non- U.S. component in
the fund as money flows continue to gravitate in that direction.
HOW DID FEDERATED GLOBAL EQUITY INCOME FUND PERFORM OVER ITS FISCAL YEAR?
For the fiscal year ended November 30, 1999, the fund's total returns, based on
net asset value, for Class A, B, and C Shares were 36.34%, 35.62% and 35.43%,
respectively. 1 These returns outpaced the 29.40% total return of the 64 global
equity income funds tracked by Lipper Analytical Services, Inc.2 The fund's
returns were also greater than the 21.22% return of its benchmark, the Morgan
Stanley Capital International World Equity Index ("MSCI-WE"). 3
WHAT STRATEGIES ACCOUNTED FOR THE FUND'S OUTPERFORMANCE OVER THE REPORTING
PERIOD?
Although the fund was not necessarily in all of the right areas all year long,
we benefited by holding a number of names in the growth end of the
telecommunications (alternative carriers, equipment suppliers, wireless
providers and bandwidth enabling companies) and technology (storage and
equipment suppliers, and hardware and software companies) sectors. These sectors
are leading the changes that result from a more capitalistic world in which
capital is more free to flow into productive and out of non-productive areas.
WHAT WERE THE FUND'S TOP TEN HOLDINGS AS OF NOVEMBER 30, 1999?
<TABLE>
<CAPTION>
PERCENTAGE OF
NAME COUNTRY NET ASSETS
<S> <C> <C>
GTE Corp. U.S. 2.83%
MCI Worldcom, Inc. U.S. 2.44%
SBC Communications, Inc. U.S. 2.20%
Tyco International Ltd. U.S. 2.01%
General Electric Co. U.S. 1.97%
Reliant Energy, Inc. U.S. 1.95%
Lucent Technologies, Inc. U.S. 1.79%
Corning, Inc. U.S. 1.71%
DDI Corp. Japan 1.64%
Sony Corp. Japan 1.57%
TOTAL 20.11%
</TABLE>
As the top ten holdings indicate, the majority of the fund's assets were
allocated to U.S. companies. The remaining assets were primarily allocated among
European companies with rising weightings in Japan.
1 Performance quoted is based on net asset value, represents past performance
and is no guarantee of future results. Investment return and principal value
will fluctuate so that an investor's shares, when redeemed, may be worth more or
less than their original cost. Total returns for the period, based on offering
price (i.e., less any applicable sales charge), for Class A, B and C Shares were
28.89%, 30.12%, and 34.43%, respectively.
2 Lipper figures represent the average of the total returns reported by all of
the mutual funds designated by Lipper Analytical Services, Inc. as falling into
the category indicated. These figures do not take sales charges into account.
3 The MSCI-WE is an unmanaged index that reflects the stock markets of 22
countries, including the United States, Europe, Canada, Australia, New Zealand
and the Far East, comprising approximately 1,482 securities with values
expressed in U.S. dollars. Investments cannot be made in an index.
WHAT WERE THE FUND'S COUNTRY WEIGHTINGS AS OF NOVEMBER 30, 1999?
At November 30, 1999, the diversification of countries was as follows:
<TABLE>
<CAPTION>
PERCENTAGE OF
COUNTRY NET ASSETS
<S> <C>
United States 64.9%
Japan 16.2%
Netherlands 4.7%
United Kingdom 4.4%
Germany 2.7%
Spain 1.3%
Australia 1.2%
Israel 1.0%
Belgium 0.9%
France 0.8%
Korea 0.8%
Canada 0.7%
Sweden 0.7%
Finland 0.6%
Italy 0.6%
India 0.5%
Norway 0.4%
Singapore 0.1%
</TABLE>
WHAT WERE SOME RECENT PURCHASES DURING THE REPORTING PERIOD?
Our recent purchases included the following:
CORNING, INC. (1.71% of net assets): This historic consumer products company is
becoming a large player in the telecommunications area. It is the leading
worldwide supplier of optical fiber to the telecommunications industry, and with
two recent acquisitions is heavily involved in the optical switching area and
LED's (flat panel glass displays.) All three areas are expected to grow revenues
at 30%-50%.
CIENA CORP. (0.91% of net assets): This manufacturer of dense wavelength
multiplexers (a means of increasing the capacity of fiber-optic data
transmission systems) is moving into the optical switching market with a new
line of products in current field trials with Williams Communications, and a
second trial in Europe starting early next year. It has an eight to twelve month
lead on its main competitors.
SAP AG - VORZUG (0.40% of net assets): This information technology company in
Europe has been hurt by the wind down of business related to the year 2000, but
next year an increase in business-to-business products should resume.
AFTER A STRONG YEAR FOR THE FUND, WHAT IS YOUR OUTLOOK FOR GLOBAL EQUITIES
AND YOUR STRATEGY AS WE ENTER THE YEAR 2000? WILL THE PORTFOLIO CONTINUE ITS
FOCUS ON U.S. EQUITIES?
Because of the success of equity investments worldwide and the realization among
consumers that money needs to be put aside for retirement, international and
domestic investors are continuing to boost their equity investments. We plan to
continue many of the same themes that made the fund successful in 1999, but we
will more than likely reduce our domestic weighting, because many of our themes
are becoming prevalent around the world.
Last Meeting of Shareholders
A Special Meeting of shareholders of Federated Global Equity Income Fund (the
"Fund"), a portfolio of World Investment Series, Inc. was held on December 17,
1999. On September 7, 1999, the record date for the shareholders voting at the
meeting, there were 2,321,627 total outstanding shares.
The following items were considered by shareholders and the results of their
voting were as follows:
AGENDA ITEM 1
Elected Directors: 1
<TABLE>
<CAPTION>
WITHHELD
SHARES AUTHORITY
VOTED FOR TO VOTE
<S> <C> <C>
Thomas G. Bigley 1,270,011 31,215
Nicholas P. Constantakis 1,270,437 30,789
John F. Cunningham 1,269,610 31,616
J. Christopher Donahue 1,269,610 31,616
Charles F. Mansfield, Jr. 1,270,011 31,215
John E. Murray, Jr., J.D., S.J.D. 1,270,011 31,215
John S. Walsh 1,269,610 31,616
</TABLE>
1 The following Directors continued their terms as Directors: John F.
Donahue, John T. Conroy, William J. Copeland, Lawrence D. Ellis, M.D.,
Peter E. Madden and Marjorie P. Smuts.
Director elections will become effective January 1, 2000.
AGENDA ITEM 2
Made changes to the Fund's fundamental investment policies:
(a) Amended the Fund's fundamental investment policy regarding borrowing money
and issuing senior securities.
<TABLE>
<CAPTION>
ABSTENTIONS
SHARES VOTED AND BROKER
SHARES VOTED FOR AGAINST NON-VOTES
<S> <C> <C>
1,138,161 72,712 90,353
</TABLE>
(b) Amended the Fund's fundamental investment policy regarding investments
in real estate.
<TABLE>
<CAPTION>
ABSTENTIONS
SHARES VOTED AND BROKER
SHARES VOTED FOR AGAINST NON-VOTES
<S> <C> <C>
1,153,349 62,406 85,471
</TABLE>
(c) Amended the Fund's fundamental investment policy regarding investments
in commodities.
<TABLE>
<CAPTION>
ABSTENTIONS
SHARES VOTED AND BROKER
SHARES VOTED FOR AGAINST NON-VOTES
<S> <C> <C>
1,138,841 79,613 82,772
</TABLE>
(d) Amended the Fund's fundamental investment policy regarding underwriting
securities.
<TABLE>
<CAPTION>
ABSTENTIONS
SHARES VOTED AND BROKER
SHARES VOTED FOR AGAINST NON-VOTES
<S> <C> <C>
1,151,084 61,111 89,031
</TABLE>
(e) Amended the Fund's fundamental investment policy regarding lending
assets.
<TABLE>
<CAPTION>
ABSTENTIONS
SHARES VOTED AND BROKER
SHARES VOTED FOR AGAINST NON-VOTES
<S> <C> <C>
1,136,258 75,827 89,681
</TABLE>
(f) Amended the Fund's fundamental investment policy regarding concentration of
the Fund's investments in the securities of companies in the same industry.
<TABLE>
<CAPTION>
ABSTENTIONS
SHARES VOTED AND BROKER
SHARES VOTED FOR AGAINST NON-VOTES
<S> <C> <C>
1,144,761 64,253 92,212
</TABLE>
(g) Amended, and made non-fundamental, the Fund's fundamental investment policy
regarding buying securities on margin.
<TABLE>
<CAPTION>
ABSTENTIONS
SHARES VOTED AND BROKER
SHARES VOTED FOR AGAINST NON-VOTES
<S> <C> <C>
1,126,722 82,555 92,249
</TABLE>
(h) Amended, and made non-fundamental, the Fund's fundamental investment policy
regarding pledging assets.
<TABLE>
<CAPTION>
ABSTENTIONS
SHARES VOTED AND BROKER
SHARES VOTED FOR AGAINST NON-VOTES
<S> <C> <C>
1,129,366 78,752 93,108
</TABLE>
AGENDA ITEM 3
Eliminated certain fundamental investment policies of the Fund:
Removed the Fund's fundamental investment policy regarding selling securities
short.
<TABLE>
<CAPTION>
ABSTENTIONS
SHARES VOTED AND BROKER
SHARES VOTED FOR AGAINST NON-VOTES
<S> <C> <C>
1,140,901 72,930 87,395
</TABLE>
AGENDA ITEM 4
Approved an amendment to the Articles of Incorporation of World Investment
Series, Inc. to permit the Board of Directors to liquidate assets of a series or
class without seeking shareholder approval to the extent permitted under
Maryland law.
