FEDERATED WORLD INVESTMENT SERIES INC, 485BPOS, 2000-03-30

FEDERATED WORLD INVESTMENT SERIES INC
485BPOS, 2000-03-30

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1933 Act File No. 33-52149
1940 Act File No. 811-7141

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
------

Pre-Effective Amendment No. ....................
-------- ------

Post-Effective Amendment No. 20 .................... X
------- ------

and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
------

Amendment No. 21 ................................... X
------- ------

FEDERATED WORLD INVESTMENT SERIES, INC.
(formerly, World Investment Series, Inc.)
(Exact Name of Registrant as Specified in Charter)

Federated Investors Funds

5800 Corporate Drive
Pittsburgh, Pennsylvania 15237-7000
(Address of Principal Executive Offices)
(412) 288-1900

(Registrant's Telephone Number)

John W. McGonigle, Esquire,
Federated Investors Tower

1001 Liberty Avenue
Pittsburgh, Pennsylvania 15222-3779

(Name and Address of Agent for Service)
(Notices should be sent to the Agent for Service)

It is proposed that this filing will become effective:

immediately upon filing pursuant to paragraph (b) X on _ MARCH 31, 2000_
pursuant to paragraph (b)(1)(v) 60 days after filing pursuant to paragraph
(a)(i) pursuant to paragraph (a)(i) 75 days after filing pursuant to paragraph
(a)(ii) on _________________ pursuant to paragraph (a)(ii) of Rule 485

If appropriate, check the following box:

This post-effective amendment designates a new effective date for a previously
filed post-effective amendment.

Copies to:

Matthew G. Maloney, Esquire
Dickstein Shapiro Morin & Oshinsky LLP

2101 L Street, NW
Washington, DC 20037-1526

PROSPECTUS

Federated Asia Pacific Growth Fund

A Portfolio of Federated World Investment Series, Inc.

CLASS A SHARES
CLASS B SHARES
CLASS C SHARES

A mutual fund seeking long-term growth of capital by investing primarily in
equity securities of Asian and Pacific Rim companies.

As with all mutual funds, the Securities and Exchange Commission (SEC) has not
approved or disapproved these securities or passed upon the adequacy of this
prospectus. Any representation to the contrary is a criminal offense.

NOT FDIC INSURED
MAY LOSE VALUE
NO BANK GUARANTEE

MARCH 31, 2000

CONTENTS

Risk/Return Summary 1
What are the Fund's Fees and Expenses? 4
What are the Fund's Investment Strategies? 5
What are the Principal Securities in Which the
Fund Invests? 6
What are the Specific Risks of Investing in the Fund? 7
What Do Shares Cost? 9
How is the Fund Sold? 11
How to Purchase Shares 12
How to Redeem and Exchange Shares 13
Account and Share Information 17

Who Manages the Fund? 17
Financial Information 18

Risk/Return Summary

WHAT IS THE FUND'S INVESTMENT OBJECTIVE?

The Fund's investment objective is to provide long-term growth of capital. While
there is no assurance that the Fund will achieve its investment objective, it
endeavors to do so by following the strategies and policies described in this
prospectus.

WHAT ARE THE FUND'S MAIN INVESTMENT STRATEGIES?

The Fund pursues its investment objective by investing at least 65% of its
assets in equity securities of companies located in Asia and the Pacific Rim.
The Adviser intends to focus its investments in the most developed capital
markets of Asia and the Pacific Rim.

In selecting countries in which to invest, the Adviser reviews the country's
economic outlook, including its interest and inflation rates, and the political
and foreign exchange risk of investing in a particular country. In selecting
investments for the portfolio the Adviser looks for companies which are
positioned for rapid growth in revenues or earnings and assets.

WHAT ARE THE MAIN RISKS OF INVESTING IN THE FUND?

All mutual funds take investment risks. Therefore, it is possible to lose money
by investing in the Fund. The primary factors that may reduce the Fund's returns
include:

CURRENCY RISKS

Because the exchange rates for currencies fluctuate daily, prices of the foreign
securities in which the Fund invests are more volatile than prices of securities
traded exclusively in the United States.

STOCK MARKET RISKS

The value of equity securities in the Fund's portfolio will fluctuate and, as a
result, the Fund's share price may decline suddenly or over a sustained period
of time.

RISKS OF FOREIGN INVESTING

Because the Fund invests in securities issued by foreign companies, the Fund's
share price may be more affected by foreign economic and political conditions,
taxation policies and accounting and auditing standards than would otherwise be
the case.

EMERGING MARKETS RISK

The Fund invests in emerging as well as developed markets in Asia and the
Pacific Rim. Countries in emerging markets can have relatively unstable
government economies based on only a few industries, and securities markets that
trade a small number of issues.

LIQUIDITY RISKS

Non-U.S. securities may trade on small exchanges less well regulated
than
U.S. exchanges, may be more difficult to buy or sell on a particular
day
and may be more volatile than U.S. securities.

Liquidity risk also refers to the possibility that the Fund may not be able to
sell a security when it wants to. If this happens, the Fund will be required to
continue to hold the security, and the Fund could incur losses.

REGIONAL RISKS

Certain risks associated with international investments and investing in
smaller, developing capital markets are heightened for investments in Asian and
Pacific Rim countries. Although there is a trend toward less government
involvement in commerce, governments of many Asian and Pacific Rim countries
have exercised and continue to exercise substantial influence over many aspects
of the private sector.

The Shares offered by this prospectus are not deposits or obligations of any
bank, are not endorsed or guaranteed by any bank and are not insured or
guaranteed by the U.S. government, the Federal Deposit Insurance Corporation,
the Federal Reserve Board, or any other government agency.

RISK/RETURN BAR CHART AND TABLE

[Graphic]

The bar chart shows the variability of the Fund's Class A Shares total returns
on a calendar year-end basis.

The total returns displayed for the Fund's Class A Shares do not reflect the
payment of any sales charges or recurring shareholder account fees. If these
charges or fees had been included, the returns shown would have been lower.

Within the period shown in the Chart, the Fund's Class A Shares highest
quarterly return was 34.26% (quarter ended December 31, 1999). Its lowest
quarterly return was (25.93)% (quarter ended December 31, 1997).

AVERAGE ANNUAL TOTAL RETURN TABLE

The following table represents the Fund's Class A Shares, Class B Shares, and
Class C Shares Average Annual Total Returns, reduced to reflect applicable sales
charges, for the calendar periods ended December 31, 1999. The table shows the
Fund's total returns averaged over a period of years relative to the Morgan
Stanley Capital International Asia Pacific Index (MSCI-AP), a broad-based market
index. The MSCI-AP is a market value- weighted average of the performance of
securities listed on the stock exchange of 13 countries in the Pacific and Asian
regions. Total returns for the index shown do not reflect sales charges,
expenses or other fees that the SEC requires to be reflected in the Fund's
performance. Indexes are unmanaged, and it is not possible to invest directly in
an index.

CLASS A CLASS B CLASS C
CALENDAR PERIOD SHARES SHARES SHARES MSCI-AP
1 Year 115.56% 120.85% 125.08% 57.86%
Start of
Performance 1 10.48% 10.78% 11.45% 1.19%

1 The Fund's Class A Shares, Class B Shares and Class C Shares start of
performance date was February 28, 1996.

Past performance does not necessarily predict future performance. This
information provides you with historical performance information so that you can
analyze whether the Fund's investment risks are balanced by its potential
returns.

What are the Fund's Fees and Expenses?

FEDERATED ASIA PACIFIC GROWTH FUND

FEES AND EXPENSES

This table describes the fees and expenses that you may pay if you buy and hold
Shares of the Fund's Class A, B, or C Shares.

<TABLE>
<CAPTION>
SHAREHOLDER FEES CLASS A CLASS
B CLASS C
<S> <C>
<C> <C>
Fees Paid Directly From
Your Investment
Maximum Sales Charge
(Load) Imposed on
Purchases (as a percentage
of offering price) 5.50%
None None
Maximum Deferred Sales
Charge (Load) (as a
percentage of original
purchase price or
redemption proceeds, as
applicable) 0.00%
5.50% 1.00%
Maximum Sales Charge
(Load) Imposed on
Reinvested Dividends (and
other Distributions)
(as a percentage of
offering price) . None
None None
Redemption Fee (as a
percentage of amount
redeemed, if applicable) None
None None
Exchange Fee None
None None

ANNUAL FUND OPERATING
EXPENSES (Before Waivers
and Reimbursement) 1
Expenses That are Deducted
From Fund Assets (as
percentage of average net
assets)
Management Fee 2 1.10%
1.10% 1.10%
Distribution (12b-1) Fee 3 0.25%
0.75% 0.75%
Shareholder Services Fee 0.25%
0.25% 0.25%
Other Expenses 4 2.40%
2.40% 2.40%
Total Annual
Fund
Operating Expenses 4.00% 4.50%
5 4.50%
1 Although not contractually obligated to do so, the adviser waived and
reimbursed
and distributor waived certain amounts. These are shown below along
with the net
expenses the Fund actually paid for the fiscal year ended November 30,
1999.
Total Waivers
and
Reimbursement of
Fund

Expenses 2.15%
1.90% 1.90%
Total Actual Annual
Fund
Operating Expenses
(after

waivers and reimbursement) 1.85% 2.60% 2.60% 2 The adviser voluntarily waived
the management fee. The adviser can terminate this voluntary waiver at any time.
The management fee paid by the Fund (after the voluntary waiver) was 0.00% for
the fiscal year ended November 30, 1999.

3 Class A Shares did not pay or accrue the distribution (12b-1) fee during the
fiscal year ended November 30, 1999. Class A Shares has no present intention of
paying or accruing the distribution (12b-1) fee during the fiscal year ending
November 30, 2000.

4 The adviser voluntarily reimbursed certain operating expenses of the Fund. The
adviser can terminate this voluntary reimbursement at any time. Total other
expenses paid by the Fund (after the voluntary reimbursement) was 1.60% for the
fiscal year ended November 30, 1999.

5 Class B Shares convert to Class A Shares (which pay lower ongoing expenses)
approximately eight years after purchase.

</TABLE>

EXAMPLE

This Example is intended to help you compare the cost of investing in the Fund's
Class A, B, and C Shares with the cost of investing in other mutual funds.

The Example assumes that you invest $10,000 in the Fund's Class A, B, and C
Shares for the time periods indicated and then redeem all of your Shares at the
end of those periods. Expenses assuming no redemption are also shown.

The Example also assumes that your investment has a 5% return each year and that
the Fund's Class A, B, and C Shares operating expenses are BEFORE WAIVERS AND
REIMBURSEMENT as shown in the table and remain the same. Although your actual
costs and returns may be higher or lower, based on these assumptions your costs
would be:

SHARE CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
CLASS A:
Expenses
assuming
redemption $ 930 $1,701 $2,488 $4,525
Expenses
assuming no
redemption $ 930 $1,701 $2,488 $4,525
CLASS B:
Expenses
assuming

redemption $1,001 $1,760 $2,478 $4,514
Expenses
assuming no
redemption $ 451 $1,360 $2,278 $4,514
CLASS C:
Expenses
assuming

redemption $ 551 $1,360 $2,278 $4,614
Expenses
assuming no
redemption $ 451 $1,360 $2,278 $4,614

What are the Fund's Investment Strategies?

The Fund is intended to provide regional exposure for a specific asset class. It
acts as the Asian and Pacific Rim component to an international equity
portfolio. In selecting the countries in which to invest, the Adviser reviews
the country's economic outlook, including its interest and inflation rates, and
the political and foreign exchange risk of investing in a particular country.
The Adviser then analyzes companies located in each particular country.

In selecting investments for the portfolio the Adviser looks for companies which
are positioned for rapid growth in revenues or earnings and assets.

The Adviser evaluates the quality of each company's management, its market share
in domestic and export markets, and the uniqueness of its product line. The
Adviser may also meet with company representative, company suppliers, customers,
or competitors. Based on this information, the Adviser evaluates the
sustainability of the company's current growth trends and potential catalysts
for increased growth. Using this type of fundamental analysis, the Adviser tries
to select securities that offer the best potential returns consistent with its
general portfolio strategy. A stock is typically sold when, in the opinion of
the portfolio manager: (i) the stock has reached its fair market value; (ii) the
company's fundamentals have deteriorated; (iii) the Fund's portfolio is too
heavily weighted in a particular industry or sector; or (iv) alternative
investment opportunities are identified.

PORTFOLIO TURNOVER

The Fund actively trades its portfolio securities in an attempt to achieve its
investment objective. Active trading will cause the Fund to have an increased
portfolio turnover rate, which is likely to generate shorter- term gains
(losses) for its shareholders, which are taxed at a higher rate than longer-term
gains (losses). Actively trading portfolio securities increases the Fund's
trading costs and may have an adverse impact on the Fund's performance.

TEMPORARY DEFENSIVE INVESTMENTS

The Fund may temporarily depart from its principal investment strategies by
investing its assets in cash and shorter-term debt securities and similar
obligations. It may do this to minimize potential losses and maintain liquidity
to meet shareholder redemptions during adverse market conditions. This may cause
the Fund to give up greater investment returns to maintain the safety of
principal, that is, the original amount invested by shareholders.

What are the Principal Securities in Which the Fund Invests?

ASIAN AND PACIFIC RIM SECURITIES

The Fund considers an issuer to be an Asian or Pacific Rim company if:

* it is organized under the laws of, or has a principal office located
in,
an Asian or Pacific Rim country;

* the principal trading market for its securities is in an Asian or
Pacific
Rim country; or

* it (or its subsidiaries) derived in its most current fiscal year at least 50%
of its total assets, capitalization, gross revenue or profit from goods
produced, services performed, or sales made in an Asian or Pacific Rim country.

Asian and Pacific Rim securities are often denominated in foreign currencies.
Along with the risks normally associated with domestic equity securities, Asian
and Pacific Rim securities are subject to currency risks and risks of foreign
investing.

Equity securities represent a share of an issuer's earnings and assets, after
the issuer pays its liabilities. The Fund cannot predict the income it will
receive from equity securities because issuers generally have discretion as to
the payment of any dividends or distributions. However, equity securities offer
greater potential for appreciation than many other types of securities, because
their value increases directly with the value of the issuer's business. The
following describes the types of equity securities in which the Fund may invest.

COMMON STOCKS

Common stocks are the most prevalent type of equity security. Common stocks
receive the issuer's earnings after the issuer pays its creditors and any
preferred stockholders. As a result, changes in an issuer's earnings directly
influence the value of its common stock.

PREFERRED STOCKS

Preferred stocks have the right to receive specified dividends or distributions
before the issuer makes payments on its common stock. Some preferred stocks also
participate in dividends and distributions paid on common stock. Preferred
stocks may also permit the issuer to redeem the stock. The Fund may also treat
such redeemable preferred stock as a fixed income security.

INTERESTS IN OTHER LIMITED LIABILITY COMPANIES

Entities such as limited partnerships, limited liability companies, business
trusts and companies organized outside the United States may issue securities
comparable to common or preferred stock.

DEPOSITARY RECEIPTS

Depositary receipts represent interests in underlying securities issued by a
foreign company. Depositary receipts are not traded in the same market as the
underlying security. The foreign securities underlying American Depositary
Receipts (ADRs) are not traded in the United States. ADRs provide a way to buy
shares of foreign-based companies in the United States rather than in overseas
markets. ADRs are also traded in U.S. dollars, eliminating the need for foreign
exchange transactions. The foreign securities underlying European Depositary
Receipts (EDRs), Global Depositary Receipts (GDRs), and International Depositary
Receipts (IDRs), are traded globally or outside the United States. Depositary
receipts involve many of the same risks of investing directly in foreign
securities, including currency risks and risks of foreign investing.

FOREIGN EXCHANGE CONTRACTS

In order to convert U.S. dollars into the currency needed to buy a foreign
security, or to convert foreign currency received from the sale of a foreign
security into U.S. dollars, the Fund may enter into spot currency trades. In a
spot trade, the Fund agrees to exchange one currency for another at the current
exchange rate. Although it has historically not done so, the Fund may also enter
into derivative contracts in which a foreign currency is an underlying asset.
The exchange rate for currency derivative contracts may be higher or lower than
the spot exchange rate. Use of these derivative contracts may increase or
decrease the Fund's exposure to currency risks.

