President's Message
- - --------------------------------------------------------------------------------
Dear Shareholder:
I'm pleased to present the 24th Annual Report for
American Leaders Fund, Inc. This report features a
design that is easier to read. We've also included more
charts that show how investments in the Fund have grown
over time. I trust you will find this format both
informative and appealing.
This Report covers the 12-month period ended March 31,
1994. It begins with an interview with the Fund's
co-portfolio managers Peter R. Anderson, Senior
Vice President of Federated Advisers, and Michael P.
Donnelly, Assistant Vice President of Federated Advisers.
It follows with a series of performance charts, a
complete listing of the Fund's holdings, and its
financial statements.
Reflecting the first quarter 1994 rise in interest rates,
the Fund's net asset value for Class A Shares decreased
over the period. On the first day of the period, the
share price for Class A Shares based on net asset value
was $14.90 compared to $14.58 on March 31, 1994.
Dividends paid to shareholders for Class A Shares totaled
$0.24 per share. The Fund also paid capital gains for
Class A Shares of $0.49 per share. Total return for Class
A Shares during the period was 2.76% based on net asset
value.
While the share price decreased, the Fund has continued
to be a strong long-term performer. I urge you to review
the series of charts at the beginning of this Report,
which show the Fund's record of success over time.
The Fund's highly diversified portfolio included common
stocks of 49 companies spanning 11 key industries. As you
can see, you're participating in the growth potential and
earnings of such household names as Ford, General Motors,
Avon, Nike, Sears, Texaco, Citicorp, Bristol-Myers
Squibb, General Electric, and American Telephone and
Telegraph.
Reflecting increased investor confidence in the Fund,
assets increased significantly, from $202.8 million at
the beginning of the period to $254 million at the
period's end.
We encourage you to add to your investment in American
Leaders Fund. By reinvesting your dividends, you can
increase your share balance on which future dividends
will be paid.
Thank you for participating in this Fund to pursue your
long-term financial goals. We welcome your comments and
suggestions.
Sincerely,
John F. Donahue
President
May 16, 1994
Investment Review
- - --------------------------------------------------------------------------------
Q. HOW HAS THE FUND PERFORMED OVER THE PAST 12
MONTHS?
A. For the 12 months ended March 31, 1994, the
Class A Shares of the Fund have provided a total
return of 2.76% based on net asset value
of versus 1.46% for the S&P 500 Index.* Despite
outperforming the S&P 500 during the second and third
quarters of 1993, as well as the first quarter of 1994,
the Fund was adversely impacted by the strong
correction in finance and utility stocks during the
fourth quarter of 1993.
Even with the underperformance of the fourth quarter of
Peter Anderson, 1993, the Fund continued its streak of outperforming
Senior Vice President, the S&P 500 on a calendar annual basis for the fourth
Federated Advisers year in a row. In fact, according to Morningstar, Inc.,
of the 1,000+ equity mutual funds that have existed
since the beginning of 1990, only 36 funds have beaten
the market each of those four years and year-to-date 1994
(as of 3/31). American Leaders is one of those 36 funds,
and the current management team--who took over management
of the Fund at the end of 1989--is proud of this
consistent record.**
* This index is unmanaged.
** Pertains to Class A Shares only.
- - --------------------------------------------------------------------------------
Q. WITH THE RECENT TIGHTENING OF MONETARY POLICY BY
THE FEDERAL RESERVE, ARE STOCKS AT RISK?
A. The tightening of Federal Reserve (the ``Fed'')
policy was definitely a preemptive strike
against perceived inflation, given the +7%
growth experienced in the fourth quarter of 1993. Some
would also argue that the Fed tightened to restrain some
of the froth and excess enthusiasm generated towards
speculative investments such as emerging market debt and
equity. Regardless of the reasoning, the effect on the
bond market was severe. Although the tightening has been
modest in magnitude (targeting 3.75% on Fed Funds),
bonds have overreacted negatively due predominantly to
the amount of leverage that has been used/abused over
the past couple of years in the debt markets. This
unwinding of leverage has and will continue to create
short-term pressure on the bond market. However, we
believe that the current uptick in interest rates is a
cyclical, not secular phenomenon. Demographic trends
and increases in productivity suggest that wage
inflation will remain under control. From a longer-term
fundamental standpoint, we do not believe inflation is
a serious threat to derail the economy or stocks.
With regard to stocks, the market has moved from a
liquidity-driven market to an earnings-driven market.
Accommodative Fed policy has been one of the main drivers
to strong equity performance over the past few years.
This spigot has been turned down, and the earnings-driven
spigot has been opened wider. We believe corporate
profits shouldcontinue to deliver double-digit growth
through the end of 1995.
Equity bull markets have ended, on average, seven months
prior to the peak in economic activity. If you believe,
as we do, that economic activity will not peak until at
least the end of 1995, then it would be extremely odd for
a bear market to begin with so many months of economic
and profit growth on the horizon. In terms of valuation,
the market is expensive, but not nearly as expensive as
it was at the peak in late January. The S&P 500 is
currently trading at 15.5 times this year's earnings.
Historically, given reasonable inflation, this level of
valuation is sustainable. So if corporate profits are
decent for the next couple of years, there is reasonable
upside for stocks.
- - --------------------------------------------------------------------------------
Q. 1993 SEEMED TO BE THE YEAR OF THE INTERNATIONAL
MUTUAL FUND. ALTHOUGH THERE HAS BEEN SOME MARKET
TURBULENCE IN 1994, WHY SHOULD SOMEONE INVEST
IN A DOMESTIC STOCK FUND SUCH AS AMERICAN
LEADERS?
A. This is a question we are often asked. First, the
investors should consider having some exposure to
international equity markets. By adding international
securities to their portfolios, investors can seek
to increase their returns and reduce their overall
portfolio risks. This is due to the historic lack of
correlation of domestic to international markets. There
are, however, risks to international investing that
should keep the average investor from being 100%
committed to the asset class. International investors
have to be more risk tolerant. International markets
tend to be more volatile due to, among other things,
limited liquidity and currency risks. Who would of
thought at the end of last year that we would have
seen the kind of corrections experienced in Mexico and
Hong Kong this year?
Where does American Leaders fit in? The fact of the
matter is that the large, stable domestic blue-chip
stocks that the Fund invests in have significant foreign
exposure. If you look at the S&P 500, roughly one third
of the sales generated by these companies are non-U.S. If
you back out the 100 utility and finance stocks and look
at the S&P 400 industrials, the sales number moves north
of 40%. For instance, currently 3 of our top 10
holdings--Hewlett-Packard, Texaco and Mattel--have over
50% of their sales from non-U.S. sources. So by
purchasing large capitalization, domestic blue-chip
stocks, an investor can participate in some of the
potential growth of international markets
without stomaching the higher volatility,
limited liquidity, and currency
fluctuations involved with international
investing.
- - --------------------------------------------------------------------------------
Q. WHAT INDUSTRY SECTORS ARE BEING EMPHASIZED IN THE
FUND, AND WHAT ARE SOME OF YOUR FAVORITE STOCKS
IN THOSE SECTORS?
A. The Fund continues to be well diversified with
overweights (relative to the S&P 500) in
finance, technology, and consumer durables.
Underweight sectors include consumer non-durables,
consumer services, and utilities. The Fund is roughly
market weight in basic industry and energy, consistent
with our valuation work.
In the consumer non-durables area, we still like the
automobile stocks. We have positions in both Ford and
General MOTORS. The automobile cycle still looks strong
with pent up demand expected to drive sales growth
through at least the end of 1995. Earnings of both
companies should be driven by cost cutting and volume
growth. At current levels, both stocks appear
inexpensive.
In the Finance sector, Travelers and Dean Witter Discover
look especially attractive. Both are currently trading at
around 8 times this year's earnings. This price per
earnings ratio of 8 this year's earnings may be suitable
for a Traditional brokerage firm, assuming that we have
already seen peak earnings for this cycle. However, with
both Travelers and Dean Witter, traditional brokerage
services account for less than one third of their overall
businesses. We beleive both companies should be able to
grow their earnings over the next 5 years, so they both
appear undervalued.