<TABLE>
<CAPTION>
ABSTENTIONS
SHARES VOTED AND BROKER
SHARES VOTED FOR AGAINST NON-VOTES
<S> <C> <C>
1,119,910 96,478 84,838
</TABLE>
Federated Global Equity Income Fund-Class A Shares
GROWTH OF A $10,000 INVESTMENT
The graph below illustrates the hypothetical investment of $10,000 1 in the
Federated Global Equity Income Fund (Class A Shares ) (the "Fund") from October
27, 1998 (start of performance) to November 30, 1999, compared to the Morgan
Stanley Capital International World Equity Index (MSCI-WE). 2
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS 3 FOR THE PERIOD ENDED NOVEMBER 30, 1999
<S> <C>
1 Year 28.89%
Start of Performance (10/27/98) 32.35%
</TABLE>
[Please see Appendix A14]
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE PERFORMANCE. YOUR INVESTMENT RETURN
AND PRINCIPAL VALUE WILL FLUCTUATE SO WHEN SHARES ARE REDEEMED, THEY MAY BE
WORTH MORE OR LESS THAN THEIR ORIGINAL COST. MUTUAL FUNDS ARE NOT OBLIGATIONS OF
OR GUARANTEED BY ANY BANK AND ARE NOT FEDERALLY INSURED.
1 Represents a hypothetical investment of $10,000 in the Fund after deducting
the maximum sales charge of 5.50% ($10,000 investment minus $550 sales charge =
$9,450). The Fund's performance assumes the reinvestment of all dividends and
distributions. The MSCI-WE has been adjusted to reflect reinvestment of
dividends on securities in the index.
2 The MSCI-WE is not adjusted to reflect sales charges, expenses, or other fees
that the Securities and Exchange Commission requires to be reflected in the
Fund's performance. The index is unmanaged.
3 Total return quoted reflects all applicable sales charges.
Federated Global Equity Income Fund-Class B Shares
GROWTH OF A $10,000 INVESTMENT
The graph below illustrates the hypothetical investment of $10,000 1 in the
Federated Global Equity Income Fund (Class B Shares) (the "Fund") from October
27, 1998 (start of performance) to November 30, 1999, compared to the Morgan
Stanley Capital International World Equity Index (MSCI-WE). 2
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS 3 FOR THE PERIOD ENDED NOVEMBER 30, 1999
<S> <C>
1 Year 30.12%
Start of Performance (10/27/98) 34.45%
</TABLE>
[Please see Appendix A15]
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE PERFORMANCE. YOUR INVESTMENT RETURN
AND PRINCIPAL VALUE WILL FLUCTUATE SO WHEN SHARES ARE REDEEMED, THEY MAY BE
WORTH MORE OR LESS THAN THEIR ORIGINAL COST. MUTUAL FUNDS ARE NOT OBLIGATIONS OF
OR GUARANTEED BY ANY BANK AND ARE NOT FEDERALLY INSURED.
1 Represents a hypothetical investment of $10,000 in the Fund. The ending value
of the Fund reflects a contingent deferred sales charge of 4.75% on any
redemption less than two years from the purchase date. The maximum contingent
deferred sales charge is 5.50% on any redemption less than one year from the
purchase date. The Fund's performance assumes the reinvestment of all dividends
and distributions. The MSCI-WE has been adjusted to reflect reinvestment of
dividends on securities in the index.
2 The MSCI-WE is not adjusted to reflect sales charges, expenses, or other fees
that the Securities and Exchange Commission requires to be reflected in the
Fund's performance. The index is unmanaged.
3 Total return quoted reflects all applicable contingent deferred sales charges.
Federated Global Equity Income Fund-Class C Shares
GROWTH OF A $10,000 INVESTMENT
The graph below illustrates the hypothetical investment of $10,000 1 in the
Federated Global Equity Income Fund (Class C Shares) (the "Fund") from October
27, 1998 (start of performance) to November 30, 1999, compared to the Morgan
Stanley Capital International World Equity Index (MSCI-WE). 2
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS 3 FOR THE PERIOD ENDED NOVEMBER 30, 1999
<S> <C>
1 Year 34.43%
Start of Performance (10/27/98) 38.48%
</TABLE>
[Please see Appendix A16]
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE PERFORMANCE. YOUR INVESTMENT RETURN
AND PRINCIPAL VALUE WILL FLUCTUATE SO WHEN SHARES ARE REDEEMED, THEY MAY BE
WORTH MORE OR LESS THAN THEIR ORIGINAL COST. MUTUAL FUNDS ARE NOT OBLIGATIONS OF
OR GUARANTEED BY ANY BANK AND ARE NOT FEDERALLY INSURED.
1 Represents a hypothetical investment of $10,000 in the Fund. A 1.00%
contingent deferred sales charge would be applied on any redemption less than
one year from the purchase date. The Fund's performance assumes the reinvestment
of all dividends and distributions. The MSCI-WE has been adjusted to reflect
reinvestment of dividends on securities in the index.
2 The MSCI-WE is not adjusted to reflect sales charges, expenses, or other fees
that the Securities and Exchange Commission requires to be reflected in the
Fund's performance. The index is unmanaged.
3 Total return quoted reflects all applicable contingent deferred sales charges.
Portfolio of Investments
NOVEMBER 30, 1999
<TABLE>
<CAPTION>
VALUE IN
SHARES U.S. DOLLARS
<C> <S> <C>
COMMON STOCKS-100.4%
APPLIANCES & HOUSEHOLD
DURABLES-1.6%
3,000 Sony Corp. $ 557,002
AUTOMOBILE-1.4%
1,900 General Motors Corp.,
Class H 162,687
10,000 Toyota Motor Credit Corp. 339,899
TOTAL 502,586
BANKING-0.8%
9,900 Washington Mutual, Inc. 287,100
BUSINESS & PUBLIC
SERVICES-7.6%
4,700 1 America Online, Inc. 341,631
4,100 1 Equant NV, ADR 386,425
47,000 1 MediaRing.com Ltd. 46,427
6,000 1 Microsoft Corp. 546,281
6,000 1 Pixar, Inc. 252,000
22,000 Railtrack Group PLC 338,544
2,000 Sanix, Inc. 222,015
400 Softbank Corp. 289,602
1,800 Suez Lyonnaise des Eaux 265,381
TOTAL 2,688,306
CHEMICALS-1.1%
4,850 Akzo Nobel NV 207,722
4,600 Monsanto Co. 194,062
TOTAL 401,784
DATA PROCESSING &
REPRODUCTION-2.3%
7,000 Fujitsu Ltd. 248,932
2,900 International Business
Machines Corp. 298,881
2,150 1 Sun Microsystems, Inc. 284,337
TOTAL 832,150
<CAPTION>
VALUE IN
SHARES U.S. DOLLARS
<C> <S> <C>
COMMON STOCKS-continued
ELECTRICAL & ELECTRONICS-
8.4%
12,000 DQE, Inc. $ 441,750
56,500 ERG Ltd. 294,890
1,600 Nokia Oyj, Class A, ADR 221,100
12,000 1 Orckit Communications,
Ltd. 348,000
1,425 1 Qualcomm, Inc. 516,295
3,100 STMicroelectronics N.V. 421,743
5,000 Telefonaktiebolaget LM
Ericsson, Class B, ADR 240,937
7,800 1 Tellabs, Inc. 506,025
TOTAL 2,990,740
ELECTRONIC COMPONENTS,
INSTRUMENTS-13.7%
2,100 1 ADVA AG Optical Networking 285,697
4,200 1 ASM Lithography Holding
NV, ADR 393,225
1,900 1 Applied Materials, Inc. 185,131
1,800 1 Cisco Systems, Inc. 160,537
6,500 Corning, Inc. 608,969
4,600 1 EMC Corp. Mass 384,387
3,800 Intel Corp. 291,412
500 1 JDS Uniphase Corp. 114,375
2,900 Kyocera Corp. 350,695
4,600 1 LSI Logic Corp. 278,012
4,600 Micron Technology, Inc. 308,775
4,750 Motorola, Inc. 542,688
2,000 Murata Manufacturing Co.
Ltd. 332,433
8,000 Taiyo Yuden Co. Ltd. 350,508
11,000 Telson Electronics Co.