What are the Specific Risks of Investing in the Fund?

CURRENCY RISKS

Exchange rates for currencies fluctuate daily. Foreign securities are normally
denominated and traded in foreign currencies. As a result, the value of the
Fund's foreign instruments and the value of the shares may be affected favorably
or unfavorably by changes in currency exchange rates relative to the U.S.
dollar. The combination of currency risk and market risks tends to make
securities traded in foreign markets more volatile than securities traded
exclusively in the U.S.

The Adviser attempts to limit currency risk by limiting the amount the Fund
invests in securities denominated in a particular currency. However,
diversifcation will not protect the Fund against a general increase in the value
of the U.S. dollar relative to other currencies.

STOCK MARKET RISKS

The value of equity securities in the Fund's portfolio will rise and fall. These
fluctuations could be a sustained trend or a drastic movement. The Fund's
portfolio will reflect changes in prices of individual portfolio stocks or
general changes in stock valuations. Consequently, the Fund's share price may
decline and you could lose money.

The Adviser attempts to manage market risk by limiting the amount the Fund
invests in each company's equity securities. However, diversification will not
protect the Fund against widespread or prolonged declines in the stock market.

RISKS OF FOREIGN INVESTING

Foreign securities pose additional risks because foreign economic or political
conditions may be less favorable than those of the United States.

Securities in foreign markets may also be subject to taxation policies
that
reduce returns for U.S. investors.

Foreign companies may not provide information (including financial statements)
as frequently or to as great an extent as companies in the United States.
Foreign companies may also receive less coverage than United States companies by
market analysts and the financial press. In addition, foreign countries may lack
uniform accounting, auditing and financial reporting standards or regulatory
requirements comparable to those applicable to U.S. companies. These factors may
prevent the Fund and its Adviser from obtaining information concerning foreign
companies that is as frequent, extensive and reliable as the information
available concerning companies in the United States.

Legal remedies available to investors in certain foreign countries may be more
limited than those available with respect to investments in the U.S. or in other
foreign countries. The laws of some foreign countries may limit the Fund's
ability to invest in securities of certain issuers organized under the laws of
those foreign countries.

CUSTODIAL SERVICES AND RELATED INVESTMENT COSTS

The inability of the Fund to make intended securities purchases due to
settlement problems could cause the Fund to miss attractive investment
opportunities. Inability to dispose of a portfolio security caused by settlement
problems could result in losses to the Fund due to a subsequent decline in value
of the portfolio security. In addition, security settlement and clearance
procedures in some emerging countries may not fully protect the Fund against
loss of its assets.

EMERGING MARKET RISKS

Securities issued or traded in emerging markets generally entail greater risks
than securities issued or traded in developed markets. For example, their prices
can be significantly more volatile than prices in developed countries. Emerging
market economies may also experience more severe downturns (with corresponding
currency devaluations) than developed economies.

REGIONAL RISKS

Certain risks associated with international investments and investing in
smaller, developing capital markets are heightened for investments in Asian and
Pacific Rim countries. For example, some of the currencies of Asian and Pacific
Rim countries have experienced steady devaluations relative to the U.S. dollar,
and major adjustments have been made in certain of these currencies
periodically.

Although there is a trend toward less government involvement in commerce,
governments of many Asian and Pacific Rim countries have exercised and continue
to exercise substantial influence over many aspects of the private sector. In
certain cases, the government still owns or controls many companies, including
some of the largest in the country. Accordingly, government actions in the
future could have a significant effect on economic conditions in Asian and
Pacific Rim countries, which could affect private sector companies and the Fund,
as well as the value of securities in the Fund's portfolio.

LIQUIDITY RISKS

Trading opportunities are more limited for equity securities that are not widely
held. This may make it more difficult to sell or buy a security at a favorable
price or time. Consequently, the Fund may have to accept a lower price to sell a
security, sell other securities to raise cash or give up an investment
opportunity, any of which could have a negative effect on the Fund's
performance. Infrequent trading of securities may also lead to an increase in
their price volatility.

What Do Shares Cost?

You can purchase, redeem or exchange Shares any day the New York Stock Exchange
(NYSE) is open. When the Fund receives your transaction request in proper form
(as described in the prospectus), it is processed at the next calculated net
asset value (NAV) plus any applicable front-end sales charge (public offering
price).

If the Fund purchases foreign securities that trade in foreign markets on days
the NYSE is closed, the value of the Fund's assets may change on days you cannot
purchase or redeem Shares.

NAV is determined at the end of regular trading (normally 4:00 p.m. Eastern
time) each day the NYSE is open. The Fund generally values equity securities
according to the last sale price in the market in which they are primarily
traded (either a national securities exchange or the over-the- counter market).

The Fund's current NAV and public offering price may be found in the mutual
funds section of certain local newspapers under "Federated" and the appropriate
class designation listing.

The following table summarizes the minimum required investment amount and the
maximum sales charge, if any, that you will pay on an investment in the Fund.
Keep in mind that investment professionals may charge you fees for their
services in connection with your Share transactions.

MAXIMUM SALES CHARGE
MINIMUM
INITIAL/

SUBSEQUENT FRONT-END CONTINGENT
INVESTMENT SALES DEFERRED SALES
SHARES OFFERED AMOUNTS 1 CHARGE 2 CHARGE 3
Class A $1,500/$100 5.50% 0.00%
Class B $1,500/$100 None 5.50%
Class C $1,500/$100 None 1.00%

Orders for $250,000 or more will be invested in Class A Shares instead of Class
B Shares to maximize your return and minimize the sales charges and marketing
fees. Accounts held in the name of an investment professional may be treated
differently. Class B Shares will automatically convert into Class A Shares after
eight full years from the purchase date. This conversion is a non-taxable event.

2 Front-End Sales Charge is expressed as a percentage of public
offering

price. See "Sales Charge When You Purchase."

3 See "Sales Charge When You Redeem."

SALES CHARGE WHEN YOU PURCHASE
CLASS A SHARES
Sales Charge
as a Percentage Sales Charge
of Public as a Percentage

Purchase Amount Offering Price of NAV
Less than $50,000 5.50% 5.82%
$50,000 but less than $100,000 4.50% 4.71%
$100,000 but less than $250,000 3.75% 3.90%
$250,000 but less than $500,000 2.50% 2.56%
$500,000 but less than $1 million 2.00% 2.04%
$1 million or greater 1 0.00% 0.00%

1 A contingent deferred sales charge of 0.75% of the redemption amount applies
to Class A Shares redeemed up to 24 months after purchase under certain
investment programs where an investment professional received an advance payment
on the transaction.

THE SALES CHARGE AT PURCHASE MAY BE REDUCED OR ELIMINATED BY:

* purchasing Shares in greater quantities to reduce the applicable
sales
charge;

* combining concurrent purchases of Shares:

- - by you, your spouse, and your children under age 21; or

- - of the same share class of two or more Federated Funds (other than
money
market funds);

* accumulating purchases (in calculating the sales charge on an additional
purchase, include the current value of previous Share purchases still invested
in the Fund); or

* signing a letter of intent to purchase a specific dollar amount of Shares
within 13 months (call your investment professional or the Fund for more
information).

THE SALES CHARGE WILL BE ELIMINATED WHEN YOU PURCHASE SHARES:

* within 120 days of redeeming Shares of an equal or lesser amount;

* by exchanging shares from the same share class of another Federated Fund
(other than a money market fund);

* through wrap accounts or other investment programs where you pay the
investment professional directly for services;

* through investment professionals that receive no portion of the sales
charge;

* as a Federated Life Member (Class A Shares only) and their immediate
family members; or

* as a Director or employee of the Fund, the Adviser, the Distributor and their
affiliates, and the immediate family members of these individuals.

SALES CHARGE WHEN YOU REDEEM

Your redemption proceeds may be reduced by a sales charge, commonly referred to
as a contingent deferred sales charge (CDSC).

<TABLE>
<CAPTION>
CLASS A

SHARES
<S>

A CDSC of 0.75% of the redemption amount applies to Class A Shares redeemed up
to 24 months after purchase under certain investment programs where an
investment professional received an advance payment on the transaction.

<CAPTION>
CLASS B

SHARES
<S>

<C>

Shares Held Up
To:

CDSC

Year

5.50%

Years

4.75%

Years

4.00%

Years

3.00%

Years

2.00%

Years

1.00%

7 Years or
More

0.00%

<CAPTION>
CLASS C

SHARES
<S>

You will pay a 1% CDSC if you redeem Shares within one year of the purchase
date.

</TABLE>

YOU WILL NOT BE CHARGED A CDSC WHEN REDEEMING SHARES:

* purchased with reinvested dividends or capital gains;

* purchased within 120 days of redeeming Shares of an equal or lesser
amount;

* that you exchanged into the same share class of another Federated Fund if the
shares were held for the applicable CDSC holding period (other than a money
market fund);

* purchased through investment professionals who did not receive
advanced
sales payments;

* if, after you purchase Shares, you become disabled as defined by the
IRS;

* if the Fund redeems your Shares and closes your account for not
meeting
the minimum balance requirement;

* if your redemption is a required retirement plan distribution; or

* upon the death of the last surviving shareholder of the account.

TO KEEP THE SALES CHARGE AS LOW AS POSSIBLE, THE FUND REDEEMS YOUR SHARES IN
THIS ORDER:

* Shares that are not subject to a CDSC; and

* Shares held the longest (to determine the number of years your Shares have
been held, include the time you held shares of other Federated Funds that have
been exchanged for Shares of this Fund).

The CDSC is then calculated using the share price at the time of purchase or
redemption, whichever is lower.

How is the Fund Sold?

The Fund offers three share classes: Class A Shares, Class B Shares, and Class C
Shares, each representing interests in a single portfolio of securities.

The Fund's Distributor, Federated Securities Corp., markets the Shares
described in this prospectus to institutions or to individuals,
directly or
through investment professionals. When the Distributor receives
marketing
fees and sales charges, it may pay some or all of them to investment
professionals. The Distributor and its affiliates may pay out of their
assets other amounts (including items of material value) to investment
professionals for marketing and servicing Shares. The Distributor is a
subsidiary of Federated Investors, Inc. (Federated).

RULE 12B-1 PLAN

The Fund has adopted a Rule 12b-1 Plan, which allows it to pay marketing fees to
the Distributor and investment professionals for the sale, distribution and
customer servicing of the Fund's Shares. Because these Shares pay marketing fees
on an ongoing basis, your investment cost may be higher over time than other
shares with different sales charges and marketing fees.

How to Purchase Shares

You may purchase Shares through an investment professional, directly from the
Fund, or through an exchange from another Federated Fund. The Fund reserves the
right to reject any request to purchase or exchange Shares.

Where the Fund offers more than one share class and you do not specify the class
choice on your New Account Form or form of payment (e.g., Federal Reserve wire
or check) you automatically will receive Class A Shares.

THROUGH AN INVESTMENT PROFESSIONAL

* Establish an account with the investment professional; and

* Submit your purchase order to the investment professional before the end of
regular trading on the NYSE (normally 4:00 p.m. Eastern time). You will receive
the next calculated NAV if the investment professional forwards the order to the
Fund on the same day and the Fund receives payment within three business days.
You will become the owner of Shares and receive dividends when the Fund receives
your payment.

Investment professionals should send payments according to the instructions in
the sections "By Wire" or "By Check."

DIRECTLY FROM THE FUND

* Establish your account with the Fund by submitting a completed New
Account Form; and

* Send your payment to the Fund by Federal Reserve wire or check.

You will become the owner of Shares and your Shares will be priced at the next
calculated NAV after the Fund receives your wire or your check. If your check
does not clear, your purchase will be canceled and you could be liable for any
losses or fees incurred by the Fund or Federated Shareholder Services Company,
the Fund's transfer agent.

An institution may establish an account and place an order by calling the Fund
and the Shares will be priced at the next calculated NAV after the Fund receives
the order.

BY WIRE

Send your wire to:

State Street Bank and Trust Company
Boston, MA
Dollar Amount of Wire

ABA Number 011000028
Attention: EDGEWIRE
Wire Order Number, Dealer Number or Group Number
Nominee/Institution Name
Fund Name and Number and Account Number

You cannot purchase Shares by wire on holidays when wire transfers are
restricted.

BY CHECK

Make your check payable to THE FEDERATED FUNDS, note your account number on the
check, and mail it to:

Federated Shareholder Services Company
P.O. Box 8600
Boston, MA 02266-8600

If you send your check by a PRIVATE COURIER OR OVERNIGHT DELIVERY SERVICE that
requires a street address, mail it to:

Federated Shareholder Services Company
1099 Hingham Street

Rockland, MA 02370-3317

Payment should be made in U.S. dollars and drawn on a U.S. bank. The
Fund
will not accept third-party checks (checks originally payable to
someone
other than you or The Federated Funds).

THROUGH AN EXCHANGE

You may purchase Shares through an exchange from the same Share class of another
Federated Fund. You must meet the minimum initial investment requirement for
purchasing Shares and both accounts must have identical registrations.

BY SYSTEMATIC INVESTMENT PROGRAM

Once you have opened an account, you may automatically purchase additional
Shares on a regular basis by completing the Systematic Investment Program
section of the New Account Form or by contacting the Fund or your investment
professional.

BY AUTOMATED CLEARING HOUSE (ACH)

Once you have opened an account, you may purchase additional Shares through a
depository institution that is an ACH member. This purchase option can be
established by completing the appropriate sections of the New Account Form.

RETIREMENT INVESTMENTS

You may purchase Shares as retirement investments (such as qualified plans and
IRAs or transfer or rollover of assets). Call your investment professional or
the Fund for information on retirement investments. We suggest that you discuss
retirement investments with your tax adviser. You may be subject to an annual
IRA account fee.

How to Redeem and Exchange Shares

You should redeem or exchange Shares:

* through an investment professional if you purchased Shares through an
investment professional; or

* directly from the Fund if you purchased Shares directly from the Fund.

THROUGH AN INVESTMENT PROFESSIONAL

Submit your redemption or exchange request to your investment professional by
the end of regular trading on the NYSE (normally 4:00 p.m. Eastern time). The
redemption amount you will receive is based upon the next calculated NAV after
the Fund receives the order from your investment professional.

DIRECTLY FROM THE FUND

BY TELEPHONE

You may redeem or exchange Shares by calling the Fund at 1-800-341-7400 once you
have completed the appropriate authorization form for telephone transactions.

If you call before the end of regular trading on the NYSE (normally 4:00 p.m.
Eastern time), you will receive a redemption amount based on that day's NAV.

BY MAIL

You may redeem or exchange Shares by mailing a written request to the Fund.

You will receive a redemption amount based on the next calculated NAV after the
Fund receives your written request in proper form.

Send requests by mail to:

Federated Shareholder Services Company
P.O. Box 8600
Boston, MA 02266-8600

Send requests by PRIVATE COURIER OR OVERNIGHT DELIVERY SERVICE to:

Federated Shareholder Services Company
1099 Hingham Street

Rockland, MA 02370-3317

All requests must include:

* Fund Name and Share Class, account number and account registration;

* amount to be redeemed or exchanged;

* signatures of all shareholders exactly as registered; and

* IF EXCHANGING, the Fund Name and Share Class, account number and account
registration into which you are exchanging.

Call your investment professional or the Fund if you need special instructions.

SIGNATURE GUARANTEES

Signatures must be guaranteed if:

* your redemption will be sent to an address other than the address of
record;

* your redemption will be sent to an address of record that was changed
within the last 30 days;

* a redemption is payable to someone other than the shareholder(s) of
record; or

* IF EXCHANGING (TRANSFERRING) into another fund with a different shareholder
registration.

A signature guarantee is designed to protect your account from fraud. Obtain a
signature guarantee from a bank or trust company, savings association, credit
union or broker, dealer, or securities exchange member. A NOTARY PUBLIC CANNOT
PROVIDE A SIGNATURE GUARANTEE.

PAYMENT METHODS FOR REDEMPTIONS

Your redemption proceeds will be mailed by check to your address of record. The
following payment options are available if you complete the appropriate section
of the New Account Form or an Account Service Options Form. These payment
options require a signature guarantee if they were not established when the
account was opened:

* an electronic transfer to your account at a financial institution
that is
an ACH member; or

* wire payment to your account at a domestic commercial bank that is a Federal
Reserve System member.