American Leaders Fund, Inc.
(Class A Shares)
- - --------------------------------------------------------------------------------
GROWTH OF $10,000 INVESTED IN AMERICAN LEADERS FUND, INC. (CLASS A SHARES)
FOR THE TEN YEAR PERIOD ENDED MARCH 31, 1994
This graph shows the hypothetical investment of $10,000 in the American Leaders
Fund, Inc. (Class A Shares) (the "Fund") for the ten year period ended from
March 31, 1984 to March 31, 1994 compared to the Standard & Poor's 500 Index
(S&P 500) and the Lipper Growth and Income Funds Average (LGIFA).+
Graphic representation A1 omitted.
See Appendix.
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. YOUR INVESTMENT RETURN
AND PRINCIPAL VALUE WILL FLUCTUATE SO WHEN SHARES ARE REDEEMED, THEY MAY BE
WORTH MORE OR LESS THAN ORIGINAL COST.
* Represents a hypothetical investment of $10,000 in the Fund after
deducting the maximum sales load of 4.50% ($10,000 investment minus $450
sales load = $9,550). The Fund's performance assumes the reinvestment of
all dividends and distributions. The S&P 500 and the LGIFA have been
adjusted to reflect reinvestment of dividends on securities in the
indices.
+ The Lipper Growth and Income Fund's Average is a compilation of mutual
fund total returns reported to Lipper Analytical Services, Inc. Each
fund is reported net of sales loads, expenses, or other fees that the
SEC requires to be reflected in a fund's performance.
American Leaders Fund, Inc.
(Class C Shares)
- - --------------------------------------------------------------------------------
GROWTH OF $10,000 INVESTED IN AMERICAN LEADERS FUND, INC. (CLASS C SHARES)
FOR THE PERIOD FROM APRIL 21, 1993 TO MARCH 31, 1994
This graph shows the hypothetical investment of $10,000 in the American Leaders
Fund, Inc. (Class C Shares) (the "Fund") from April 21, 1993 to March 31, 1994
compared to the Standard & Poor's 500 Index (S&P 500) and the Lipper Growth and
Income Funds Average (LGIFA).+
Graphic representation A2 omitted.
See Appendix.
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. YOUR INVESTMENT RETURN
AND PRINCIPAL VALUE WILL FLUCTUATE SO WHEN SHARES ARE REDEEMED, THEY MAY BE
WORTH MORE OR LESS THAN ORIGINAL COST.
* Represents a hypothetical investment of $10,000 in the Fund. The ending
value of the Fund reflects a contingent deferred sales charge of 1.00% on
any redemption less than one year from the purchase date. The S&P 500 and
the LGIFA have been adjusted to reflect reinvestment of dividends on
securities in the indices.
+ The Lipper Growth and Income Fund's Average is a compilation of mutual
fund total returns reported to Lipper Analytical Services, Inc. Each
fund is reported net of sales loads, expenses, or other fees that the
SEC requires to be reflected in a fund's performance.
American Leaders Fund, Inc.
(Fortress Shares)
- - --------------------------------------------------------------------------------
GROWTH OF $10,000 INVESTED IN AMERICAN LEADERS FUND, INC. (FORTRESS SHARES)
FOR THE PERIOD FROM JULY 27, 1993 TO MARCH 31, 1994
This graph shows the hypothetical investment of $10,000 in the American Leaders
Fund, Inc. (Fortress Shares) (the "Fund") from July 27, 1993 to March 31, 1994
compared to the Standard & Poor's 500 Index (S&P 500) and the Lipper Growth and
Income Funds Average (LGIFA).+
Graphic representation A3 omitted.
See Appendix.
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. YOUR INVESTMENT RETURN
AND PRINCIPAL VALUE WILL FLUCTUATE SO WHEN SHARES ARE REDEEMED, THEY MAY BE
WORTH MORE OR LESS THAN ORIGINAL COST.
* Represents a hypothetical investment of $10,000 in the Fund after deducting
the maximum sales load of 1.00% ($10,000 investment minus $100 sales load =
$9,900). The Fund's performance assumes the reinvestment of all dividends and
distributions. The S&P 500 and the LGIFA have been adjusted to reflect
reinvestment of dividends on securities in the indices.
** The ending value of the Fund reflects a contingent deferred sales charge of
1.00% on any redemption less than four years from the purchase date.
+ The Lipper Growth and Income Fund's Average is a compilation of mutual fund
total returns reported to Lipper Analytical Services, Inc. Each Fund is
reported net of sales loads, expenses, or other fees that the SEC requires to
be reflected in a fund's performance.
Two Ways You May Seek to Invest for Success
in American Leaders Fund, Inc.
- - --------------------------------------------------------------------------------
Initial Investment:
A $26,000 INVESTMENT (REINVESTING ALL DIVIDENDS AND CAPITAL GAINS) GREW TO
$254,493.
If you had invested $26,000 in the Class A Shares of American Leaders Fund, Inc.
on 2/26/69, reinvested dividends and capital gains, and didn't redeem any
shares, your account would be worth $254,493 on 3/31/94. You would have earned
a 9.52%* average annual total return for the 26-year investment life span.
One key to investing wisely is to reinvest all distributions in Fund shares.
This increases the number of shares on which you can earn future dividends, and
you gain the benefit of compounding.
As of 3/31/94, the Class A Shares' average annual one-year, five-year and
ten-year total returns were -1.85%, 9.85%, and 12.87% respectively. Class C
Shares' total return since inception on 4/21/93 was 2.52%. Fortress Shares'
total return since inception on 7/27/93 was -2.31%.
Graphic representation A4 omitted.
See Appendix.
* Total return represents the change in the value of an investment after
reinvesting all income and capital gains, and takes into account the 4.5%
sales charge applicable to an initial investment in Class A Shares.
Data quoted represent past performance and do not guarantee future results.
Investment return and principal value will fluctuate so an investor's shares,
when redeemed, may be worth more or less than their original cost.
American Leaders Fund, Inc.
- - --------------------------------------------------------------------------------
One Step at a Time:
$1,000 INVESTED ON INCEPTION DATE AND ON EACH ANNIVERSARY DATE FOR 25 YEARS
(REINVESTING ALL DIVIDENDS AND CAPITAL GAINS) GREW TO $139,747.
With this approach, the key is consistency.
If you had started investing $1,000 on the inception date of the fund and $1,000
on each anniversary date in the Class A Shares of American Leaders Fund, Inc. on
2/26/69, reinvested your dividends and capital gains and didn't redeem any
shares, you would have invested only $26,000, but your account would have
reached a total value of $139,747* by 3/31/94. You would have earned an
average annual total return of 11.48%.
A practical investment plan helps you pursue long-term performance from
blue-chip stocks. Through systematic investing, you buy shares on a regular
basis and reinvest all earnings. An investment plan works for you when you
invest only $1,000 annually. You can take it one step at a time. Put time and
compounding to work!
Graphic representation A5 omitted.
See Appendix.
* No method of investing can guarantee a profit or protect against loss in down
markets. However, by investing regularly over time and buying shares at
various prices, investors can purchase more shares at lower prices, and all
accumulated shares have the ability to pay income to the investor.
Because such a plan involves continuous investment, regardless of changing
price levels, the investor should consider whether or not to continue
purchases through periods of low price levels.
American Leaders Fund, Inc._
A History of Solid Earnings--Sixteen 10-Year Periods
- - --------------------------------------------------------------------------------
$10,000 Invested with Distributions Reinvested
HOW A $10,000 INVESTMENT GREW DURING EACH 10-YEAR PERIOD SINCE FUND INCEPTION
This chart shows what your account would be worth had you invested $10,000 at
the beginning of these consecutive decades.