Ltd. 279,922
TOTAL 4,866,766
ENERGY EQUIPMENT &
SERVICES-1.3%
4,300 Halliburton Co. 166,356
8,500 1 Petroleum Geo-Services,
ADR 132,813
5,500 Tidewater, Inc. 175,656
TOTAL 474,825
<CAPTION>
VALUE IN
SHARES U.S. DOLLARS
<C> <S> <C>
COMMON STOCKS-continued
ENERGY SOURCES-3.4%
37,000 ENI SPA $ 202,840
9,000 Enron Corp. 342,563
21,500 1 Forest Oil Corp. 245,906
20,500 Gas Authority of India
Ltd., GDR 194,494
87,000 Oil Search Ltd. 114,627
8,000 Union Pacific Resources
Group, Inc. 104,500
TOTAL 1,204,930
FINANCIAL SERVICES-2.7%
4,300 Citigroup, Inc. 231,663
17,000 Nikko Securities Co. Ltd. 212,093
1,400 Orix Corp. 228,577
66,000 Toho Bank Ltd. 300,192
TOTAL 972,525
FOOD & HOUSEHOLD PRODUCTS-
0.4%
18,000 Kikkoman Corp. 138,985
FOREST PRODUCTS & PAPER-
3.6%
6,000 Bowater, Inc. 294,000
9,800 Fort James Corp. 281,750
7,500 International Paper Co. 391,406
8,800 Mead Corp. 314,050
TOTAL 1,281,206
HEALTH & PERSONAL CARE-
1.7%
3,000 Johnson & Johnson 311,250
4,000 Lilly (Eli) & Co. 287,000
TOTAL 598,250
INSURANCE-0.6%
5,300 Lincoln National Corp. 220,944
MULTI-INDUSTRY-6.3%
7,600 Allied-Signal, Inc. 454,575
5,400 General Electric Co. 702,000
95,000 Marubeni Corp. 370,500
17,800 Tyco International Ltd. 713,113
TOTAL 2,240,188
<CAPTION>
VALUE IN
SHARES U.S. DOLLARS
<C> <S> <C>
COMMON STOCKS-continued
RECREATION, OTHER CONSUMER
GOODS-0.2%
5,500 Mattel, Inc. $ 78,719
TELECOMMUNICATIONS-29.4%
2,150 BCE, Inc. 144,629
6,500 BellSouth Corp. 300,219
14,296 British Telecommunication
PLC 286,788
6,000 1 COLT Telecom Group PLC 226,759
42 DDI Corp. 581,757
13,800 GTE Corp. 1,007,400
10,700 1 Global Crossing Ltd. 466,788
10,000 1 Global TeleSystems Group,
Inc. 319,375
15,000 1 ICG Communications, Inc. 284,063
15,000 1 Intermedia Communications,
Inc. 418,125
9 Japan Telecom Co., Ltd. 353,652
3,900 Kokusai Den(Kdd) 540,203
10,500 1 MCI Worldcom, Inc. 868,219
2,500 Mannesmann AG 519,999
7,500 1 NEXTLINK Communications,
Inc. 375,000
10 NTT Mobile Communication
Network, Inc. 351,687
11,500 1 Qwest Communications
International, Inc. 393,156
6,900 1 RCN Corp. 311,363
15,055 SBC Communications, Inc. 781,919
21,481 Telefonica SA 447,656
1,100 1 United Pan-Europe
Communications NV 108,081
1,500 1 United Pan-Europe
Communications NV, ADR 145,125
115,740 Vodafone AirTouch PLC 545,389
2,200 1 VoiceStream Wireless Corp. 202,950
9,100 1 WinStar Communications,
Inc. 461,825
TOTAL 10,442,127
TELECOMMUNICATIONS
EQUIPMENT-5.1%
7,400 1 CIENA Corp. 325,138
5,750 1 E-Tek Dynamics, Inc. 431,250
8,700 Lucent Technologies, Inc. 635,644
2,600 1 SDL, Inc. 423,150
TOTAL 1,815,182
<CAPTION>
SHARES OR
PRINCIPAL VALUE IN
AMOUNT U.S. DOLLARS
<C> <S> <C>
COMMON STOCKS-continued
UTILITIES - ELECTRICAL &
GAS-8.8%
49,000 Centrica PLC $ 147,680
8,000 Duke Energy Corp. 405,500
9,200 El Paso Energy Corp. 354,200
11,000 Entergy Corp. 303,188
14,000 Peco Energy Co. 461,125
10,000 Pinnacle West Capital
Corp. 331,875
28,000 Reliant Energy, Inc. 694,750
11,500 Texas Utilities Co. 411,844
TOTAL 3,110,162
TOTAL COMMON STOCKS
(IDENTIFIED COST
$31,792,065) 35,704,477
PREFERRED STOCKS-0.4%
BUSINESS & PUBLIC
SERVICES-0.4%
350 SAP AG (identified cost
$157,161) 141,614
REPURCHASE AGREEMENTS-1.7%
2
$ 605,000 J.P. Morgan & Co., Inc.,
5.71%, dated 11/30/1999,
due 12/1/1999 (at
amortized cost) 605,000
TOTAL INVESTMENTS
(IDENTIFIED COST
$32,554,226) 3 $ 36,451,091
</TABLE>
1 Non-income producing security.
2 The repurchase agreement is fully collateralized by U.S. government and/or
agency obligations based on market prices at the date of the portfolio. The
investment in the repurchase agreement is through participation in a joint
account with other Federated funds.
3 The cost of investments for federal tax purposes amounts to $32,580,723. The
net unrealized appreciation of investments on a federal tax basis amounts to
$3,870,368 which is comprised of $5,654,343 appreciation and $1,783,975
depreciation at November 30, 1999.
Note: The categories of investments are shown as a percentage of net assets
($35,553,478) at November 30, 1999.
The following acronyms are used throughout this portfolio:
ADR -American Depositary Receipt
GDR -Global Depositary Receipt
See Notes which are an integral part of the Financial Statements
Statement of Assets and Liabilities
NOVEMBER 30, 1999
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS:
Total investments in
securities, at value
(identified cost
$32,554,226 and tax
cost $32,580,723) $ 36,451,091
Cash 4,172
Cash denominated in
foreign currencies
(identified cost $1,169) 1,160
Income receivable 56,315
Receivable for investments
sold 185,034
Receivable for shares sold 62,035
TOTAL ASSETS 36,759,807
LIABILITIES:
Payable for investments
purchased $ 1,058,997
Payable for shares
redeemed 73,418
Payable for taxes withheld 1,178
Accrued expenses 72,736
TOTAL LIABILITIES 1,206,329
Net assets for 2,476,525
shares outstanding $ 35,553,478
NET ASSETS CONSIST OF:
Paid-in capital $ 26,159,435
Net unrealized
appreciation of
investments and
translation of assets and
liabilities in foreign
currency 3,895,993
Accumulated net realized
gain on investments and
foreign currency
transactions 5,541,290
Distributions in excess of
net investment income (43,240)
TOTAL NET ASSETS $ 35,553,478
NET ASSET VALUE, OFFERING
PRICE AND REDEMPTION
PROCEEDS PER SHARE
CLASS A SHARES:
Net Asset Value Per Share
($34,303,092 / 2,389,029
shares outstanding) $14.36
Offering Price Per Share
(100/94.50 of $14.36) 1 $15.20
Redemption Proceeds Per
Share $14.36
CLASS B SHARES:
Net Asset Value Per Share
($1,059,794 / 74,140
shares outstanding) $14.29
Offering Price Per Share $14.29
Redemption Proceeds Per
Share (94.50/100 of
$14.29) 1 $13.50
CLASS C SHARES:
Net Asset Value Per Share
($190,592 / 13,356 shares
outstanding) $14.27
Offering Price Per Share $14.27
Redemption Proceeds Per
Share (99.00/100 of
$14.27) 1 $14.13
</TABLE>
1 See "What Do Shares Cost?" in the Prospectus.
See Notes which are an integral part of the Financial Statements
Statement of Operations
YEAR ENDED NOVEMBER 30, 1999
<TABLE>
<CAPTION>
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends (net of foreign
taxes withheld of $10,088) $ 325,909
Interest 45,461
TOTAL INCOME 371,370
EXPENSES:
Investment adviser fee $ 261,208
Administrative personnel
and services fee 185,000
Custodian fees 20,668
Transfer and dividend
disbursing agent fees and
expenses 84,252
Auditing fees 14,302
Legal fees 6,784
Portfolio accounting fees 72,464
Distribution services fee-
Class A Shares 64,087
Distribution services fee-
Class B Shares 2,961
Distribution services fee-
Class C Shares 683
Shareholder services fee-
Class A Shares 64,087
Shareholder services fee-
Class B Shares 987
Shareholder services fee-
Class C Shares 228
Share registration costs 70,684
Printing and postage 29,208
Insurance premiums 2,509
Taxes 2,798
TOTAL EXPENSES 882,910
WAIVER AND REIMBURSEMENT:
Waiver of investment
adviser fee $(261,208)
Reimbursement of other
operating expenses (95,707)
TOTAL WAIVER AND
REIMBURSEMENT (356,915)
Net expenses 525,995
Net operating loss (154,625)
REALIZED AND UNREALIZED
GAIN ON INVESTMENTS AND
FOREIGN CURRENCY:
Net realized gain on
investments and foreign
currency transactions 5,656,519
Net change in unrealized
appreciation of
investments and
translation of assets and
liabilities in foreign
currency 2,936,562
Net realized and
unrealized gain on
investments and
foreign currency 8,593,081
Change in net assets
resulting from operations $ 8,438,456
</TABLE>
See Notes which are an integral part of the Financial Statements
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
NOVEMBER 30, NOVEMBER 30,
1999 1998 1
<S> <C> <C>
INCREASE (DECREASE) IN NET
ASSETS
OPERATIONS:
Net investment income (net
operating loss) $ (154,625) $ 7,658
Net realized gain on
investments and foreign
currency transactions
($5,697,730 and $10,176,
respectively, as computed
for federal tax purposes) 5,656,519 21,907
Net change in unrealized
appreciation of
investments and
translation of assets and
liabilities in foreign
currency 2,936,562 959,431
CHANGE IN NET ASSETS
RESULTING FROM OPERATIONS 8,438,456 988,996
DISTRIBUTIONS TO
SHAREHOLDERS: 2
Distributions from net
investment income
Class A Shares (19,389) -
Distributions from net
realized gains on
investments and foreign
currency transactions
Class A Shares (14,020) -
CHANGE IN NET ASSETS
RESULTING FROM
DISTRIBUTIONS
TO SHAREHOLDERS (33,409) -
SHARE TRANSACTIONS:
Proceeds from sale of
shares 11,245,353 17,871,433
Net asset value of shares
issued to shareholders in
payment of
distributions declared 32,098 -
Cost of shares redeemed (2,987,531) (2,218)
CHANGE IN NET ASSETS
RESULTING FROM SHARE
TRANSACTIONS 8,289,920 17,869,215
Change in net assets 16,694,967 18,858,211
NET ASSETS:
Beginning of period 18,858,511 300
End of period (including
undistributed net
investment income of $0 and
$19,389, respectively) $ 35,553,478 $ 18,858,511
</TABLE>
1 Reflects operations for the period from October 27, 1998 (date of initial
public investment) to November 30, 1998.
2 Distributions from net investment income and distributions from net realized
gains on investment and foreign currency transactions did not round to $1.00 for
Class B Shares or Class C Shares for the fiscal year ended November 30, 1999 due
to the low number of shares outstanding of Class B Shares and Class C Shares on
the record date of the distributions.