REDEMPTION IN KIND

Although the Fund intends to pay Share redemptions in cash, it reserves the
right to pay the redemption price in whole or in part by a distribution of the
Fund's portfolio securities.

LIMITATIONS ON REDEMPTION PROCEEDS

Redemption proceeds normally are wired or mailed within one business day after
receiving a request in proper form. Payment may be delayed up to seven days:

* to allow your purchase to clear;

* during periods of market volatility; or

* when a shareholder's trade activity or amount adversely impacts the Fund's
ability to manage its assets.

You will not accrue interest or dividends on uncashed checks from the Fund if
those checks are undeliverable and returned to the Fund.

REDEMPTIONS FROM RETIREMENT ACCOUNTS

In the absence of your specific instructions, 10% of the value of your
redemption from a retirement account in the Fund may be withheld for taxes.

This withholding only applies to certain types of retirement accounts.

EXCHANGE PRIVILEGE

You may exchange Shares of the Fund into Shares of the same class of another
Federated Fund. To do this, you must:

* ensure that the account registrations are identical;

* meet any minimum initial investment requirements; and

* receive a prospectus for the fund into which you wish to exchange.

An exchange is treated as a redemption and a subsequent purchase, and is a
taxable transaction.

The Fund may modify or terminate the exchange privilege at any time. The Fund's
management or investment adviser may determine from the amount, frequency and
pattern of exchanges that a shareholder is engaged in excessive trading that is
detrimental to the Fund and other shareholders.

If this occurs, the Fund may terminate the availability of exchanges to that
shareholder and may bar that shareholder from purchasing other Federated Funds.

SYSTEMATIC WITHDRAWAL/EXCHANGE PROGRAM

You may automatically redeem or exchange Shares in a minimum amount of $100 on a
regular basis. Complete the appropriate section of the New Account Form or an
Account Service Options Form or contact your investment professional or the
Fund. Your account value must meet the minimum initial investment amount at the
time the program is established. This program may reduce, and eventually
deplete, your account. Payments should not be considered yield or income.
Generally, it is not advisable to continue to purchase Class A Shares subject to
a sales charge while redeeming Shares using this program.

SYSTEMATIC WITHDRAWAL PROGRAM (SWP) ON CLASS B SHARES

You will not be charged a CDSC on SWP redemptions if:

* you redeem 12% or less of your account value in a single year;

* you reinvest all dividends and capital gains distributions; and

* your account has at least a $10,000 balance when you establish the
SWP.
(You cannot aggregate multiple Class B Share accounts to meet this
minimum balance.)

You will be subject to a CDSC on redemption amounts that exceed the 12% annual
limit. In measuring the redemption percentage, your account is valued when you
establish the SWP and then annually at calendar year-end.

You can redeem monthly, quarterly, or semi-annually.

For SWP accounts established prior to April 1, 1999, your account must be at
least one year old in order to be eligible for the waiver of the CDSC.

ADDITIONAL CONDITIONS

TELEPHONE TRANSACTIONS

The Fund will record your telephone instructions. If the Fund does not follow
reasonable procedures, it may be liable for losses due to unauthorized or
fraudulent telephone instructions.

SHARE CERTIFICATES

The Fund no longer issues share certificates. If you are redeeming Shares
represented by certificates previously issued by the Fund, you must return the
certificates with your written redemption request. For your protection, send
your certificates by registered or certified mail, but do not endorse them.

Account and Share Information

CONFIRMATIONS AND ACCOUNT STATEMENTS

You will receive confirmation of purchases, redemptions and exchanges (except
for systematic transactions). In addition, you will receive periodic statements
reporting all account activity, including systematic transactions, dividends and
capital gains paid.

DIVIDENDS AND CAPITAL GAINS

The Fund declares and pays any dividends annually to shareholders. Dividends are
paid to all shareholders invested in the Fund on the record date. The record
date is the date on which a shareholder must officially own Shares in order to
earn a dividend.

In addition, the Fund pays any capital gains at least annually. Your dividends
and capital gains distributions will be automatically reinvested in additional
Shares without a sales charge, unless you elect cash payments.

Therefore, you should consider the tax implications of purchasing Shares shortly
before the Fund declares a dividend or capital gain. Contact your investment
professional or the Fund for information concerning when dividends and capital
gains will be paid.

ACCOUNTS WITH LOW BALANCES

Due to the high cost of maintaining accounts with low balances, non- retirement
accounts may be closed if redemptions or exchanges cause the account balance to
fall below the minimum initial investment amount. Before an account is closed,
you will be notified and allowed 30 days to purchase additional Shares to meet
the minimum.

TAX INFORMATION

The Fund sends an annual statement of your account activity to assist you in
completing your federal, state and local tax returns. Fund distributions of
dividends and capital gains are taxable to you whether paid in cash or
reinvested in the Fund. Dividends are taxable as ordinary income; capital gains
are taxable at different rates depending upon the length of time the Fund holds
its assets.

Fund distributions are expected to be primarily capital gains. Redemptions and
exchanges are taxable sales. Please consult your tax adviser regarding your
federal, state and local tax liability.

Who Manages the Fund?

The Board of Directors governs the Fund. The Board selects and oversees the
Adviser, Federated Global Investment Management Corp. The Adviser manages the
Fund's assets, including buying and selling portfolio securities. The Adviser's
address is 175 Water Street, New York, NY 10038-4965.

The Adviser and other subsidiaries of Federated advise approximately 176 mutual
funds and separate accounts, which totaled approximately $125 billion in assets
as of December 31, 1999. Federated was established in 1955 and is one of the
largest mutual fund investment managers in the United States with approximately
1,900 employees. More than 4,000 investment professionals make Federated Funds
available to their customers.

THE FUND'S PORTFOLIO MANAGERS ARE:

ALEXANDRE DE BETHMANN

Alexandre de Bethmann has been the Fund's portfolio manager since its
inception. Mr. de Bethmann joined Federated in 1995 as a Senior
Portfolio
Manager and a Vice President of the Fund's Adviser. Mr. de Bethmann
served
as Assistant Vice President/Portfolio Manager for Japanese and Korean
equities at the College Retirement Equities Fund from 1994 to 1995. Mr.
De
Bethman is a Chartered Financial Analyst. He received his M.B.A. in
Finance
from Duke University.

HENRY A. FRANTZEN

Henry A. Frantzen is the Fund's Chief Investment Officer. Mr. Frantzen
joined Federated in 1995 as an Executive Vice President of the Fund's
Adviser and has overseen the operations of the Adviser since its
formation.
Mr. Frantzen served as Chief Investment Officer of international
equities
at Brown Brothers Harriman & Co. from 1992 until 1995. Mr. Frantzen
earned
his bachelors degree in Business Administration from the University of
North Dakota.

ADVISER FEES

The Adviser receives an annual investment adviser fee of 1.10% of the Fund's
average daily net assets. The Adviser may voluntarily waive a portion of its fee
or reimburse the Fund for certain operating expenses.

Financial Information

FINANCIAL HIGHLIGHTS

The Financial Highlights will help you understand the Fund's financial
performance for its past five fiscal years, or since inception, if the life of
the Fund is shorter. Some of the information is presented on a per share basis.
Total returns represent the rate an investor would have earned (or lost) on an
investment in the Fund, assuming reinvestment of any dividends and capital
gains.

This information has been audited by Ernst & Young LLP, whose report, along with
the Fund's audited financial statements, is included in the Annual Report.

Financial Highlights-Class A Shares

(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30 1999 1998 1997
1996 1

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)
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.

Financial Highlights-Class B Shares

(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30 1999 1998 1997
1996 1

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.

Financial Highlights-Class C Shares

(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30 1999 1998 1997
1996 1

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.

[Graphic]

Federated

World-Class Investment Manager

PROSPECTUS

Federated Asia Pacific Growth Fund

A Portfolio of Federated World Investment Series, Inc.

CLASS A SHARES
CLASS B SHARES
CLASS C SHARES

MARCH 31, 2000

A Statement of Additional Information (SAI) dated March 31, 2000, is
incorporated by reference into this prospectus. Additional information about the
Funds and their investments is contained in the Fund's SAI and Annual and
Semi-Annual Report to shareholders as they become available. The Annual Report's
Management Discussion and Analysis discusses market conditions and investment
strategies that significantly affected the Fund's performance during its last
fiscal year. To obtain the SAI, Annual Report, Semi-Annual Report and other
information without charge, and make inquiries, call your investment
professional or the Fund at 1-800-341- 7400.

You can obtain information about the Fund (including the SAI) by writing to or
visiting the Public Reference Room in Washington, DC. You may also access fund
information from the EDGAR Database on the SEC's Internet site at
http://www.sec.gov. You can purchase copies of this information by contacting
the SEC by email at [email protected] or by writing to the SEC's Public
Reference Section, Washington, DC 20549-0102. Call 1-202-942- 8090 for
information on the Public Reference Room's operations and copying fees.

[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

Investment Company Act File No. 811-7141

Cusip 981487507
(Effective April 3, 2000, the Cusip number will be 31428U102) Cusip 981487606
(Effective April 3, 2000, the Cusip number will be 31428U201) Cusip 981487705
(Effective April 3, 2000, the Cusip number will be 31428U300)

G01470-02 (3/00) 513043

[Graphic]

STATEMENT OF ADDITIONAL INFORMATION

Federated Asia Pacific Growth Fund

A Portfolio of Federated World Investment Series, Inc.

CLASS A SHARES
CLASS B SHARES
CLASS C SHARES

This Statement of Additional Information (SAI) is not a prospectus. Read this
SAI in conjunction with the prospectus for Federated Asia Pacific Growth Fund
(Fund), dated March 31, 2000.

This SAI incorporates by reference the Fund's Annual Report. Obtain the
prospectus or the Annual Report without charge by calling 1-800-341-7400.

MARCH 31, 2000

[Graphic]
Federated
World-Class Investment Manager
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

G01470-03 (3/00)

[Graphic]

CONTENTS

How is the Fund Organized? 1
Securities in Which the Fund Invests 1
What Do Shares Cost? 6
How is the Fund Sold? 7
Exchanging Securities for Shares 8
Subaccounting Services 8
Redemption in Kind 8
Account and Share Information 9
Tax Information 9
Who Manages and Provides Services to the Fund? 10
How Does the Fund Measure Performance? 14
Who is Federated Investors, Inc.? 16
Financial Information 17
Investment Ratings 17
Addresses 19

How is the Fund Organized?

The Board of Directors (the Board) has established three classes of shares of
the Fund, known as Class A Shares, Class B Shares and Class C Shares (Shares).
This SAI relates to all classes of Shares. The Fund's investment adviser is
Federated Global Investment Management Corp. (Adviser).

Securities in Which the Fund Invests

In pursuing its investment strategy, the Fund may invest in the following
additional securities, not described in the prospectus, for any purpose that is
consistent with its investment objective.

SECURITIES DESCRIPTIONS AND TECHNIQUES

FOREIGN GOVERNMENT SECURITIES

Foreign government securities also include fixed income securities of
quasi-governmental agencies that are either issued by entities owned by a
national, state or equivalent government or are obligations of a political unit
that are not backed by the national government's full faith and credit. Further,
foreign government securities include mortgage-related securities issued or
guaranteed by national, state or provincial governmental instrumentalities,
including quasi-governmental agencies.

WARRANTS

CONVERTIBLE SECURITIES

Convertible securities are fixed income securities that the Fund has the option
to exchange for equity securities at a specified conversion price.

The option allows the Fund to realize additional returns if the market price of
the equity securities exceeds the conversion price. For example, the Fund may
hold fixed income securities that are convertible into shares of common stock at
a conversion price of $10 per share. If the market value of the shares of common
stock reached $12, the Fund could realize an additional $2 per share by
converting its fixed income securities.

Convertible securities generally have less potential for gain or loss than
common stocks. Convertible securities generally provide yields higher than the
underlying common stocks, but generally lower than comparable non- convertible
securities. Because of this higher yield, convertible securities generally sell
at prices above their "conversion value," which is the current market value of
the stock to be received upon conversion.

The difference between this conversion value and the price of convertible
securities will vary over time depending on changes in the value of the
underlying common stocks and interest rates. When the underlying common stocks
decline in value, convertible securities will tend not to decline to the same
extent because of the interest or dividend payments and the repayment of
principal at maturity for certain types of convertible securities. However,
securities that are convertible other than at the option of the holder generally
do not limit the potential for loss to the same extent as securities convertible
at the option of the holder. When the underlying common stocks rise in value,
the value of convertible securities may also be expected to increase. At the
same time, however, the difference between the market value of convertible
securities and their conversion value will narrow, which means that the value of
convertible securities will generally not increase to the same extent as the
value of the underlying common stocks. Because convertible securities may also
be interest-rate sensitive, their value may increase as interest rates fall and
decrease as interest rates rise. Convertible securities are also subject to
credit risk, and are often lower-quality securities.

DERIVATIVE CONTRACTS

Derivative contracts are financial instruments that require payments based upon
changes in the values of designated (or underlying) securities, currencies,
commodities, financial indices or other assets. Some derivative contracts (such
as futures, forwards and options) require payments relating to a future trade
involving the underlying asset. Other derivative contracts (such as swaps)
require payments relating to the income or returns from the underlying asset.
The other party to a derivative contract is referred to as a counterparty.

The Fund may trade in the following types of derivative contracts.

FUTURES CONTRACTS

Futures contracts provide for the future sale by one party and purchase by
another party of a specified amount of an underlying asset at a specified price,
date, and time. Entering into a contract to buy an underlying asset is commonly
referred to as buying a contract or holding a long position in the asset.
Entering into a contract to sell an underlying asset is commonly referred to as
selling a contract or holding a short position in the asset.

Futures contracts are considered to be commodity contracts. Futures contracts
traded OTC are frequently referred to as forward contracts.

The Fund may buy or sell the following types of futures contracts:
foreign
currency, securities and securities indices.

OPTIONS

The Fund may:

* Buy call options on foreign currencies, securities, securities indices and
future contracts in anticipation of an increase in the value of the underlying
asset; and

* Buy put options on foreign currencies, securities, securities indices and
futures contracts in anticipation of a decrease in the value of the underlying
asset.

The Fund may also write call options on foreign currencies, securities indices,
and future contracts to generate income from premiums, and in anticipation of a
decrease or only limited increase in the value of the underlying asset. If a
call written by the Fund is exercised, the Fund foregoes any possible profit
from an increase in the market price of the underlying asset over the exercise
price plus the premium received.

The Fund may also write put options on foreign currencies, securities indices
and future contracts to generate income from premiums, and in anticipation of an
increase or only limited decrease in the value of the underlying asset. In
writing puts, there is a risk that the Fund may be required to take delivery of
the underlying asset when its current market price is lower than the exercise
price.

When the Fund writes options on futures contracts, it will be subject to margin
requirements similar to those applied to futures contracts.

SWAPS

Swaps are contracts in which two parties agree to pay each other (swap) the
returns derived from underlying assets with differing characteristics. Most
swaps do not involve the delivery of the underlying assets by either party, and
the parties might not own the assets underlying the swap. The payments are
usually made on a net basis so that, on any given day, the Fund would receive
(or pay) only the amount by which its payment under the contract is less than
(or exceeds) the amount of the other party's payment.

Swap agreements are sophisticated instruments that can take many different
forms, and are known by a variety of names including caps, floors, and collars.
Common swap agreements that the Fund may use include:

INTEREST RATE SWAPS

Interest rate swaps are contracts in which one party agrees to make regular
payments equal to a fixed or floating interest rate times a stated principal
amount of fixed income securities, in return for payments equal to a different
fixed or floating rate times the same principal amount, for a specific period.
For example, a $10 million LIBOR swap would require one party to pay the
equivalent of the London Interbank Offer Rate of interest (which fluctuates) on
$10 million principal amount in exchange for the right to receive the equivalent
of a stated fixed rate of interest on $10 million principal amount.

CURRENCY SWAPS

Currency swaps are contracts which provide for interest payments in different
currencies. The parties might agree to exchange the notional principal amount as
well.

CAPS AND FLOORS

Caps and Floors are contracts in which one party agrees to make payments only if
an interest rate or index goes above (Cap) or below (Floor) a certain level in
return for a fee from the other party.