OVER EVERY 10-YEAR PERIOD SINCE THE FUND'S INCEPTION, A $10,000 INVESTMENT IN
ITS CLASS A SHARES (WITH ALL DIVIDENDS AND CAPITAL GAINS REINVESTED) GREW IN
VALUE. There was never a decade in which an investor would have lost money.
<TABLE>
<CAPTION>
A HISTORY OF INVESTMENT GROWTH
Initial Dividends and
April 1- Number of Capital Gains Total Ending Value
March 31 Shares Reinvested Shares of Shares
<S> <C> <C> <C> <C>
1969-1979* 955 $5,256 1,614 $12,878
1970-1980 973 5,991 1,749 13,501
1971-1981 929 7,404 1,719 16,122
1972-1982 930 7,425 1,805 15,323
1973-1983 967 10,905 1,962 21,505
1974-1984 1163 14,766 2,500 27,603
1975-1985 1285 12,487 3,139 36,385
1976-1986 1057 23,601 2,787 38,019
1977-1987 1093 28,637 3,108 44,167
1978-1988 1300 27,069 3,457 43,389
1979-1989 1196 27,765 3,325 43,363
1980-1990 1238 29,182 3,628 44,293
1981-1991 1018 25,200 2,930 38,621
1982-1992 1125 28,859 3,204 44,472
1983-1993 871 24,406 2,509 37,385
1984-1994 865 20,949 2,302 33,561
</TABLE>
* This 10-year period is February 26, 1969 through March 31, 1979.
American Leaders Fund, Inc._
Serving a Wide Range of Investors
- - --------------------------------------------------------------------------------
AMERICAN LEADERS FUND, INC. APPEALS TO A BROAD RANGE OF INVESTORS SEEKING
LONG-TERM GROWTH THROUGH BLUE-CHIP STOCKS.
The Fund invests primarily in a diversified portfolio of stocks issued by some
of America's leading corporations. Fund shares are not guaranteed, and the value
of your investment may fluctuate. Mutual funds involve risk, including possible
loss of principal.
<TABLE>
<CAPTION>
SOME OF THE FUNDS'S MAJOR SHAREHOLDER GROUPS
<S> <C>
Individuals and Joint Tenants $117,318,262
IRAs 40,599,820
Trusts 24,500,200
Custodians (under Uniform Gift to Minors Act) 6,880,615
Corporations 4,119,229
Pension Plans 2,616,657
Keogh/Profit-Sharing 1,504,866
Estates 909,409
</TABLE>
American Leader Fund, Inc._
Portfolio Update
- - --------------------------------------------------------------------------------
This chart lists the Fund's best-performing holdings that were in its portfolio
from 3/31/93 to 3/31/94. They are ranked by their total return.
<TABLE>
<CAPTION>
TOP TEN PERFORMERS
Price Price
as of as of
Basic Industries 3/31/93 3/31/94 Total Return
<S> <C> <C> <C>
General Motors Corp. $37.63 $53.88 45.32%
Litton Industries $22.47 $30.63 36.32%
US Healthcare Inc. $30.83 $41.00 34.37%
Rockwell Intl. Corp. $30.38 $39.63 33.74%
Citicorp $29.50 $37.50 27.12%
American Stores $21.13 $25.63 23.29%
Martin Marietta $36.75 $44.00 22.14%
General Electric $89.13 $100.00 15.23%
Mapco, Inc. $52.63 $59.63 15.20%
Lubrizol Corp. $31.13 $34.50 13.61%
</TABLE>
American Leaders Fund, Inc._
Hypothetical Investor Profile: Investing for a College Education
- - --------------------------------------------------------------------------------
David and Joan Rice are a fictional couple who, like many shareholders, are
searching for a way to make their money grow over time.
David and Joan are planning for the college education of their child in 15
years. On March 31, 1979, they invested $5,000 in the Class A Shares of American
Leaders Fund, Inc. Since then, David and Joan have made investments of $250
every month.
As this chart shows, over 15 years, the original $5,000 investment along with
their additional monthly $250 investments totaling $50,000 has grown to
$166,210. This represents a 13.43% average annual total return. For the Rices,
a dedicated program of monthly investment really paid off.
Graphic representation A6 omitted.
See Appendix
THIS HYPOTHETICAL SCENARIO IS PROVIDED FOR ILLUSTRATIVE PURPOSES ONLY AND DOES
NOT REPRESENT THE RESULTS OBTAINED BY ANY PARTICULAR SHAREHOLDER. PAST
PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS.
American Leaders Fund, Inc.
Portfolio of Investments
- - --------------------------------------------------------------------------------
March 31, 1994
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- - ------------- ---------------------------------------------------------------------------------- --------------
COMMON STOCKS--90.1%
- - -------------------------------------------------------------------------------------------------
BASIC INDUSTRY--7.4%
----------------------------------------------------------------------------------
101,000 **FMC Corp. $ 4,797,500
----------------------------------------------------------------------------------
101,000 Lubrizol Corp. 3,484,500
----------------------------------------------------------------------------------
128,000 Phelps Dodge Corp. 6,688,000
----------------------------------------------------------------------------------
215,000 Praxair, Inc. 3,735,625
---------------------------------------------------------------------------------- --------------
Total 18,705,625
---------------------------------------------------------------------------------- --------------
CONSUMER DURABLES--8.1%
----------------------------------------------------------------------------------
116,000 Eastman Kodak Co. 5,147,500
----------------------------------------------------------------------------------
78,000 Ford Motor Co. 4,582,500
----------------------------------------------------------------------------------
83,000 General Motors Corp. 4,482,000
----------------------------------------------------------------------------------
257,500 Mattel, Inc. 6,469,687
---------------------------------------------------------------------------------- --------------
Total 20,681,687
---------------------------------------------------------------------------------- --------------
CONSUMER NON-DURABLES--5.7%
----------------------------------------------------------------------------------
76,600 Avon Products, Inc. 4,327,900
----------------------------------------------------------------------------------
50,700 Nike, Inc., Class B 2,687,100
----------------------------------------------------------------------------------
111,100 Philip Morris Companies, Inc. 5,638,325
----------------------------------------------------------------------------------
52,000 Reebok International Ltd. 1,781,000
---------------------------------------------------------------------------------- --------------
Total 14,434,325
---------------------------------------------------------------------------------- --------------
CONSUMER SERVICES--6.5%
----------------------------------------------------------------------------------
113,400 American Stores Co. 5,811,750
----------------------------------------------------------------------------------
152,800 Sears, Roebuck & Co. 6,570,400
----------------------------------------------------------------------------------
201,100 **Tele-Communications, Inc. 4,172,825
---------------------------------------------------------------------------------- --------------
Total 16,554,975
---------------------------------------------------------------------------------- --------------
ENERGY--10.4%
----------------------------------------------------------------------------------
172,400 Baker Hughes, Inc. 3,060,100
----------------------------------------------------------------------------------
72,300 Chevron Corp. 6,091,275
----------------------------------------------------------------------------------
85,000 Mapco, Inc. 5,068,125
----------------------------------------------------------------------------------
ENERGY--CONTINUED
----------------------------------------------------------------------------------
102,000 Texaco, Inc. 6,426,000
----------------------------------------------------------------------------------
195,500 USX-Marathon Group 3,225,750
----------------------------------------------------------------------------------
62,178 Western Atlas, Inc. 2,564,843
---------------------------------------------------------------------------------- --------------
Total 26,436,093
---------------------------------------------------------------------------------- --------------
FINANCE--15.4%
----------------------------------------------------------------------------------
139,600 American General Corp. 3,856,450
----------------------------------------------------------------------------------
78,000 Bankers Trust of New York Corp. 5,528,250
----------------------------------------------------------------------------------
103,000 Citicorp 3,862,500
----------------------------------------------------------------------------------
103,042 Dean Witter, Discover & Co. 3,361,745
----------------------------------------------------------------------------------
74,300 Federal National Mortgage Association 5,776,825
----------------------------------------------------------------------------------
152,000 PNC Financial Corp. 4,047,000
----------------------------------------------------------------------------------
109,500 TIG Holdings, Inc. 2,107,875
----------------------------------------------------------------------------------
81,600 Transamerica Corp. 4,120,800
----------------------------------------------------------------------------------
185,200 Travelers, Inc. 6,505,150
---------------------------------------------------------------------------------- --------------
Total 39,166,595
---------------------------------------------------------------------------------- --------------
HEALTHCARE--7.6%
----------------------------------------------------------------------------------
100,000 American Home Products Corp. 5,800,000
----------------------------------------------------------------------------------
104,300 Becton, Dickinson & Co. 3,911,250
----------------------------------------------------------------------------------
82,000 Bristol-Myers Squibb Co. 4,233,250
----------------------------------------------------------------------------------
132,300 U.S. Healthcare, Inc. 5,424,300
---------------------------------------------------------------------------------- --------------
Total 19,368,800
---------------------------------------------------------------------------------- --------------
INDUSTRIAL/MANUFACTURING--8.3%
----------------------------------------------------------------------------------
65,000 General Electric Co. 6,475,625
----------------------------------------------------------------------------------