See Notes which are an integral part of the Financial Statements
Financial Highlights-Class A Shares
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
NOVEMBER 30, NOVEMBER 30,
1999 1998 1
<S> <C> <C>
NET ASSET VALUE, BEGINNING
OF PERIOD $10.55 $10.00
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income (net
operating loss) (0.07) 2 0.01
Net realized and
unrealized gain on
investments and foreign
currency 3.90 0.54
TOTAL FROM INVESTMENT
OPERATIONS 3.83 0.55
LESS DISTRIBUTIONS:
Distributions from net
investment income (0.01) -
Distributions from net
realized gain on
investments and foreign
currency transactions (0.01) -
TOTAL DISTRIBUTIONS (0.02) -
NET ASSET VALUE, END OF
PERIOD $14.36 $10.55
TOTAL RETURN 3 36.34% 5.50%
RATIOS TO AVERAGE NET
ASSETS:
Expenses 2.00% 2.00% 4
Net investment income (net
operating loss) (0.58%) 0.44% 4
Expense
waiver/reimbursement 5 1.37% 4.07% 4
SUPPLEMENTAL DATA:
Net assets, end of period
(000 omitted) $34,303 $18,858
Portfolio turnover 187% 3%
</TABLE>
1 Reflects operations for the period from October 27, 1998 (start of
performance) to November 30, 1998.
2 Per share amount is based on average shares outstanding.
3 Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
4 Computed on an annualized basis.
5 This voluntary expense decrease is reflected in both the expense and the net
investment income (net operating loss) ratios shown above.
See Notes which are an integral part of the Financial Statements
Financial Highlights-Class B Shares
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30 1999 1
<S> <C>
NET ASSET VALUE, BEGINNING
OF PERIOD $10.55
INCOME FROM INVESTMENT
OPERATIONS:
Net operating loss (0.15) 2
Net realized and
unrealized gain on
investments and foreign
currency 3.91
TOTAL FROM INVESTMENT
OPERATIONS 3.76
LESS DISTRIBUTIONS:
Distributions from net
investment income (0.01)
Distributions from net
realized gain on
investments and foreign
currency transactions (0.01)
TOTAL DISTRIBUTIONS (0.02)
NET ASSET VALUE, END OF
PERIOD $14.29
TOTAL RETURN 3 35.62%
RATIOS TO AVERAGE NET
ASSETS:
Expenses 2.50%
Net operating loss (1.08%)
Expense
waiver/reimbursement 4 1.37%
SUPPLEMENTAL DATA:
Net assets, end of period
(000 omitted) $1,060
Portfolio turnover 187%
</TABLE>
1 Financial Highlights for Class B Shares and Class C Shares are not presented
for the period from October 27, 1998 (start of performance) to November 30,
1998. Class B Shares and Class C Shares had no public investments during that
period.
2 Per share amount is based on average shares outstanding.
3 Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
4 This voluntary expense decrease is reflected in both the expense and the net
operating loss ratios shown above.
See Notes which are an integral part of the Financial Statements
Financial Highlights-Class C Shares
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30 1999 1
<S> <C>
NET ASSET VALUE, BEGINNING
OF PERIOD $10.55
INCOME FROM INVESTMENT
OPERATIONS:
Net operating loss (0.16) 2
Net realized and
unrealized gain on
investments and foreign
currency 3.90
TOTAL FROM INVESTMENT
OPERATIONS 3.74
LESS DISTRIBUTIONS:
Distributions from net
investment income (0.01)
Distributions from net
realized gain on
investments and foreign
currency transactions (0.01)
TOTAL DISTRIBUTIONS (0.02)
NET ASSET VALUE, END OF
PERIOD $14.27
TOTAL RETURN 3 35.43%
RATIOS TO AVERAGE NET
ASSETS:
Expenses 2.50%
Net operating loss (1.08%)
Expense
waiver/reimbursement 4 1.37%
SUPPLEMENTAL DATA:
Net assets, end of period
(000 omitted) $191
Portfolio turnover 187%
</TABLE>
1 Financial Highlights for Class B Shares and Class C Shares are not presented
for the period from October 27, 1998 (start of performance) to November 30,
1998. Class B Shares and Class C Shares had no public investments during that
period.
2 Per share amount is based on average shares outstanding.
3 Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
4 This voluntary expense decrease is reflected in both the expense and the net
operating loss ratios shown above.
See Notes which are an integral part of the Financial Statements
Notes to Financial Statements
NOVEMBER 30, 1999
ORGANIZATION
World Investment Series, Inc. (the "Corporation") is registered under the
Investment Company Act of 1940, as amended (the "Act"), as an open-end,
management investment company. The Corporation consists of ten portfolios. The
financial statements included herein are only those of Federated Global Equity
Income Fund (the "Fund"), a diversified portfolio. The financial statements of
the other portfolios are presented separately. The assets of each portfolio are
segregated and a shareholder's interest is limited to the portfolio in which
shares are held.
The Fund offers three classes of shares: Class A Shares, Class B Shares and
Class C Shares. The fund's objective is to provide capital appreciation and
above-average income.
SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS
Listed equity securities are valued at the last sale price reported on a
national securities exchange. Short-term securities are valued at the prices
provided by an independent pricing service. However, short-term securities with
remaining maturities of 60 days or less at the time of purchase may be valued at
amortized cost, which approximates fair market value. With respect to valuation
of foreign securities, trading in foreign cities may be completed at times which
vary from the closing of the New York Stock Exchange. Therefore, foreign
securities are valued at the latest closing price on the exchange on which they
are traded prior to the closing of the New York Stock Exchange. Foreign
securities quoted in foreign currencies are translated into U.S. dollars at the
foreign exchange rate in effect at noon, eastern time, on the day the value of
the foreign security is determined.
REPURCHASE AGREEMENTS
It is the policy of the Fund to require the custodian bank to take possession,
to have legally segregated in the Federal Reserve Book Entry System, or to have
segregated within the custodian bank's vault, all securities held as collateral
under repurchase agreement transactions. Additionally, procedures have been
established by the Fund to monitor, on a daily basis, the market value of each
repurchase agreement's collateral to ensure that the value of collateral at
least equals the repurchase price to be paid under the repurchase agreement.
The Fund will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed by
the Fund's adviser to be creditworthy pursuant to the guidelines and/or
standards reviewed or established by the Board of Directors (the "Directors").
Risks may arise from the potential inability of counterparties to honor the
terms of the repurchase agreement. Accordingly, the Fund could receive less than
the repurchase price on the sale of collateral securities. The Fund, along with
other affiliated investment companies, may utilize a joint trading account for
the purpose of entering into one or more repurchase agreements.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS
Interest income and expenses are accrued daily. Bond premium and discount, if
applicable, are amortized as required by the Internal Revenue Code, as amended
(the "Code"). Dividend income and distributions to shareholders are recorded on
the ex-dividend date. Non-cash dividends included in dividend income, if any,
are recorded at fair market value. The fund offers multiple classes of shares,
which differ in their respective distribution and service fees. All shareholders
bear the common expenses of the Fund based on average daily net assets of each
class, without distinction between classes. Dividends are declared separately
for each class. No class has preferential rights; differences in per share
dividend rates are generally due to differences in separate class expenses.
Income and capital gain distributions are determined in accordance with income
tax regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments for foreign currency
transactions and net operating loss. The following reclassifications have been
made to the financial statements.
<TABLE>
<CAPTION>
INCREASE (DECREASE)
ACCUMULATED NET
REALIZED GAIN ON
INVESTMENTS AND
FOREIGN CURRENCY DISTRIBUTIONS IN EXCESS OF
TRANSACTIONS NET INVESTMENT INCOME
<S> <C>
$(111,385) $111,385
</TABLE>
Net investment income, net realized gains/losses, and net assets were not
affected by this reclassification.
FEDERAL TAXES
It is the Fund's policy to comply with the provisions of the Code applicable to
regulated investment companies and to distribute to shareholders each year
substantially all of its income. Accordingly, no provision for federal tax is
necessary.
Withholding taxes on foreign interest and dividends have been provided for in
accordance with the applicable country's tax rules and rates.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
The Fund may engage in when-issued or delayed delivery transactions. The Fund
records when-issued securities on the trade date and maintains security
positions such that sufficient liquid assets will be available to make payment
for the securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date. Losses may occur on these transactions due to changes in market
conditions or the failure of counterparties to perform under the contract.
FOREIGN EXCHANGE CONTRACTS
The Fund may enter into foreign currency commitments for the delayed delivery of
securities or foreign currency exchange transactions. The Fund may enter into
foreign currency contract transactions to protect assets against adverse changes
in foreign currency exchange rates or exchange control regulations. Purchased
contracts are used to acquire exposure to foreign currencies; whereas contracts
to sell are used to hedge the Fund's securities against currency fluctuations.
Risks may arise upon entering these transactions from the potential inability of
counterparties to meet the terms of their commitments and from unanticipated
movements in security prices or foreign exchange rates. The foreign currency
transactions are adjusted by the daily exchange rate of the underlying currency
and any gains or losses are recorded for financial statement purposes as
unrealized until the settlement date. At November 30, 1999, the Fund had no
outstanding foreign currency commitments.
FOREIGN CURRENCY TRANSLATION
The accounting records of the Fund are maintained in U.S. dollars. All assets
and liabilities denominated in foreign currencies ("FC") are translated into
U.S. dollars based on the rates of exchange of such currencies against U.S.
dollars on the date of valuation. Purchases and sales of securities, income and
expenses are translated at the rate of exchange quoted on the respective date
that such transactions are recorded. The Fund does not isolate that portion of
the results of operations resulting from changes in foreign exchange rates on
investments from the fluctuations arising from changes in market prices of
securities held. Such fluctuations are included with the net realized and
unrealized gain or loss from investments.
