FEDERATED WORLD INVESTMENT SERIES INC, 485APOS, 2000-11-27

FEDERATED WORLD INVESTMENT SERIES INC
485APOS, 2000-11-27

Previous: CALPINE CORP, 424B5, 2000-11-27

Next: FEDERATED WORLD INVESTMENT SERIES INC, 485APOS, EX-99.ARTICLESINC, 2000-11-27

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. 21 .................... X
------- ------

and/or

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

Amendment No. 22 ................................... X
------- ------

FEDERATED 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) on _ _ pursuant to paragraph
(b)(1)(v) 60 days after filing pursuant to paragraph (a)(i) X on JANUARY 31,
2001 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 GLOBAL EQUITY FUND

(Formerly, Federated Global Equity Income Fund)

A Portfolio of World Investment Series, Inc.

CLASS A SHARES

CLASS B SHARES

CLASS C SHARES

A mutual fund seeking to obtain a total return on its assets by investing in
domestic and foreign equity securities.

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.

CONTENTS
Risk/Return Summary
What are the Fund's Fees and
Expenses?
What are the Fund's Investment
Strategies?
What are the Principal Securities
in Which the Fund Invests?
What are the Specific Risks of
Investing in the Fund?
What do Shares Cost?
How is the Fund Sold?
How to Purchase Shares
How to Redeem and Exchange Shares
Account and Share Information
Who Manages the Fund?
Financial Information
NOT FDIC INSURED
MAY LOSE VALUE
NO BANK GUARANTEE

January 31, 2001

RISK/RETURN SUMMARY

WHAT IS THE FUND'S INVESTMENT OBJECTIVE?

The Fund's investment objective is to obtain a total return on its assets. 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 in domestic and foreign
equity securities.

The adviser evaluates each company's earnings relative to its current valuation
to narrow the list of attractive companies. The adviser then evaluates product
positioning, management quality, earnings diversification, dividend yield and
sustainability of current growth trends of those companies. The adviser expects
to receive a yield on the stocks selected for the portfolio at least equal to
the yield of the Morgan Stanley Capital World Index. In implementing this
strategy, the adviser will invest in emerging market countries. Using this type
of fundamental analysis, the adviser selects the most promising companies for
the Fund's portfolio.

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 foreign
securities in which the Fund invests are more volatile than prices of securities
traded exclusively in the U.S.

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.

DIVIDEND RISK

An issuer's dividend policy may change in response to strategic changes or other
management decisions affecting the need for available funds. The adviser manages
these risks by periodically investing in cash and cash equivalent instruments.
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- FROM SSB

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 World Equity Index (MSCI-WE), a broad-based market
index. The MSCI-WE Index reflects the stock markets of 22 countries, including
the United States, Europe, Canada, Australia, New Zealand and the Far East,
comprising approximately 1, 482 securities with values expressed in U.S.
dollars. 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.

CALENDAR PERIODCLASS A CLASS B CLASS C MSCI-WI
SHARES SHARES SHARES
1 Year 40.49% 42.30% 46.64% 23.56%
Start of 47.43% 50.14% 53.73% 32.78%
Performance1

1 The Fund's Class A Shares, Class B Shares and Class C Shares start of
performance date was October 27, 1998.

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 GLOBAL EQUITY 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.

SHAREHOLDER FEES CLASS CLASS CLASS
A B C
FEES PAID DIRECTLY FROM YOUR INVESTMENT

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

ANNUAL FUND OPERATING EXPENSES (Before
Reimbursements/Waivers)1
EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS (AS A
PERCENTAGE OF AVERAGE NET ASSETS)
Management Fee % % %
Distribution (12b-1) Fee % % %
Shareholder Services Fee % % %
Other Expenses % % %
Total Annual Fund Operating Expenses % %(X) %
1 Although not contractually obligated to do so, the adviser waived and
reimbursed certain amounts. These are shown below along with the net expenses
the Fund ACTUALLY PAID for the fiscal year ended November 30, 2000.

Total Reimbursements/Waivers of Fund Expenses % % %
Total Actual Annual Fund Operating Expenses (after % % %
reimbursements/waivers
2 [Insert Applicable footnote(s) as provided by State Street Bank. 3 After Class
B Shares have been held for eight years from the date of purchase, they will
automatically convert to Class A Shares on the 15th of the following month.
Class A Shares pay lower operating expenses than Class B Shares.

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/REIMBURSEMENTS as shown in the table and remain the same. Although your
actual costs may be higher or lower, based on these assumptions your costs would
be:

SHARE CLASS 1 3 YEARS 5 10
YEAR YEARS YEARS
CLASS A

Expenses assuming $871 $1,529 $2,208 $4,007
redemption
Expenses assuming no $871 $1,529 $2,208 $4,007
redemption
CLASS B

Expenses assuming $939 $1,581 $2,190 $3,989
redemption
Expenses assuming no $389 $1,181 $1,990 $3,989
redemption
CLASS C

Expenses assuming $489 $1,181 $1,990 $4,096
redemption
Expenses assuming no $389 $1,181 $1,990 $4,096
redemption

WHAT ARE THE FUND'S INVESTMENT STRATEGIES?

The Fund pursues its investment objective by investing in domestic and foreign
equity securities.

The adviser takes a bottom-up approach to stock selection and searches for
companies with sound economic fundamentals with the potential for appreciation
in stock price. The adviser evaluates each company's earnings relative to its
current valuation to narrow the list of attractive companies. The adviser then
evaluates product positioning, management quality, earnings diversification,
dividend yield and sustainability of current growth trends of those companies.
In implementing this strategy, the adviser may invest in emerging market
countries. Using this type of fundamental analysis, the adviser selects the most
promising companies for the Fund's portfolio. Securities may be sold when they
no longer represent good long-term value.

Companies with similar characteristics may be grouped together in broad
categories called business sectors. In determining the amount to invest in a
security, the adviser limits the Fund's exposure to each business sector.

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?

FOREIGN SECURITIES

Foreign equity securities are equity securities of issuers based outside the
United States. The Fund considers an issuer to be based outside the United
States if:

o.....it is organized under the laws of, or has a principal office
located in, another country;
o the principal trading market for its securities is in another
country; or
o 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 another country.

Foreign equity securities are often denominated in foreign currencies. Along
with the risks normally associated with domestic equity securities, foreign
equity securities are subject to currency risks and risks of foreign investing.
Trading in certain foreign markets is also subject to liquidity risks.