62,178 Litton Industries, Inc. 1,904,201
----------------------------------------------------------------------------------
72,700 Loews Corp. 6,524,825
----------------------------------------------------------------------------------
113,900 Textron, Inc. 6,150,600
---------------------------------------------------------------------------------- --------------
Total 21,055,251
---------------------------------------------------------------------------------- --------------
TECHNOLOGY--12.1%
----------------------------------------------------------------------------------
175,400 General Motors Corp. "E" 6,007,450
----------------------------------------------------------------------------------
78,300 Hewlett-Packard Co. 6,430,388
----------------------------------------------------------------------------------
122,400 Martin-Marietta Corp. 5,385,600
----------------------------------------------------------------------------------
105,600 Raytheon Co. 6,824,400
----------------------------------------------------------------------------------
150,200 Rockwell International Corp. 5,970,450
---------------------------------------------------------------------------------- --------------
Total 30,618,288
---------------------------------------------------------------------------------- --------------
TRANSPORTATION--1.8%
----------------------------------------------------------------------------------
188,000 Ryder Systems, Inc. 4,653,000
---------------------------------------------------------------------------------- --------------
UTILITIES--6.8%
----------------------------------------------------------------------------------
114,700 American Telephone & Telegraph Co. 5,878,375
----------------------------------------------------------------------------------
110,100 Detroit Edison Co. 2,917,650
----------------------------------------------------------------------------------
74,000 Duke Power Co. 2,673,250
----------------------------------------------------------------------------------
74,800 Enron Corp. 2,281,400
----------------------------------------------------------------------------------
155,600 MCI Communications Corp. 3,637,150
---------------------------------------------------------------------------------- --------------
Total 17,387,825
---------------------------------------------------------------------------------- --------------
TOTAL COMMON STOCKS (IDENTIFIED COST$187,247,513) 229,062,464
---------------------------------------------------------------------------------- --------------
CONVERTIBLE PREFERRED STOCKS--1.8%
- - -------------------------------------------------------------------------------------------------
FINANCE--0.8%
----------------------------------------------------------------------------------
103,400 Citicorp, Conv. Pfd., Series P, 8.25% 2,042,150
----------------------------------------------------------------------------------
INDUSTRIAL/MANUFACTURING--1.0%
----------------------------------------------------------------------------------
195,000 Westinghouse Electric Corp., Participating Equity Preferred $1.30 2,608,125
---------------------------------------------------------------------------------- --------------
TOTAL CONVERTIBLE PREFERRED STOCKS (IDENTIFIED COST $4,340,950) 4,650,275
---------------------------------------------------------------------------------- --------------
</TABLE>
American Leaders Fund, Inc.
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- - ------------- ---------------------------------------------------------------------------------- --------------
CONVERTIBLE SECURITIES--1.2%
- - -------------------------------------------------------------------------------------------------
TECHNOLOGY--1.2%
----------------------------------------------------------------------------------
$ 2,750,000 General Instrument Corp., 5.00%, 6/15/2000 $ 3,107,500
---------------------------------------------------------------------------------- --------------
TOTAL CONVERTIBLE SECURITIES (IDENTIFIED COST $2,750,000) 3,107,500
---------------------------------------------------------------------------------- --------------
*REPURCHASE AGREEMENT--8.4%
- - -------------------------------------------------------------------------------------------------
21,390,000 Morgan (J.P.) Securities, Inc., 3.59%, dated 3/31/94, due 4/4/94
(at amortized cost) (Note 2B) 21,390,000
---------------------------------------------------------------------------------- --------------
TOTAL INVESTMENTS (IDENTIFIED COST $215,728,463) $ 258,210,239+
---------------------------------------------------------------------------------- --------------
</TABLE>
+ The cost of investments for federal tax purposes amounts to $215,728,463. The
net unrealized appreciation on a federal tax basis amounts to $42,481,776,
which is comprised of $47,183,394 appreciation and $4,701,618
depreciation at March 31, 1994.
*The repurchase agreement is fully collateralized by U.S. government and/or
agency obligations based on market prices at the date of the portfolio.
**Non-income producing.
Note: The categories of investments are shown as a percentage of net assets
($254,034,187) at March 31, 1994.
(See Notes which are an integral part of the Financial Statements)
American Leaders Fund, Inc.
Statement of Assets and Liabilities
- - --------------------------------------------------------------------------------
March 31, 1994
<TABLE>
<S> <C> <C>
ASSETS:
- - ---------------------------------------------------------------------------------------------------
Investments in securities, at value (Notes 2A and 2B) (identified and tax cost $215,728,463) $258,210,239
- - ---------------------------------------------------------------------------------------------------
Cash 24,322
- - ---------------------------------------------------------------------------------------------------
Receivable for investments sold 2,019,790
- - ---------------------------------------------------------------------------------------------------
Receivable for fund shares sold 940,475
- - ---------------------------------------------------------------------------------------------------
Dividends and interest receivable 732,851
- - --------------------------------------------------------------------------------------------------- -----------
Total assets 261,927,677
- - ---------------------------------------------------------------------------------------------------
LIABILITIES:
- - ---------------------------------------------------------------------------------------------------
Payable for investments purchased $7,082,455
- - ----------------------------------------------------------------------------------------
Payable for Fund shares redeemed 735,726
- - ----------------------------------------------------------------------------------------
Accrued expenses and other liabilities 75,309
- - ---------------------------------------------------------------------------------------- ---------
Total liabilities 7,893,490
- - --------------------------------------------------------------------------------------------------- -----------
NET ASSETS for 17,426,317 shares of capital stock outstanding $254,034,187
- - --------------------------------------------------------------------------------------------------- -----------
NET ASSETS CONSIST OF: (Note 2G)
- - ---------------------------------------------------------------------------------------------------
Paid-in capital $208,102,878
- - ---------------------------------------------------------------------------------------------------
Unrealized appreciation of investments 42,481,776
- - ---------------------------------------------------------------------------------------------------
Accumulated undistributed net realized gain on investments 2,136,205
- - ---------------------------------------------------------------------------------------------------
Undistributed net investment income 1,313,328
- - --------------------------------------------------------------------------------------------------- -----------
Total Net Assets $254,034,187
- - --------------------------------------------------------------------------------------------------- -----------
NET ASSET VALUE:
- - ---------------------------------------------------------------------------------------------------
Class A Shares (net assets of $226,857,019 / 15,560,982 shares of capital stock outstanding) $14.58
- - --------------------------------------------------------------------------------------------------- -----------
Class C Shares (net assets of $11,895,408 / 817,284 shares of capital stock outstanding) $14.55
- - --------------------------------------------------------------------------------------------------- -----------
Fortress Shares (net assets of $15,281,760 / 1,048,051 shares of capital stock outstanding) $14.58
- - --------------------------------------------------------------------------------------------------- -----------
OFFERING PRICE PER SHARE:
- - ---------------------------------------------------------------------------------------------------
Class A Shares (100/95.5 of $14.58)* $15.27
- - --------------------------------------------------------------------------------------------------- -----------
Class C Shares $14.55
- - --------------------------------------------------------------------------------------------------- -----------
Fortress Shares (100/99.0 of $14.58)* $14.73
- - --------------------------------------------------------------------------------------------------- -----------
COMPUTATION OF PROCEEDS ON REDEMPTION:
- - ---------------------------------------------------------------------------------------------------
Class A Shares (99.5/100 of $14.58)** $14.51
- - --------------------------------------------------------------------------------------------------- -----------
Class C Shares (99.0/100 of $14.55)*** $14.40
- - --------------------------------------------------------------------------------------------------- -----------
Fortress Shares (99.0/100 of $14.58)**** $14.43
- - --------------------------------------------------------------------------------------------------- -----------
</TABLE>
*See "What Shares Cost" in the prospectus.