Reported net realized foreign exchange gains or losses arise from sales of
portfolio securities, sales and maturities of short-term securities, sales of
FCs, currency gains or losses realized between the trade and settlement dates on
securities transactions, the difference between the amounts of dividends,
interest, and foreign withholding taxes recorded on the Fund's books, and the
U.S. dollar equivalent of the amounts actually received or paid. Net unrealized
foreign exchange gains and losses arise from changes in the value of assets and
liabilities other than investments in securities at fiscal year end, resulting
from changes in the exchange rate.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts of assets, liabilities, expenses and revenues reported in the
financial statements. Actual results could differ from those estimated.
OTHER
Investment transactions are accounted for on a trade date basis.
CAPITAL STOCK
At November 30, 1999, par value shares ($0.001 per share) authorized were as
follows:
NUMBER OF PAR VALUE
CLASS NAME CAPITAL STOCK AUTHORIZED
Class A Shares 100,000,000
Class B Shares 100,000,000
Class C Shares 100,000,000
TOTAL 300,000,000
INITIAL SHARE CAPITAL
CLASS NAME SHARES AMOUNT
Class A Shares 10 $100
Class B Shares 10 100
Class C Shares 10 100
TOTAL 30 $300
Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
NOVEMBER 30, 1999 NOVEMBER 30, 1998
1
CLASS A SHARES: SHARES AMOUNT SHARES
AMOUNT
<S> <C> <C> <C>
<C>
Shares sold 737,809 $ 8,916,311 1,787,143
$17,871,433
Shares issued to
shareholders in payment of
distributions declared 2,918 32,098
- - -
Shares redeemed (138,629) (1,706,232) (222)
(2,218)
NET CHANGE RESULTING FROM
CLASS A
SHARE TRANSACTIONS 602,098 $ 7,242,177 1,786,921 $
17,869,215
<CAPTION>
YEAR ENDED PERIOD ENDED
NOVEMBER 30, 1999 NOVEMBER 30, 1998
2
CLASS B SHARES: SHARES AMOUNT SHARES
AMOUNT
<S> <C> <C> <C>
<C>
Shares sold 74,673 $ 918,828
- - -
Shares issued to
shareholders in payment of
distributions declared - -
- - -
Shares redeemed (543) (7,113)
- - -
NET CHANGE RESULTING FROM
CLASS B
SHARE TRANSACTIONS 74,130 $ 911,715
- - -
<CAPTION>
YEAR ENDED PERIOD ENDED
NOVEMBER 30, 1999 NOVEMBER 30, 1998
2
CLASS C SHARES: SHARES AMOUNT SHARES
AMOUNT
<S> <C> <C> <C>
<C>
Shares sold 107,962 $ 1,410,214
- - -
Shares issued to
shareholders in payment of
distributions declared - -
- - -
Shares redeemed (94,616) (1,274,186)
- - -
NET CHANGE RESULTING FROM
CLASS C
SHARE TRANSACTIONS 13,346 $ 136,028
- - -
NET CHANGE RESULTING FROM
SHARE TRANSACTIONS 689,574 8,289,920 1,786,921 $
17,869,215
</TABLE>
1 Represents activity for the period from October 27, 1998 (date of public
investment) to November 30, 1998.
2 For the period from October 27, 1998 (start of performance) to November 30,
1998, Class B Shares and Class C Shares had no public investments.
INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISER FEE
Federated Global Investment Management Corp., the Fund's investment adviser (the
"Adviser"), receives for its services an annual investment Adviser fee equal to
1.00% of the Fund's average daily net assets. The Adviser may voluntarily choose
to waive any portion of its fee and/or reimburse certain operating expenses of
the Fund. The Adviser can modify or terminate this voluntary waiver and/or
reimbursement at any time at its sole discretion.
ADMINISTRATIVE FEE
Federated Services Company ("FServ"), under the Administrative Services
Agreement, provides the Fund with administrative personnel and services. The fee
paid to FServ is based on a scale that ranges from 0.15% to 0.075% of the
average aggregate daily net assets of all funds advised by subsidiaries of
Federated Investors, Inc. subject to a $125,000 minimum per portfolio and
$30,000 per each additional class.
DISTRIBUTION SERVICES FEE
The Fund has adopted a Distribution Plan (the "Plan") pursuant to Rule 12b-1
under the Act. Under the terms of the Plan, the Fund will compensate Federated
Securities Corp. ("FSC"), the principal distributor, from the net assets of the
Fund to finance activities intended to result in the sale of the fund's Class A
Shares, Class B Shares and Class C Shares. The Plan provides that the Fund may
incur distribution expenses according to the following schedule annually, to
compensate FSC.
<TABLE>
<CAPTION>
PERCENTAGE OF
AVERAGE DAILY
SHARE CLASS NAME NET ASSETS OF CLASS
<S> <C>
Class A Shares 0.25%
Class B Shares 0.75%
Class C Shares 0.75%
</TABLE>
SHAREHOLDER SERVICES FEE
Under the terms of a Shareholder Services Agreement with Federated Shareholder
Services Company ("FSSC"), the Fund will pay FSSC up to 0.25% of average daily
net assets of the Fund for the period. The fee paid to FSSC is used to finance
certain services for shareholders and to maintain shareholder accounts.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES
FServ, through its subsidiary FSSC, serves as transfer and dividend disbursing
agent for the Fund. The fee paid to FSSC is based on the size, type, and number
of accounts and transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES
FServ maintains the Fund's accounting records for which it receives a fee. The
fee is based on the level of the Fund's average daily net assets for the period,
plus out-of-pocket expenses.
GENERAL
Certain of the Officers and Directors of the Corporation are Officers and
Directors or Trustees of the above companies.
INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities (and in-
kind contributions), for the fiscal year ended November 30, 1999, were as
follows:
Purchases $ 56,961,169
Sales $ 47,756,076
CONCENTRATION OF CREDIT RISK
The Fund invests in securities of non-U.S. issuers. The political or economic
developments within a particular country or region may have an adverse effect on
the ability of domiciled issuers to meet their obligations. Additionally,
political or economic developments may have an effect on the liquidity and
volatility of portfolio securities and currency holdings.
LINE OF CREDIT AGREEMENT
Effective November 29, 1999 the Corporation entered into a $75,000,000 unsecured
committed revolving line of credit ("LOC") agreement with State Street
Corporation. The LOC was made available for extraordinary or emergency purposes,
primarily for financing redemption payments. Borrowings are charged interest at
a rate of 0.50% over the Federal Funds Rate. The LOC includes a commitment fee
of 0.08% per annum on the daily unused portion. The Corporation did not make any
borrowing under the LOC during the fiscal year ended November 30, 1999.
Report of Ernst & Young LLP, Independent Auditors
TO THE BOARD OF DIRECTORS OF WORLD INVESTMENT SERIES, INC.
AND SHAREHOLDERS OF FEDERATED GLOBAL EQUITY INCOME FUND:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of Federated Global Equity Income Fund (the Fund)
(one of the portfolios constituting the World Investment Series, Inc.) as of
November 30, 1999, and the related statement of operations for the year then
ended, the statement of changes in net assets and the financial highlights for
each of the periods presented therein. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned as of November 30, 1999, by correspondence with the custodian and brokers
or other appropriate auditing procedures where replies from brokers were not
received. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Federated Global Equity Income Fund of World Investment Series, Inc. at November
30, 1999, and the results of its operations for the year then ended, the changes
in its net assets and the financial highlights for each of the periods presented
therein, in conformity with accounting principles generally accepted in the
United States.
[Graphic]
Boston, Massachusetts
January 21, 2000
Directors
JOHN F. DONAHUE
THOMAS G. BIGLEY
JOHN T. CONROY, JR.
NICHOLAS P. CONSTANTAKIS
WILLIAM J. COPELAND
LAWRENCE D. ELLIS, M.D.
RICHARD B. FISHER
EDWARD L. FLAHERTY, JR., ESQ.
PETER E. MADDEN
CHARLES F. MANSFIELD, JR.
JOHN E. MURRAY, JR., J.D., S.J.D.
WESLEY W. POSVAR
MARJORIE P. SMUTS
Officers
JOHN F. DONAHUE
Chairman
RICHARD B. FISHER
President
J. CHRISTOPHER DONAHUE
Executive Vice President
EDWARD C. GONZALES
Executive Vice President
JOHN W. MCGONIGLE
Executive Vice President and Secretary
HENRY A. FRANTZEN
Chief Investment Officer
RICHARD J. THOMAS
Treasurer
JAMES O. PERRY
Assistant Secretary
Mutual funds are not bank deposits or obligations, are not guaranteed by any
bank, and are not insured or guaranteed by the U.S. government, the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other
government agency. Investment in mutual funds involves investment risk,
including the possible loss of principal.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the fund's prospectus which contains facts concerning
its objective and policies, management fees, expenses, and other information.
[Graphic]
Federated
World-Class Investment Manager
Federated Global Equity Income Fund
Established 1998
2ND ANNUAL REPORT
ANNUAL REPORT
AS OF NOVEMBER 30, 1999
[Graphic]
Federated
Federated Global Equity Income Fund
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
1-800-341-7400
WWW.FEDERATEDINVESTORS.COM
Federated Securities Corp., Distributor
Cusip 981487697
Cusip 981487689
Cusip 981487671
G02336-04 (1/00)
[Graphic]
WORLD INVESTMENT SERIES, INC.
APPENDIX
FEDERATED ASIA PACIFIC GROWTH FUND
A1 The graphic presentation here displayed consists of a legend in the upper
left quadrant indicating the components of the corresponding mountain chart. The
color coded mountain chart is a visual representation of the narrative text
above it. The "x" axis reflects computation periods from 2/28/96 to 11/30/99.
The "y" axis is measured in increments of $1,000 ranging from $0 to $6,000 and
indicates that the ending value of hypothetical initial investment of $4,000 in
the fund's Class A Shares, assuming the reinvestment of capital gains and
dividends ,would have grown to $5,134 on 11/30/99.