TOTAL RETURN SWAPS

Total return swaps are contracts in which one party agrees to make payments of
the total return from the underlying asset during the specified period, in
return for payments equal to a fixed or floating rate of interest or the total
return from another underlying asset.

HYBRID INSTRUMENTS

Hybrid instruments combine elements of derivative contracts with those of
another security (typically a fixed income security). All or a portion of the
interest or principal payable on a hybrid security is determined by reference to
changes in the price of an underlying asset or by reference to another benchmark
(such as interest rates, currency exchange rates or indices). Hybrid instruments
also include convertible securities with conversion terms related to an
underlying asset or benchmark.

The risks of investing in hybrid instruments reflect a combination of the risks
of investing in securities, options, futures and currencies, and depend upon the
terms of the instrument. Thus, an investment in a hybrid instrument may entail
significant risks in addition to those associated with traditional fixed income
or convertible securities. Hybrid instruments are also potentially more volatile
and carry greater interest rate risks than traditional instruments. Moreover,
depending on the structure of the particular hybrid, it may expose the Fund to
leverage risks or carry liquidity risks.

SPECIAL TRANSACTIONS

REPURCHASE AGREEMENTS

Repurchase agreements are transactions in which the Fund buys a security from a
dealer or bank and agrees to sell the security back at a mutually agreed upon
time and price. The repurchase price exceeds the sale price, reflecting the
Fund's return on the transaction. This return is unrelated to the interest rate
on the underlying security. The Fund will enter into repurchase agreements only
with banks and other recognized financial institutions, such as securities
dealers, deemed creditworthy by the Adviser.

The Fund's custodian or subcustodian will take possession of the securities
subject to repurchase agreements. The Adviser or subcustodian will monitor the
value of the underlying security each day to ensure that the value of the
security always equals or exceeds the repurchase price.

Repurchase agreements are subject to credit risks.

REVERSE REPURCHASE AGREEMENTS

Reverse repurchase agreements are repurchase agreements in which the Fund is the
seller (rather than the buyer) of the securities, and agrees to repurchase them
at an agreed upon time and price. A reverse repurchase agreement may be viewed
as a type of borrowing by the Fund. Reverse repurchase agreements are subject to
credit risks. In addition, reverse repurchase agreements create leverage risks
because the Fund must repurchase the underlying security at a higher price,
regardless of the market value of the security at the time of repurchase.

DELAYED DELIVERY TRANSACTIONS

Delayed delivery transactions, including when issued transactions, are
arrangements in which the Fund buys securities for a set price, with payment and
delivery of the securities scheduled for a future time. During the period
between purchase and settlement, no payment is made by the Fund to the issuer
and no interest accrues to the Fund. The Fund records the transaction when it
agrees to buy the securities and reflects their value in determining the price
of its shares. Settlement dates may be a month or more after entering into these
transactions so that the market values of the securities bought may vary from
the purchase prices. Therefore, delayed delivery transactions create interest
rate risks for the Fund. Delayed delivery transactions also involve credit risks
in the event of a counterparty default.

SECURITIES LENDING

The Fund will reinvest cash collateral in securities that qualify as an
acceptable investment for the Fund. However, the Fund must pay interest to the
borrower for the use of cash collateral.

Loans are subject to termination at the option of the Fund or the borrower. The
Fund will not have the right to vote on securities while they are on loan, but
it will terminate a loan in anticipation of any important vote.

The Fund may pay administrative and custodial fees in connection with a loan and
may pay a negotiated portion of the interest earned on the cash collateral to a
securities lending agent or broker.

Securities lending activities are subject to interest rate risks and credit
risks.

ASSET COVERAGE

In order to secure its obligations in connection with derivatives contracts or
special transactions, the Fund will either own the underlying assets, enter into
an offsetting transaction or set aside readily marketable securities with a
value that equals or exceeds the Fund's obligations. Unless the Fund has other
readily marketable assets to set aside, it cannot trade assets used to secure
such obligations without entering into an offsetting derivative contract or
terminating a special transaction. This may cause the Fund to miss favorable
trading opportunities or to realize losses on derivative contracts or special
transactions.

HEDGING

Hedging transactions are intended to reduce specific risks. For example, to
protect the Fund against circumstances that would normally cause the Fund's
portfolio securities to decline in value, the Fund may buy or sell a derivative
contract that would normally increase in value under the same circumstances. The
Fund may attempt to lower the cost of hedging by entering into transactions that
provide only limited protection, including transactions that: (1) hedge only a
portion of its portfolio; (2) use derivatives contracts that cover a narrow
range of circumstances; or (3) involve the sale of derivatives contracts with
different terms. Consequently, hedging transactions will not eliminate risk even
if they work as intended. In addition, hedging strategies are not always
successful, and could result in increased expenses and losses to the Fund.

INTER-FUND BORROWING AND LENDING ARRANGEMENTS

The SEC has granted an exemption that permits the Fund and all other funds
advised by subsidiaries of Federated Investors, Inc. ("Federated funds") to lend
and borrow money for certain temporary purposes directly to and from other
Federated funds. Participation in this inter-fund lending program is voluntary
for both borrowing and lending funds, and an inter- fund loan is only made if it
benefits each participating fund. Federated administers the program according to
procedures approved by the Fund's Board, and the Board monitors the operation of
the program. Any inter-fund loan must comply with certain conditions set out in
the exemption, which are designed to assure fairness and protect all
participating funds.

For example, inter-fund lending is permitted only (a) to meet shareholder
redemption requests, and (b) to meet commitments arising from "failed" trades.
All inter-fund loans must be repaid in seven days or less. The Fund's
participation in this program must be consistent with its investment policies
and limitations, and must meet certain percentage tests. Inter- fund loans may
be made only when the rate of interest to be charged is more attractive to the
lending fund than market-competitive rates on overnight repurchase agreements
(the "Repo Rate") and more attractive to the borrowing fund than the rate of
interest that would be charged by an unaffiliated bank for short-term borrowings
(the "Bank Loan Rate"), as determined by the Board. The interest rate imposed on
inter-fund loans is the average of the Repo Rate and the Bank Loan Rate.

INVESTMENT RISKS

There are many factors which may affect an investment in the Fund. The Fund's
principal risks are described in its prospectus. Additional risk factors are
outlined below.

BOND MARKET RISKS

* Prices of fixed income securities rise and fall in response to interest rate
changes for similar securities. Generally, when interest rates rise, prices of
fixed income securities fall.

* Interest rate changes have a greater effect on the price of fixed income
securities with longer durations. Duration measures the price sensitivity of a
fixed income security to changes in interest rates.

LEVERAGE RISKS

* Investments can have these same results if their returns are based on a
multiple of a specified index, security, or other benchmark.

CREDIT RISKS

* Credit risk is the possibility that an issuer will default on a security by
failing to pay interest or principal when due. If an issuer defaults, the Fund
will lose money.

* Many fixed income securities receive credit ratings from services such as
Standard & Poor's and Moody's Investor Services. These services assign ratings
to securities by assessing the likelihood of issuer default. Lower credit
ratings correspond to higher credit risk. If a security has not received a
rating, the Fund must rely entirely upon the Adviser's credit assessment.

* Fixed income securities generally compensate for greater credit risk by paying
interest at a higher rate. The difference between the yield of a security and
the yield of a U.S. Treasury security with a comparable maturity (the spread)
measures the additional interest paid for risk. Spreads may increase generally
in response to adverse economic or market conditions. A security's spread may
also increase if the security's rating is lowered, or the security is perceived
to have an increased credit risk. An increase in the spread will cause the price
of the security to decline.

* Credit risk includes the possibility that a party to a transaction involving
the Fund will fail to meet its obligations. This could cause the Fund to lose
the benefit of the transaction or prevent the Fund from selling or buying other
securities to implement its investment strategy.

RISKS ASSOCIATED WITH NONINVESTMENT GRADE SECURITIES

* Securities rated below investment grade, also known as junk bonds, generally
entail greater market, credit and liquidity risks than investment grade
securities. For example, their prices are more volatile, economic downturns and
financial setbacks may affect their prices more negatively, and their trading
market may be more limited.

FUNDAMENTAL INVESTMENT OBJECTIVE AND POLICIES

The Fund's Investment objective is to provide long-term growth of
capital

INVESTMENT LIMITATIONS

The following limitations and guidelines are considered at the time of purchase
under normal market conditions and are based on a percentage of the Fund's net
assets unless otherwise noted.

ISSUING SENIOR SECURITIES AND BORROWING MONEY

The Fund may borrow money, directly or indirectly, and issue senior securities
to the maximum extent permitted under the 1940 Act.

CONCENTRATION OF INVESTMENTS

The Fund will not make investments that will result in the concentration of its
investments in the securities of issuers primarily engaged in the same industry.
Government securities, municipal securities and bank instruments will not be
deemed to constitute an industry. To conform to the current view of the SEC
staff that only domestic bank instruments may be excluded from industry
concentration limitations, as a matter of non-fundamental policy, the Fund will
not exclude foreign bank instruments from industry concentration limitations
tests as long as the policy of the SEC remains in effect. In addition,
investments in bank instruments, and investments in certain industrial
development bonds funded by activities in a single industry, will be deemed to
constitute investment in an industry, except when held for temporary defensive
purposes. The investment of more than 25% of the value of the Fund's total
assets in any one industry will constitute "concentration."

INVESTING IN COMMODITIES

The Fund may not purchase or sell physical commodities, provided that the Fund
may purchase securities of companies that deal in commodities.

INVESTING IN REAL ESTATE

The Fund may not purchase or sell real estate, provided that this restriction
does not prevent the Fund from investing in issuers which invest, deal or
otherwise engage in transactions in real estate or interests therein, or
investing in securities that are secured by real estate or interests therein.
The Fund may exercise its rights under agreements relating to such securities,
including the right to enforce security interests and to hold real estate
acquired by reason of such enforcement until that real estate can be liquidated
in an orderly fashion.

LENDING CASH OR SECURITIES

The Fund may not make loans, provided that this restriction does not prevent the
Fund from purchasing debt obligations, entering into repurchase agreements,
lending its assets to broker/dealers or institutional investors and investing in
loans, including assignments and participation interests.

UNDERWRITING

The Fund may not underwrite the securities of other issuers, except that the
Fund may engage in transactions involving the acquisitions, disposition or
resale of its portfolio securities, under circumstances where it may be
considered to be an underwriter under the Securities Act of 1933.

DIVERSIFICATION OF INVESTMENTS

With respect to securities comprising 75% of the value of its total assets, the
Fund will not purchase securities of any one issuer (other than cash, cash
items, or securities issued or guaranteed by the U.S. government, its agencies
or instrumentalities, and repurchase agreements collateralized by such U.S.
government securities; and securities of other investment companies) if, as a
result, more than 5% of the value of its total assets would be invested in the
securities of that issuer, and will not acquire more than 10% of the outstanding
voting securities of any one issuer.

LIMITATIONS, HOWEVER, MAY BE CHANGED BY THE BOARD WITHOUT SHAREHOLDER
APPROVAL. SHAREHOLDERS WILL BE NOTIFIED BEFORE ANY MATERIAL CHANGES IN
THESE LIMITATIONS BECOMES EFFECTIVE.

BUYING SECURITIES ON MARGIN

The Fund will not purchase securities on margin, provided that the Fund may
obtain short-term credits necessary for the clearance of purchases and sales of
securities, and further provided that the Fund may make margin deposits in
connection with its use of financial options and futures, forward and spot
currency contracts, swap transactions and other financial contracts or
derivative instruments.

PLEDGING ASSETS

The Fund will not mortgage, pledge, or hypothecate any of its assets, provided
that this shall not apply to the transfer of securities in connection with any
permissible borrowing or to collateral arrangements in connection with
permissible activities.

INVESTING IN ILLIQUID SECURITIES

The Fund will not invest more than 15% of the value of its net assets in
illiquid securities, including repurchase agreements providing for settlement in
more than seven days after notice, non-negotiable time deposits with maturities
over seven days, over-the-counter options, swap agreements not determined to be
liquid, and certain restricted securities not determined by the Directors to be
liquid.

As a matter of non-fundamental policy: (a) utility companies will be divided
according to their services, for example, gas, gas transmission, electric and
telephone will each be considered a separate industry; (b) financial service
companies will be classified according to the end users of their services, for
example, automobile finance, bank finance and diversified finance will each be
considered a separate industry; and (c) asset-backed securities will be
classified according to the underlying assets securing such securities. To
conform to the current view of the SEC staff that only domestic bank instruments
may be excluded from industry concentration limitations, as a matter of
non-fundamental policy, the Fund will not exclude foreign bank instruments from
industry concentration limitation tests so long as the policy of the SEC remains
in effect. In addition, investments in bank instruments, and investments in
certain industrial development bonds funded by activities in a single industry
will be deemed to constitute investment in an industry, except when held for
temporary defensive purposes. The investment of more than 25% of the value of
the fund's total assets in any one industry will constitute "concentration."

For purposes of the above limitations, the Fund considers certificates of
deposit and demand and time deposits issued by a U.S. branch of a domestic bank
or savings association having capital, surplus and undivided profits in excess
of $100,000,000 at the time of investment to be "cash items." Except with
respect to borrowing money, if a percentage limitations is adhered to at the
time of investment, a later increase or decrease in percentage resulting from
any change in value or net assets will not result in a violation of such
limitation.

DETERMINING MARKET VALUE OF SECURITIES

Market values of the Fund's portfolio securities are determined as follows:

* for equity securities, according to the last sale price in the market in which
they are primarily traded (either a national securities exchange or the
over-the-counter market), if available;

* in the absence of recorded sales for equity securities, according to
the
mean between the last closing bid and asked prices;

* for bonds and other fixed income securities, at the last sale price on a
national securities exchange, if available, otherwise, as determined by an
independent pricing service;

* for short-term obligations, according to the mean between bid and asked prices
as furnished by an independent pricing service, except that short- term
obligations with remaining maturities of less than 60 days at the time of
purchase may be valued at amortized cost or at fair market value as determined
in good faith by the Board; and

* for all other securities at fair value as determined in good faith by
the
Board.

The Fund values futures contracts and options at their market values established
by the exchanges on which they are traded at the close of trading on such
exchanges. Options traded in the over-the-counter market are valued according to
the mean between the last bid and the last asked price for the option as
provided by an investment dealer or other financial institution that deals in
the option. The Board may determine in good faith that another method of valuing
such investments is necessary to appraise their fair market value.

TRADING IN FOREIGN SECURITIES

Trading in foreign securities may be completed at times which vary from the
closing of the New York Stock Exchange (NYSE). In computing its NAV, the Fund
values foreign securities at the latest closing price on the exchange on which
they are traded immediately prior to the closing of the NYSE. Certain foreign
currency exchange rates may also be determined at the latest rate prior to the
closing of the NYSE. Foreign securities quoted in foreign currencies are
translated into U.S. dollars at current rates. Occasionally, events that affect
these values and exchange rates may occur between the times at which they are
determined and the closing of the NYSE.

If such events materially affect the value of portfolio securities, these
securities may be valued at their fair value as determined in good faith by the
Fund's Board, although the actual calculation may be done by others.

What Do Shares Cost?

The Fund's net asset value (NAV) per Share fluctuates and is based on the market
value of all securities and other assets of the Fund. The NAV for each class of
Shares may differ due to the variance in daily net income realized by each
class. Such variance will reflect only accrued net income to which the
shareholders of a particular class are entitled.

REDUCING OR ELIMINATING THE FRONT-END SALES CHARGE

You can reduce or eliminate the applicable front-end sales charge, as follows:

QUANTITY DISCOUNTS

Larger purchases of the same Share class reduce the sales charge you pay. You
can combine purchases of Shares made on the same day by you, your spouse and
your children under age 21. In addition, purchases made at one time by a trustee
or fiduciary for a single trust estate or a single fiduciary account can be
combined.

ACCUMULATED PURCHASES

If you make an additional purchase of Shares, you can count previous Share
purchases still invested in the Fund in calculating the applicable sales charge
on the additional purchase.

CONCURRENT PURCHASES

You can combine concurrent purchases of the same share class of two or more
Federated Funds in calculating the applicable sales charge.