**See "Redeeming Class A Shares" in the prospectus.
***See "Redeeming Class C Shares" in the prospectus.
****See "Redeeming Fortress Shares" in the prospectus.
(See Notes which are an integral part of the Financial Statements)
American Leaders Fund, Inc.
Statement of Operations
- - --------------------------------------------------------------------------------
Year Ended March 31, 1994
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- - ---------------------------------------------------------------------------------------------------
Dividends $ 5,257,545
- - ---------------------------------------------------------------------------------------------------
Interest 893,447
- - --------------------------------------------------------------------------------------------------- -------------
Total income (Note 2C) 6,150,992
- - ---------------------------------------------------------------------------------------------------
Expenses--
- - ---------------------------------------------------------------------------------------------------
Investment advisory fee (Note 4) $ 1,549,057
- - -------------------------------------------------------------------------------------
Directors' fees 9,629
- - -------------------------------------------------------------------------------------
Administrative personnel and services (Note 4) 441,948
- - -------------------------------------------------------------------------------------
Custodian, and recordkeeping fees and expenses 79,304
- - -------------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses (Note 4) 252,505
- - -------------------------------------------------------------------------------------
Capital stock registration costs 76,781
- - -------------------------------------------------------------------------------------
Auditing fees 20,764
- - -------------------------------------------------------------------------------------
Legal fees 22,452
- - -------------------------------------------------------------------------------------
Distribution services fee (Note 4) 40,115
- - -------------------------------------------------------------------------------------
Printing and postage 86,105
- - -------------------------------------------------------------------------------------
Taxes 33,377
- - -------------------------------------------------------------------------------------
Shareholder services plan fee--Class A Shares (Note 4) 127,809
- - -------------------------------------------------------------------------------------
Shareholder services plan fee--Class C Shares (Note 4) 13,371
- - -------------------------------------------------------------------------------------
Shareholder services plan fee--Fortress Shares (Note 4) 10,981
- - -------------------------------------------------------------------------------------
Insurance premiums 9,581
- - -------------------------------------------------------------------------------------
Miscellaneous 12,245
- - ------------------------------------------------------------------------------------- ------------
Net expenses 2,786,024
- - --------------------------------------------------------------------------------------------------- -------------
Net investment income $ 3,364,968
- - --------------------------------------------------------------------------------------------------- -------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
- - ---------------------------------------------------------------------------------------------------
Realized and unrealized gain (loss) on investments (identified cost basis) 4,928,604
- - ---------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) on investments (3,465,543)
- - --------------------------------------------------------------------------------------------------- -------------
Net realized and unrealized gain on investments 1,463,061
- - --------------------------------------------------------------------------------------------------- -------------
Change in net assets resulting from operations $ 4,828,029
- - --------------------------------------------------------------------------------------------------- -------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
American Leaders Fund, Inc.
Statement of Changes in Net Assets
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
----------------------------
1994 1993
------------- -------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- - ------------------------------------------------------------------------------------
OPERATIONS--
- - ------------------------------------------------------------------------------------
Net investment income $ 3,364,968 $ 3,749,273
- - ------------------------------------------------------------------------------------
Net realized gain on investments ($4,928,604 net gain and $10,971,722 net gain,
respectively, as computed for federal tax purposes) 4,928,604 10,971,722
- - ------------------------------------------------------------------------------------
Net Change in unrealized appreciation (depreciation) on investments (3,465,543) 15,744,367
- - ------------------------------------------------------------------------------------ ------------- -------------
Change in net assets resulting from operations 4,828,029 30,465,362
- - ------------------------------------------------------------------------------------ ------------- -------------
Net equalization (debits)/credits (Note 2E) 151,939 98,153
- - ------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 2C)--
- - ------------------------------------------------------------------------------------
Dividends to shareholders from net investment income:
- - ------------------------------------------------------------------------------------
Class A Shares (3,432,521) (3,601,265)
- - ------------------------------------------------------------------------------------
Class C Shares (48,153)* --
- - ------------------------------------------------------------------------------------
Fortress Shares (82,470)** --
- - ------------------------------------------------------------------------------------
Distributions to shareholders from net realized gain on
investment transactions:
- - ------------------------------------------------------------------------------------
Class A Shares (7,004,322) (13,108,670)
- - ------------------------------------------------------------------------------------
Class C Shares (111,800)* --
- - ------------------------------------------------------------------------------------
Fortress Shares (97,411)** --
- - ------------------------------------------------------------------------------------ ------------- -------------
Change in net assets from distributions to shareholders (10,776,677) (16,709,935)
- - ------------------------------------------------------------------------------------ ------------- -------------
CAPITAL STOCK TRANSACTIONS (NOTE 3)--
- - ------------------------------------------------------------------------------------
Net proceeds from sale of shares 90,270,028 36,579,416
- - ------------------------------------------------------------------------------------
Net asset value of shares issued to shareholders
in payment of dividends declared 8,479,636 12,847,965
- - ------------------------------------------------------------------------------------
Cost of shares redeemed (41,784,861) (31,625,348)
- - ------------------------------------------------------------------------------------ ------------- -------------
Change in net assets from Fund share transactions 56,964,803 17,802,033
- - ------------------------------------------------------------------------------------ ------------- -------------
Change in net assets 51,168,094 31,655,613
- - ------------------------------------------------------------------------------------
NET ASSETS:
- - ------------------------------------------------------------------------------------
Beginning of period 202,866,093 171,210,480
- - ------------------------------------------------------------------------------------ ------------- -------------
End of period (including undistributed net income of
$1,313,328 and $1,359,565, respectively) $ 254,034,187 $ 202,866,093
- - ------------------------------------------------------------------------------------ ------------- -------------
</TABLE>
* For the period from April 21, 1994 (date of initial public offering) to
March 31, 1994.
** For the period from July 27, 1994 (date of initial public offering) to March
31, 1994.
(See Notes which are an integral part of the Financial Statements)
American Leaders Fund, Inc.