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 principal types of equity security in which the Fund
invests.

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.

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 because of the increased
risk to the portfolio, 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?

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.

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.

CURRENCY RISKS

Exchange rates for currencies fluctuate daily. Foreign securities are normally
denominated and traded in Foreign currencies. As a result, the value if the
Fund's foreign instruments and the value if 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 risk 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,
diversification will not protect the Fund against a general increase in the
value of the U.S. dollar relative to other currencies.

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.

Foreign countries may have restrictions on foreign ownership of securities or
may impose exchange controls, capital flow restrictions or repatriation
restrictions which could adversely affect the liquidity of the Fund's
investments Custodial services and other costs relating to investment in
international securities markets are generally more expensive than in the U.S.
Such markets have settlement and clearance procedures that differ from those in
the U.S. 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. The inability to dispose of a
portfolio security caused by settlement problems could result either in losses
to the Fund due to a subsequent decline in value of the portfolio security or
could result in possible liability to the Fund. In addition, security settlement
and clearance procedure in some emerging countries may not fully protect the
Fund against loss or theft of its assets.

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 Custodial services and other
costs relating to investment in international securities markets generally are
more expensive than in the U.S. Such markets have settlement and clearance
procedures that differ from those in the U.S. 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 either 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.

DIVIDEND RISK

An issuer's dividend policy may change in response to strategic changes or other
management decisions affecting the need for available funds.

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 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 FRONT-END CONTINGENT

SHARES OFFERED INITIAL/SUBSEQUENT SALES DEFERRED
INVESTMENT CHARGE2 SALES CHARGE3
AMOUNTS1

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%
1 THE MINIMUM INITIAL AND SUBSEQUENT INVESTMENT AMOUNTS FOR RETIREMENT PLANS ARE
$250 AND $100, RESPECTIVELY. THE MINIMUM SUBSEQUENT INVESTMENT AMOUNTS FOR
SYSTEMATIC INVESTMENT PROGRAMS IS $50. INVESTMENT PROFESSIONALS MAY IMPOSE
HIGHER OR LOWER MINIMUM INVESTMENT REQUIREMENTS ON THEIR CUSTOMERS THAN THOSE
IMPOSED BY THE FUND. 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 Sales Charge as
Purchase Amount Percentage of a Percentage of
Public Offering NAV
Price
Less than $50,000 5.50% 5.82%
$50,000 but less than 4.50% 4.71%
$100,000

$100,000 but less than 3.75% 3.90%
$250,000

$250,000 but less than 2.50% 2.56%
$500,000
$500,000 but less than $1 2.00% 2.04%
million
$1 million or greater1 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.

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.

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

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

o 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);
o 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

o 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:

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

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

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

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

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

o 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).

CLASS A SHARES

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.

CLASS B SHARES

Shares Held Up To: CDSC
1 year 5.50%
2 years 4.75%
3 years 4.00%
4 years 3.00%
5 years 2.00%
6 years 1.00%
7 years or more 0.00%
CLASS C SHARES
You will pay a 1% CDSC if you redeem
Shares within one year of the purchase
date.

YOU WILL NOT BE CHARGED A CDSC WHEN REDEEMING SHARES:

o purchased with reinvested dividends or capital gains;

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

o 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);

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

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

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

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

o 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:

o Shares that are not subject to a CDSC; and

o 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

o Establish an account with the investment professional; and

o 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

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

o 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:

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

o 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:

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

o amount to be redeemed or exchanged; and

o signatures of all shareholders exactly as registered; and

o 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:

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

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

o a redemption is payable to someone other than the shareholder(s)
of record.

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:

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

o 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:

o to allow your purchase to clear;

o during periods of market volatility; or

o 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:

o ensure that the account registrations are identical;

o meet any minimum initial investment requirements; and

o 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 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:

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

o you reinvest all dividends and capital gains distributions; and

o 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 or exchanging
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.

If you purchase Shares just before a Fund declares a dividend or capital gain
distribution, you will pay the full price for the Shares and then receive a
portion of the price back in the form of a taxable distribution, whether or not
you reinvest the distribution in Shares. 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:

RICHARD J. LAZARCHIC

Richard J. Lazarchic has been a Portfolio Manager of the Fund since its
inception. Mr. Lazarchic joined Federated in 1998 as a Senior Portfolio
Manager and Vice President of the Fund's Adviser. From May 1979 through
October 1997, Mr. Lazarchic was employed with American Express
Financial Corp., initially as an Analyst and then as a Vice
President/Senior Portfolio Manager. Mr. Lazarchic is a Chartered
Financial Analyst. He received his M.B.A. from Kent State University.

RICHARD WINKOWSKI

Richard Winkowski has been the Fund's Portfolio Manager since December
1999. Mr Winkowski joined Federated as a Senior Investment Analyst in
April 1998 and became an Assistant Vice President of the Fund's Adviser
in July 1999. He served as a Senior Research Analyst with Union Bank of
Switzerland from October 1997 through March 1998. He was employed with
American Express Financial Corp. as a Statistical Analyst from 1994
through January 1995 and then as a Portfolio Manager Assistant until
September 1997. Mr. Winkowski earned his B.A. from the University of
Wisconsin.

STEPHEN F. AUTH

Stephen F. Auth has been the Fund's Portfolio Manager since May 2000.
Mr. Auth joined Federated in May 2000 as Senior Vice President and
Director of Global Portfolio Management of the Fund's Adviser. From
1985 through March 2000, Mr. Auth was employed with Prudential
Investments, a unit of Prudential Insurance Company of America, where
he served as a Portfolio Manager since September 1991 and also as
Senior Managing Director. Mr. Auth is a Chartered Financial Analyst.
He earned a Bachelors Degree from Princeton University and an M.B.A.
from Harvard University.

HENRY J. FRANTZEN

Henry A. Frantzen is the Chief Investment Officer for global and
international investments. 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. In 1999, Mr. Frantzen
became a Director of the Fund's Adviser. 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.

ADVISORY FEES

The Adviser receives an annual investment advisory fee of 1.00% 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.

FEDERATED GLOBAL EQUITY FUND

(Formerly, Federated Global Equity Income Fund)

A Portfolio of Federated World Investment Series, Inc.

CLASS A SHARES
CLASS B SHARES
CLASS C SHARES

A Statement of Additional Information (SAI) dated November 30, 2000, is
incorporated by reference into this prospectus. Additional information about the
Fund and its 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, D.C. 20549-0102. Call 1-202-942-8090 for
information on the Public Reference Room's operations and copying fees.