LETTER OF INTENT CLASS A SHARES

You can sign a Letter of Intent committing to purchase a certain amount of the
same class of Shares within a 13-month period to combine such purchases in
calculating the sales charge. The Fund's custodian will hold Shares in escrow
equal to the maximum applicable sales charge. If you complete the Letter of
Intent, the Custodian will release the Shares in escrow to your account. If you
do not fulfill the Letter of Intent, the Custodian will redeem the appropriate
amount from the Shares held in escrow to pay the sales charges that were not
applied to your purchases.

REINVESTMENT PRIVILEGE

You may reinvest, within 120 days, your Share redemption proceeds at the next
determined NAV without any sales charge.

PURCHASES BY AFFILIATES OF THE FUND

The following individuals and their immediate family members may buy Shares at
NAV without any sales charge because there are nominal sales efforts associated
with their purchases:

* the Directors, employees and sales representatives of the Fund, the
Adviser, the Distributor and their affiliates;

* any associated person of an investment dealer who has a sales
agreement
with the Distributor; and

* trusts, pension or profit-sharing plans for these individuals.

REDUCING OR ELIMINATING THE CONTINGENT DEFERRED SALES CHARGE

These reductions or eliminations are offered because: no sales commissions have
been advanced to the investment professional selling Shares; the shareholder has
already paid a Contingent Deferred Sales Charge (CDSC); or nominal sales efforts
are associated with the original purchase of Shares.

Upon notification to the Distributor or the Fund's transfer agent, no CDSC will
be imposed on redemptions:

* following the death or post-purchase disability, as defined in Section
72(m)(7) of the Internal Revenue Code of 1986, of the last surviving
shareholder;

* representing minimum required distributions from an Individual Retirement
Account or other retirement plan to a shareholder who has attained the age of
70-1/2;

* of Shares that represent a reinvestment within 120 days of a
previous redemption;

* of Shares held by the Directors, employees, and sales representatives of the
Fund, the Adviser, the Distributor and their affiliates; employees of any
investment professional that sells Shares according to a sales agreement with
the Distributor; and the immediate family members of the above persons;

* of Shares originally purchased through a bank trust department, a registered
investment adviser or retirement plans where the third party administrator has
entered into certain arrangements with the Distributor or its affiliates, or any
other investment professional, to the extent that no payments were advanced for
purchases made through these entities;

* which are involuntary redemptions processed by the Fund because the accounts
do not meet the minimum balance requirements.

CLASS B SHARES ONLY

* which are qualifying redemptions of Class B Shares under a Systematic
Withdrawal Program.

How is the Fund Sold?

Under the Distributor's Contract with the Fund, the Distributor
(Federated
Securities Corp.) offers Shares on a continuous, best-efforts basis.

FRONT-END SALES CHARGE REALLOWANCES

The Distributor receives a front-end sales charge on certain Share sales. The
Distributor generally pays up to 90% (and as much as 100%) of this charge to
investment professionals for sales and/or administrative services. Any payments
to investment professionals in excess of 90% of the front-end sales charge are
considered supplemental payments. The Distributor retains any portion not paid
to an investment professional.

RULE 12B-1 PLAN

As a compensation-type plan, the Rule 12b-1 Plan is designed to pay the
Distributor (who may then pay investment professionals such as banks,
broker/dealers, trust departments of banks, and registered investment advisers)
for marketing activities (such as advertising, printing and distributing
prospectuses, and providing incentives to investment professionals) to promote
sales of Shares so that overall Fund assets are maintained or increased. This
helps the Fund achieve economies of scale, reduce per share expenses, and
provide cash for orderly portfolio management and Share redemptions. In
addition, the Fund's service providers that receive asset-based fees also
benefit from stable or increasing Fund assets.

The Fund may compensate the Distributor more or less than its actual marketing
expenses. In no event will the Fund pay for any expenses of the Distributor that
exceed the maximum Rule 12b-1 Plan fee.

For some classes of Shares, the maximum Rule 12b-1 Plan fee that can be paid in
any one year may not be sufficient to cover the marketing-related expenses the
Distributor has incurred. Therefore, it may take the Distributor a number of
years to recoup these expenses.

Federated and its subsidiaries may benefit from arrangements where the Rule
12b-1 Plan fees related to Class B Shares may be paid to third parties who have
advanced commissions to investment professionals.

SHAREHOLDER SERVICES

The Fund may pay Federated Shareholder Services Company, a subsidiary of
Federated, for providing shareholder services and maintaining shareholder
accounts. Federated Shareholder Services Company may select others to perform
these services for their customers and may pay them fees.

SUPPLEMENTAL PAYMENTS

Investment professionals may be paid fees out of the assets of the Distributor
and/or Federated Shareholder Services Company (but not out of Fund assets). The
Distributor and/or Federated Shareholder Services Company may be reimbursed by
the Adviser or its affiliates.

Investment professionals receive such fees for providing distribution-related or
shareholder services such as sponsoring sales, providing sales literature,
conducting training seminars for employees, and engineering sales-related
computer software programs and systems. Also, investment professionals may be
paid cash or promotional incentives, such as reimbursement of certain expenses
relating to attendance at informational meetings about the Fund or other special
events at recreational-type facilities, or items of material value. These
payments will be based upon the amount of Shares the investment professional
sells or may sell and/or upon the type and nature of sales or marketing support
furnished by the investment professional.

When an investment professional's customer purchases shares, the investment
professional may receive:

* an amount up to 5.50% and 1.00%, respectively, of the NAV of Class B and C
Shares.

In addition, the Distributor may pay investment professionals 0.25% of the
purchase price of $1 million or more of Class A Shares that its customer has not
redeemed over the first year.

CLASS A SHARES

Investment professionals purchasing Class A Shares for their customers are
eligible to receive an advance payment from the Distributor based on the
following breakpoints:

<TABLE>
<CAPTION>
ADVANCE PAYMENTS
AS A PERCENTAGE OF

AMOUNT PUBLIC OFFERING PRICE
<S> <C>
First $1 - $5 million 0.75% Next $5 - $20 million 0.50% Over $20 million 0.25%
</TABLE>

For accounts with assets over $1 million, the dealer advance payments reset
annually to the first breakpoint on the anniversary of the first purchase.

Class A Share purchases under this program may be made by Letter of Intent or by
combining concurrent purchases. The above advance payments will be paid only on
those purchases that were not previously subject to a front- end sales charge
and dealer advance payments. Certain retirement accounts may not be eligible for
this program.

A contingent deferred sales charge of 0.75% of the redemption amount applies to
Class A Shares redeemed up to 24 months after purchase. The CDSC does not apply
under certain investment programs where the investment professional does not
receive an advance payment on the transaction including, but not limited to,
trust accounts and wrap programs where the investor pays an account level fee
for investment management.

Exchanging Securities for Shares

You may contact the Distributor to request a purchase of Shares in exchange for
securities you own. The Fund reserves the right to determine whether to accept
your securities and the minimum market value to accept. The Fund will value your
securities in the same manner as it values its assets. This exchange is treated
as a sale of your securities for federal tax purposes.

Subaccounting Services

Certain investment professionals may wish to use the transfer agent's
subaccounting system to minimize their internal recordkeeping requirements. The
transfer agent may charge a fee based on the level of subaccounting services
rendered. Investment professionals holding Shares in a fiduciary, agency,
custodial or similar capacity may charge or pass through subaccounting fees as
part of or in addition to normal trust or agency account fees. They may also
charge fees for other services that may be related to the ownership of Shares.
This information should, therefore, be read together with any agreement between
the customer and the investment professional about the services provided, the
fees charged for those services, and any restrictions and limitations imposed.

Redemption in Kind

Although the Fund intends to pay Share redemptions in cash, it reserves the
right, as described below, to pay the redemption price in whole or in part by a
distribution of the Fund's portfolio securities.

Because the Fund has elected to be governed by Rule 18f-1 under the 1940 Act,
the Fund is obligated to pay Share redemptions to any one shareholder in cash
only up to the lesser of $250,000 or 1% of the net assets represented by such
Share class during any 90-day period.

Any Share redemption payment greater than this amount will also be in cash
unless the Fund's Board determines that payment should be in kind. In such a
case, the Fund will pay all or a portion of the remainder of the redemption in
portfolio securities, valued in the same way as the Fund determines its NAV. The
portfolio securities will be selected in a manner that the Fund's Board deems
fair and equitable and, to the extent available, such securities will be readily
marketable.

Redemption in kind is not as liquid as a cash redemption. If redemption is made
in kind, shareholders receiving the portfolio securities and selling them before
their maturity could receive less than the redemption value of the securities
and could incur certain transaction costs.

Account and Share Information

VOTING RIGHTS

Each share of the Fund gives the shareholder one vote in Director elections and
other matters submitted to shareholders for vote.

All Shares of the Corporation have equal voting rights, except that in matters
affecting only a particular Fund or class, only Shares of that Fund or class are
entitled to vote.

Directors may be removed by the Board or by shareholders at a special meeting. A
special meeting of shareholders will be called by the Board upon the written
request of shareholders who own at least 10% of the Corporation's outstanding
shares of all series entitled to vote.

As of March 2, 2000, the following shareholder owned of record, beneficially, or
both, 5% or more of outstanding Class B Shares: MLPF&S For the Sole Benefit of
its Customers, Jacksonville, FL, owned approximately 278,504 (16.88%) Shares.

As of March 2, 2000, the following shareholder owned of record, beneficially, or
both, 5% or more of outstanding Class C Shares: MLPF&S For the Sole Benefit of
its Customers, Joacsonville, FL, owned approximately 700,995 (70.90%) Shares.

Shareholders owning 25% or more of outstanding Shares may be in control and be
able to affect the outcome of certain matters presented for a vote of
shareholders.

Tax Information

FEDERAL INCOME TAX

The Fund intends to meet requirements of Subchapter M of the Internal Revenue
Code applicable to regulated investment companies. If these requirements are not
met, it will not receive special tax treatment and will pay federal income tax.

The Fund will be treated as a single, separate entity for federal income tax
purposes so that income earned and capital gains and losses realized by the
Corporation's other portfolios will be separate from those realized by the Fund.

FOREIGN INVESTMENTS

If the Fund purchases foreign securities, their investment income may be subject
to foreign withholding or other taxes that could reduce the return on these
securities. Tax treaties between the United States and foreign countries,
however, may reduce or eliminate the amount of foreign taxes to which the Fund
would be subject. The effective rate of foreign tax cannot be predicted since
the amount of Fund assets to be invested within various countries is uncertain.
However, the Fund intends to operate so as to qualify for treaty-reduced tax
rates when applicable.

Distributions from a Fund may be based on estimates of book income for the year.
Book income generally consists solely of the coupon income generated by the
portfolio, whereas tax-basis income includes gains or losses attributable to
currency fluctuation. Due to differences in the book and tax treatment of
fixed-income securities denominated in foreign currencies, it is difficult to
project currency effects on an interim basis. Therefore, to the extent that
currency fluctuations cannot be anticipated, a portion of distributions to
shareholders could later be designated as a return of capital, rather than
income, for income tax purposes, which may be of particular concern to simple
trusts.

If the Fund invests in the stock of certain foreign corporations, they may
constitute Passive Foreign Investment Companies (PFIC), and the Fund may be
subject to Federal income taxes upon disposition of PFIC investments.

If more than 50% of the value of the Fund's assets at the end of the tax year is
represented by stock or securities of foreign corporations, the Fund intends to
qualify for certain Code stipulations that would allow shareholders to claim a
foreign tax credit or deduction on their U.S. income tax returns. The Code may
limit a shareholder's ability to claim a foreign tax credit. Shareholders who
elect to deduct their portion of the Fund's foreign taxes rather than take the
foreign tax credit must itemize deductions on their income tax returns.

Who Manages and Provides Services to the Fund?

BOARD OF DIRECTORS

The Board is responsible for managing the Corporation's business affairs and for
exercising all the Corporation's powers except those reserved for the
shareholders. Information about each Board member is provided below and includes
each person's: name, address, birth date, present position(s) held with the
Corporation, principal occupations for the past five years and positions held
prior to the past five years, total compensation received as a Director from the
Corporation for its most recent fiscal year, and the total compensation received
from the Federated Fund Complex for the most recent calendar year. The
Corporation is comprised of nine funds and the Federated Fund Complex is
comprised of 43 investment companies, whose investment advisers are affiliated
with the Fund's Adviser.

As of March 2, 2000, the Fund's Board and Officers as a group owned less than 1%
of the Fund's outstanding Class A, B and C Shares.

<TABLE>
<CAPTION>
NAME
TOTAL

BIRTH DATE
AGGREGATE COMPENSATION
ADDRESS PRINCIPAL OCCUPATIONS
COMPENSATION FROM CORPORATION
POSITION WITH CORPORATION FOR PAST FIVE YEARS
FROM CORPORATION AND FUND COMPLEX
<S> <C>
<C> <C>
JOHN F. DONAHUE*+# Chief Executive
Officer $0 $0 for the Corporation
Birth Date: July 28, 1924 and Director or Trustee
of and 43 other investment
Federated Investors Tower the Federated
Fund companies in the
1001 Liberty Avenue Complex; Chairman
and Fund Complex
Pittsburgh, PA Director,
Federated
DIRECTOR AND CHAIRMAN Investors, Inc.; Chairman,
Federated

Investment

Management Company,
Federated
Global

Investment

Management

Corp. and

Passport

Research, Ltd.; formerly:
Trustee,
Federated

Investment

Management

Company and Chairman

and

Director,
Federated

Investment Counseling.
THOMAS G. BIGLEY Director or Trustee
of $1,514.23 $116,760.63 for the
Birth Date: February 3, 1934 the Federated
Fund Corporation and 43 other
15 Old Timber Trail Complex; Director,
Member investment companies
Pittsburgh, PA of Executive
Committee, in the Fund Complex
DIRECTOR Children's Hospital
of
Pittsburgh; Director,
Robroy Industries, Inc.
(coated steel
conduits/
computer

storage

equipment); formerly:
Senior Partner, Ernst

&
Young LLP; Director,
MED

3000 Group, Inc.
(physician
practice

management); Director,
Member of
Executive

Committee, University

Pittsburgh.
JOHN T. CONROY, JR. Director or Trustee of
the $1,665.92 $128,455.37 for the
Birth Date: June 23, 1937 Federated Fund
Complex; Corporation and 37 other
Grubb & Ellis/Investment Properties President,
Investment investment companies
Corporations Wood/Commercial Dept. Properties
Corporation; in the Fund Complex
John R. Wood Associates, Inc. Realtors Senior Vice President,
3201 Tamiami Trail North John R. Wood
and
Naples, FL Associates, Inc.,
DIRECTOR Realtors; Partner
or
Trustee in private

real

estate ventures
in

Southwest Florida;
formerly: President,
Naples
Property

Management, Inc.
and

Northgate

Village

Development Corporation.
NICHOLAS CONSTANTAKIS Director or Trustee of
the $1,514.23 $73,191.21 for the
Birth Date: September 3, 1939 Federated Fund
Complex; Corporation and 37 other
175 Woodshire Drive Director, Michael
Baker investment companies
Pittsburgh, PA Corporation
(engineering, in the Fund Complex
DIRECTOR construction,
operations
and technical services);
formerly: Partner,
Andersen Worldwide SC.
JOHN F. CUNNINGHAM++ Director or Trustee of
some $0 $93,190.48 for the
Birth Date: March 5, 1943 of the Federated
Fund Corporation and 37 other
353 El Brillo Way Complex;
Chairman, investment companies
Palm Beach, FL President and
Chief in the Fund Complex
DIRECTOR Executive Officer,
Cunningham & Co., Inc.
(strategic
business

consulting);
Trustee

Associate, Boston College;
Director, Iperia Corp.
(communications/software);
formerly: Director,
Redgate Communications
and

EMC Corporation

(computer
storage systems).
Previous Positions:
Chairman of the Board
and

Chief Executive Officer,
Computer Consoles, Inc.;
President and
Chief

Operating Officer,
Wang

Laboratories; Director,
First National Bank
of

Boston; Director,
Apollo

Computer, Inc.
LAWRENCE D. ELLIS, M.D.* Director or Trustee of
the $1,514.23 $116,760.63 for the
Birth Date: October 11, 1932 Federated Fund
Complex; Corporation and 43 other
3471 Fifth Avenue Professor of
Medicine, investment companies
Suite 1111 University of
Pittsburgh; in the Fund Complex
Pittsburgh, PA Medical Director,
DIRECTOR University of
Pittsburgh
Medical Center - Downtown;
Hematologist, Oncologist,
and Internist,
University

of Pittsburgh

Medical

Center; Member,
National

Board of Trustees,
Leukemia Society
of

America.