Financial Highlights--Class A Shares
- - --------------------------------------------------------------------------------
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
-------------------------------------------------------------------------------------------------
1994 1993 1992 1991 1990 1989 1988 1987 1986
----- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING
OF PERIOD $ 14.90 $ 13.88 $ 13.18 $ 12.21 $ 13.04 $ 12.55 $ 14.21 $ 13.64 $ 11.59
- - ---------------------------
INCOME FROM INVESTMENT
OPERATIONS
- - ---------------------------
Net investment income 0.23 0.29 0.29 0.37 0.55 0.50 0.45 0.46 0.53
- - ---------------------------
Net realized and
unrealized gain (loss) on
investments 0.18 2.05 1.34 1.28 0.36 1.08 (1.21) 1.81 2.88
- - --------------------------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
Total from investment
operations 0.41 2.34 1.63 1.65 0.91 1.58 (.76) 2.27 3.41
- - ---------------------------
LESS DISTRIBUTIONS
- - ---------------------------
Dividends to shareholders
from net investment income (0.24) (0.28) (0.28) (0.38) (0.56) (0.50) (0.43) (0.47) (0.52)
- - ---------------------------
Dividends to shareholders
from net realized gain on
investment transactions (0.49) (1.04) (0.65) (0.30) (1.18) (0.59) (0.47) (1.23) (0.84)
- - --------------------------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
Total distributions (0.73) (1.32) (.93) (.68) (1.74) (1.09) (0.90) (1.70) (1.36)
- - --------------------------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
NET ASSET VALUE, END OF
PERIOD $ 14.58 $ 14.90 $ 13.88 $ 13.18 $ 12.21 $ 13.04 $ 12.55 $ 14.21 $ 13.64
- - --------------------------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
TOTAL RETURN** 2.76% 18.31% 12.91% 14.17% 7.13% 13.23% (5.32)% 18.38% 31.80%
- - ---------------------------
RATIOS TO AVERAGE NET
ASSETS
- - ---------------------------
Expenses 1.18% 1.13% 1.02% 1.02% 1.01% 1.01% 1.00% 1.00% 1.09%
- - ---------------------------
Net investment income 1.48% 2.07% 2.12% 3.06% 4.23% 3.85% 3.35% 3.44% 4.42%
- - ---------------------------
Expense waiver/
reimbursement (b) -- 0.06% 0.16% 0.30% 0.35% 0.12% 0.11% 0.12% 0.18%
- - ---------------------------
SUPPLEMENTAL DATA
- - ---------------------------
Net assets, end of period
(000 omitted) 226,857 202,866 171,210 149,360 147,235 149,049 158,818 157,999 112,472
- - ---------------------------
Portfolio turnover rate 27% 39% 67% 57% 50% 27% 65% 28% 31%
- - ---------------------------
<CAPTION>
YEAR ENDED
FEBRUARY 28,
------------
<S> <C> <C>
1985* 1985
----- ----
NET ASSET VALUE, BEGINNING
OF PERIOD $ 11.55 $ 10.97
- - ---------------------------
INCOME FROM INVESTMENT
OPERATIONS
- - ---------------------------
Net investment income 0.03 0.54
- - ---------------------------
Net realized and
unrealized gain (loss) on
investments 0.01 1.91
- - --------------------------- --------- -------------
Total from investment
operations 0.04 2.45
- - ---------------------------
LESS DISTRIBUTIONS
- - ---------------------------
Dividends to shareholders
from net investment income -- (0.52)
- - ---------------------------
Dividends to shareholders
from net realized gain on
investment transactions -- (1.35)
- - --------------------------- --------- -------------
Total distributions -- (1.87)
- - --------------------------- --------- -------------
NET ASSET VALUE, END OF
PERIOD $ 11.59 $ 11.55
- - --------------------------- --------- -------------
TOTAL RETURN** .35% 25.85
- - ---------------------------
RATIOS TO AVERAGE NET
ASSETS
- - ---------------------------
Expenses 1.06%(a) 1.29%
- - ---------------------------
Net investment income 3.18%(a) 5.03%
- - ---------------------------
Expense waiver/reimburse-
ment (b) 0.22%(a) 0.05%
- - ---------------------------
SUPPLEMENTAL DATA
- - ---------------------------
Net assets, end of period
(000 omitted) 71,899 71,455
- - ---------------------------
Portfolio turnover rate 6% 32%
- - ---------------------------
</TABLE>
* For the one month period ended March 31, 1985. The Fund changed its fiscal
year-end from February 28 to March 31, effective March 31, 1985.
** Based on net asset value which does not reflect sales load or contingent
deferred sales charge, if applicable.
(a) Computed on an annualized basis.
(b) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above (Note 4).
(See Notes which are an integral part of the Financial Statements)
American Leaders Fund, Inc.
Financial Highlights--Class C Shares
- - --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED
3/31/94*
- - -------------------------------------------------------------------------------------------------- ---------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $14.70
- - --------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- - --------------------------------------------------------------------------------------------------
Net investment income 0.12
- - --------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments 0.35
- - -------------------------------------------------------------------------------------------------- ---------
Total from investment operations 0.47
- - --------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
- - --------------------------------------------------------------------------------------------------
Dividends to shareholders from net investment income (0.13)
- - --------------------------------------------------------------------------------------------------
Distributions for shareholders from net realized gain on investment transactions (0.49)
- - -------------------------------------------------------------------------------------------------- ---------
Total distributions (0.62)
- - -------------------------------------------------------------------------------------------------- ---------
NET ASSET VALUE, END OF PERIOD $14.55
- - -------------------------------------------------------------------------------------------------- ---------
TOTAL RETURN** 3.16%
- - --------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- - --------------------------------------------------------------------------------------------------
Expenses 2.11%(a)
- - --------------------------------------------------------------------------------------------------
Net investment income 0.71%(a)
- - --------------------------------------------------------------------------------------------------
Expense waiver/reimbursement (b) -- (a)
- - --------------------------------------------------------------------------------------------------
SUPPLEMENTARY DATA
- - --------------------------------------------------------------------------------------------------
Net assets, end of period (000 omitted) 11,895
- - --------------------------------------------------------------------------------------------------
Portfolio turnover rate 27%
- - --------------------------------------------------------------------------------------------------
</TABLE>
* Reflects operations for the period from April 21, 1993 (date of initial
public offering) to March 31, 1994.
** Based on net asset value which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(a) Computed on an annualized basis.
(b) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above (Note 4).
(See Notes which are an integral part of the Financial Statements)
American Leaders Fund, Inc.
Financial Highlights--Fortress Shares
- - --------------------------------------------------------------------------------
(For a share outstanding throughout the period)
<TABLE>
<CAPTION>
YEAR ENDED
3/31/94*
- - -------------------------------------------------------------------------------------------------- ---------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $14.95
- - --------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- - --------------------------------------------------------------------------------------------------
Net investment income 0.16
- - --------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments (0.20)
- - -------------------------------------------------------------------------------------------------- ---------
Total from investment operations (0.04)
- - --------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
- - --------------------------------------------------------------------------------------------------
Dividends to shareholders from net investment income (0.16)
- - --------------------------------------------------------------------------------------------------
Distributions for shareholders from net realized gain on investment transactions (0.17)
- - -------------------------------------------------------------------------------------------------- ---------
Total distributions (0.33)
- - -------------------------------------------------------------------------------------------------- ---------
NET ASSET VALUE, END OF PERIOD $14.58
- - -------------------------------------------------------------------------------------------------- ---------
TOTAL RETURN** -0.30%
- - --------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- - --------------------------------------------------------------------------------------------------
Expenses 1.35%(a)
- - --------------------------------------------------------------------------------------------------
Net investment income 1.51%(a)
- - --------------------------------------------------------------------------------------------------
Expense waiver/reimbursement (b) -- (a)
- - --------------------------------------------------------------------------------------------------
SUPPLEMENTARY DATA
- - --------------------------------------------------------------------------------------------------
Net assets, end of period (000 omitted) 15,282
- - --------------------------------------------------------------------------------------------------
Portfolio turnover rate 27%
- - --------------------------------------------------------------------------------------------------
</TABLE>
* Reflects operations for the period from July 27, 1993 (date of initial
public offering) to March 31, 1994.
** Based on net asset value which does not reflect sales load or contingent
deferred sales charge, if applicable.
(a) Computed on an annualized basis.
(b) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above (Note 4).
(See Notes which are an integral part of the Financial Statements)
American Leaders Fund, Inc.
Notes to Financial Statements
- - --------------------------------------------------------------------------------
Year Ended March 31, 1994
(1) ORGANIZATION
The Fund is registered under the Investment Company Act of 1940, as amended, as
a diversified, open-end, management investment company. The following is a
summary of significant accounting policies consistently followed by the Fund in
the preparation of its financial statements. The policies are in conformity with
generally accepted accounting principles.