INVESTMENT COMPANY ACT FILE NO. 811-7141
CUSIP 31428U870

CUSIP 31428U862
CUSIP 31428U854

G01472-02 (1/01)

STATEMENT OF ADDITIONAL INFORMATION

FEDERATED GLOBAL EQUITY FUND

(Formerly, Federated Global Equity Income 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 Global Equity Fund (Fund),
dated November 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.

January 31, 2001

CONTENTS
How is the Fund Organized?
Securities in Which the Fund Invests
What do Shares Cost?
How is the Fund Sold?
Exchanging Securities for Shares
Subaccounting Services
Redemption in Kind
Account and Share Information
Tax Information
Who Manages and Provides Services
to the Fund?
How Does the Fund Measure
Performance?
Who is Federated Investors, Inc.?
Financial Information
Investment Ratings
Addresses

G02337-01 (1/01)

HOW IS THE FUND ORGANIZED?

The Fund is a diversified portfolio of World Investment Series, Inc.
(Corporation). The Corporation is an open-end, management investment
company that was established under the laws of the State of Maryland on
January 25, 1994. The Corporation may offer separate series of shares
representing interests in separate portfolios of securities. On
September 8, 2000, the Fund changed its name from Federated Global
Equity Income Fund to Federated Global Equity Fund. The Fund's
investment adviser is Federated Global Investment Management Corp.
(Adviser).

The Board of Directors (Board) has established three classes of shares of the
Fund: Class A Shares; Class B Shares and Class C Shares (Shares). This SAI
relates to all three classes.

SECURITIES IN WHICH THE FUND INVESTS

In pursuing its investment strategy, the Fund may invest in the following
securities in addition to those described in the prospectus, for any purpose
that is consistent with its investment objective.

SECURITIES DESCRIPTIONS AND TECHNIQUES

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. American Depositary Receipts (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.

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.

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.

REAL ESTATE INVESTMENT TRUSTS (REITS)

REITs are real estate investment trusts that lease, operate and finance
commercial real estate. REITs are exempt from federal corporate income tax if
they limit their operations and distribute most of their income. Such tax
requirements limit a REIT's ability to respond to changes in the commercial real
estate market.

WARRANTS

Warrants give the Fund the option to buy the issuer's equity securities at a
specified price (the exercise price) at a specified future date (the expiration
date). The Fund may buy the designated securities by paying the exercise price
before the expiration date. Warrants may become worthless if the price of the
stock does not rise above the exercise price by the expiration date. This
increases the market risks of warrants as compared to the underlying security.
Rights are the same as warrants, except companies typically issue rights to
existing stockholders.

FIXED INCOME SECURITIES

Fixed income securities pay interest, dividends or distributions at a specified
rate. The rate may be a fixed percentage of the principal or adjusted
periodically. In addition, the issuer of a fixed income security must repay the
principal amount of the security, normally within a specified time. Fixed income
securities provide more regular income than equity securities. However, the
returns on fixed income securities are limited and normally do not increase with
the issuer's earnings. This limits the potential appreciation of fixed income
securities as compared to equity securities. A security's yield measures the
annual income earned on a security as a percentage of its price. A security's
yield will increase or decrease depending upon whether it costs less (a
discount) or more (a premium) than the principal amount. If the issuer may
redeem the security before its scheduled maturity, the price and yield on a
discount or premium security may change based upon the probability of an early
redemption. Securities with higher risks generally have higher yields. The
following describes the types of fixed income securities in which the Fund
invests.

TREASURY SECURITIES

Treasury securities are direct obligations of the federal government of the
United States. Treasury securities are generally regarded as having the lowest
credit risks.

AGENCY SECURITIES

Agency securities are issued or guaranteed by a federal agency or other
government sponsored entity acting under federal authority (a GSE). The United
States supports some GSEs with its full, faith and credit. Other GSEs receive
support through federal subsidies, loans or other benefits. A few GSEs have no
explicit financial support, but are regarded as having implied support because
the federal government sponsors their activities. Investors regard agency
securities as having low credit risks, but not as low as treasury securities.

The Fund treats mortgage backed securities guaranteed by GSEs as agency
securities. Although a GSE guarantee protects against credit risks, it does not
reduce the market and prepayment risks of these mortgage backed securities.

CORPORATE DEBT SECURITIES

Corporate debt securities are fixed income securities issued by businesses.
Notes, bonds, debentures and commercial paper are the most prevalent types of
corporate debt securities. The Fund may also purchase interests in bank loans to
companies. The credit risks of corporate debt securities vary widely amount
issuers. The credit risk of an issuer's debt security may also vary based on its
priority for repayment. For example, higher ranking (senior) debt securities
have a higher priority than lower ranking (subordinated) securities. This means
that the issuer might not make payments on subordinated securities while
continuing to make payments on senior securities. In addition, in the event of
bankruptcy, holders of senior securities may receive amounts otherwise payable
to the holders of subordinated securities. Some subordinated securities, such as
trust preferred and capital securities notes, also permit the issuer to defer
payments under certain circumstances. For example, insurance companies issue
securities known as surplus notes that permit the insurance company to defer any
payment that would reduce its capital below regulatory requirements.

COMMERCIAL PAPER

Commercial paper is an issuer's obligation with a maturity of less than nine
months. Companies typically issue commercial paper to pay for current
expenditures. Most issuers constantly reissue their commercial paper and use the
proceeds (or bank loans) to repay maturing paper. If the issuer cannot continue
to obtain liquidity in this fashion, its commercial paper may default. The short
maturity of commercial paper reduces both the market and credit risks as
compared to other debt securities of the same issuer.

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 have lower yields than comparable fixed income
securities. In addition, at the time a convertible security is issued the
conversion price exceeds the market value of the underlying equity securities.
Thus, convertible securities may provide lower returns than non-convertible
fixed income securities or equity securities depending upon changes in the price
of the underlying equity securities. However, convertible securities permit the
Fund to realize some of the potential appreciation of the underlying equity
securities with less risk of losing its initial investment. The Fund treats
convertible securities as both fixed income and equity securities for purposes
of its investment policies and limitations, because of their unique
characteristics.