A2 The graphic presentation here displayed consists of a legend in the upper
left quadrant indicating the components of the corresponding mountain chart. The
color coded mountain chart is a visual representation of the narrative text
above it. The "x" axis reflects computation periods from 2/28/96 to 11/30/99.
The "y" axis is measured in increments of $1,000 ranging from $0 to $8,000 and
indicates that the ending value of hypothetical yearly investments of $1,000 in
the fund's Class A Shares, assuming the reinvestment of capital gains and
dividends ,would have grown to $6,317 on 11/30/99.
A3. The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed underneath. The Class A
Shares of Federated Asia Pacific Growth Fund, a portfolio of World Investment
Series, Inc., based on a 5.50% sales load are represented by a solid line. The
Morgan Stanley Capital International Combined Asia Pacific Index (MSCI-AP) is
represented by a dotted line. The line graph is a visual representation of a
comparison of change in value of a $10,000 hypothetical investment in the Class
A Shares of the fund, and the MSCI-AP. The "x" axis reflects computation periods
from 2/28/96 to 11/30/99. The "y" axis reflects the cost of the investment. The
right margin reflects the ending value of the hypothetical investment in the
fund's Class A Shares, based on a 5.50% sales load, as compared to the MSCI-AP.
The ending values were $12,835 and $10,063, respectively. The legend in the
upper quadrant of the graphic presentation indicates the fund's Class A Shares
Average Annual Total Returns for the one-year period ended 11/30/99 and from the
fund's start of performance (2/28/96) to 11/30/99. The total returns were
100.59% and 6.87%, respectively.
A4. The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed underneath. The Class B
Shares of Federated Asia Pacific Growth Fund, a portfolio of World Investment
Series, Inc., are represented by a solid line. The Morgan Stanley Capital
International Combined Asia Pacific Index (MSCI-AP) is represented by a dotted
line. The line graph is a visual representation of a comparison of change in
value of a $10,000 hypothetical investment in the Class B Shares of the fund,
and the MSCI-AP. The "x" axis reflects computation periods from 2/28/96 to
11/30/99. The "y" axis reflects the cost of the investment. The right margin
reflects the ending value of the hypothetical investment in the fund's Class B
Shares as compared to the MSCI-AP. The ending values were $12,941 and $10,063,
respectively. The legend in the upper quadrant of the graphic presentation
indicates the fund's Class B Shares Average Annual Total Return for the one-year
period ended 11/30/99 and from the start of performance of Class B Shares
(2/28/96) to 11/30/99. The total returns were 104.99% and 7.10%, respectively.
A5. The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed underneath. The Class C
Shares of Federated Asia Pacific Growth Fund, a portfolio of World Investment
Series, Inc., are represented by a solid line. The Morgan Stanley Capital
International Combined Asia Pacific Index (MSCI-AP) is represented by a dotted
line. The line graph is a visual representation of a comparison of change in
value of a $10,000 hypothetical investment in the Class C Shares of the fund,
and the MSCI-AP. The "x" axis reflects computation periods from 2/28/96 to
11/30/99. The "y" axis reflects the cost of the investment. The right margin
reflects the ending value of the hypothetical investment in the fund's Class C
Shares as compared to MSCI-AP. The ending values were $13,274 and $10,063,
respectively. The legend in the upper quadrant of the graphic presentation
indicates the fund's Class C Shares Average Annual Total Returns for the
one-year period ended 11/30/99 and from the start of performance of Class C
Shares (2/28/96) to 11/30/99. The total returns were 109.46% and 7.84%,
respectively.
FEDERATED EMERGING MARKETS FUND
A6. The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed underneath. The Class A
Shares of Federated Emerging Markets Fund, a portfolio of World Investment
Series, Inc., based on a 5.50% sales load are represented by a solid line. The
International Finance Corporation Investable Composite Index (IFCIC) is
represented by a dotted line. The line graph is a visual representation of a
comparison of change in value of a $10,000 hypothetical investment in the Class
A Shares of the fund, and the IFCIC. The "x" axis reflects computation periods
from 2/28/96 to 11/30/99. The "y" axis reflects the cost of the investment. The
right margin reflects the ending value of the hypothetical investment in the
fund's Class A Shares, based on a 5.50% sales load, as compared to the IFCIC.
The ending values were $11,615, and $9,724, respectively. The legend in the
upper quadrant of the graphic presentation indicates the fund's Class A Shares
Average Annual Total Returns for the one-year period ended 11/30/99 and from the
fund's start of performance (2/28/96) to 11/30/99. The total returns were 38.25%
and 4.07%, respectively.
A7. The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed underneath. The Class B
Shares of Federated Emerging Markets Fund, a portfolio of World Investment
Series, Inc., are represented by a solid line. The International Finance
Corporation Investable Composite Index (IFCIC) is represented by a dotted line.
The line graph is a visual representation of a comparison of change in value of
a $10,000 hypothetical investment in the Class B Shares of the fund, and the
IFCIC. The "x" axis reflects computation periods from 2/28/96 to 11/30/99. The
"y" axis reflects the cost of the investment. The right margin reflects the
ending value of the hypothetical investment in the fund's Class B Shares as
compared to the IFCIC. The ending values were $11,650 and $9,724, respectively.
The legend in the upper quadrant of the graphic presentation indicates the
fund's Class B Shares Average Annual Total Return for the one-year period ended
11/30/99 and from the start of performance of Class B Shares (2/28/96) to
11/30/99. The total returns were 39.70% and 4.15%, respectively.
A8. The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed underneath. The Class C
Shares of Federated Emerging Markets Fund, a portfolio of World Investment
Series, Inc., are represented by a solid line. The International Finance
Corporation Investable Composite Index (IFCIC) is represented by a dotted line.
The line graph is a visual representation of a comparison of change in value of
a $10,000 hypothetical investment in the Class C Shares of the fund, and the
IFCIC. The "x" axis reflects computation periods from 2/28/96 to11/30/99. The
"y" axis reflects the cost of the investment. The right margin reflects the
ending value of the hypothetical investment in the fund's Class C Shares as
compared to IFCIC. The ending values were $11,969 and $9,724, respectively. The
legend in the upper quadrant of the graphic presentation indicates the fund's
Class C Shares Average Annual Total Returns for the one-year period ended
11/30/99 and from the start of performance of Class C Shares (2/28/96) to
11/30/99. The total returns were 44.44% and 4.90%, respectively.
FEDERATED EUROPEAN GROWTH FUND
A9. The graphic presentation here displayed consists of a legend in the upper
left quadrant indicating the components of the corresponding mountain chart. The
color coded mountain chart is a visual representation of the narrative text
above it. The "x" axis reflects computation periods from 2/28/96 to 11/30/99.
The "y" axis is measured in increments of $1,000 ranging from $0 to $8,000 and
indicates that the ending value of a hypothetical initial investment of $4,000
in the fund's Class A Shares, assuming all sales charges and the reinvestment of
capital gains and dividends, would have grown to $7,380 on 11/30/99.
A10. The graphic presentation here displayed consists of a legend in the upper
left quadrant indicating the components of the corresponding mountain chart. The
color coded mountain chart is a visual representation of the narrative text
above it. The "x" axis reflects computation periods from 2/22/96 to 11/30/99.
The "y" axis is measured in increments of $1,000 ranging from $0 to $6,000 and
indicates that the ending value of hypothetical yearly investments of $1,000 in
the fund's Class A Shares, assuming the reinvestment of capital gains and
dividends, would have grown to $5,568 on 11/30/99.
A11. The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed underneath. The Class A
Shares of Federated European Growth Fund (the "Fund") are represented by a solid
line. The Morgan Stanley Capital International Europe Index (MSCI-EUROPE) is
represented by a dotted line. The line graph is a visual representation of a
comparison of change in value of a $10,000 hypothetical investment in the Class
A Shares of the Fund and the MSCI- EUROPE. The "x" axis reflects computation
periods from 2/28/96 to 11/30/99. The "y" axis reflects the cost of the
investment. The right margin reflects the ending value of the hypothetical
investment in the Fund's Class A Shares as compared to the MSCI- EUROPE. The
ending values were $18,517 and $19,741, respectively.
A12. The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed underneath. The Class B
Shares of Federated European Growth Fund (the "Fund") are represented by a solid
line. The Morgan Stanley Capital International Europe Index (MSCI-EUROPE) is
represented by a dotted line. The line graph is a visual representation of a
comparison of change in value of a $10,000 hypothetical investment in the Class
B Shares of the Fund and the MSCI- EUROPE. The "x" axis reflects computation
periods from 2/28/96 to 11/30/99. The "y" axis reflects the cost of the
investment. The right margin reflects the ending value of the hypothetical
investment in the Fund's Class B Shares as compared to the MSCI-LAF. The ending
values were $18,738 and $19,741, respectively.
A13. The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed underneath. The Class C
Shares of Federated European Growth Fund (the "Fund") are represented by a solid
line. The Morgan Stanley Capital International Europe Index (MSCI-EUROPE) is
represented by a dotted line. The line graph is a visual representation of a
comparison of change in value of a $10,000 hypothetical investment in the Class
C Shares of the Fund and the MSCI- EUROPE. The "x" axis reflects computation
periods from 2/28/96 to 11/30/99. The "y" axis reflects the cost of the
investment. The right margin reflects the ending value of the hypothetical
investment in the Fund's Class C Shares as compared to the MSCI- EUROPE. The
ending values were $19,004 and $19,741, respectively.
FEDERATED GLOBAL EQUITY INCOME FUND
A14. The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed underneath. The Class A
Shares of Federated Global Equity Income Fund, a portfolio of World Investment
Series, Inc., based on a 5.50% sales load are represented by a solid line. The
Morgan Stanley Capital International World Equity Index (MSCI-WE) is represented
by a dotted line. The line graph is a visual representation of a comparison of
change in value of a $10,000 hypothetical investment in the Class A Shares of
the fund, and the MSCI-WE. The "x" axis reflects computation periods from
10/27/98 to 11/30/99. The "y" axis reflects the cost of the investment. The
right margin reflects the ending value of the hypothetical investment in the
fund's Class A Shares, based on a 5.50% sales load, as compared to the MSCI-WE.