<CAPTION>
NAME
TOTAL

BIRTH DATE
AGGREGATE COMPENSATION
ADDRESS PRINCIPAL OCCUPATIONS
COMPENSATION FROM CORPORATION
POSITION WITH CORPORATION FOR PAST FIVE YEARS
FROM CORPORATION AND FUND COMPLEX
<S> <C>
<C> <C>
PETER E. MADDEN Director or Trustee of
the $1,429.52 $109,153.60 for the
Birth Date: March 16, 1942 Federated Fund
Complex; Corporation and 43 other
One Royal Palm Way formerly:
Representative, investment companies
100 Royal Palm Way Commonwealth
of in the Fund Complex
Palm Beach, FL Massachusetts
General
DIRECTOR Court; President,
State
Street Bank and

Trust

Company and

State

Street Corporation.
Previous Positions:
Director, VISA USA and
VISA

International;
Chairman

and Director,
Massachusetts
Bankers

Association; Director,
Depository
Trust

Corporation; Director,
The

Boston Stock Exchange.
CHARLES F. MANSFIELD, JR.++ Director or Trustee of
some $1,595.28 $102,573.91 for the
Birth Date: April 10, 1945 of the Federated
Fund Corporation and 40 other
80 South Road Complex; Executive
Vice investment companies
Westhampton Beach, NY President, Legal
and in the Fund Complex
DIRECTOR External Affairs,
Dugan
Valva Contess, Inc.
(marketing,
communications,
technology

and consulting); formerly:
Management Consultant.
Previous Positions:
Chief

Executive Officer,
PBTC

International Bank;
Partner, Arthur Young
&
Company (now Ernst &
Young

LLP); Chief
Financial

Officer of Retail

Banking

Sector, Chase

Manhattan

Bank; Senior

Vice

President, Marine

Midland

Bank; Vice President,
Citibank;
Assistant

Professor of Banking

and

Finance, Frank G.
Zarb

School of Business,
Hofstra University.
JOHN E. MURRAY, JR., J.D., S.J.D.# Director or Trustee
of $1,665.92 $128,455.37 for the
Birth Date: December 20, 1932 the Federated
Fund Corporation and 43 other
President, Duquesne University Complex; President,
Law investment companies
Pittsburgh, PA Professor,
Duquesne in the Fund Complex
DIRECTOR University;
Consulting
Partner, Mollica & Murray;
Director, Michael
Baker

Corp. (engineering,
construction,
operations

and technical services).
Previous Positions:
Dean

and Professor of Law,
University of
Pittsburgh

School of Law; Dean

and

Professor of Law,
Villanova
University

School of Law.
MARJORIE P. SMUTS Director or Trustee of
the $1,514.23 $116,760.63 for the
Birth Date: June 21, 1935 Federated Fund
Complex; Corporation and 43 other
4905 Bayard Street Public
Relations/ investment companies
Pittsburgh, PA

Marketing/Conference in the Fund
Complex
DIRECTOR Planning.
Previous Positions:
National Spokesperson,
Aluminum Company
of

America;
television

producer; business owner.
JOHN S. WALSH++ Director or Trustee of
some $0 $94,536.85 for the
Birth Date: November 28, 1957 of the Federated
Fund Corporation and 39 other
2007 Sherwood Drive Complex; President
and investment companies
Valparaiso, IN Director, Heat Wagon,
Inc. in the Fund Complex
DIRECTOR (manufacturer
of
construction

temporary

heaters); President
and

Director,
Manufacturers

Products, Inc.
(distributor of
portable

construction heaters);
President, Portable

Heater

Parts, a division

Manufacturers Products,
Inc.; Director, Walsh
&
Kelly, Inc. (heavy
highway

contractor); formerly:
Vice President, Walsh

&
Kelly, Inc.
J. CHRISTOPHER DONAHUE+ President or
Executive $0 $0 for the Corporation
Birth Date: April 11, 1949 Vice President of
the and 30 other investment
Federated Investors Tower Federated Fund
Complex; companies in the
1001 Liberty Avenue Director or Trustee of
some Fund Complex
Pittsburgh, PA of the Funds in
the
EXECUTIVE VICE PRESIDENT Federated Fund Complex;
AND DIRECTOR President, Chief
Executive
Officer and Director,
Federated Investors, Inc.;
President, Chief
Executive

Officer and Trustee,
Federated
Investment

Management Company;
Trustee,
Federated

Investment Counseling;
President, Chief
Executive

Officer and Director,
Federated
Global

Investment

Management

Corp.; President and

Chief

Executive Officer,
Passport Research, Ltd.;
Trustee,
Federated

Shareholder

Services

Company; Director,
Federated
Services

Company; formerly:
President,
Federated

Investment Counseling.
EDWARD C. GONZALES President, Executive
Vice $0 $0 for the Corporation
Birth Date: October 22, 1930 President and Treasurer
of and 42 other investment
Federated Investors Tower some of the Funds in
the company in the
1001 Liberty Avenue Federated Fund
Complex; Fund Complex
Pittsburgh, PA Vice Chairman,
Federated
EXECUTIVE VICE PRESIDENT Investors, Inc.; Trustee,
Federated

Administrative

Services; formerly:
Trustee or Director of
some

of the Funds in
the

Federated Fund Complex;
CEO and Chairman,
Federated
Administrative

Services; Vice President,
Federated
Investment

Management Company,
Federated
Investment

Counseling,
Federated

Global

Investment

Management Corp.
and

Passport Research, Ltd.;
Director and
Executive

Vice President,
Federated

Securities Corp.;
Director,
Federated

Services Company; Trustee,
Federated
Shareholder

Services Company.

<CAPTION>
NAME
TOTAL

BIRTH DATE
AGGREGATE COMPENSATION
ADDRESS PRINCIPAL OCCUPATIONS
COMPENSATION FROM CORPORATION
POSITION WITH CORPORATION FOR PAST FIVE YEARS
FROM CORPORATION AND FUND COMPLEX
<S> <C>
<C> <C>
JOHN W. MCGONIGLE Executive Vice
President $0 $0 for the Corporation
Birth Date: October 26, 1938 and Secretary of
the and 43 other investment
Federated Investors Tower Federated Fund
Complex; companies in the
1001 Liberty Avenue Executive Vice
President, Fund Complex
Pittsburgh, PA Secretary and Director,
EXECUTIVE VICE PRESIDENT Federated Investors, Inc.;
AND SECRETARY formerly: Trustee,
Federated

Investment

Management Company

and

Federated

Investment

Counseling; Director,
Federated
Global

Investment

Management

Corp, Federated

Services

Company and

Federated

Securities Corp.
RICHARD J. THOMAS Treasurer of the
Federated $0 $0 for the Corporation
Birth Date: June 17, 1954 Fund Complex;
Vice and 43 other investment
Federated Investors Tower President -
Funds companies in the
1001 Liberty Avenue Financial
Services Fund Complex
Pittsburgh, PA Division,
Federated
TREASURER Investors, Inc.; formerly:
various

management

positions within
Funds

Financial

Services

Division of

Federated

Investors, Inc.
RICHARD B. FISHER* President or
Vice $0 $0 for the Corporation
Birth Date: May 17, 1923 President of some of
the and 41 other investment
Federated Investors Tower Funds in the Federated
Fund companies in the
1001 Liberty Avenue Complex; Vice
Chairman, Fund Complex
Pittsburgh, PA Federated Investors, Inc.;
DIRECTOR Chairman,
Federated
Securities Corp.;
formerly: Director
or

Trustee of some of
the

Funds in the Federated

Fund

Complex,; Executive

Vice

President,
Federated

Investors, Inc.
and

Director and

Chief

Executive Officer,
Federated Securities Corp.
HENRY A. FRANTZEN Chief Investment
Officer $0 $0 for the Corporation
Birth Date: November 28, 1942 of this Fund and
various and 2 other investment
Federated Investors Tower other Funds in
the companies in the
1001 Liberty Avenue Federated Fund
Complex; Fund Complex
Pittsburgh, PA Executive Vice President,
CHIEF INVESTMENT OFFICER Federated
Investment
Counseling,
Federated

Global

Investment

Management Corp.,
Federated
Investment

Management Company

and

Passport Research, Ltd.;
Registered Representative,
Federated
Securities

Corp.; Vice President,
Federated Investors, Inc.;
formerly: Executive
Vice

President,
Federated

Investment

Counseling

Institutional

Portfolio

Management

Services

Division; Chief

Investment

Officer/Manager,
International Equities,
Brown Brothers Harriman
&
Co.; Managing Director,
BBH Investment
Management

Limited.

</TABLE>

* An asterisk denotes a Director who is deemed to be an interested person as
defined in the 1940 Act.

# A pound sign denotes a Member of the Board's Executive Committee, which
handles the Board's responsibilities between its meetings.

+ Mr. Donahue is the father of J. Christopher Donahue, Executive Vice
President and Director of the Corporation.

++ Mr. Mansfield became a member of the Board of Directors on January
1,
1999. Messrs. Cunningham and Walsh became members of the Board of
Directors on December 7, 1999. Messrs. Cunningham and Walsh did not
receive any fees as of the fiscal year end of the Company.

INVESTMENT ADVISER

The Adviser conducts investment research and makes investment decisions for the
Fund.

The Adviser is a wholly owned subsidiary of Federated.

The Adviser shall not be liable to the Corporation or any Fund shareholder for
any losses that may be sustained in the purchase, holding, or sale of any
security or for anything done or omitted by it, except acts or omissions
involving willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties imposed upon it by its contract with the Corporation.

OTHER RELATED SERVICES

Affiliates of the Adviser may, from time to time, provide certain electronic
equipment and software to institutional customers in order to facilitate the
purchase of Fund Shares offered by the Distributor.

CODE OF ETHICS RESTRICTIONS ON PERSONAL TRADING

As required by SEC rules, the Fund, its Adviser, and its Distributor have
adopted codes of ethics. These codes govern securities trading activities of
investment personnel, Fund Directors, and certain other employees. Although they
do permit these people to trade in securities, including those that the Fund
could buy, they also contain significant safeguards designed to protect the Fund
and its shareholders from abuses in this area, such as requirements to obtain
prior approval for, and to report, particular transactions.

BROKERAGE TRANSACTIONS

When selecting brokers and dealers to handle the purchase and sale of portfolio
instruments, the Adviser looks for prompt execution of the order at a favorable
price. The Adviser will generally use those who are recognized dealers in
specific portfolio instruments, except when a better price and execution of the
order can be obtained elsewhere. The Adviser may select brokers and dealers
based on whether they also offer research services (as described below). In
selecting among firms believed to meet these criteria, the Adviser may give
consideration to those firms which have sold or are selling Shares of the Fund
and other funds distributed by the Distributor and its affiliates. The Adviser
makes decisions on portfolio transactions and selects brokers and dealers
subject to review by the Fund's Board.

RESEARCH SERVICES

Research services may include advice as to the advisability of investing in
securities; security analysis and reports; economic studies; industry studies;
receipt of quotations for portfolio evaluations; and similar services. Research
services may be used by the Adviser or by affiliates of Federated in advising
other accounts. To the extent that receipt of these services may replace
services for which the Adviser or its affiliates might otherwise have paid, it
would tend to reduce their expenses. The Adviser and its affiliates exercise
reasonable business judgment in selecting those brokers who offer brokerage and
research services to execute securities transactions. They determine in good
faith that commissions charged by such persons are reasonable in relationship to
the value of the brokerage and research services provided.

For the fiscal year ended, November 30, 1999, the Fund's Adviser directed
brokerage transactions to certain brokers due to research services they
provided. The total amount of these transactions was $129,737,440.37 for which
the Fund paid $556,756.66 in brokerage commissions.

Investment decisions for the Fund are made independently from those of other
accounts managed by the Adviser. When the Fund and one or more of those accounts
invests in, or disposes of, the same security, available investments or
opportunities for sales will be allocated among the Fund and the account(s) in a
manner believed by the Adviser to be equitable. While the coordination and
ability to participate in volume transactions may benefit the Fund, it is
possible that this procedure could adversely impact the price paid or received
and/or the position obtained or disposed of by the Fund.

ADMINISTRATOR

Federated Services Company, a subsidiary of Federated, provides administrative
personnel and services (including certain legal and financial reporting
services) necessary to operate the Fund. Federated Services Company provides
these at the following annual rate of the average aggregate daily net assets of
all Federated Funds as specified below:

<TABLE>
<CAPTION>
MAXIMUM AVERAGE AGGREGATE DAILY
ADMINISTRATIVE FEE NET ASSETS OF THE FEDERATED FUNDS
<S> <C>
0.150 of 1% on the first $250 million
0.125 of 1% on the next $250 million
0.100 of 1% on the next $250 million
0.075 of 1% on assets in excess of $750 million
</TABLE>

The administrative fee received during any fiscal year shall be at least
$125,000 per portfolio and $30,000 per each additional class of Shares.
Federated Services Company may voluntarily waive a portion of its fee and may
reimburse the Fund for expenses.

Federated Services Company also provides certain accounting and recordkeeping
services with respect to the Fund's portfolio investments for a fee based on
Fund assets plus out-of-pocket expenses.

CUSTODIAN

State Street Bank and Trust Company, Boston, Massachusetts, is custodian for the
securities and cash of the Fund. Foreign instruments purchased by the Fund are
held by foreign banks participating in a network coordinated by State Street
Bank.

TRANSFER AGENT AND DIVIDEND DISBURSING AGENT

Federated Services Company, through its registered transfer agent subsidiary,
Federated Shareholder Services Company, maintains all necessary shareholder
records. The Fund pays the transfer agent a fee based on the size, type and
number of accounts and transactions made by shareholders.

INDEPENDENT AUDITORS

The independent auditor for the Fund, Ernst & Young LLP, Boston, MA, plans and
performs its audit so that it may provide an opinion as to whether the Fund's
financial statements and financial highlights are free of material misstatement.

FEES PAID BY THE FUND FOR SERVICES

FOR THE YEAR ENDED NOVEMBER 30 1999 1998 1997
<S> <C> <C> <C>
Adviser Fee Earned $249,853 $122,689 $100,152
Adviser Fee Reduction 249,853 122,689 100,152
Brokerage Commissions 565,890 350,186 200,241
Administrative Fee 185,000 185,000 185,000
12B-1 FEE

Class A Shares - - -
Class B Shares 62,424 - -
Class C Shares 23,477 - -
SHAREHOLDER SERVICES FEE
Class A Shares 28,151 - -
Class B Shares $20,808 - -
Class C Shares 7,826 - -
</TABLE>

Fees are allocated among classes based on their pro rata share of Fund assets,
except for marketing (Rule 12b-1) fees and shareholder services fees, which are
borne only by the applicable class of Shares.

How Does the Fund Measure Performance?

The Fund may advertise Share performance by using the Securities and Exchange
Commission's (SEC) standard method for calculating performance applicable to all
mutual funds. The SEC also permits this standard performance information to be
accompanied by non-standard performance information.

Share performance reflects the effect of non-recurring charges, such as maximum
sales charges, which, if excluded, would increase the total return and yield.
The performance of Shares depends upon such variables as: portfolio quality;
average portfolio maturity; type and value of portfolio securities; changes in
interest rates; changes or differences in the Fund's or any class of Shares'
expenses; and various other factors.

Share performance fluctuates on a daily basis largely because net earnings
fluctuate daily. Both net earnings and offering price per Share are factors in
the computation of yield and total return.

AVERAGE ANNUAL TOTAL RETURNS

Total returns are given for the one-year and Start of Performance periods ended
November 30, 1999.

<TABLE>
<CAPTION>
START OF PERFORMANCE ON
1 YEAR FEBRUARY 28, 1996.
<S> <C> <C>
CLASS A SHARES:
Total Return 100.59% 6.87%
CLASS B SHARES:
Total Return 104.99% 7.10%
CLASS C SHARES:
Total Return 109.46% 7.84%
</TABLE>

TOTAL RETURN

Total return represents the change (expressed as a percentage) in the value of
Shares over a specific period of time, and includes the investment of income and
capital gains distributions.