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

Options are rights to buy or sell an underlying asset for a specified price (the
exercise price) during, or at the end of, a specified period. A call option
gives the holder (buyer) the right to buy the underlying asset from the seller
(writer) of the option. A put option gives the holder the right to sell the
underlying asset to the writer of the option. The writer of the option receives
a payment, or premium, from the buyer, which the writer keeps regardless of
whether the buyer uses (or exercises) the option. The Fund may write covered
call options and secured put options on up to 25% of its net assets and may
purchase put and call options provided that no more than 5% of the fair market
value of its net assets may be invested in premiums on such options.

The Fund may:

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

o Write covered call options on foreign currencies, securities, and
securities indices and on futures contracts involving these items to
generate income from premiums. 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.

o Write secured put options on foreign currencies, securities, and
securities indices and futures contracts involving these items (to
generate income from premiums). 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.

o Buy or write options to close out existing options positions.

The Fund may also write covered call options on foreign currencies, securities,
and securities indices and on futures contracts involving these items to
generate income from premiums. 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 secured put options on foreign currencies, securities, and securities
indices and futures contracts involving these items (to generate income from
premiums). 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.

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 market 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.

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 market
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.

Securities lending activities are subject to market 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 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.

INVESTMENT RATINGS FOR INVESTMENT GRADE SECURITIES

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 derivative 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 Securities and Exchange Commission (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.

CREDIT RISKS

o 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.

o Many fixed income securities receive credit ratings from services such as
Standard & Poor's and Moody's Investors Service. 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.

o 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.

o 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.

PREPAYMENT RISKS

o Mortgage backed securities generally compensate for greater
prepayment risks by paying a higher yield. The difference between
the yield of a mortgage backed 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 the security is perceived to
have an increased prepayment risk or less market demand. An
increase in the spread will cause the price of the security to
decline.

o The Fund may have to reinvest the proceeds of mortgage prepayments in other
fixed income securities with lower interest rates, higher prepayment risks,
or other less favorable characteristics.

EURO RISKS

o The Fund makes significant investments in securities denominated in the
euro, the new single currency of the European Monetary Union (EMU).
Therefore, the exchange rate between the euro and the U.S. dollar will have
a significant impact on the value of the Fund's investments.

o With the advent of the euro, the participating countries in the EMU can no
longer follow independent monetary policies. This may limit these country's
ability to respond to economic downturns or political upheavals, and
consequently reduce the value of their foreign government securities.

EMERGING MARKET RISKS

o 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.

o 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.

SECTOR RISKS

o Companies with similar characteristics may be grouped together in broad
categories called sectors. Sector risk is the possibility that a certain
sector may underperform other sectors or as the market as a whole. As the
Adviser allocates more of the Fund's portfolio holdings to a particular
sector, the Fund's performance will be more susceptible to any economic,
business or other developments which generally affect that sector.

LIQUIDITY RISKS

o Trading opportunities are more limited for equity securities that
are not widely held or are issued by companies located in emerging
markets. 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.

o Liquidity risk also refers to the possibility that the Fund may not be able
to sell a security or close out a derivative contract when it wants to. If
this happens, the Fund will be required to continue to hold the security or
keep the position open, and the Fund could incur losses.

RISKS RELATED TO COMPANY SIZE

o Generally, the smaller the market capitalization of a company, the fewer
the number of shares traded daily, the less liquid its stock and the more
volatile its price. Market capitalization is determined by multiplying the
number of its outstanding shares by the current market price per share.

o Companies with smaller market capitalizations also tend to have unproven
track records, a limited product or service base and limited access to
capital. These factors also increase risks and make these companies more
likely to fail than larger, well capitalized companies.

BOND MARKET RISKS

o 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.

o 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.

RISKS ASSOCIATED WITH NONINVESTMENT GRADE SECURITIES o 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.

LEVERAGE RISKS

o Leverage risk is created when an investment exposes the Fund to a level of
risk that exceeds the amount invested. Changes in the value of such an
investment magnify the Fund's risk of loss and potential for gain.
Investments can have these same results if their returns are based on a
multiple of a specified index, security, or other benchmark.

o The adviser attempts to reduce the risks described above through
diversification of the portfolio and by credit analysis of each issuer as
well as by monitoring broad economic trends and corporate and legislature
developments.

FUNDAMENTAL INVESTMENT OBJECTIVE

The Fund's investment objective is to obtain a total return on its assets. The
investment objective may not be changed by the Fund's Board without shareholder
approval.

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 Investment Company Act of 1940, as
amended (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.

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 manner.

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.

THE ABOVE LIMITATIONS CANNOT BE CHANGED UNLESS AUTHORIZED BY THE BOARD AND BY
THE "VOTE OF A MAJORITY OF ITS OUTSTANDING VOTING SECURITIES," AS DEFINED BY THE
1940 ACT. THE FOLLOWING LIMITATIONS, HOWEVER, MAY BE CHANGED BY THE BOARD
WITHOUT SHAREHOLDER APPROVAL. SHAREHOLDERS WILL BE NOTIFIED BEFORE ANY MATERIAL
CHANGE IN THESE LIMITATIONS BECOMES EFFECTIVE.

BUYING 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.

ILLIQUID SECURITIES

The Fund will not purchase securities for which there is no readily available
market, or enter into repurchase agreements or purchase time deposits maturing
in more than seven days, if immediately after and as a result, the value of such
securities would exceed, in the aggregate, 15% of the Fund's net assets.

Except with respect to borrowing money, if a percentage limitation is adhered to
at the time of investment, a later increase or decrease in percentage resulting
from any change in value or net assets will not result in a violation of such
restriction.

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."

As a matter of non-fundamental operating policy, for purposes of the commodities
policy, investments in transactions involving futures contracts and options,
forward currency contracts, swap transactions and other financial contracts that
settle by payment or cash are not deemed to be investments in commodities.

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."

DETERMINING MARKET VALUE OF SECURITIES

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

o 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;

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

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

o futures contracts and options are valued at 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;

o 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

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

Prices provided by independent pricing services may be determined without
relying exclusively on quoted prices and may consider institutional trading in
similar groups of securities, yield, quality, stability, risk, coupon rate,
maturity, type of issue, trading characteristics, and other market data or
factors. From time to time, when prices cannot be obtained from an independent
pricing service, securities may be valued based on quotes from broker-dealers or
other financial institutions that trade the securities.