The ending values were $13,593 and $13,008, respectively. The legend in the
upper quadrant of the graphic presentation indicates the fund's Class A Shares
Average Annual Total Returns for the one-year period ended 11/30/99 and from the
fund's start of performance (10/27/98) to 11/30/99. The total returns were
28.89% and 32.35%, respectively.
A15. The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed underneath. The Class B
Shares of Federated Global Equity Income Fund, a portfolio of World Investment
Series, Inc., are represented by a solid line. The Morgan Stanley Capital
International World Equity Index (MSCI-WE) is represented by a dotted line. The
line graph is a visual representation of a comparison of change in value of a
$10,000 hypothetical investment in the Class B Shares of the fund, and the
MSCI-WE. The "x" axis reflects computation periods from 10/27/98 to 11/30/99.
The "y" axis reflects the cost of the investment. The right margin reflects the
ending value of the hypothetical investment in the fund's Class B Shares as
compared to the MSCI-WE. The ending values were $13,833 and $13,008,
respectively. The legend in the upper quadrant of the graphic presentation
indicates the fund's Class B Shares Average Annual Total Return for the one-year
period ended 11/30/99 and from the start of performance of Class B Shares
(10/27/98) to 11/30/99. The total returns were 30.12% and 34.45%, respectively.
A16. The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed underneath. The Class C
Shares of Federated Global Equity Income Fund, a portfolio of World Investment
Series, Inc., are represented by a solid line. The Morgan Stanley Capital
International World Equity Index (MSCI-WE) is represented by a dotted line. The
line graph is a visual representation of a comparison of change in value of a
$10,000 hypothetical investment in the Class C Shares of the fund, and the
MSCI-WE. The "x" axis reflects computation periods from 10/27/98 to 11/30/99.
The "y" axis reflects the cost of the investment. The right margin reflects the
ending value of the hypothetical investment in the fund's Class C Shares as
compared to MSCI-WE. The ending values were $14,288 and $13,008, respectively.
The legend in the upper quadrant of the graphic presentation indicates the
fund's Class C Shares Average Annual Total Returns for the one-year period ended
11/30/99 and from the start of performance of Class C Shares (10/27/98) to
11/30/99. The total returns were 34.43% and 38.48%, respectively.
FEDERATED GLOBAL FINANCIAL SERVICES FUND
A17. The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed underneath. The Class A
Shares of Federated Global Financial Services Fund (the "Fund") are represented
by a solid line. The Morgan Stanley Capital International All Country World
Finance Index (MSCI-WFI) is represented by a dotted line. The line graph is a
visual representation of a comparison of change in value of a $10,000
hypothetical investment in the Class A Shares of the Fund and the MSCI- WFI. The
"x" axis reflects computation periods from 9/30/98 to 11/30/99. The "y" axis
reflects the cost of the investment. The right margin reflects the ending value
of the hypothetical investment in the Fund's Class A Shares as compared to the
MSCI-WFI. The ending values were $12,562 and $13,315, respectively.
A18. The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed underneath. The Class B
Shares of Federated Global Financial Services Fund (the "Fund") are represented
by a solid line. The Morgan Stanley Capital International All Country World
Finance Index (MSCI-WFI) is represented by a dotted line. The line graph is a
visual representation of a comparison of change in value of a $10,000
hypothetical investment in the Class B Shares of the Fund and the MSCI- WFI. The
"x" axis reflects computation periods from 9/30/98 to 11/30/99. The "y" axis
reflects the cost of the investment. The right margin reflects the ending value
of the hypothetical investment in the Fund's Class B Shares as compared to the
MSCI-WFI. The ending values were $12,698 and $13,315, respectively.
A19. The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed underneath. The Class C
Shares of Federated Global Financial Services Fund (the "Fund") are represented
by a solid line. The Morgan Stanley Capital International All Country World
Finance Index (MSCI-WFI) is represented by a dotted line. The line graph is a
visual representation of a comparison of change in value of a $10,000
hypothetical investment in the Class C Shares of the Fund and the MSCI- WFI. The
"x" axis reflects computation periods from 9/30/98 to 11/30/99. The "y" axis
reflects the cost of the investment. The right margin reflects the ending value
of the hypothetical investment in the Fund's Class C Shares as compared to the
MSCI-WFI. The ending values were $13,194 and $13,315, respectively.
FEDERATED INTERNATIONAL GROWTH FUND
A20. The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed underneath. The Class A
Shares of Federated International Growth Fund, a portfolio of World Investment
Series, Inc., based on a 5.50% sales load are represented by a solid line. The
Morgan Stanley Capital International All Country World EX U.S. Index (MSCI-ACW)
is represented by a dotted line and the Morgan Stanley Capital International
Europe Australia Far East Index (MSCI-EAFE) is represented by a dashed line. The
line graph is a visual representation of a comparison of change in value of a
$10,000 hypothetical investment in the Class A Shares of the fund, the MSCI-ACW
and the MSCI-EAFE. The "x" axis reflects computation periods from 7/1/97 to
11/30/99. The "y" axis reflects the cost of the investment. The right margin
reflects the ending value of the hypothetical investment in the fund's Class A
Shares, based on a 5.50% sales load, as compared to the MSCI-ACW and the
MSCI-EAFE. The ending values were $11,833,12,159 and $12,714, respectively. The
legend in the upper quadrant of the graphic presentation indicates the fund's
Class A Shares Average Annual Total Returns for the one-year period ended
11/30/99 and from the fund's start of performance (7/1/97) to 11/30/99. The
total returns were 40.24% and 7.22%, respectively.
A21. The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed underneath. The Class B
Shares of Federated International Growth Fund, a portfolio of World Investment
Series, Inc., are represented by a solid line. The Morgan Stanley Capital
International All Country World EX U.S. Index (MSCI-ACW) is represented by a
dotted line and the Morgan Stanley Capital International Europe Australia Far
East Index (MSCI-EAFE) is represented by a dashed line. The line graph is a
visual representation of a comparison of change in value of a $10,000
hypothetical investment in the Class B Shares of the fund, the MSCI-ACW and the
MSCI-EAFE. The "x" axis reflects computation periods from 7/1/97 to 11/30/99.
The "y" axis reflects the cost of the investment. The right margin reflects the
ending value of the hypothetical investment in the fund's Class B Shares as
compared to the MSCI-ACW and the MSCI-EAFE. The ending values were $11,901,
12,159 and $12,714, respectively. The legend in the upper quadrant of the
graphic presentation indicates the fund's Class B Shares Average Annual Total
Return for the one-year period ended 11/30/99 and from the start of performance
of Class B Shares (7/1/97) to 11/30/99. The total returns were 41.83% and 7.46%,
respectively.
A22. The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed underneath. The Class C
Shares of Federated International Growth Fund, a portfolio of World Investment
Series, Inc., are represented by a solid line. The Morgan Stanley Capital
International All Country World EX U.S. Index (MSCI-ACW) is represented by a
dotted line and the Morgan Stanley Capital International Europe Australia Far
East Index (MSCI-EAFE) is represented by a dashed line. The line graph is a
visual representation of a comparison of change in value of a $10,000
hypothetical investment in the Class C Shares of the fund, the MSCI-ACW and the
MSCI-EAFE. The "x" axis reflects computation periods from 7/1/97 to 11/30/99.
The "y" axis reflects the cost of the investment. The right margin reflects the
ending value of the hypothetical investment in the fund's Class C Shares as
compared to the MSCI-ACW and the MSCI-EAFE. The ending values were $12,345,
12,159 and $12,714, respectively. The legend in the upper quadrant of the
graphic presentation indicates the fund's Class C Shares Average Annual Total
Returns for the one-year period ended 11/30/99 and from the start of performance
of Class C Shares (7/1/97) to 11/30/99. The total returns were 46.45% and 9.10%,
respectively.
FEDERATED INTERNATIONAL HIGH INCOME FUND
A23. The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed underneath. The Class A
Shares of Federated High Income Fund, a portfolio of World Investment Series,
Inc., based on a 5.50% sales load are represented by a solid line. The J.P.
Morgan Emerging Market Bond Index (JPM-EMB) is represented by a dotted line. The
line graph is a visual representation of a comparison of change in value of a
$10,000 hypothetical investment in the Class A Shares of the fund and the
JPM-EMB. The "x" axis reflects computation periods from 10/2/96 to 11/30/99. The
"y" axis reflects the cost of the investment. The right margin reflects the
ending value of the hypothetical investment in the fund's Class A Shares, based
on a 5.50% sales load, compared to the the JPM-EMB. The ending values were
$10,349 and $12,286, respectively. The legend in the upper quadrant of the
graphic presentation indicates the fund's Class A Shares Average Annual Total
Returns for the one-year period ended 11/30/99 and from the fund's start of
performance (7/1/97) to 11/30/99. The total returns were 2.66% and 1.09%,
respectively.
A24. The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed underneath. The Class B
Shares of Federated International High Income Fund, a portfolio of World
Investment Series, Inc., are represented by a solid line. The J.P. Morgan
Emerging Market Bond Index (JPM-EMB) is represented by a dotted line. The line
graph is a visual representation of a comparison of change in value of a $10,000
hypothetical investment in the Class B Shares of the fund, and the JPM-EMB. The
"x" axis reflects computation periods from 10/2/96 to 11/30/99. The "y" axis
reflects the cost of the investment. The right margin reflects the ending value
of the hypothetical investment in the fund's Class B Shares as compared to the
JPM-EMB. The ending values were $10,347 and $12,286 respectively. The legend in
the upper quadrant of the graphic presentation indicates the fund's Class B
Shares Average Annual Total Return for the one-year period ended 11/30/99 and
from the start of performance of Class B Shares (7/1/97) to 11/30/99. The total
returns were 41.83% and 7.46%, respectively.