The average annual total return for Shares is the average compounded rate of
return for a given period that would equate a $1,000 initial investment to the
ending redeemable value of that investment. The ending redeemable value is
computed by multiplying the number of Shares owned at the end of the period by
the NAV per Share at the end of the period. The number of Shares owned at the
end of the period is based on the number of Shares purchased at the beginning of
the period with $1,000, less any applicable sales charge, adjusted over the
period by any additional Shares, assuming the annual reinvestment of all
dividends and distributions.

PERFORMANCE COMPARISONS

Advertising and sales literature may include:

* references to ratings, rankings, and financial publications and/or
performance comparisons of Shares to certain indices;

* charts, graphs and illustrations using the Fund's returns, or returns in
general, that demonstrate investment concepts such as tax-deferred compounding,
dollar-cost averaging and systematic investment;

* discussions of economic, financial and political developments and their impact
on the securities market, including the portfolio manager's views on how such
developments could impact the Fund; and

* information about the mutual fund industry from sources such as the Investment
Company Institute.

The Fund may compare its performance, or performance for the types of securities
in which it invests, to a variety of other investments, including federally
insured bank products such as bank savings accounts, certificates of deposit,
and Treasury bills.

The Fund may quote information from reliable sources regarding individual
countries and regions, world stock exchanges, and economic and demographic
statistics.

You may use financial publications and/or indices to obtain a more complete view
of Share performance. When comparing performance, you should consider all
relevant factors such as the composition of the index used, prevailing market
conditions, portfolio compositions of other funds, and methods used to value
portfolio securities and compute offering price. The financial publications
and/or indices which the Fund uses in advertising may include:

STANDARD & POOR'S DAILY STOCK PRICE INDEX OF 500 COMMON STOCKS (S&P
500)

Composite index of common stocks in industry, transportation, and financial and
public utility companies. Can be used to compare to the total returns of funds
whose portfolios are invested primarily in common stocks.

In addition, the S&P 500 assumes reinvestments of all dividends paid by stocks
listed on its index. Taxes due on any of these distributions are not included,
nor are brokerage or other fees calculated in the S&P figures.

LIPPER ANALYTICAL SERVICES, INC.

Lipper Analytical Services, Inc. ranks funds in various fund categories by
making comparative calculations using total return. Total return assumes the
reinvestment of all capital gains distributions and income dividends and takes
into account any change in net asset value over a specified period of time. From
time to time, the Fund will quote its Lipper ranking in the "pacific region
funds" category in advertising and sales literature.

MORGAN STANLEY CAPITAL INTERNATIONAL WORLD INDICES

Morgan Stanley Capital International World Indices includes, among others, the
Morgan Stanley Capital International Europe, Australia, Far East Index (EAFE
Index). The EAFE Index is an unmanaged index of more than 1,000 companies of
Europe, Australia, and the Far East.

IBBOTSON ASSOCIATES INTERNATIONAL BOND INDEX

Ibbotson Associates International Bond Index provides a detailed breakdown of
local market and currency returns since 1960.

BEAR STEARNS FOREIGN BOND INDEX

Bear Stearns Foreign Bond Index provides simple average returns for individual
countries and GNP-weighted index, beginning in 1975. The returns are broken down
by local market and currency.

MORNINGSTAR, INC.

Morningstar, Inc., an independent rating service, is the publisher of the
bi-weekly Mutual Fund Values, which rates more than 1,000 NASDAQ-listed mutual
funds of all types, according to their risk-adjusted returns. The maximum rating
is five stars, and ratings are effective for two weeks.

CDA/WIESENBERGER INVESTMENT COMPANY SERVICES

Mutual fund rankings and data that ranks and/or compares mutual funds by overall
performance, investment objectives, assets, expense levels, periods of existence
and/or other factors.

FINANCIAL TIMES ACTUARIES INDICES

Includes the FTA-World Index (and components thereof), which are based on stocks
in major world equity markets.

FINANCIAL PUBLICATIONS

The Wall Street Journal, Business Week, Changing Times, Financial World, Forbes,
Fortune and Money magazines, among others-provide performance statistics over
specified time periods.

DOW JONES INDUSTRIAL AVERAGE (DJIA)

Represents share prices of selected blue-chip industrial corporations. The DJIA
indicates daily changes in the average price of stock of these corporations.
Because it represents the top corporations of America, the DJIA index is a
leading economic indicator for the stock market as a whole.

CNBC/FINANCIAL NEWS COMPOSITE INDEX

THE WORLD BANK PUBLICATION OF TRENDS IN DEVELOPING COUNTRIES (TIDE)

TIDE provides brief reports on most of the World Bank's borrowing members. The
World Development Report is published annually and looks at global and regional
economic trends and their implications for the developing economies.

SALOMON BROTHERS GLOBAL TELECOMMUNICATIONS INDEX

Composed of telecommunications companies in the developing and emerging
countries.

DATASTREAM, INTERSEC, FACTSET, IBBOTSON ASSOCIATES, AND WORLDSCOPE

Database retrieval services for information including, but not limited to,
international financial and economic data.

INTERNATIONAL FINANCIAL STATISTICS

Produced by the International Monetary Fund.

WORLD BANK

Various publications and annual reports produced by the World Bank and its
affiliates.

INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT

Various publications.

MOODY'S INVESTORS SERVICE, INC., FITCH IBCA, INC. AND STANDARD &
POOR'S

Various publications

WILSHIRE ASSOCIATES

An on-line database for international financial and economic data including
performance measures for a wide range of securities.

INTERNATIONAL FINANCE CORPORATION (IFC) EMERGING MARKETS DATA BASE

Provides detailed statistics on stock and bond markets in developing countries,
including IFC market indices.

ORGANIZATION FOR ECONOMIC COOPERATION AND DEVELOPMENT (OECD)

Various publications.

Who is Federated Investors, Inc.?

Federated is dedicated to meeting investor needs by making structured,
straightforward and consistent investment decisions. Federated investment
products have a history of competitive performance and have gained the
confidence of thousands of financial institutions and individual investors.

Federated's disciplined investment selection process is rooted in sound
methodologies backed by fundamental and technical research. At Federated,
success in investment management does not depend solely on the skill of a single
portfolio manager. It is a fusion of individual talents and state- of-the-art
industry tools and resources. Federated's investment process involves teams of
portfolio managers and analysts, and investment decisions are executed by
traders who are dedicated to specific market sectors and who handle trillions of
dollars in annual trading volume.

FEDERATED FUNDS OVERVIEW

MUNICIPAL FUNDS

In the municipal sector, as of December 31, 1999, Federated managed 12 bond
funds with approximately $2.0 billion in assets and 24 money market funds with
approximately $13.1 billion in total assets. In 1976, Federated introduced one
of the first municipal bond mutual funds in the industry and is now one of the
largest institutional buyers of municipal securities. The Funds may quote
statistics from organizations including The Tax Foundation and the National
Taxpayers Union regarding the tax obligations of Americans.

EQUITY FUNDS

In the equity sector, Federated has more than 29 years' experience. As of
December 31, 1999, Federated managed 53 equity funds totaling approximately
$18.3 billion in assets across growth, value, equity income, international,
index and sector (i.e., utility) styles. Federated's value- oriented management
style combines quantitative and qualitative analysis and features a structured,
computer-assisted composite modeling system that was developed in the 1970s.

CORPORATE BOND FUNDS

In the corporate bond sector, as of December 31, 1999, Federated managed 13
money market funds and 29 bond funds with assets approximating $35.7 billion and
$7.7 billion, respectively. Federated's corporate bond decision making-based on
intensive, diligent credit analysis-is backed by over 27 years of experience in
the corporate bond sector. In 1972, Federated introduced one of the first
high-yield bond funds in the industry. In 1983, Federated was one of the first
fund managers to participate in the asset backed securities market, a market
totaling more than $209 billion.

GOVERNMENT FUNDS

In the government sector, as of December 31, 1999, Federated managed 9 mortgage
backed, 11 government/agency and 16 government money market mutual funds, with
assets approximating $4.7 billion, $1.6 billion and $34.1 billion, respectively.
Federated trades approximately $450 million in U.S. government and mortgage
backed securities daily and places approximately $25 billion in repurchase
agreements each day. Federated introduced the first U.S. government fund to
invest in U.S. government bond securities in 1969. Federated has been a major
force in the short- and intermediate-term government markets since 1982 and
currently manages approximately $43.8 billion in government funds within these
maturity ranges.

MONEY MARKET FUNDS

In the money market sector, Federated gained prominence in the mutual fund
industry in 1974 with the creation of the first institutional money market fund.
Simultaneously, the company pioneered the use of the amortized cost method of
accounting for valuing shares of money market funds, a principal means used by
money managers today to value money market fund shares. Other innovations
include the first institutional tax-free money market fund. As of December 31,
1999, Federated managed more than $83.0 billion in assets across 54 money market
funds, including 16 government, 13 prime and 24 municipal and 1 euro-denominated
with assets approximating $34.1 billion, $35.7 billion, $13.1 billion and $115
million, respectively.

The Chief Investment Officers responsible for oversight of the various
investment sectors within Federated are: U.S. equity and high yield-
J. Thomas Madden; U.S. fixed income-William D. Dawson III; and global
equities and fixed income-Henry A. Frantzen. The Chief Investment
Officers
are Executive Vice Presidents of the Federated advisory companies.

MUTUAL FUND MARKET

Thirty-seven percent of American households are pursuing their financial goals
through mutual funds. These investors, as well as businesses and institutions,
have entrusted over $5 trillion to the more than 7,300 funds available,
according to the Investment Company Institute.

FEDERATED CLIENTS OVERVIEW

Federated distributes mutual funds through its subsidiaries for a variety of
investment purposes. Specific markets include:

INSTITUTIONAL CLIENTS

Federated meets the needs of approximately 1,160 institutional clients
nationwide by managing and servicing separate accounts and mutual funds for a
variety of purposes, including defined benefit and defined contribution
programs, cash management, and asset/liability management. Institutional clients
include corporations, pension funds, tax exempt entities,
foundations/endowments, insurance companies, and investment and financial
advisers. The marketing effort to these institutional clients is headed by John
B. Fisher, President, Institutional Sales Division, Federated Securities Corp.

BANK MARKETING

Other institutional clients include more than 1,600 banks and trust
organizations. Virtually all of the trust divisions of the top 100 bank holding
companies use Federated Funds in their clients' portfolios. The marketing effort
to trust clients is headed by Timothy C. Pillion, Senior Vice President, Bank
Marketing & Sales.

BROKER/DEALERS AND BANK BROKER/DEALER SUBSIDIARIES

Federated Funds are available to consumers through major brokerage firms
nationwide-we have over 2,200 broker/dealer and bank broker/dealer relationships
across the country-supported by more wholesalers than any other mutual fund
distributor. Federated's service to financial professionals and institutions has
earned it high ratings in several surveys performed by DALBAR, Inc. DALBAR is
recognized as the industry benchmark for service quality measurement. The
marketing effort to these firms is headed by James F. Getz, President,
Broker/Dealer Sales Division, Federated Securities Corp.

Financial Information

The Financial Statements for the Fund for the fiscal year ended November 30,
1999, are incorporated herein by reference to the Annual Report to Shareholders
of Federated Asia Pacific Growth Fund dated November 30, 1999.

Investment Ratings

STANDARD AND POOR'S LONG-TERM DEBT RATING DEFINITIONS

AAA-Debt rated AAA has the highest rating assigned by Standard & Poor's.
Capacity to pay interest and repay principal is extremely strong.

AA-Debt rated AA has a very strong capacity to pay interest and repay principal
and differs from the higher-rated issues only in small degree.

A-Debt rated A has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher-rated categories.

BBB-Debt rated BBB is regarded as having an adequate capacity to pay interest
and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher-rated categories.

BB-Debt rated BB has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or exposure to
adverse business, financial, or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments. The BB
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied BBB rating.

B-Debt rated B has a greater vulnerability to default but currently has the
capacity to meet interest payments and principal repayments. Adverse business,
financial, or economic conditions will likely impair capacity or willingness to
pay interest and repay principal. The B rating category is also used for debt
subordinated to senior debt that is assigned an actual or implied BB or BB-
rating.

CCC-Debt rated CCC has a currently identifiable vulnerability to default, and is
dependent upon favorable business, financial, and economic conditions to meet
timely payment of interest and repayment of principal.

In the event of adverse business, financial, or economic conditions, it is not
likely to have the capacity to pay interest and repay principal. The CCC rating
category is also used for debt subordinated to senior debt that is assigned an
actual or implied B or B- rating.

CC-The rating CC typically is applied to debt subordinated to senior debt that
is assigned an actual or implied CCC debt rating.

C-The rating C typically is applied to debt subordinated to senior debt which is
assigned an actual or implied CCC debt rating. The C rating may be used to cover
a situation where a bankruptcy petition has been filed, but debt service
payments are continued.

MOODY'S INVESTORS SERVICE, INC. LONG-TERM BOND RATING DEFINITIONS

AAA-Bonds which are rated AAA are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as gilt
edged. Interest payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective elements are likely
to change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.

AA-Bonds which are rated AA are judged to be of high quality by all standards.
Together with the AAA group, they comprise what are generally known as
high-grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in AAA securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risks appear somewhat larger than in AAA securities.

A-Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper-medium-grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment sometime in the future.

BAA-Bonds which are rated BAA are considered as medium-grade obligations, (i.e.,
they are neither highly protected nor poorly secured). Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.

BA-Bonds which are BA are judged to have speculative elements; their future
cannot be considered as well assured. Often the protection of interest and
principal payments may be very moderate and thereby not well safeguarded during
both good and bad times over the future. Uncertainty of position characterizes
bonds in this class.

B-Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.

CAA-Bonds which are rated CAA are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.

CA-Bonds which are rated CA represent obligations which are speculative in a
high degree. Such issues are often in default or have other marked shortcomings.

C-Bonds which are rated C are the lowest-rated class of bonds, and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.

FITCH IBCA, INC. LONG-TERM DEBT RATING DEFINITIONS

AAA-Bonds considered to be investment grade and of the highest credit quality.
The obligor has an exceptionally strong ability to pay interest and repay
principal, which is unlikely to be affected by reasonably foreseeable events.

AA-Bonds considered to be investment grade and of very high credit quality. The
obligor's ability to pay interest and repay principal is very strong, although
not quite as strong as bonds rated AAA. Because bonds rated in the AAA and AA
categories are not significantly vulnerable to foreseeable future developments,
short-term debt of these issuers is generally rated F- 1+.

A-Bonds considered to be investment grade and of high credit quality. The
obligor's ability to pay interest and repay principal is considered to be
strong, but may be more vulnerable to adverse changes in economic conditions and
circumstances than bonds with higher ratings.

BBB-Bonds considered to be investment grade and of satisfactory credit quality.
The obligor's ability to pay interest and repay principal is considered to be
adequate. Adverse changes in economic conditions and circumstances, however, are
more likely to have adverse impact on these bonds, and therefore impair timely
payment. The likelihood that the ratings of these bonds will fall below
investment grade is higher than for bonds with higher ratings.

BB-Bonds are considered speculative. The obligor's ability to pay interest and
repay principal may be affected over time by adverse economic changes.

However, business and financial alternatives can be identified which could
assist the obligor in satisfying its debt service requirements.

B-Bonds are considered highly speculative. While bonds in this class are
currently meeting debt service requirements, the probability of continued timely
payment of principal and interest reflects the obligor's limited margin of
safety and the need for reasonable business and economic activity throughout the
life of the issue.

CCC-Bonds have certain identifiable characteristics which, if not remedied, may
lead to default. The ability to meet obligations requires an advantageous
business and economic environment.

CC-Bonds are minimally protected. Default in payment of interest and/or
principal seems probable over time.

C-Bonds are imminent default in payment of interest or principal.