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 net asset value
(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:

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

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

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

FEDERATED LIFE MEMBERS

Shareholders of the Fund known as "Federated Life Members" are exempt from
paying any front-end sales charge. These shareholders joined the Fund
originally:

o through the "Liberty Account," an account for Liberty Family of Funds
shareholders on February 28, 1987 (the Liberty Account and Liberty Family of
Funds are no longer marketed); or

o as Liberty Account shareholders by investing through an affinity
group prior to August 1, 1987.

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:

o 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;

o 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;

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

o 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;

o 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;

o which are involuntary redemptions processed by the Fund because
the accounts do not meet the minimum balance requirements; and

CLASS B SHARES ONLY

o 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:

o 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:

ADVANCE
PAYMENTS

AMOUNT AS A PERCENTAGE
OF
PUBLIC OFFERING
PRICE

First $1 - $5 0.75%
million
Next $5 - $20 0.50%
million
Over $20 million 0.25%
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 January xx 2001, the following shareholders owned of record, beneficially,
or both, 5% or more of outstanding Class A Shares:

As of January xx 2001, the following shareholders owned of record, beneficially,
or both, 5% or more of outstanding Class B Shares:

As of January xx 2001, the following shareholders owned of record, beneficially,
or both, 5% or more of outstanding Class C 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.

----------------------------------------------------------------------------------------------

NAME AGGREGATE TOTAL
BIRTH DATE COMPENSATION COMPENSATION
ADDRESS PRINCIPAL OCCUPATIONS FROM FROM CORPORATION
POSITION WITH FOR PAST FIVE YEARS CORPORATION AND FUND COMPLEX
CORPORATION

JOHN F. DONAHUE*+# Chief Executive Officer and Director $0 $0 for the
Birth Date: July or Trustee of the Federated Fund Corporation and
28, 1924 Complex; Chairman and Director, 42 other
Federated Investors Federated Investors, Inc.; Chairman, investment
Tower Federated Investment Management companies in
1001 Liberty Avenue Company, Federated Global Investment the
Pittsburgh, PA Management Corp. and Passport Fund Complex
DIRECTOR AND Research, Ltd. ; formerly: Trustee,
CHAIRMAN Federated Investment Management
Company and Chairman and Director,
Federated Investment Counseling.

THOMAS G. BIGLEY Director or Trustee of the Federated $ $116,760.63 for
Birth Date: Fund Complex; Director, Member of the Corporation
February 3, 1934 Executive Committee, Children's and 42 other
15 Old Timber Trail Hospital of Pittsburgh; Director and investment
Pittsburgh, PA Chairman of Audit Committee, Robroy companies in
DIRECTOR Industries, Inc. (coated steel the
conduits/computer storage equipment); Fund Complex
formerly: Senior Partner, Ernst &
Young LLP; Director, MED 3000 Group,
Inc. (physician practice management);
Director, Member of Executive
Committee, University of Pittsburgh.

JOHN T. CONROY, JR. Director or Trustee of the Federated $ $128,455.37 for
Birth Date: June Fund Complex; Chairman of the Board, the Corporation
23, 1937 Investment Properties Corporation; and 42 other
Grubb & Partner or Trustee in private real investment
Ellis/Investment estate ventures in Southwest Florida; companies in
Properties formerly: President, Investment the
Corporation Properties Corporation; Senior Vice Fund Complex
3201 Tamiami Trail President, John R. Wood and
North Associates, Inc., Realtors; President,
Naples, FL Naples Property Management, Inc. and
DIRECTOR Northgate Village Development
Corporation.

NICHOLAS P. Director or Trustee of the Federated $ $73,191.21 for
CONSTANTAKIS Fund Complex; Director and Chairman of the Corporation
Birth Date: the Audit Committee, Michael Baker and 36 other
September 3, 1939 Corporation (engineering, investment
175 Woodshire Drive construction, operations and technical companies in
Pittsburgh, PA services); formerly: Partner, Andersen the
DIRECTOR Worldwide SC. Fund Complex

JOHN F. CUNNINGHAM Director or Trustee of some of the $ $93,190.48 for
Birth Date: March Federated Fund Complex; Chairman, the Corporation
5, 1943 President and Chief Executive Officer, and 36 other
353 El Brillo Way Cunningham & Co., Inc. (strategic investment
Palm Beach, FL business consulting); Trustee companies in
DIRECTOR Associate, Boston College; Director, the
Iperia Corp. Fund Complex
(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, Director or Trustee of the Federated $ $116,760.63 for
M.D.* Fund Complex; Professor of Medicine, the Corporation
Birth Date: October University of Pittsburgh; Medical and 42 other
11, 1932 Director, University of Pittsburgh investment
3471 Fifth Avenue Medical Center - Downtown; companies in
Suite 1111 Hematologist, Oncologist and the
Pittsburgh, PA Internist, University of Pittsburgh Fund Complex
DIRECTOR Medical Center; Member, National Board
of Trustees, Leukemia Society of
America.

PETER E. MADDEN Director or Trustee of the Federated $ $109,153.60 for
Birth Date: March Fund Complex; formerly: the Corporation
16, 1942 Representative, Commonwealth of and 42 other
One Royal Palm Way Massachusetts General Court; investment
100 Royal Palm Way President, State Street Bank and Trust companies in
Palm Beach, FL Company and State Street Corporation. the
DIRECTOR Fund Complex
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. Director or Trustee of some of the $ $102,573.91 for
MANSFIELD, JR. Federated Fund Complex; Management the Corporation
Birth Date: April Consultant; formerly: Executive Vice and 39 other
10, 1945 President, Legal and External investment
80 South Road Affairs, DVC Group, Inc. (formerly, companies in
Westhampton Beach, Dugan Valva Contess, Inc.) (marketing, the
NY communications, technology and Fund Complex
DIRECTOR consulting).

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, HSBC Bank USA (formerly, Marine Midland Bank);
Vice President, Citibank; Assistant Professor of Banking
and Finance, Frank G. Zarb School of Business, Hofstra
University.

JOHN E. MURRAY, Director or Trustee of the Federated $ $128,455.37 for
JR., J.D., S.J.D.# Fund Complex; President, Law the Corporation
Birth Date: Professor, Duquesne University; and 42 other
December 20, 1932 Consulting Partner, Mollica & Murray; investment
President, Duquesne Director, Michael Baker Corp. companies in
University (engineering, construction, operations the
Pittsburgh, PA and technical services). Fund Complex
DIRECTOR

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 Federated $0 $116,760.63 for
Birth Date: June Fund Complex; Public the Corporation
21, 1935 Relations/Marketing/Conference and 42 other
4905 Bayard Street Planning. investment
Pittsburgh, PA companies in
DIRECTOR Previous Positions: National the
Spokesperson, Aluminum Company of Fund Complex America;
television producer; business owner; conference
coordinator.