A25. The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed underneath. The Class C
Shares of Federated International High Income Fund, a portfolio of World
Investment Series, Inc., are represented by a solid line. The J.P. Morgan
Emerging Market Bond Index (JPM-EMB) is represented by a dotted line. The line
graph is a visual representation of a comparison of change in value of a $10,000
hypothetical investment in the Class C Shares of the fund and the JPM-EMB. The
"x" axis reflects computation periods from 10/2/96 to 11/30/99. The "y" axis
reflects the cost of the investment. The right margin reflects the ending value
of the hypothetical investment in the fund's Class C Shares as compared to the
JPM-EMB. The ending values were $10,579 and $12,286, respectively. The legend in
the upper quadrant of the graphic presentation indicates the fund's Class C
Shares Average Annual Total Returns for the one-year period ended 11/30/99 and
from the start of performance of Class C Shares (7/1/97) to 11/30/99. The total
returns were 5.76% and 1.79%, respectively.
FEDERATED INTERNATIONAL SMALL COMPANY FUND
A26. The graphic presentation here displayed consists of a legend in the upper
left quadrant indicating the components of the corresponding mountain chart. The
color coded mountain chart is a visual representation of the narrative text
above it. The "x" axis reflects computation periods from 2/28/96 to 11/30/99.
The "y" axis is measured in increments of $3,000 ranging from $0 to $15,000 and
indicates that the ending value of a hypothetical initial investment of $4,000
in the fund's Class A Shares, assuming all sales charges and the reinvestment of
capital gains and dividends, would have grown to $13,571 on 11/30/99.
A27. The graphic presentation here displayed consists of a legend in the upper
left quadrant indicating the components of the corresponding mountain chart. The
color coded mountain chart is a visual representation of the narrative text
above it. The "x" axis reflects computation periods from 2/22/96 to 11/30/99.
The "y" axis is measured in increments of $2,000 ranging from $0 to $10,000 and
indicates that the ending value of hypothetical yearly investments of $1,000 in
the fund's Class A Shares, assuming the reinvestment of capital gains and
dividends, would have grown to $9,662 on 11/30/99.
A28. The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed underneath. The Class A
Shares of Federated International Small Company Fund (the "Fund") are
represented by a solid line. The Morgan Stanley Capital International Small Cap
World ex-U.S. Index (MSCI-SCW) is represented by a dotted line. The line graph
is a visual representation of a comparison of change in value of a $10,000
hypothetical investment in the Class A Shares of the Fund and the MSCI-SCW. The
"x" axis reflects computation periods from 2/28/96 to 11/30/99. The "y" axis
reflects the cost of the investment. The right margin reflects the ending value
of the hypothetical investment in the Fund's Class A Shares as compared to the
MSCI-SCW. The ending values were $33,761 and $9,349, respectively.
A29. The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed underneath. The Class B
Shares of Federated International Small Company Fund (the "Fund") are
represented by a solid line. The Morgan Stanley Capital International Small Cap
World ex-U.S. Index (MSCI-SCW) is represented by a dotted line. The line graph
is a visual representation of a comparison of change in value of a $10,000
hypothetical investment in the Class B Shares of the Fund and the MSCI-SCW. The
"x" axis reflects computation periods from 2/28/96 to 11/30/99. The "y" axis
reflects the cost of the investment. The right margin reflects the ending value
of the hypothetical investment in the Fund's Class B Shares as compared to the
MSCI-SCW. The ending values were $34,456 and $9,349, respectively.
A30. The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed underneath. The Class C
Shares of Federated International Small Company Fund (the "Fund") are
represented by a solid line. The Morgan Stanley Capital International Small Cap
World ex-U.S. Index (MSCI-SCW) is represented by a dotted line. The line graph
is a visual representation of a comparison of change in value of a $10,000
hypothetical investment in the Class C Shares of the Fund and the MSCI-SCW. The
"x" axis reflects computation periods from 2/28/96 to 11/30/99. The "y" axis
reflects the cost of the investment. The right margin reflects the ending value
of the hypothetical investment in the Fund's Class C Shares as compared to the
MSCI-SCW. The ending values were $34,742 and $9,349, respectively.
Federated Latin American Growth Fund
A31. The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed underneath. The Class A
Shares of Federated Latin American Growth Fund (the "Fund") are represented by a
solid line.
The Morgan Stanley Capital International Latin American-Free Index (MSCI-LAF)
is represented by a dotted line. The line graph is a visual representation of a
comparison of change in value of a $10,000 hypothetical investment in the Class
A Shares of the Fund and the MSCI-LAF. The "x" axis reflects computation periods
from 2/28/96 to 11/30/99. The "y" axis reflects the cost of the investment. The
right margin reflects the ending value of the hypothetical investment in the
Fund's Class A Shares as compared to the MSCI-LAF. The ending values were
$10,541 and $12,800, respectively.
A32. The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed underneath. The Class B
Shares of Federated Latin American Growth Fund (the "Fund") are represented by a
solid line.
The Morgan Stanley Capital International Latin American-Free Index (MSCI-LAF)
is represented by a dotted line. The line graph is a visual representation of a
comparison of change in value of a $10,000 hypothetical investment in the Class
B Shares of the Fund and the MSCI-LAF. The "x" axis reflects computation periods
from 2/28/96 to 11/30/99. The "y" axis reflects the cost of the investment. The
right margin reflects the ending value of the hypothetical investment in the
Fund's Class B Shares as compared to the MSCI-LAF. The ending values were
$10,541 and $12,800, respectively.
A33. The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed underneath. The Class C
Shares of Federated Latin American Growth Fund (the "Fund") are represented by a
solid line.
The Morgan Stanley Capital International Latin American-Free Index (MSCI-LAF)
is represented by a dotted line. The line graph is a visual representation of a
comparison of change in value of a $10,000 hypothetical investment in the Class
C Shares of the Fund and the MSCI-LAF. The "x" axis reflects computation periods
from 2/28/96 to 11/30/99. The "y" axis reflects the cost of the investment. The
right margin reflects the ending value of the hypothetical investment in the
Fund's Class C Shares as compared to the MSCI-LAF. The ending values were
$10,847 and $12,800, respectively.
FEDERATED WORLD UTILITY FUND
A34. The graphic presentation here displayed consists of a legend in the upper
left quadrant indicating the components of the corresponding mountain chart. The
color coded mountain chart is a visual representation of the narrative text
above it. The "x" axis reflects computation periods from 4/22/94 to 11/30/99.
The "y" axis is measured in increments of $4,000 ranging from $0 to $16,000 and
indicates that the ending value of a hypothetical initial investment of $6,000
in the fund's Class A Shares, assuming all sales charges and the reinvestment of
capital gains and dividends, would have grown to $14,766 on 11/30/99.
A35. The graphic presentation here displayed consists of a legend in the upper
left quadrant indicating the components of the corresponding mountain chart. The
color coded mountain chart is a visual representation of the narrative text
above it. The "x" axis reflects computation periods from 4/22/94 to 11/30/99.
The "y" axis is measured in increments of $2,000 ranging from $0 to $12,000 and
indicates that the ending value of hypothetical yearly investments of $1,000 in
the fund's Class A Shares, assuming the reinvestment of capital gains and
dividends, would have grown to $10,828 on 11/30/99.
A36. The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed underneath. The Class A
Shares of Federated World Utility Fund (the "Fund") are represented by a solid
line. The Standard & Poor's 500 Index (S&P 500) is represented by a dotted line,
the FT/S&P Global Utility Index (FTGU) is represented by a dashed line and the
Lipper Utility Funds Average (LUFA) is represented by a broken line. The line
graph is a visual representation of a comparison of change in value of a $10,000
hypothetical investment in the Class A Shares of the Fund and the S&P 500, FTGU,
and LUFA. The "x" axis reflects computation periods from 4/22/94 to 11/30/99.
The "y" axis reflects the cost of the investment. The right margin reflects the
ending value of the hypothetical investment in the Fund's Class A Shares as
compared to the S&P 500, FTGU, and LUFA. The ending values were $24,610,
$34,665, $22,084 and $26,716, respectively.
A37. The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed underneath. The Class B
Shares of Federated World Utility Fund (the "Fund") are represented by a solid
line. The Standard & Poor's 500 Index (S&P 500) is represented by a dotted line,
the FT/S&P Global Utility Index (FTGU) is represented by a dashed line and the
Lipper Utility Funds Average (LUFA) is represented by a broken line. The line
graph is a visual representation of a comparison of change in value of a $10,000
hypothetical investment in the Class B Shares of the Fund and the S&P 500, FTGU,
and LUFA. The "x" axis reflects computation periods from 7/27/95 to 11/30/99.
The "y" axis reflects the cost of the investment. The right margin reflects the
ending value of the hypothetical investment in the Fund's Class B Shares as
compared to the S&P 500, FTGU, and LUFA. The ending values were $22,779,
$26,734, $25,001 and $20,385, respectively.
A38. The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed underneath. The Class C
Shares of Federated World Utility Fund (the "Fund") are represented by a solid
line. The Standard & Poor's 500 Index (S&P 500) is represented by a dotted line,
the FT/S&P Global Utility Index (FTGU) is represented by a dashed line and the
Lipper Utility Funds Average (LUFA) is represented by a broken line. The line
graph is a visual representation of a comparison of change in value of a $10,000
hypothetical investment in the Class C Shares of the Fund and the S&P 500, FTGU,
and LUFA. The "x" axis reflects computation periods from 7/27/95 to 11/30/99.
The "y" axis reflects the cost of the investment. The right margin reflects the
ending value of the hypothetical investment in the Fund's Class C Shares as
compared to the S&P 500, FTGU, and LUFA. The ending values were $22,940,
$26,734, $25,001 and $20,385, respectively.