MOODY'S INVESTORS SERVICE, INC. COMMERCIAL PAPER RATINGS

PRIME-1-Issuers rated Prime-1 (or related supporting institutions) have a
superior capacity for repayment of short-term promissory obligations. Prime-1
repayment capacity will normally be evidenced by the following characteristics:

* Leading market positions in well-established industries;

* High rates of return on funds employed;

* Conservative capitalization structure with moderate reliance on debt
and
ample asset protection;

* Broad margins in earning coverage of fixed financial charges and high internal
cash generation; and

* Well-established access to a range of financial markets and assured sources of
alternate liquidity.

PRIME-2-Issuers rated Prime-2 (or related supporting institutions) have a strong
capacity for repayment of short-term promissory obligations. This will normally
be evidenced by many of the characteristics cited above but to a lesser degree.
Earnings trends and coverage ratios, while sound, will be more subject to
variation. Capitalization characteristics, while still appropriate, may be more
affected by external conditions. Ample alternate liquidity is maintained.

STANDARD AND POOR'S COMMERCIAL PAPER RATINGS

A-1-This designation indicates that the degree of safety regarding timely
payment is strong. Those issues determined to possess extremely strong safety
characteristics are denoted with a plus sign (+) designation.

A-2-Capacity for timely payment on issues with this designation is satisfactory.
However, the relative degree of safety is not as high as for issues designated
A-1.

FITCH IBCA, INC. COMMERCIAL PAPER RATING DEFINITIONS

FITCH-1-(Highest Grade) Commercial paper assigned this rating is regarded as
having the strongest degree of assurance for timely payment.

FITCH-2-(Very Good Grade) Issues assigned this rating reflect an assurance of
timely payment only slightly less in degree than the strongest issues.

Addresses

FEDERATED ASIA PACIFIC GROWTH FUND

Class A Shares
Class B Shares
Class C Shares

Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000

DISTRIBUTOR

Federated Securities Corp.
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

INVESTMENT ADVISER

Federated Global Investment Management Corp.
175 Water Street
New York, NY 10038-4965

CUSTODIAN

State Street Bank and Trust Company
P.O. Box 8600
Boston, MA 02266-8600

TRANSFER AGENT AND DIVIDEND DISBURSING AGENT

Federated Shareholder Services Company
P.O. Box 8600
Boston, MA 02266-8600

INDEPENDENT AUDITORS

Ernst & Young LLP
200 Clarendon Street
Boston, MA 02116-5072

PROSPECTUS

Federated Emerging Markets Fund

A Portfolio of Federated World Investment Series, Inc.

CLASS A SHARES

CLASS B SHARES

CLASS C SHARES

A mutual fund seeking long-term growth of capital by investing primarily in
equity securities of issuers and companies located in countries having emerging
markets.

NOT FDIC INSURED
MAY LOSE VALUE
NO BANK GUARANTEE

MARCH 31, 2000

CONTENTS

Risk/Return Summary 1

What are the Fund's Fees and Expenses? 3

What are the Fund's Investment Strategies? 4

What are the Principal Securities in Which the

Fund Invests? 6

What are the Specific Risks of Investing in the Fund? 7

What Do Shares Cost? 8

How is the Fund Sold? 11

How to Purchase Shares 11

How to Redeem and Exchange Shares 13

Account and Share Information 17

Who Manages the Fund? 18

Financial Information 19

Risk/Return Summary

WHAT IS THE FUND'S INVESTMENT OBJECTIVE?

The Fund's investment objective is to provide long-term growth of capital. While
there is no assurance that the Fund will achieve its investment objectives, it
endeavors to do so by following the strategies and policies described in this
prospectus.

WHAT ARE THE FUND'S MAIN INVESTMENT STRATEGIES?

The fund pursues its investment objective by investing at least 65% of its
assets in equity securities of issuers and companies located in countries having
emerging markets. Emerging markets are those which have gross domestic product
per capita lower than $10,000 per year.

WHAT ARE THE MAIN RISKS OF INVESTING IN THE FUND?

All mutual funds take investment risks. Therefore, it is possible to lose money
by investing in the Fund. The primary factors that may reduce the Fund's returns
include:

STOCK MARKET RISKS

The value of equity securities in the Fund's portfolio will fluctuate and, as a
result, the Fund's share price may decline suddenly or over a sustained period
of time.

CURRENCY RISKS

Because the exchange rates for currencies fluctuate daily, prices of the
emerging market securities in which the Fund invests are more volatile than
prices of securities traded exclusively in the United States.

RISKS OF FOREIGN INVESTING

Because the Fund invests in securities issued by emerging market companies, the
Fund's share price may be more affected by economic and political conditions,
taxation policies and accounting and auditing standards in those emerging market
countries than in more developed countries.

EMERGING MARKETS RISKS

Securities issued or traded in emerging markets generally entail greater risks
than securities issued or traded in developed markets. Emerging market countries
may have relatively unstable governments and may present the risk of
nationalization of businesses, expropriation, confiscatory taxation or, in
certain instances, reversion to closed market, centrally planned economies.

LIQUIDITY RISKS

RISK/RETURN BAR CHART AND TABLE

[Graphic]

The bar chart shows the variability of the Fund's Class A Shares total returns
on a calendar year-end basis.

Within the period shown in the Chart, the Fund's Class A Shares highest
quarterly return was 42.70% (quarter ended December 31, 1999). Its lowest
quarterly return was (25.24%) (quarter ended September 30, 1998).

AVERAGE ANNUAL TOTAL RETURN TABLE

The following table represents the Fund's Class A Shares, Class B Shares, and
Class C Shares Average Annual Total Returns, reduced to reflect applicable sales
charges, for the calendar periods ended December 31, 1999. The table shows the
Fund's total returns averaged over a period of years relative to the
International Financial Corporation Investable Composite Index (IFCIC). The
IFCIC is a market capitalization-weighted index of over 1,000 securities in 26
emerging market countries. Total returns for the index shown do not reflect
sales charges, expenses or other fees that the SEC requires to be reflected in
the Fund's performance. Indexes are unmanaged, and it is not possible to invest
directly in an index.

<TABLE>

CLASS A CLASS B CLASS C
CALENDAR PERIOD SHARES SHARES SHARES IFCIC
<S> <C> <C> <C> <C>
1 Year 69.15% 72.50% 76.91% 67.11%
Start of Performance 1 9.97% 10.18% 10.78% 3.30%

</TABLE>

1 The Fund's Class A Shares, Class B Shares and Class C Shares start of
performance date was February 28, 1996.

What are the Fund's Fees and Expenses?

FEDERATED EMERGING MARKETS FUND

FEES AND EXPENSES

This table describes the fees and expenses that you may pay if you buy and hold
Shares of the Fund's Class A, B, or C Shares.

<TABLE>

SHAREHOLDER FEES
CLASS A CLASS B CLASS C
<S>

<C> <C> <C>
Fees Paid Directly From Your
Investment

Maximum Sales Charge (Load) Imposed on Purchases (as a
percentage
of offering price)
5.50% None None

Maximum Deferred Sales Charge (Load) (as a percentage of
original
purchase price or redemption proceeds, as applicable)
0.00% 5.50% 1.00%
Maximum Sales Charge (Load) Imposed on Reinvested Dividends
(and other Distributions) (as a percentage of offering price).
None None None
Redemption Fee (as a percentage of amount
redeemed, if applicable)
None None None
Exchange Fee
None None None

ANNUAL FUND OPERATING EXPENSES (Before Waivers) 1 Expenses That are Deducted
From Fund Assets (as percentage of

average net assets)
Management Fee 2
1.25% 1.25% 1.25%
Distribution (12b-1) Fee 3
0.25% 0.75% 0.75%
Shareholder Services Fee
0.25% 0.25% 0.25%
Other Expenses
1.70% 1.70% 1.70%
Total Annual Fund Operating Expenses
3.45% 3.95% 4 3.95%
1Although not contractually obligated to do so, the adviser and distributor
waived certain amounts. These are shown below along with the net expenses the
Fund actually paid for the fiscal year ended November 30, 1999.

Total Waivers of Fund Expenses
0.84% 0.59% 0.59%
Total Actual Annual Fund Operating Expenses (after waivers) 2.61% 3.36% 3.36% 2
The adviser voluntarily waived a portion of the management fee.

The adviser can terminate this voluntary waiver at any time. The management fee
paid by the Fund (after the voluntary waiver) was 0.66% for the fiscal year
ended November 30, 1999.

3Class A Shares did not pay or accrue the distribution (12b-1) fee during the
fiscal year ended November 30, 1999. Class A Shares has no present intention of
paying or accruing the distribution (12b-1) fee during the fiscal year ending
November 30, 2000.

4Class B Shares convert to Class A Shares (which pay lower ongoing expenses)
approximately eight years after purchase.

</TABLE>

EXAMPLE

This Example is intended to help you compare the cost of investing in the Fund's
Class A, B, and C Shares with the cost of investing in other mutual funds.

The Example also assumes that your investment has a 5% return each year and that
the Fund's Class A, B, and C Shares operating expenses are BEFORE WAIVERS as
shown in the table and remain the same. Although your actual costs and returns
may be higher or lower, based on these assumptions your costs would be:

<TABLE>

SHARE CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
CLASS A:
Expenses assuming redemption $879 $1,551 $2,244 $4,074
Expenses assuming no redemption $879 $1,551 $2,244 $4,074
CLASS B:
Expenses assuming redemption $947 $1,604 $2,228 $4,058
Expenses assuming no redemption $397 $1,204 $2,028 $4,058
CLASS C:
Expenses assuming redemption $497 $1,204 $2,028 $4,164
Expenses assuming no redemption $397 $1,204 $2,028 $4,164

</TABLE>

What are the Fund's Investment Strategies?

The Adviser weighs several factors in selecting investments for the portfolio.
First, the Adviser analyzes a country's general economic condition and outlook,
including its interest rates, foreign exchange rates and trade balance. In
connection with this analysis, the Adviser also considers how developments in
other countries in the region or the world might affect these factors. Using its
analysis, the Adviser tries to identify countries with favorable
characteristics, such as a strengthening economy, favorable inflation rate or
sound budget policy.

The Adviser then evaluates available investments in these countries by examining
the issuer's liquidity, industry representation, performance relative to its
industry, and profitability as well its products, the quality of its management,
and its competitive position in the marketplace.

Under normal market conditions, the Adviser anticipates that the portfolio will
contain a minimum of 150 stocks. Under normal market conditions, the Adviser
expects to be invested in more than 20 countries.

Companies may be grouped together in broad categories called economic sectors.
The Adviser may emphasize certain economic sectors in the portfolio that exhibit
stronger growth potential or higher profit margins.

The Adviser allocates the portfolio among five economic sectors: consumer,
financial, industrial, resources, and utilities. The Adviser tries to select
securities that offer the best potential returns consistent with its general
portfolio strategy. Some of the factors the adviser looks for in selecting
investments include:

* Issuers in countries expected to have economic and market
environments
that will be positive;

* Estimated market value in excess of current stock price;

* Favorable expected returns relative to perceived risk;

* Low debt levels relative to equity;

* Companies expected to benefit from long-term trends in the economy
and
society;

* Low market valuations relative to earnings forecast, book value, cash flow and
sales; and

* Turnaround potential for companies that have been through difficult periods.

PORTFOLIO TURNOVER

TEMPORARY DEFENSIVE INVESTMENTS

What are the Principal Securities in Which the Fund Invests?

EMERGING MARKETS

Under normal circumstances, at least 65% of the Fund's total assets are invested
in securities of companies that are domiciled or primarily doing business in
emerging countries. For purposes of the Fund's investments, "emerging countries"
are countries with economies or securities markets that are not considered by
the Fund's Adviser to be developed and typically have gross domestic product per
capita below $10,000 per year.

DEPOSITARY RECEIPTS

FOREIGN EXCHANGE CONTRACTS

In order to convert U.S. dollars into the currency needed to buy a foreign
security, or to convert foreign currency received from the sale of a foreign
security into U.S. dollars, the Fund may enter into spot currency trades. In a
spot trade, the Fund agrees to exchange one currency for another at the current
exchange rate. The Fund may also enter into derivative contracts in which a
foreign currency is an underlying asset.

EQUITY SECURITIES

COMMON STOCKS

PREFERRED STOCKS

What are the Specific Risks of Investing in the Fund?

An investment in the Fund involves a substantial degree of risk. Even though the
Fund seeks long-term capital growth, you could lose money on your investment or
not make as much as if you invested elsewhere if:

* Stock markets of emerging market countries go down or perform poorly relative
to other stock markets (this risk may be greater if you are a short-term
investor);

* Securities of emerging market issuers or value stocks fall out of
favor
with investors; or

* The Fund's assets remain undervalued or do not have the potential value
initially expected.

Investing in emerging market issuers involves unique risks compared to investing
in securities of issuers in the United States and other developed countries.
These risks are more pronounced to the extent the Fund invests in issuers in the
lesser developed emerging markets or in any one region.

These risks may include:

* The U.S. dollar may appreciate against emerging market currencies or an
emerging market government may impose restrictions on currency conversion or
trading:

* Less information about emerging market issuers or markets may be available due
to less rigorous disclosure or accounting standards or regulatory practices;

* Many emerging markets are smaller, less liquid and more volatile than
developed markets. In a changing market, the adviser may not be able to sell the
Fund's portfolio securities in amounts and at prices Federated considers
reasonable;

* Economic, political or social instability in an emerging market country or
region may significantly disrupt the principal financial markets in

which the Fund invests;

* The economies of emerging market countries may grow at slower rates than
expected or may experience a downturn or recession;

* Emerging market countries may experience rising interest rates, or, more
significantly, rapid inflation or hyperinflation;

* The Fund could experience a loss from settlement and custody practices in some
emerging markets; and

* Withholding and other non-U.S. taxes may decrease the Fund's return.

CUSTODIAL SERVICES AND RELATED INVESTMENT COSTS

Custodial services and other costs relating to investment in international
securities markets generally are more expensive than in the United States.

Such markets have settlement and clearance procedures that differ from those in
the United States. In certain markets there have been times when settlements
have been unable to keep pace with the volume of securities transactions, making
it difficult to conduct such transactions. The inability of the Fund to make
intended securities purchases due to settlement problems could cause the Fund to
miss attractive investment opportunities. Inability to dispose of a portfolio
security caused by settlement problems could result in losses to the Fund due to
a subsequent decline in value of the portfolio security. In addition, security
settlement and clearance procedures in some emerging countries may not fully
protect the Fund against loss of its assets.

What Do Shares Cost?

You can purchase, redeem or exchange Shares any day the New York Stock Exchange
(NYSE) is open. When the Fund receives your transaction request in proper form
(as described in the prospectus) it is processed at the next calculated net
asset value (NAV) plus any applicable front-end sales charge (public offering
price).

If the Fund purchases foreign securities that trade in foreign markets on days
the NYSE is closed, the value of the Fund's assets may change on days you cannot
purchase or redeem Shares.

The Fund's current NAV and public offering price may be found in the mutual
funds section of certain local newspapers under "Federated" and the appropriate
class designation listing.

<TABLE>

MINIMUM MAXIMUM SALES CHARGE
INITIAL/
SUBSEQUENT CONTINGENT
SHARES INVESTMENT FRONT-END DEFERRED
OFFERED AMOUNTS 1 SALES CHARGE 2 SALES CHARGE 3
<S> <C> <C> <C>
Class A $1,500/$100 5.50% 0.00%
Class B $1,500/$100 None 5.50%
Class C $1,500/$100 None 1.00%

</TABLE>

2 Front-End Sales Charge is expressed as a percentage of public
offering

price. See "Sales Charge When You Purchase."

3 See "Sales Charge When You Redeem."

SALES CHARGE WHEN YOU PURCHASE

<TABLE>

CLASS A SHARES
Sales Charge
as a Percentage Sales Charge
of Public as a Percentage

Purchase Amount Offering Price of NAV
<S> <C> <C>
Less than $50,000 5.50% 5.82%
$50,000 but less than $100,000 4.50% 4.71%
$100,000 but less than $250,000 3.75% 3.90%
$250,000 but less than $500,000 2.50% 2.56%
$500,000 but less than $1 million 2.00% 2.04%
$1 million or greater 1 0.00% 0.00%

</TABLE>

If your investment qualifies for a reduction or elimination of the sales charge
as described below, you or your investment professional should notify the Fund's
Distributor at the time of purchase. If the Distributor is not notified, you
will receive the reduced sales charge only on additional purchases, and not
retroactively on previous purchases.