JOHN S. WALSH Director or Trustee of some of the $0 $94,536.85 for
Birth Date: Federated Fund Complex; President and the Corporation
November 28, 1957 Director, Heat Wagon, Inc. and 38 other
2604 William Drive (manufacturer of construction investment
Valparaiso, IN temporary heaters); President and companies in
DIRECTOR Director, Manufacturers Products, Inc. the
(distributor of portable construction Fund Complex
heaters); President, Portable Heater
Parts, a division of Manufacturers
Products, Inc.; Director, Walsh &
Kelly, Inc. (heavy highway
contractor); formerly: Vice President,
Walsh & Kelly, Inc.

J. CHRISTOPHER President or Executive Vice President $0 $0 for the
DONAHUE*+ of the Federated Fund Complex; Corporation
Birth Date: April Director or Trustee of some of the and 29 other
11, 1949 Funds in the Federated Fund Complex; investment
Federated Investors President, Chief Executive Officer and companies in
Tower Director, Federated Investors, Inc.; the
1001 Liberty Avenue President, Chief Executive Officer and Fund Complex
Pittsburgh, PA Trustee, Federated Investment
EXECUTIVE VICE Management Company; Trustee, Federated
PRESIDENT AND Investment Counseling; President,
DIRECTOR 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 President $0 $0 for the
Birth Date: October and Treasurer of some of the Funds in Corporation
22, 1930 the Federated Fund Complex; Vice and 41 other
Federated Investors Chairman, Federated Investors, Inc.; investment
Tower Trustee, Federated Administrative companies in
1001 Liberty Avenue Services; formerly: Trustee or the
Pittsburgh, PA Director of some of the Funds in the Fund Complex
EXECUTIVE VICE Federated Fund Complex; CEO and
PRESIDENT 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.

JOHN W. MCGONIGLE Executive Vice President and Secretary $0 $0 for the
Birth Date: October of the Federated Fund Complex; Corporation
26, 1938 Executive Vice President, Secretary and 42 other
Federated Investors and Director, Federated Investors, investment
Tower Inc.; formerly: Trustee, Federated companies in
1001 Liberty Avenue Investment Management Company and the
Pittsburgh, PA Federated Investment Counseling; Fund Complex
EXECUTIVE VICE Director, Federated Global Investment
PRESIDENT AND Management Corp., Federated Services
SECRETARY Company and Federated Securities Corp.

RICHARD J. THOMAS Treasurer of the Federated Fund $0 $0 for the
Birth Date: June Complex; Senior Vice President, Corporation
17, 1954 Federated Administrative Services; and 42 other
Federated Investors formerly: Vice President, Federated investment
Tower Administrative Services; held various companies in
1001 Liberty Avenue management positions within Funds the
Pittsburgh, PA Financial Services Division of Fund Complex
TREASURER Federated Investors, Inc.

RICHARD B. FISHER President or Vice President of some of $0 $0 for the
Birth Date: May 17, the Funds in the Federated Fund Corporation
1923 Complex; Vice Chairman, Federated and 40 other
Federated Investors Investors, Inc.; Chairman, Federated investment
Tower Securities Corp.; formerly: Director companies in
1001 Liberty Avenue or Trustee of some of the Funds in the the
Pittsburgh, PA Federated Fund Complex,; Executive Fund Complex
DIRECTOR Vice President, Federated Investors,
Inc. and Director and Chief Executive
Officer, Federated Securities Corp.

HENRY A. FRANTZEN Chief Investment Officer of this Fund $0 $0 for the
Birth Date: and various other Funds in the Corporation
November 28, 1942 Federated Fund Complex; Executive Vice and 2 other
Federated Investors President, Federated Investment investment
Tower Counseling, Federated Global companies in
1001 Liberty Avenue Investment Management Corp., Federated the
Pittsburgh, PA Investment Management Company and Fund Complex
CHIEF INVESTMENT Passport Research, Ltd.; Director,
OFFICER Federated Global Investment Management
Corp. and Federated Investment
Management Company; 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 THE1940 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 OF
THE CORPORATION.

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 $66,267,303.04 for which
the Fund paid $128,032.42 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:

MAXIMUM AVERAGE AGGREGATE DAILY NET ASSETS OF THE ADMINISTRATIVE FEE FEDERATED
FUNDS 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 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
misstatements.

FEES PAID BY THE FUND FOR SERVICES

FOR THE YEAR ENDED 1999 1998
NOVEMBER 30
Adviser Fee Earned $261,208 $14,621
Adviser Fee Reduction $261,208 $14,621
Brokerage Commissions $130,763 $19,167
Administrative Fee $185,000 $15,205
12b-1 Fee
Class A Shares $64,087 --
Class B Shares $2,961 --
Class C Shares $683 --
Shareholder Services Fee

Class A Shares $64,087 --
Class B Shares $987 --
Class C Shares $228 --
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 SEC's 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.

Start of Performance on

SHARE CLASS 1 YEAR October 27, 1998
CLASS A SHARES

Total Return 28.89% 32.35%
Start of

1 Year Performance on
October 27, 1998
CLASS B SHARES

Total Return 30.12% 34.45%
------------------------------------------------------------------------

Start of

1 Year Performance on
October 27, 1998
CLASS C SHARES

Total Return 34.43% 38.48%
------------------------------------------------------------------------

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:

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

o 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;

o 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

o 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:

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 NAV over
a specified period of time.

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.

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.

ORGANIZATION FOR ECONOMIC COOPERATION AND DEVELOPMENT (OECD)
Various publications.

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.

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, 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,
2000 are incorporated herein by reference to the Annual Report to Shareholders
of Federated Emerging Markets Fund dated November 30, 2000.

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

o Leading market positions in well-established industries;

o High rates of return on funds employed;

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

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

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

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

STANDARD AND POOR'S COMMERCIAL PAPER RATINGS

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

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

FITCH IBCA, INC. COMMERCIAL PAPER RATING DEFINITIONS FITCH-1--(Highest Grade)
Commercial paper assigned this rating is regarded as having the strongest degree
of assurance for timely payment.

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

ADDRESSES

FEDERATED GLOBAL EQUITY 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 INTERNATIONAL HIGH INCOME FUND

A Portfolio of Federated World Investment Series, Inc.