The Fund provides four classes of shares ("Class A Shares," "Class B Shares,",
"Class C Shares" and "Fortress Shares"). Class A Shares, Class B Shares, Class C
Shares and Fortress Shares are identical in all respects except that Class B
Shares and Class C Shares are sold pursuant to a distribution plan ("Plan")
adopted in accordance with Investment Company Act Rule 12b-1. All four classes
of shares are subject to certain sales and contingent deferred sales charges.
(2) SIGNIFICANT ACCOUNTING POLICIES
A. INVESTMENT VALUATIONS--Listed equity securities are valued at last sales
price reported on national securities exchanges. Unlisted securities and
short-term obligations (and private placement securities) are generally
valued at the prices provided by an independent pricing service. Short-term
securities with remaining maturities of sixty days, or less may be stated
at amortized cost, which approximates value.
B. REPURCHASE AGREEMENTS--It is the policy of the Fund to require the
custodian bank to take possession, to have legally segregated in the
Federal Reserve Book Entry System or to have segregated within the
custodian bank's vault, all securities held as collateral in support of
repurchase agreement investments. Additionally, procedures have been
established by the Fund to monitor, on a daily basis, the market value of
each repurchase agreement's underlying collateral to ensure the value at
least equals the principal amount of the repurchase agreement, including
accrued interest.
The Fund will only enter into repurchase agreements with banks and other
recognized financial institutions such as broker/dealers which are deemed
by the Fund's adviser to be creditworthy pursuant to guidelines established
by the Directors. Risks may arise from the potential inability of
counterparties to honor the terms of the repurchase agreements.
Accordingly, the Fund could receive less than the repurchase price on the
sale of collateral securities.
C. INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Dividend income and
distributions to shareholders are recorded on the ex-dividend date.
Interest income and expenses are accrued daily. Bond premium and discount
if applicable, are amortized as required by the Internal Revenue Code
("Code").
D. FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the
"Code" applicable to regulated investment companies and to distribute to
shareholders each year substantially all of its taxable income.
Accordingly, no provision for federal tax is necessary.
E. EQUALIZATION--The Fund follows the accounting practice known as
equalization by which a portion of the proceeds from sales and costs of
redemptions of capital stock equivalent, on a per share basis to the amount
of undistributed net investment income on the date of the transaction is
credited or charged to undistributed net investment income. As a result,
undistributed net investment income per share is unaffected by sales or
redemptions of capital stock.
F. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in
when-issued or delayed delivery transactions. The Fund records when-issued
securities and maintains security positions such that sufficient liquid
assets will be available to make payment for the securities purchased.
Securities purchased on a when-issued or delayed delivery basis are marked
to market daily and begin earning interest on the settlement date.
G. RECLASSIFICATIONS--During the current period, the Fund adopted Statement of
Position 93-2 Determination, Disclosure, and Financial Statement
Presentation of Income, Capital Gain, and Return of Capital Distributions
by Investment Companies. Accordingly, permanent book and tax basis
differences relating to shareholder distributions have been reclassified to
paid-in-capital. As of April 1, 1993, the cumulative effect of such
differences, totaling $29,983,561 was reclassified from accumulated net
realized gain/loss on investments to paid-in-capital. Net investment
income, net realized gains, and net assets were not affected by this
change.
H. OTHER--Investment transactions are accounted for on the trade date.
(3) CAPITAL STOCK
At March 31, 1994, there were 100,000,000 shares of $0.20 par value capital
stock authorized. Of these shares, 30,000,000 have been designated as Class A
Shares of the Fund, 30,000,000 have been designated as Class C Shares of the
Fund and 30,000,000 as Fortress Shares of the Fund. The remaining 10,000,000
shares are undesignated. Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
-------------------------------------------------------
1994 1993
-------------------------- ---------------------------
CLASS A SHARES DOLLARS SHARES DOLLARS
<S> <C> <C> <C> <C>
- - ------------------------------------------------------- ----------- ------------- ------------ -------------
Shares sold 4,010,791 59,786,383 1,863,117 36,579,416
- - -------------------------------------------------------
Shares issued to shareholders
in payment of dividends declared 564,327 8,249,042 1,693,723 12,847,965
- - -------------------------------------------------------
Shares redeemed (2,631,678) (39,327,244) (2,271,507) (31,625,348)
- - ------------------------------------------------------- ----------- ------------- ------------ -------------
Change resulting from Capital Stock
transactions 1,943,440 $ 28,708,181 1,285,333 $ 17,802,033
- - ------------------------------------------------------- ----------- ------------- ------------ -------------
</TABLE>
American Leaders Fund, Inc.
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED
3/31/94*
-------------------------
CLASS C SHARES DOLLARS
<S> <C> <C>
- - -------------------------------------------------------------------------------------- ---------- -------------
Shares sold 858,693 $ 12,978,745
- - --------------------------------------------------------------------------------------
Shares issued to shareholders in payment of dividends declared 6,285 93,101
- - --------------------------------------------------------------------------------------
Shares redeemed (47,694) (718,025)
- - -------------------------------------------------------------------------------------- ---------- -------------
Change resulting from Capital Stock transactions 817,284 $ 12,353,821
- - -------------------------------------------------------------------------------------- ---------- -------------
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED
3/31/94**
-------------------------
FORTRESS SHARES SHARES DOLLARS
<S> <C> <C>
- - -------------------------------------------------------------------------------------- ---------- -------------
Shares sold 1,152,663 $ 17,504,900
- - --------------------------------------------------------------------------------------
Shares issued to shareholders in payment of dividends declared 9,223 137,493
- - --------------------------------------------------------------------------------------
Shares redeemed (113,835) (1,739,592)
- - -------------------------------------------------------------------------------------- ---------- -------------
Change resulting from Capital Stock transactions 1,048,051 $ 15,902,801
- - -------------------------------------------------------------------------------------- ---------- -------------
</TABLE>
* For the period from April 21, 1993 (date of initial public offering) to March
31, 1994.
** For the period from July 27, 1993 (date of initial public offering) to March
31, 1994.
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Federated Advisers, the Fund's investment adviser
("Adviser") receives for its services an annual investment advisory fee equal to
0.55 of 1% of the Fund's average daily net assets, plus 4.5% of the Fund's gross
income (excluding capital gains or losses). Adviser may choose to waive a
portion of its fee and reimburse certain operating expenses of the Fund. Adviser
can modify or terminate this voluntary waiver and reimbursement at any time at
its sole discretion.
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS") provides the Fund
with certain administrative personnel and services. Prior to March 1, 1994,
these services were provided at approximate cost. Effective March 1, 1994, the
fee is based on the level of average aggregate net assets of all funds advised
by subsidiaries of Federated Investors for the period. 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.
DISTRIBUTION AND SERVICE PLAN--The Fund has adopted a Distribution Plan (the
"Plan") pursuant to Rule 12b-1 under the Investment Company Act of 1940. Under
the terms of the Plan, the Fund will compensate Federated Securities Corp.
("FSC"), the principal distributor, from the assets of the Fund, to finance
activities intended to result in the sale of the Fund's Class B and
Class C Shares. The Plan provides that the Fund may incur distribution expenses
up to 0.75% of the average daily net assets of the Class B and Class C Shares,
annually, to compensate FSC.
SHAREHOLDER SERVICE PLAN--Under the terms of a shareholder service agreement
with Federated Shareholder Services ("FSS") the Fund will pay FSS up to 0.25 of
1% of the level of average net assets for the Fund for the period. This fee is
to obtain certain personal services for shareholders and the maintenance of
shareholder accounts.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT FEES, ACCOUNTING AND CUSTODY
FEES--Federated Services Company ("FServ") serves as transfer agent and dividend
disbursing agent for the Fund. The fee is based on the size, type and number of
accounts and transactions made by shareholders.