CLASS A SHARES

CLASS B SHARES

CLASS C SHARES

A mutual fund seeking a high level of income and a secondary objective of
capital appreciation by investing primarily in government and corporate debt
obligations of issuers in emerging market countries and developed foreign
countries.

January 31, 2001

RISK/RETURN SUMMARY

WHAT IS THE FUND'S INVESTMENT OBJECTIVE?

The Fund's investment objective is to seek a high level of current income. The
Fund has a secondary objective of capital appreciation. 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 invests in foreign government and corporate debt obligations. The
securities may be denominated in foreign currency or in U.S. dollars and the
Fund may invest in securities of any duration. The Adviser looks primarily for
securities offering higher interest rates. In implementing this strategy, the
Adviser will invest in emerging market countries as well as developed countries.
Many emerging market countries and corporations issue securities rated below
investment grade. There is no minimum rating standard for the Fund's securities.
The Fund does not limit the amount it may invest in securities rated below
investment grade.

WHAT ARE THE MAIN RISKS OF INVESTING IN THE FUND?

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.

BOND MARKET RISKS

o 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.

CREDIT RISKS

There is the actual or perceived risk that issuers of securities in which the
Fund may invest may default in the payment of interest or principal on the
securities when due, which would cause the Fund to lose money.

RISKS OF FOREIGN INVESTING

LIQUIDITY RISKS

The non-investment grade securities in which the Fund invests may be less
readily marketable and may be subject to greater fluctuation in price than other
securities.

RISKS ASSOCIATED WITH NON-INVESTMENT GRADE SECURITIES The Fund may invest a
portion of its assets in securities rated below investment grade that generally
are subject to greater interest rate, credit and liquidity risks than investment
grade securities.

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.

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 - TO BE FILED BY AMENDMENT

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 period ended December 31, 2000. The table shows the
Fund's total returns averaged over a period of years relative to the Morgan
Stanley Capital International World (ex U.S.) Small Cap Index (MSCI-SCW), a
broad- based market index. The MSCI-SCW includes stocks having market
capitalizations between U.S. $200-800 million. This index tracks small-cap stock
performance worldwide by defining a consistent market capitalization range
across 23 developed markets (ex-U.S.). 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.

CALENDAR PERIOD CLASS A CLASS B CLASS C MSCI-SCW
SHARES SHARES SHARES

1 Year
Start of

Performance1

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 INTERNATIONAL HIGH INCOME 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 and C Shares.

SHAREHOLDER FEES CLASS CLASS CLASS
A B C
FEES PAID DIRECTLY FROM YOUR INVESTMENT

Maximum Sales Charge (Load) Imposed on Purchases (as 4.50% None None a
percentage of offering price) Maximum Deferred Sales Charge (Load) (as a
percentage 0.00% 5.50% 1.00% of original purchase price or redemption proceeds,
as applicable) Maximum Sales Charge (Load) Imposed on Reinvested None None None
Dividends (and other Distributions) (as a percentage of offering price)
Redemption Fee (as a percentage of amount redeemed, None None None if
applicable) Exchange Fee None None None

ANNUAL FUND OPERATING EXPENSES (Before Waivers)(1)
EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS (AS A
PERCENTAGE OF AVERAGE NET ASSETS)
Management Fee 0.85% 0.85% 0.85%
Distribution (12b-1) Fee 0.25% 0.75% 0.75%
Shareholder Services Fee 0.25% 0.25% 0.25%
Other Expenses % % %
Total Annual Fund Operating Expenses % %3 %
1Although not contractually obligated to do so, the advisor 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, 2000.

Total Waivers of Fund Expenses % % %
Total Actual Annual Fund Operating Expenses (after % % %
waivers)
2 Effective March 1, 2000, Class A Shares discontinued paying and accruing the
shareholder services fee.

3 After Class B Shares have been held for eight years from the date of purchase,
they will automatically convert to Class A Shares on the 15th of the following
month. Class A Shares pay lower operating expenses than Class B Shares.

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 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 3 YEARS 5 10
YEAR YEARS YEARS
CLASS A:

Expenses assuming $ $ $ $
redemption

Expenses assuming no $ $ $ $
redemption

CLASS B:

Expenses assuming $ $ $ $
redemption

Expenses assuming no $ $ $ $
redemption

CLASS C:

Expenses assuming $ $ $ $
redemption
Expenses assuming no $ $ $ $
redemption

WHAT ARE THE FUND'S INVESTMENT STRATEGIES?

The Fund invests in foreign government and corporate debt obligations. The
securities may be denominated in foreign currency or in U.S. dollars. The
Adviser looks primarily for securities offering higher interest rates. In
implementing this strategy, the Adviser will invest in emerging market countries
and developed foreign countries. Many emerging market countries and corporations
issue securities rated below investment grade. The Fund considers "emerging
markets" to include any country that is defined as an emerging market or
developing country by any of the following: the International Bank for
reconstruction and development (i.e., the World Bank), the International Finance
Corporation or the United Nations or its authorities. These are typically
countries with gross domestic product per capita lower than $10,000 per year.
The Adviser may pursue investment opportunities in Asia, Africa, Latin America,
the Middle East and the developing countries of Europe (primarily in Eastern
Europe) as well as developed countries. The Fund does not limit the amount it
may invest in securities rated below investment grade.

The Adviser attempts to manage the risks of these high yield securities in two
ways. First, by investing the portfolio in a large number of securities from a
wide range of foreign countries. Second, by allocating the portfolio among
countries whose markets, based on historical analysis, respond differently to
changes in the global economy.

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 current account
balance. The Adviser then analyzes the country's financial condition, including
its credit ratings, government budget, tax base, outstanding public debt and the
amount of public debt held outside the country. 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, sound budget policy or strong
public commitment to repay government debt. For investments in corporate
issuers, the Adviser analyzes the business, competitive position, and financial
condition of the issuer to assess whether the security's risk is commensurate
with its potential return.

PORTFOLIO TURNOVER

TEMPORARY DEFENSIVE INVESTMENTS

WHAT ARE THE PRINCIPAL SECURITIES IN WHICH THE FUND INVESTS?

FIXED INCOME SECURITIES

A security's yield measures the annual income earned on a security as a
percentage of its price. A security's yield will increase or decrease depending
upon whether it costs less (a discount) or more (a premium) than the principal
amount. If the issuer may redeem the security before its scheduled maturity, the
price and yield on a discount or premium security may change based upon the
probability of an early redemption. Securities with higher risks generally have
higher yields. The following describes the principal types of fixed income
securities in which the Fund invests.

FOREIGN GOVERNMENT SECURITIES

Foreign government securities generally consist of fixed income securities
supported by national, state or provincial governments or similar political
subdivisions. Foreign government securities also include debt obligations of
supranational entities, such as international organizations designed or
supported by governmental entities to promote economic reconstruction or
development, international banking institutions and related government agencies.
Examples of these include, but are not limited to, the International Bank for
Reconstruction and Development (the World Bank), the Asian Development Bank, the
European Investment Bank and the Inter- American Development Bank.

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.

CORPORATE DEBT SECURITIES

The Fund will also invest in high-yield debt securities of foreign corporations.
Notes, bonds, debentures and commercial paper are the most prevalent types of
corporate debt securities. The Fund may also purchase interests in bank loans to
companies.

The credit risks of corporate debt securities vary widely among issuers. The
credit risk of an issuer's debt security may also vary based on its priority for
repayment. For example, higher ranking (senior) debt securities have a higher
priority than lower ranking (subordinated) securities. This means that the
issuer might not make payments on subordinated securities while continuing to
make payments on senior securities. In addition, in the event of bankruptcy,
holders of senior securities may receive amounts otherwise payable to the
holders of subordinated securities. Some subordinated securities, such as trust
preferred and capital securities notes, also permit the issuer to defer payments
under certain circumstances. For example, insurance companies issue securities
known as surplus notes that permit the insurance company to defer any payment
that would reduce its capital below regulatory requirements.

Foreign securities are securities of issuers based outside the United States.
The Fund considers an issuer to be based outside the United States if:

o.....it is organized under the laws of, or has a principal office
located in, another country;
o the principal trading market for its securities is in another
country; or
o 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 another country.

Foreign securities are often denominated in foreign currencies. Along with the
risks normally associated with domestic equity securities, foreign securities
are subject to currency risks and risks of foreign investing. Trading in certain
foreign markets is also subject to liquidity risks.

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. 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.

INVESTMENT RATINGS FOR INVESTMENT GRADE SECURITIES

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 investments 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 United States. The Adviser attempts to limit currency risk by
limiting the amount the Fund invests in securities denominated in a particular
currency. However, diversification will not protect the Fund against a general
increase in the value of the U.S. dollar relative to other currencies. 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. CREDIT RISKS Credit risk is
the possibility, real or perceived, that an issuer will default on a security by
failing to pay interest or principal when due. If an issuer defaults or is
perceived as being endangering of defaulting, the Fund would lose money.

Many fixed income securities receive credit ratings from services such as
Standard & Poor's and Moody's Investors Service. 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.

RISKS ASSOCIATED WITH NON-INVESTMENT 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.
RISKS OF FOREIGN INVESTING Foreign securities pose additional risks because
foreign economic or political conditions may be less favorable that those of the
United States. Foreign financial markets may also have fewer investor
protections. 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 U.S. 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. In addition, foreign countries may have restrictions on foreign
ownership or may impose exchange controls, capital flow restrictions or
repatriation restrictions that could adversely affect the Fund's investments.

The foreign sovereign debt securities the Fund purchases involve specific risks,
including that: (i) the governmental entity that controls the repayment of
sovereign debt may not be willing or able to repay the principal and/or interest
when it becomes due because of political constraints, cash flow problems and
other national economic factors; (ii) governments may default on their sovereign
debt, which may require holders of such sovereign debt to participate in debt
rescheduling or additional lending to defaulting governments; and (iii) there is
no bankruptcy proceedings by which defaulted sovereign debt may be collected in
whole or in part.

Legal remedies available to investors in certain foreign countries may be more
limited than those available with respect to investments in the United States 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. 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 creditworthiness and
consequently their prices can be significantly more volatile than prices in
developed countries. Emerging market economies may also experience more actual
or perceived severe downturns (with corresponding currency devaluations) than
developed economies.

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.

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.

LIQUIDITY RISKS

Trading opportunities are more limited for fixed income securities that have not
received any credit ratings, have received ratings below investment grade, or
are not widely held or are issued by companies located in emerging markets.
These features 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 increase their price
volatility.

SECTOR RISKS

A substantial part of the Fund's portfolio may be comprised of securities issued
or credit enhanced by companies in similar businesses, or with other similar
characteristics. As a result, the Fund will be more susceptible to any economic,
business, political, or other developments which generally affect these issuers.
The Fund will manage this risk by investing in a wide range of issuers within a
particular sector.

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 this 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 fixed income securities according to the mean between
bid and asked prices as furnished by an independent pricing service, except that
fixed income securities with remaining maturities of less than 60 days at the
time of purchase may be valued at amortized cost.

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.

MAXIMUM SALES CHARGE

MINIMUM

INITIAL/ CONTINGENT
SUBSEQUENT FRONT-END DEFERRED
INVESTMENT SALES SALES

SHARES OFFERED AMOUNTS1 CHARGE2 CHARGE3
Class A $1,500/$100 4.50% 0.00%
Class B $1,500/$100 None 5.50%
Class C $1,500/$100 None 1.00%
1 THE MINIMUM INITIAL AND SUBSEQUENT INVESTMENT AMOUNTS FOR RETIREMENT PLANS ARE
$250 AND $100, RESPECTIVELY. THE MINIMUM SUBSEQUENT INVESTMENT AMOUNTS FOR
SYSTEMATIC INVESTMENT PROGRAMS IS $50. INVESTMENT PROFESSIONALS MAY IMPOSE
HIGHER OR LOWER MINIMUM INVESTMENT REQUIREMENTS ON THEIR CUSTOMERS THAN THOSE
IMPOSED BY THE FUND. 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. AFTER CLASS B SHARES HAVE BEEN HELD FOR
EIGHT YEARS FROM THE DATE OF PURCHASE, THEY WILL AUTOMATICALLY CONVERT TO CLASS
A SHARES ON THE 15TH OF THE FOLLOWING MONTH. 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

Purchase Amount Sales Charge Sales Charge
as a Percentage as a Percentage
of Public of NAV
Offering Price

Less than $100,000 4.50% 4.71%
$100,000 but less than 3.75% 3.90%
$250,000

$250,000 but less than 2.50% 2.56%
$500,000
$500,000 but less than $1 2.00% 2.04%
million
$1 million or greater1 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.