Certain of the Officers and Directors of the Fund are Officers and Directors of
the above companies.
(5) INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the
fiscal year ended
March 31, 1994 were as follows:
<TABLE>
<S> <C>
- - --------------------------------------------------------------------------------------------------
PURCHASES $101,175,332
- - -------------------------------------------------------------------------------------------------- ------------
SALES $ 56,781,145
- - -------------------------------------------------------------------------------------------------- ------------
</TABLE>
Report of Independent
Public Accountants
- - --------------------------------------------------------------------------------
To the Shareholders and Board of Directors of
AMERICAN LEADERS FUND, INC.:
We have audited the accompanying statement of assets and liabilities of American
Leaders Fund, Inc. (a Maryland corporation), including the schedule of portfolio
investments, as of March 31, 1994, and the related statement of operations for
the year then ended, the statement of changes in net assets for each of the two
years in the period then ended, and the financial highlights for each of the
periods presented. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of March
31, 1994, by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
American Leaders Fund, Inc. as of March 31, 1994, the results of its operations
for the year then ended, the changes in its net assets for each of the two years
in the period then ended, and the financial highlights for each of the periods
presented, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN & CO.
Pittsburgh, Pennsylvania
May 13, 1994
Directors Officers
- - --------------------------------------------------------------------------------
John F. Donahue John F. Donahue
John T. Conroy, Jr. President
William J. Copeland J. Christopher Donahue
J. Christopher Donahue Vice President
James E. Dowd Richard B. Fisher
Lawrence D. Ellis, M.D. Vice President
Edward L. Flaherty, Jr. Edward C. Gonzales
Peter E. Madden Vice President and Treasurer
Gregor F. Meyer John W. McGonigle
Wesley W. Posvar Vice President and Secretary
Marjorie P. Smuts John A. Staley, IV
Vice President
David M. Taylor
Assistant Treasurer
Charles H. Field
Assistant Secretary
Mutual funds are not obligations of or insured by any bank nor are they insured
by the federal government or any of its agencies. Investment in these shares
involves risk, including the possible loss of principal.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the Fund's prospectus, which contains facts
concerning its objective and policies, management fees, expenses and
other information.
[LOGO] AMERICAN
LEADERS
FUND, INC.
24TH ANNUAL REPORT
March 31, 1994
Established 1968
[LOGO] FEDERATED SECURITIES CORP.
--------------------------
Distributor
A subsidiary of FEDERATED INVESTORS
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
8042504 (5/94)
APPENDIX
A 1. The graphic presentation here displayed consists of a
line graph. The corresponding components of the line graph
are listed underneath. The Class A Shares of the Fund are
represented by a solid line; Standard & Poor's 500 is
represented by a dotted line and Lipper Growth and Income
Funds Average is represented by a broken line. The line
graph is a visual representation of a comparison in change
in value of a hypothetical investment in the Class A Shares
of the Fund and Standard & Poor's 500 Index and Lipper
Growth and Income Funds Average for the ten year period from
March 31, 1984 to March 31, 1994. The "x" axis reflects the
cost of the investment. The "y" axis reflects computation
periods from the ending value of the hypothetical investment
in Class A Shares of the Fund as compared to Standard and
Poor's 500 Index and Lipper Growth and Income Funds
Average; the ending values are $33,561, $39,427 and $32,916
respectively. Beneath the list of components that
correspond to the line graph are the following total return
data for the Class A Shares of the Fund: total return
figures for the one year, five year, and ten year periods,
and inception-to-date average annualized total return. The
corresponding total return figures are as follows: (1.85%);
9.85%; 12.87%; and 9.52% respectively. The performance
disclaimer and footnotes are listed directly under the
graphic presentation.
A 2. The graphic presentation here displayed consists of a
line graph. The corresponding components of the line graph
are listed underneath. The Class C Shares of the Fund are
represented by a solid line; Standard & Poor's 500 is
represented by a dotted line and Lipper Growth and Income
Funds Average is represented by a broken line. The line
graph is a visual representation of a comparison in change
in value of a hypothetical investment in the Class C Shares
of the Fund and Standard & Poor's 500 Index and Lipper
Growth and Income Funds Average for the period from April
21, 1983 to March 31, 1994. The "x" axis reflects the cost
of the investment. The "y" axis reflects computation
periods from the ending value of the hypothetical investment
in Class A Shares of the Fund as compared to Standard and
Poor's 500 Index and Lipper Growth and Income Funds
Average; the ending values are $10,252, $10,412 and $10,308
respectively. Beneath the list of components that
correspond to the line graph is the Inception-To-Date Total
Average Cumulative Return for the Class C Shares of the
Fund (4/21/93 - 3/31/94) This figure is 2.52%. The
performance disclaimer and footnotes are listed directly
under the graphic presentation.
A 3. The graphic presentation here displayed consists of a
line graph. The corresponding components of the line graph
are listed underneath. The Fortress Shares of the Fund are
represented by a solid line; Standard & Poor's 500 is
represented by a dotted line and Lipper Growth and Income
Funds Average is represented by a broken line. The line
graph is a visual representation of a comparison in change
in value of a hypothetical investment in the Fortress Shares
of the Fund and Standard & Poor's 500 Index and Lipper
Growth and Income Funds Average for the period from July
27, 1983 to March 31, 1994. The "x" axis reflects the cost
of the investment. The "y" axis reflects computation
periods from the ending value of the hypothetical investment
in Fortress Shares of the Fund as compared to Standard and
Poor's 500 Index and Lipper Growth and Income Funds
Average; the ending values are $9,769, $10,154 and $10,233
respectively. Beneath the list of components that
correspond to the line graph is the Inception-To-Date Total
Average Cumulative Return for the Fortress Shares of the
Fund (7/27/93 - 3/31/94) This figure is 2.31%. The
performance disclaimer and footnotes are listed directly
under the graphic presentation.
A 4 . The graphic representation here displayed consists of
a boxed legend in the upper left quadrant of the graphic
presentation indicating the components of the corresponding
mountain chart. The color-coded mountain chart is a visual
representation of the narrative text beneath it, which shows
that an initial investment of $26,000 in American Leaders
Fund Class A Shares in 1969 would have grown to $254,493 in
1994. The "x" axis reflects the cost of investment, the "y"
axis reflects computation periods from 1969 to 1994, and the
right margin reflects a total investment range from $0 to
$300,000. The chart further indicates the ending market
value attributable to principal, as well as the ending
market value attributable to capital gains and reinvested
dividends.
A 5. The graphic representation here displayed consists of
a boxed legend in the upper left quadrant of the graphic
presentation indicating the components of the corresponding
mountain chart. The color-coded mountain chart is a visual
representation of the narrative text beneath it, which shows
that yearly investments of $1,000 in American Leaders Fund
Class A Shares (the "Fund") beginning on the inception date
of the Fund in 1969, and on each anniversary date, would
have grown to $139,747 in 1994. The "x" axis reflects the
cost of investment, the "y" axis reflects computation
periods from 1969 to 1994, and the right margin reflects a
total investment range from $0 to $150,000. The chart
further indicates the ending market value attributable to
principal, as well as the ending market value attributable
to capital gains and reinvested dividends.
A 6. The graphic representation here displayed consists of a
boxed legend in the upper left quadrant of the graphic
presentation indicating the components of the corresponding
mountain chart. The color-coded mountain chart is a visual
representation of the narrative text beneath it, which shows
hypothetical growth over time in American Leaders Fund Class
A Shares (the "Fund") beginning with a $5,000 investment
in the Fund in 1979, which would have grown to $166,210 in
1994. The "x" axis reflects the cost of investment, the "y"
axis reflects computation periods from 1979 to 1994, and the
right margin reflects a total investment range from $0 to
$200,000. The chart further indicates the ending market
value attributable to principal, as well as the ending
market value attributable to capital gains and reinvested
dividends.
